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

May 23, 2016

Vietnam: Protecting Trade Secrets

Subscribe to Updates
Managing Intellectual Property

Trade secrets have been protected under Vietnam’s intellectual property regulations and other laws for many years. However, questions as to the actual effectiveness of such legal protection measures continue to vex lawyers and other experts. These questions stem from the laws themselves, as well as how the regulations may be applied in actual legal proceedings.

Trade Secret Protection in the Law

The current legal regulations in Vietnam governing or touching upon the issue of trade secret protection are found scattered throughout a wide range of legislation, such as the 2005 Law on Intellectual Property (Article 4.23), the 2012 Labor Code (Articles 19.1 and 23.2) and the 2004 Law on Competition (Articles 3.10, 39.2, and 41). While this may seem to be comprehensive coverage to an outside observer, some fundamental shortcomings remain within the legal system, as there are no regulations governing the relationship  between these laws.

For example, how will the law balance the right of an employee to freely sign and terminate labor contracts and to work for any employer and at any place not prohibited by law, an important principle stipulated in Article 10.1 of the Labor Code, against non-compete clauses previously agreed to between the employee and the employer, that say that the employee cannot work for a competitor or another company in the same field in Vietnam for a given period of time after concluding the labor contract? In this situation, if the agreement of the two parties becomes “law” and is binding upon the employee, will this agreement implicitly be valid or must it be accompanied by some condition such as only being valid when the employee is given some material benefit from the employer in exchange, commensurate to the amount of time and the geographical region in respect of which they commit not to work for competitors?

Looking at the history of the law in Vietnam, when the Competition Law was originally drafted, many legal experts mentioned the need for some specific provisions governing non-compete agreements in labor relationships, as well as in other legal relationships such as franchising, technology transfer, and licensing, but the lawmakers opted to remain silent on this issue. Thus, the potential legal risks have not yet had a satisfactory solution.

In addition to non-compete clauses in labor contracts, another measure provided in the law (Article 119.1(d) of the Labor Code) that is commonly used to protect trade secrets is specifying the responsibility and obligation of trade secret confidentiality in the internal labor rules of a company. Typically, these regulations will define who can access the information, which documents are considered trade secrets and how they are to be kept and managed, and the sanctions for breaches, the most serious of which is termination. The fact that the internal labor rules must be registered with labor authorities may strengthen the probability of enforcement. However, it will be very interesting to see how the effectiveness of these measures plays out.

Trade Secret Protection in Practice

Unlike IP disputes in other areas such as patent and trademark, disputes related to trade secrets have thus far been very uncommon in Vietnam. To date, we have only seen two cases related to trade secrets that have been heard by the courts, one in 2005 in the People’s Court of Ho Chi Minh City (Case No. 20/LD-ST dated March 17, 2005) and one in 2010 in the Duc Hoa District Court of Long An Province (Case No. 09/2010/LD-ST dated December 10, 2010).

The first case was in relation to an American company’s firing of an employee for breaching the internal labor rules on confidentiality when the employee sent an email to her sister disclosing information about the employer’s products. The court ruled in the employer’s favor, that the termination was justified, after recognizing the legal validity of the internal labor rules on confidentiality that the employer had issued and registered with the labor authorities.

The second case concerned a Vietnamese company, where an employee had signed a non-compete clause in the form of agreeing not to work for any competitor for a period of one year after ending the labor relationship with the employer. However, the unique aspect of this situation was that the employer had retained the right to regularly update the list of companies that it considered to be its “competitors,” which employees could not go to work for, but the employees did not get any material benefits in return for complying with this clause. Despite this, the court still recognized the legality of this non-competition agreement when it held that this was a purely civil agreement and thus was viewed as the will of both parties.

From the two cases above it can be seen that the courts of Vietnam have had a tendency to uphold measures protecting trade secrets that the parties have agreed to, but there are still some legal risks. In the Labor Code of 2012, the lawmakers stipulated that if there is an agreement on protection of trade secrets, then in addition to agreeing on penalties to compensate for breaches, the confidentiality agreement must take into account the benefits of the employee (Article 23.2 of the Labor Code). This may create room for courts to tend to rule in favor of the employee in more cases.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Intellectual Property

Location

RELATED INSIGHTS​ 

January 20, 2026
Arbitrations seated in Thailand are governed principally by the Arbitration Act B.E. 2545 (2002) and, where applicable, the rules of institutions such as the Thailand Arbitration Center (THAC) and the Thai Arbitration Institute (TAI). While these instruments set the core procedural structure, they are not comprehensive. To fill in these procedural gaps, arbitral tribunals often look to the Thai Civil Procedure Code (CPC) and apply its principles when the Arbitration Act or institutional rules are silent. This hybrid system is familiar to local practitioners but can surprise international parties who expect a more self-contained arbitral procedure. Examples of How CPC Principles Are Applied Evidence Management: Section 25 of the Arbitration Act requires equal treatment of the parties and guarantees each side a full opportunity to present its case. At the same time, it grants tribunals broad discretion to conduct proceedings “as it deems appropriate” and expressly suggests that arbitrators may apply the CPC evidence rules where appropriate. In practice, tribunals frequently apply CPC evidence rules when addressing: submission of evidence lists, late or additional evidence, questions of admissibility and relevance, and assessment of witness and expert testimony. Amendments to Pleadings: Because the Arbitration Act and institutional rules provide limited guidance on amending pleadings, tribunals often rely on CPC principles when parties seek to amend a statement of claim or defense. Amendments may be permitted if they are sought in a timely manner, do not unfairly prejudice the opposing party, do not cause undue delay, and do not alter the nature of the dispute. These conditions closely mirror the standards applied by Thai courts under the CPC. Subpoenas and Court Assistance: Arbitral tribunals seated in Thailand generally do not have inherent subpoena powers. Section 33 of the Arbitration Act fills this gap by permitting the tribunal, an individual arbitrator, or a
Read More
January 14, 2026
Employers operating in Thailand can enforce post-employment noncompete covenants, but success depends on precise drafting and strong evidentiary support. Thai courts will uphold restraints that protect legitimate employer interests and are fair and reasonable in duration, geographic reach, and substantive scope. Overbroad covenants, however, draw judicial skepticism and may fail unless they are drafted in severable, defensible components tied to the employee’s actual role. This article synthesizes recent trends in Thai case practice, explains how Thai courts assess reasonableness in employment restraints, and provides a practical litigation-focused framework for drafting enforceable covenants, preparing evidence, and pursuing relief through the Labor Court. The Legal Framework and Its Practical Implications Thai courts evaluate noncompete covenants under general principles of contract enforceability and public policy, with particular focus on whether a restraint is necessary to protect a legitimate employer interest and proportionate to that objective. In employment matters, this analysis is shaped by the employee-protective tenor of Thai labor law and by the Labor Court’s equitable discretion in determining appropriate remedies. The practical takeaway is that standardized or broadly drafted covenants rarely survive scrutiny. Courts look for a demonstrable nexus between the employee’s actual exposure to confidential information, trade secrets, or customer relationships and the scope of the restraint. Where that nexus is weak or the restraint operates as a blanket prohibition, courts are inclined to decline enforcement or limit relief to a narrowly tailored prohibition. The employer interests most commonly recognized as legitimate in Thai practice include the protection of trade secrets, confidential business information, and goodwill tied to identifiable customer segments or territories. Courts are more likely to enforce restraints where employers can clearly document what information is at risk, why particular customer relationships matter, and how the employee was involved with those assets. Judges also look closely at the
Read More
January 8, 2026
Doing business in Thailand means operating under a strict regulatory framework. From time to time, companies may receive unexpected administrative orders from government authorities that restrict their operations, impose new compliance obligations, or levy fines and penalties. When this happens, a business may challenge the order under Thailand’s administrative law system. The primary concern in pursuing administrative litigation is timing, as strict statutory deadlines apply and missing them can permanently affect a company’s rights. First Step: Administrative Appeal Many companies assume the first step is to immediately bring the matter before the Administrative Court to seek revocation or suspension of the order. Some even attempt to request an interim injunction to stop the order from taking effect. However, Thai law generally requires that the company first challenge the order through an administrative appeal with the same agency that issued it. Only after this process is complete can the matter be taken to court. Seeking an interim injunction at this stage is also not possible. This is because Thai law does not allow a standalone application for an interim injunction; an injunction can only be requested together with the underlying complaint filed with the Administrative Court. Since a court complaint cannot be filed until the administrative appeal process has been exhausted, an injunction is usually not available at the early stage. What Are the Timeframes for Administrative Appeal? Thailand applies a two-stage administrative appeal process. The appeal must first be submitted to the same authority that issued the order, which will review its own decision. If that authority affirms its decision, the appeal is then escalated to the relevant higher authority for further review. In most cases, both stages must be completed before a company is allowed to proceed to court. The timeframe for filing an administrative appeal is very
Read More
December 30, 2025
The Intellectual Property Office of Vietnam (IP Office), with support from the Japan International Cooperation Agency (JICA), is drafting additional annexes to its Guidelines for Patent Examination, focusing on the examination of patent applications in the pharmaceutical and biotechnology sectors. The new annexes are expected to be officially issued in early 2026 as Annexes III and IV, following the successful issuance in 2023 of Annexes I and II addressing computer program-related inventions. The IP Office recently organized a seminar to gather feedback on the draft annexes from intellectual property representatives, academic institutions, research institutes, and other interested parties, emphasizing its intention to receive further constructive opinions to refine the guidelines for pharmaceuticals and biotechnology. Why These Guidelines Matter Patent examination in Vietnam has traditionally relied on the Guidelines for Patent Examination issued under Decision No. 487/QD-SHTT (2010), recently supplemented by Annexes I and II. While these documents provide a solid foundation, they do not fully address practical challenges in examining pharmaceutical and biotech inventions, particularly issues related to clarity, sufficiency of disclosure, enablement, features of function and utility, combination therapies, and inventions involving artificial intelligence (AI) applications in these fields. Annexes III and IV aim to close these gaps by introducing structured principles and illustrative examples. Guidance on Patent Specification Requirements Annex III provides detailed guidance on the requirements for patent specifications in pharmaceuticals and biotechnology, covering two main parts: Part A addresses sufficiency of disclosure, clarity of specifications, and consistency between claims and descriptions. Part B covers inventions related to Markush-type compounds, claims containing exclusion statements (disclaimers), and additional experimental data submitted during examination. The Guidelines outline specific disclosure requirements for subject matters such as compounds, formulations, pharmaceutical compositions, genes, polypeptides, proteins, vectors, transgenic organisms, modified organisms, and hybrid cells. Annex III emphasizes that disclaimers are not accepted
Read More