Enforcing IP Rights with the Customs in Vietnam: A Case Study

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shutterstock_118547785Border control can be an effective means for European SMEs for enforcing their IP rights in Vietnam, and it serves the purpose of preempting and suppressing IP counterfeits of SMEs’ products at Vietnam’s borders. Border control has gained more attention over the past few years from business owners wishing to protect their IP in Vietnam as the Vietnamese government recently granted the Customs more powers, making it more efficient.

Even though, Vietnamese Customs are actively looking for possible infringing products crossing the border of the country, it is advisable for the European SMEs to actively cooperate with the Customs authorities by recording their IP with the Customs and by actively monitoring the market and letting the Customs know of suspected infringing shipments, to fully benefit from the Customs protection.

How does Customs Protection Work

Vietnamese customs laws prohibit the importation of goods that infringe IP Rights, and Vietnamese Customs has the authority to impose fines on infringers and confiscate infringing goods for import. However, infringing goods for export are not subject to any penalties imposed by the Vietnamese authorities so far. If the infringement of IP Rights exceeds a certain threshold, the Customs authorities can also arrange criminal proceedings to be brought against the infringing party.

In order to fully benefit from the Customs protection, it is advisable for the SMEs to record their IP (trade marks and copyrights mostly) with the Vietnamese Customs. To seek customs recordal, SMEs must file an application with the Department of Customs Control and Supervision under the General Department of Customs. No later than 20 days from the receipt of the request, the Department of Customs Control and Supervision should notify the SMEs whether the application is accepted or not. The effective period of the recordal is two years from the date of the acceptance notice by the Department. The period may be extended for two more years upon request. After the extension period expires, companies must re-file a new application if they wish to pursue the customs recordal.

Although registering with Vietnamese Customs is not mandatory, it is advisable to be included to their database, as it will help the customs authorities to recognize counterfeit versions of SMEs’ product, and improve the chances of such suspect items being blocked at the border. If SMEs are aware of a suspected illegal shipment of their products, they can also work together with Vietnamese customs to detain such shipments.

It is particularly advisable for the SMEs to be vigilant and to report suspected infringements of their products to the Vietnamese Customs authorities because Infringers are demonstrating increasingly sophisticated counterfeiting methods, and are finding new ways to try to outwit the Customs and other IP enforcement authorities.

Case Study

This case study demonstrates the importance of cooperating with the Vietnamese customs to best protect company’s IP. It is particularly important because the Customs are generally looking out for identical products that are obviously infringing IP rights and could sometimes miss products that could be possibly infringing the original goods.

Background

A power supply company (Company A) has registered its mark ”SANTAK” in Vietnam since 1995 for “Uninterruptible Power Systems – UPS”. Further, ”SANTAK” is a well-known trade mark which has a large portion of the Asian market. Company A had information of a shipment of products bearing the sign ”SANTAKUPS” being imported from China by a Vietnamese company.

Advice

Company A was advised to register its mark ”SANTAK” with Customs and cooperate with the IP Enforcement and Anti-Counterfeiting Department within the General Customs Office and the Haiphong Customs Office to investigate and detect the shipment of products bearing the sign ”SANTAKUPS”.

Outcome

After the discovery of the shipment of 162 products bearing the sign ”SANTAKUPS” imported from China by a Vietnamese company, Company A’s representative requested the competent authorities to suspend the import procedures of the shipment. Haiphong Department of Custom issued a Decision to keep the shipment under custody according to administrative procedures. “SANTAKUPS” was written as one word, but the intent was to make a customer think that this was a combination of the words Santak and UPS. In this context, UPS is an abbreviation of uninterruptible power supply, so UPS did not create a distinction. Because of this, a comparison was only made with the word ”SANTAK” which was identical to the protected trade mark. Upon consideration of these findings, the competent Authority issued a Decision to apply sanctions under regulations of relevant Law: imposition of a high monetary fine and removal of “SANTAKUPS” from all infringing goods.

Lessons Learned

Through the registration of the mark with Customs as well as cooperation between Company A and Customs, Company A timely prevented the risk of infringement of trade mark in Vietnam by not only protecting their own interests in the market but also their reputation for the trade mark “SANTAK”.

South-East Asia IPR SME Helpdesk Team

 

SEA IPR

 

The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question@southeastasia-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.

The South-East Asia IPR SME Helpdesk is co-funded by the European Union.

To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.

IP Considerations for ICT Industry in South-East Asia

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The ICT sector is considered to play a pivotal role in supporting regional integration and connectivity efforts between the countries in South-East Asia. The latest ASEAN ICT Industry Masterplan 2016-2020 aims to propel ASEAN towards a digitally-enabled economy that is secure, sustainable, and transformative and to enable an innovative, inclusive and integrated ASEAN Community[1]. The ICT industry is one of the sectors presenting major business growth opportunities for EU SMEs in South-East Asia.

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Continue reading “IP Considerations for ICT Industry in South-East Asia” »

Explaining the New Regulations of Foreign Contractor Withholding Tax on Trade Marks in Vietnam

shutterstock_81193486-520x345In today’s blog post we asked our IP expert Mr. Son Doan to clarify the provisions of the Official Letter on taxing the transfer of the right to use trade marks, issued by the Ministry of  Finance of Vietnam. 

On 7 November 2016 the Ministry of Finance of Vietnam issued the Official Letter 15888/BCT-CST to provide detailed guidance on foreign contractor withholding tax (FCWT) applicable to income of foreign contractors from transfer of right to use a trade mark. According to the Official Letter:

  • Pursuant to the Law on Intellectual Property, when a Vietnamese party uses a trade mark and makes payments to a foreign party for the transfer of use right, this should be considered as transfer of the right to use a trade marks in accordance with the Law on Intellectual Property, distinguishable from the assignment intellectual property rights.
  • As a result the income of foreign contractors from transfer of the rights to use a trade mark should be subject to FCWT with applicable tax rates as follows:
    • CIT rate on taxable revenue is 10%
    • VAT rate is 10% (if foreign contractor declare VAT under the credit method) or 5% (if foreign contractors declare VAT under the deemed method).

This means that if a foreign owner fully transfers the ownership of a trade mark to a Vietnamese party, there will be no taxes applied. However, if the foreign company merely grants the right to use the brand to the local Vietnamese businesses, then Vietnam tax authorities will collect the CIT and also the VAT.  Continue reading “Explaining the New Regulations of Foreign Contractor Withholding Tax on Trade Marks in Vietnam” »

Patent Prosecution Highway Pilot Program and Patent Information Data Exchange Between Vietnam and Japan


patent-prosecution-highwayToday’s blog post has been kindly drafted for us by our IPR experts Mr. Max Ng and  Ms. Amira Nabila Budiyano from the Gateway Law Corporation, who will discuss the Patent Prosecution Highway Pilot Program between Vietnam and Japan. The Patent Prosecution Highway Pilot Program is important as it can accelerate the examination of patent applications in Vietnam. The experts will explain how the Patent Prosecution Highway works and how SMEs from Europe and around the world can benefit from the program.  

Background 

One of the problems currently faced by the National Office of Intellectual Property of Vietnam (“NOIP”) is the increasing backlog of patent applications, which is one of the main reasons for the delayed examination of patent applications in Vietnam. This may adversely affect the quality of patent examination, as the bigger the backlog, the less time the examiners would have for reviewing the patent applications. The backlog of patent applications may further hinder the innovation process of the country while also posing a real concern to foreign businesses and investors wanting to venture into the Vietnam market. The Patent Prosecution Highway Pilot Program between the NOIP and the Japan Patent Office (“JPO”), which came into effect on 1 April 2016, is therefore a much welcomed move by the NOIP to cope with the increasing backlog and accelerate examination of patent applications in Vietnam. Continue reading “Patent Prosecution Highway Pilot Program and Patent Information Data Exchange Between Vietnam and Japan” »

New Developments in Vietnamese IP Regulations on Internet Domain Names

shutterstock_167099189In today’s blog post we take a  look at the recent developments in Vietnamese IP regulations concerning Internet Domain names and analyse the implications of these regulations to the European SMEs. 

On the 8 June 2016 the Ministry of Information and Communication and the Ministry of Science and Technology issued a Joint Circular on the amendment and recovery of domain names which breach the law on intellectual property.  The Joint Circular introduces a set of administrative proceedings that are available under the Vietnamese Law on Intellectual Property, for companies experiencing internet domain name infringement disputes. Such measures include clear deadlines for infringers to ensure they stop their activities and return the domain names to their rightful owners, as well as steps that the authorities can take if the infringers refuse to obey these regulations. Continue reading “New Developments in Vietnamese IP Regulations on Internet Domain Names” »