Legal basis of penal liability for criminal offence

of infringing upon intellectual property rights according to current Vietnamese laws

Email: vinh@bross.vn

General principles on handling IP rights crimes

The Vietnamese Intellectual Property Law (IP Law) does not provide for handling of infringements of intellectual property rights by criminal measure except that Article 212 of the IP Law saying that the infringement made by an individual upon having satisfied criminal constituents shall be liable for penal liability in accordance with the penal legislation. Article 212 are materially a reference to the criminal law provisions, most notably the 2015 Penal Code as revised and the 2015 Penal Procedure Code.

Criminal punishment imposed on the subject of infringing intellectual property rights is the most severe one compared with civil or administrative remedies, ie. offender may be facing a fine, non-custodial reform, imprisonment of up to 20 years, life imprisonment or even the death penalty. On the other hand, criminal liability as from January 1, 2018 may also apply to corporation whose legal consequences may include fines of up to 5 billion VND or suspended from business activities for a period of 6 months to 2 years[1].

Nevertheless, the basis of criminal liability only arises based on the principle stating that only person who committed an offense available in the 2015 Penal Code as revised shall be criminally responsible and only commercial enterprise committed a crime out of 33 offenses provided by the 2015 Penal Code as revised shall be held criminal liability. Basically, infringements of intellectual property rights that are considered crimes are found in 6 offenses, including:

Article 225 - Crime of infringing copyright, related rights;

Article 226 - Crime of infringing upon industrial property rights;

Article 192 - Crime of producing, trading in fake goods;

Article 193 - Crime of producing, trading in fake goods that are food, foodstuffs, food additives;

Article 194 - Crime of producing, trading in fake goods that are curative, preventive medicine; and

Article 195 - Crime of manufacturing, trading in fake goods that are food used for feeding animals, fertilizers, veterinary drugs, plant protection drugs, plant varieties and animal breeds.

Determining any of the above six offenses may be a rather complicated issue in the reality of investigating crimes for intellectual property rights due to overlapping criminal objectives because the 2015 Penal Code as revised does not identify the borderline between counterfeit goods and counterfeit trademark goods while the principle of handling criminal liability stipulates that no one is convicted twice for a crime.

For example, the act of production and trading in counterfeit goods and the act of producing and trading in intellectual property counterfeit goods (trademark or geographic indications) are very similar as objective elements, ie. they fabricated outer appearance of genuine goods (form of expression, information presentation on package are identical or indistinguishable similar) and deceive consumer into believing that the goods in question are genuine one.

In essence, there are 3 types of fake goods or counterfeit goods: (a) counterfeiting as to outer appearance (packaging, labels, marks); (b) falsification of content (no use value or no function); and (c) fake both in form and content. While criminal law does not distinguish fake goods and counterfeit goods mentioned above, Decree 08/2013/ND-CP arranges fake goods in 4 groups: (a) goods with no use value, goods with content and quantity of main substances only reaches 70% or less compared to quality standards; (b) goods with counterfeit goods labels and goods packages, including goods packing, containing indications of origin of goods, places of manufacture, packaging, or assembly of goods; (c) intellectual property counterfeit goods under Article 213 of the IP Law^[2]; and (d) forged packaging stamps and labels^[3]

Required constituents of infringing upon industrial property rights, and infringing upon copyright and related rights

Assuming that purely intellectual property rights are protected by the criminal law, there are only 2 crimes by the 2015 Criminal Code as revised, including Article 225 - crime of infringing copyright, neighboring rights and Article 226 - Crime of infringing upon industrial property rights.

For Article 226, according to the basic criminal constituent of Clause 1, Article 226, an individual aged fullly 16 or older must be penalized for a principal fine of 50 million up to 500 million VND, or a non-custodial reform of up to 3 years if all of three elements are met:

(a) the individual has willfully committed; and

(b) the subject being infringed is a forged trademark or fake geographical indication; and

(c) the commission of crime is committed on a commercial scale, or the individual illegally gained from 100 million VND to less than 300 million VND, or caused damage to the trademark owner from 100 million VND to less than 500 million VND, or violated goods worth from 200 million VND to less than 500 million VND

Where any of 5 aggravating circumstances emerges: (a) committing in an organized manner, (b) committing the crime twice or more, (c) gaining an illegal profit of 300 million VND or more, (d) caused damage to the owner of trademark or of geographical indication of 500 million VND or more, (d) infringing goods worth 500 million VND or more, shall be subject to a fine of between 500 million VND and 1 billion VND or sentenced to between 6 months and 03 years’ imprisonment.

With respect to additional penalties, offender may also be imposed a fine of between 20 million VND and 200 million VND, banned from holding certain position, practicing certain occupations or doing certain jobs for between 1 and 5 years.

Independent from the criminal liability imposed on an individual offender under Article 226 above, legal entity (only profit-for corporate) may also be prosecuted for penal liability by point a clause 4 Article 226 with the principal penalty under the basic composition as a fine of between 500 million VND and 2 billion VND or business suspension for a period of between 6 months and 2 years, if all of the criminal constituents are satisfied:

a. Committed legal entity has met 4 conditions under Article 75 of the Penal Code[4]; and

b. Subject being infringed is the counterfeit trademarks or geographical indication; and

c. The infringement carried out on a commercial scale, or have gained illicit profits from 200 million VND to under 300 million VND, or caused damage to trademark owner from 300 million VND to under 500 million VND, or infringing goods valued between 300 million VND and under 500 million VND, or a violating goods worth from 100 million VND to less than 300 million VND but have been administratively sanctioned for this act.

Commercial legal entity is subject to a fine of up to 5 billion VND where any of 5 aggravating circumstances is found under Clause 2, Article 226 above.

Regarding additional penalties, commercial legal entity may also be subject to a fine of between 100 million VND and 500 million VND, be banned from operating in certain fields or from raising capital for a period of 01 year and 03 years.

For offense of copyright infringement and related rights under Article 225, it should be noted that only 2 of the 10 types of exclusive rights (reproduction right and distribution right) afforded to author, owner of copyright or related rights may be subject to criminal prosecution. Specifically, according to Clause 1, Article 225, infringer of copyright and related rights may be considered as offender and subject to a fine (principal penalty) of between 50 million VND and 300 million VND, or non-custodial reform for up to 3 years, if simultaneously satisfying the three elements:

(a) the offender committed in a wilful manner; and

(b) the committed act performed in the form of copying a work, phonogram, video, or distributing to the public a copy of the same; and

(c) the infringement committed on a commercial scale, or have made an illegal profit of between 50 million VND and under 300 million VND, or caused damage to copyright or related rights owners from 100 million VND to less than 500 million VND, or infringing goods worth between 100 million VND and under 500 million VND.

A fine of from 500 million VND to 1 billion VND or a termed prison of between 6 months and 03 years is imposed if one of 5 aggravating circumstances is found: (a) organized crime, (b) committed a crime 02 times or more, (c) have gained an illegal profit of 300 million VND or more, (d) caused damage to the copyright owner or related rights of 500 million VND or more, (d) infringing goods valued at 500 million VND or more

Regarding additional penalties, offender may also be imposed a fine of between 20 million VND and 200 million VND, banned from holding certain position, practicing certain occupations or doing certain jobs for between 1 and 5 years.

Commercial legal entity, if committing acts as stated in Clause 1, Article 225 on a commercial scale, or has gained illicit profits from 200 million VND to under 300 million VND, or caused damage to copyright or copyright holders ff the infringing goods valued at between 300 million VND and under 500 million VND, or violating goods valued between 300 million VND and under 500 million VND, shall be imposed a fine of between 300 million VND and 1 billion VND. Where any of 5 aggravating circumstances under Clause 2, Article 225 is found, a fine of between 1 billion VND and 3 billion VND shall be imposed, or the operation shall be suspended for a period of between 06 months and 2 years.

Additional penalties, including fines of from 100 million VND to 300 million VND, being banned from business, operating in certain fields or raising capital from 01 to 03 years may also be applied to commercial legal entity.

First criminal case in Vietnam convicting both individual defendant and corporate defendant

The first criminal case in Vietnam wherein legal entity held criminally liable is the prosecution, investigation and trial of the infringement of industrial property rights under Article 226 of the 2015 Penal Code as revised. The criminal investigation against both individual and corporate originating which began from a letter for criminal denunciation submitted by the owner of registered trademark "Viet Phap Shal Aluminum" resulted in the seizure of 42,405 aluminum profiles (about 170 tons) in Trung Ha Industrial Zone, Tam Nong, Phu Tho province, which are concluded to be counterfeit to the aluminium profiles bearing the trademark "Viet Phap Shal Aluminum". According to the first-instance criminal judgment no. 02/2020/HS-ST of January 14, 2020, the People's Court of Phu Tho province held that both individual defendant and corporate defendant found guilty by Article 226 of the 2015 Penal Code as revised.

Bross & Partners have had experience in criminal litigation and civil litigation in cases involving intellectual property rights as well as experience in handling infringements of intellectual property rights by administrative measures. Should you have specific needs, please contact: vinh@bross.vn; cellphone 84-903 287 057, 84-4-3555 3466; Wechat: wxid_56evtn82p2vf22; Skype: vinh.bross.

Bross & Partners, a renowned and qualified Patent, Design, Trademark and Copyright agent of Vietnam, constantly ranked and recommended by the Managing Intellectual Property (MIP), World Trademark Review (WTR), Legal 500 Asia Pacific, AsiaLaw Profiles, Asia IP and Asian Legal Business, is providing clients all over the world with the reliable, affordable contentious and non-contentious IP services including enforcement, anti-counterfeiting,  litigation regarding trademark, trade name, industrial design, patent, copyright and domain name.