Administrative remedies against counterfeit goods other than 'IP counterfeit goods' introduced

On November 25 2013 the government issued Decree 185/2013/ND-CP on handling administrative violations related to manufacturing and trading in counterfeit and banned goods, as well as consumer protection. In addition to remedies against violations related to the production and trading of banned goods, trade promotion, e-commerce and the violation of consumer’s rights, Decree 185 also provides remedies applicable to acts of manufacturing and trading in counterfeit goods that do not meet the threshold for criminal liability.

The decree introduced a detailed penalty system based on the “value of the equivalent genuine goods”, up to D120 million (approximately $6,000). Additional types of remedies include:

• confiscating exhibits and instruments used to commit violations;
• temporarily revoking the practice certificate or licence of the infringer - this measure can be applied in cases of repeated violations or recidivism;
• ordering the destruction of the counterfeit goods;
• ordering the transfer of profits resulting from the production of counterfeit goods to the State budget; and
• ordering the recall and destruction of goods that have already been sold and are in circulation.

Notably, Decree 185 defines ‘counterfeit goods’ as including the following types of goods:

• counterfeit goods having no actual use value (goods whose uses are not consistent with their nature, names, or announced or registered functions);
• goods for which the level of primary substances, nutrients or technical properties only reaches 70% or less compared to the quality standards and technical regulations that have been registered, announced or written on the label or packaging;
• medicines for humans and domestic animals that have no pharmaceutical substances, or which contain an amount of pharmaceutical substances that is not consistent with the registered specification, or which do not contain all the pharmaceutical substances specified, or which contain pharmaceutical substances other than those written on the label or packaging;
• plant protection drugs that do not contain active ingredients, or which contain an amount of active ingredients that reaches only 70% or less compared to the quality standards and technical regulations that have been registered or  announced, or which do not contain all the active ingredients specified, or which contain active ingredients other than those written on the label or packaging;
• goods using labels and packaging where the names and addresses of other traders, or the trademarks, brand names, circulation licence numbers, bar codes or packaging of other traders, are forged;
• goods whose labels or packaging contain fraudulent information about the place where the goods have been produced, packaged and assembled;
• ‘intellectual property counterfeit goods’, as prescribed by Article 213 of the Law on Intellectual Property 2005; and
• counterfeit stamps, labels and packaging.

Under Article 213 of the Law on Intellectual Property, ‘intellectual property counterfeit goods’ include counterfeit trademark goods (ie, goods or packaging incorporating a mark or a sign which is identical to, or substantially indistinguishable from, a protected trademark or geographical indication) and pirated goods.

Acts of manufacturing and trading in ‘intellectual property counterfeit goods’ will still be subject to the fines and remedies set forth in Decree 99/2013/ND-CP on Sanctioning Administrative Violations in the Field of Industrial Property, which came into force on October 15 2013. More often than not, in practice, ‘counterfeit goods’ will fall into the category of ‘intellectual property counterfeit goods’ and the enforcement authorities will apply the provisions of Decree 99, which, in many cases, allows the authorities to impose much higher levels of fines and remedies.

Decree 185 took effect on January 1 2014.

Son Doan, IPMAX Law Firm, Hanoi