Online intellectual property infringements related to industrial design are worrying investors, including those from the US, forcing state agencies to set forth an adequate legal mechanism to handle the situation.

Vietnam’s weak IP legislation and lack of enforcement are deterring foreign investment

Numerous counterfeit items are being put up regularly on many e-commerce platforms, Facebook pages, and websites, regardless of intellectual property (IP) regulations on industrial design and brand names.

Sendo.vn, matdep.net, mango.vn, pinterest.com, and many others were accused by Nguyen Nhu Quynh, vice chief inspector from the Ministry of Science and Technology (MoST), of selling fake items such as wrist-watches, handbags, sun glasses, and more, violating IP regulations. Quynh made the statement at an IP workshop held by the American Chamber of Commerce in Vietnam (AmCham) last week in Hanoi.

Lazada Vietnam is offering feature phone LV102, the industrial design of which is strikingly similar to Nokia’s feature phone Nokia 1280. This raises doubts about IP infringements relating to industrial design, though Lazada set up its policies for sales and IP with careful consideration of manufacturers and providers that sell items on its platform.

Meanwhile, information about the LV102’s manufacturer is sketchy, with the website (http://lvmobile.vn/dtdd-gia-re/lv-mobile/lv102-136.html) providing no information about the manufacturer or provider – only information on points of sale in Ho Chi Minh City and a hotline for sales.

Two working days after VIR’s queries sent on March 14, Lazada Vietnam gave no feedback on the origin and industrial specifications of the LV102 feature phone.

The majority of IP infringement cases were handled through negotiations and penalties from VND50 million ($2,283) – VND100 million ($4,400) – light levels against the ceiling of VND500 million ($22,830) as prescribed in existing legal documents. These treatments are claimed to be not strong enough deterrents to stop IP infringements.

IP infringement cases are normally handled through dialogue and negotiations between the parties. State agencies would intervene if dialogue and negotiations do not produce results. Such cases are handled in accordance with Circular No.11/2015/TT-BKHCN issued by the MoST in 2015, said Quynh.

In addition to the fines, under Circular No.47/2014/TT-BCT issued by the Ministry of Industry and Trade, entities violating regulations relating to IP and the sale of counterfeit, fake, or illegally-imported items on their websites are only asked to remove information related to such items from the websites.

MoST Deputy Minister Tran Van Tung affirmed that the robust development of technology aids many business models on e-commerce platforms, Facebook, and other social media networks. These pose challenges to state agencies in controlling and managing e-commerce activities coupled with the protection of IP.

The alliance between ministries and agencies has faced a variety of difficulties in preventing IP violations, leading to few positive outcomes. The deputy minister said that dialogue and negotiations between dispute parties would remain an effective way to deal with the situation.

Adam Sitkoff, executive director of AmCham Vietnam in Hanoi, told VIR that the challenges Vietnam faces can be solved. For example, the country could demand higher fines from people engaged in IP infringements and increase the number of cases brought to court. This would also require improving the capacity of people working in justice and the courts, as well as in inspection.

Sitkoff added that in the US, the local administration tries to create mechanisms that are very strict on enforcement. If entities in the US show a pattern of IP infringements, they can be brought to court. “We need to see more of that in Vietnam to deter people from committing IP violations. Since many firms are trying to grow their brand, maybe this could make them feel more comfortable doing business in Vietnam”.

Regarding the criminalisation of IP infringements, the AmCham executive director suggested that the Vietnamese government should look at behaviours over time to identify which are right or wrong and which are good for the economy. “It could learn from the experience of the multitude of countries which have criminalised IP violations in the past,” he said.

“Some countries enforce very strict laws and harsh penalties for IP violations, under the approach that if the country is protected by strict IP enforcement, the economy will do better. There are several technology companies from the US which hope to come to Vietnam, but they are scared or worried about IP, because the enforcement of IP-related mechanisms is weak,” Sitkoff said.

For foreign companies, top priority should be given to registering their industrial design in Vietnam before introducing their products to the market, Nguyen Nguyet Dung, head of the Vietnam branch of the International Association for the Protection of Intellectual Property, told VIR. If the products are marketed, then the industrial design applications are filed for registration and such industrial design will lose its novelty.

Further, foreign providers could set up a network of local sales agents or distributors who are responsible for checking, supervising, and investigating the market, in order to discover infringements in a timely manner. Foreign-invested enterprises may, in return, provide support to the local enterprise to quickly settle the infringement, efficiently deter the violators, and save costs for enforcement actions.

The idea of establishing a specialised IP court remains a long-term approach in Vietnam, Quynh said, unveiling that in a more drastic move, Vietnam has drafted a document which mentions the establishment of an IP-dedicated division as part of courts.

VIR