New decree on unfair competition to enter into force

Decree 71/2014/ND-CP, issued by the government on July 21 2014, will enter into force on September 15 2014, superseding Decree 120/2005/ND-CP of September 30 2005 on competition violations.

In addition to providing remedies against practices restraining competition and other unfair competition practices, Decree 71 also provides remedies against the following unfair competition acts in relation to industrial property:

1. Use of a trademark protected in a country that is party to a treaty to which Vietnam is also party, which prohibits the use of such mark by a representative or agent of the trademark proprietor without the authorisation of the proprietor and without justifiable reason;

2. Registering, possessing the right to use or using a domain name identical with, or confusingly similar to, the protected trade name or trademark of another or a protected geographical indication, for the purpose of benefiting from or prejudicing the reputation and goodwill of the mark, trade name or geographical indication; and

3. Use of commercial indications containing misleading information about trade names, business slogans, business logos, packaging, geographical indications, trademarks, product labels and other facts in order to mislead consumers in their understanding of goods and services for competitive purposes.

Remedies against the abovementioned violations include:

• financial penalties of up to D200 million (approximately $9,400) for corporate infringers and D100 million (approximately $4,700) for individual infringers;
• confiscation of the infringing goods or means of committing the violations;
• recovery of the profits derived from the violations; and
• compulsory public correction.

These remedies can be sought by initiating legal proceedings before the Vietnam Competition Authority (DCA) of the Ministry of Industry and Trade, as provided in Decree 116/2005/ND-CP dated September 15 2005.

The abovementioned provisions of Decree 71 seem to conflict with the provisions of Decree 99/2013/ND-CP dated August 29 2013, which set out a different system of remedies and procedures whereby other competent authorities, such as the Inspectorate of Science and Technology, the Inspectorate of Information and Technology and Vietnam Customs, can issue administrative sanctions for the same IP-related unfair competition acts.

The financial penalties provided by Decree 71 are different from those set forth in Decree 99 (ie, some are more lenient while others are stricter). Moreover, contrary to Decree 99, Decree 71 does not provide for supplementary measures such as the revocation of the infringing domain names or the destruction of the infringing goods. Further, although litigation is expensive, time consuming and unpredictable, the administrative procedure set forth in Decree 99 is still the preferred option for brand owners seeking to stop IP-related unfair competition acts.

Decree 71 removed an important provision that was included in Decree 120, according to which “the power of other authorities to impose penalties for breaches of the provisions on unfair competitive practices relating to intellectual property rights shall be determined in accordance with the law on administrative offences”. Therefore, it is now unclear whether the pre-existing system under Decree 99 will continue to be valid for IP-related unfair competition acts. This is a real concern for brand owners because the system of remedies set forth in Decree 71 is not sufficiently detailed to deal with IP-related unfair competition acts effectively, and the legal proceedings before the DCA will be more complex and take longer compared to the administrative procedure under Decree 99.

Son Doan, IPMAX Law Firm, Hanoi