The registration of a new trademark is frequently well-publicised in the context of Viet Nam’s present march towards full participation in the global economy. Everyone recognises the importance of registering a new trademark to protect it from use or misuse by others.

However, more significant on a day-by-day basis to the country’s current progress and certainly more common, is the licensing of an existing trademark to a domestic or foreign enterprise seeking to establish a trademark or brand name already in use elsewhere in the world for use here in Viet Nam.

The licence to use an already established and widely known brand name can give the local licensee a significant advantage in penetrating and quickly dominating the market over a competitor struggling to establish the reputation a new trademark.

The licence itself is merely a matter of contract between the owner of the trademark and the enterprise here in Viet Nam.

The contract grants the user a right to use a trademark for a particular use and for a period of time. The terms of the licence agreement will usually demand, as well, that the licensee adheres to and maintains certain quality standards associated with the brand.

Where the local licensee frequently stumbles, however, is in the failure to register the licence. A license to use an existing trademark must be registered in order to be enforceable, just as the right to use a new trademark must be registered.

Parties to a licence agreement all too frequently overlook the need to record the agreement with the State authorities. Many think, mistakenly, that a licence agreement, like other contracts, is enforceable when executed by the parties. This can be a fatal misapprehension.

In fact, the law of Viet Nam provides that any licence must be registered at the National Office of Intellectual Property (NOIP). An unregistered licence agreement is ineffective not only against third parties who might violate the rights of the licensee, but also as between both the licensor and licensee.

An unregistered trademark licence agreement is unenforceable before courts and other administrative State Authorities, and both the licensee and licensor accordingly lack any means to protect or enforce their contractual rights under the licence.

A trademark licence agreement must be in writing and is only legally effective upon its registration with the NOIP.

In addition, enterprises should be aware that a trademark’s validity in Viet Nam may be cancelled if the owner fail to use it within a specified time, presently five consecutive years. If a trademark licence agreement is registered, the licensee’s use of the trademark is considered the same as the owner’s (licensor’s) use of the trademark. The licensee is the owner’s proxy, if you will. Thus, the licensee’s use of the trademark maintains the mark’s validity and prevents cancellation of the trademark by reason of non-use. This constitutes a significant incentive for the licensor to register a trademark licence agreement.

As to the licensee, registration of the trademark licence may also be a necessary prerequisite simply to using the trademark.

Take, for example, the case of a trademark for medicines or cosmetics where the licensor is an overseas manufacturer and the licensee is a Vietnamese distributor. The licensee cannot distribute the products in Viet Nam because the law of Viet Nam provides that a distributor must evidence its right to use the trademark. In these circumstances, registration of the trademark licence contract constitutes such evidence. — VNS