An exclusive product formula that is only used in Vietnam can be licensed to a partner in another market. This creates a passive revenue stream without extra capital or staff. This article explains when you need a valuation, the 3 groups of valuation methods, the 4 types of licence and the mandatory legal points when drafting a transfer contract.
- Businesses that own trademarks, inventions, formulas or software
- Businesses preparing for M&A, fundraising or a capital contribution in the form of IP assets
- Legal and finance staff in charge of transfer contracts
Level: advanced. Reading time: 6 minutes. Based on: WIPO guidance; the Law on Intellectual Property; Joint Circular No. 39/2014/TTLT-BKHCN-BTC; Circular No. 06/2014/TT-BTC. Includes: 3 valuation methods · 4 types of licence.
- IP assets need to be valued in 8 situations, not only when they are bought or sold: M&A, capital contribution, secured loans, calculating damage and more.
- “Price” is what a buyer is willing to pay. “Value” is set through an orderly method. A proper valuation gives you a better basis for negotiation.
- There are 3 groups of methods: cost, income (the most common) and market (still limited in Vietnam).
- The 25% rule is only a starting point for negotiation. It is not a binding rule.
- A contract assigning registered subject matter only takes effect once it is registered with the Intellectual Property Office of Vietnam. Unreasonable restrictive clauses are automatically invalid.
This is the core value of properly valuing and commercialising intellectual property. It is also an area many Vietnamese businesses do not use well. One reason is the lack of reliable valuation tools. Another is concern about how complex it is to negotiate a licence contract.
1. When do you need to value IP assets?
Assignment and licensing
Every commercial transaction based on IP assets.
Mergers and acquisitions
You need to know how much the IP assets contribute to the total value of the deal.
Capital contribution, equitisation and loans
Capital contribution, joint ventures and share issues; using IP assets as security for a bank loan.
Damage, tax incentives and disposing of assets
Calculating damage when your rights are infringed; calculating tax incentives when IP is donated; deciding whether to keep or drop IP assets that no longer pay off.
2. Conditions for valuing an IP asset
According to WIPO, an IP asset can be valued when it meets all 7 conditions
- It can be identified and separated from other assets.
- There is tangible evidence that it exists (contracts, protection titles, related financial records).
- It was created at an identifiable time.
- It can be lawfully enforced and transferred.
- Its income stream can be separated from that of other assets.
- It can be sold separately from other business assets.
- It has an identifiable end date (for example, the expiry date of the protection title).
Price
The amount a buyer is willing to pay in a specific transaction.
Value
An amount set through an orderly set of valuation rules and methods.
3. Three groups of valuation methods
The approach below is consistent between WIPO guidance and Vietnamese regulations (Joint Circular No. 39/2014/TTLT-BKHCN-BTC; Circular No. 06/2014/TT-BTC):
Cost method
Calculates the cost of recreating or replacing a similar asset.
Income method
The present value of the expected net income stream over the economic life of the IP asset.
Market method
Compares with actual transaction prices for equivalent IP assets.
The 25% rule
The licensor usually receives about 25% of the profit from selling goods that carry the licensed trademark or invention. The licensee keeps about 75% to cover its risk and the costs of development, production and bringing the product to market. This is only a reference starting point. The actual rate depends on the level of exclusivity, each side’s bargaining position and the market potential.
4. Official valuation support in Vietnam
Under the Ministry of Science and Technology, with an official function of valuing IP assets.
Across the country.
Working nationwide.
Source: compiled by FC Legal from public information.
5. From valuation to contract: four types of licence
| Type of licence | Licensee | Licensor may use it itself | Licensor may license others |
|---|---|---|---|
| Exclusive (độc quyền) | Has the exclusive right to use | No, unless permitted | No |
| Sole (độc nhất) | The only party granted a licence | Yes | No |
| Non-exclusive (không độc quyền) | One of several licensees | Yes | Yes (including franchising) |
| Sub-licence (thứ cấp) | Receives the licence from a party that is itself a licensee | – | The licensor is the licensee under another contract |
Summary of the article content. Specific conditions depend on the agreement and the law.
6. Mandatory legal points when drafting a transfer contract in Vietnam
5 points that can make a contract ineffective or partly invalid
- A contract assigning an invention, industrial design, layout design, trademark or plant variety only takes effect once it is registered with the Intellectual Property Office of Vietnam. This is a mandatory condition.
- A licence contract takes effect as agreed, but it is only valid against third parties once it is registered (except trademark licence contracts).
- An author may not assign moral rights (except the right to publish the work). Keep this in mind when buying copyright from an individual.
- Rights to a trade name can only be assigned together with the whole business establishment.
- Clauses that unreasonably restrict the licensee’s rights are automatically invalid, even if signed. Examples: a ban on improvements, a duty to transfer improvements free of charge, unreasonable export restrictions, forcing the licensee to buy materials for reasons other than quality assurance, and a ban on challenging the validity of the transferred right.
So even though a licence contract is in essence a commercial agreement, an IP lawyer should still review it carefully. A clause that looks reasonable from a business point of view can still be invalid if it is drafted wrongly. This creates risk for both parties if there is a dispute.
7. From “idle” assets to cash flow
Source: Decision No. 1068/QD-TTg, Intellectual Property Strategy to 2030.
This figure shows the large gap between the number of IP assets that are protected and how many are actually commercialised. For a business with an IP portfolio it has not fully used, this is a gap and an opportunity: value your assets and look for licensing partners earlier than your competitors.
Draft and review commercial licence contracts with an FC Legal lawyer
From valuing IP assets with the right method to negotiating and drafting a legally sound transfer contract.
- Choosing a valuation method that fits the purpose of the transaction
- Choosing the type of licence, scope, territory and term
- Reviewing clauses at risk of being invalid; registering the contract with the Intellectual Property Office of Vietnam
Please do not send confidential documents or personal data through the form.
For the overall framework, see IP management for businesses.
Sources
WIPO: Valuing Intellectual Property Assets, www.wipo.int/en-web-business-ip-valuation.
Ministry of Science and Technology and Ministry of Finance: Joint Circular No. 39/2014/TTLT-BKHCN-BTC.
Ministry of Finance: Circular No. 06/2014/TT-BTC.
National Assembly: Law on Intellectual Property.
Prime Minister: Decision No. 1068/QD-TTg, Intellectual Property Strategy to 2030.
This article is for reference. It is compiled from WIPO guidance and current Vietnamese law (the Law on Intellectual Property, Joint Circular No. 39/2014/TTLT-BKHCN-BTC and Circular No. 06/2014/TT-BTC). It does not replace legal advice or a professional valuation for a specific case.
Prepared by the FC Legal legal team and reviewed by FC Legal’s managing lawyer. Updated 30 September 2026.
