New IP law amendments and counterfeiting report in Vietnam

Its been a busy week in Vietnam’s IP world. The International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy initiative (BASCAP) is a business driven program focused on stopping counterfeiting. It has released its first report on IP in Vietnam. Focusing on the prevalence of fake and pirated goods, the report identifies a series of problems that cause the widespread proliferation of fakes in Vietnam. They cite a large grey economy, corruption; weak enforcement systems and poor consumer awareness.  They report cites some recent developments but adds that more needs to be done. Their recommendations include:

• Better enforcement systems
• Legislative reform
• Use of international technical assistance
• The need for more capacity building in IP institutions

Vietnam's IPO is broadly supportive of the report. Progress has been made and there is more to do. they said at BASCAPS's report launch. 

In a separate step Vietnam’s Ministry of Industry and Trade has recently released amendments to the IP laws to comply with the CPTPP (see here for background). Among the amendments are:

1. Patent Novelty destroying disclosure exceptions are narrowed.

2. Trademark License recordal will no longer be compulsory

3. Legal Fees are limited in scope in Vietnam, but now, where a case is lost when a Court finds no infringement, the winner may claim losing appropriate lawyers’ fees.

The draft law has been submitted to the National Assembly for their review and adoption.

Criminal IP statistics in Vietnam and SE Asia

One of the major barriers to enforcement in SE Asia is the lack of transparency around counterfeiting and piracy crimes.  Raids may happen but with multiple bodies handling them in a country and often no consistency, data is rarely collected. Criminal prosecutions may or may not follow; some countries have rules as to when a crime is prosecuted or not. When the regular criminal courts hear cases, it is very hard to collect data from remote areas.

The Vietnamese authorities and specifically Steering committee 389 which covers IP issues, announced in March their 2016 results, in the presence of the Deputy Prime Minister. 223,260 cases investigated, 1560 prosecutions of 1863 defendants and recovery of UDS948 billion were the numbers used. But these covered smuggling trade fraud and counterfeiting.  In effect counterfeiting and piracy is buried in the data.  

Countries choose their own information collection methods and reporting so the net result is no clear comparable data. ASEAN says that it intends to as part of its proposed enforcement plan to help collect data on enforcement.

This is a critical need for the region; to help understand how effective enforcement actually is and where improvements are needed. Thailand for all the criticism does at least have clear data from its IP/IT court because only one court hears IP cases. The rest of the region can hide weaknesses through poor data; IP holders need to start to drive collection and review of data to improvements can be made.

Vietnam delays Penal Code revisions

Vietnam enacted its new Penal Code in 2015. It sought to improve penalties, to lower thresholds for certain types of liability, and to widen liability (to companies for example) for IP crimes. However the government was forced to suspend implementation. It was intended to be effective from 1 July 2016 but this has been postponed. The reason is that around 90 technical errors were found recently. Now the National Assembly is reviewing the code again and it will be revised then a new date for its effect given.

Countries frequently struggle with the increasing complexity of new laws conflicting with old ones. This issue has been common in the past in Vietnam. It is good this law was caught and inconsistencies can be ironed out before it came into effect.

Vietnam delays Penal Code revisions

Vietnam enacted its new Penal Code in 2015. It sought to improve penalties, to lower thresholds for certain types of liability, and to widen liability (to companies for example) for IP crimes. However the government was forced to suspend implementation. It was intended to be effective from 1 July 2016 but this has been postponed. The reason is that around 90 technical errors were found recently. Now the National Assembly is reviewing the code again and it will be revised then a new date for its effect given.

Countries frequently struggle with the increasing complexity of new laws conflicting with old ones. This allegation has been raised in Vietnam often before. It is good this law was caught and inconsistencies can be ironed out before it came into effect.

Windshield raid in Saigon

A raid by the Ho CHi Minh City Economic Police department uncovered a factory, Minh Hoang Ltd, Co. (located at Tan Tao industrial zone, Binh Tan district of the city) making counterfeit car windshields. The raid uncovered numerous counterfeit windshields for car brands such as Mercedes, BMW, Audi, Toyota and Kia. Mercedes and BMW representatives appear to be leading the case. Minh Hoang was uncovered through investigations to be importing blank windshields from China. Then they were cutting and silkscreen printing them with the brands. The fake products were sold at one tenth of the genuine product prices in Ho Chi Minh City. 

Vietnam counterfeiting and smuggling

A smuggling bust in Vietnam shows some of the unintended consequences of counterfeiting. A year ago police seized 4 trucks carrying genuine Gucci and Dolce & Gabbana clothes, accessories, shoes, and bags. The trucks were in the basement of the Sheraton Hotel in downtown Saigon.  Interpol was engaged to hunt for the owners of two local stores called Gucci-Milano.

2 businessmen were charged with smuggling but absconded. They led the luxury-goods smuggling ring that was uncovered in late 2012. What has now been uncovered is that the goods were genuine, made in Italy, but they had been declared as Chinese-made goods in the customs declarations. The real aim was avoiding import tax on the authentic prices. The ring had apparently previously sent shipments from Italy via Hong Kong then on to Vietnam. Customs would accept them in Vietnam as Chinese-made fakes.

Its a clear example of how many other crimes are committed in the course of counterfeiting. Smuggling, tax evasion, lack of business registration and similar problems follow, when counterfeiting is a widespread and accepted method of business.