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Legal updates on IPR Border Protection in Vietnam
(Ngày đăng: 2017-04-10)

Informed Counsel

vinh@bross.vn

Introduction

According to TRIPs, WTO members are required to enact in their national legislations premature prevention mechanism against counterfeit trademarked, pirated copyright goods and/or purportedly infringing goods over intellectual property rights imported into the territory of such member. This provisional remedy is widely known as intellectual property right border control. More particularly, suspension of clearance and/or detection of counterfeit and pirated goods responsible by Customs Authorities under section 51 TRIPs is set out as below:

Members shall, in conformity with the provisions set out below, adopt procedures to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories.

Customs Authority’s Competence

To implement its WTO 150th member’s obligation regarding the above Section 51 TRIPs, Vietnam introduced somewhat TRIPs provision to its IP Law of 2005. Under Section 216 of 2005 IP Law, IPR-related border control that may be applicable for both import and export commodities comprises: (a) suspension of customs procedures for goods suspected of infringing intellectual property rights; and/or (b) inspection and supervision to detect goods showing signs of infringing intellectual property rights. In accordance with Section 200(4) IP Law, customs authorities nationwide are bestowed the power on controlling intellectual property rights relating to imports and exports goods at the border gates.

Prior to becoming WTO member on January 11, 2007, Vietnam had transposed TRIPs-based border control measure into Customs Law of 2001. However, only general rules regarding the protection of intellectual property right at border IPR border were available in this Law leading to the fact the same as usual needed to be guided in detail by Decree 154/2005/ND-CP, Circular 44/2011/TT-BTC and Decision 916/QD-TCHQ. As a persistent tradition, any law passed by the National Assembly is not enforceable until it has been guided by Decree by the Government and subsequently by Circular providing guidance on the implementation of Decree. Most recently, the new trend has showed that would-be provisions in Decrees are incorporated into law to prevent dependent status pending under-law guidance documents by enforcement bodies. For IPR border protection, guided or detailed provisions that should have been included in Decree are seen in Customs Law of 2014 wherein two independent measures that are able to be chosen by IPR holder in separate or parallel manner comprising:

Suspension of clearance means a measure taken at the request of an intellectual property right holder in order to collect information and evidence on the goods consignment in question so that the intellectual property right holder may exercise the right to request that the infringing act be dealt with and to request the application of provisional urgent measures (interlocutory injunction), preventive measures and/or measures to secure enforcement of administrative penalties.

Inspection and supervision to detect goods showing signs of infringing intellectual property rights means a measure taken at the request of an intellectual property right holder in order to collect information for the exercise of the right to request suspension of customs procedures.

Below analyses shall merely focus on two most misleading matters consisting of export goods and goods in transit that are alleged to be IPR infringing ones are subject to request for customs suspension or not? 

Infringing Goods for Export are not Subject to Suspension of Clearance?

According to the provisions regarding IPR border control stated in Customs Law of 2001, Customs Law as revised in 2005 and Customs Law of 2014, export goods may be subject to request for customs inspection or suspension. For instance, Section 73(1) Customs Law of 2014 stipulates holders of intellectual property rights protected in accordance with the law on intellectual property have the right to request customs authorities to apply inspection and supervision methods or postpone customs formalities for imported and exported goods showing signs of intellectual property right infringement. However, export goods, whether are alleged to be infringing IPR or accused to be counterfeit or pirated ones, are in practice subject neither to customs inspection nor suspension. If this matter is true meaning the above provisions regarding IPR infringing export goods have been nullified? Below analyses would point out what rationale is.

First of all we look back a case happened on October 18, 2007: an export lot of 2,500 batteries just reached Hai Phong port but not yet customs clear was seized by an unknown authority other than customs authority. The lot was reportedly to implement sale contract no. N0210/07 entered into by exporter, Tia Sang Battery Joint Stock Company, a Vietnamese company and its Cambodian partner, importer. The lot consisted of 1,200 batteries bearing the trademark TIASANGGGG (this mark is registered under the name of exporter in Vietnam) and 1,300 batteries trademarked NATSIONALLLL (this mark is registered in Cambodia in the name of importer). Ultimately 3 months after being made minute for administrative violation and seized, the lot was promptly released by the seizing authority and it was successfully exported without obstacle[1].  

In debate against IPR enforcement bodies those who maintain their views that the act of exporting goods bearing infringing element over IPR per se is not an infringement, some long-running local practitioners hold their views that notwithstanding the absence of act of exportation of goods amounted to the definition of use of a trademark, export goods must be prohibited from exporting if they are counterfeit or pirated ones or infringing goods since before they reach the border or port they have been manufactured, processed, packaged, delivered or consigned, at which time one of these acts namely manufacturing, processing, packaging, delivering or consigning had been detected or making administrative violation minute has completely constituted an act of infringement subject to either administrative violation punishment, civil remedy or even criminal penalty.

In fact, these point of views are either lack of legal grounds or unfounded reasoning as any commodities or goods produced or processed, whether to sell in Vietnam or export are needed to undergo a multi-step process from procuring material, installing, processing, packaging, transporting to exporting outside Vietnam. Therefore, there would be null and void if persisting in their opinions that any act of manufacturing, processing, packaging, affixing, transporting or consigning infringed goods found has constituted an IPR infringement like other normal IPR infringement acts.

To avoid misunderstanding and confusion around some practitioners’ inaccurate controversial viewpoints, the underlying reasons below may be helpful for IPR holders:

(a)    Under Section 124(5) IP Law of 2005 a full list of acts that shall be regarded as those of use of a trademark include: (a) affixing the protected mark on goods, goods packages, business facilities, means of service provision or transaction documents in business activities, (b) circulating, offering, advertising for sale or stocking for sale goods bearing the protected mark, and (c) importing goods or services bearing the protected mark. Accordingly, it is submitted that no act of exportation of goods set out from this Section including implication that the act of export goods per se is the act of use of a trademark leading to the conclusion that as long as an act of use of trademark does not exist, no infringement occurs.

(b)   It is widely recognized that like other countries following civil law legal system, Vietnam’s each of legal regime can be enforceable only where both statutory laws by the legislature and regulatory laws by the executive body are enacted. However, reverse sides of this legal system happening in Vietnam are practices of conflict between laws, inconsistently guided provisions in addition to trends of old-fashionedness of newly issued laws and implementation guidance thereof and psychology of dependence by legal enforcement bodies towards under-law guides namely decrees, circulars, joint circulars or decisions. IPR enforcement activities are also not exceptions to this practice. In particular, one can easily see IPR border control provisions including goods export activities are stipulated in a very puzzling and confused manner.

We can take an example while Article 34 Decree 105/2006/ND-CP as revised in 2010 providing guidelines for the implementation of a number of articles of IP Law with respect to protection of intellectual property provides for IPR holder shall have the right, directly or via a representative, to file an application requesting inspection and supervision in order to detect import or export goods showing signs of infringing intellectual property rights, or to file a request for temporary cessation of customs clearance for imports or exports suspected of infringing intellectual property rights then under Decree 99/2013/ND-CP on sanctioning of administrative violations in industrial property (in replace with Decree 97/2010/ND-CP and older one Decree 106/2006/ND-CP on the same matter), for instance, no act of goods export are referred to in Article 11 subject to administrative violation fine regarding infringement of trademark.

Why does the above-indicated contradiction or conflict exist? Everything is derived from Section 51 TRIPs thereby Vietnam as well as WTO’s other members has no obligation to suspend customs clearance against the exportation of goods that is suspected of infringing IPR. According to Law on the Conclusion, Accession to and Implementation of Treaties of 2005, international treaties are considered as one of legal sources under Vietnam legal system whose legal effect must be always higher than any domestic laws but Constitution. Likewise, Section 5(2) IP Law maintains this rule by stating that where an international treaty of which the Socialist Republic of Vietnam is a member contains provisions different from those in this Law, such international treaty shall prevail. For the reason, act of exportation of goods, whether has amounted to trademark infringement, are excluded from the scope of any administrative, civil or criminal remedies including of course customs suspension.

Infringing Goods in Transit No Longer Subject to Clearance Suspension

Whether or not goods in transit are subject to requests for customs suspension were formerly a fiercely disputed topic amongst customs authorities, IPR holders and customs declarant. IPR holders or IP practitioners contended that no statutory provision in IP Law stated that goods in transit that is suspected to be infringing IPR or is accused as counterfeit goods are exceptions to possible application of administrative, civil or even criminal remedies. In particular, under Decree 99/2013/ND-CP, for instance, Article 11 thereof stipulates that the act of selling, offering, transporting, storing including transiting for sale of goods that have amounted to infringement of registered trademark shall be subject to confiscation and punishment. In the other hand, they further argued that there was no restriction or exception stated in the general rule for suspension of IPR infringement goods under Section 57 Customs Law of 2001.

Not until January 1, 2006 - the date of entry into force of Customs Law as amended in 2005, IPR infringing goods in transit, inter alia, became subjects that are no longer applicable for suspension procedure. This new change along with other extended exceptions continued appearing in Customs Law of 2014 coming into force as from January 1, 2015. Section 73(3) provides for that provisions on postponement of customs formalities for imported and exported goods showing signs of intellectual property right infringement as prescribed in this Law are not applicable to humanitarian aid goods, personal belongings, goods eligible for privileges and immunities, baggage, donations and gifts within the duty-free quota and transited goods.

Vietnam’s IPR border protection provisions excluding transited goods are in conformity with Paris Convention and TRIPs. Article 9(4) Paris Convention sets forth that the authorities shall not be bound to effect seizure of goods in transit while in accordance with Section 51 TRIPs, the scope of suspension of release by customs authorities does not extend to goods in transit when TRIPs acknowledges that it is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit. Furthermore, WIPO assumed that a major practical problem in the field of counterfeit goods is that goods enter a country but are not subjected to customs’ control because they are destined another country. Once out of customs’ control the goods may then be diverted thereby not only evading customs’ duties but also evading customs’ inspection for the purpose of preventing counterfeiting, drug trafficking, weapon smuggling and the like. Notwithstanding the serious practice, we shall acknowledge that IPRs are just territorial and the goods made in country A are transported through country B to enter country C. Accordingly,  under a circumstance the goods are genuine one for both countries A and C but are counterfeit for country B then the goods cannot be deemed as infringing ones in country B[2].

Conclusion

For the above reason, notwithstanding the existence of act of transiting goods mentioned in Article 11 Decree 99/2013/ND-CP on sanctioning of administrative violations in industrial property or the presence of act of export goods set out in Article 34 of Decree 105/2006/ND-CP as amended, both acts of transiting and exportation of infringing goods that are still regarded legal are practically not subjected to any customs suspension.


[1] Source: Inspectorate of Ministry of Science and Technology (2007)

[2] See the Enforcement Intellectual Property Right – A Case Book, 3rd Edition of 2012, WIPO Publication No. 791E, page 551

 

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