Vinataba’s monopoly aspirations go up in smoke

Deputy Prime Minister Nguyen Xuan Phuc directed the Ministry of Science and Technology (MoST) – the administrative authority on industrial property rights – to refuse Vinataba’s request to invalidate Sumatra Tobacco’s Protection Title on its Jet and Hero tobacco brands.

Phuc also denied the firm’s extraordinary request to gain the rights to use the Jet and Hero trademarks for products that Vinataba planned to manufacture soon.

The state-owned cigarette maker, which holds a monopoly on tobacco products made in Vietnam, passed its demands off as an attempt to “secure the nation’s and consumers’ interests”, given the large number of Jet and Hero products being smuggled into the country. It argued that Sumatra Tobacco’s trademark registration is, in fact, to disguise the smuggling of low-cost and low-quality tobacco into Vietnam. Vinataba estimated that the Jet and Hero brands account for over 80 per cent (approximately 17.8 billion cigarettes per year) of the total number of cigarettes illegally crossing Vietnam’s borders.

The company claimed that if it were allowed to own the trademarks, it could help control the brands’ trading activities and therefore eradicate smuggling of the brands, which would financially benefit both consumers and the state budget.

In response, the MoST said that such arguments were far from persuasive, as Vinataba failed to provide evidence to prove any relationship between Sumatra Tobacco and the smuggling of Jet and Hero cigarettes. Even if evidence for a relationship were found, according to the ministry, there would be no legal basis for the suspension of trademarks due to smuggling.

Since the trademarks still belong to Sumatra Tobacco, the MoST refused to grant trademark certificates to Vinataba, in keeping with domestic and international property rights laws. The MoST reported the issue to Deputy Prime Minister Phuc on March 9 and received a directive last week.

The government’s rejection marked Vinataba’s failure to sweep out its Indonesian competitor and take up the market share of Jet and Hero products, despite the fact that it had previously been granted cancellation of the majority of Sumatra Tobacco’s trademark certificates. Sumatra has held 67 MoST certificates on trademarks for its two cigarette products since 1990, of which 46 were abrogated in January this year. Vinataba showed that these trademarks had not been used for the past five consecutive years; thus, under Article 93 of the Law on Intellectual Property, Sumatra Tobacco’s rights had to be revoked.