A foreign group transfers a production process and management software to its Vietnamese subsidiary by a parent-company email instruction, with no contract and no confidentiality clause, on the reasoning that it is all one family. Three years later the subsidiary has an outside shareholder after a funding round, its Vietnamese director resigns taking process know-how to a competitor, and the group is stuck: no document establishes that the process is the group trade secret or what duties the recipients in Vietnam ever owed.
Primary sources to check
Technology transfer relations in Vietnam are governed by the Law on Technology Transfer 07/2017/QH14 — noting that Law 115/2025/QH15 amends it with amended points effective from 1 April 2026, so at the time of writing the original 2017 frame still governs most content. The Vietnamese subsidiary is a separate legal person: the group handing technology to it is in substance a transaction between two subjects, which must be documented by a technology transfer contract or an internal licence agreement identifying the know-how and establishing confidentiality duties. Without that, proving the Article 84 conditions of the IP Law inside one own group becomes very hard. Intra-group technology transfer is also a related-party transaction subject to transfer-pricing rules in Decree 255/2026/ND-CP — the decree that replaced Decree 132/2020/ND-CP from 1 July 2026 and applies from the 2026 corporate income tax period — so the internal paperwork also serves tax compliance.
What this means for an FDI employer
A proper intra-group agreement needs four components similar to a third-party contract: an inventory of the technology and documents transferred, with confidentiality grading; the scope of use — only for the subsidiary operations in Vietnam, with no onward transfer to contractors or partners without the owner consent; flow-down duties to subsidiary staff via personal confidentiality agreements and internal rules; and a change mechanism — new shareholders, share sales, director replacement — including use-right review and document recall. The point FDI firms often skip is ownership: the document must state that the technology belongs to the parent or the group IP holding unit, with the subsidiary a mere licensee, so that when subsidiary personnel take secrets away, the infringed subject and the standing to sue are immediately clear under Article 127.
When the subsidiary leaks a secret, the parent acts in two separate capacities: as shareholder — asking the subsidiary board to review and handle the violator under the subsidiary charter and labour contracts; and as secret owner — demanding cessation and damages under the internal licence agreement and Article 127 of the IP Law against third parties receiving the secret. Mixing the two capacities, for example the parent entering and seizing subsidiary documents on its own, breaches legal-person independence and weakens the file. The operational lesson is that every internal transfer must pass through the group IP governance point, with a handover record and entry into the secrets inventory, even where the recipient is a wholly owned subsidiary.
Steps to follow
- Document every internal technology transfer by a transfer contract or internal licence agreement, with a confidentially marked document inventory.
- State clearly the technology owner and the subsidiary licensee status in all internal documents.
- Flow confidentiality duties down to subsidiary personnel via personal agreements and internal rules, aligned with group standards.
- Review technology use rights whenever the subsidiary shareholder structure or management changes.
FAQs
When transferring technology to a Vietnamese subsidiary, is an internal confidentiality agreement needed?
Yes, because the subsidiary is a separate legal person and a secret is protected only where the owner applies secrecy measures under Article 84 of the IP Law — an internal licence agreement with a confidentiality clause is the central evidence of those measures. The agreement also establishes who owns the technology, the scope the subsidiary may use, and what must happen when the ownership relation changes. Without this document, when subsidiary personnel take secrets away, the group stumbles at the very first step of proving rights and duties.
If the subsidiary leaks, how does the parent handle it?
Handle it in two separate capacities. As shareholder, the parent asks the subsidiary governance bodies to review the incident and handle the violator under the subsidiary charter and labour contracts. As secret owner, the parent demands cessation and damages based on the internal licence agreement and Article 127 of the IP Law, especially against third parties that received the secret. What must be avoided is the parent unilaterally seizing subsidiary documents, which breaches legal-person independence and can spoil the evidence value.
What should a foreign investor entering Vietnam do first on intra-group technology?
For a foreign investor, particularly in an outbound investment into Vietnam, the immediate step is to inventory all technology already handed to the subsidiary and regularise it with an internal licence agreement containing confidentiality, royalty and recall mechanics — this dossier simultaneously serves transfer-pricing compliance under Decree 255/2026/ND-CP (replacing Decree 132/2020/ND-CP from 1 July 2026) and the Article 84 secrecy basis. The investor should also review the investment licence and the subsidiary charter to ensure internal agreements do not conflict with registered commitments.
This article has been quality-reviewed by the FLAW AI Legal Council