The signing of a franchising contract is becoming more widespread in commercial practice in Vietnam. One of the issues that parties in a franchising contract are particularly concerned about is content related to intellectual property. According to current regulations, the validity of the content on the transfer of rights to use intellectual property objects will have to comply with the provisions in the law on intellectual property.
In this article, BLawyers Vietnam would like to present 06 essential notes regarding intellectual property rights (“IPR”) in franchising contracts under current Vietnamese law.
1. Scope of IPR objects transferred for use in franchising contract
The law regulates various types of intellectual property assets, but only some types of intellectual property assets can be transferred for use, which are:
- For copyright and related rights, the owner has the right to permit other organizations and individuals to use one, several, or all of the rights as prescribed. However, authors and performers are not allowed to transfer moral rights, except for the right to name a work and the right of publication.
- For industrial property rights, the owner of such industrial property object (“IPO”) has the right to allow other organizations and individuals to use IPO within their scope of rights, except for cases where the transfer of rights to use IPO is restricted under the law on intellectual property.
- For plant variety rights, the protection certificate holder has the right to allow others to conduct one or more acts within their holder’s right to use the plant variety.
2. Form and content of contracts for the transfer of the right to use IPR objects in franchising contracts
Similar to franchising contracts, agreements on the transfer of the right to use IPR objects in franchising contracts must be done in writing. In addition, contracts for the transfer of the right to use IPR objects must contain basic content as required by law, such as the parties’ information, the grounds for transfer, the scope of transfer, the price and payment method, the parties’ rights and obligations, responsibilities for contract violations, etc.
3. Effective date of contracts for transfer of the right to use IPR objects in franchising contracts
For industrial property rights established on the basis of registration according to the regulations of law, an IPR transfer contract will take effect according to the agreement between the parties, but it only has validity for third parties when registered with an industrial property rights authority. If the industrial property rights of the transferor are invalidated, the validity of an industrial property rights transfer contract shall be automatically terminated.
4. Transfer of IPR objects with co-ownership
In cases where IPRs objects have co-ownership, the transfer of usage rights must be agreed upon by all co-owners. For registering an IPR transfer contract, the law also requires that the application file must include written consent from co-owners and a written explanation of the reasons for disagreement from any co-owner regarding the transfer of rights.
5. Transfer of the right to use IPR objects to a third party
Organizations and individuals that have been granted the right to use copyright and related rights can transfer this right to other organizations and individuals with the consent of the copyright owner and the related rights owner.
6. Obligations of the franchisees regarding IPR assets after the termination or expiration of the franchising contract
Unless otherwise agreed, franchisees must meet the following obligations after the termination or expiration of the franchising contract:
- To maintain the confidentiality of any licensed business secrets;
- To stop using trademarks, trade names, business slogans, logos, and other IPR (if any) of the franchisor.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.
Date: 03 October 2023
Writer: BLawyers Vietnam
