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November 4, 2024

Vietnam Issues New Circular on Administrative Sanctions in Industrial Property

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On September 30, 2024, Vietnam’s Ministry of Science and Technology (MOST) issued Circular No. 06/2024/TT-BKHCN (“Circular 06”), amending and supplementing certain articles of Circular No. 11/2015/TT-BKHCN dated 26 June 2015. These two circulars are the primary guidance on Decree No. 99/2013/ND-CP and Decree No. 46/2024/ND-CP on administrative sanctions in industrial property. Circular 06, which will come into force on November 15, 2024, will improve the alignment between the recently amended IP Law and its subordinate legal instruments.

Some of the notable amendments of Circular 06 are set out below.

Clarification of Additional Sanctions: Circular 06 clarifies the application of the additional sanction of “full or partial suspension of production, trading, or service activities for 1 to 3 months”, which was recently amended in Decree No. 46/2024/ND-CP. It specifies that only activities directly related to the violating goods or services will be partially suspended.

Preventive Measures for Domain Name Disputes: Circular 06 specifies the required documents for brand owners to request the preventive security measure of placing a temporary hold on the registration of domain names during enforcement action against cybersquatters. The introduction of this regime under Circular 06 is expected to enhance cooperation between the Vietnam Internet Network Information Center, domain name registrars, and enforcement authorities to place the temporary hold on infringing domain names.

Unfair Competition Relating to Domain Names: Circular 06 outlines specific requirements to prove unfair competition involving the possession and use of Vietnamese domain names that are identical or confusingly similar to another person’s registered trademark, trade name, or geographical indication. However, the regime established by Circular 06 does not fully align with the Uniform Domain Name Dispute Resolution Policy (UDRP) mechanism, a standard procedure for the settlement of domain name disputes that Vietnam is obligated to adhere to under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In particular, the UDRP includes a mechanism for transferring domain names to trademark owners in cases of disputes, but Circular 06 lacks this remedy.

Exemption for Indications of IP Protection: Circular 06 provides an exemption from violations regarding the use of indications of IP protection such as the ® symbol, “protected trademark”, “P”, and “Patent” without a valid IP registration in Vietnam. Accordingly, such use might not be deemed a false indication if a sub-label is added to the product packaging to clearly state the registration status of the mark in Vietnam. Prior to Circular 06, Vietnamese customs agencies had occasionally penalized importers for these violations, causing trouble for IP owners. In the context of global trade, sanctions for IP indications are not reasonable, as IPR holders cannot register their IP worldwide. The new exemption under Circular 06 may reduce the number of cases subject to sanctions.

Written Trademark License Contracts: Circular 06 requires that a written trademark license contract be in place for the use of a licensed trademark on goods or packaging. Failure to form such contract will amount to a violation of the transfer of the right to use IP under Article 6 of Decree No. 46/2024/ND-CP. Circular 06 specifies that a letter of consent, letter of authority, or similar document from the trademark owner, allowing the use of the licensed trademark, is not considered a trademark license agreement and is insufficient to avoid sanctions. It is too early to assess how this regulation will be applied in practice. In our view, without specific clarification, the wording of Circular 06 may lead to different legal interpretations from different agencies. For example, the IP Office might view a letter of authority from a trademark owner as insufficient to prove the lawful use of a trademark in Vietnam, potentially leading to trademark cancellation due to non-use.

As Vietnam continues to strengthen its IP protection framework. Circular 06 introduces some notable changes to Vietnam’s IP enforcement regime. Businesses operating in Vietnam should review their IP strategies and compliance practices to ensure adherence to the new regulations.

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