Penalty rates for trademark counterfeiting of enterprises in Vietnam

Trademark belongs to the protected subjects by the law of Vietnam as well as the world. Along with the development of the economy, violations of trademarks keep increasing in these years, especially the counterfeiting of trademarks. So, how does the law regulates and handles this issue? Will trademark violators face penalization from the state? In this article, LSX legal firm will provide you with: “Penalty rates for trademark counterfeiting of enterprises in Vietnam”

Legal grounds

• Law on Intellectual Property 2005
• Criminal Code 2015
• Decree 98/2020/ND-CP

Trademark registration under Vietnamese legislation?

Trademark registration, a procedure that individuals and organizations need to carry out to legalize their trademark ownership; and publicize their brand on the mass media.
Registration of trademark means a method of publicizing a trademark. When a registered trademark published, a large part of customers will access it. As a result, customers may identify your brand with the brands of other individuals and organizations.

After individuals and organizations granted a protection title, the owner’s trademark becomes an exclusive trademark. As a result, the owner has the right to use without any other subject infringing the trademark throughout the territory of Vietnam.

• Owners have the right to own, use and exploit their logos, and trademarks within the scope of legal protection;
• The owners have the right to request legal protection when having infringement acts as well as acts of unfair competition that violate the rights of owners regarding trademark protection.

Why register a trademark protection?

Trademark is a sign to distinguish goods and services of individuals and organizations. This is to show who is the producer or service provider.
According to the law, the NOIP (The National Office of Intellectual Property of Vietnam) will refuse to register if the mark is likely to make confusion with another mark.
Registering trademark protection helps enterprises prevent their rivals rom using that mark to profit from the registered trademark. In case that an enterprise intentionally trades potentially misleading products with the trademarked, the trademark owner can initiate a lawsuit to claim compensation.
One of the competitive advantages in today’s developed economy is that businesses can build their brand’s reputation. The registration of trademark protection for enterprises not only promotes brand promotion activities but also creates trust in relationships with customers. On the other hand, the enterprise also has a legal basis to protect its interests against the illegal use of that mark.

Penalty rates for trademark counterfeiting

In fact, many organizations and individuals for the purpose of gaining illicit profits or reducing the trademarks’ reputation for unfair competition have seriously infringed upon the registered trademarks of organizations and individuals through trademark counterfeiting. This act violates the regulations of the law regarding intellectual property protection and will face administrative sanctions or investigation for criminal liability.

Administrative sanction

Article 11 of Decree 98/2020/ND-CP regulates the administrative sanction rate for the act of counterfeiting and producing counterfeit goods as well as trademarks.

Article 11. Trade in goods whose labels or packages are forged

1. Fines imposed for trading in goods whose labels or packages forged as prescribed in Point dd Clause 7 Article 3:
   a) A fine ranging from VND 1.000.000 to VND 3.000.000 shall be imposed if the quantity of counterfeit goods is equivalent to an amount of genuine goods worth less than VND 3.000.000 or the illegal profit obtained is less than VND 5.000.000;
   b) A fine ranging from VND 3.000.000 to VND 5.000.000 shall be imposed if the quantity of counterfeit goods is equivalent to an amount of genuine goods worth from VND 3.000.000 to under VND 5.000.000 or the illegal profit obtained is from VND 5.000.000 to under VND 10.000.000;
   c) A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the quantity of counterfeit goods equivalent to an amount of genuine goods worth from VND 5.000.000 to under VND 10.000.000 or the illegal profit obtained is from VND 10.000.000 to under VND 20.000.000;
   d) A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed if the quantity of counterfeit goods equivalent to an amount of genuine goods worth from VND 10.000.000 to under VND 20.000.000 or the illegal profit obtained is from VND 20.000.000 to under VND 30.000.000;
   dd) A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the quantity of counterfeit goods equivalent to an amount of genuine goods worth from VND 20.000.000 to under VND 30.000.000 or the illegal profit obtained is from VND 30.000.000 to under VND 50.000.000;
   e) A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed if the quantity of counterfeit goods equivalent to an amount of genuine goods worth VND 30.000.000 or more of the illegal profit obtained is VND 50.000.000 or more, if not liable to criminal prosecution.

Criminal handling

Forging trademarks not only infringes upon the State’s management regime in production and business management activities but also the industrial property rights of Trademarks protected by the law on intellectual property. Therefore, the act of forging trademarks can be criminally prosecuted for one of the following two crimes according to the Criminal Code 2015:

Article 192. Manufacturing and trading of counterfeit goods

1. Any person who manufactures or deals in counterfeit goods in the following cases shall be liable to a fine of from VND 100,000,000 to VND 1,000,000,000 or face a penalty of 01 – 05 years imprisonment:
   a) The counterfeit goods assessed at from VND 20,000,000 to under VND 100,000,000 according to their selling prices, posted prices, or prices on invoices;
   b) The quantity of counterfeit goods equivalent to an amount of genuine goods or goods of the same specifications or uses assessed from VND 30,000,000 to under VND 150,000,000 if selling prices, posted prices, or prices on invoices of counterfeit goods cannot determined;
   c) The counterfeit goods assessed at under VND 20,000,000 according to their selling prices, posted prices, or prices on invoices, or the quantity of counterfeit goods equivalent to an amount of genuine goods or goods of the same specifications or uses assessed at under VND 30,000,000 but the offender previously incurred a civil penalty for the same offence or any of the offences specified in Article 188, 189, 190, 191, 193, 194, 195, 196 and 200 hereof or has a previous conviction for any of the aforementioned offences not expunged;
   dd) The counterfeit goods assessed at under VND 20,000,000 according to their selling prices, posted prices or prices on invoices, or the quantity of counterfeit goods equivalent to an amount of genuine goods or goods of the same specifications or uses assessed at under VND 30,000,000 but they result in either: 31% – 60% physical disability of a person; total physical disability of 31% – 60% of 02 or more people, property damage of from VND 100,000,000 to under VND 500,000,000.
2. …

Article 226. Infringement of industrial property rights

1. A person who infringes upon industrial property rights to a brand name or geographical indication protected in Vietnam and earns an illegal profit of from VND 100,000,000 to under VND 300,000,000 or causes a loss of from VND 200,000,000 to under VND 500,000,000 to the owner of such brand name or geographical indication, or with the violating goods assessed at from VND 200,000,000 to under VND 500,000,000 shall take liability to a fine of from VND 50,000,000 to VND 500,000,000 or face a penalty of up to 03 years’ community sentence.
2. This offence committed in any of the following cases shall carry a fine of from VND 500,000,000 to VND 1,000,000,000 or a penalty of 06 – 03 years imprisonment:
   a) The offence committed by an organized group;
   b) The offence committed more than once;
   c) The illegal profit reaped from VND 300,000,000 or more;
   d) The loss incurred by the owner of the brand name or geographical indication is VND 500,000,000 or over;
   dd) The illegal goods assessed at VND 500,000,000 or over.
3. …

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