By Mr. Le Quang Vinh, Senior Partner
Bross & Partners
It is striking that the first time in its development history of criminal jurisprudence and legislation, Vietnam accepted and passed the new inclusion of corporate criminal liability regime in the Penal Code of 2015. Although only 31 out of 314 offences subject to corporate criminal liability and amongst these 31 crimes there are 22 belonging to group of perpetrating economic management order including offences for infringing upon copyright, related right (Section 225) and upon industrial property right (Section 226) and 9 committing the environment-related crimes. This article is intended to update and analyze newly-criminalized legal responsibility applicable for corporate but merely relating to offences for contravening copyright, related right and industrial property right.
Corporate Criminal Liability – a Strikingly Legislative Progress
According to the National Assembly’s Resolution No. 41/2017/QH14 of June 20, 2017, starting from January 1, 2018, the Penal Code No. 100/2015/QH13 as amended, supplemented some articles under Law No. 12/2017/QH14 (herein called as the 2015 Penal Code) will come into effect, whereby some noticeable rules thereof comprise:
(a) all articles and provisions of the 2015 Penal Code applicable for procedures of instituting, investigating, prosecuting and adjudicating criminal cases and executing criminal judgments for offenders whose conviction take place since 0:00 of January 1, 2018;
(b) Where an offence occurs prior to 0:00 of January 1, 2018 after which would have been either found, inquired into, prosecuted or judged while there is any article of the 2015 Penal Code provides for omission of a crime, penalty, circumstance aggravating penal liability or sets out a less severe penalty, new circumstance extenuating penal responsibility or penalty exemption, etc. in favor of the offenders then these articles shall be applied accordingly;
(c) However, 31 articles relating to corporation criminal liability in the 2015 Penal Code shall not be apply to the crimes committed by corporation that had taken place before 0:00 of January 1, 2018
In parallel with the principle for individual or natural person criminal liability that has been long-lastingly existing in Vietnam’s criminal policy and legislation over past decades, the 2015 Penal Code, as the first time in its legislature history, incorporated criminal liability regime for corporations into it. Kindly note that the term corporations or its variants such as companies, entities, legal persons that are construed in a narrow meaning shall be commercial ones that seems to be for-profit ones only other than all non-profit corporations or organizations whether is state-run or private-run. It is also crucial that a corporation liable to criminal responsibility would not exclude the possibility that individual working for such corporation shall be criminally liable. It is likely that Article 75 of the 2015 Penal Code requiring the satisfaction of the following 4 conditions as the bases for charging criminal liability for a corporate that resembles other countries, namely US, France, UK, Japan where corporation criminal liability is available, is originated from the doctrine of identification evolved in the old English law, by which this doctrine, also known as the directing mind theory, states the minds, collectively and individually, of the person or persons who control and direct the corporation are in law, the mind of the corporation itself: (a) the conviction committed on behalf of such corporate, (b) the offence made for the sake of such corporate, (c) the crime committed on the basis of direction, instruction or approval of such corporate, and (d) the statute of limitation for penal liability examination does not expire.
Criminal Liability for Infringing Upon Copyright, Related Right
Unlike the basic element of a sub-section 170a(1) offence infringing copyright, related right under the 1999 Penal Code as amended in 2009 (the 1999 Penal Code as revised), this crime set out in section 225 of the 2015 Penal Code of which sub-section 225(1) retains the precondition “on a commercial scale” but supplements other quantitative thresholds that is expected to remove the persistent and lasting obstacle preventing competent bodies from criminal charge during nearly past 10 years. In particular, those who without permission of copyright or related copyright holders, deliberately infringe in a commercial scale upon copyright or related rights currently protected in Vietnam by performance of either reproducing works, phonograms or video recordings, or distributing the public copies of works, phonograms or video recordings, have gained illicit profit of between fifty million dong and below three hundred million dong or have caused damage to the holders from one hundred million dong to below five hundred million dong or their infringing commodities valued a range of one hundred million dong to below five hundred million dong shall be imposed a fine of between fifty million and three hundred million dong or subject to non-custodial reform for up to three years
By sub-section 225(4), corporates by itself shall be charged criminally by a fine of between three hundred million dong and one billion dong only where one of the above acts as described to individual is committed by the corporations and such similar act must have been already administratively sanctioned before or have already been charged for this crime but not yet entitled to criminal record remission and repeat the violation. Where such acts made by corporates fall into sub-section 225(2), namely in an organized manner, committed more than twice or infringing goods valued more than five hundred million dong, the corporates shall be fined up to three billion dong, or suspended doing business in a definite period of between six months and two years, or banned practicing in some activities.
Offence for Infringing Upon Industrial Property Right
In terms of individual criminal liability, like sub-section 171 the 1999 Penal Code as revised, although the basic constitution of sub-section 226(1) keeps unchanged two subjects of crime being registered trademarks and geographical indications, elements of crime have been extended and added, particularly infringing goods subject to criminal responsibility shall be the ones bearing counterfeit trademarks and geographical indications. It seems that there have been a link between the penal code and intellectual property law since the legal term TRIPs-based counterfeit trademark goods transposed in Section 213 IP Law 2005 as revised providing for intellectual property counterfeit goods comprise goods bearing counterfeit trademarks and goods bearing counterfeit geographical indications wherein counterfeit mark goods means goods or their packages bearing a mark or sign which is identical with or indistinguishable from a mark or geographical indication currently protected for those very goods, without permission from the mark owner or organization managing the geographical indication. However, these ingredients are not enough for the purpose of criminal threshold except where it is proven that offenders infringed on a commercial scale or have gained illicit profit of between one hundred million dong and below three hundred million dong or have caused damage to the holders from two hundred million dong to below five hundred million dong or their infringing goods worth a range of two hundred million dong to below five hundred million dong shall be imposed a fine of between fifty million and five hundred million dong or subject to non-custodial reform for up to three years
Like criminal liability imposed on natural person by section 226(1), prerequisites for charging criminally to a corporation are: (a) committed any act stipulated in section 226(1) above on a commercial scale, or (b) has gained illicit profit of between two hundred million dong and below three hundred million dong, or (c) has caused damage to the holders from three hundred million dong to below five hundred million dong, or (d) its infringing goods worth in a range of three hundred million dong to below five hundred million dong, or (e) has gained illicit profit of between one hundred million dong and below two hundred million dong or has caused damage to the holders from one hundred million dong to below three hundred million dong or its infringing goods worth in a range of one hundred million dong to below three hundred million dong but has been already administratively sanctioned for this type of act or has been already charged for this crime but not yet entitled to criminal record remission and repeat the violation, shall be imposed a fine of between five hundred million dong and two billion dong. And where the corporate committed sub-section 226(2), namely in an organized manner, committed more than twice or infringing goods valued more than five hundred million dong, the corporates shall be fined between two billion dong and and five billion dong, or suspended doing business in a definite period of between six months and two years, or banned practicing in some activities.
It is expected that there would be likely more and more infringers of intellectual property rights, however natural person or legal person, whose acts and extent of infringement upon having been put into explicit thresholds of criminal liability supplementing the so-called “on a commercial scale” causing the standstill status for IPR-related criminal prosecution and adjudication during last nearly 10 years, shall be promptly punished by strict fine or jailed up to 3 years.