IP alterations shape asset strategies for local investors

Vu Hoang Ha Thu, associate and head of Intellectual Property, Indochine Counsel

In the context of increasingly intensive innovation, technological development and international economic integration, the law amending and supplementing the Law on Intellectual Property (IP) was adopted by the National Assembly to address issues arising in the course of implementing the current law, which was amended in 2009, 2019, and 2022.

By clarifying the scope of industrial design protection, taking the initial steps towards codifying IP issues related to AI, and establishing a legal framework for the use of published texts and data for research and technological development, these amendments hold direct significance for businesses and investors in formulating and adjusting strategies for the protection, exploitation, and commercialisation of IP assets in Vietnam.

The current IP law to expand the definition of industrial designs in two notable directions. Firstly, protected subject matter includes not only the design of an entire product but also the design of a part of a product (partial design), instead of being limited to entire products or parts used for assembling complex products under the current regulations. The protection of partial design is crucial for the automotive and electronics industries, where specific components serve as core brand identifiers.

Secondly, the new law expands the scope of protection for designs of non-physical products, rather than limiting such protection to physical products as provided under the current regulations. Non-physical products may be understood to include graphical user interfaces, icons, animations and motion effects, typefaces, and the shapes of certain digital assets in accordance with relevant sector-specific legislation, among other things.

These forms of subject matter are becoming increasingly prevalent in the context of rapid digital technology development. This further empowers fintech and edtech companies to safeguard their unique user experiences from infringement.

This amendment brings Vietnamese law into closer alignment with industrial design protection trends in numerous countries and regions, such as the United States, Japan, South Korea, China, the European Union, and Singapore. Simultaneously, it addresses the limitations of the existing legislation in protecting creative achievements and enhances the attractiveness of Vietnam’s technological investment environment.

One notable new feature of the amended law is the first-time recognition, at the statutory level, of issues relating to the accrual and establishment of IP rights in respect of subject matter created with the use of AI systems.

Specifically, Article 1.2 of the amended law supplements Clause 5 of Article 6 of the current law, which delegates authority to the government to provide detailed regulations on the accrual and establishment of IP rights where such subject matter is created using AI systems.

The amended law does not recognise AI as a right holder and does not specifically provide for the protection of subject matter created entirely by AI systems. Under the current IP law, IP rights can only accrue to and be established for organisations and individuals. Where subject matter is created with the assistance of AI, the amended IP law takes a cautious approach by not providing specific criteria for determining the level of human creative contribution, leaving such matters to be addressed in future government guidance.

As a result, this approach may give rise to disputes in practice, particularly in determining the decisive creative role of humans in works created within a human-AI hybrid environment. Businesses are advised to maintain an audit trail of prompts and refinements to avoid the risk of works falling into the public domain.

Article 1.3 of the amended IP law supplements Clause 5 of Article 7 of the current law, allowing the use of lawfully published and publicly accessible texts and data for scientific research, testing, and AI training, provided that such use does not cause unreasonable prejudice to the legitimate rights and interests of authors and right holders.

This provision marks the first time that IP law has codified, at the statutory level, the use of published texts and data for research, testing and technological development activities, including the training of AI systems. However, the concept of unreasonable prejudice has not yet been clearly defined, and detailed guidance has yet to be issued.

As commercial generative AI applications can produce outputs that compete directly with original works, determining what constitutes unreasonable prejudice will be a key issue and is likely to depend on sub-law guidelines as well as dispute resolution practices. In this context, businesses and research organisations should closely monitor implementing regulations while exercising caution in designing and deploying data mining activities to mitigate the risk of conflicts with third-party IP rights.

While the amended IP law permits the use of lawfully published texts and data for research, testing and the training of AI systems, such use may also involve considerations under personal data protection laws. Under the Law on Personal Data Protection, the processing of personal data must, in principle, be based on the consent of the data subject, except for specific statutory exceptions.

Notably, the cases of data processing without consent under that law do not currently include exceptions for scientific research, technological development, or AI training. In practice, datasets used for AI training often contain both protected IP subject matter and personal data.

This may lead to situations in which businesses comply with the requirements of the amended IP law but still face the risk of violating personal data protection regulations, if the processing of personal data fails to fully satisfy the requirements regarding consent and processing conditions under relevant laws.