A Quick Guide to Handle Counterfeit Goods and IP Infringement in Vietnam

By Elite Law Firm

During a segment on Vietnam Television’s Business and Law program, Mr. Nguyen Tran Tuyen provided valuable insights into the current state, challenges, and potential legal remedies surrounding counterfeit goods and intellectual property (IP) infringement within Vietnam’s e-commerce platforms. To facilitate understanding, we summarize the key takeaways from the program below.

What legal grounds determine IP rights infringement?

According to the provisions of Article 129 in the Vietnam IP Law, any person or organization that uses a mark that is identical or confusingly similar to a protected trademark for goods or services that are identical or similar to goods and/or services protected under that trademark without the permission of the trademark owner is considered a trademark infringement. Simultaneously, Article 72 of Decree 65/2023, guiding the implementation of this provision of the Vietnam IP Law, further stipulates that an act meeting all the following 4 grounds will be considered trademark infringement:

    1. The subject matter under consideration falls within the scope of another person’s protected trademark;
    2. There are elements of trademark infringement in the subject under consideration;
    3. The person who commits the act under consideration is not the trademark owner and does not have the right to use the trademark as prescribed;
    4. The act under consideration occurs in Vietnam. 

The act is also considered to occur in Vietnam if it takes place on the Internet and is conducted on a website with a Vietnamese domain name or with a display language in Vietnamese.

How do you assess the nature and extent of counterfeit brand products on e-commerce platforms?

From the perspective of the trademark owner: the prevalence of counterfeit goods presents a double-edged sword. On the one hand, it could indicate positive commercial aspects such as:

  • Strong brand recognition and consumer trust;
  • Significant market share and demand for the genuine product.

However, the negative consequences are far-reaching and can encompass the following:

  • Reduced revenue and profitability: Counterfeit sales directly eat into legitimate profits;
  • Market share erosion and loss: Counterfeits can displace genuine products, diminishing market share;
  • Consumer boycotts and reputational damage: Consumers may boycott the genuine product due to association with counterfeits, tarnishing the brand image;
  • Potential legal risks and financial liabilities: Failure to adequately address counterfeiting can invite legal action from aggrieved parties;
  • Business instability and insolvency: The combined impact of these factors can threaten the long-term viability of the enterprise.

Therefore, trademark owners whose products are subject to counterfeiting should not remain passive. They must take timely, comprehensive, and assertive legal action to combat counterfeit goods. This proactive approach protects not only their business interests but also safeguards the interests of consumers and contributes to a healthy and lawful market environment.

From the perspective of consumers: they should not compromise or tolerate this illegal phenomenon for the sake of short-term gains by continuing to purchase the products. Instead, consumers should act in the long-term interests of themselves and society by condemning, boycotting, and refusing to purchase counterfeit goods and goods that infringe intellectual property rights.

What are the legal consequences for producing and distributing counterfeit goods? 

Within the Vietnamese legal framework, acts of infringement upon protected trademarks can be addressed through various measures, depending on the specific circumstances. These measures fall into three primary categories: administrative, civil, and criminal.

  1. Administrative Measures:

As stipulated in Decree 99/2013/ND-CP and its subsequent amendment, Decree 126/2021/ND-CP, administrative actions address instances of selling, offering, transporting, storing, or displaying counterfeit goods infringing upon another’s protected trademark. Penalties under this category range from warnings to fines, with individuals facing a maximum fine of VND 250 million and organizations facing a maximum fine of VND 500 million.

  1. Civil Measures: 

Trademark owners whose rights have been infringed have the right to initiate civil lawsuits against the offending individuals or organizations. Such lawsuits may seek a variety of remedies, including:

  • Compelling the termination of infringing acts;
  • Compelling public apology or rectifications; 
  • Compelling the performance of civil obligations;
  • Compelling the payment of damages;
  • Compelling destruction, distribution, or use for non-commercial purposes of goods, raw materials, materials, and means used largely for the production or trading of intellectual property right-infringing goods, provided that such destruction, distribution, or use does not affect the exploitation of rights by intellectual property right holder.

It is important to note that civil measures can be pursued even if the infringing activities have already been addressed through administrative or criminal measures. The procedures for seeking civil remedies are governed by the provisions of the Vietnamese Civil Procedure Code.

  1. Criminal Measures:

Under Article 226 of the 2015 Vietnamese Criminal Code, as amended in 2017, intentional infringement of protected trademarks in Vietnam constitutes a criminal offense. Penalties for such offenses can include:

  • Anyone who intentionally infringes on industrial property rights to a trademark that is protected in Vietnam may be fined up to 1 billion VND be subject to non-custodial reform for up to 3 years, or be fined. imprisonment from 6 months to 3 years;
  • Organizations/legal entities that violate trademarks, may be subject to a maximum fine of up to 5 billion VND or temporary suspension of business operations from 6 months to 2 years according to regulations.

Are there any limitations in the legal provisions as well as enforcement that make the situation of counterfeit goods still so complicated?

In my opinion, the current legal regulations on handling counterfeit goods in particular, and sanctions to enforce and protect our IP rights still have some main limitations that need to be overcome as follows:

  • Administrative penalties for IPR infringement are relatively low. The maximum fine for individuals is VND 250 million (approximately USD 10,000). The maximum fine for legal entities is VND 500 million (approximately USD 20,000). In the future, it is necessary to increase the level of monetary penalties to deter and punish IPR infringement.
  • It is difficult to collect evidence to prove actual damages for civil lawsuits seeking compensation for IPR infringement. This includes evidence such as VAT invoices and valuations of infringing goods.
  • The procedures for enforcing court judgments and decisions are complex, time-consuming, and not very effective.
  • There are currently 05 government agencies with the authority to handle IPR infringement: the Science and Technology Inspectorate, the Information and Communication Inspectorate, the Market Management Agency, Customs, the Police, the People’s Committees (at the provincial and district levels), and the Court. This can make it difficult for businesses to choose the appropriate government agency to handle an IPR infringement case.
  • There is no specialized Intellectual Property Court to hear IPR infringement cases; this can lead to delays in the adjudication of cases and a lack of quality in the judgments.
  • Only two agencies provide expert opinions on IPR infringement assessment: the Industrial Property Assessment Agency and the Copyright Assessment Agency. This can lead to delays in the adjudication of cases and a lack of expert opinions.

Do you have any suggestions for improving legal regulations as well as enforcement to help businesses better protect their IP rights against counterfeit goods?

  • The government
    • The government should further improve the legal framework for the enforcement of intellectual property rights (IPR) to ensure that IPR infringement is dealt with effectively, thoroughly, and promptly. This would create a fair and competitive business environment;
    • Increase the penalties for administrative violations of IPR, such as fines, to a level that is sufficient to deter and prevent infringement;
    • Amend the regulations on evidence to prove actual damages to make them more practical and feasible for IPR holders;
    • Improve the efficiency of court judgments enforcement;
    • Consolidate the authority to handle IPR infringement into a single agency or court;
    • Establish a specialized Intellectual Property Court to hear IPR disputes and infringement cases;
    • Increase the number of industrial property experts, copyright experts, and agencies that provide expert opinions on IPR infringement.
  • IPR Holders
    • IPR holders, such as businesses and individuals, should take a proactive and strategic approach to combating counterfeit goods and other IPR infringements. This should be a key part of their business operations to protect their rights and interests, as well as the reputation of their products and services.
    • IPR holders should also seek professional advice from experts before taking any action to enforce their IPR.
  • Consumers
    • Consumers should not compromise or tolerate IPR infringement for the sake of short-term gains. Instead, they should act in the long-term interests of themselves and society by condemning, boycotting, and refusing to purchase counterfeit goods and other IPR-infringing products.

How do businesses respond to the situation of counterfeit goods?

In my opinion, businesses should pay attention to the following issues to effectively solve this problem:

  • Awareness: Facing the situation of counterfeit goods, Vietnamese Businesses need to consider the enforcement of IP rights protection as part of the business process (Trading products, registering for protection, seeking infringements, investigating infringements, enforcement). Businesses need to identify the handling of counterfeit goods as an important part of business activities to protect the rights and interests and reputation of themselves and their customers;
  • Proactively seek & investigate IP infringements of competitors.  Businesses should use professional investigation services if there is no such department in the enterprise.
  • Businesses need to conduct: 
    • Look up the ability to register, the possibility of being infringed with the rights of patent, industrial design, trademark, or copyright of others before submitting an application;
    • Apply for protection of their intellectual property) as soon as possible at the Vietnam IP office, and Vietnam Copyright office before carrying out production and business activities, bringing products and services to the market. 
  • Businesses should also use a professional service on IP representation to deploy effectively and economically if there is no dedicated department in this issue in the enterprise.

I would like to encourage businesses to leverage their IP rights/property protection regulations as a competitive tool, an effective way to contribute to business success!

 

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