Legal regulations on intellectual property rights in the process of dissolution

The above article analyzes the current status of intellectual property rights in the process of dissolution and clarifies the legal provisions that need to be taken into account regarding  intellectual property rights during the dissolution process.

I. Current status of intellectual property rights in the process of dissolution

In practice, intellectual property rights during the dissolution process have not received adequate attention. Most enterprises only focus on settling debts, handling tangible assets, and fulfilling tax obligations, while intangible assets such as trademarks, industrial designs, patents, software, and trade secrets are often overlooked or improperly handled.

Some existing issues include:

• Lack of detailed guidance: Current legislation does not state specific and clear provisions on the transfer, cancellation, or continued maintenance of intellectual property rights when enterprises are dissolved.
• Risk of disputes: Failure to disclose and clarify the status of intellectual property rights may lead to conflicts of interest among shareholders, creditors, or business partners.
• Insufficient valuation of intellectual property assets: Many enterprises underestimate the value of brands or trade secrets, resulting in the loss of assets.
• Ineffective enforcement: Competent authorities still face limitations in supervising and assisting with intellectual property rights when enterprises terminate their operations.

Overall, such situations demonstrate that the protection of intellectual property rights in the dissolution process remains inadequate, failing to reflect the growing role of intellectual assets in a knowledge-based economy.

II. What are intellectual property rights in the process of dissolution?

In the process of dissolution, intellectual property rights are considered an essential component of an enterprise’s assets. Unlike tangible assets that can be easily inventoried and appraised, intellectual property rights such as trademarks, patents, copyrights, and trade secrets obtain special characteristics tied to creativity, reputation, and brand value. Therefore, the handling of intellectual property rights upon termination of an enterprise involves not only legal aspects but also directly affects the interests of shareholders, creditors, and partners.

1. How should enterprises deal with intellectual property assets during dissolution to avoid value loss?

Enterprises must inventory, value, and publicly disclose all intellectual assets. Such rights may be:

• Transferred or auctioned to recover value.
• Terminated in accordance with legal procedures if no longer required.
• Assigned to shareholders or strategic partners to maintain brand identity.

Failure to implement such steps may result in significant loss of intangible value and create disputes over ownership after dissolution.

2. Can intellectual property rights be considered assets for settling debt obligations to creditors?

According to Clause 1, Article 34 of the Law on Enterprise 2020, intellectual property rights are recognized as one form of capital contribution. During dissolution, debts are settled in the order of priority specified in Clause 5, Article 208 of the Law on Enterprise 2020:

• Wages, severance allowance, social insurance, health insurance, unemployment insurance, and other benefits of employees under collective labor agreements and employment contracts;
• Tax liabilities;
• Other debts.

Thus, intellectual property rights are legitimate assets of enterprises and can be used to repay creditors in the process of dissolution. It is typically implemented through valuation and transfer of intellectual property rights. However, due to their intangible nature and valuation difficulties, repayment through intellectual property assets requires the consent of all parties and compliance with legal procedures on ownership transfer.

III. Legal provisions on intellectual property rights in the process of dissolution

Within the legal framework of Vietnam, intellectual property rights are recognized as legitimate assets of enterprises. Consequently, during the dissolution, the handling, transfer, or termination of intellectual property rights must comply not only with the Law on Enterprise 2020 but also with the Law on Intellectual Property 2005 (as amended in 2022) and related guiding documents. This ensures transparency in the dissolution process and prevents potential loss of intangible assets or disputes.

1. Main legal provisions regarding intellectual property rights in dissolution

• Law on Enterprise 2020, amended in 2025: Governing conditions for dissolution (Article 207), and order and procedures for dissolution (Article 208).
• Law on Intellectual Property 2005, amended in 2009, 2019, 2022:Governing the assignment of copyright and related rights (Articles 45 and 46); assignment of industrial property rights (Articles 138, 139, 140, etc.).

2. What legal procedures must enterprises follow if disputes over intellectual property rights arise during dissolution?

Disputes may initially be resolved through negotiation or mediation. If unsuccessful, enterprises or related parties may:

• File lawsuits with competent courts under the Civil Procedure Code 2015;
• Request commercial arbitration if there is an arbitration clause in the contract.

For disputes concerning registration rights or validity of titles, the Intellectual Property Office of Vietnam (IP Vietnam) has initial jurisdiction, with the possibility of subsequent court proceedings if parties disagree.

3. What is the legal liability of the legal representative if intellectual property rights are not safeguarded during dissolution?

The legal representative is responsible for:

• Fully declaring and handling assets, including intellectual property rights.
• If intentionally omitting, concealing, or misvaluing assets, thereby causing damage to shareholders or creditors, the individual may be subject to administrative sanctions or even criminal liability depending on the severity of the violation; and must compensate for damages pursuant to Clause 2, Article 211 of the Law on Enterprise 2020.

4. Must intellectual property rights during dissolution be notified to the Intellectual Property Office of Vietnam?

If an enterprise terminates intellectual property rights (such as invalidation of protection titles, withdrawal of applications) or assigns intellectual property rights (patents, trademarks, industrial designs, etc.), notification and registration of changes with IP Vietnam are mandatory. It is a prerequisite for the transaction to have legal effect against third parties and ensures transparency in the circulation of intellectual property rights in the market.

IV. Questions on intellectual property rights in the process of dissolution

1. What is the legal responsibility if a company owns unregistered intellectual property rights during dissolution?

If intellectual property rights have not yet been granted protection titles, the enterprise only holds the right to file and the priority right, but not legal ownership.

In dissolution, the enterprise must decide whether to pursue or withdraw the application. Concealing or neglecting such matters may result in the legal representative being held liable for compensating creditors or shareholders for the loss of potential assets.

2. Can intellectual property rights be transferred to third parties during dissolution?

Enterprises may assign, auction, or transfer intellectual property rights to third parties, except that authors cannot transfer moral rights under Clause 2, Article 45 Intellectual Property Law 2005 (as amended in 2009, 2019, 2022). Assignments must be made in writing as stated in Article 46 of the Intellectual Property Law 2005 (as amended).

3. What disputes may arise concerning intellectual property rights in dissolution?

Common disputes include:

• Disputes over ownership (who is the legitimate holder).
• Disputes over valuation of intellectual property rights during liquidation.
• Disputes between enterprises and shareholders, creditors, or partners over continued exploitation of intellectual property rights after dissolution.
• Disputes with third parties regarding infringement or breach of intellectual property transfer contracts.

4. What measures can be applied to safeguard intellectual property rights in dissolution?

Measures include:

• Transparent inventory and valuation of all intellectual property rights.
• Timely registration of transfer transactions with IP Vietnam.
• Public disclosure of decisions regarding intellectual property rights to avoid litigation.
• Consultancy from lawyers to handle complex or high-risk cases.

5. What are the consequences if the dissolution process for intellectual property rights is not properly conducted?

Consequences may include:

• Loss of asset value due to unlawful transfer.
• Disputes or litigation from shareholders, creditors, or partners.
• Legal representatives may take civil, administrative, or even criminal liability if significant damages occur.

V. Should enterprises consult lawyers regarding intellectual property rights in dissolution?

Given the complexity and significant value of intellectual property rights, consulting specialized lawyers in Intellectual Property Law and Corporate Law is strongly advisable.

Lawyers will:

• Advise on lawful valuation, handling, and transfer of intellectual property rights.
• Represent enterprises in negotiations, mediation, or litigation concerning intellectual property rights.
• Assist in preparing documentation and procedures with IP Vietnam and other relevant authorities.

Enterprises seeking advice on intellectual property rights in the process of dissolution are invited to contact NPLaw for direct consultation and guidance from our legal experts.