Circular No. 30/2005/TT-BKHCN guiding certain provisions of Decree No. 11/2005/NĐ-CP dated February 2, 2005 of the Government detailing regulations on technology transfer (amended).

CIRCULAR

Guidelines for certain provisions of Decree No. 11/2005/NĐ-CP

dated February 2, 2005, of the Government detailing regulations on technology transfer (amended)

details on technology transfer (amended)

Pursuant to Decree No. 54/2003/NĐ-CP dated May 19, 2003, of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Science and Technology, and Decree No. 28/2004/NĐ-CP dated January 16, 2004, of the Government amending and supplementing certain Articles of Decree No. 54/2003/NĐ-CP;

Pursuant to Decree No. 11/2005/NĐ-CP dated February 2, 2005, of the Government stipulating detailed regulations on technology transfer (amended),

The Ministry of Science and Technology guides the implementation of certain contents as follows:

PART I

INTERPRETATION OF TERMS

In Decree No. 11/2005/NĐ-CP dated February 2, 2005, of the Government stipulating detailed regulations on technology transfer (amended) (hereinafter referred to as Decree No. 11/2005/NĐ-CP), the following terms shall be understood as follows:

1. Technical evaluation certificate is a conclusion document of the technical evaluation organization determining the level, value, and impact of the technology on economic and social development and the environment.

2. Technical appraisal certificate is a conclusion document of the technical appraisal organization regarding the degree of suitability of the technology in practice compared with the contents of the technology transfer contract, technology in the investment project.

3. Organization or individual being the lawful owner of the technology or having the right to transfer the right to use the technology is an organization or individual that has invested to create the technology or possesses the technology and implements technology transfer without violating the provisions of Vietnamese intellectual property law concerning industrial property rights over the technology.

4. Price of transferred technology is the total amount of money that the Receiving Party must pay to the Transferring Party (and a third party designated by the Transferring Party to perform the technology transfer contract) during the entire duration of the technology transfer contract according to the agreement between the Transferring Party and the Receiving Party, consistent with the nature, content, scale of application of the technology, and the economic benefits brought about by the transferred technology (excluding travel, accommodation, and living expenses of the Receiving Party's staff when trained, excluding costs for purchasing machinery and equipment).

5. Special business license also known as Franchise under the Commercial Law (franchise). Technology transfer in franchise is carried out in accordance with Decree No. 11/2005/NĐ-CP dated February 2, 2005, and this Circular..

PART II

CONTENTS OF TECHNOLOGY TRANSFER

I. OBJECTS OF TECHNOLOGY TRANSFER

1. Trade secrets about technology, technical solutions, technological plans, technological processes, design documents (containing technical solutions, trade secrets), computer software containing technical solutions (the transfer of computer software without accompanying technological content will be implemented in accordance with the provisions of copyright law), special business licenses.

2. If technology is an object of industrial property protected by a certificate of protection, the transfer of technology must be carried out together with the transfer of ownership and usage rights of such industrial property objects in accordance with the provisions of intellectual property law.

II. METHODS OF TECHNOLOGY TRANSFER

Methods of technology transfer include:

1. Transfer of technical documents containing technical solutions, trade secrets, designs, formulas, technological processes. The contract must specify the names and contents of the types of documents to be transferred.

2. Conduct training to help the Receiving Party master and control the technology within a specified period. The training program specifies the number of workers, technical staff, trades, training content, duration, and location of training, and training results.

If the contract includes training content, the contract must stipulate that upon completion of the training program, the Transferring Party must issue a certificate to the trainees. The contract may specify training costs for each item such as tuition fees, accommodation, travel expenses for trainees and instructors, and other related costs.

3. Provide technical support and advice by sending experts from the Transferring Party to assist the Receiving Party in putting the technology into production with quality standards and production targets set forth in the contract, resolving difficulties in applying the transferred technology to production.

Technical support must be detailed in the contract or its annexes, specifying the content and costs for each technical support item such as the number of experts, working hours, salaries, allowances for experts, travel, accommodation, and other costs.

While providing technical support and advisory services, the Transferring Party does not directly manage the technology or directly manage business operations on behalf of the Receiving Party. Purely business management advice does not fall within the scope of technology transfer.

III. RESULTS OF TECHNOLOGY TRANSFER

The parties to the technology transfer contract need to determine the results of the technology transfer; these results are determined by the quality criteria of the technology and product quality criteria specified in the technology transfer contract.

IV. CONTENTS OF THE TECHNOLOGY TRANSFER CONTRACT

The contents of the technology transfer contract are guided as follows:

1. The technology transfer contract is a contract transferring the objects specified in Section I, Part II of this Circular. Contracts transferring the objects mentioned in Item 1, Part II are also called technology license contracts and technical assistance contracts, technology secret license contracts, technical assistance contracts, which are also understood as technology transfer contracts (hereinafter referred to as the Contract).

Contracts named technology license contracts, technology secret license contracts (license means permission) imply allowing the Receiving Party to use the technology under certain conditions such as using the technology within a specified time frame or within a specified limit.

2. Depending on the agreement between the parties regarding the content of technology transfer, the contract may include all or only part of the content already stipulated in Section I, Part II of this Circular.

3. Types of Special Contracts:

a) In cases where equipment sales include technology transfer, the content and costs of technology transfer must be established as a separate part of the equipment purchase contract.

b) When technology transfer from abroad to Vietnam, within the country, or from Vietnam to abroad is agreed upon by both parties for free but with obligations regarding rights and responsibilities, the parties must also establish a written contract according to the provisions of Decree No. 11/2005/NĐ-CP.

4. Payment Methods for Technology Transfer.

The parties involved in the contract may agree on payment for technology transfer through the following methods:

a) Payment in the form of capital contribution by technology.

If the transferring party and the receiving party agree on capital contribution based on the value of the technology, both parties must establish a technology transfer contract in which the entire value of the transferred technology is calculated as a specific amount in the total capital of the receiving party. After the transferring party has fully implemented the technology transfer content stipulated in the contract, both parties must establish an acceptance certificate to confirm that the transferring party has completed the technology transfer and the capital contribution by technology.

b) Periodic payment based on a percentage of Net Sale Price.

For semi-finished products, parts, components, and spare parts produced in Vietnam by a third party using the technology of the transferring party (through the receiving party) and if the transferring party does not charge technology transfer fees for the third party, the transferring party and the receiving party may agree not to deduct the cost of purchasing these semi-finished products, parts, components, and spare parts when calculating the Net Sale Price.

c) Periodic payment by a fixed amount per unit product (with applied transferred technology) produced and sold by the receiving party.

d) Payment based on a percentage of Gross Revenue.

đ) Payment based on a percentage of Pre-tax Profit of the receiving party.

e) Lump-sum or multiple payments.

Under this method, both parties determine payment by a fixed amount or quantity of goods, divided into lump-sum or multiple payments at various stages of the technology transfer process during the contract period. For example, after the contract becomes effective, upon receipt of technical documents, upon completion of trial runs, upon acceptance, upon commencement of commercial production, upon sale of the first batch of products.

g) Agreement on multiple payment methods.

Both parties may agree on multiple payment methods for the transferred technology. In such cases, the payment value in the application for confirmation of contract registration must be calculated as a percentage of Net Sale Price (for technology transfer for producing products using semi-finished products, parts, components, and spare parts from other suppliers) or as a percentage of Gross Revenue (for technology transfer for producing other products) and the estimated total payment value for technology transfer throughout the contract period.

5. Commitments Regarding Guarantee and Warranty.

The contract should include the following commitments:

a) Commitment of the Transferring Party:

- In cases where the purpose of the technology transfer contract is to apply a new technological process or create a new Product, the transferring party must commit that the content of the technology transfer is necessary and sufficient for the receiving party to have technology with quality standards and product quality meeting the targets set out in the contract.

- Responsibility for violations of Industrial Property Rights of third parties.

- Contents of technology under warranty and warranty period.

- Other commitments in cases where the technology, products, or services do not meet the criteria specified in the contract, do not ensure hygiene and environmental standards.

b) Commitment of the Receiving Party:

The receiving party commits to strictly follow the instructions of the transferring party, ensure confidentiality of the technology, and make payments as stipulated in the contract.

6. The parties may refer to the model contract provided in Appendix 5 of this Circular.

PART III

STATE MANAGEMENT OF

TECHNOLOGY TRANSFER CONTRACTS

I. REGISTRATION OF TECHNOLOGY TRANSFER CONTRACTS.

1. The document confirming the registration of the technology transfer contract is a document confirming the legality of the contract and the validity of the registration dossier.

2. The document confirming the registration of the contract is not a production permit for products, nor is it a permit for importing or exporting raw materials, materials, chemicals, and semi-finished products for the production of contract products.

3. The document confirming the registration of the contract serves as the basis for enjoying state preferential policies on technology transfer, is the basis for foreign currency conversion for the purchase and sale of technology, and is the legal foundation for accounting technology transfer costs.

II. Dossier for Registration of Technology Transfer Contracts

The dossier for registering technology transfer contracts is specified as follows:

1. Application for Confirmation of Contract Registration (according to the model provided in Appendix 1 of this Circular).

In cases of technology transfer from abroad to Vietnam or within the country, the receiving party must sign the Application for Confirmation of Contract Registration. If the receiving party wishes to authorize a legal representative to register the contract, this authorization must be clearly stated in the Application for Confirmation of Contract Registration.

In cases of technology transfer from Vietnam to abroad, the transferring party must sign the Application.

If the contract content involves trade secrets of the parties involved, the Application for Confirmation of Contract Registration must specify the confidentiality requirements for the contract.

2. Contract (original) signed and stamped (if the participating subject is a legal entity), the name of the signer and the name of the organization on the stamp must match the name of the authorized representative and the name of the organization specified in the contract.

All parties must sign (or affix a cross-stamp if the participating subject is a legal entity) on all pages of the contract and appendices.

3. Legal documents confirming the legal status of the parties to the Contract (copies of the Investment License or Business Registration or Operating Permit). A certificate confirming the legal status of the representative signing the Contract (in cases where the representative's signature is not accompanied by a stamp). For foreign-language documents, a certified translation is required.

4. A brief explanation summarizing the content of the transferred technology (including a diagram of the technological steps and results achieved after using the technological secrets) signed and stamped by the Vietnamese party. If there is already a Feasibility Study Report or an Economic and Technical Explanation detailing the technology, only one copy of the Feasibility Study Report (or a copy of the Economic and Technical Explanation) needs to be submitted.

5. Industrial property rights protection certificates in Vietnam for the transferred ownership or usage rights of industrial property objects that have been granted certificates (certified copies with original seals from the Vietnamese party participating in the Contract).

6. Decision of the competent authority deciding on investment (as stipulated in the Investment Management Regulations issued by the Government) approving the Technology Transfer Contract of the Project using State Budget Capital, State-Guaranteed Credit, or State Development Investment Capital (for all three cases: transferring technology from abroad to Vietnam, domestic technology transfer, and transferring technology from Vietnam to abroad) (original or certified copy).

7. Minutes of the Board of Directors of the recipient party agreeing to approve the Technology Transfer Contract in cases of transferring technology from abroad to Vietnam and domestic technology transfer where the recipient uses State Budget Capital, State-Guaranteed Credit, or State Development Investment Capital and the Articles of Association of the recipient stipulate that the Board of Directors must agree to the annual budget revenue and expenditure plan of the recipient (the Board of Directors of the recipient agrees to approve the Contract before it is signed), (original or certified copy).

In cases where the recipient enterprise uses State Budget Capital, State-Guaranteed Credit, or State Development Investment Capital and does not have a Board of Directors, the representative of the owner must approve the Contract before it is signed (original or certified copy).

8. Evaluation and inspection certificates for technology (for technologies listed in the Catalogue of Fields of Technology Required to Have Evaluation and Inspection Certificates issued by the Prime Minister) (original or certified copy).

9. Production permit for the product, certified copy with signatures and stamps of the Vietnamese party participating in the Contract (for products that require a production permit under the law).

When submitting the Application at the Registration Confirmation Authority, three sets must be submitted (at least one set must include original documents as specified in Section II of this Part), while the Feasibility Study Report only requires one copy as stipulated in Clause 4 of Section II of this Part.

III. LEVELS OF REGISTRATION CONFIRMATION FOR TECHNOLOGY TRANSFER CONTRACTS

1. Registration with the Ministry of Science and Technology

Technology Transfer Contracts from abroad to Vietnam valued at over 1,000,000,000 VND and Technology Transfer Contracts from Vietnam to abroad shall submit the Application to the Ministry of Science and Technology. The Department of Evaluation, Appraisal, and Inspection of Technology under the Ministry of Science and Technology is the unit assisting the Minister in implementing this task.

2. Registration with the Provincial Department of Science and Technology

For Technology Transfer Contracts from abroad to Vietnam with a total payment value of up to 1,000,000,000 VND and domestic technology transfers valued at 500,000,000 VND or more (or Contracts with a total payment value lower than this but the parties to the Contract request registration confirmation) shall submit the Application for Registration Confirmation of the Contract to the Provincial Department of Science and Technology of the province or centrally-administered city where the recipient conducts business registration. The Technology Management Division under the Provincial Department of Science and Technology is the unit assisting the Director of the Provincial Department of Science and Technology in implementing this task.

3. The Registration Confirmation Authority for Technology Transfer Contracts has the right to recall and revoke the registration confirmation of Technology Transfer Contracts registered at this authority if violations of the law are discovered.

4. Registration Confirmation

Within fifteen working days from the date of receiving complete and valid Applications, the competent state management agency is responsible for issuing a Registration Confirmation Document to the parties to the Technology Transfer Contract (the model of the Registration Confirmation Document for Technology Transfer Contracts is prescribed in Appendix 2 of this Circular).

IV. TECHNOLOGY TRANSFER CONTRACTS NOT ELIGIBLE FOR REGISTRATION CONFIRMATION

Contracts not eligible for issuance of a Registration Confirmation Document include:

1. Contracts without technology transfer content (the content of the Contract is purely scientific research, testing, experimentation, purchasing products, hiring labor, management, production, exploration, construction, use, warranty, repair of equipment).

2. Content and Documents of the Contract do not comply with Vietnamese laws.

3. For Contracts that have not yet been confirmed for registration, after the Contract is modified and supplemented by the parties to address the issues mentioned in Clauses 1 and 2 above, the Contract will continue to be reviewed and confirmed for registration.

V. REPORT ON IMPLEMENTATION OF TECHNOLOGY TRANSFER CONTRACTS

The recipient of the technology (in cases of transferring technology from abroad to Vietnam and domestic technology transfer), the provider (in cases of transferring technology from Vietnam to abroad) must submit an annual report on the implementation of technology transfer to the Authority that issued the Registration Confirmation Document (the model of the Annual Report is prescribed in Appendix 3 of this Circular).

VI. ACCEPTANCE CERTIFICATE OF THE RESULTS OF IMPLEMENTATION OF TECHNOLOGY TRANSFER CONTRACTS

The results of the implementation of the Contract must be evaluated and confirmed by the parties to the Contract through an Acceptance Certificate and sent to the Authority that issued the Registration Confirmation Document (the model of the Acceptance Certificate is prescribed in Appendix 4 of this Circular).

VII. INSPECTION OF TECHNOLOGY TRANSFER ACTIVITIES

The agency issuing the registration confirmation document shall be responsible for inspecting technology transfer activities and handling violations within its authorized jurisdiction and in accordance with the law.

PART IV

IMPLEMENTING PROVISIONS

1. This Circular replaces Circular No. 1254/1999/TT-BKHCNMT dated July 12, 1999 of the Ministry of Science, Technology and Environment guiding the implementation of Decree No. 45/1998/NĐ-CP dated July 1, 1998 of the Government detailing technology transfer and Circular No. 11/2002/TT-BKHCN dated November 29, 2002 of the Ministry of Science and Technology guiding the implementation of Point d Clause 1 Article 4 of Decree No. 59/2002/NĐ-CP dated June 4, 2002 of the Government regarding the abolition of certain licenses and the replacement of certain licenses with other management methods.

2. Contracts that have been registered and approved before the effective date of Decree No. 11/2005/NĐ-CP shall remain valid until the end of their registered and approved term.

If the parties to a Contract wish to amend, supplement, or modify a Contract that has been registered and approved (before the effective date of Decree No. 11/2005/NĐ-CP), they must submit the amended, supplemented, or modified Contract to the agency that issued the registration confirmation document for review and decision. The content of the amended, supplemented, or modified Contract shall comply with the provisions of Decree No. 11/2005/NĐ-CP.

This Circular shall take effect fifteen days after its publication in the Official Gazette.

During the implementation of this Circular, if there are any issues, individuals and organizations are requested to promptly reflect them to the Ministry of Science and Technology for research and resolution./.