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October 20, 2024

Vietnam: Challenges in Recordal of Trademark Assignments

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Managing Intellectual Property

The annual statistics issued by the Intellectual Property Office of Vietnam (“IP Office”) in recent years show an increase in the number of IP transactions and applications to establish IP rights, including requests for the recordal of assignment of IP rights. Nevertheless, the numbers of trademark assignment recordals approved by the IP Office has not followed this trend, falling from 1,281 requests approved in 2022 to 1,120 requests approved in 2023. This decrease may be due to the IP Office’s overly strict viewpoint in approving trademark assignments, including its rejection of assignment recordal on the ground of conflict with the assignor’s trade name.

IP Office’s practice on assignment recordal

Vietnam’s IP Law restricts the assignment of trademarks in several cases, as set out in Article 139.4 that “the assignment of the rights to marks must not cause confusion as to properties or origins of goods or services bearing such marks.” Thus, when an assigned mark is identical to the dominant element of the assignor’s company name, the IP Office will view that the assignee’s use of the mark will result in confusion with the assignor’s trade name, and then instantly reject the assignment request. In this case, the IP Office will only accept the assignment if the IP holder can submit documents issued by relevant authorities proving at least one of the following conditions:

  • The assignor has assigned all business premises and operations under its name to the assignee;
  • The assignor has removed business lines relating to the goods/services bearing the trademarks and such removal is recorded in the Enterprise Registration Certificate;
  • The assignor has been dissolved or does not exist after signing the agreement;
  • The assignor has changed its name after signing the agreement so that it does not contain any element identical or similar to the assigned trademarks; or
  • The assignor and the assignee are affiliated companies.

Without these documents, the assignment approval can be difficult to obtain. In many cases, the refusal of assignment recordal leads to very lengthy appeal proceedings at the IP Office’s Appeal Division if the parties wish to pursue the case.

Differing opinions on the IP Office’s practice

The provision on potential rejection of assignment due to conflict with the assignor’s trade name has been in place for years, and the IP Office has also refused assignment recordal if the assigned mark is identical or similar to the main element of the assignor’s name. However, in the past, if a rejection of trademark assignment recordal was issued on this ground, a declaration executed by the assignor attesting to the assignor’s non-use of the company name in Vietnam, attesting to the affiliate relationship between the assignor and assignee, or attesting to the assignor’s initiation of dissolution procedures was sufficient to overcome the rejection. Documents issued by the authorities were not required.

Nevertheless, the IP Office’s practice has changed in the past three years in that it now requires these documents, creating challenges for IP holders to overcome the assignment rejection on this ground. This change has led to many debates among IP practitioners, and even within the IP Office.

A common argument is that the rejection itself is not well-grounded. Under Vietnamese law, a company’s name does not become a trade name by default. According to Article 14.2 of Circular 11/2015/TT-BKHCN, a company name will only be considered a trade name if it is used in actual business activities and meets several conditions prescribed in Articles 76 and 78 of the IP Law (e.g., it is capable of distinguishing the business entity bearing it from other business entities operating in the same business field and locality). As such, the IP Office’s rejection of assignment recordal on grounds of conflicting with the assignor’s trade name, without evidence/information on the actual use of the assignor’s company name in Vietnam, appears to be unconvincing. Unfortunately, Circular 11 is no longer in effect, and a new circular to amend and supplement it is still pending.

Second, while the IP Law prevents a pending mark from being protected on the ground of likelihood of confusion with another party’s trade name, the author is not aware of any case where the IP Office ex officio issued a refusal on this ground, unless the pending mark was opposed by the trade name owners.

Third, the options to overcome the assignment rejection suggested by the IP Office, notably the requirement to submit documents issued by the authorities, seem unrealistic. For example, it is common for assignors filing for recordal of trademark assignment in Vietnam to be multinational companies with different business strategies for their marks in each market in which they operate. In this case, it is unreasonable to request them to change the company name, remove the eliminated business lines related to goods and services bearing the assigned mark, or assign to the assignee the entire business establishment and business activities, just for the purpose of recording the assignment of a single mark in Vietnam.

Even when the assignor and assignee are affiliated companies, it can be difficult to submit legal documents proving their relationship. In some cases, the assignor has carried out dissolution procedures after signing an IP assignment agreement, but can only be dissolved after fulfilling all its property obligations, including assignments of IP rights to the recipients. As this procedure takes time, the IP Office’s requirements for submitting legal documents proving the completion of dissolution seems unfeasible.

Recommendations

The amended IP Law issued in 2022 and taking effect on January 1, 2023, as well as its guiding Circular 23/2023/TT-BKHCN issued and taking immediate effect on November 30, 2023, have shed more light on the IP procedures. However, there is no clear provision or guidance on recordal of assigned marks that are identical to the assignor’s trade name in these legal documents.

At present, a draft version of the amended Circular 23 is open for public comments, and IP practitioners have recommended that the IP Office ease its requirements in cases where the assigned trademark is identical or similar to the assignor’s trade name. Specifically, the assignor’s declaration of its non-use of the company name, declaration attesting to the affiliate relationship between the assignor and the assignee, or evidence showing the assignor’s initiation of dissolution procedures should be viewed as sufficient to overcome the assignment rejection on this ground, as was accepted by the IP Office in the past.

In the future, a related rejection of assignment should only be issued if there are grounds to believe that the assignor’s company name is actually used in Vietnam and thus could be protected as a trade name.

This article first appeared in Managing Intellectual Property.

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