Ramifications of prosecution for counterfeit actions

By Nguyen Thuy Chung - Partner, ASL Law

According to the investigation records, after many years of experience working at Saigon Beer-Alcohol-Beverage Corporation (SABECO), Trung quit and established Saigon Vietnam Beer Group with the purpose of making beer products with similar designs and trademarks to SABECO’s products and then bringing them to the market, according to the investigation.

In April 2020, Saigon Vietnam Beer Group signed a contract with BiVa Brewery located in Hoa Long commune of the southern province to produce Bia Saigon Vietnam.

A June inspection discovered that the beer showed signs of infringing industrial property rights of SABECO, which has protected trademarks in Vietnam. The authority recorded a temporary seizure of tens of thousands of cases and single cans of beer.

The investigating police agency requested an assessment at the Institute of Intellectual Property Science and the inspection showed that the products bore images like the shield and dragon on the product which contains elements that infringe upon the intellectual property rights of SABECO’s protected trademarks.

According to the investigation results, the acts of Le Dinh Trung and Saigon Vietnam Beer Group are eligible to have constituted a criminal offense violating intellectual property rights under the provisions of Article 226 of the Criminal Code 2015.

Accordingly, the highest penalty is a fine of up to VND1 billion ($43,500) or a prison term of up to three years, with the violator being barred from certain jobs for a maximum of five years. A legal entity may be fined up to VND5 billion ($217,000), suspended for a term from six months to two years, or may be banned from doing business and banned from operating in certain fields, as well as banned from raising capital for 1-3 years.

As for BiVa Brewery that is determined to provide goods under a contract, it is not committed to be responsible for the legality of the trademark. There is not enough evidence to accuse Biva. Only two shareholders of Saigon Vietnam Beer Group – Tran Thi Ai Loan and Tran Thi Khanh Ha – are recognised to have contributed capital but have not participated in designing and ordering raw materials. Therefore, there is also not enough evidence to handle burden them with “infringement of industrial property rights”.

Currently, acts of infringement of these rights in Vietnam are taking place more and more sophisticatedly and complicatedly and on an increasingly large scale. In addition, the signing of new free trade agreements by Vietnam is posing many challenges for Vietnam in the protection and enforcement of intellectual property rights. Therefore, the completion of legal provisions on intellectual property, especially the provisions on handling infringements of intellectual property rights, is a very urgent requirement.

The 2015 Criminal Code, effective from 2018, has significantly contributed to promoting the effectiveness of the crime of infringement of intellectual property rights in Vietnam. Criminal sanctions applied to subjects who commit acts of infringement of intellectual property rights are the harshest when compared to civil or administrative sanctions.

On the other hand, according to the provisions of the 2015 Criminal Code, the criminal liability for the subjects committing acts of infringement of intellectual property rights after January 1, 2018 also applies to commercial legal entities. Expanding criminal prosecution with commercial legal entities can be seen as a significant effort by Vietnam to properly punish criminals of infringement of intellectual property rights.

Infringement of intellectual property rights is considered a crime found in six articles (192-195 and 225-226); however, the accusation is a rather complicated issue in practice of prosecuting criminal responsibility for the subjects who commit acts of infringement of intellectual property rights due to the overlap of the articles.

This is because the 2015 Criminal Code does not define the concept and does not demarcate counterfeit goods and intellectual property counterfeit goods, while the criminal liability handling principle states that no-one will be convicted twice because of the same crime. In fact, among criminal cases related to intellectual property rights, most procedural agencies only prosecute on charges of producing and trading counterfeit goods instead of infringing intellectual property rights or copyright infringement.

Therefore, it is hoped that with the expansion of the possibility of criminal prosecution for the infringement of such rights, the number of cases that were prosecuted and raise awareness of individuals and enterprises on intellectual property rights, while minimising cases of infringement, can create confidence in the business environment in the Vietnamese market for both businesses and investors.