Vietnam Moves To Fill IP System Gaps

Vietnam has only been developing a modern intellectual property law system for the last 19 years. Over this period. a fundamental legal basis for protection of industrial property has been introduced to cover inventions. utility solutions, industrial designs, trade marks and appellations of origin. The system, however, has not touched upon the protection of trade secrets or on unfair competition measures.

Despite much attention from legislators, the Vietnamese IP law system is still developing and has numerous loop-holes. It does not yet meet the commercial requirements of a system which can genuinely stimulate intellectual creation nor the demands for fair competition as laid out in the World Trade Organization (WTO) agreement on trade--related intellectual property (TRIPs). In a series of attempts to fill these gaps, legislation is pending to provide for protection of well-known trade marks, geographical indications, trade names, integrated circuit designs and plant varieties. This article first lists the new laws issued in last year and under consideration and then assesses the gap-filling revisions to existing laws which are also under consideration.

On March 6, 1999, the Vietnam Government issued Decree No 12/1999-CP providing Penalties for Administrative Violations in the Field of Industrial Property, which took effect on March 31, 999 and replaced Article 15(1)(a) and (3)(a) of Decree No. 57/CP dated May 31, 1997.

Decree No. 12/CP provides administrative penalties for violations in the field of IP, particularly, penalties for infringing acts in the following main groups:

i) Penalties for infringements of procedures for establishing and asserting IPR and procedures for granting an IP service license;

ii) Penalties for infringements of provisions on indications regarding protection of IPR;

iii) Penalties for infringement of provisions on IP obligations;

iv) Penalties for infringements of provisions on IP protection;

v) Penalties for infringements of provisions concerning IP services.

On December 21, 1999 National Assembly passed a new Criminal Code containing five articles providing Penalties for crimes in the field of Industrial Property, which replaced the Criminal Code 1985 and its successive amendments 1989, 1991, and 1997 (the Old Code) and took effect on July 1, 2000.

The new Criminal Code, amongst others, provides specifically five following IP related crimes.

Article 156. The crime of making or trading in fake goods. The penalty for this crime is from 6 months to 2 years in prison, in especially serious cases is from 3 to 10 years and in extremely serious cases is from 7 to 15 years in prison.

Article 157. The crime of making or trading in fake goods, which are food products or medicine. The penalty for this crime is from 2 years to 7 years in prison, in especially serious cases is from 5 to 12 years and in extremely serious cases is 20 years, life in prison or death penalty.

Article 158. The crime of making or trading in fake goods, which are foods for animals, fertilizers, veterinary preparations or insecticides. The penalty for this crime is a fine ranging from DVN 10 millions to 100 millions or from 1 years to 5 years in prison, in especially serious cases is from 3 to 10 years and in extremely serious cases is from 7 to 15 years in prison.

Article 170. The crime of violating regulations on granting protection of IPR. The penalty for this crime is re-education without detention up to 3 years or from 6 months to 3 years in prison, in especially serious cases is from 2 to 7 in prison.

Article 171. The crime of infringement of IPR. The penalty for this crime is from DVN 20 millions to 200 millions or re-education without detention up to 2 years, in especially serious cases is from 6 months to 3 years in prison.

Fake goods under the new Code refer to both goods of quality under the implied and counterfeit goods.

As to infringement of IPR, the new Code only deals with such repeated offences, involving serious consequences, leaving others for administrative or civil settlements.

The new code has replaced Article 167 on counterfeiting of the old Law with four (4) Articles. Among them are three (3) articles on crimes of making or trading in fake goods and one (1) article on crime of infringement of other IPR. Moreover, depending on levels of danger for society (e.g. human health, food safety, harm of public interest and etc.), the Code defines penalty limits for each crime. It is a new approach of the Law-Makers to an issue of identifying the variation or complication of such a crime. Besides, a new crime on granting IPR has been added to raise the responsibility of the officials in their duties.

Introduction of the New Laws is called for the booming of economy in Vietnam. Nowadays, counterfeiting and unfair competition are major violations in the area of IP in Vietnam. Counterfeiting, especially, has been a growing problem in Vietnam and many brand owners are constantly engaged in hit and run skirmishes with purveyors of counterfeit goods. Counterfeit goods sap the IP value of the trademark and trading in counterfeit goods and copying of registered marks as a fraudulent practice in commerce. Both consumers and brand owners of genuine products suffer losses due to the situation.

Therefore, there must be a reliable enforcement climate before local as well as foreign manufactures and traders feel secure in marking significant investment. Strong IP protection is a necessary and important element in promoting the economy. Under the influence of the WTO, minimum standards of IP protection are being set, but enforcement remains a huge issue and it is a matter of taking action against IP infringement in Vietnam. One of the problems with enforcement in Vietnam appears to be the difficulty of receiving any meaningful damage awards.

Decree No. 12/CP and the new Criminal Code appear to remedy some of the starkest legislative gaps in IP protection in Vietnam. The most important significance of the issuance of the new Laws is that they give the authorities the detailed legal basis for resolving disputes and settling infringement, and gives local as well as foreign traders undertaking business in Vietnam a "legal firm bar" to protect efficiently their lawful benefits.

Decree No. 12/CP and the new Criminal Code, which contain effective enforcement measures, are welcome development for IP owners and public. They may be assumed to be the most effective implementing legal documents to strengthen the effect of protection of IPR of lawful owners, as well as lawful interests of the public, and to contribute to the diminution and prevention of production, trade of counterfeits and commercial fraud in Vietnam.

The issuance of the new Laws is a major step forward in the Government’s continuing efforts to keep up with global developments in the field of IP affairs and to develop and upgrade the IP system in Vietnam. It is hoped hat the regulations accord with present conditions in Vietnam and international practice, and when implemented, will bring with them the badly needed instruments to fully enforce IPR in Vietnam.

The Vietnamese government has recently drafted a wide--ranging decree covering protection of trade secrets, geographical indications, trade names, and protection against unfair competition, the details of which are highlighted below.

Beneficiaries of the legislation are intended to be persons, both natural and legal and both domestic and foreign, with business activities in Vietnam. Alternatively, they may be such persons or entities without any business activities in Vietnam but enjoying protection either under international treaties to which Vietnam is a party or on the basis of the principle of reciprocity. If any international agreement which Vietnam has rectified or acceded to contains provisions different from those of the decree, the provisions of the international agreement will prevail.

Trade secrets will be protected if the following criteria are met, regardless of registration or observance of any other formal requirements:

• the trade secret is not generally known;
• the trade secret can be used for business and, if used, can offer advantages; and
• the trade secret has been subject to reasonable efforts at protection and has been under the control of the per-son who keeps the information secret and inaccessible.

Information such as personal secrets, state management secrets, national security and national defence information would not be protected under this law.

Infringement of a trade secret is defined as the following behaviour under the draft legislation:

• accessing and gathering a trade secret by violating the owner’s efforts to maintain secrecy;
• disclosing and using of a trade secret without the owner’s consent;
• breaching a confidentiality agreement, inducing others to breach a duty of confidence, or abusing the trust of such persons to access; gather and disclose the trade secret; or
• accessing and gathering a trade secret of another that has been submitted to the competent authorities for marketing approval, e.g. pharmaceutical or agrochemical products, by violating efforts to keep the secret or by using the trade secret for business purposes.

Geographical indications are defined as denominations, signs, symbols or devices indicating a country, region, or locality from which the products or services bearing the sign originate. Appellations of origin protected by other relevant provisions of the laws of Vietnam would not be covered by this provision: neither would geographical indications that have become a generic term for any kind of products, as such signs cannot indicate the origin of the product.

Proscribed infringement of geographical indications would include:

• using any commercial indication that is identical or confusingly similar to a protected geographical indication;
• using any commercial indication that is identical or confusingly similar to a protected geographical indication for the same or similar products that does not ensure the acquired reputation and goodwill of the products bearing the protected geographical indication; or
• using a geographical indication identifying wines or spirits which do not originate from she place indicated by the geographical indication, even where the geo-graphical indication is accompanied by such expressions as ‘kind’, ‘type’, ‘imitation’ or the like.

The proposed new law would require that trade names be pronounceable words capable of either indicating the business features or organizational form, such as the organizational structure or form of liability, of the business, or of distinguishing the business features or organizational form of that person from those of others. Names to be excluded from protection would include: names of the administrative authorities, politico-social organizations, social organizations, social-professional organizations or other non-commercial organization; names that are identical or similar to prior trade names of others engaged in the same line of business within the same jurisdiction; and names which are identical or similar to prior registered trade marks of others.

Infringement on a trade name would be defined as the use of a commercial indication that is identical or similar to the trade name of another in respect of the same or similar products or services and thus misleads as to the person carrying out business under the name.

Unfair competition includes acts contrary to honest practice in industry or commerce, such as:

• using commercial indications to take advantage of someone else's reputation and good will;
• using such indications in a way which damages the reputation and goodwill of another;
• using such indications so as to mislead the public as to the nature, quality, or quantity of the goods or services of a competitor;

• maintaining or using, without authorization, the results of a competitors investment-

Any person whose interests are damaged or likely to be damaged by any act of unfair competition related to IP rights will have the right to request the competent authorities in Vietnam to have the infringer cease infringing actions and pay damages in accordance with the current laws.

A separate decree has been drafted in accordance with the basic principles of Act 1991 of the UPOV Convention. The national authority for Vietnam would be the office of new varieties of plants in the Ministry of Agriculture and Rural Development. The body responsible for DUS testing will be the center for plant variety testing.

The subject matter to be protected would be new plant varieties from national breeders, who may be legal or natural persons, or from breeders of countries which have entered into an agreement on the protection of plant varieties with Vietnam. Local, native or transferred varieties would not be protected under the draft proposal.

Plant breeder's rights could be obtained if the variety meets the criteria of

• distinctiveness:
• uniformity:
• stability:
• commercial novelty: and
• appropriate denomination.

A national working group is being established the decree on protection of integrated circuit (IC designs). At the moment there is no actual domestic need for this protection since there is not yet a semiconductor industry in Vietnam either producing ICs or able to reverse engineer them. However, the country does have an obligation to protect ICs under bilateral or international agreements. The draft proposal will most probably apply principles of IPLC and TRIPs, creating a sui generis form of protection.

The Department General of Posts and Telecommunication has drafted regulations on management and allocation of internet domain names and addresses, with similar provisions to the current provisional regulations, which is issued later this year.

IP-related border control

The Ministry of Science, Technology and Environment and Vietnam Customs have drafted a joint circular on IP related border control, which includes procedures for detention, inspection, verification and disposition of detained goods.

The circular, to be issued soon, is a further step strengthening and harmonizing the country's IP system and will help IPR holders to enforce their rights,

A joint circular providing guidelines for implementing provisions in the Civil Code for the settlement of IP disputes, is being drafted by the Supreme People's Court, Supreme People's Procuratorate and the Ministry of Science, Technology and Environment. The aim of the circular is to fill gaps in the IPR enforcement system, in particular, the courts may issue injunctions for instant enforce of IPR.

As well as proposing the variety of new laws and regulations detailed above, the government also plans revisions to an of existing Vietnamese legislation to bring it into line with international standards. Decree No 63 is chief among the existing laws which will be revised. Adjustments and amendments will address such issues as protection of well-known marks, compulsory patent licensing and various procedural matters.

Well-known marks under the draft Decree No 63 means those marks which are extensively known through their continuous use for products and services of high repute recognized by the competent authority. Decisions on the recognition of well-known marks are published.

The protection of well-known marks included the right to exclude the use of any trade mark identical or similar to or seen as translation or transliteration of the well-known mark, for the same or similar goods or services and even for goods or services of other kinds. The reasoning for this broader than usual protection is to protect a well-known mark from the confusion likely to be created as to the origin of a good or service and to protect consumers from being misled as to the relation between the user and the owner of the well-known mark.

Associated marks mean all similar trade marks in the name of the same owner which are registered for the same or similar or related goods or services. Transfer of any trade mark of this kind will result in transferring ail the associated marks under the revised law.

The provision on collective marks is to be amended to clarify the function of collective marks to read "to distinguish the common characteristic of goods or services of a collective from. those of others".

A provision on international trade marks is proposed for addition to the law, with a view to protecting trade marks from the date of their publication in the WIPQ Official Gazette to the end of the term of international registrations as set forth by the Madrid Agreement,

The draft provides that third parties may request the National Office of Industrial Property to cancel the whole or any part of a trade mark registration if during five years from its registration date, it is found to have been granted in a manner contrary to the law. The major instances for application of this exception to the rule of trade mark registration incontestability would be cases of bad faith or those involving 'greenmail' registration of well-known marks.

The term of patents protected under the old parent regulations, formerly 15 years after the filing date or the priority date of the application if the Paris Convention priority is claimed, may be extended to 20 years.

The provision on non-voluntary licenses is proposed to be amended to bridge the gap between the Civil Code and its subordinate legislation (Decree No 63/CP). The conditions for granting non-voluntary licenses will include:

• the patent is not worked or is insufficiently working; or
• the owner of the-patent has refused to grant a license on reasonable terms and within a reasonable time without justified grounds; or
• the working of the patent is considered necessary to meet the demands of national defense, security, public health or other vital public interests.

These conditions are not applied within the four-year period from the application date or within the three-year period before the termination date. Non-voluntary licenses may be revoked if the conditions for their grant cease to exist and they are non-exclusive and non-transferable.

The amended law will provide that the following acts shall be considered infringements of industrial property rights:

• the unauthorized use of a design not substantially different from a protected industrial design; and
• the unauthorized use of a mark which is identical or confusingly similar to a registered trade mark in respect of the same or similar goods or services.

The following acts shall not be considered infringements of industrial property rights:

• using the subjects of IP rights for non-business purposes;
• using products launched on the market by the owner, the licensee or prior user; or
• using IP subjects only for the purpose of ensuring the operation of foreign transiting means of transport or temporarily staying in the territory of Vietnam.

According to the current schedule, revised Decree No 63/C P and the decree on protection of the new IP-related objects will be issued in the next few months and the decree on protection for plant varieties will be issued by the end of the year.

Nevertheless, there are still many problems in the Vietnam IP system, especially regarding enforcement.

One of the major hurdles yet to be addressed in legislation or practice is that the authorities responsible for IP R enforcement - such as the Economic Police, Market Management Offices, Customs and the Courts - are not capable of acting as recommended, nor do they work together to properly enforce IP rights. Staff within these various authorities may not have specific IPR qualifications or much experience in IP enforcement, specialized IP bodies within these organizations have not yet been established and the Vietnam courts are not geared up for the settlement of IPR disputes. Despite the new legislation, then, the government will have to pay still further attention to IPR issues before Vietnam can claim to have a truly effective system for IP protection

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.