Consulting and Drafting Trademark License Contracts

If any brand owner wishes to expand the market size and increase consumer awareness of their brand, they can transfer the rights of using the trademark for one/several other businesses to jointly use and develop the brand.

According to the provisions of Article 141 of the 2005 Commercial Law, the parties are transferring the rights to use industrial property objects in this circumstance. This must be done in the form of a written contract (contract for use of industrial property objects – License contract).

Relevant legal documents

Intellectual Property Law 2005

Some notes in the license contract

The right to use geographical indications and trade names cannot be transferred (a license contract cannot be signed with this group).
The right to use a collective trademark can not be transferred to organizations or individuals that are not members of that collective trademark owner.
The licensees is not allowed to sign a secondary contract with a third party, unless they are permitted by the licensors.
The licensees take the responsibility for writing instructions on the goods and packaging that the goods are produced under the trademark use contract.

Types of license contracts

According to the division of the 2005 Commercial Law, there are 3 types of license contracts:

Exclusive contract: during the scope and term of transfer, the licensee has the exclusive right to use the industrial property object, the licensor is not allowed to sign a contract to use the industrial property object with any third party and could only use that industrial property object with the permission of the licensee;
Non-exclusive contract: during the scope and term of transfer of use rights, the licensor still has the right to use the industrial property object and the right to sign a contract to use the non-exclusive industrial property object with others;
Secondary contract: in which the licensor is the one who is transferred the right to use that industrial property object under another contract (transferring to a third party).

Content required in the License contract

Full names and addresses of the transferor and transferee. In addition, there should be additional contact information such as phone number, email, website, and bank account information.
Basis for transfer of usage rights: are documents related to industrial property rights (the subject of this contract).
Contract type: exclusive/non-exclusive/Secondary contract
Scope of transfer, including limits on usage rights and territorial limits: it should be noted that the transferor can only transfer rights that he or she is authorized, which means he or she cannot transfer objects that are not authorized. (eg geographical indications cannot be transferred).
Contract term.
Price of transfer of usage rights;
Rights and obligations of the licensor and the licensee.

It should be noted that there are some contents can not be included in the contract (if included, they will automatically be void).

The licensee is prohibited from improving industrial property objects (except trademarks); or force the licensee to transfer to the licensor the above improvements, or the right to register industrial property or industrial property rights over those improvements.
Directly or indirectly restrict the licensee from exporting goods and services produced or provided under the license contract to other territories where the licensee has the public ownership rights or has the exclusive right to import that kind of goods;
Force the licensee to purchase all or a certain percentage of raw materials, components or equipment from the licensor or a third party designated by the licensor (except for cases for the purpose of quality assurance).
The licensee is prohibited from suing about the validity of the industrial property rights or the transfer rights of the licensor.

If you have any questions related to the License contract, please do not hesitate to contact An Luat Vietnam for support and advice.