Chinese firm loses brand case

Locally-owned TLL now holds the rights to the Chinese firm’s brand in Vietnam

The Hanoi People’s Court (HPC) recent first instance session heard a dispute on industrial property right transfer between Vietnamese enterprise - Thanh Long Lighting Co., Ltd (TLL) - as defendant, and plaintiff, Chinese firm NVC Lighting Technology Corporation (NVC).

The two companies originally signed a contract  in April 2006 in which TLL would act as the exclusive agent for the Chinese firm to distribute NVC lighting products in the Vietnamese market.  As part of the agreement, NVC told TLL to go and register their industrial property rights at the National Office of Intellectual Property Right Protection (NOIP). The same month TLL registered the NVC brand in the Vietnamese market.

TLL received an industrial property right registration certificate for the NVC brand from the National Office of Intellectual Property of Vietnam (NOIP) in November 2008.

In March 2012, TLL and NVC signed a contract on industrial property right transfer of NVC brand. The contract  which came into force from April that year regulates that from that date all the rights, the certificates and associated benefits will be transferred to the Chinese partner NVC.

However, the Chinese company claimed that the local partner TLL had not executed this part of the deal to return them the original certificate which meant NVC was unable to continue to register their industrial property right at the NOIP themselves.

The NVC proposed that the Hanoi People’s Court force TLL to complete its obligations and restore the NVC brand registration certificate to the Chinese.

TLL director Nguyen Chi Thanh, however, claimed that he did not know about the contract until he received a court notification.

“I only got to know about this so-called contract when working with the Hanoi People’s Court and was greatly concerned that Clause 1 in the contract stated a zero transfer price on the fixed brand,” said Thanh.

He said part of the contract was just a draft without seal.

Article 148 in the Law on Intellectual Property regulates that industrial property rights were only established upon registration at an agency able to issue such recognition. Any contract would be based on this agency’s recognition.

In this case, NVC had yet to register with a Vietnamese agency for the transfer of their own industrial property, so it could not be determined that the contract had taken effect.

In its reply to the Hanoi People’s Committee dispatch to the NOIP asking whether the contract on industrial property right transfer between TLL and NVC had been registered, the NOIP confirmed such a contract had not been recorded on the registration list at the office.

This means pursuant to Item 1, Clause 148 in the Law on Intellectual Property the contract on industrial property right transfer between TLL and NVC had yet to come into force.

The alleged transfer contract was then announced invalid in the Hanoi Court’s recent court of first-instance.

In dealing with repercussions of an invalid contract, Article 137 of the Civil Code states “when a civil transaction is invalid, the parties shall be restored to the original status and shall return to each other what they have received.”

In this case, since the transfer price was set zero, and the related parties still do not handle their obligations (as the contract still does not take effect under current regulations), there will be nothing exchanged between the involved parties.