Vietnam's commitment to joining the WTO has resulted in substantial development of its IP system over the last five years. The biggest change was the new IP Law, which became effective on July 1 2006. A series of implementing decrees on copyright, industrial property, intellectual property protection and administrative sanctions in industrial property field were also promulgated in 2006. These all led to a complete overhaul of trade mark, copyright, patent, and plant variety laws.

In addition, in 2005 the Civil Procedure Code and the Competition Law became effective. International Conventions have also been signed: the Berne Convention (2004); Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (2006); and Geneva Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms (July 2005). Internationally recognized collective management organizations were also established with respect to musical works (Vietnam has been a Cisac and BIEM member since November 23 2005).

Two anti-counterfeiting associations have been established: the Association for Anti-Counterfeiting and Brand Protection of Vietnam and the Vietnam Anti-Counterfeiting and IP Protection Association of Foreign Invested Enterprises. Vietnam has also set up a new IP enforcement unit within the National Economic Police and established a new Department of Competition Administration under the Ministry of Trade.

It is therefore increasingly important for IP rights holders to review their strategies in a jurisdiction where, on the one hand, the law is constantly changing and, on the other, infringers of intellectual property rights are becoming more and more sophisticated.

Enforcement practice

Although the system has been greatly improved, many difficulties still exist – due more to poor implementation of the laws than inadequacies in the laws themselves. The administrative procedure is still the most common route for quick enforcement. Trade mark and registered design rights are the most easily enforced. Enforcement against acts of unfair competition, infringement of geographical indications, patents or copyrights is possible, but requires greater effort. The laws also provide for the protection of other IP rights (IPRs), such as rights over confidential information, layout design of integrated circuits and plant varieties but enforcement of these rights is difficult due to the enforcement authorities' lack of experience in this area.

Administrative procedures

The following authorities are competent to conduct administrative enforcement:

• The Economic Police (EP): The EP is the most powerful force. It will, however, only take on cases which involve serious infringement on a large scale, large quantities of stock or a network of infringers, or which pose a danger to consumers (for example, pharmaceutical or foodstuffs).

• The Market Management Bureau (MMB) (under the Ministry of Trade): The MMB will undertake activity at market level, for example, small to medium workshops and retail outlets.

• The Inspectorate of Science and Technology (under the Ministry of Science and Technology): This body has a better knowledge of industrial property, and can deal with complicated infringement issues such as design infringement, infringement of geographical indications and acts of unfair competition. However, it usually liaises with the EP or MMB because it requires manpower and practical assistance in any action.

• The Inspectorate of Culture and Information (under the Ministry of Culture & Information): This is a specialized inspectorate that can take action against copyright infringement. Its enforcement capability is similar to that of the Inspectorate of Science and Technology.

• The People's Committee at various levels: The People's Committee at city and provincial levels rarely deals with IPR infringement. However, it provides decisions on sanctions if they could have an impact on the community.

Remedies

Remedies available in Vietnam include warning, monetary fines, seizure or sealing of infringing goods, destruction (or removal or exclusion from channels of commerce) of infringing elements and suspension of the infringer's business operation within the field of infringement (with a time limit).

The laws provide detailed principles for the determination of sanctions, and the level and form of infringement, but the imposition of many of these sanctions is discretionary, not mandatory. It is up to the relevant authority to determine whether or not an infringement is small or large scale, and whether or not it is organized. So in many cases the level and form of the sanctions to be applied will depend on the view of the authority.

The limitation period for applying administrative sanctions is two years commencing from the date the IP infringement takes place.

Confirmation of infringement

It was common for authorities to require an NOIP opinion to confirm infringement before any action could be taken, especially for infringement not involving identical copies. The problem now is that the NOIP stopped issuing opinions on IPR infringement and acts of unfair competition from October 2006. There is a provision in the new IP Law that only IP assessors will have this function. However, at time of writing there is no detailed guidance on IP assessors. So, while the NOIP has stopped providing its opinion for authorities, there is no other body set up to replace it. This inevitably causes delay for the IPR holder seeking action from the authorities. It is hoped that the guidance on IP assessors will be soon promulgated.

Warning

According to the IP Law, warning (normally in the form of a warning letter) must be given in advance of any raid action in relation to infringements that do not involve counterfeit branded goods and that are not thought to cause damage to consumers or society.

Acts of unfair competition

As IPR protection in Vietnam has developed, infringers are moving away from direct infringement to imitating packaging, and other forms of unfair competition.

Unfair competition cases relating to IPR should be filed with the Department of Competition Administration (DCA) under the Competition Law 2005 (the NOIP stopped handling unfair competition complaints in July 1 2006). However, although this is an administrative action the legal procedure at DCA is complicated, and compares with civil Court proceedings but it does not have the same powers as the Court. It has not been as effective as was anticipated initially and few cases go to DCA. Alternatively, complaints can be lodged with other competent authorities, for example, the Inspectorate of Science and Technology at a provincial level or the Market Management Department. Settlement by the Ministry of Science and Technology inspectors would be preferable, as they have good IP knowledge and are willing to take difficult cases.

Although the burden of proof is on the complainant in DCA cases, the DCA may also conduct its own investigation. Acts of unfair competition are subject to the following remedies:

• monetary fine from D5 million to D20 million ($300 to $1300);

• confiscation of goods and facilities for commission of the offence, and profits gained from the offending practices; and

• public apology.

The complainant may also seek compensation for damages caused by the act of unfair competition. However, compensation can only be obtained through Civil Court proceedings, and not through DCA or other administrative routes.

Civil Court procedures

Courts have not generally been used for infringement actions, at least not as a first step. This is because of delays and a lack of certainty as to outcome. However, the new IP Law clearly envisages that more disputes will go to court.

The limitation period for commencing a legal court proceeding is two years from the date the dispute/infringement takes place. The burden of proof is on the plaintiff, while the Civil Court, acting on its own, may carry out investigations to collect evidence. Conciliation is a compulsory process. The first hearing will be scheduled within three to four months (or six months in complicated cases). However, the process could be delayed many times and it could be up to one year before the first hearing takes place. The defendant may also appeal against the Court decision at the first hearing, and may use the appeal process as a tactic to delay enforcement of the decision. The procedure for reviewing the Court decision could take 8 to 12 months.

A request for a preliminary injunction can only be made upon or following, the filing of a petition to initiate a Civil Court case. If the request for a preliminary injunction is made in due form, the judge must issue a decision within 48 hours of receiving the request. However, this practice is still new and has not yet been applied by the Court. The Court may, at the request of a party, order:

• the sealing/seizure, or prohibition of transfer, of the assets in dispute;

• a propitiatory or mandatory injunction; and

• the collection and preservation of products/evidence.

The plaintiff is obliged to lodge a bond, equivalent to 20% of the total value of the relevant infringing goods or if the value cannot be assessed, D20 million, for possible compensation if the preliminary injunction is wrongly granted.

For the first time, the IP Law contains provisions on compensation for financial and psychological damage caused by the infringement of IPRs. Damage includes loss of income and profits, reasonable expenses to prevent infringement, reasonable fees payable to lawyers, loss of business opportunities, decrease of business prestige and other indirect losses. The plaintiff must prove material loss. If it is unable to do so, the Court will determine the amount (the maximum level of compensation will be D500 million).

Criminal procedures

The production and/or sale of counterfeit goods constitutes a criminal offence under the Criminal Code, which provides for punishment by imprisonment of six months to five years if (i) the value of the genuine goods is D30 million to D150 million; (ii) there are serious consequences; or (iii) it is recidivist offence. Depending on the seriousness of the consequences and on the nature of the products (for example, foodstuffs and medicines), the offence could lead to imprisonment for between two to 20 years, or even a life sentence or death penalty. In reality, no criminal action will be instituted unless the police and the prosecutor consider the matter extremely serious.

IPR infringement can also constitute a criminal offence if the infringing activities are for business purposes, have serious consequences, or are of a recidivist nature. In these cases, the financial penalty will be D20 million to D200 million. Imprisonment for six months to three years will be imposed if the infringing activity is organised or has extremely serious consequences. Again, this is not common.

Customs

Both the Customs Law and the IP Law provide that Customs authorities are one of the bodies responsible for IPR enforcement at the border, and can implement measures against the import and export of goods infringing IPR.

The Customs Law provides only for Customs monitoring of counterfeit branded products (using identical or almost identical trade marks, to the extent that ordinary consumers could not distinguish them from genuine products) and pirated copyright goods.

When Customs detects infringing goods, it will intercept them and immediately notify the IPR owner in writing. The IPR owner will be required, within three days, to lodge a bond for possible compensation in case the goods have been wrongly seized, unless a bond has been lodged earlier.

Once a bond has been provided, the Customs authority will issue a decision to suspend release of the goods for 10 days. This period may be extended for a further 10 days at the request of the applicant. During the period of suspension, the applicant will be required to submit a request for settling the infringement or initiate civil court proceedings against the infringer.

In general, as well as lack of detailed guidance for IPR enforcement, there is a shortage of IPR information. An IPR database for Customs is planned, but it will require substantial resources. Among other solutions, Customs seeks to establish close cooperation with IPR holders to enrich its database and promote its enforcement practice. There should also be greater cooperation between Customs and other enforcement bodies.

Better enforcement needed

The IPR environment in Vietnam at the moment is ever changing. Since the new IP Law became effective in 2006 there have been further changes. Ultimately, a good IP court system is required so that IPR holders can feel comfortable that their rights are properly protected in this fast-growing and fast-changing environment.

Chris Vale

Vale joined the London office of Rouse & Co International in January 1998 and became a partner of Rouse Legal (formerly Willoughby & Partners), the UK legal arm of Rouse & Co International, in January 2003. From 2001, he worked for Rouse & Co International in Indonesia, Vietnam, Beijing and Thailand before settling in Hong Kong. He now manages Rouse's Vietnam offices. Vale has extensive contentious and non-contentious IP experience. He advises on global IP strategy and brand management for a number of leading brand owners in a variety of sectors, including sport, pharmaceutical, entertainment, apparel, and confectionery. He has also lectured in Asia and Europe, and written extensively, on IP issues. He is a qualified solicitor in England and Wales, and Hong Kong.

Rouse Legal, the English Law Firm of Rouse & Co International Group (Rouse & Co), has been granted a licence for the establishment of its branch office in Vietnam, enabling it to provide the full range of legal services, including intellectual property which is of course the firm's main focus. Rouse Legal in Vietnam is now in the process of applying for an IP agency licence with the National Office of Intellectual Property (NOIP) to enable it to handle all IP matters directly with the NOIP. Rouse Legal in Vietnam hopes that it will be the first foreign law firm to obtain such a status. For over 10 years, Rouse & Co's multi national client base has been advised in Vietnam initially by an association with an IP consultancy company and more recently through its association with a Vietnamese law firm, Doan Hong Son Law Office. The opening of Rouse Legal obviously strengthens its practice in Vietnam and consolidates its position as the leading international IP service provider in Vietnam. Chris Vale will be the Managing Lawyer of the Rouse Legal practice in Vietnam.