Vietnam legislation guide
By Pham Vu Khanh Toan
Pham & Associates
Tel: +84 4 38 244 852 Fax: +84 4 38 244 853 Website: www.pham.com.vn
A number of legal papers were drafted and enacted in Vietnam in 2010 to further improve national legislation to ensure the more effective protection and enforcement of IP rights. Decree 97 was regarded as the most important one, and this took effect on November 9 2010 replacing Decree 106.
Compared to Decree 106, Decree 97 provides more specific stipulation on forms of sanctions and remedies, forms of violation, the valuation of infringing goods or services, and unfair competition.
Forms of sanctions and remedies
Article 3 of Decree 97 stipulates that each act of administrative violation is subject to either of the principal sanctions: caution and fine. For fines, a maximum fine level of VND 500 million (US$24,000) can be imposed. Violations that are more serious may be subject to criminal sanctions, and this is believed to be more effective in deterring potential violators from serious infringement.
In addition to fines, depending on the nature and severity of violations, violators may also be subject to additional sanctions. These include (i) confiscation of counterfeit goods, materials and means used mainly for producing or trading in those goods, and (ii) suspension for a definite period of time of the production, trading or provision of infringing products or services. Violators may also be forced to apply remedies such as the removal of infringing elements on their goods or means of business, distribution or use for non-commercial purposes of goods bearing counterfeit marks or geographical indications (GIs), forcible re-export of goods bearing counterfeit marks or GIs, and destruction of infringing elements.
Forms of violations
Violating activities to be administratively sanctioned are stipulated in greater detail compared to the previous Decree 106. They are classified into two groups: (i) violation of regulations on IP management; and (ii) IP infringement and unfair competition. For each, the Decree also determines the various levels of fine, and additional sanctions and remedies that can be imposed. This enables the competent authorities to make sanctioning judgments.
Fines imposed on violation of IP management regulations are between VND 1 million and VND 20 million depending on the nature and severity of the violation. For infringement of IP rights and unfair competition, the fines are higher and are calculated on the basis of the value of infringing goods – normally equal to 60-80% of this value but not exceeding VND 500 million.
Valuation of infringing goods or services
The valuation of goods in violation is conducted by competent persons based on principles specified in Article 34 of the Government’s Decree 128 of December 16 2008. This details a number of articles of the Ordinance on Handling of Administrative Violations.
If impossible to apply Article 34, valuation will be based on quantity of goods produced, sold or transported, or amount of services provided based on, for example, payment invoices, contracts, delivery bills, and warehousing bills. If no price is indicated in the relevant documents, other documents indicating the price may be reviewed. These include price advice, documents on product introduction, or advertisements of infringing goods or services.
If impossible to evaluate the value of infringing goods, fines will be imposed as follows: between VND 10 million and VND 90 million for infringing rights to inventions, utility solutions, layout designs, trade marks, GIs, trade names or industrial designs; and between VND 10 million and VND 20 million for acts of using signs infringing rights to trade marks, GIs, trade names or industrial designs in advertisements, or showing these signs on business transaction papers, signboards, goods packages, or means of business or service or advertisement media.
Unfair competition
Another notable development of Decree 97 is that it provides a clearer specification of ‘unfair competition’ by specifically listing acts to be deemed a violation. It also provides detailed levels of fine, additional sanctions and remedies.
A fine can be imposed of between VND 10 million and VND 50 million for acts of using misleading trade indications, between VND 10 million and VND 30 million for infringing upon rights to business secrets. There is also a fine of between VND 5 million and VND 20 million for acts of registering or appropriating the right to use or using domain names identical or confusingly similar to protected marks, GIs or trade names of other parties in order to appropriate domain names, taking advantage of or harming reputation of those marks, trade names or GIs. The highest level of fine for acts of unfair competition is VND 70 million.
Requisition for violation handling
Decree 97 provides a clearer procedure of the requisition, and the competent authorities for handling violations. It also identifies a number of subjects who are entitled to file a requisition for the handling of IP rights violations. In addition to IP rights holders, who are directly affected by any violation, any organisations and individuals who are aware of such violation are entitled to request violation handling.