Legal provisions on industrial property right license contracts

1. What is an industrial property right license contract?

According to the 2005 Intellectual Property Law, amended and supplemented in 2009, 2019 has the following provisions:

“Transfer of the right to use an industrial property right means that the owner of an industrial property right allows another organization or individual to use an industrial property right within the scope of his/her use right.”

At the same time, the law further stipulates: “The transfer of the right to use industrial property rights must be done in the form of a written contract (the contract to use the industrial property right).”

Thus, an industrial property right license contract is a written agreement on the transfer of the right to use an industrial property right.

Accordingly, this type of contract is aimed at the right to use, so after signing, the licensor remains the owner of the industrial property right.

2. Types of industrial property right license contracts.

Pursuant to Article 143 of the Law on Intellectual Property 2005 amended and supplemented in 2009, 2019, industrial property right license contracts include the following forms:

• Exclusive contract means a contract under which, within the licensing scope and term, the licensee shall have the exclusive right to use the licensed industrial property right while the licensor may neither enter into any industrial property right licence contract with any third party nor, without permission from the licensee, use such industrial property right.

• Non-exclusive contract means a contract under which, within the licensing scope and term, the licensor shall still have the right to use the industrial property right and to enter into a non-exclusive industrial property right licence contract with others.

• Industrial property right sub-licence contract means a contract under which the licensor is a licensee of the right to use such industrial property right pursuant to another contract.

3. Contents of the industrial property right license contract

a. Main content of the contract

A contract for the transfer of the right to use an industrial property right has the following principal contents:

• Full name and address of licensor and licensee.

• Bases for licensing of use rights.

• Contract form.

• Scope of transfer, including limited use rights, limited territory.

• Contract term.

• License transfer price.

• Rights and obligations of the licensor and the licensee.

In addition, a contract for transferring the right to use an IP object may have the following additional contents:

• Contract security.

• Contract penalty and compensation for contract damage.

• Terms of improvement, development in the contract.

• Dispute resolution.

• Validity of contract.

...

b. Terms not included in the contract

An industrial property right use contract must not contain provisions that unreasonably restrict the rights of the licensor, especially the following terms not derived from the licensor's rights:

• Prohibit the licensee from improving industrial property rights, except for trademarks; oblige the licensee to transfer to the licensor free of charge the industrial property right improvements created by the licensee or the right to register industrial property, industrial property rights for such improvements.

• Directly or indirectly restricting the licensee from exporting goods or services produced or supplied under the contract for the use of the industrial property right to territories other than where the licensor holds the respective industrial property rights or has the exclusive right to import such goods.

• Forcing 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 without the purpose of ensuring the quality of the goods. goods or services produced or provided by the licensee.

• Prohibit the licensor from claiming the validity of the industrial property right or the licensor's right of assignment.

When there are these terms in the contract, the contract is automatically void.

4. Limitations of the transfer of the right to use industrial property rights

• The right to use geographical indications and trade names is not transferable.

• The right to use a collective mark may not be transferred to an organization or individual that is not a member of the owner of that collective mark.

• The licensee may not enter into a secondary contract with a third party, unless otherwise permitted by the licensor.

• The licensee of the right to use the mark is obliged to write instructions on the goods and packages of goods about the fact that such goods are produced under the contract to use the mark.

• The party that is licensed to use the invention under an exclusive contract is obliged to use the invention as the owner of the invention.

It is very important to understand the provisions of the law on intellectual property when concluding a license contract. However, despite being able to carefully prepare knowledge and information, encountering difficulties in implementation still often occurs. Therefore, choosing a legal support unit like Siglaw is the right thing to do in order to save time and effort when transferring the right to use industrial property rights.

5. Legal basis

Law on Intellectual Property 2005 amended and supplemented in 2009, 2019.