You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 4, 2021

Vietnam: Differing Views on the Use of a Mark on Exports

Managing Intellectual Property

Vietnam has become a big player in the global fashion industry. Garments made in Vietnam now appear all over the world, especially in the U.S. and the EU. In this value chain, however, Vietnamese companies usually play the role of garment processors, fulfilling the orders of big brands for immediate export purposes. While the goods bearing the registered marks are made in Vietnam by local companies, the brand owners are often overseas or global corporations.

As a brand owner can lose protection of its mark in Vietnam due to non-use, this situation leads to the question of what constitutes “use” of a mark when the mark-bearing goods are processed for export only, and not sold in the Vietnam market.

Article 124.5 of Vietnam’s IP Law provides that:

Use of a mark means the performance of the following acts:

    1. Affixing the protected mark on goods, packaging, business facilities, means of service provision, or transaction documents in business activities;
    2. Circulating, offering, advertising, or stocking for sale goods bearing the protected mark;
    3. Importing goods or services bearing the protected mark.

At first glance, the above provision seems quite clear. While importing goods appears on the list, exporting goods is conspicuously absent, and therefore it is not an act of use.

However, it is also clear that for the purpose of exporting, a product should go through a manufacturing or processing stage in which the mark will be physically affixed to the product or its packaging. For fashion goods, this could be in the form of a removable tag or package, a tag sewn onto the item, or a fundamental part of the garment’s design (such as a T-shirt emblazoned with a brand name, or a shoe featuring a distinctive logo). Then, the question becomes whether this act of affixing the mark on the goods or packaging in the manufacturing process constitutes an act of use.

To defend its marks against a non-use cancellation action, a brand owner can lean on a literal argument, as “affixing the protected mark on goods or packaging” is clearly stated in Article 124.5(a), and business activities, while not defined in the law, could logically be interpreted to include the manufacturing stage.

In practice, if the brand owner can present a license agreement in which the Vietnamese local processor is granted a license to use the mark in question, it is very likely that the mark’s affixation to exported products will qualify as use of the mark, hence it is helpful to defend the mark from non-use action. Thus, it is highly recommended for brand owners to enter into trademark license agreements with their local processors to support any such defense. It is also worth noting that since January 14, 2019, a trademark license agreement no longer needs to be registered to be valid against a third party.

Viewed from a different angle, there is also the question of whether the use of marks for goods that are manufactured in Vietnam solely for export purposes could constitute trademark infringement.

In this case, the answers from the enforcement authorities and IP practitioners vary. Some practitioners take a straightforward view that exporting is not considered use of a mark, and thus the exportation of goods bearing another’s registered mark is not an infringement. The General Department of Customs seemingly takes this view as well, despite the fact that Article 199.2 of the IP Law provides that, if necessary, the competent authorities can apply measures to control imported and exported goods regarding intellectual property issues, and Article 200.4 further provides that such control falls within the authorization of customs.

The Ministry of Science and Technology (MOST) views the issue slightly differently, as shown in an official letter in a recent case where MOST stated that the exportation of goods bearing another’s registered mark is not specifically mentioned in Vietnamese law and thus must be handled cautiously, and no sanctions against such exportation were recommended. While not expressly indicated, it seems that MOST views that the use of a mark for export goods does not cause any damage to the brand owner, so no sanctions should be imposed against such use.

Another related authority, the Market Surveillance Department, apparently has not yet been involved in an actual case related to exported goods. However, in discussions with them, they have expressed that in their role of monitoring the domestic market, if they detect any goods bearing the registered trademark of another owner in the inland territory (e.g., in a warehouse or on their way to the port), they may view that these acts fall within Article 124.5(b), and thus constitute trademark infringement.

In short, there is no hard and fast answer for the use of a mark on exported goods. Depending on the specific circumstances, the authorities may resolve the issue differently.

This article first appeared in Managing Intellectual Property.

RELATED INSIGHTS​ 

October 25, 2021
Michael Ramirez, a counsel in Tilleke & Gibbins’ dispute resolution group in Bangkok, has updated the firm’s contribution to the Global Attorney-Client Privilege Guide, published by Lex Mundi. The newly expanded guide provides information on what constitutes attorney-client privilege in over 70 countries around the world. The Thailand section of the guide contains in-depth information on the function and applications of attorney-client privilege in Thailand (or, as explained in the guide, an equivalent concept enshrined in Thai law), including coverage of the following topics: Privilege in corporations Common interest doctrine Litigation funding Crime-fraud exception Work product doctrine/litigation privilege Other privileges including mediation, accountant-client and settlement negotiation The interactive guide features expert contributions by Lex Mundi member firms from jurisdictions worldwide. Readers can browse the contributions, generate country-specific reports, and compare attorney-client privilege in multiple jurisdictions. For more information, please visit the Lex Mundi website.
October 14, 2021
As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2021. This guide outlines all of the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Guides to Doing Business series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource when planning an international business strategy or researching a new market.
August 26, 2021
The Ministry of Health of Vietnam recently issued Circular No. 10/2021/TT-BYT dated June 30, 2021, stipulating the list of substances prohibited from use in the production and trading of health supplements (“Circular 10”). Circular 10 will come into effect on September 1, 2021. Accordingly, substances found on the following lists will be prohibited from use in health supplements: The list of drugs and drug materials prohibited from importation and production found in Annex V of Decree No. 54/2017/ND-CP of the Government dated May 8, 2017, guiding the implementation of Law on Pharmacy (Decree 54). Lists promulgated with Decree No. 73/2018/ND-CP of the Government dated May 15, 2018, stipulating the list of narcotic substances and precursors, including: List I: Narcotic substances banned from use in healthcare and daily life, the use of which for analysis, testing, scientific research, and criminal investigation is subject to permission by competent authorities. List II: Narcotic substances restricted from analysis, testing, scientific research, criminal investigation, or healthcare as regulated by competent authorities. List III: Narcotic substances permitted in analysis, testing, scientific research, criminal investigation, healthcare, and veterinary medicine as regulated by competent authorities. List IVA: Essential precursors involved in forming the structure of narcotic substances. The list of narcotic active ingredients found in Annex I of Circular No. 20/2017/TT-BYT of the Ministry of Health, detailing articles of the Law on Pharmacy and Decree 54 related to drugs and drug materials under special control. The list of toxic drugs and toxic drug materials under Circular No. 06/2017/TT-BYT of the Ministry of Health dated May 3, 2017. Lists under Circular No. 42/2017/TT-BYT of the Ministry of Health dated November 13, 2017, stipulating the lists of toxic herbal materials, including: Annex I: List of toxic herbal materials of plant origin. Annex II: List of toxic herbal materials of
August 26, 2021
In April 2021, the Vietnamese government made public a draft decree to amend Decree No. 43/2017/ND-CP of the Government dated April 14, 2017, on goods labeling (“Decree 43”), which is the primary legislation in Vietnam on the labeling requirements for domestically circulating goods and imported goods. Some noteworthy differences between the draft and the current Decree 43 include the following: 1. Original labels for imported products For imported goods, the draft adds a requirement on compulsory information for original labels, which is not mentioned in Decree 43. In particular, the original product label for goods being imported to circulate on the Vietnam market must contain the following compulsory information in a foreign language or in Vietnamese before customs clearance: Product name; Name and address of the entities responsible for the products; Product origin or place where the final production stage to complete the product was conducted. (If this information is not presented on the original product label, it must be included in the import documents accompanying the product.) 2. Vietnamese labels for imported products Under the draft, if it is impossible to determine the product origin under rules/guidance on determining product origin in Vietnam, it is acceptable to instead indicate on the product label the place(s) where the final production stage to complete the product was conducted. 3. Nutritional information for food Instead of being optional information as mentioned in Decree 43, “nutritional value” is compulsory information on labels for some food products under the draft. The Ministry of Health will have a roadmap for carrying out nutritional labeling and will provide appropriate guidance to manufacturers and importers, as well as issue regulations on types of food that are partially or entirely exempt from declaration of nutritional value. The draft has not yet been finalized and is subject to