Tort Liability for Intellectual Property Infringement in Vietnam under the New Guidance of the Supreme People's Court

Attorney Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

Damages are usually the central claim in any civil lawsuits because it allows the right holder through a civil action to request a court to compel the infringing party to pay compensation for material and moral losses caused by intellectual property right infringements. Bross & Partners hereinbelow updates the new rule on determining the tort liability for damages issued by the Justice Council of the Supreme People's Court (“SPC”).

Liability Tort for Intellectual Property Infringement

Intellectual property right is a property right but also a civil right, so it must be respected, protected, and guaranteed according to the Constitution and laws. As a civil right, IP rights can be established based on many different bases, including the establishment on the ground of the results of labor, production, business, or the results of creation of those IP rights. Thus, non-contractual compensation is one of the legal remedies to protect civil rights characterizing by the fact that plaintiff and defendant are not bound by any contractual relationship.

In addition to the fact that the right holder can choose administrative measures, or even petition for prosecute criminal cases against the act of forging trademarks, forging geographical indications on a commercial scale, an IP holder may initiate a civil lawsuit against a tortfeasor to protect his/her civil rights – IP rights along with claim for damages.

According to the IP Law 2022, in addition to being able to claim for mental damages between 5 million and 50 million VND (220$-2,200$), a right holder (plaintiff) can select one of three grounds to ask for material losses paid by the infringer (defendant): (1) material damages caused to the plaintiff plus profits earned by the defendant; or (2) the price of licensing the right to use the IP rights; or (3) request the court to award fixing the compensation amount of not exceeding 500 million VND (22,000$). Apart from 2 types of damages above, plaintiff is also entitled to claim other reasonable expenses for the purpose of prevention or remedy the losses, namely attorney fees, expert opinion, temporary emergency measures, storage of goods and services, etc. For example, according to the first instance judgment no. 32/2015/KDTM-ST dated 17/07/2015, the Hanoi People's Court ruled that the defendant has to compensate the plaintiff 2,230,595,000 VND (appropriately $100,000,000) which includes: (a) loss of business opportunity: 431,595,000 VND; (b) illegal profits obtained by defendant by reason of using the sign SEXTRA confusingly similar with the registered trademark SEFTRA: 1,169,000,000 VND; and (c) lawyers’ fees: 630,000,000 VND.

SPC New Guidance on Determination for Tort Liability

The Civil Code 2015 (“Civil Code”) is a general law governing civil relations including intellectual property rights relations and compensation for non-contractual damage with respect to IP infringement. Article 584 of the Civil Code stipulates that those who commit acts of infringing upon the reputation, property, legitimate rights, interests of others that have caused damage, must compensate.

In order to interpret Article 584 of the Civil Code, on September 6, 2022, the Judicial Council of the Supreme People's Court issued Resolution No. 02/2022/NQ-HDTP (“Resolution 02”) providing for 3 factors that plaintiff is obliged to prove when determining the tort liability for compensation as a consequence of defendant’s IP infringement, specifically:

1.     Having committed acts of infringing upon the reputation, property, rights and other’s legitimate interests; and

2.     Damage incurred is material damage and/or mental damage; and

3.     There is a causal relationship between the damage occurred and IP infringement. The damage must be the inevitable result of the infringement and vice versa, the infringement is the cause of the damage.

Resolution 02 provides for that material damage must be actual material loss calculated in cash, including irreparable property loss, lost or reduced actual income, and other reasonable costs to prevent or repair damage. In case of claiming compensation for mental damage, plaintiff must prove that his/her moral loss is caused by infringing upon his/her reputation, other legitimate rights and interests.

Damages must be fully and timely awarded and guaranteed. Compensation in criminal or administrative cases must be carried out together with hearing those criminal and administrative cases. However, where there are no conditions to prove it and on the condition that it does not affect the settlement of criminal or administrative cases, damages can be separated and settled according to civil procedures.

Particularly for reputational damage, Resolution 02 instructs courts to award expenses for loss remedy, including those for recovering and removing items with content affecting the reputation of the victim; expenses for collecting documents and evidence; cost of rectification in the mass media. However, please keep in mind that other than the maximum compensation for a person whose reputation is infringed under Article 592.2 of the Civil Code is not more than 10 times the base salary, compensation for mental damage when the defendant infringes intellectual property right can be determined between 5 million and 50 million VND.

Regarding the statute of limitations, Resolution 02 sets out that if a tort damage occurred before or after January 1, 2017 (the effective date of the Civil Code), the statute of limitations for initiating a lawsuit to claim compensation for damages is 03 years from the date of knowing by plaintiff, or the date on which he/she knew that his/her legitimate rights and interests have been infringed.

Bross & Partners, an intellectual property company ranked First (Tier 1) by Legal 500 Asia Pacific, has litigation experience regarding tort liability for IP infringement before Vietnamese courts.

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