IS A FOREIGN COMPANY’S LICENSING OF COMPUTER SOFTWARE TO CUSTOMERS IN VIETNAM CONSIDERED A TECHNOLOGY TRANSFER?

In the course of using software provided by foreign enterprises, many businesses in Vietnam wonder whether being granted the right to use such software constitutes a technology transfer activity. This issue needs to be clearly determined in order to properly apply the relevant legal regulations. Through this article, let’s explore this issue with Pham Consult.

 

I. What is Technology Transfer? What Are the Transferable Technology Objects?

To determine whether software licensing constitutes technology transfer, it is first necessary to understand the concept of technology transfer and the technology objects that may be transferred under the law.

Pursuant to Clause 7, Article 2 of the Law on Technology Transfer 2017, as amended by Point b, Clause 1, Article 1 of the 2025 Amending Law on Technology Transfer, technology transfer means a scientific, technological, and innovation activity carried out through the transfer of ownership rights to technology or the transfer of technology use rights for the purpose of applying such technology in practice to create new products, services, or production methods.

Transferable technology objects:

Pursuant to Clause 1, Article 4 of the Law on Technology Transfer 2017, as amended by Clause 3, Article 1 of the 2025 Amending Law on Technology Transfer, transferable technology objects include:

(1) Technical know-how and technological know-how;

(2) Technological plans and processes; technical solutions, parameters, designs, technical diagrams; models, algorithms, formulas, software, information, and data;

(3) Production rationalization solutions and technological innovation solutions;

(4) Machinery and equipment accompanying any of the objects specified in items (1), (2), and (3).

II. Is a Foreign Company’s Licensing of Computer Software to Customers in Vietnam Considered a Technology Transfer?

Although software is identified as one of the technology objects that may be transferred, not every software licensing arrangement is automatically regarded as a technology transfer. The determination depends on the form and substance of the transaction between the parties.

Pursuant to Articles 5 and 6 of the Law on Technology Transfer 2017, as amended by Clause 4, Article 1 of the 2025 Amending Law on Technology Transfer, the forms and methods of technology transfer are prescribed as follows:

Forms of Technology Transfer

1. Independent technology transfer.
2. Technology transfer as part of:

a) An investment project;

b) Capital contribution by technology;

c) Commercial franchising;

d) Transfer of intellectual property rights;

dd) Purchase and sale of machinery and equipment specified in Point d, Clause 1, Article 4 of this Law.

3. Other forms of technology transfer as prescribed by law.
4. Technology transfers specified in Clause 1 and Point b, Clause 2 of this Article must be established in the form of a contract. Technology transfers specified at Points a, c, d, and dd, Clause 2 and Clause 3 of this Article may be reflected in a contract, contractual provisions, appendices, or investment project dossiers containing the contents prescribed in Article 23 of this Law.

Methods of Technology Transfer

1. Transfer of technological documents, quality management procedures, standards, and related technical specifications.
2. Training the technology recipient to master and control the technology within the agreed period.
3. Assigning technical experts to assist the recipient in applying and operating the technology to achieve the agreed product quality and implementation schedule.
4. Transfer of machinery and equipment together with the technology specified in Point d, Clause 1, Article 4 of this Law, accompanied by one or more of the methods mentioned above.
5. Other transfer methods as agreed upon by the parties.

Accordingly, a foreign company’s licensing of computer software to customers in Vietnam may be considered a technology transfer if such licensing follows one of the technology transfer forms or methods mentioned above.

For example, where the foreign company not only grants software usage rights but also provides source code, detailed technical documentation, specialized training, operation guidance, and technical know-how to the customer, such arrangement may be regarded as a technology transfer.

III. When Must Technology Transfer Be Registered? What Documents Are Required?

Once a transaction is determined to constitute a technology transfer, businesses should further consider whether technology transfer registration is required under applicable law.

Pursuant to Clause 1, Article 31 of the Law on Technology Transfer 2017, as amended by Points a and c, Clause 14, Article 1 of the 2025 Amending Law on Technology Transfer:

Registration and Information Provision for Technology Transfer

1. Technology transfer contracts and technology transfer portions specified in Clause 2, Article 5 of this Law must be registered with the state authority in charge of science and technology if they fall into one of the following cases, except for restricted technologies that have already been granted a Technology Transfer License:

a) Technology transfer from abroad into Vietnam;

b) Technology transfer from Vietnam to foreign countries;

c) Domestic technology transfer involving state capital or state budget funds.

…

3. A technology transfer registration dossier includes:

a) An application for technology transfer registration, including a commitment by the parties that the contract complies with relevant legal regulations;

b) The original or a certified copy of the technology transfer agreement containing the contents prescribed in Article 23 of this Law. If the agreement is not in Vietnamese, a Vietnamese translation that has been notarized or certified must be provided.

Accordingly, technology transfer contracts and technology transfer portions specified in Clause 2, Article 5 of the Law on Technology Transfer 2017 must be registered with the competent state authority in the following cases:

• Technology transfer from abroad into Vietnam;
• Technology transfer from Vietnam to foreign countries;
• Domestic technology transfer involving state capital or state budget funds.

The registration dossier includes:

• An application for technology transfer registration containing the parties’ commitment to comply with relevant laws;
• The original or a certified copy of the technology transfer agreement as prescribed in Article 23 of the Law on Technology Transfer 2017. If the agreement is not in Vietnamese, a notarized or certified Vietnamese translation must be submitted.

In conclusion, a foreign company’s licensing of software to customers in Vietnam is not always considered a technology transfer. However, where the licensing arrangement includes the transfer of technical documentation, technological know-how, training, or assistance enabling the recipient to master and apply the technology, the transaction may fall within the scope of technology transfer regulations and may trigger technology transfer registration obligations under Vietnamese law.