Vietnam has demonstrated remarkable determination in establishing and enforcing a legal framework to protect IP rights and prevent unfair competition individually.
Most competition regimes establish general rules designed to deter any act of competition that is contrary to honest practices. Article 1(2) of the Paris Convention for the Protection of Industrial Property stipulates that: “the protection of industrial property has as its object patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition.”
According to Article 10 of the Paris Convention, contracting parties are bound to put in place effective safeguards against unfair competition, which is defined as any act of competition that is contrary to honest practices in industrial or commercial matters (eg, all acts that create confusion, false allegations in the course of trade, indications or allegations whose use in the course of trade is liable to mislead the public as to the nature, characteristics of the goods).
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) includes no additional definitions or rules, apart from its reaffirmation in Article 2 that: “in respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention.”
Approach to unfair competition under old regime
The phrase ‘unfair competition’ first appeared in Article 5.1(b) of the Decree on Administrative Violations in the Field of Industrial Property (Decree 12/1999/ND-CP), which states that “carrying out the procedures for establishing or exercising the industrial property rights for the purposes of unfair competition, monopoly, illegal manipulation of market, abolishment of industrial property objects, limitation or restriction of scope of protection of industrial property rights of other persons, taking advantage or diminishing the commercial goodwill of other business establishments” may be subject to a warning or a fine of between D200,000 and D1 million.
However, it was not until October 3 2000 that specific rules on unfair competition were officially promulgated by the Decree on the Protection of Industrial Property Rights, Business Secrets, Geographical Indications and Trade Names, and the Protection of the Right against Industrial Property-Related Unfair Competition (Decree 54/2000/ND-CP).
According to Article 24, two types of act are subject to the decree’s provisions on unfair competition related to industrial property. The first is the use of commercial indications to create confusion and
misleading impressions about business subjects, business establishments, business activities, goods and/or services. The second is the appropriation and use of others’ investments, without their permission.
According to Decree 54, organisations or individuals that suffer damage as the result of an act of unfair competition must provide evidence that the allegedly damaging party, for example, took advantage of or damaged the prestige and reputation of other producers, or created confusion in the minds of consumers about the origins, production methods, properties, etc.
One of the most famous cases under Decree 54/2000/ND-CP was a lawsuit between Hungarian pharmaceutical manufacturer Richter Gedeon Nyrt and two Vietnamese pharmaceutical companies,
Cong ty TNHH duoc pham Trung Nam and Cong ty duoc va vat tu y te Binh Duong. In its application to initiate legal proceedings in September 2004 (as amended on April 4 2005), submitted to the Ho Chi Minh City People’s Court, Richter Gedeon Nyrt – holder of the mark POSTINOR in Class 05, protected in Vietnam, among other countries, under International Registration 441291, dated October 19 1978 – claimed that the defendants’ use of designs, labels and decorative packaging on their Posinight-branded contraceptive medicine was confusingly similar to those on its POSINOR-branded contraceptive medicine, and that this constituted an act of unfair competition. The plaintiff also requested that the court order the defendants to pay compensation of $85,348.60 for damages caused and $9,496.59 in attorneys’ fees, as well as to remove from the market and destroy all infringing packages and publish an apology in the newspapers.
In its first-instance judgment of March 29 2006 (275/2006/DSST), the Ho Chi Minh City People’s Court partially accepted the plaintiff’s request for damages and ordered the defendants to pay compensation in Vietnamese dongs in an amount equivalent to $46,969.68, to cease using the infringing packaging and to remove from the market and destroy all infringing packaging already in circulation.
Upon appeal by the defendants, the Appellate Bench in Ho Chi Minh City, in its appellate civil judgment of January 4 2006 (316/2006/DSPT), amended this first-instance judgment and dismissed the plaintiff’s request for damages. Then on September 29 2009 the Supreme Court’s Council of Justices annulled both previous judgments in a judicial review, finding that the relevant laws and applications had been wrongly applied by both the first-instance and appellate courts.
The Supreme Court also noted that, in its January 8 2005 official letter in reply to the court’s request for assessment, the National Office of Intellectual Property – which had previously granted registrations for both the POSTINOR and POSINIGHT marks – confirmed that POSINIGHT was not confusingly similar to POSTINOR. However, it went on to state that the expression of design and colours on POSINIGHT’s packaging did constitute an act of unfair competition. In respect of the applicable laws and regulations, the Supreme Court’s judicial review decision reveals that even though no penalties against administrative violations for acts of unfair competition were granted at that time, there was no ruling that the plaintiff’s request for compensation for damages was groundless. For that reason, the Supreme Court ordered the Ho Chi Minh City People’s Court to re-hear the case.
New legal regime for unfair competition
It was not until 2004 that Vietnam issued its Competition Law, which came into effect on July 1 2005. The law provides a comprehensive definition of ‘unfair competition’, describing it thus: “unfair competitive practices means competitive practices by an enterprise during the business process which are contrary to general standards of business ethics and which cause or may cause damage to the interests of the State and/or to the legitimate rights and interests of other enterprises or of consumers.” Among nine particular acts under Article 39 that can be regarded as unfair competition, only the act of using misleading indications relates purely to industrial property.
The IP Law was duly passed by the Vietnamese National Assembly on November 29 2005 and came into effect on July 1 2006. This law sets out detailed provisions on unfair competition, but – unlike the broad provisions established by the Competition Law – limits its treatment of unfair competition to acts which affect IP rights. In particular, Article 130 provides for four types of act deemed to be acts of unfair competition in an IP context:
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Using marks protected in a country which is a contracting party to a treaty to which Vietnam is a signatory and under which representatives or agents of owners of such marks are prohibited from using such marks, if users are representatives or agents of the rights holders and such use is neither consented to by the rights holders nor justified; or
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Registering or possessing the right to use or using domain names that are identical or confusingly similar to protected trade names or marks of others, or using geographical indications without an appropriate licence, for the purpose of possessing such domain name, or benefiting from or prejudicing the reputation and popularity of the respective mark, trade name or geographical indication.
In comparison to the previous regime, the provisions on IP-related unfair competition introduced by the Competition Law and the IP Law represent a considerable step forward, establishing a comprehensive legal framework for resolving disputes involving acts of unfair competition. In particular, the regime is characterised by the following:
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Acts of unfair competition are clearly listed and defined – for example, the use of commercial indications to create confusion as to business entities or as to the origin, production methods of goods/services. In this regard, ‘commercial indications’ are “signs and information serving as guidelines to trading of goods or services including marks, trade names, business symbols, business slogans, geographical indications, designs of packages and/or labels of goods”,
- Unlike the Paris Convention or TRIPs, as well as the national laws of many other countries, the IP Law states that “registering or possessing the right to use or using domain names confusingly similar or identical with other protected trademarks, trade names or geographical indications IS considered unfair competition” – which was unexpected progress.
Domain names and cybersquatters
Samsung Electronics Co, Ltd (Korea) v Duong Hong Minh– a 2010 domain name dispute relating to the possession and use of the domain names ‘samsungmobile.com.vn’ and ‘samsungmobile.vn’, which was heard by the Hanoi People’s Court – is considered a milestone in the case law in this area. In its June 2 2010 first-instance judgment, the court ruled that the domain name ‘samsungmobile.com.vn’ should be recovered and a priority right to register it should be granted to Samsung. However, the court dismissed a request to recover the domain name ‘samsungmobile.vn’. Upon appeal against this partial dismissal of Samsung’s claim, the Supreme Court’s Appellate Bench in Hanoi ordered the recovery of the second domain name ‘samsungmobile.vn’ and granted a priority right to Samsung to register that domain name.
This judgment demonstrates that the judicial system has generated confidence among investors, organisations and individuals, giving genuine owners of trademarks confidence that they can stop cybersquatters from registering, trafficking in or using domain names with the bad-faith intention of profiting from the goodwill of trademarks.
Conclusion
With the above-mentioned court judgments, it is believed that the use of civil measures through the judicial system will be demonstrably more balanced when compared to the administrative remedies regularly chosen by rights holders.
"This article first appeared on the website http://www.worldtrademarkreview.com/. To view the issue in full, please go to http://www.worldtrademarkreview.com/Magazine/Issue/48/Country-correspondents/Vietnam-Bross-Partners"
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