1. Globalization and the Push for Technological Transformation

In the context of globalization and the Fourth Industrial Revolution, technology and research & development (R&D) play a pivotal role in international cooperation. According to Vietnam Law Magazine, Vietnam has emerged as a top destination for foreign investment, with total FDI reaching USD 38.23 billion in 2024, placing the country among the top 15 developing nations attracting the most FDI. Notably, Vietnam’s information and communication technology (ICT) sector is booming, with total revenue estimated at VND 4.244 trillion (approximately USD 165.9 billion) in 2024, an increase of 13.2% compared to the previous year.

However, a major challenge lies in the protection of intellectual property rights (IPR), as law enforcement remains inconsistent, particularly in the face of widespread online copyright infringement. To sustain growth and attract further international investment, establishing and enforcing an effective legal framework for intellectual property protection and technology transfer is essential.

2. Common Forms of Technology Transfer

Vietnam offers a range of legal frameworks for technology transfer, tailored to meet the diverse needs of both domestic and foreign enterprises. Common forms include:

Standalone Technology Transfer Contracts

This is a direct licensing arrangement in which the technology owner (transferor) agrees to transfer the rights to use or own the technology to the recipient (typically a Vietnamese company). These contracts generally include provisions on the scope of use, transfer fees, training, and confidentiality.

Under Vietnamese law, technology transfer contracts from abroad into Vietnam must be registered with the competent authority within 90 days from the date of signing. If the technology falls under the restricted category, a transfer license must be obtained within 60 days.

Legal basis:

• Law on Technology Transfer 2017
• Decree 76/2018/ND-CP guiding the Law on Technology Transfer
• Civil Code 2015 (general contract provisions)

Capital Contribution via Technology

Foreign investors may contribute technology as capital to establish joint ventures or subsidiaries in Vietnam. This allows the foreign party to exchange know-how or trade secrets for equity in the Vietnamese entity. The contribution must be properly valued and comply with the Law on Enterprises, typically accompanied by a technology transfer contract specifying the rights and obligations of all parties.

Legal basis:

• Law on Investment 2020
• Law on Enterprises 2020
• Combined with the Law on Technology Transfer 2017 if technology is involved

Franchising (Technology Licensing)

Technology transfer may also occur through franchising or IP licensing agreements. For instance, a foreign company may license its proprietary processes or know-how to a Vietnamese partner to ensure production aligns with international standards. This form merges business model and technology transfer. Franchising in Vietnam is regulated by the Commercial Law, while IP licensing (patents, utility solutions, IC layout designs, etc.) falls under the Intellectual Property Law. Such agreements must clearly define the scope of rights, duration, territory, and royalty fees to prevent IP infringements.

Legal basis:

• Section 8, Chapter VI of the Commercial Law 2005
• Decrees 35/2006/ND-CP and 120/2011/ND-CP

Mergers & Acquisitions (M&A)

Another approach is acquiring companies or high-tech projects in Vietnam. A foreign investor may acquire a local firm owning the target technology and transfer it into their broader business structure. M&A transactions require thorough legal due diligence, especially concerning IP ownership, patents, and employee agreements to avoid future disputes.

Legal basis:

• Law on Enterprises 2020
• Competition Law 2018 (for large-scale M&A)
• Law on Technology Transfer and Intellectual Property Law if the transaction involves tech or IP assets

R&D Cooperation

Foreign-invested enterprises (FIEs) may form joint ventures with Vietnamese partners, with foreign parties contributing technology and equipment while Vietnamese counterparts offer infrastructure, manpower, or market access. Through joint ventures or collaborative R&D projects, technology is transferred incrementally alongside workforce training. This model is long-term and trust-based, as the technology is incubated throughout the production-research cycle.

Legal basis:

• Law on Science and Technology 2013
• Law on Technology Transfer 2017
• Amended Intellectual Property Law 2022 (if results are registered or commercialized)

3. Common Legal Risks

• IP Protection Risk: Failure to register intellectual property in Vietnam may lead to loss of protection and vulnerability to infringement or preemptive registration by third parties.
• Non-compliance with Local Laws: Vietnam has specific rules for foreign technology transfers, including mandatory registration or licensing. Failure to comply may result in invalid contracts or administrative penalties.
• Unclear Contractual Terms: Ambiguities regarding usage scope, duration, territory, confidentiality, and sub-licensing may lead to legal and commercial risks.
• Personnel and Trade Secret Risks: Technical staff leaving with proprietary knowledge poses significant threats. Non-compete agreements are still rare and hard to enforce in Vietnam.
• Reverse Competition or Technology Imitation: Without post-transfer restrictions or proper control mechanisms, partners may compete or replicate the transferred technology.
• Unauthorized Technology Transfer: Certain technologies are restricted or subject to conditional transfer under Articles 10 & 11 of the Law on Technology Transfer 2017. Violations may result in penalties or denial of legal registration.
• Lack of Transparent Valuation: Inadequate valuation can lead to disputes over capital contributions, taxes, or allegations of transfer pricing.

4. Legal Solutions and Protection Strategies

• IP Registration in Vietnam: Ensure that all core IP assets are registered and protected in Vietnam before any transfer occurs.
• Non-Disclosure and Robust Contractual Arrangements: Sign NDAs before any information exchange. NDAs must clearly define the scope of confidentiality, duration, and consequences of breach.
• Confidentiality and Non-Compete Agreements: Apply NDAs and non-compete clauses to both partners and internal staff, specifying timeframe, geographic scope, and penalties.
• Preparedness for Enforcement: Even in the absence of disputes, businesses must be ready to enforce rights if violations occur.
• Trade Secret Protection and Trusted Personnel Training: Safeguard proprietary technologies that cannot be patented (e.g., formulas, algorithms) as trade secrets, and train reliable staff accordingly.
• Phased Transfer with Monitoring: A strategic approach is to transfer technology in stages, tied to performance milestones. This allows ongoing evaluation and minimizes exposure to misuse.

5. Role of Legal Counsel in Technology Transfer

• Advise on the appropriate collaboration model (licensing, capital contribution, joint venture, etc.).
• Draft and negotiate clear, enforceable contracts that protect clients’ interests.
• Handle legal procedures such as contract registration, licensing, and IP filings.
• Provide ongoing support for dispute resolution, enforcement, or repatriation of profits or technology.

6. Conclusion

Technology transfer in international production cooperation is more than a business transaction—it is a test of legal systems, negotiation capability, and long-term vision. When intellectual property is well protected, technology can flourish and deliver real value.

With deep expertise in investment, technology transfer, and IP law, HMLF is proud to support foreign enterprises in structuring optimal legal models to ensure secure, effective, and compliant technology transfer processes.

Contact HMLF for preliminary consultations, IP portfolio audits, or legal reviews of your technology transfer in Vietnam.

Harley Miller Law Firm

• Email: info@luatminhnguyen.com
• Website: luatminhnguyen.com or hmlf.vn
• Hotline: + 84 9372 15585