The State of IP Infringement and Vietnam’s Efforts

to Boost Efficiency in Enforcement of Intellectual Property Rights

Attorney Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

In general, all IP subjects such as inventions, designs, trademarks, geographical indications, business secrets, copyrights, and plant varieties are being recognized in the Vietnamese IP Law 2022.[1] However, IPR enforcement in Vietnam is much limited, which is probably mainly due to the fact that Vietnam does not yet have a strong enough judicial system to protect intellectual property rights by civil and criminal measures.[2] The following article provides an overview of the current state of IP infringement and Vietnam’s efforts to improve the efficiency in IP enforcement in Vietnam.

Current State of IP Infringement in Vietnam

According to the 2022 special report 301 released by the Office of the United States Trade Representative (USTR), Vietnam remains on the Watch List in 2022, which was the result of annual review of the state of IP protection and enforcement in U.S. trading partners around the world. The report considered that Vietnam continues to rely heavily on administrative enforcement actions, which have consistently failed to deter widespread counterfeiting and piracy.[3]

IP Infringement in Vietnam is currently at an alarming degree. A report titled "Promoting and Protecting Intellectual Property in Vietnam" issued at the initiative of the International Chamber of Commerce ICC (“ICC Bascap”) in cooperation with the Vietnam Chamber of Commerce and industry (VCCI) and Vietnam International Arbitration Center (VIAC) show three notable aspects: (a) the status of counterfeit and pirated goods at an alarming rate contributes positively to the underground economy. The underground economy (unobserved economy) is valued at tens of billions of dollars, leaving the state without tax revenue and consumers suffering from health risks in which counterfeit goods appear in all areas from textiles, cosmetics, pharmaceuticals, spirits, food and software; (b) intruders are increasingly sophisticated because they use sophisticated counterfeiting technology to disable detection, with a focus on faking big brands; and (c) IPR infringement is growing rapidly and is popular in the internet environment focusing on pirated websites, distributing, distributing copyrighted or copyrighted products, cracking, smuggling, livestreaming.[4]

Regarding the copyright field, Mr. Gary Gan - Director of Asia-Pacific Compliance Program of Software Alliance (BSA) said: “the rate of installing non-copyrighted software in Vietnam at the highest among the APAC region is 78%, which is 4/5 cases. By comparison, the best performing country in APAC region is New Zealand with 18% and the leading country in the world is USA with 17%”.[5]

Most of the current infringements of intellectual property rights in Vietnam are handled by administrative measures. According to the General Department of Market Management under the Ministry of Industry and Trade of Vietnam, although the laws and regulations have relevant statutory provisions on enforcement of intellectual property rights by civil, criminal, and administrative measures, the IP enforcement in practice is not really effective because administrative measures are applied mainly. Moreover, even the administrative measures are applied, its effectiveness is relatively limited due to the participation of many forces such as Customs, specialized Inspectors, Market Management and Economic Police but it cannot clearly identify which agency is the major. [6]

Resolving non-criminal intellectual property cases or disputes in Vietnam's court system is rarely used by rights holders. Calculated after the effective date of the IP Law (from July 1, 2006), according to the statistics of the Supreme People's Court from July 1, 2006 to June 22, 2009, the entire system of court only accepted 108 cases of intellectual property dispute (of which the majority were copyright disputes with 90 cases; disputes of industrial property rights accounted for 10 cases; disputes over contracts for use of works accounted for 5 cases; disputes over technology transfer contracts accounting for 3 cases). Assuming that only the Supreme Court of Appeal in Hanoi was recalled, from July 1, 2006 up to now, the Supreme Court of Appeal in Hanoi has only accepted 7 cases, but in fact only is 5 cases, because there are 2 cases to hear appellate for the 2nd time. The number of cases is still too limited shows that IP rights holders are still afraid of initiating a lawsuit to the court but instead, they choose the handling of violations by administrative measures. The fact in this period comes from (i) the asymmetry of the substantive law on copyright and industrial property rights, (ii) the inadequacies of the procedural law for resolving disputes about intellectual property rights, and (iii) the incompetence as to expertise capacity of the judges, as a result, the court has not really become a convincing and preferred settlement channel for IP disputes.[7]

For IP infringement cases having criminal signs, ie. offense of manufacturing, trading in counterfeit goods, crimes of infringing upon industrial property rights, crimes of infringing copyright, related rights, according to a report of the General Department of Police under Ministry of Public Security in September 2007 for the period from 2002 to 2007, there were only 1092 cases involving practitioners but only 162 cases were prosecuted for criminal cases. However, among these criminal cases, most of the procedure-conducting agencies only prosecuted the crime of producing and trading in counterfeit goods instead of infringing upon industrial property rights or infringing copyright. Until September 2008, there were only a few criminal prosecutions under Article 171 of the 1999 Penal Code for industrial property rights infringement.[8]

Vietnam’s Endeavor to Boost Effectiveness in IP Enforcement

Recently, Vietnam has shown its endeavors to improve the efficiency of IP enforcement. Firstly, the highly appreciated legislative highlight is that Vietnam for the first time holds commercial legal entities liable for criminal responsibility when they are found guilty of Article 225 copyright infringement or Article 226 industrial property infringement on a commercial scale under the Penal Code 2015 as amended. In practice, up to now, there have been 2 cases of counterfeiting goods wherein the commercial entities were prosecuted, investigated, and heard by the courts across the country.[9]

Secondly, Vietnam IP Law 2022 first time holds an ISP (intermediary service providers) or an OSP (online service providers) responsible for copyright infringement made by users. That means OSPs will be not automatically exempt from liability or enjoys “safe harbor” provision if they do not comply with conditional immunity provisions. This new provision would significantly impact on dealing with piracy and trade in counterfeit goods on the internet.[10] Thirdly, customs authority is authorized to proactively detect and suspend customs clearance if exported/imported goods are counterfeit.

In order to increase effectiveness in preventing the production and sale of counterfeit trademark goods, Vietnam amended Clause 1, Article 155 and Clause 8, Article 157 of the Criminal Procedure Code 2015 so that the investigation agency can may prosecute criminal cases for industrial property rights infringement without the victim's request.[11]

Resolving an intellectual property case at a civil court or economic court may also bring some significant material benefits to the right holder, especially the compensation for damages that inclines to increase. The judicial view and decision on the amount of damages ruled by the courts in the period after 2012 are noteworthy with the court's acceptance of a claim asking the defendant to return reasonable cost of retaining lawyers at a record of up to VND 630 million (roughly US$29,000). By 2015, there was a court accepting claims for actual damages up to over VND 2.2 billion, which the plaintiffs proved to exist in all 3 forms: losses of business opportunities, illegal profits, and the cost of hiring a lawyer but then afterwards the appellate court dismissed all the illegal profits claimed over VND 1.1 billion (US$ 450,000) and only accepting a small part of the loss of business opportunity is VND 22 million compared to the originally claimed number of over VND 430 million.[12]

In a more holistic view, Vietnam has been showing a certain effort in preventing smuggling, trade frauds and counterfeit goods by the Prime Minister's issuance of Decision 389 from 2014 which is referred to as the National Steering Committee 389 (“Ban chỉ đạo 389”) headed by a Deputy Prime Minister. Through the coordination and coordination between the law enforcement forces of different ministries and branches, the National Steering Committee 389 has achieved some initial successes, such as dealing with 223,262 cases within only 9 months of 2016 with a collection budget of VND 225,563 billion and a total of 1,561 cases involving 1,863 violators were prosecuted, most of which involved in the production and trading of counterfeit goods.[13]

Bross & Partners, an intellectual property company ranked Tier 1 in 3 consecutive years (2020-2022) by Legal 500 Asia Pacific, has practical experience in resolving complicated IP disputes including trademarks, copyrights, patents, plant varieties.

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