Vietnam Draft Law Enables Use of Intellectual Property as Capital and Loan Collateral in Cultural Industries

On October 24, Minister of Culture, Sports and Tourism Lam Thi Phuong Thanh presented to the National Assembly Vietnam's draft Law on the Development of the Cultural Industry. A key feature of the draft law is the establishment of a legal mechanism permitting intellectual property (IP) rights within the cultural sector to be used as capital contributions and collateral in credit relationships.

Article 11 of the draft law explicitly authorizes cultural industry enterprises to leverage their IP rights as capital or loan guarantees. This provision marks a significant shift from traditional reliance on tangible assets, enabling businesses to capitalize on the economic value of their creative intellectual property.

However, the draft law clarifies that the acceptance of IP as collateral is subject to the discretion of credit institutions. Not all IP assets will be automatically accepted, nor will their valuation necessarily align with the business’s proposed figures. Credit institutions may require valuation certificates or reports from qualified valuation firms, in accordance with the law on pricing, to assess the collateral’s worth.

The authority to accept collateral, determine its value, and grant credit remains vested in credit institutions under the law governing credit organizations. Furthermore, the registration of security interests in IP rights will follow the law on secured transaction registration. Registered security interests will be integrated with the National Digital Cultural Data Repository and updated within the Cultural Industry Database, ensuring transparency and traceability.

The draft law also addresses the management of IP rights when cultural enterprises, cooperatives, or unions face dissolution, rehabilitation, or bankruptcy. If multiple options exist for handling IP with equivalent financial value, priority is given to continuing exploitation of the IP through transfer, licensing, or other legal means to capable cultural industry enterprises. This approach aims to preserve both the economic and cultural value of intellectual property rather than focusing solely on financial recovery.

Chairman of the National Assembly’s Committee on Culture and Social Affairs, Nguyen Dac Vinh, highlighted the importance of accurately valuing IP assets, noting that unlike tangible assets, IP value depends heavily on factors such as exploitability, marketability, and commercialization potential.

To address this, the draft law proposes policies to enhance valuation capacity. These include developing and refining valuation methods, standards, technical guidelines, and databases; researching new valuation models for emerging IP types; and providing specialized training for valuers, IP experts, lawyers, auditors, financial professionals, and credit institutions.

Additionally, the draft envisions establishing a council of experts to advise on and assess the potential for exploiting IP rights. This council would be appointed by the Minister of Culture, Sports and Tourism or the Chairman of the Provincial People’s Committee, in line with government regulations. While the council’s assessments serve as advisory references, they do not replace legally mandated valuation results under the pricing law.

The Ministry of Culture, Sports and Tourism will also regularly publish comprehensive data on the IP rights market within cultural industries. This information will support valuation processes, capital contributions, secured transactions, and IP transfers, fostering a more informed and dynamic cultural economy.

By integrating intellectual property rights into financial mechanisms and emphasizing robust valuation and management practices, Vietnam’s draft law seeks to unlock new economic opportunities for cultural enterprises while safeguarding the intrinsic cultural value of creative assets.