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Fake Goods and Counterfeit Trademark Goods Under The Laws of Vietnam

08

JUL

2020

ICC Bascap to release first time its report on counterfeiting and piracy in Vietnam

For the first time, a 39-page comprehensive report on intellectual property matters in Vietnam including the current situation of infringement of intellectual property rights, counterfeit goods and pirated goods was issued at the initiative of the International Chamber of Commerce (ICC) which is shortly called as the ICC Bascap named "Promoting and Protecting Intellectual Property in Vietnam" in cooperation with the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam International Arbitration Center (VIAC) [1].

In terms of the infringement of intellectual property rights, there are three most alarming issues from the ICC Bascap’s report:

  1. The situation of fake and contraband goods at an alarming level in Vietnam contributes positively to the underground economy (sometimes known as “the economy has not been observed”) worth up to tens of billions of dollars, making the State lose tax revenue and the consumers’ health is at risk. Counterfeit goods are available in all areas from textiles, cosmetics, pharmaceuticals, spirits, food and software
  2. Intruders are increasingly sophisticated because they use sophisticated counterfeiting technology to disable detection, with a focus on faking big brands
  3. Infringement of intellectual property rights is growing rapidly and is popular on the internet environment, focusing on illegal webs, unauthorized distribution and dissemination of copyrighted work and products in cracked, livestreamed manner, etc.,

How to distinguish the fake goods and counterfeit trademark goods

Counterfeit goods are generally understood to be a particular type of consumer goods which has been forged in terms of the outer appearance (external form) or the quality compared with the genuine goods produced by the latter’s genuine manufacturer to make or deceive consumers hardly distinguish which one is fake or genuine.

Legally, if one gives a direct definition of what a fake product is then it may be likely to be much controversial or debatable, so an indirect definition by listing out which goods are to be considered counterfeit seems to be better. According to Decree 185 / ND-CP of November 15, 2013[2], there are 8 categories of goods, if falling into one of the following circumstance, they must be classified as counterfeit goods:

  1. Goods of no use value or utility; having use value, utility but not in accordance with the natural origin, appellations of the goods; having use value, utility but not in accordance with the use value, utility as announced or registered;
  2. Goods with a quantitative content of the main substance or a total of nutrients or other basic technical features only reachs 70% or less in comparison with the quality specification or regulatory standards as registered, declared that was indicated on the label or packaging of goods
  3. Preventive and curative medicines for humans and animals without pharmaceutical substances; having pharmaceutical substance but not in accordance with content as registered; not enough numbers of pharmaceutical substances as registered; having pharmaceutical substances different from those stated on labels or goods packages.
  4. Plant protection drugs without active ingredients; content of active ingredients reaches only 70% or less compared to quality standards and technical regulations already registered and announced to apply; not enough kinds of registered active ingredients; there are active ingredients other than the active ingredients inscribed on the goods labels or packages;
  5. Goods with goods labels, goods packages forging other trader’s name or address; falsifying trade names or brand names of goods; forging circulation registration codes, barcodes or forging goods packages of other traders;
  6. Goods with goods labels, goods packages containing falsified indications on the origin of goods, places of production, packaging, or assembling goods;
  7. Goods counterfeiting as to intellectual property specified in Article 213 of the 2005 Intellectual Property Law;
  8. Forged stamps, labels and packaging.

Out of 8 types of fake goods mentioned above, there is at least one type of counterfeit goods directly relating to the infringement of intellectual property rights called as the intellectual property counterfeit goods. The intellectual property counterfeit goods are actually originated from the term "counterfeit goods" or "counterfeit trademark goods" provided in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs agreement[3]) to which Vietnam is a member and Vietnam is obliged to transpose it into its national law as a prerequisite for Vietnam to have been accepted as the 150th member of the World Trade Organization (WTO)[4].

Acts of infringement of intellectual property rights in general or trademark infringement in particular must be, of course, handled by administrative or / and civil measures under the laws of Vietnam[5]. However, an infringement subject to either administrative penalty or civil court injuction with damage claim is not sufficient in serious circumstances at the request of the TRIPs agreement, thereby Vietnam is also forced to criminalize trademark infringement if it is concluded as counterfeit trademark goods and was actually carried out on "a commercial scale"[6].

The Vietnamese IP Law introduced the above obligations imposed by the TRIPs agreement into its Article 213 providing that intellectual property counterfeit goods comprises 3 types: (a) trademark counterfeiting, (b) geographical indication counterfeing, and (c) pirated goods, in which the counterfeit trademark goods are defined as goods or packages of goods containing the trademark or mark which are identical or almost indistinguishable from the validly registered trademark for the very goods without the rightholder’s permission[7].

In conclusion, fake goods may be counterfeit trademark goods or in contrast, counterfeit trademark goods may be fake goods as long as they fall into any of the 8-type list of fake goods stipulated by Decree 185/2013 / ND- CP or described in Article 213 of the Intellectual Property

Administrative liability or criminal punishment must be determined against infringer?

A special attention should be paid to the fact that as provided by the Vietnamese laws, infringer (an individual or organization) who manufactured, traded or circulated counterfeit goods may avoid criminal liability (only administrative sanction is applied[8]) where that infringer’s production, trading in or circulating said above is, under the general rule, concluded to have not yet constituted the mandatory criminal constituents stated in the 2015 Penal Code.

The act of production or trading in fake goods (unnecessarily related to counterfeit trademark goods) that are the food, medicine for humans must theoretically be prosecuted criminally in accordance with Articles 193 and 194 of the 2015 Criminal Code as revised respectively, regardless of the commercial scale or the monetary value of the confisticated fake goods because the fundamental constituents of penal liability of manufacturing or trading in the fake goods in the form of food, foodstuffs, food additives are that offender shall be jailed between 2 and 5 years[9], while the fake goods in the form of medicines then the offender shall be imprisoned between 02 and 07 years[10].

Where the act of manufacturing or trading in counterfeit trademark goods, which are determined as the one of counterfeiting other’s registered trademark in accordance with Article 213 of the Intellectual Property Law, may, in principle, be criminally punished under Article 226 of the 2015 Criminal Code as revised. Under Article 226, an individual may be subject to a principal (criminal) penalty of between VND 50 million and VND 1 billion, non-custodial reform for up to 3 years, or imprisonment of between 6 months and 3 years, if such individual's infringement simultaneously satisfies the three constituents of crime:

(a) such individual committed the wilful infringement, and

(b) the subject matter being infringed is the counterfeit trademark goods or forged geographical indication, and

(c) the infringement was committed on a commercial scale, or has illegally made a profit of between VND 100 million and VND 300 million, or caused damage to the trademark owner between VND 100 million and VND 500 million, or infringing goods worth between VND 200 million and VND 500 million

Independent of the criminal liability that the offender made in the preceding paragraph, a commercial corporation (a for-profit entity or company) may also be subject to criminal prosecution under Article 226[11], for example, in the case of counterfeit trademark “Nhôm Việt Pháp Shal[12]. According to clause 4 Article 226, the principal penalty applicable for the legal entity, where the infringement is determined to meet the basic criminal constituents, is the monetary fines of between VND 500 million and VND 2 billion or forcible suspension of business operations for a period of between 06 months and 02 years, or where the aggravating circumstance is found under Clause 2 Article 226, the principal punishment applied would be a fine of up to VND 5 billion, if the following crime-forming elements are satisfied:

  1. The commercial entity commited the infringement with intentional faults, and
  2. The subject matter being infringed is the counterfeit trademark goods or forged geographical indication, and
  3. the infringement was conducted on a commercial scale, or has earned unjust profit of between VND 200 million and VND 300 million, or caused damage to the trademark owner between VND 300 million and VND 500 million, or the infringing goods worth between VND 300 million and under VND 500 million, or the infringing goods valued between VND 100,000,000 and VND 300,000,000 but have been administratively sanctioned for such acts.


[1] Full report may be found at: https://iccwbo.org/publication/icc-bascap-promoting-and-protecting-intellectual-property-in-vietnam/. The relevant information around the publication of this report can be found in the article “ICC BASCAP publishes first report on counterfeiting and piracy in Vietnam”: http://www.viac.vn/en/news-events/icc-bascap-publishes-first-report-on-counterfeiting-and-piracy-in-vietnam-n188.html; or see more the talk show “Senior Partner Le Quang Vinh, Bross & Partners, shared with the Hanoi Television’s audience in terms of “the Vietnamese IP Law and its inadequacies needed to be amended: http://bross.vn/newsletter/ip-news-update/Senior-Partner-Le-Quang-Vinh-Bross--Partners-shared-with-the-Hanoi-Television%E2%80%99s-audience-in-terms-of-%E2%80%9Cthe-Vietnamese-IP-Law-and-its-inadequacies-needed-to-be-amended%E2%80%9D; or the video link: http://hanoitv.vn/ha-noi-nhung-goc-nhin-luat-so-huu-tri-tue-va-nhung-bat-cap-can-khac-phuc-v117044.html)

[2] See Clause 8, Article 3 of Decree 85/2013 / ND-CP on sanctioning of administrative violations in commercial activities, production, trading in fake goods, banned goods and consumer protection

[3] The definition of “counterfeit trademark goods” is stated at Footnote 14(a) of the TRIPs agreement:

"counterfeit trademark goods" shall mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation”

[4] See more: https://www.wto.org/english/thewto_e//countries_e/vietnam_e.htm

[5] Pursuant to Article 202, Clauses 1 & 2, Article 205 of the Intellectual Property Law of 2005, regardless of whether trademark infringement has been administratively handled or not, the trademark owner (plaintiff) can initiate a civil lawsuit demanding the court to force the violator (the defendant) to stop the infringement and compensate for material damage of up to VND 500 million or higher (if the actual material damage can be proven at the amount higher than VND 500 million) and spiritual damage in maximum of up to VND 50 million

[6] Article 61 the TRIPs agreement

Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale.

[7] Article 213 of the IP Law. Intellectual property counterfeit goods

1. Intellectual property counterfeit goods regulated in this Law comprise goods bearing counterfeit

marks and goods bearing counterfeit geographical indications (counterfeit mark goods) defined in clause 2 of this article and pirated goods defined in clause 3 of this article.

2. Counterfeit mark goods means goods or their packages bearing a mark or sign which is identical with

or indistinguishable from a mark or geographical indication currently protected for those very goods,

without permission from the mark owner or organization managing the geographical indication.

3. Pirated goods means copies made without permission from the copyright holder or related right holder.

[8] Readers those who are keen on finding out how the legal sanctions of criminal, civil or administrative shall be applied to infringements of intellectual property rights as well as how to identify and anticipate the applicabily of each of them in practice can more view our Q&A published by the Legal 500 Asia Pacific titled All-inclusive understanding of the IP Laws and practices of Vietnam including three types of patents, copyright and plant varieties contributed by Bross & Partners are alive in the form of the comparative guide by the Legal 500, namely Part 1: http://bross.vn/newsletter/ip-news-update/PART-1-ALLINCLUSIVE-UNDERSTANDING-OF-THE-IP-LAWS-AND-PRACTICES-OF-VIETNAM-INCLUDING-THREE-TYPES-OF-PATENTS-COPYRIGHT-AND-PLANT-VARIETIES-CONTRIBUTED-BY-BROSS--PARTNERS-ARE-LIVE-IN-THE-FORM-OF-THE-COMPARATIVE-GUIDE-BY-THE-LEGAL-500, and Part 2: http://bross.vn/newsletter/ip-news-update/PART-2-ALLINCLUSIVE-UNDERSTANDING-OF-THE-IP-LAWS-AND-PRACTICES-OF-VIETNAM-INCLUDING-THREE-TYPES-OF-PATENTS-COPYRIGHT-AND-PLANT-VARIETIES-CONTRIBUTED-BY-BROSS--PARTNERS-ARE-LIVE-IN-THE-FORM-OF-THE-COMPARATIVE-GUIDE-BY-THE-LEGAL-500

[9] Clause 1 Article 193 of the 2015 Penal Code as revised took effect from January 1, 2018 (crime of manufacturing and trading in counterfeit goods is food, food, food additives) stipulates “those who manufacture or trade in fake goods being food, foodstuffs, food additives, shall be jailed between 2 and 5 years

[10] Clause 1 Article 194 of the 2015 Penal Code as revised took effect as from January 1, 2018 (cime of manufacturing and trading in counterfeit goods being curative and preventive medicines): those who manufacture or trade in fake goods being curative and preventive medicine shall be imprisoned between 02 and 07 years.

[11] To more understand criminal punishment applicable for corporate, see more “Some updates and comments on IPR-related corporate criminal liability: http://bross.vn/newsletter/ip-news-update/Some-Updates-and-Comments-on-IPRrelated-Corporate-Criminal-Liability-1261

[12] According to the article "Vụ án xâm phạm quyền sở hữu công nghiệp được phát hiện như thế nào?” published on December 6, 2019 by the newspaper Công an nhân dân online, a criminal case was instituted against both of the accused and his company per se regarding the seized amount 42,405 aluminum profiles (about 170 tons) in the Trung Ha Industrial Park, Tam Nong, Phu Tho province bearing the counterfeit trademark "Nhôm Viet Phap Shal". This is the first criminal case in Vietnam that criminal investigation authority already instituted against a legal entity. See more (only in Vietnamese): http://cand.com.vn/Lan-theo-dau-vet-toi-pham/Vu-an-xam-pham-quyen-so-huu-cong-nghiep-duoc-phat-hien-nhu-the-nao-572863/

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