Technology transfer

What is 'Technology transfer'?

Technology transfer means the transfer of the right to own or the right to use a technology from the party that has the right to transfer the technology to a technology transferee.

Transfer of ownership of a technology means the transfer of the right to possess, use or dispose of a technology by a technology owner to another organization or individual.

Transfer of the right to use a technology means that an organization or individual allows another organization or individual to use its technology.

Where a technology is the subject of industrial property rights protection, the assignment of the right to own or use the technology must be effected together with the assignment of industrial property rights.

Capital contribution by technology is also an indirect form of technology transfer.

Types of technology transfer?

Forms of technology transfer are specified in Article 5 - Law on Technology Transfer 2017, including:

1. Independent technology transfer contract.

2. Technology transfer component in the following cases:

  • Investment projects;
  • Capital contribution by technology;
  • Franchise agreements;
  • Transfer of IP rights;
  • Purchase and sale of machinery and equipment stipulated in Point d Clause 1 of Article 4 of Law on Technology Transfer.

3. Other forms of technology transfer as provided for by law.

4. The technology transfer stipulated in Clause 1 and Point b Clause 2 of this Article must be in forms of contracts; the technology transfer stipulated in Points a, c, d and đ Clause 2 and Clause 3 of this Article shall be in forms of contracts or articles, clauses or appendixes of contracts or dossiers of investment projects which include contents stipulated in Article 23 of Law on Technology Transfer.

(Article 5 – Law on Technology Transfer 2017)

Technologies allowed to be transferred? 

Transferrable subject matters of technology is part or the whole of a technology of the following types:

  • Technical know-how and technological know-how;
  • Technological plans and process; technical solutions, parameters, drawings, or diagrams; formulae, computer software and data information;
  • Solutions for production optimization and renovation of technologies;
  • Equipment and machinery accompanying one of the transferable subject matters of technology mentioned in Point a, b and c of this Clause.

In case the transferable subject matter of technology specified in Clause 1 of this Article is subject to intellectual property (IP) rights protection, the transfer of the intellectual property rights shall be carried out in accordance with regulations stipulated in the Law on Intellectual Property.

(Article 4 - Technology Transfer Law 2017)

Procedures for technology transfer?

The parties are free to agree on the transfer of technology, without being required to go through administrative procedures, except for the case of technology transfer on the list of restricted transfers.

For technologies on the List of technologies restricted from transfer, approval of the Ministry of Science and Technology is required before the transfer is carried out according to the following process:

  • Organizations or individuals which want to transfer technologies restricted from transfer shall send an application for approval of technology transfer to Ministry of Science and Technology.
  • Within 03 working days from receiving the application, Ministry of Science and Technology shall review the application; in case the application is inadequate, the written document is sent to request the organization or individual to supplement the application as stipulated by laws.
  • Within 30 days from receiving the adequate application, the Ministry of Science and Technology shall chair and coordinate with relevant Ministries and branches to prepare the written approval for technology transfer. In case the application is refused, a written response clearly stating reasons for the refusal shall be sent to the applicant.
  • The Minister of Science and Technology is responsible for promulgating templates to apply for approval of technology transfer and explanations on technology.

(Article 29 - Law on Technology Transfer 2017)

Technology transfer application for approval?

  • The application form to request the approval of technology transfer
  • The legal status of the applicant
  • The written explanation on the technology to be transferred
  • The written explanation on conditions of using the transferred technology as stipulated by laws
  • The written explanation on the conformity of the technology in accordance with laws on standards and technical specifications.

(Article 29 - Law on Technology Transfer 2017)

Application for a technology transfer license?

  • The application form to request the grant of Technology Transfer License, which clearly specifies the parties’ responsibility to ensure contents of the technology transfer contract compliant with relevant laws
  • The legal status of the parties entering into the technology transfer contract
  • The original in Vietnamese or certified copy of the technology transfer contract. In case of no contract in Vietnamese is available, the notarized Vietnamese-translated contract shall be submitted
  • The list of documents relating to the technology, machinery, equipment (if any) enclosed with the technology transfer contract
  • The notarized copy of IP Rights Certificate for objects subject to IP Rights protection (if any)
  • Standards and quality of products and services created by using the transferred technology
  • The written explanation on conditions for using the technology
  • The document on price valuation of the transferred technology in case the technology transferee uses State budget

(Article 30 - Law on Technology Transfer 2017)

Notes when negotiating technology transfer contracts?

Parties to the contract and technology transfer

It is necessary to determine the Competence of the technology transferor, Information on registration of protection of the transferred technology, Intellectual Property Rights of the transferred technology.

Technology valuation

One of the most complex and difficult jobs is the pricing of technology. Transferors and transferees should consult and exchange information with experts in the field of transfer as well as information in the market for the most appropriate price.

The parties also need to specify a specific payment method in the contract or contract appendix to have a reasonable and effective payment solution in the technology transfer process.

Scope of transfer

Clearly define the scope of the assignment (transfer of ownership or licensing) so that the parties understand the rights and obligations of each party to avoid leading to a dispute later.

Transfer time

When transferring the license, the parties to a technology transfer contract need to clearly define the time limit for technology transfer.

Drafting technology transfer contract

In case of transferring many technology objects, one or more contracts may be made, but the contents of the contracts must not overlap the technology object to be transferred.

In case of technology transfer accompanied by machinery, equipment or technical means, this list and agreements on such machinery, equipment or technical means must be stated in the contract or the attached contract appendix. attached.

In case of transfer being a technology document containing technical solutions, technical know-how, design drawings, formulas, or technical process, the name and content of the documents must be specified in the contract. technology will be transferred.

In case of technology transfer in the form of training, it is necessary to specify the number of workers, technicians, occupations, training contents, cost, time, training location in the contract or sub-contract. contract but must ensure that the transferee receives and master the transferred technology after training.

In case of technology transfer in the form of appointing a technical consultant to assist in providing technical advice to the transferee of the technology to put the technology into production, the number of experts, content and time required must be specified. and support costs, technical advice in the contract or contract appendix.

Sign up for a technology transfer contract

Technology transfer contracts and parts of technology transfer which belong to one of the following cases shall be registered with  State management agencies in charge of science and technology, excluding technologies restricted from transfer which have been granted the Technology Transfer License:

  • Transfer of technology from abroad to Vietnam
  • Transfer of technology from Vietnam to abroad
  • Domestic technology transfer using the State-owned capital or State budget, excluding cases where Registration Certificate of Outcomes Implementing Tasks on Science and Technology Tasks has been already granted.

The State encourages organizations and individuals to register technology transfer for cases which are not subjected to register as defined above.

(Article 31 - Law on Technology Transfer 2017)

Supporting and encouraging technology transfer

Vietnam has many policies and incentives for foreign investors to transfer technology to individuals and organizations in Vietnam. At the same time, the country has established a National Technology Innovation Fund to support technology transfer businesses.

The National Technology Innovation Fund shall support in the following forms:

  • Providing preferential loans
  • Supporting loan interest rates
  • Granting guarantees for loans
  • Supporting capitals.

The National Fund for Technology Renovation is established to aim at the following objectives:

  • Supporting enterprises to transfer, renovate or improve technologies on the List of those encouraged for transfer as defined in Article 9 of the Law on Technology Transfer
  • Promoting the transfer of technologies serve ford for agricultural development in rural regions, mountainous regions and regions faced with difficult or extremely difficult socio-economic conditions
  • Supporting technology incubation, science and technology business incubation and decrypting activities
  • Supporting training for science and technology human resources to serve for the transfer, innovation and improvement of technologies
Tax incentives when implementing technology transfer

The following entities shall be eligible for tax incentives in accordance with the law on taxation:

  • Machinery, equipment, accessories, materials, specimens or technologies which are not yet created domestically and are imported to directly use for research and development, decrypting, technology innovation and technology transfer; scientific documents, books and journals used for innovation startups and science and technology business development;
  • Technology incubators, science and technology business incubators, organizations or individuals investing in and supporting innovation startups; intermediary organizations of the science and technology market which have incomes from technology transfer services;
  • Organizations and individuals carrying out technology transfer from Vietnam to abroad; organizations and individuals carrying out scientific research and technology development, technology decrypting and technology transfer at enterprises;
  • Organizations or individuals transferring technologies on the List of those encouraged for transfer.

(Article 39 – Law on Technology Transfer 2017)

Crowe Vietnam delivers a full-service package in all business phases including Market Entry, Establishment, Operation, Expansion, M&A and Exit. To view our services in detail.