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Technology transfer in Vietnam is a promising investment activity in Vietnam, but it comes with various legal risks if businesses are not well-versed in the applicable regulations. From registration procedures and technology valuation to intellectual property rights, these legal aspects must be carefully addressed to avoid disputes and ensure investment security.
Legal Framework for Technology Transfer: Not to Be Overlooked
In Vietnam, technology transfer is governed by the Law on Technology Transfer 2017 and its guiding regulations. Under current rules, the transferred technology must not be on the prohibited list and must be registered if it falls under the restricted transfer category. This is particularly important in sensitive fields such as biotechnology, environmental technology, or defense-related technology.
Furthermore, technology transfer agreements must be made in writing and satisfy certain mandatory conditions, including detailed descriptions of the technology, the rights and obligations of the parties, confidentiality clauses, and provisions for breach of contract. Omitting these terms could render the agreement invalid or unrecognized during dispute resolution proceedings.
Common Legal Risks in Technology Transfer
A frequent legal pitfall is the lack of transparency in technology valuation. Many companies struggle to determine the fair value of the technology due to the absence of comparable benchmarks or internal pricing influences. This can trigger scrutiny from tax authorities or raise suspicions of transfer pricing violations by investment regulators.
Additionally, if the transferred technology involves intellectual property rights, the failure to register or record those rights properly may leave the transferee’s use of the technology unprotected. In the event of a dispute, the transferee could lose the right to use the technology or find the transfer agreement unenforceable under the law.
How to Minimize Risks When Investing in Technology Transfer?
First and foremost, businesses should conduct a comprehensive legal due diligence on the proposed technology. Determining whether the technology falls under restricted categories, and whether expert appraisal or sectoral approvals are required, is essential to ensure the legality of the agreement. Seeking advice from legal professionals or intellectual property specialists is also crucial to avoid drafting errors.
Investors should also prioritize transparent, well-founded, and, if necessary, audited technology valuation methods. This not only helps mitigate tax risks but also enhances the credibility of the agreement in court or commercial arbitration. Simultaneously, any related intellectual property rights should be registered in parallel with the transfer process to secure usage rights.
Taking Proactive Legal Steps to Embrace the Technology Transfer Wave
Technology transfer is an inevitable trend in Vietnam’s strategy to attract investment and foster innovation. As the country moves toward a more integrated, green, clean, and sustainable economy, technology plays a central role in all aspects of production, governance, and consumption.
However, to seize this opportunity safely and effectively, both domestic and foreign investors must pay close attention to legal compliance. A successful strategy of technology transfer in Vietnam requires thorough preparation in contract drafting, legal procedures, intellectual property rights, and full adherence to Vietnam’s regulatory framework.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for technology transfer services in Vietnam. If you need any advice, please contact us for further information or collaboration.
