Vietnam: Amendment on the IP law to create a safer environment for businesses

Vietnam: Amendment on the IP law to create a safer environment for businesses

Currently, Vietnam is in the process to join the international market and affirms its position with the neighboring countries. Therefore, it is crucial for Vietnam to have a thriving business habitat which is the backbone of the whole economy. Accordingly, the proposals for tighter trademark protection and opening up opportunities for new types of trademarks in the current draft amendments to the IP Law will facilitate the process of Vietnam entering and shining in the international market, and it will also help Vietnam with the creation of a safer environment for businesses to work with.

Trung Nguyen Coffee and Rice Field: Friend or foe?

In 2000, Trung Nguyen Coffee Company cooperated with Rice Field Company in the US intending to enter this market. After the initial contact, Trung Nguyen company discovered an ugly truth that its partner Rice Field had gone behind their back and registered their trademark. Although they immediately filed a complaint, it was not until two years later that Trung Nguyen company reclaimed its trademark. However, to settle the dispute, Trung Nguyen company still has to accept Rice Field to be its distributor of coffee products in the US.

Trung Nguyen Coffee’s battle with trademark registration in foreign soil. Source: vietnamnews

Trung Nguyen’s case is one of the first cases of infringement of intellectual property rights of Vietnamese enterprises abroad. Trung Nguyen Coffee Company has lost a lot of time and money in order to reclaim its trademark. It has become an expensive lesson for many people and companies when conducting businesses on foreign soil. However, more than 20 years later, the situation when their trademarks are lost due to not registering for protection in foreign markets still seems to be a familiar story.

Trademark registration in bad faith

Is this problem’s core reason because businesses are too careless not to register for protection early? Perhaps the businesses should not take full responsibility because they themselves are just victims. To get to the bottom of this problem, it is important to minimize cases of intentional pre-registration for bad faith trademark appropriation. Most of the trademarks that are appropriated usually have a certain reputation and position in the market. Therefore, some people/organizations often want to take advantage of the trademark’s influence to sell their products under the name of these trademarks or gain a profit by reselling the trademark to the true owner, etc.

This situation not only happens to Vietnamese enterprises when entering foreign markets but conversely, many domestic and foreign enterprises also face this problem in Vietnam. Registering a trademark with bad intentions not only causes damage to the rightful owner but also makes the business environment less friendly, affecting investment attraction in particular and the whole economy in general.

One of the typical cases that played both contrasting roles is Vinataba tobacco company. They are both the victim of trademark appropriation when entering foreign markets, and they are also the stealer of other trademarks when they are in the country. In 2002, Vinataba – the largest tobacco company in Vietnam also discovered that the trademark “Vinataba” had been registered by a company in Indonesia for protection in Japan, China, Korea, and most Southeast Asian countries. Faced with the risk of losing its reputation and export markets, Vinataba has sought to regain ownership of the trademark. Although it took a lot of time, effort, and money, they only managed to regain the brand name in a few markets. 

However, by 2016, Vinataba was in a completely opposite situation: they were in danger of being sued by an Indonesian tobacco company for having filed an application for protection of its tobacco brands in Vietnam. This case was so well-known and had a really bad influence on Vietnam’s image that the Government had a document directing the Ministry of Science and Technology and related units to handle this case. Because Vinataba’s argument is not convincing enough, the Vietnam Bar Association has suggested that Vinataba should not grant ownership of the above trademarks to avoid being sued by the Indonesian company in an international court, affecting the reputation of Vietnam. 

Amendment to the IP Law to create a safer environment for businesses

In the light of increasingly complicated trademark registration disputes, the recent draft amendments to the IP Law have proposed to add provisions to annul the entire validity of a protection certificate in case the applicant registers a trademark with bad faith. This new provision is expected to remove the long-standing difficulty that arises in the trademark registration process. 

According to current regulations, organizations and individuals have the right to request state management agencies to cancel the validity of industrial property protection certificates in the circumstance when the applicant does not have the right to register that trademark. The time limit for exercising this right is 5 years from the date of granting the protection certificate excluding the situation where the certificate is granted due to the applicant’s dishonesty. 

Amendment to the IP Law to create a safer environment for businesses

However, because the measurement of dishonest purposes of the applicant is not within the scope of protection standards but only within the scope of registration rights, leading to many cases where the applicant still meets the registration rights, but it was obtained due to the dishonesty/malicious intentions of the applicant. For example, there have been many cases where individuals/organizations take advantage of the trademarks that have not been registered in Vietnam to register the same or similar trademarks with the aim of taking advantage of the reputation of that mark to do business, or they only want to prevent or seek to resell these trademarks to foreign trademark owners when they enter Vietnam market (similar to domain name registration with bad intention).

In addition to the goal of solving the problem of trademark registration with bad intentions, the extension of this provision is also consistent with the current world trend. Although each country has different regulations on bad intentions in trademark registration, in the current globalized context, it seems that regulations on intellectual property in general and on bad intentions in trademark registration are becoming more and more stringent. One example of the countries that have added this type of regulation into their law is China. This country has supplemented provisions on this issue when amending their Trademark Law in 2019.

Extending opportunities for new trademarks

Not only strengthening the protection of existing trademarks, but this draft amendment to the IP Law also opens up opportunities for businesses to bring new trademarks to the market by proposing to reduce the time limit for consumers to forget a trademark from 5 years to 3 years. Specifically, individuals/organizations can register for the protection of trademarks that are identical or similar to a protected trademark on the condition that its trademark registration has expired for 3 years or more, instead of 5 years as before. They can also apply for registration if the trademarks are identical or similar to the ones that have been terminated due to lack of use for 5 consecutive years without good reason.

Creating opportunities for new businesses and new trademarks

The provision of a limited period allowing consumers to forget, or terminate the association with an old trademark that is no longer valid, is essential for consumer protection. However, “with the rapid development of the market economy, the more and more trademarks appear, the time a trademark is born and disappeared from the market is getting shorter and shorter, therefore, the time limit for a consumer to forget about the existence of a trademark in 5 years is no longer reasonable”, according to a report analyzing the draft amendments to the IP Law. 

The need to shorten the time limit becomes even more important in the context that the number of newly established businesses is increasing, leading to an escalation in the number of trademarks applying for registration, leading to a limit in trademark options. Therefore, reducing the duration of trademarks that are not practiced in actual use will create conditions for newly filed trademarks to have the opportunity to establish rights earlier, helping businesses to promptly bring products with trademark to the market.

ASL LAW is the top-tier Vietnam IP Firm. If you need any advice, please contact us for further information or collaboration.

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