Current Situation of Protection and Enforcement of Intellectual Property Rights of Vietnamese enterprises in China

Current Situation of Protection and

Enforcement of Intellectual Property Rights of Vietnamese enterprises in China

Attorney Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

China is the largest trading partner of Vietnam with the total import-export turnover of Vietnam – China in 2020 reaching 133.1 billion USD, of which only export turnover, China is the second largest export market in Vietnam (following the US) with export turnover reaching 48.90 billion USD[1]. Despite many great advances in IP[2], China continues to be included in the list of countries of particular concern by the United States regarding the enforcement and protection of intellectual property rights (Priority Watch List) according to the publication in 2020 by USTR for trade secret infringement, production, sale, and export of counterfeit, contraband goods on e-commerce platforms.[3]

The following article provides information on the status of intellectual property protection and enforcement of Vietnamese enterprises in the Chinese market.

Quick statistics on the number of registration applications of Vietnamese enterprises in China

In the whole year of 2020, Vietnam only had 19 applications filed with the China Intellectual Property Office (CNIPA), including 11 patent applications, 3 utility solution applications and 5 design applications. The number of applications for registration of the three types of patents mentioned above by Vietnam is very small compared to the other two ASEAN countries, including Singapore with 1772 applications and Thailand with 146 applications respectively. Regarding the percentage of patents granted, in 2019 Vietnam was granted a total of 11 patents, including 1 patent, 3 utility solutions and 7 designs. In 2020, Vietnam will be granted 17 patents, including 4 patents, 6 utility solutions and 7 designs. Regarding trademarks, in 2019 Vietnam had 488 trademark registration applications in China, of which 313 were granted trademarks. In 2020, Vietnam has 345 registration applications, including 254 trademarks granted protection. For comparison, the respective numbers in 2020 of Thailand and Singapore are 2369 and 1919, 5103 and 5867.[4]

Some cases of loss of Vietnamese IP assets in China

For Vietnam, the loss of intellectual property assets abroad is a very serious problem because it can affect an entire economic sector or a country as in the case of the loss of a geographical indication (GI) in Buon Ma Thuot for coffee, Phu Quoc for fish sauce, it can block the opportunity for Vietnamese enterprises to reach other countries' markets such as the case of Duy Loi folding hammock (in Japan) and G7 Instant Coffee of China. Basically, there are only two main causes of loss of IP assets in China in particular and abroad in general, namely, IP rights are limited to the territory and IPR rights are established according to the first-to-file principle in most countries in the world. In short, there are three consequences of losing intellectual property abroad:

1.    Loss of intellectual property abroad means loss of market, loss of export opportunities to expand markets to increase revenue.

2.    Loss of intellectual property also means that Vietnamese enterprises have to face the risk of being sued, blocked exports at the border of the importing country and compensating for damages.

3.    The benefits derived from the Free Trade Agreements that Vietnam has recently signed such as the CPTPP, EVFTA and RCEP may become meaningless.

Vietnam's IP assets lost in China are mostly trademarks and geographical indications. Loss of trademarks and geographical indications can be simply understood as Chinese individuals/organizations quickly file for registration of trademarks/geographical indications in China without the permission. This phenomenon is called as bad faith. Bad faith is a widespread, persistent, and serious phenomenon that is happening in China. The CNIPA and Chinese courts have been working hard to take action against bad faith. For example, according to the CNIPA statistics in 2018, there were about 100,000 “abnormal applications” that were rejected during the examination process or refused during the opposition procedure. In 2019, there were 39,000 rejected trademark applications.

Due to the lack of full statistical data, below we can only temporarily list some IP loss cases in China related to Vietnam's trademarks, certification marks and geographical indications:

Comment on cases of loss of IP assets in China

(a)          In Scenario 1, Vietnam won the cancellation action against 2 Buon Ma Thuot trademarks[6] granted by the CNIPA in favor of Guangdong-based company due to a conflict with the geographical indication Buon Ma Thuot for coffee protected by Vietnam. When consulting the People's Committee of Dak Lak Province in 2011, we believed that there was a chance to successfully cancel these 2 bad faith trademarks based on 3 main legal bases: (i) the grant of protection of 2 dispute trademarks is a violation of Article 16[7] of China's Trademark Law that prevents the granting of protection of a mark constituting a geographical indication regardless of whether it is registered or unregistered in China; (ii) 2 bad faith trademarks infringing Article 15[8] prohibiting "representatives" or "agents" from registering trademarks without the holder's permission along with trial guides (at points 12 & 13) of the Chinese Supreme People’s Court (SPC) dated 20/04/2010; (iii) 2 bad faith trademarks infringing Article 31 stipulating that trademark registration must not cause damage to the prior rights of others, nor may they compete unfairly by registering someone else's trademark that has a good reputation. However, in a similar case, Vietnam unsuccessfully protested the Phu Quoc bad faith trademark, which was also considered an infringement of Vietnam’s first and most famous GI Phu Quoc. It is not clear what reasons for this disappointing result were, or whether the failure was based on the stipulation that GI Phu Quoc was granted protection in Vietnam on June 1, 2001, before the date of China joining WTO on 11/12/2001? We also have not been able to explain why Vietnam did not file a lawsuit against TRAB's decision to a competent court of China?[9]

(b)          Scenario 2 shows that the opponent copied the original design of the word "Moc Chau Milk" of the trademark holder and quickly filed for registration of this trademark with CNIPA. It is also worth noting that the opponent even filed an application for registration at CNIPA nearly 6 months earlier than the filing date of this trademark registration application by the trademark holder at VNIPO: May 17, 2016 compared to November 3, 2016.

(c)          Similar to Scenario 2 where the opponent copied the original design of the word "Moc Chau Milk", Scenario 3 is different in that the opponent takes advantage of the rule of sub-classification, namely sub-class (advertising services, business management) bearing the bad faith trademark (different from the sub-class of the bad faith Moc Chau trademark granted in Scenario 2), resulting in CNIPA granting protection to the bad faith trademark in Scenario 3 as usual.

(d)          Scenario 4 at first glance seems simple because CNIPA leaves out the earlier registered trademark G7 Coffee Trung Nguyen & device trademark which has obviously earlier priority date. However, in the cancellation proceeding at TRAB, the defendant counter-opposed the plaintiff's cancellation claim, arguing that the disputed trademark was not similar to the plaintiff's previous trademark and contended that his disputed trademark was protected as a “certain influence through long time use and publicity”. One of the key legal arguments that contributed to winning this case was Bross & Partners and Chinese lawyers tried to convince TRAB to reject these evidences as they are only copies based on strict standards of evidence and proceedings set forth by TRAB,[10] at the same time, Bross & Partners provided an affidavit with numerous evidence of widespread and sustained sales of the instant coffee bearing G7 Coffee trademark in China. Finally, TRAB issued a decision in favor of the plaintiff and invalidated the defendant's disputed trademark.

(e)          Scenario 5 shows that the opponent Guangxi Dongxing Fuhua Food Import & Export Co., Ltd filed 5 trademarks containing the term Ben Tre including Ba To Ben Tre and Ben Tre Que Huong for various classes in which the class containing confectionery in class 30. This scenario also shows that no Ben Tre trademark has been filed/registered by a Vietnamese entity, and on the other hand, even though Ben Tre is the name of a province of Vietnam, CNIPA still grants protection to the opponent.

(f)           Scenario 6 shows that even the giant Airbus must still accept defeat despite its efforts to sue against the decision to grant protection to the copycatted trademark Airbus designating confectionery products before Beijing Intermediate Court No. 1 as there is insufficient evidence to prove that Airbus obtained well-knownness prior to July 24, 1998 – the filing date by Shenyang Yongfeng Food Inc.

Bross & Partners, a Vietnam intellectual property law firm ranked Tier 1 in 2021 by Legal 500 Asia Pacific, has experience and capacity to resolve complex IP disputes regarding trademark, copyright, patent, plant variety and domain name in Vietnam and abroad.

Should you need any assistance, please contact: vinh@bross.vn; mobile: 0903 287 057; Zalo: +84903287057; Skype: vinh.bross; Wechat: Vinhbross2603.