I. Understanding the contract for assignment of industrial design usage rights
Industrial designs are considered the creation of an individual or organization and are registered for protection under the provisions of intellectual property law. And transferring the right to use industrial designs is also one of the rights of the registrant in the form of a written contract. So what does the law stipulate on this issue? Let's find out with NPLaw through the article below!
1. What is a contract for assignment of industrial design usage rights?
According to Clauses 4 and 13, Article 4 of the Intellectual Property Law 2005 (as amended in 2009 and 2022), an industrial design is the external appearance of a product represented by shapes, lines, colors, or a combination thereof. It is considered one of the objects of industrial property rights that may be protected under law.
Additionally, Article 141 of the Intellectual Property Law stipulates that the assignment of industrial property rights refers to the owner's act of permitting other organizations or individuals to use the subject matter within their usage rights. This assignment must be made in the form of a written contract.
-> Therefore, a contract for the assignment of industrial design usage rights is a written agreement in which the owner of a protected industrial design allows another party (individual or organization) to use the industrial design within the scope of their lawful rights.
2. Subject matter of the contract
Pursuant to Clause 2, Article 3 of the Law on Intellectual Property 2005 (issued in 2009, 2022), industrial design is one of the subjects of industrial property rights and individuals and organizations are allowed to transfer the right to use industrial designs through written contracts.
Furthermore, Point a, Clause 3, Article 6 states that ownership rights to industrial designs are established based on a protection title granted by a competent authority through a registration procedure.
-> Hence, the subject of the assignment contract must be a registered industrial design with an official protection title issued by a competent state authority.
II. Legal regulations on the contract for assignment of industrial design usage rights
1. Legal provisions on executing the contract
Under Clause 3, Article 142 of the Intellectual Property Law, the assignee is not allowed to enter into sub-licensing contracts with third parties, except when explicitly authorized by the assignor.
Contracts for the use of industrial designs may be entered into in the forms stipulated in Article 143, including:
- Exclusive license;
- Non-exclusive license;
- Sub-license for using the industrial design.
Additionally, Clause 2, Article 144 prohibits unreasonable restrictive terms against the assignee. Particularly, the following clauses are invalid if included:
- Prohibiting the assignee from improving the industrial design, or requiring them to transfer improvements or related industrial property rights to the assignor free of charge;
- Directly or indirectly restricting the assignee from exporting goods/services produced under the assigned rights to territories where the assignor holds no corresponding industrial property rights or import monopoly;
- Forcing the assignee to purchase all or a specific percentage of raw materials, components, or equipment from the assignor or a third party designated by the assignor, unless it is for ensuring product/service quality;
- Prohibiting the assignee from complaints about the validity of the assignor’s ownership or the assignment itself.
-> Any such clause is automatically void by law.
2. Rights and obligations of the Parties
Although the Intellectual Property Law does not specify detailed rights and obligations for each party in these contracts, based on related legal provisions, the following apply:
Assignor’s rights and obligations:
- Receive payment according to the agreed schedule and method in the contract;
- Request interest on late payments (if applicable) as per agreement or relevant laws;
- Deliver all relevant documents regarding the industrial design upon the contract's effective date;
- Guarantee that the industrial design is not disputed or infringing on third-party rights;
- Fulfill other rights and obligations as mutually agreed.
Assignee’s rights and obligations:
- Receive all relevant documents from the assignor once the contract becomes effective;
- Fulfill all legal obligations related to the industrial design after the assignment;
- Take responsibility for tax obligations arising from the assignment;
- Fulfill other rights and obligations as mutually agreed.
III. Questions about the contract for assignment of industrial design usage rights
1. Why is a written contract necessary?
According to Clause 2, Article 141 of the Intellectual Property Law, a written contract is mandatory for the assignment of usage rights. Without it, the assignment will not be legally effective.
2. How to resolve disputes regarding the contract?
In the event of a dispute, the parties may:
- Resolve it through mutual negotiation;
- Initiate legal proceedings before a court;
- File a complaint with the Intellectual Property Office of Vietnam for administrative remedies under Decree 99/2013/ND-CP.
3. Can a party unilaterally terminate the contract?
Although the Intellectual Property Law does not directly address unilateral termination of assignment contracts, such contracts are considered property rights agreements under the Civil Code.
According to Clause 1, Article 428 of the Civil Code 2015, a party may unilaterally terminate a contract without compensation if the other party commits a serious breach, if the parties have an agreement, or if the law provides for such termination. However, the terminating party must promptly notify the other party; failure to notify that results in damage will require compensation.
IV. Legal consulting and drafting services for assignment contracts of industrial design usage rights
The contract for assignment of industrial design usage rights is a key legal instrument in intellectual property transactions. To ensure legal compliance and minimize risks, individuals and organizations are advised to seek professional legal consulting services. The benefits include:
- Lawyers ensure the contract complies with applicable laws and contains all necessary provisions;
- Lawyers explain each clause and relevant legal rules in detail;
- In case of disputes, lawyers assist in protecting the legitimate interests of the parties.
