Pursuant to the Law on Organization of the Council of Ministers dated 4 July 1981;

Pursuant to Decree No. 35- CP dated 9 February 1981 regulating the functions, powers and responsibilities of Ministers and functions of the Ministries in a number of administration areas;
In order to simplify the task of organizing and managing activities concerning industrial property rights;

On the proposal of the Chairman of the State Committee for Science and Technology;

Article 1

Issued with this Decree are Regulations on the purchase and sale of the right to use inventions, utility solutions, industrial designs, trademarks on goods and technical secrets (hereinafter referred to as Regulations on Licensing)

Article 2

The Regulations shall be of full force and effect as of the date of their signing. Any previous regulations which are inconsistent with the provisions contained in the Regulations are hereby repealed.

Article 3

Ministers, Chairmen of State committees, heads of other bodies under the Council of Ministers and chairmen of the people's committees of the provinces, cities and special zones under central authority shall be responsible for the implementation of this Decree.

1. Chapter I

Article 1

1. These Regulations apply to the purchase and sale of the right to use inventions, utility solutions, industrial designs, trademarks on goods and technical secrets (hereinafter referred to as licensing) and shall apply to all individuals and legal entities of the Socialist Republic of Vietnam who engage in lawful research, production and business activities.

2. Foreign individuals and legal entities (hereinafter referred to as foreigners) may also carry out licensing activities in accordance with these Regulations an the laws of the Socialist Republic of Vietnam and the international agreements to which Vietnam is a party.

Article 2

1. The objects of licensing are the rights to use inventions, utility solutions, industrial designs and trademarks on goods which are legally protected.

2. The objects of licensing may also be know-how, data, documents and secret technical information (hereinafter referred to as technical secrets), and design sketches and models of goods relating to the above objects, even where the documents of protection for these objects have expired.

Article 3

1. Individuals and legal entities (including foreigners) may sell only those objects of licensing (referred to in article 2 of these Regulations) which are owned by them, or those objects of licensing in respect of which they have the right to sub-licence in an exclusive licensing contract or pursuant to paragraph 5 of article 6 of these Regulations.

2. With respect to inventions owned by the State (in respect of which inventor's patents have been granted which are still valid), the legal entities, i.e. the State agencies, State enterprises or State-private joint venture enterprises receiving the patents of public service inventions, or the authors of the inventions, are authorised to grant licensing rights to collective or private economic unit and to sell technical secrets which are related to the patented inventions.

3. Vietnamese individuals and legal entities must receive permission from the State Committee for Science and Technology before proceeding with the negotiation and granting of licensing rights to foreigners.

Article 4

1. All legal entities of all economic sectors have the right to purchase licensing rights (including those from foreigners) to promote their production and business provided such purchase will increase efficiency.

2. The purchase of licensing rights in order to extinguish or limit the use of the object of licensing for the purpose of illegal competition or frustration of technological progress is strictly prohibited.

Chapter II

Article 5

1. Licensing shall take place by way of contract in writing

2. A licensing contract is a legal document which sets out the obligations of the contracting parties for the purposes of establishing, modifying or suspending the relation, obligation and rights of the parties in relation to the objects of licensing referred to in article 2 of these Regulations

Article 6

A licensing contract shall not contain provisions which:

1. Unreasonably limit the licensee in the use, production and marketing of the product produced under the licence (including its export).

2. Unreasonably control the market price of the product produced under the licence.

3. Forbid the licensees to make improvements to and perfect the object of the licensing or which forbid the licensee to utilize similar technology of other individuals or legal entities.

4. Forbid the licensee to continue utilizing the object of licensing after expire of the contract (except for trademarks)

5. Forbid the licensee to grant an exclusive sub-licence to a third party which is engaged in lawful production and business activities in Vietnam.

In certain circumstances and particularly when required by the national economy, defence and security and proposed by the administrative agency concerned, the State Committee for Science and Technology may approve licensing contracts with foreigners which contain provisions that are otherwise prohibited by this article.

Article 7

1. The duration of a licensing contract shall not exceed seven years from the date of:

* signing of the contract (contracts between domestic signatory parties);

* approval of the contract by the State Committee for Science and Technology (contracts with foreigners).

2. A licensing contract expires when:

* the documents of protection of the objects of licensing expire;

* the contract is terminated in accordance with those cases provided for in article 17 of these Regulations.

Chapter III

Article 8

The parties to a licensing contract shall have the legal standing and capacity necessary to perform the obligations agreed upon the contract.

Article 9

Licensing contracts between individuals and legal entities within the country shall strictly observe the procedure for signing of economic contracts stipulated by the State and shall be registered and filed with the Inventions Department in accordance with article 14 of these Regulations.

Article 10

Individuals who and legal entities which sign licensing contracts with foreigners shall have the following rights and responsibilities:

1. Before proceeding with licensing activities, legal entities which are State agencies or enterprises or State-private joint venture enterprises shall report to and obtain the approval of their supervising administrative agency (ministry, agency of the same level as a ministry, people's committee of province, city or special zone under central authority).

In the case of the sale of licensing rights to foreigners, individuals and legal entities the sale shall be performed in accordance with the provisions contained in paragraph 3 of article 3 of these Regulations.

2. The following basic organizations or units (hereinafter referred to as organizations permitted export and import licences) may negotiate and sign licensing contracts with foreigners:

* export and import organizations permitted by the State to sign licensing contracts with foreigners;

* organizations permitted by the State to provide services in relation to licensing contracts with foreigners; and

* basic units permitted by the State to enter into economic co-operation with foreigners.

The above organizations permitted export and import licences shall in the signing of contracts with foreigners, comply with the regulations and follow the guidance of the Ministry of Foreign Economic Relations.

3. Individuals who and legal entities which (other than those referred to above) wish to engage in licensing with foreigners may select and delegate licensing work to one of the appropriate licence exporting and importing organizations referred to above. The delegation shall be by way of contract and the fee for the service shall be agreed upon by parties.

Article 11

In the process of negotiating and signing licensing contracts with foreigners, the delegator and delegatee shall lilies closely. Where necessary, a representative of the delegator shall join in the negotiations with the foreigners.

Article 12

1. Within thirty (30) days of the date of signing the licensing contract with foreigners, the individual or legal entity engaged in the licensing shall be responsible for establishing and filing a complete application for approval of the licensing contract by the State Committee for Science and Technology. Where the legal entity is a State agency, State enterprise or State-private joint venture enterprise, a copy of the contract shall be sent to the supervising State agency.

2. An application for approval of the licensing contract shall consist of:

* the application for the licensing contract;

* the licensing contract in Vietnamese and foreign languages; and

* copies of the titles of protection of the objects of the licensing.

Article 13

1. Within thirty (30) days from the date of its receipt of the application for approval of the licensing contract, the state Committee for Science and Technology shall respond to the application for approval and may extend this period for response by up to sixty (60) days, but in doing so must officially notify the applicant in writing for the reason for the extension.

2. If after thirty (30) days from the date of its receipt of the application for approval there is no notification of extension of the period for consideration, or if after ninety (90) days from the date of its receipt of the application when there has been notification of extension, the State Committee for Science and Technology has not issued a decision to refuse to approve the licensing contract, it shall be deemed approved.

3. Prior to granting approval of the contract, the State Committee for science and Technology shall consult the supervising State agency and where the legal entity applying for approval is a State agency, a State enterprise, or State-private joint venture enterprise it shall consult other related agencies. If necessary, the State Committee for Science and Technology may establish a consultative experts' council for approval of licensing contracts. This council, to be formed upon the decision of the Chairman, shall contain representatives of the bodies in charge of foreign investment, finance and banking.

Article 14

1. After approval of the licensing contract (with foreigners) or after signing of the contract (between domestic parties), the licensing contract shall be registered and filed with the Inventions Department in order that the transfer of the object of the contract may be legally recognized.

2. The foreign party which applies for registration of the licensing contract at the Inventions Department must do so through a representative recognized by the competent bodies of Vietnam.

3. An applicant for registration of a licensing contract must pay a registration fee as prescribed.

4. An application for registration of a licensing contract shall contain:

* an application for registration of a licensing contract;

* the approved licensing contract (if signed with foreigners) or the signed licensing contract (if signed between domestic parties); and * a receipt of payment of the licensing contract registration fee.

5. After receiving from both parties to the contract the applications for licensing contract registration, the Inventions Department shall issue certificates of licensing contract registration, record the contract in the register of licensing contracts and publish the transfer of the right to use in the industrial property gazette of the Inventions Department

Article 15

1. The decision to approve and the certificate of registration of the licensing contract shall form the basis for the issue of permits for export and import, utilizing foreign exchange, securing capital loans from banks and protecting industrial property rights.

2. Individuals who and legal entities which deliberately fail to carry out their obligations of registering and obtaining approval of licensing contract may, depending on the degree of damage caused by such failure, be subject to administrative penalty, fines or criminal prosecution.

Article 16

After the licensing contract has taken effect, Vietnamese individuals who and legal entities which, have opened and maintain accounts at banks shall send a copy of their contract to the authorized economic arbitration body for monitoring.

Chapter IV

Article 17

1. After the licensing contract has taken effect, the parties to the contract shall be responsible for performing their obligations in relation to the content and quality of the work and within the time agreed upon therein.

2. During performance of the contract, the parties may agree to substitute, add to and amend the provisions previously agreed upon. All substitutions, amendments and additions shall be made unanimously in writing; and in the case of contracts with foreigners, they shall take effect only upon approval being granted in accordance with the provisions of Chapter III of these Regulations.

3. A licensing contract may be terminated where:

* the two parties agree on termination;

* one of the two parties has breached its obligations to such an extent that the contract cannot be performed and the party causing the breach even though given written notice of ninety days by the other party, is unable to rectify it;

* it is impossible to perform the contract, due to force major, in which case the party claiming force major must notify the other party within seven days;

* a decision to terminate by an arbitration body has been made.

4. No later than fifteen (15) days after the decision to terminate has been made, the individuals and legal entities concerned shall notify the responsible State body, if any, and the Inventions Department . The termination of a licensing contract shall be registered by the Inventions Department in its register and shall be published in its official gazette.

Article 18

The parties to the licensing contract shall, throughout the duration of the contract, inform each other of all creative ideas for improving the technology, utility solutions or further inventions which arise during the application of the object of licensing. Conditions for the application for newly-discovered technology shall be determined by the parties to the contract in a supplemental licensing contract.

Article 19

The parties to a licensing contract must keep confidential all information and technical know-how in relation to the technical secrets transferred. This obligation shall be observed throughout the duration of the contract and even after its expire until such time as when the information and technical know-how transferred have become public.

Article 20

The parties to the contract shall be responsible for protection of the rights transferred.

(a) Where one of the two parties to the contract discovers the possibility of infringement of the transferred rights, it shall notify the other party in order that both of them may take preventive measures;

(b) Where a third party infringes any of the rights transferred in the contract, the licenser has an obligation to take all measures necessary to compel the infringing party to stop its acts of infringement and to pay compensation for damages.

In the case of an exclusive licensing agreement, however, if, after three months from the date of notification by the licensee, the licenser does not file a complaint, the licensee may itself take measures to counter the infringement by the third party. In such cases, the licenser shall assists the licensee.

(c) Where the use of the object of licensing leads to a complaint of a third party, the licenser shall assists the licensee in resolving the complaint.

(d) All expenses which arise out of the need to defend the rights transferred by the licensing contract and all amounts of compensation collected under a decision of an arbitration body, shall be divided in accordance with the agreement of the two parties.

Article 21

1. All disputes which arise between the parties during implementation of a licensing contract shall be resolved by way of negotiation between them.

2. Where the dispute is unable to be resolved through negotiation as referred to in paragraph 1 of this article:

(a) With regard to contracts between Vietnamese individuals and legal entities:

* Provided one or all of the parties have opened and maintained accounts at banks, the economic arbitrator shall resolve the dispute in accordance with the legal provisions on economic contracts and economic arbitration.

* A court shall resolve disputes which relate to the civil aspects of the licensing contract and the contractual disputes which are not within the scope of economic arbitration.

(b) With regard to licensing contracts signed with foreigners, where the parties do not agree on the manner in which disputes or disagreements are to be resolved, they shall be forwarded to an economic arbitration body of Vietnam or other body selected by the parties for resolution of the dispute.

Article 22

1. Where the parties consider the decisions made in accordance with article 21 to be unsatisfactory, they may refer the matter to a higher body for resolution of the disputed. While awaiting resolution, they must abide by the decision.

2. On review, the arbitration or other body and the parties shall comply with the applicable procedures stipulated by the State.

Chapter V

Article 23

1. Royalties received from licensing shall where the legal entity is a State body, a State enterprise or a State-private joint venture enterprise, be paid to the State Treasury, or where the licenser is an individual or legal entity operating within the sectors of collectives, individuals, or foreigners licensing in Vietnam, be subject to taxation. The amount to be paid to the State Treasury or to by paid as tax shall be calculated as follows:

* On royalties collected in one lump sum or collected by installments in a licensing contract, the duration of which is less than five years, individuals or legal entities (within the State sector as well as the collective sector private sector or foreign sector) the amount to be paid to the State Treasury or to be paid as tax shall be equivalent to ten (10) per cent of the value of the contract.

* On royalties collected by installment in a licensing contract the duration of which is longer than five years, the amount to be paid to the State Treasury or as tax shall be equivalent to fifteen (15) per cent of the value of the contract.

2. In licensing contracts with foreigners, that payment of tax to the State Treasury shall be paid in the foreign currency of the contract.

Article 24

In order to actively promote creative Labour, legal entities which are State agencies, State enterprises or State-private joint venture enterprise may use twenty five (25) per cent of the royalties earned from licensing (after deducting expenses incurred in negotiation, signing and implementing the contract, and paying to the State Treasury the amount contained in article 23 of these Regulations ) for the purpose of payment of remuneration to the author (and co-author, if any) of the invention, to other people who have directly assisted the author in perfecting the technology licensed, and to the people who have directly assisted the units to prepare and implement the licensing contract . The remaining income shall be used by the units to establish funds under the general guidance of the State.

The heads of these units shall have the responsibility and power to make decisions regarding the above remuneration, in accordance with the current regulations and guidance of the State relating to compensation payable in respect of industrial property.

Article 25

1. Individuals and legal entities selling licences overseas are authorised to use foreign currency in accordance with current regulations.

2. The State encourages foreign individuals and legal entities to use royalties obtained from their licensing activities in Vietnam for the purpose of investment in production and business activities in Vietnam, in respect of which they shall be granted the privileges provided for in the Law on Foreign Investment in Vietnam.

Chapter VI

Article 26

The Chairman shall be responsible for issuing circulars, and for organizing with the bodies concerned, the implementation of and provision of assistance in relation to these Regulations.

Article 27

Ministers, Chairmen of State Committees, heads of other bodies under the Council of Ministers and chairmen of the people's committees of the provinces, cities and special zones under central authority shall be responsible for issuing detailed provisions for the implementation of these Regulations within their branches or localities, and for promoting, checking and inspecting the implementation of these Regulations.