Grant-Back Clauses in License Agreements in Vietnam: Who Owns Improvements by the Licensee. FLAT regularly handles this issue when foreign investors deal with grant-back clauses and ownership of licensee improvements in Vietnam: one wrong step can trigger administrative fines, loss of asset rights or prolonged disputes. This article follows a lawyer’s review sequence: the legal basis in force as of October 2026, how it applies to a concrete file, the procedure to follow and the risks to settle before signing anything.
Core legal basis — grant-back clauses and ownership of licensee improvements
A grant-back obliges the licensee to assign or license back improvements it creates on the licensed technology or mark. Vietnamese law does not let this clause run free on party agreement alone: the Law on Technology Transfer (consolidated after amendment by Law 115/2025/QH15) prohibits unreasonable restrictive clauses, including forcing the recipient to hand back improvements based on the transferred technology without compensation, and the Competition Law 23/2018/QH14 addresses competition-restricting licence arrangements.
Applying the rules to your situation
Negotiation turns on three variables: whether the improvement is severable from the base technology, whether the grant-back is an assignment or only a licence, and whether it is compensated. A non-exclusive licence-back confined to non-severable improvements usually stands; a free, exclusive assignment of all improvements is the structure most exposed to being voided under Vietnamese technology transfer law.
Procedure and documents to prepare
- Step 1: define improvements in the contract: severable versus non-severable from the licensed technology, with a notice mechanism when the licensee creates one.
- Step 2: choose the grant-back form by tier: non-exclusive licence-back for non-severable improvements; separate negotiation for severable improvements with independent value.
- Step 3: attach reasonable compensation to valuable grant-backs, avoiding the prohibited uncompensated hand-back structure.
- Step 4: screen the whole clause under the Technology Transfer Law and Competition Law 23/2018/QH14 before signing; register the technology transfer contract where registration applies.
Risks to anticipate
The first risk is an overbroad grant-back being voided, leaving the licensor with no rights in improvements at all — worse than a narrow but valid clause. The second is evasion: the licensee titles improvements in staff or affiliates if the contract lacks affiliate coverage. The third is severability disputes: the licensor calls an improvement non-severable to capture it, the licensee calls it its own independent asset.
Answers to client questions
What is a grant-back clause in a licence agreement?
It is the clause obliging the licensee to assign or license back to the licensor the improvements the licensee develops on the licensed subject matter during the licence. Grant-back decides where improvement value flows, and it is among the clauses most closely screened by technology transfer and competition law.
Who owns a technology improvement made by the licensee?
By default, an improvement created by the licensee belongs to the licensee where the contract says nothing else and the improvement qualifies for independent protection. A valid grant-back can oblige the licensee to license it back, but a clause forcing assignment of all improvement ownership without compensation risks invalidity under the Technology Transfer Law’s prohibited clauses.
Does an exclusive grant-back violate competition law?
An exclusive grant-back, especially combined with uncompensated assignment and all-improvements scope, can be assessed as a competition-restricting arrangement and a prohibited restrictive clause under technology transfer law. Risk drops sharply where the clause is confined to non-severable improvements, is non-exclusive and carries reasonable compensation.
How should grant-back be negotiated for balance?
The licensor should take use rights in non-severable improvements rather than demanding ownership; the licensee should keep ownership of severable improvements and independent exploitation. Both sides need definitions, a notice mechanism, compensation and expert classification of disputes — the four elements that decide whether the clause survives legal review.
Action conclusion
Negotiate grant-back on the narrow-but-solid principle: clear definitions, non-severable improvements only, non-exclusive licence-back form and a compensation mechanism. Write an independent-expert classification mechanism for disputed improvements into the contract itself.
This article has been quality-reviewed by the FLAW AI Legal Council