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May 16, 2024

Vietnam Issues New Decree on Administrative Sanctions in Industrial Property

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On May 4, 2024, the Vietnamese government issued Decree No. 46/2024/ND-CP (“Decree 46”) amending and supplementing certain articles of Decree No. 99/2013/ND-CP dated August 29, 2013, on administrative sanctions in industrial property, as amended and supplemented in 2021 (“Decree 99”). Decree 46, which will come into force on July 1, 2024, is designed to bring Decree 99 in line with the amended IP Law of 2022.

Some of the notable amendments of Decree 46 are discussed below.

New Infringing Acts

Decree 46 added the following new infringing acts subject to sanctions, which had not been set out in the former decree:

  • Use of patents, utility solutions, layout designs, or industrial designs without paying compensation according to the provisions on temporary rights specified in Article 131 of the amended IP Law.
  • Accepting a trademark license not in the form of a written contract in the case of using the licensed trademark on goods or packaging.
  • Failure to notify clients of costs, charges, and fees related to procedures for establishing and protecting industrial property rights.
  • Deceiving clients in the course of entering into and performing industrial property representative service contracts, but not to the extent of criminal prosecution, or forcing customers to enter into and perform industrial property representative service contracts.

Although these acts are not common occurrences, it is nevertheless important to have clear regulations in order to ensure consistency with the amended IP Law and overcome difficulties and obstacles if such acts are committed in practice.

Amendments and Supplements

Decree 46 adopted amendments and supplements to main sanctions, additional sanctions, and remedial measures, specifically:

  • The monetary fine imposed for violations against trade secrets is VND 50 million to VND 100 million (approx. USD 2,000 – USD 4,000), a large increase compared to the VND 5 million to VND 15 million (approx. USD 200 – USD 600) in the previous decree. This is a recognition of the importance of trade secrets, which cover information acquired from an enterprise’s financial and intellectual investments, and can be crucial to the enterprise’s success.
  • The former additional sanction of “suspension of activities of production or trading in violating goods or services for 1 to 3 months” has been amended to “complete or partial suspension of production, trading, or service activities for 1 to 3 months.” This regulation seems broader and vaguer, as it does not specify that only activities related to violating goods or services are affected, and may trigger confusion with the enforcement authorities.
  • Complete or partial suspension of industrial property representative service activities for 1 to 3 months is imposed on violations of industrial property representative service organizations. Decree 99 only imposed similar sanctions on individuals, not organizations, so this change was absolutely necessary. However, the term “partial suspension” sounds vague as aforementioned.
  • Forcible removal from the Vietnamese territory or forcible re-export is applied to imported or transited goods bearing counterfeit trademarks or geographical indications. Pursuant to the former decree, forcible removal was applied for transited goods infringing industrial property rights while forcible re-export was imposed on goods bearing counterfeit trademarks or geographical indications. Given the new regulation, such remedial measures are no longer imposed for imported and transited lookalikes.
  • The measure of mandatory restoration to original status replaces the measure of mandatory recovery of dispersed exhibits and means of violation found in the former decree. This regulation is rather abstract, and may be difficult to enforce.
  • Forced compensation payment is added as a remedial measure in Decree 46, and applies to the act of using patents, utility solutions, layout designs, and industrial designs without paying compensation as mentioned above.

Temporary Hold on Domain Names

Decree 46 refers to the preventive and security measure of temporarily holding domain names, which  is imposed on the act of possessing or using a domain name that is identical or confusingly similar to another person’s registered trademark, trade name, or geographical indication, which the party does not have the right to use, with malicious intent or to take advantage of the prestige or reputation of the respective trademark, trade name, or geographical indication in order to gain illegal profit.

The authority/agency handling the case will need to cooperate with the Vietnam Internet Network Information Center and the registrar to perform such temporary hold of infringing domain names.

Remedial Measures After Statute of Limitations Expires

Decree 46 also stipulates that when the statute of limitations for administrative sanctions expires, resulting in the enforcement authorities refusing to handle a case, remedial measures can still be imposed. This regulation was not mentioned in Decree 99, but is consistent with the Law on Handling Administrative Violations.

Competence of Police

The competence of the police is extended under Decree 46; specifically, the police are entitled to handle cases connected to the following acts in industrial property assessment activities (activities related to, for example, determining if marks, designs, etc., are infringements):

  • Taking advantage of the role of examiner and assessment activities for personal interests.
  • Deliberately making false assessment conclusions.
  • Modifying, erasing, or committing other acts that falsify assessment documents.
  • Providing untruthful information to relevant agencies during the process of registering for an examination of industrial property assessment profession, requesting industrial property examiner cards, and requesting recognition of industrial property assessment organization.
  • Conducting assessment in cases in which assessment must be refused as prescribed by law.

This extension of the police’s competence seems to be unnecessary, and the police might be reluctant to handle these cases in practice because, with respect to IP infringements, the police normally prefer dealing with counterfeit goods rather than infringing acts connected to paperwork.

From the perspective of IP rights-holders, it would be more beneficial to extend the police’s competence to handling manufacturers of lookalikes. Under prevailing regulations, only the inspectorates of the Ministry of Science and Technology (MOST) or the Departments of Science and Technology (DOST) at the city or provincial level are entitled to handle lookalike cases of local manufacturers. However, MOST is based in Hanoi, and MOST officials infrequently travel to other cities/provinces, while the DOST inspectorates, even in Ho Chi Minh City, tend to have a shortage of manpower for handling IP infringements. Hence, taking action against manufacturers of lookalikes usually does not happen immediately. In addition, MOST and DOST tend to request the manufacturers to attend a meeting in which the authorities explain the laws and request the manufacturers to cease making the lookalikes without conducting any inspections into the manufacturers’ locations and seizing infringing goods. Such settlement has little deterrent effect when no sanctions are imposed on manufacturers. Given this, additional assistance from the police in matters related to manufacturers of lookalikes would be welcome.

Invalidation Matters

Under existing regulations, administrative authorities like MOST have faced numerous challenges in managing IP-related complaints and disputes when the adverse party submits an invalidation request related to the concerned IP subject-matter to the IP Office. This often leads to the suspension of the case due to the pending invalidation, and long delays in the settlement process.

However, under Decree 46, when these situations arise, the competent authority must request clarification from the IP Office on the status of the IP rights, and the IP Office must respond within 10 days of receiving the request. Subsequently, the competent authority will base their decision on whether to continue handling the case on the opinion provided by the IP Office. This should help to greatly speed up the administrative sanctioning process and help curtail ongoing infringement.

Conclusion

Decree 46 is the second amendment to the administrative sanctions in industrial property, and its issuance demonstrates that the Vietnamese government has listened to the opinions of IP practitioners and organizations to further improve the relevant regulations. The new decree includes some needed amendments and supplements; however, some amendments of still remain vague and could be difficult to enforce. Decree 46 takes effect very soon; it will be interesting to see how effectively the amendments are applied in practice in the coming time.

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