Eus regulations on trademark licensing agreement experience for vietnam

However, this research merely focused on technology transfer agreement but not industrial property license in general and trademark licensing agreement in particular.. This is an effecti

HO CHI MINH CITY UNIVERSITY OF LAW

MANAGING BOARD

OF SPECIAL TRAINING PROGRAMS

BACHELOR’S THESIS REGULAR TRAINING PROGRAM

COURSE 34 (2009 – 2013)

EU’S REGULATIONS ON TRADEMARK LICENSING AGREEMENT

EXPERIENCE FOR VIETNAM

Student : NGUYỄN THỊ HẠNH LÊ Student ID : 0955010105

Class : CLC34 Supervisor : Dr TRẦN THỊ THUỲ DƯƠNG

HO CHI MINH CITY, 2013

I hereby affirm that this thesis is my own study under the supervisor’s guidance

All of the information other than my idea to be used or quoted has been

acknowledged by means of complete references I would bear

full responsibility for my protest

July 15th, 2013

Nguyễn Thị Hạnh Lê

TABLE OF CONTENTS

INTRODUCTION 1

CHAPTER 01 OVERVIEW OF TRADEMARK LICENSE 7

1.1 Concept of trademark license 7

1.1.1 Trademark license definition 7

1.1.2 Trademark – the subject of trademark license 10

1.1.2.1 “Trademark” concept 10

1.1.2.2 Trademark as subject of license in EU and Vietnamese law 14

1.1.2.3 Grounds for trademarks to be subject of license 17

1.2 Roles of license and trademark license 19

1.2.1 For the licensor – the proprietor 19

1.2.2 For the licensee 21

1.2.3 For society 22

1.3 Features of trademark license 24

1.3.1 Subject 24

1.3.2 Limitation 24

1.3.3 Licensee 26

1.3.4 Trademark license in comparison with other agreement relating to industrial property 26

1.3.4.1Trademark license in comparison with other industrial property license 26

1.3.4.2 Trademark license in comparison with trademark assignment 28

1.4 Classifications of trademark license 29

1.4.1 Classification based on manner of using the licensed trademark 29

1.4.2 Classification based on licensed scope of right 30

1.4.3 Classification based on entity granting license 32

1.5 Remarks 33

CHAPTER 02 TRADEMARK LICENSING AGREEMENT UNDER LIGHT OF EU REGULATIONS AND VIETNAMESE LAW 34

2.1 Legal framework on trademark licensing agreement 34

2.2 Clauses of a trademark licensing agreement 39

2.2.1 Type of clauses 39

2.2.2 Basic contents of trademark licensing agreement 43

2.2.2.1 Subject of license 45

2.2.2.2 Extent of license 47

2.2.2.3 Financial clauses 51

2.2.2.4 Clauses on controlling quality of products or services under license 53 2.2.2.5 Other clauses 56

2.2.3 Unpermitted restrictive clauses in trademark licensing agreement 59

2.2.3.1 Absolute territorial protection 59

2.2.3.2 Quantitative restrictions 62

2.2.3.3 Downstream restriction and customer restriction 63

2.2.3.4 Non?challenge clause 64

2.3 Form and registration of trademark license 65

2.3.1 Form of trademark license 65

2.3.2 Registration of trademark license 66

2.4 Remarks 70

CONCLUSION 72

ABBREVIATIONS BTIP Benelux Treaty on Intellectual property

Directive 2008/95/EC Directive 2008/95/EC of the European Parliament and of

the Council of 22 October 2008 to approximate the laws

of the Member States relating to trademark

The Guidelines The OHIM Guidelines Concerning Proceedings Before

the Office for Harmonization In the Internal Market

(Trademarks and Designs)

Paris Convention Paris Convention for the Protection of Industrial Property The Manual The OHIM Manual concerning proceedings before the

office for Harmonization in the Internal market

(Trademarks and Designs) Regulation 207/2009 Council Regulation (EC) No 207/2009 of 26 February

2009 on the Community trademark

TFEU The Treaty on the functioning of the European Union TRIPS Agreement on Trade Related Aspects of Intellectual

Property Rights TTBER Commission Regulation (EC) No 772/2004 of 27 April

2004 on the application of Article 81(3) of the Treaty to categories of technology transfer agreements

Vietnamese IPL Vietnamese Intellectual Property Law No 50/2005/QH11

36/2009/QH12 on 19/6/2009

WIPO World Intellectual Property Organization

INTRODUCTION

1 The necessity of doing research

Trademark, as an intellectual property (hereinafter referred to as IP) subject matter, has played an important role in both society and economy For a long time, law has recognized intellectual property rights (hereinafter referred to as IPR) and encouraged IP to develop more Legal frameworks on this field have been improved more with every passing day Basing on that ground, the proprietor has more advantageous to utilise effectively his IP in general and trademark in particular

Among all, “licensing is an extremely common method” of exploitation1, which

plays important roles to the proprietor and other parties as well as to consumers and market2 In Vietnam, trademark license is the most popular license in comparison with other IP license3

As long as trademark license are popular in trade activities, it is important for law to provide clearly and appropriately on this practice Therefore, doing research on practical development and legal regulations on trademark license has significant meanings and value to: (i) improve a legal framework with appropriate provisions; (ii) help entities have grounds for exercising their right on exploiting trademark effectively and lawfully Around the world, trademark license has been under concern of researcher for a long time, especially in European Union (hereinafter referred to as EU) EU in general and its Member States in particular have a long historical development in IP field and experiences on protecting and enforcing IPR Besides, EU also has a special system of trademark protection, which consists of four branches: national protection, Benelux territorial protection, EU territorial protection and international protection4 By contrast, Vietnam is similar to some developing countries that are inexperienced in this field, especially on license matters Consistently, trademark license is a new method for researching in Vietnam Therefore, studying valuable experiences of EU in order to propose

1

David I Bainbridge, Cases & materials in Intellectual Property law, Second Edition, Financial times,

Pitman Publishing, 1999, page 10

suitable suggestions to improve Vietnamese laws on IP in general and on trademark

in particular has significant meanings and value

For above reasons, the topic

is chosen for the author’s graduation thesis

2 The literature review of the research

Doing research on trademark licensing agreement under EU’s regulations is not a new research method all over the world According to the author’s research, there are many research works on this matter, in which some works are considered

remarkable in relation to the matter concerned, i.e (i) Guy Tritton, Intellectual

property in Europe, Second Edition, Sweet & Maxwell, London 2002 and Third Edition, Sweet & Maxwell, 2008; (ii) Charles Gielen, Verena von Bomhard, Concise European trademark and design law, Wolters Kluwer, Law & Business,

2011; (iii) Agnieszka A Machnicka, Trademark licensing agreements in light of the

EC competition rules, 2008, etc Those research works have clarified some

theoretical and practical matter relating to trademark licensing agreement and its contents, which are helpful materials to the thesis for researching on EU’s regulations on trademark licensing agreement However, those mainly focus on content of trademark license under aspect of competition law

In Vietnam, the first legal grounds for trademark were adopted in 1980s However, research works on IP in general and on each IPR subject matter including trademark has just been under concern since the Civil Code 1995 was passed and Vietnam applied for membership of the World Trade Organization in 01/1995, especially in recent years, after the National Assembly of Vietnam passed the first Intellectual Property Law in 20055 Nevertheless, there have been not many research works on

IP license, and if any, predominantly focusing on IP license relating to technology transfer Besides, most of them are not researched under aspect of learning from other developed countries in general and from EU in particular In Vietnam,

5

Vietnamese Intellectual Property Law No 50/2005/QH11 passed on 29/11/2005, amended by Law No 36/2009/QH12 on 19/6/2009 (hereinafter referred to as Vietnamese IPL)

trademark license has not been under concern of research According to the author’s research, there are few research works relating to the matter concerned

This work described the concept of and analyzed the current EU’s legal frameworks on technology transfer agreement, especially under the aspect of competition law However, this research merely focused on technology transfer agreement but not industrial property license in general and trademark licensing agreement in particular Besides, it mainly analyzed EU’s regulations of competition law on technology transfer practice – the TTBER7, which does not cover pure trademark license

Vietnamese regulations on trademark licensing agreement However, the analysis based on the Vietnamese Intellectual Property law 2005 and some other subordinate documents, which is invalid now, i.e Decree 63/CP dated 24/10/1996 of the Government detailing and guiding on industrial property This thesis mentioned sketchily regulations of many countries on this issue, i e US, EU, Lao, Cambodia, etc.9 but not focus mainly on any country’s regulations

3 The purpose of the thesis

This thesis has two main purposes:

The first purpose is to analyze both theoretical and practical aspects of trademark licensing agreement It aims at finding the nature of trademark licensing agreement

Bùi Thế Hưng, “Một số vấn đề lý luận và thực tiễn về hợp đồng liKxăng nhãn hiệu hàng hoá tại Việt Nam”,

Master’s thesis, Ho Chi Minh City, 2006

9

The master thesis only mentioned regulations of those countries in about ½ page for each

as well as its basic contents in comparison with other related agreements Basing on that grounds, it aims at defining specific features of trademark licensing agreement The second purpose is to draw experiences for Vietnam in order to improve Vietnamese regulations on relating matters This cannot be achieved without investigating and evaluating EU’s regulations on trademark licensing agreement

To satisfy those purposes, the thesis shall focus on object of theoretical and practical matters relating to trademark licensing agreement under EU’s and Vietnamese regulations under viewpoint of intellectual property law (hereinafter referred to as IPL)

4 Delimitation

The thesis has certain limitation in some following points due to time and material limitation:

Limitation on theory: the thesis focuses on basic theoretical matters relating to

trademark license and its contents under IP aspect Trademark is analyzed only as a subject of license but not as an individual IP subject

Limitation on legal grounds: First, trademark licensing agreement has legal

frameworks consisting of three branches10 However, the thesis shall mainly analyze

on regulations of IPL Civil and competition regulations are only researched under

aspect of IPL on Second, under aspect of IPL, the thesis shall merely analyze

regulations trademark licensing agreement and some related regulations on

trademark Third, the thesis shall analyze primarily regulations of EU and Vietnam

Regulations of international law and other countries are only learned and applied for references

Limitation on content: the thesis shall analyze generally trademark licensing

agreement under two aspects: (i) as IP license, (ii) as a unique agreement The thesis shall not analyze particularly on other greater agreements including trademark license part, i e technology transfer agreement, distributing agreement, franchise

10

See section 2.1 infra

agreement, etc Besides, the thesis shall merely analyze basic and specific contents but not all contents of trademark licensing agreement

Limitation on time: the research on information sources is limited to the date of the

thesis completion ? July 15, 2013

5 Methodology

For the objective and delimitation mentioned above, the thesis shall combine various kinds of legal methods as follows:

doing research, as the main purpose of the thesis is to draw experiences for Vietnamese law by analyzing and comparing Vietnamese to EU’s regulations on trademark licensing agreement This is an effective method in order to find out similarities as well as differences between: (i) trademark license and other IP licenses, (ii) EU and Vietnamese legal systems on each matter relating to trademark licensing agreement

throughoutly to analyze provisions in the EU’s regulations as well as those in Vietnamese law on trademark licensing agreement

on theoretical and legal matters relating to trademark licensing agreement from different sources, i e books, legal journals and websites on Internet, in

other to make the remarkable conclusion

6 Value of the research

In Vietnam, the thesis shall be one of the first pieces of research on trademark licensing agreement learnt from developed regulations The thesis provides a general and basic overview on trademark licensing agreement, and hopefully shall become a reference project in course of studying and researching on relating matters Furthermore, the thesis can be used for references by legislator in making and improving law on related issues Besides, the thesis has practical value of

references for parties in negotiating and signing their trademark licensing agreement

7 The structure of the thesis

The thesis is divided into two main chapters, as defined below:

Chapter 01: Overview of trademark license

Chapter 02:Trademark licensing agreement under light of EU regulations and Vietnamese law

CHAPTER 01 OVERVIEW OF TRADEMARK LICENSE

1.1 Concept of trademark license

The development of IP and knowledge economy has resulted in an increase in not only the legal recognition and protection on IPR but also manners of utilising those Among many means for using the IP, licensing seems to be one of the most effective and popular ways Trademark license, as a typical one of IP license, is not

an exception

In fact, there is no standard for definition of “trademark license” concept The

Agreement on Trade Related Aspects of Intellectual Property Rights (hereinafter referred to as TRIPs)11, which is the international document aiming at harmonizing Members’ law and providing standard for protecting IP under aspect of trade, has

not provided a clear definition of “trademark license” or any other licenses as well

It is the same as the Paris Convention for the Protection of Industrial Property (hereinafter referred to as Paris Convention)12 Every national law can provide its own definition of “trademark license”

In general, “license” often means giving others an “official permission to do, own,

sense, “license” is a “formal authority” 14 or permission given to a person to

“commit some act that would otherwise be unlawful” 15 On those grounds, the

concept of “trademark license” can be generally construed as a permission of the

trademark’s proprietor that allows other party or parties, as the licensee(s), to have

11

The TRIPS Agreement is Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization (WTO), signed in Marrakesh, Morocco on 15/4/1994

12

Paris Convention for the Protection of Industrial Property ? Paris Convention was concluded on 20/3/1883

at Paris, France It was revised at Brussels on 14/12/1900, at Washington on 02/6/1911, at The Hague on 6/11/1925, at London on 02/6/1934, at Lisbon on 31/10/1958 and at Stockholm on 14/7/1967, and it was amended on 28/9/1979 At present, the Convention has 174 contracting parties Vietnam has been the contracting party since 1949 The information was last updated on www.wipo.int on 07/6/2013

rights to utilise his trademark lawfully In other words, a trademark license gives the licensee the opportunity for using trademark legally under consent of proprietor Basing on that general concept of trademark license, regulations of EU and Vietnamese law on IPR have also provided definitions for this concept

Vietnamese IPL in Article 141(1) has adopted a definition of license that is a

“permission by the owner of such industrial property object for another organization or individual to use the industrial property object within the scope of the owner's right” This definition covers industrial property right license in

common, which includes trademark license Accordingly, trademark license is the permission that the proprietor grants within his rights on trademark to others for using that trademark The definition also defines clearly that no one but the proprietor can grant a license16 Besides, this provision defines an important principle of license that is the proprietor, as the licensor concurrently, is only

allowed to grant license “within the scope” of his right conferred by the trademark

This is one of the most important principles of license17

Unlike Vietnamese law, the EU regulations do not provide any definition in

legislative texts The “trademark license” concept is only defined in The Guidelines

Concerning Proceedings Before the Office for Harmonization In the Internal Market (hereinafter referred to as The Guidelines) and The Manual concerning proceedings before the office for Harmonization in the Internal market (hereinafter

referred to as The Manual)18 Those documents have defined a concrete and unanimous definition of trademark licensing agreement, not a general definition of industrial property license Accordingly, the Introduction of The Guidelines as well

as The Manual has provided that “trademark license” is:

A contract by virtue of which the proprietor of a trade mark (the

licensor), whilst retaining his proprietorship, authorizes a third person (the licensee) to use the trade mark in the course of trade, under the

conditions and within the limitations and contents provided in the said contract

Accordingly, it has determined not only a concrete definition but also some features

as well as factors of a trademark license Firstly, two parties of the license are the

licensee, who is a party granted a license, and the licensor, who is the proprietor of

the licensed trademark Secondly, the proprietor keeps his proprietorship on

trademark regardless of quantity of licenses he had granted It means that licensing

does not remove the proprietorship of the licensor on trademark Thirdly, granting trademark license is for the purpose of using trademark “in the course of trade” only Any license of trademark for other purposes, for instance, individual purpose,

will not be recognized as license under law, as those do not relate to the features of

trademark, which connect closely with the trade activities Fourthly, content in the

licensing agreement determines clearly the licensee’s rights extent and manners of exploiting trademark The licensee can only utilise the licensed trademark within

the content of those Fifthly, the proprietor is the only entity having right to give

permission for using his trademark to others19

The definitions of trademark license under regulations of EU and Vietnam have

similarity, which mainly focus on the features of subject and permission of the

proprietor However, there are also main differences: (i) Vietnamese regulation

merely defines “license” as permission, while EU’s regulations define “trademark

licensing” as an agreement containing permission; (ii) EU requires trademark

license to be for purpose of trade while Vietnamese IPL does not In fact, the definition in EU’s regulations is rather more comprehensive and sufficient than Vietnamese IPL, as there is no trademark license not forming as an agreement and

as long as trademark is industrial property subject matter, a trademark license

cannot for any other purpose than trade Besides, under aspect that “agreement”

concept is merely a genuine consent of parties on licensing a trademark but not a

written contract stricto sensu, a trademark licensing agreement can be formed under

many types First, a trademark licensing agreement can be a solely contract, which

is also known as trademark licensing contract Second, a trademark licensing 19

See section 1.3 infra

agreement can be clauses in another contract For instance, a trademark licensing agreement is part of or a sub?contract of a distribution contract, franchising contract,

or of another licensing contract or of a technology transfer licensing contract In fact, an IP license is usually a part of a greater contract20, which is a main contract This practice is not an exception for trademark licensing agreement

In conclusion, there is no norm for definition of “trademark licensing agreement”

However, a definition often defines natures of trademark license, which are: (i) it is

an agreement between two parties; (ii) it is an allowance of the licensor within his

proprietorship Generally, a trademark licensing agreement is an agreement in

which the proprietor allows others to use his trademark, which belongs to his proprietorship, in a determined term, territory and under conditions in agreement

!

“Trademark” is not a new concept in trade practices Historically, trademarks

appeared and were used in the ancient age already About 3000 years ago, the Indian craftsmen were the first ones who affixed trademark on their products by engraving their signatures on artistic creations before sending them to Iran for selling Approximately 2000 years ago, Chinese producers also marked their goods before selling them in the Mediterranean area At the same time, there were about a

arose and were used long time ago for the first purpose of individualizing and distinguishing products of one provider from others In common sense, trademark

represents for the goodwill and reputation of its proprietor although “the identity of

trademark and sometimes considered as two main functions of trademark25

In common sense, individualization is ability of trademark informing to consumers the defined undertaking

to which products or services bearing trademark belongs; in other words, the origin of products or services

In general, under trade aspect, “trademark” is “a name, symbol or design that a

general definition provides signs that are often used as trademark as well as

mentions indirectly the individualization feature of trademark

In jurisprudence, it often defines trademark as “any sign that individualizes the

goods of a given enterprise and distinguishes them from the goods of its

ability of individualization and distinguishability Besides, different legal texts also

provide a variety of definitions of trademark as well

The TRIPs Agreement provides an understandable definition28 of trademark in

Article 15(1) Accordingly, trademark is “any sign or any combination of signs,

capable of distinguishing the goods or services of one undertaking from those of

other undertakings, shall be capable of constituting a trademark” This definition

defines clearly signs that could be trademarks as well as trademark’s

distinguishability feature In general, Article 15(1) of TRIPs Agreement has

bearing trademark However, it does not mean that the trademark have to inform to consumer the “actual

person” that has produced the products or the one selling those (WIPO, WIPO Intellectual Property

Handbook: Policy, Law and Use, 2nd Edition, fn 21supra, page 66) In fact, consumer does not need to

know all of information of the original undertaking They merely need to know which undertaking has

responsibility for those products or services they chose Hence, in case they are not satisfied, they can know

the original undertaking of those and thus can make complain or just decide not to choose those from the

market anymore Otherwise, consumer can have exactly impression on the original undertaking and from

there on they can continue to choose those products or services from that original undertaking, recognized by

its trademark It thus helps consumers to distinguish products or services bearing that trademark with others

Therefore, consumers do not know any other detailed information of the undertaking having those products

or services; they merely know that they trust in that undertaking on the satisfying quality of products or

services Those consumers’ belief results in the goodwill and reputation of the proprietor of trademark

24

Distinguishability is the ability of trademark helping consumers to distinguish products or services bearing

trademark of an undertaking from those of others relevant on the market Distinguishability is often

considered as not only the function of trademark but also a requirement for a sign to be legally protected

25

In fact, there are different definitions of the “trademark”, and some often only mention one of

individualization or distinguishability However, those always need to be considered together under aspect of

interdependence and cannot be separated, though definition of “trademark” concept does not mention both

(WIPO, WIPO Intellectual Property Handbook: Policy, Law and Use, 2 nd Edition, fn 21supra, page 66)

Thus, it seems that those are always put in a very close relationship, when one is mentioned that means the

other one is automatically grasped

Due to its mission is harmonizing Member countries’ law and providing norm for protecting IP under

aspect of trade, definition in TRIPs Agreement has to be as general and sufficient as possible, because it

would be the standard for Member countries to provide on definition of trademark

provided two main elements of a trademark that is: (i) constitution of sign(s) and (ii) distinguishability Besides, it also defines that trademark can be applied for both products and services

In EU, there is a Directive on approximating the national laws of Member States on trademark that is Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating

to trademark (hereinafter referred to as Directive 2008/95/EC)29 Article 2 of this Directive provides:

A trademark may consist of any signs capable of being represented graphically, (…) provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings

This provision defines trademark by providing signs that could be considered as

trademark as well as requirement on distinguishability In fact, “sign” is a criterion

to distinguish trademark with other information on products that also informs consumers of origin of products, for instance, geographical indication, labels of products, trade name, etc Besides, under EU’s regulations, trademark must have the

ability of being represented graphically This requirement is different from other

definitions on trademark of international texts and of Vietnamese IPL Technically,

the ability of being represented graphically is often considered as the capacity of being represented clearly, precisely, by “writing, drawing or by a graph – that is,

sometimes considered as restriction on protecting invisible trademark such as

audible and olfactory trademark, which rarely has the ability of being represented

graphically, in EU However, it is still not a clear base, as this requirement covers

signs that are not “visually perceptible” as well32, and according to the ECJ in

Sieckmann 33 , “it is not necessary that a mark can be perceived visually provided it

can be recognized and protected in EU35

Vietnamese IPL provides the definition of trademark in Article 4(16) and Article

72(1) as well Appropriately, trademark is “visible sign” that is “used to distinguish

goods or services of different organizations or individuals” Unlike EU’s

regulations, the Vietnamese definition does not mention the ability of being

Accordingly, Vietnam only recognizes visible trademark but not any other invisible form such as audible sign or olfactory sign This point is different from definitions

of trademark in EU as well as many countries, which recognise and protect all expressed forms of signs including visible trademark, audible trademark and olfactory trademark However, this provision of Vietnamese IPL is compatible with WTO law as the TRIPs Agreement entitles Member countries to provide the

reason for which Vietnam does not recognise invisible trademark is lack of the

ability to examine distinguishability feature of invisible sign38

36

Article 72 of Vietnamese IPL provided: “A mark shall be eligible for protection when it satisfies the following conditions: (1.) It is a visible sign in the form of letters, words, drawings or images including holograms, or a combination thereof, represented in one or more colours; (2.) It is capable of distinguishing goods or services of the mark owner from those of other subjects.”

37

Article 15 (1) of TRIPs Agreement provided in the last sentence: “… Members may require, as a condition

of registration, that signs be visually perceptible” However, the provision of visibility in Article 15 (1) of

TRIPs Agreement does not mean that it constrains Member countries from recognising and protecting audible and olfactory or any other invisible trademark In fact, many countries has allowed for the

registration of audible signs (sounds such as “the roar of the lion that precedes films produced by MGM”),

olfactory signs (smells, such as perfumes) Otherwise, many other countries have set limits as to what may be registered as a trademark, generally allowing only signs that are visually perceptible or can be represented

graphically (WIPO, Understanding industrial property, WIPO Publication No 895(E), page 12)

38

In fact, it requires ability of manpower and development of technology to have accurate examination on

distinguishability of invisible sign Meanwhile, those elements in Vietnam are still not enough to have that

examination In Vietnam, the historical development of IP as well as industrial property field has just started since 1980s of the 20th century It is not a long time for practice of IP to develop well Hence, in trademark field, Vietnam does not have enough ability in technology as well as manpower to examine invisible signs,

In general, regardless of different definitions of trademark, this concept is generally

defined unanimously as sign affixed on products or services that is used to

individualize and distinguish those of the proprietor from those of others

Trademark helps consumers to remember and recognize products or services of an

identified undertaking

In EU, there are types of trademark that can be subject of trademark license The

Directive 2008/95/EC defines obviously in Article 1 the scope of Directive as well

as trademark that is able to be subject of trademark license39 Accordingly, Article 1

provides that:

“This Directive shall apply to every trade mark in respect of goods or

services which is the subject of registration or of an application in a

Member State for registration (…), or which is the subject of a

registration or an application for registration in the Benelux Office for

Intellectual Property or of an international registration having effect in a

Member State.”

Firstly, within the national protection, the proprietor can license trademark that is

registered in Member State It is trademark that has been filled and recorded with

the appropriate authorities of each Member States According to general principle,

registered trademark is trademark that is already registered or “for which an

proprietor can only license those trademarks within the national extent as well

which require a high level of examination such as audible sign and olfactory sign Besides, the high level of

development also relates to practice of creating opportunities to undertakings for having ability of creating

those audible and olfactory trademarks Hence in Vietnam, there is not much undertaking that has ability to

create those trademarks either Therefore, Vietnam does not have a context for those invisible trademarks to

be recognized and developed

39

Directive 2008/95/EC covers trademark license by Article 8, which provides: “A trademark may be

licensed (…)” Hence, it can understand that trademark within the scope of the Directive can all be subject of

trademark license under light of this Directive

40

Charles Gielen, Verena von Bomhard, Concise European trademark and design law, Wolters Kluwer, Law

& Business, 2011, page 328

Secondly, within the Benelux territorial protection, the proprietor can license

trademark that is registered in the Benelux Office for IP41 It is trademark that is entitled of a wider extent of protection than national trademark However, is not protected within the entire of EU yet As long as those trademarks are within Benelux system, the proprietor can only license those within the Benelux territory, which includes the Kingdom of Belgium, the Grand Duchy of Luxembourg, and the Kingdom of Netherlands42

Third, within the protection of the whole of EU territory, the proprietor can license

the Community trademark (hereinafter referred to as CTM) In general, this is trademark that is protected and can be licensed within the entire of EU CTM is the specific trademark of EU, which is covered under Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trademark (hereinafter referred to

as the Regulation 207/2009)43 CTM is trademark being registered “in accordance

with the conditions” provided in this Regulation and “in the manner herein

trademark (which is individualization, distinguishability or ability of being

represented graphically) as usual Actually, those are mentioned as condition for

sign to be protected as CTM provided in Article 4 of the Regulation45 The CTM not only has basic features of a basic trademark but also has the specific feature that

is the “unitary character”, which means the CTM will “have equal effect

CTM to be protected equally regardless of the national origin of the proprietor The

unitary character of CTM expresses in principle that a CTM is protected,

cannot be protected at Community level without satisfying conditions to be protected at national level Hence, the necessary conditions for a trademark to be protected at Community level are kind of similar to conditions for protecting trademark in EU in general

46

Article 1(2) of Regulation 207/2009

surrendered, transferred, revoked and invalidated by means of only one procedure and for the entire of EU47 It is essential to make CTM accomplish its reason to be existed48 If it does not have unitary character, CTM cannot help promote the single

market of Community

Fourthly, within the international protection, the proprietor can license international

registered trademark It is trademark that is registered under international procedure and protected in territory of many countries, which are member of the international procedure For instance, trademark that is registered under Madrid and its Protocol system is international trademark

In contrast, under light of Vietnamese law, the proprietor can only license national and international registered trademark Although there is not an obvious provision defined that, it can be recognized through some regulations of Vietnamese IPL49 Accordingly, Vietnamese IPL regulates that licensing trademark is within content of exclusive right50, and an entity can only be a proprietor if he is granted a Certificate

for protection of trademark, which means only if the trademark is registered, he can

become the proprietor

47

Tobias Cohen Jehoram, Constant van Nispen, Tony Huydecoper, European Trademark Law: Community trademark law and Harmonized national trademark law, Wolters Kluwer International, 2010, page 470; Marketa Trimble, Extraterritorial intellectual property enforcement in the European Union, Southwestern Journal of International law, vol 18, 19/01/2012, page 234; Luis?Alfonso Durán, The new European Union Trademark Law, Denver Journal of International Law and Policy, vol 23:3, 1995, page 498

48

The reason that EU creates the Community trademark has been provided in Recitals 2 and 3 of Regulation

207/2009 Accordingly, Recital 2 provided: “In order to create a market of this kind and make it increasingly a single market, not only must barriers to free movement of goods and services be removed and arrangements be instituted which ensure that competition is not distorted, but, in addition, legal conditions must be created which enable undertakings to adapt their activities to the scale of the Community, whether in manufacturing and distributing goods or in providing services For those purposes, trademarks enabling the products and services of undertakings to be distinguished by identical means throughout the entire Community, regardless of frontiers, should feature amongst the legal instruments which undertakings have at their disposal” On that ground, it has to accomplish two missions for the purpose of creating and promoting the single market in EU Firstly, “barriers to free movement of goods and services” have to be removed Secondly, there must be “legal conditions” allowing undertakings to “adapt their activities to the scale of the Community” Hence, trademarks that can distinguish products and services of undertakings from others

throughout the entire Community market “regardless of frontiers” should be attached much importance to It

is the reason for creating the Community trademark that can have effect within the whole EU

49

Accordingly, Article 123 of Vietnamese IPL provides right of the proprietor of trademark as well as of

other industrial property rights Meanwhile, the definition of “proprietor” is regulated in Article 121 (1), which is “an organization or individual who is granted a protection title for such trademark by the competent body or who has an internationally registered trademark recognized by the competent body or who has a wellKknown trademark”

50

See section 1.1.2.3 infra

1.1.2.3 Grounds for trademarks to be subject of license

Licensing is a legal manner for using trademark that law provides for proprietor In fact, there are legal grounds for a trademark to be subject of trademark license

Firstly, the law always considers trademark as object of property existing separately from undertakings Hence, trademark can be individual subject of any

transfer and license transaction, equally regardless of its type51 or expressed form52 This principle is one of the most basic grounds for a trademark to be licensed between undertakings in fact It often states under legal provision or merely is a principle under jurisprudence For instance, Recital 11 of Regulation 207/2009 provided that:

A Community trademark is to be regarded as an object of property, which exists separately from the undertakings whose goods or services are designated by it Accordingly, it should be capable of being transferred, subject to the overriding need to prevent the public being misled as a result of the transfer It should also be capable of being charged as security in favor of a third party and of being the subject matter of licenses

Accordingly, the proprietor can license his CTM because it is an “object of property

which exists separately from the undertakings” despite of being affixed on products

or services Directive 2008/95/EC does not provide this ground clearly However, it

is still considered in fact as a principle of protecting IPR It is similar to Vietnamese law, which does not provide any regulation that contains this principle, even though

it is still understood in fact

Secondly, the proprietor of trademark is legally entitled to give permissions to other parties on exploiting his trademark under trademark license Technically, it results

from the exclusive rights of the proprietor conferred from trademark As long as the

51

There are many types of trademark, such as: individual trademark, collective trademark, collective trademark, certification trademark, integrated trademark (in Vietnamese IPL) or guarantee trademark (in EU’s law); normal trademark or well?known trademark, trademark for products or for services, etc

52

There are many types of expressed sign constitute a trademark, such as: visual trademark or invisual trademark (audible, olfactory trademark); word mark, color mark, shape mark, three – dimensional trademark, trademark consists of single sign or combination sign, etc

proprietor has exclusive right on his trademark, he has sufficient rights to use or determine trademark, and also prevents third parties from using his trademark without allowance The proprietor can decide to utilise the trademark himself, or assign it, or allow others to use it by a licensing agreement Hence, licensing a trademark is within content of exclusive rights of the proprietor Those exclusive rights of proprietor are effortlessly seen in laws on trademark In fact, both Vietnamese and EU’s regulations provide rights of the proprietor in licensing as a legal ground for a trademark to be subject of trademark license Specifically, under EU’s regulations, those contents state in Article 5 of Directive 2008/95/EC and Article 9 of the Regulation 207/200953 However, EU’s regulations do not provide clearly that the proprietor has the right to license his trademark but consider it as a natural principle conferred from exclusive of proprietor Hence, those often do not provide licensing within content of exclusive right, but as a sole right of proprietor stating in Article 8 of the Directive 2008/95/EC54 and Article 22 of the Regulation 207/200955 Under light of Vietnamese law, exclusive rights of the proprietor state Article 123 of Vietnamese IPL providing on rights of proprietor Unlike EU’s regulations, Vietnamese IPL, by this provision, has provided clearly that granting trademark license is within the content of exclusive right of the proprietor

Accordingly, the proprietor has right to “use”, “give permission to others to use”,

“prevent others from using and dispose of” trademark as well as any other

industrial property right

Thirdly, legal provisions consider that licensing is a manner for the proprietor to exploit his trademark On this ground, the proprietor can use his trademark by

licensing it legally Specifically, Article 10(2) of Directive 2008/95/EC provides

53

Artcile 5 of the Directive 2008/95/EC provided that: “1 The registered trademark shall confer on the proprietor exclusive rights therein The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark” Those are similar to contents of Article 9 of the Regulation 207/2009

54

Article 8 of the Directive 2008/95/EC provided that: “A trade mark may be licensed for some or all of the goods or services for which it is registered and for the whole or part of the Member State concerned”

55

Article 22 of the Regulation 207/2009 provided that: “A Community trade mark may be licensed for some

or all of the goods or services for which it is registered and for the whole or part of the Community”

that “use of the trade mark with the consent of the proprietor or by any person who

has authority to use a collective mark or a guarantee or certification mark shall be deemed to constitute use by the proprietor” The Regulation 207/2009 also provides

the similar provision in Article 15(2) as well56 It is similar to Vietnamese IPL in Article 123(1), Article 124(5) and Section 2 of Chapter X)57

1.2 Roles of license and trademark license

In general, the trademark license establishes roles for all the licensor, the licensee and society with consumer as well

"

Due to nature of trademark on representing for reputation of the proprietor, the proprietor often wishes to license his trademark for popularizing his goodwill Besides extending reputation, licensing a trademark also brings many advantages to the proprietor

(a) Trademark license brings lots of economic benefits to the proprietor By

licensing, the proprietor while exploiting trademark himself can allow many others

to use his trademark concurrently Hence, the proprietor can obtain profit from both exploiting himself and from other licensees In fact, the proprietor often licenses his trademark for obtaining more profits owning to financial agreements in the license

It bases on nature that the more value trademark has, the higher license price it takes Obviously, the proprietor’s goodwill and reputation always attach to a trademark, especially international well?recognized trademark58 In fact, some well?known trademarks, i e Coca Cola, which has value of 77, 839 billion USD59, can bring to its proprietor big profits in trade This is the most important role of trademark license playing on the proprietor

59

Information on Best global brand 2012, http://www.interbrand.com/en/best?global?brands/2012/Coca?

Cola, last visit on 11/7/2013

Therefore, the licensing of a trademark can help the proprietor to exploit their trademark in a more flexible and effective way Moreover, the more popular that trademark is used in practice, the more it can approach consumers, which can increase value of trademark as well as economic profits for the proprietor

(b) Trademark license plays a role on extending the goodwill and reputation of proprietor, basing on the feature of trademark that is “in connection with the

reputation of its proprietor Hence, the proprietor often desires to grant as many trademark licenses as possible for expanding its goodwill and reputation into

unchanged, it can remain identifying its proprietor; by this, the proprietor can extend goodwill in market through the large number of products or services bearing

his trademark Basing on the nature of “source identification” – individualization of

trademark, the more products or services bearing trademark are put on market, the broader its proprietor’s reputation is

(c)Trademark license helps the proprietor protect his goodwill and reputation It

defends the proprietor from other competitors who “would take advantages of the

position and reputation of the trademark by selling goods improperly bearing that

and reputation, there will be many other competitors that want to do business by taking advantages of those reputations If those competitors cannot use other’s trademark legally under a license, they may have to take those advantages unlawfully by manufacturing counterfeit products and affixing on a trademark that

is similar to or the same as trademark of other’s, etc In those circumstances, it will affect to reputation and goodwill of the proprietor, because counterfeit products often cannot satisfy consumers as the proprietor’s products do Therefore, if the proprietor can grant license, other parties, who want to take advantages from

goodwill and reputation of his trademark, can ask the proprietor for using trademark lawfully under a license Moreover, by licensing, the proprietor can also ensure quality of products or services bearing his trademark, so he can protect his goodwill and reputation Hence, licensing trademark creates more opportunities for undertaking to use other’s trademark legally; it thus can reduce practice of making counterfeit products much63 Thus, the proprietor can protect his trademark better

"

Besides the proprietor, trademark license also plays important roles for the licensee

(a) Trademark license creates opportunities for the licensee to do business more advantageous Many trademarks have strong goodwill and reputation and affirm

their position in the market For young undertakings, it is very significant to them if they can use other’s trademark, which consumers have already recognized, to make profits for their business, instead of wasting time on taking a very first step It is an important manner for young undertakings to take opportunities to penetrate markets relating to their types of products or services

(b) Trademark license is a good manner for licensees to use trademark of other entity Trademark confers its proprietor the exclusive right to exploit it and “right to

protected against other competitors who want to make corrupt use of renowned belonging to marked products and sell products bearing that mark improperly65 It is the same to trademark for services Hence, there is no opportunity for other parties

to use other’s trademark without the licensing and transferring system; while there are third parties desiring to use trademark of other due to its goodwill, reputation and position on market, especially well?known trademark However, negotiating on transferring a trademark is not easy66, licensing system is thus a better solution

Besides, based on exclusive rights of the proprietor, trademark licensing is the only way for local business to use trademark of foreigners67

(a) Trademark license helps consumers to have more opportunities to approach their favorite products or services, which have good quality, from reputable

Satisfaction and belief of consumers putting on products or services bearing trademark create goodwill and reputation of the proprietor Conversely, goodwill and reputation of the proprietor under trademark creates belief of consumers as well

as orients consumers on making their choice on products or services As long as consumers trust in a trademark, they often choose products or services bearing that mark Hence, trademark license by helping increase number of products or services bearing trademark on market, it creates more opportunities to consumers on approaching to their favorite marked products or services Besides, it also helps consumers to approach well?qualified products or services with a lower price than the importation price

(b)Trademark license helps protect consumers from counterfeit products As

analyzed above69, trademark license helps reduce practice of making counterfeit products on market Besides, as long as trademark can help consumers recognize genuine products or services, trademark license can create more opportunities to consumers to approach genuine products or services It thus protects consumers from counterfeit and disqualified products or services Reduction of counterfeit products manufacturing by licensing also helps to protect fair competition on market

(c)Trademark license creates opportunities for national economic development, especially in developing countries, as well as solves social issues The most

important role that trademark license plays to society often manifests in relationship

67

WIPO, WIPO Intellectual Property Handbook: Policy, Law and Use, 2 nd Edition, fn 21 supra, page 94

68

Trademark is crucial as it encourages the “market transparency” as well as allows its proprietor to “create

a direct link with consumers” that help consumers to identify and memorize products or services they prefer (Bardehle Pagenberg Partnerschaft, Trademark protection in Europe, fn 31 supra, page 5)

69

See section 1.2.1(c) supra

between the licensor from developed country with the licensee from developing country70 In these circumstances, it is not merely a trademark license but a general greater contract containing agreements on licensing of patents, trademarks, know?how and/or any other IPR and sometimes, technical assistance In fact, those

countries where licensees come from Under this aspect, license is one of the most common ways for helping developing countries to improve level of researching and utilizing industrial property Those licenses encourage on transfer of technology that help developing countries to come in for advanced technology; besides, it also helps with solving the unemployment issue72 and using local raw material73 or any other national problems relating to technology Particularly, when having licensed technology, developing countries can save time on doing research on the same technology, which has been already found out by others; and that time can be used for researching on improving and developing more on existed technology On that ground, economy of developing countries can develop more as well as quality of social life can develop Meanwhile, in many circumstances, technology transfer license without licensing related trademark could not be performed in practice as it can infringe the proprietor’s exclusive rights on those trademarks Therefore, trademark license plays an important role in developing national economy and society

(d) Trademark license helps countries to develop their national reputation in international market As long as trademark license helps popularizing trademark

into different territories, the more well?recognized trademark is licensed, the more reputation that country can obtains In fact, when a country has lots of licensed

70

As there is no restriction imposed on licensor to consider about nationality of the licensee, in fact, trademark license can be agreed between the licensor from developed country and the licensee from developing country or vice versa However, due to economic development and high?developed level in industrial property field, in fact, high?valued trademarks often originate from developed countries; the licensor thus often comes from the developed country as well

well?known trademark, it can affirm its reputation more in the international trade relationship

1.3 Features of trademark license

agreement has nature of industrial property license that makes it different from

other civil or trade agreement Second, due to specific features of trademark,

trademark license also has its own natures in comparison with other industrial property license In this section, features of trademark license will be analyzed under both aspects concurrently

The first feature of trademark license is related to the subject of license Subject of trademark licensing agreement is using a trademark The main subject that parties focus on trademark licensing agreement is the invisible value obtaining from using trademark The value here can be value of brand75 of the proprietor, value of goodwill and reputation attached to trademark, value of profits that licensee can foreseeably obtain when exploiting trademark, other value of advantages that the licensee can gain from trademark license, etc This is reason why subject of IP license is often supposed to be invisible Parties when licensing does not seek to have trademark itself, which is for instance a logo or a combination of words, but to obtain all value behind those Hence, subject of this special agreement is not a

trademark itself but right to use a trademark This is the common feature of IPR

licensing agreement and the main difference between licensing agreement with other civil and trade agreements

undertaking on market IPL does not recognise and protect this concepr (Alexander I Poltorak, Paul J

Lerner, Essentials of intellectual property, John Wiley & Sons, Inc., 2002, page 24)

on: (i) geographical extent; (ii) time; (iii) extent of rights licensed Besides, trademark license also can have another kind of limitation on types of products or services bearing trademark This feature bases on the principle that the proprietor only has exclusive rights within a limitation and he can only give permission to other within content of his exclusive rights

First is the limitation on geographical extent Accordingly, the proprietor can only

grant license to other parties for using his trademark in the geographical extent where the trademark is protected It bases on principle that trademark only has

effect “within the territory where it is registered or wellKknown” 76 Thus by nature,

the proprietor can only grant trademark license within his protected territory77 Conversely, licensees can only use the licensed trademark within geographical extent defined in license

Second is the limitation on time Trademark is only protected in a limited period of

time78 For instance, EU’s regulations protect CTM for a period of 10 years79, which

is the same to Vietnamese IPL80 However, term for protection of trademark is renewable A trademark can be renewed unlimitedly, as many times as the proprietor desire, provided that each renewal term is limited, for instance in

everlastingly Hence, in total, trademark license can be granted unlimited “as long

Article 46 of Regulation 207/2009 provides that: “Community trademarks shall be registered for a period

of 10 years from the date of filing of the application Registration may be renewed in accordance with Article

47 for further periods of 10 years”

80

Article 93(6) of Vietnamese IPL provides that: “A certificate of registered mark shall be valid from the grant date until the end of ten (10) years after the filing date and may be renewed for many consecutive terms, each of ten (10) years”

an everlasting trademark license but always provides within protection term, which

is the first term or renew term83

licensing to the licensee has to be within content of exclusive rights of the proprietor Conversely, the licensee is only allowed to use licensed trademark under content provided in license

Fourth is the limitation on types of products or services bearing trademark licensed An undertaking can manufacture many types of products and/or provide

many types of services without limitation, provided that those are registered in the certificate of business Besides, undertaking can have different trademarks regard to different lines of products or services that it provides However, aiming to ensuring

on economic profits and controlling quality of products or services provided under license, the proprietor always determines types of products and/or services that the licensee can manufacture and/or provide and affixing licensed trademark on

# # &

A trademark can be licensed to different licensees As subject of trademark license

is invisible85, it can be granted to unlimited number of licensee In other words, any undertaking wishing to use other’s trademark shall ask for a license; and if the licensor is not constrained by any exclusive license, he can grant as many license to others as he want It cannot has the same practice with other civil or trade agreements, as subject of civil agreement is a physical fixed property that can only give to one party to use

$

Technically, indication of “industrial property” includes patents, industrial designs,

trademark, trade name, design of semi?conducting, geographical indication, and

right to protection against unfair competition86 Among those, geographical indication, trade name and right to protection against unfair competition are not subject of the licensing agreement87 Therefore, license of industrial property only includes trademark license, patent license, industrial design license, design of semi?conducting license and trade secrets license

There are two features of trademark license in comparison with other industrial

property rights licenses Firstly, term of trademark license can be the most long

lasted license, as a trademark can be protected forever as long as it is used88, while other industrial property rights have a fixed term of protection89, licenses of those

thus have a fixed term Secondly, trademark cannot be subject of technology

transfer license, though others can be license as a technology transfer license In particular, Article 1(1)(b) and (h) of the TTBER90 provides that subject of technology transfer license can be patent, know?how, industrial design, design of semi?conducting, software copyright, or a mixed of those, but not trademark91 Vietnamese Law on Technology transfer 2006has the same provision92 It bases on ground that trademark does not relate to technology, due to its nature and function

of merely individualizing the proprietor and distinguishing products or services

86

In fact, there are two schools on classifying IPR concept The first one defines IPR including copy right and related right; industrial property rights, which includes rights on patent, industrial design, designs of semi?conducting closed circuit, trade secret, trademark, trade name, geographical indication, right to prevent unfair competition; and rights to plant varieties The second one defines IPR including copy right and related right; industrial property right, which considers rights to plant varieties belong to industrial property right However, the first definition is more sensible as nature of right to plant varieties does not relate to trade activities as other industrial property right; hence, it should not be considered as industrial property right 87

It bases on nature of those IPR Particularly, geographical indication cannot separate from a fixed geographical area; hence, as long as products origin from that area, those can bear that geographical indication; otherwise, no products from area outside can bear that geographical indication Hence, license of this IPR makes no practical sense For tradename, it belongs to existence of an undertaking Thus, there is no undertaking can use other’s tradename It is different from the trademark, which is merely sticks on products Therefore, tradename cannot be licensed as well Right to protection against unfair competition belongs to all entities having business operations, hence it does not need to be licensed

Besides, it is also because trademark does not attach much creativity and novelty 93, which is one of reasons for practice of transferring technology In fact, trademark

by nature only consists of “signs transmitting information to consumers” as well as

protection opposing to any unpermitted use of trademark, which is able to cause

confusion and mistake for consumers ?“misleading practices”94, but not nature of creativity or relating to technology By nature, trademark’s licensee often desires to use trademark for purpose of their course of trade but not of exploiting technology relating to making trademark or marking products

Another type of trademark transfer is trademark assignment In general, assignment

is transfer of proprietorship to other party By nature, there are differences between license and assignment of a trademark

The first difference is nature of subject of agreement Accordingly, licensing

agreement has subject of right to use trademark, which means it transfer the right of using trademark, while assignment transfers the proprietorship of trademark By assignment, the trademark’s proprietor will change from the assignor to the assignee Otherwise, by licensing, the proprietor can still remains his proprietorship

on trademark

The second difference is number of parties Technically, as analyzed above95, a trademark can be licensed to many licensees, exception for case of exclusive license Otherwise, a trademark can be assigned for only one party, as it transfer proprietorship of trademark, meanwhile there can not be more than one entity has right to own a trademark

The third difference is content of right attached to trademark In fact, after

assigning, content of rights attached to trademark does not change in essence In other words, the assignee by assignment has the same content of rights attached to

93

Actually, trademark in fact is the appliance and/or combination of signs that have been already exist for purpose of making special mark affixing on products or services of undertaking to distinguish those from others

trademark as the assignor, which is the first trademark’s proprietor A trademark license only allows the licensee to have parts of content of rights of the proprietor provided by limitation in license96, which means the licensee does not have sufficient content of rights of the proprietor

1.4 Classifications of trademark license

There are many types of trademark license due to each criterion for classification In general, those criteria are similar to those applied for classification of IPR license However, there is one type of license that is not applied to trademark ? compulsory license97

Generally, based on manner of using the licensed trademark, trademark licensing agreement often forms one of three types: (i) trademark licenses associated with manufacturing; (ii) distribution trademark license, and; (iii) trademark licenses agreement as a part of the franchise contract98

The manufacturing trademark license allows the licensee to put the licensed

trademark on products manufactured by licensee Naturally, this type of trademark license often forms an independent agreement, which is not subsidiary to any other greater contract It is in fact one of the most popular trademark licensing agreements99 Besides, this type of trademark license is also often applied when the licensor and the licensee sign a technology transfer license, for instance, patent or know?how license or mixed In these circumstances, trademark licensing agreement

is an ancillary part of the greater licensing contract of patent and/or know?how100

trademark do not relate closely with situations that need a compulsory license Hence, trademark should not

be subject of a compulsory license, for purpose of preventing parties from abusing it to exploit trademark without consent of the proprietor

The distribution trademark license nominates the licensee as a distributor or reseller

of marked products of the licensor In many circumstances, the proprietor grants trademark license as clauses in a distribution or resale contract to licensee Hence, this type of trademark license often forms under an ancillary part of a greater distribution contract101 For purpose of advertising or marketing or performing any other activities to promote distribution, the proprietor will often provide a trademark license in distribution contract; as by that, the licensee is entitled to use the licensed trademark for selling products bearing trademark or do other marketing activities relating to those products

The trademark franchise license gives permission to the licensee to do merchandise

under trademark of licensor, who is the franchisor simultaneously In general, franchise contract often includes technology transfer licenses such as patent license, know?how license and transfer of using trade name102 It bases on nature of franchise, which is granting other parties rights and advantages to run business under capacity of the franchisor In course of nature, a franchise contract cannot be performed practically without provisions of trademark license Naturally, the franchisee will do trade under brand and business manner of franchisor Hence, as long as the franchisor does not license his trademark to the franchisee, the franchisee cannot operate the franchising business, for instance, manufacturing and selling products bearing the franchisor’s trademark, without being considered infringement on franchisor’s trademark Therefore, trademark license can be seen as

a compulsory content in the franchise contract

Technically, the proprietor has sufficient right to decide content and scope of right

to license to other parties, as well as decide on the number of licensee allowed to use his trademark Basing on criterion of licensed scope of right, there are two types

101

Ibid., page 635

102

Ibid

of trademark license, which are: exclusive license and non?exclusive license Both are provided under light of provisions of EU’s and Vietnamese law103

Exclusive license is not defined under provision of EU’s regulations, while

Vietnamese IPL has provided a quite clear definition of exclusive license in Article 143(1), which is:

Exclusive contract means a contract under which, within the licensing scope and term, the licensee shall have the exclusive right to use the licensed industrial property object while the licensor may neither enter into any industrial property object license contract with any third party nor, without permission from the licensee, use such industrial property object

In general, exclusive license has two main features, which bring to the licensee

advantageous as “it prevents all competition from using the licensed IP rights” 104 Firstly, exclusive license gives the licensee exclusive rights to exploit the licensed

trademark This exclusive rights of the licensee are considered under meaning that there will be no other party has right to exploit licensed trademark within that geographical extent and licensed term, even the licensor – the proprietor of trademark, without permission of the licensee The licensee in this case has the same exclusive right to exploit trademark as the proprietor in geographical extent and within term of license However, even though the licensee is granted license for all the rights of proprietor in the same protection term of the licensor, the licensee still is not the trademark proprietor but merely trademark holder Thus, though the licensee has exclusive right to utilize the trademark, he still is not allowed to freely grant a sub?license to others without consent of the proprietor

Secondly, the proprietor of licensed trademark may be prevented from exploiting his

trademark as well as granting other licenses to other parties that contain the same or

103

Under light of EU’s provisions, Article 8(1) of the Directive 2008/95/EC and Article 22(1) of Regulation

207/2009 provide that “A license may be exclusive or nonKexclusive” In Vietnamese IPL, Article 143 also regulates that “Industrial property object license contracts shall be of the following types: (1) exclusive license (…); (2) nonKexclusive license (…)”

104

O’Donnell, R.W., O’Malley, J.J., Huis, R.J., Halt, G.B., Intellectual Property in the Food Technology Industry: Protecting Your Innovation, Springer Science & Business Media, 2008, page 116

part of geographical extent and term of such exclusive license granted to the exclusive licensee Nevertheless, this restriction only lasts for a geographical extent and under term provided in license In other words, under the other territory or in other term, the proprietor still has his sufficient exclusive right on trademark and no one can intervene

Other type is nonKexclusive license Similarly, EU’s regulations do not provide any

definition of non?exclusive license In general, it can be considered as a license that has opposite features to exclusive?license Vietnamese IPL in Article 143(2) provides definition of non?exclusive license, which is:

NonKexclusive contract means a contract under which, within the licensing scope and term, the licensor shall still have the right to use the industrial property object and to enter into a nonKexclusive industrial property object license contract with others

Basically, non?exclusive license means it does not give the licensee exclusive right

to exploit the licensed trademark Therefore, the licensor remains his rights to use trademark normally himself and grant other non?exclusive licenses to other parties This type of license is often used in case the proprietor of trademark still desire to maintain his rights on exploiting his trademark

Basing on ground of this criterion, trademark license can be divided into two types: main license and sub?license

Main license is license granted by the proprietor

SubKlicense is license granted by the licensee on the ground of the main license, in

which the proprietor allows the licensee to grant sub?license; or even in case that main license does not define but the licensee is given permission by the proprietor EU’s regulations do not define the concept of sub?license Under Vietnamese law,

sub?license is “contract under which the licensor is a licensee of the right to use

content of sub?license always depends on the main license Subject of sub?license is 105

Article 143(3) of Vietnamese IPL

the licensed trademark of the main license Thus, content of extent of sub?license obviously depends on content and validity of the main license; as well as the licensee can only grant sub?license of rights that he had been granted by the proprietor

Article 142(3) of Vietnamese IPL also provides a regulation affirming the principle

of granting sub?license, which is “the licensee must not enter into a subKlicense

contract with a third party, unless it is so permitted by the licensor”

This principle bases on the ground that right to grant license only belongs to the proprietor of the license In fact, the licensee though is allowed to use trademark, he

is still only the right holder Hence, he is actually allowed to exploit the trademark

by provision in the license but not to make any decision on that including granting a sub?license The proprietor is the only person authorized to perform right of allowing others to use his trademark This is for purpose of protecting reputation as well as the proprietor itself If the licensee is entitled to grant sub?license freely, exploitation on trademark will be out of control of the proprietor as he may be unable to control quality of products or services bearing his trademark It can make negative influence on goodwill and reputation of the proprietor

1.5 Remarks

Licensing trademark is an effective way to exploit a trademark that attracts both the proprietor and the licensee and it has been existed for a long time in trade In jurisprudence as well as in each national legal system, there is not an unanimous

definition of “trademark license” concept, but all definitions have figured out

nature of it that is a permission of the proprietor within his right to others for using his trademark Besides, basing on natures of a trademark, which is license’ main subject matter, a trademark license has its own features In common, a trademark license has features of a civil agreement, of an IPR license and its specific features

as well Those create specific content of a trademark license and a multiform legal ground covering it, which shall be analyzed clearly in Chapter 2 of the thesis

CHAPTER 02 TRADEMARK LICENSING AGREEMENT UNDER LIGHT

OF EU REGULATIONS AND VIETNAMESE LAW

2.1 Legal framework on trademark licensing agreement

Legal framework is a set of law and regulations covering a practical matter, which

in here is practice of licensing a trademark by a licensing agreement Technically, trademark licensing agreement, which focuses mainly on trademark, is obviously covered by specific provisions of IPL system Besides, as being an agreement, it is also covered by general contractual principles relating on civil and/or commercial contract Moreover, competition rules also cover trademark license as well.106

Trademark is a subject matter of IPR, thus a trademark license obviously has to be first and foremost covered by provision of IPL system In fact, IPL system is the main legal frame on trademark license, which regulates conditions for licensing a trademark legally as well as some basic contents of licensing agreement The IPL system is expressed under different forms in each country107

Besides, though trademark licensing agreement has specific features of an IPR license, it still has essence of a civil agreement, which means trademark licensing agreement has to be covered by civil principles applied for contract in general For

instance, trademark licensing agreement has to base on grounds of genuine consent

of both parties, requirement on proprietorship of the licensor on subject of agreement–trademark, content of license must be compatible with general legal principle as well as social interest, etc

Moreover, due to close relationship between performing in IPR and competition on market, trademark licenses are also covered by principle of competition law This relationship can be construed that as IPR confers exclusive rights to the proprietor

to use his IP in general and trademark in particular, the proprietor is thus “able

for instance, the Trademark Act of United Kingdom Those can also be provided in a common act on industrial property rights, which is divided basing on branches of IPR (see fn 80 supra), for instance, Law on Industrial property rights of Japan Those can also be provided in the most common act for IPR, for instance, the Vietnamese Intellectual Property Law

unilaterally to prevent unauthorized use of its intellectual property and has a

Besides, contents of licensing agreement are not allowed to infringe competition regulations

However, in consistence of thesis’s delimitation, the content of trademark licensing agreement will only be analyzed focusing on regulations of IPL and under aspect of competition regulations related

Legal framework of EU on IPR license in general and trademark license in particular consists of three components: (i) national law of each Member States that provides principle applied for licensing transaction within national territory; and, (ii) the common law of EU, which is often expressed in Directive and Regulation, provides a common policy of the EU on those issues; and, (iii) international treaties

in which EU members participate also However, the thesis only focuses on the common law of EU but not national law of Member States or other international documents Under aspect of common law of EU, trademark licensing agreement is covered by:

(i) The EU Directive: EU has a common Directive regulating on trademark, which

provides common standards for purpose of harmonizing national law of Member States on trademark109 that is Directive 2008/95/EC of the European Parliament and

of the Council of 22 October 2008 to harmonize the laws of the Member States

relating to trade marks It is the latest version of The “First Harmonisation

Trademarks Directive”, which was the First Council Directive 89/104/EEC to

previous Directive 89/104/EEC is not for obligating Member States to obey fixed regulations, but merely trying to diminish the disparities existing in national law of each By doing so, EU can ensure maintenance of

“free movement of goods and freedom to provide services” as well as “proper functioning” of EU's single

market Hence, provisions in Directive do merely orient national law of member states to be approximated