08 July, 2016
Spruson

Vietnam Update: New Penal Code enhances Intellectual Property protection

Vietnam Update: New Penal Code enhances Intellectual Property protection

On 1 July 2016 the new Vietnam Penal Code 2015 came into force, replacing the current Penal Code. The new Penal Code introduces a number of important changes related to trademarks and other intellectual property (IP) and will enhance the ability of brand owners to enforce their trademark and other IP rights.

The Penal Code 2015 introduces a number of important changes related to trademarks and other intellectual property, including most notably:

  • For the first time, criminal liability can be applied to legal entities (juridical persons, as opposed to individuals) for several crimes, including:
    • the crime of manufacturing and trading in counterfeit goods (Article 192);
    • the crime of manufacturing and trading in counterfeit foods, foodstuffs or food additives (Article 193);
    • the crime of manufacturing and trading in counterfeit curative medicines or preventive medicines (Article 194);
    • the crime of manufacturing and trading in counterfeit animal feeds, fertilizers, veterinary drugs, plant protection drugs, plant varieties and animal breeds (Article 195);
    • the crime of violating copyright and related rights (Article 225); and
    • the crime of violating industrial property rights (trademarks and geographical indications) (Article 226).
 
  • The criminal remedies applied to legal entities may include:
    • monetary fines;
    • suspension of business;
    • prohibition on doing business; and
    • prohibition on raising capital.
 

The application of criminal liability to legal entities will allow more robust and effective trademark and other IP investigations and prosecutions against organized crime. It will also help eradicate repeated crimes of manufacturing and trading in counterfeit goods, as well as goods infringing IP rights, particularly copyright, trademarks and geographical indications.

With respect to the crime of manufacturing and trading in counterfeit and infringing goods, the Penal Code 2015 provides for new, lower thresholds:

Counterfeits

Manufacturing or trading in counterfeit goods having a value of approximately USD89 or over (determined based on the selling price, the listed price, or the price specified in the invoice) is sufficient to constitute the crime of manufacturing/trading in counterfeit goods.

If it is not possible to determine the selling price of the counterfeit goods, the listed price or the price specified in the invoice for the counterfeit goods, the criminal threshold provided in Penal Code 2009 shall be applied, meaning that the act of manufacturing or trading in counterfeit goods shall constitute a crime if the value of the equivalent genuine goods amounts to approximately USD134 or over.

Infringements

Under the previous Penal Code, the act of intentionally infringing the rights protecting a trademark or geographical indication on a commercial scale was sufficient to constitute a violation of industrial property rights. However, there had been difficulty enforcing this provision because of the absence of guidelines on when an infringement was considered “on a commercial scale”.

The new Penal Code 2015 has removed the phrase “on a commercial scale” and provides the following threshold for the crime of violating industrial property rights.

 
  • the infringer gains an illicit profit of approximately USD445 or over;
  • the infringement has caused damage to the industrial property right holder of approximately USD890 or over; or
  • the infringing goods have a value of approximately USD890 or over.
 

The new Vietnam Penal Code 2015 is a welcome development for brand owners as it enhances the ability of brand owners to enforce their trademark and other IP rights.


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