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February 8, 2022

New Decree on IP Sanctions a Small Step Forward in Vietnam

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Managing Intellectual Property

On December 30, 2021, Vietnam’s Ministry of Science and Technology (MOST) issued Decree No. 126/2021/ND-CP (Decree 126) amending several provisions of Decree No. 99/2013/ND-CP of the government dated August 29, 2013 (Decree 99), which is the primary legislation on the sanctioning of administrative violations in industrial property. Decree 126 took near-immediate effect with the new year on January 1, 2022.

While the new decree offers some clear improvements that will help enforcement authorities and practitioners to deal with the infringement of industrial property rights, it has some notable shortcomings compared to a draft version of the decree that was circulated in mid-2021

Key Changes in Decree 126

While Decree 126 retains most of the regulations in Decree 99, it introduces some significant changes such as expanding the scope of regulation, increasing the level of administrative fines, and providing more specific details on violations as well as remedies.

First, Decree 126 has expanded the scope of its coverage under Article 1, and added a new sub-article explicitly listing the entities that are subject to administrative sanctions, such as companies, IP agencies, and IP examiners. This new provision allows the enforcement authorities to easily detect and apply sanctions to infringers.

Decree 126 has also expanded the seizure authority in many provisions. Under the previous regulations, the authorities could only confiscate material evidence and means used in the commission of administrative violations when the total value of such materials did not exceed the amount of the fine for the violation. Under Decree 126, the total value of confiscated materials may be up to twice the set fine amount. This should have a noticeable impact on enforcement efforts.

While some of the provisions in Decree 99 are somewhat vague and, as a result, difficult to apply, Decree 126 has made an improvement by setting forth clearer and more specific regulations about violations and remedial measures. With these provisions more clearly set out in the law, there will be less need for interpretation, which will make life easier for both IP holders and enforcement authorities.

Changes Left Behind in the Draft

Prior to the issuance of Decree 126, in June 2021, MOST had published a draft version of the decree to get comments from professionals and the public. The draft decree, in many ways, would have provided stronger protection to IP holders than the version that was promulgated, and removed some obstacles to enforcement of their IP rights in Vietnam.

One of the highlights in the draft decree was the addition of the export of IP-infringing goods to the list of activities subject to administrative sanctions. Unfortunately, Decree 126 did not retain this change, which will leave enforcement authorities in a difficult position when trying to deal with infringements encountered in exported goods, due to the lack of regulations.

Further, in the draft decree, MOST had specifically set a longer time limit of two years for imposing administrative sanctions on IP violations, and also stipulated that repeated violations were aggravating circumstances. In Decree 126, MOST has withdrawn these regulations. As a result, the statute of limitations for handling administrative violations remains one year only. Most IP holders find that this period is quite short for taking effective legal action.

Not all of the new decree’s departures from the draft should be viewed as negative. For example, the draft decree limited the ability to apply supplemental sanctions and remedies in all categories by making the confiscation of raw materials, materials, and means used to manufacture or trade infringing goods only applicable if “deliberate and serious” violations were committed during the manufacture, export, import, trade, transport, or storage for sale of goods bearing counterfeit marks or geographical indications. However, Decree 126 has not laid down any requirements regarding the deliberateness or seriousness of the violation in order to apply supplemental sanctions. In this context, the IP holder is not forced to prove the deliberate and serious nature of the violation in order to apply the remedies, which can be a time-consuming and complicated process.

More importantly, Decree 126 has not removed cross-border transit from all categories of administrative sanctions, as was found in the draft decree. In particular, Decree 126 still explicitly includes cross-border transit as a form of transporting goods, and thus it still falls within the scope of administrative sanctions. At present, many infringers take advantage of the transit regime to trade in counterfeit goods. Hence, the authorities should have the right to address transit shipments to crack down on infringement.

The government is finalizing a new version of the IP Law, which is expected to be issued this year. It is hoped that after the new IP Law is in place, MOST will amend and supplement new, stronger regulations on IP sanctions in line with the new law.

This article first appeared in Managing Intellectual Property.

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