IP Crime in Vietnam: When an Infringement of Trademark or Geographical Indication May Become a Crime

Founding Partner Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

To implement its international commitments in the TRIPs and CPTPP[1] on criminal handling of trademark counterfeiting and copyright piracy, Vietnam identified some acts of infringement of copyright (authors’ rights), neighboring rights (related rights), and a number of acts of infringement of industrial property rights are IP crime, particularly Section 225 - crime of infringement of copyright, related rights, and Section 226 - crime of infringement of industrial property rights in the 2015 Penal Code as revised in 2017 (“Penal Code”), Bross & Partners below explains the basic legal signs constituting a Section 226 offence.

Basic theory of crime in Vietnamese criminal law

Elements constituting a crime are the only legal basis for determining crimes because criminal law defines crimes by describing the signs of criminal acts. From that legal basis, theorists generalized into common characteristic signs called four elements for crime.[2] The Penal Code does not define what constituents of a crime mean. Criminal theoretical researchers define crime as the totality of typical legal signs of a specific crime as stipulated in the Penal Code, in particular, a crime must meet four elements: objectivism, subjectivism, objective aspect, and subjective aspect.[3]

Elements constituting a Section 226 Offence

5. Subjectivism of the crime: Section 226 does not identify special signs for the subjectivism of this crime. Therefore, the subjectivism of this crime is any individual 16 years of age or older with criminal liability capacity. The subjectivism of this crime can also be a commercial legal entity (legal person) as defined in Article 75 of the 2015 Civil Code.[4]

5. Objectivism of the crime: Like Section 225, the crime of infringing on industrial property rights under Sectione 226 is classified by lawmakers into a group of other crimes that violate economic order, not in the same group of crimes that violate economic order in production, business, and trade (such as crimes of producing and trading counterfeit goods according to Sections 192-195). Thus, in view of the classification of crime objectivism, the crime of infringing upon industrial property rights also has the same general objectivism and categorial objectivism as the group of crimes of producing and trading counterfeit goods but differs in direct objectivism.

The subject of impact of the crime of industrial property right infringement is industrial property rights protected by law but limited to only two forms of legal protection: trademarks and geographical indications. However, industrial property right infringement over trademarks, geographical indications (GIs) are of a different nature from acts of counterfeiting trademarks or GIs, while criminal law only deals with criminal responsibility for trademark or GI counterfeiting. Thus, counterfeiting a trademark or GI that is being protected in Vietnam is a mandatory sign of the crime. To identify goods counterfeiting trademarks or GIs, it is necessary to carefully evaluate 4 factors at Article 213 of the IP Law 2022.[5]

Unlike the principle of criminal prosecution for two crimes: authors’ rights  infringement offence, and related rights infringement offence if both forms of protection are violated according to Section 225, we believe that there is no basis for prosecuting two crimes: the crime of infringing industrial property rights (for trademarks) and the crime of infringing industrial property rights (for GIs) though the trademark and GI protection are two independent forms of legal protection prescribed in the IP Law 2022 because Section 226 of the Penal Code only identifies a single crime, which is infringement of industrial property rights.

5. Objectiveness of the crime: The objective act of this crime is to commit an infringement of industrial property rights to trademarks or GIs that are protected in Vietnam. However, the required legal sign here must be that the goods bear a fake trademark, or a forged GI. In the case of only determining that the goods infringe a trademark or GI but are not counterfeit goods according to Article 213 of the IP Law 2022, the objectiveness aspect of this crime is not satisfied.

It should be further noted that this crime has a material component, meaning that the consequences occurred are also mandatory signs of crime. Consequences here are understood as acts committed “on a commercial scale".[6] Similar to Section 225, lawmakers do not explain what commercial scale is but only add legal signs immediately after the phrase commercial scale including different types of consequences caused by crimes in the form of threshold for material damage (implied to be equivalent to the commercial scale) is converted into cash, including illegal profits of at least 100 million VND, damage to the right holder of 200 million VND or more, or infringing goods has a minimum value of 200 million VND.

5. Subjectiveness of the crime: whoever committed the crime of infringing upon industrial property rights with his/her intentional fault (directly or indirectly), meaning he/she is clearly aware that his/her act of attaching marks on goods or packaging of goods in a way that is identical or difficultly distinguishable from the trademark or GI currently protected for that same product without the permission of the right holder, foreseeing the consequences of the act, and wants the consequences to happen, or foresee the consequences of that behavior that may occur, although not desired but still consciously let the consequences happen. In other words, the use of identical signs or indistinguishable signs can easily make consumers immediately mistakenly believe that the goods have the same commercial origin as the goods bearing the protected trademark or GI. Like Section 225, business purpose is not a mandatory element of Section 226.

Regarding the criminal liability of legal persons, the procedure-conducting bodies must prove that the conduct committed by the commercial legal entity through its legal representative simultaneously satisfies four conditions: (1) the criminal act was committed on behalf of the legal person; (2) the violation was committed for the benefit of the commercial entity; (3) the criminal act is committed with the direction, control or approval of a commercial legal entity; and (4) the statute of limitations for criminal prosecution has not yet expired.

Specific crime cases according to Section 226

The crime of infringing upon industrial property rights has two main penalty frames applicable to individual offenders and commercial legal entities. Individuals who committed crimes according to frame 1 (basic crimes constitution) are subject to the main penalty of a fine from 50 million to 500 million VND or non-custodial reform for up to 3 years if damage is caused as a result of the crime reached “on a commercial scale”, or the offender gains illegal profits from 100 million to under 300 million VND, or caused damage to the rights holder from 200 million to under 500 million VND, or the infringing goods are worth between 200 million to under 500 million VND.

If one of the 5 aggravating circumstances below appears, the individual offender will have his or her criminal liability increased according to frame 2, specifically a fine of from 500 million to 1 billion VND, or a prison sentence of 6 months to 3 years:

(a) Organized crime (with accomplices and close collusion between people who commit the crime)

b) Committed the crime 2 times or more.

c) Gaining illegal profits of 300 million VND or more.

d) Caused damage to the owner of the trademark or geographical indication of 500 million VND or more.

e) Infringing goods worth VND 500 million or more.

In addition to the primary penalty, individual offenders may also be subject to additional penalties including a fine (if the primary penalty is not a fine) from 20 million to 200 million VND, a ban from holding positions, practicing a profession, or working as a particular job from 1 to 5 years.

A commercial legal entity can be considered guilty of infringing on industrial property rights independently of the individual offender, specifically it can be subject to a fine (main punishment) from 500 million to 2 billion VND, if the physical damage (consequences) caused reaches the minimum threshold converted into cash, including:

1. Illegal profits from 200 million to under 300 million VND, or illegal profits from 100 million to under 200 million VND but have been administratively sanctioned for the acts specified in this law, or have been convicted of this crime, the criminal record has not been erased but still committed; or
2. Causing damage to the right holder from 300 million to under 500 million VND, or causing damage from 100 million to under 300 million VND but has been administratively sanctioned for the acts specified in this law, or has been convicted of this crime, the criminal record has not been erased but remains committed; or
3. Infringing goods worth from 300 million to 500 million VND, or infringing goods worth from 100 million to less than 300 million but have been administratively sanctioned for the acts specified in this article, or have been convicted of this offence, the criminal record has not been erased but still committed.

Where an individual offender meets the criteria for an aggravated crime according to frame 2, Section 226, the commercial legal entity will also have the criminal punishment increased in accordance with Section 226(4)(b) of the 2015 Penal Code, meaning that it will be fined from 2 billion to 5 billion VND, or suspended from operations for a period of 6 months to 2 years.

In addition, a commercial legal entity may also be subject to additional penalties including fines from 100 million to 500 million VND (if the main penalty does not apply a fine), ban on doing business, ban on operating in certain fields from 1 to 3 years.

Bross & Partners, an intellectual property firm ranked Tier 1 in 2021 by Legal 500 Asia Pacific, has rich experience in civil and criminal litigation related to intellectual property rights in Vietnam.

Please contact: vinh@bross.vn ; mobile: 0903 287 057; Zalo: +84903287057; Skype: vinh.bross ; Wechat: Vinhbross2603.