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Preventing trade name infringement in Vietnam

Trade name is one category of intellectual property rights, which is codified and recognized under Vietnam Intellectual Property Law 2005, revised in 2009 (“Vietnam IP Law”). Per Article 3.2 of Vietnam IP Law, objects of industrial property rights include inventions, industrial designs, layout-designs of semi-conductor integrated circuits, business secrets, trademarks, trade names and geographical indications. A trade name is often a name for a company. Thus, one of the most critical steps in setting up a new business is finding a name for the company. In this sense, under Article 4.21 of Vietnam IP Law, Trade name is a designation of an organization or individual used in business to distinguish the business entity bearing such designation from other business entities acting in the same field and area of business. The area of business is defined as the geographical area where business entity has business partners, clients or reputation. When choosing a name, the two major concerns are (i) the meaning of the name and (ii) its availability for use. As there are countless businesses already established, it is not easy for a new firm to select a name that benefits its public image without infringing other companies’ trademark rights or trade name rights.

Not like a trademark, rights to a trade name are not established through registration procedures, but on legitimate use in commerce. Per Article 6.3(b) of Vietnam IP Law, industrial property rights to trade names shall be established on the basis of lawful use of the trade names. In Vietnam, awareness of IP rights, even within the business community, is still at low level. When choosing a name for a new company, businesses have traditionally focused purely on the meaning and wording of the name, ignoring the need to ensure that it can be used legitimately. This has led to many infringements of trade names, made either deliberately or unknowingly. A trade name shall be eligible for protection in Vietnam if it is capable of distinguishing the business entity bearing such trade name from other business entities acting in the same field and locality of business. It is important to bear in mind that a trade name shall be considered as distinctiveness if it meets 03 following conditions: (i) to consist of a proper name, except where it has been widely known as a result of use; (ii) not to be identical with or confusingly similar to a trade name having been used earlier by another person in the same field and locality of business; (iii) Not to be identical with or confusingly similar to another’s mark or a geographical indication having been protected before the date it is used.

It is quite a popular phenomenon that businesses often use their company name/trade name without knowing that such use constitutes an infringement over a prior mark of others. Some are intentional to create a company name closely similar to other’s trademark/trade name. A case relating to VINCOM trade name vs. VINCON trade name is known in Vietnam in which the former filed a lawsuit against the latter and finally, the court requested the defendant to change the infringing trade name.

Trade name falls within the scope of the so-called “commercial indication” in Vietnam. Under Article 130.2 of Vietnam IP Law, commercial indications mean signs and information serving as guidelines to trading of goods or services including such unregistered IP subject matters as marks, trade names, business symbols, business slogans, geographical indications, designs of packages and/or labels of goods.

Under Article 19.1 of Circular 11/2015/TT-BKHCN, the rights holder who is entitled to request handling a third party’s unfair competition act is “the business entity that has made prior use of a commercial indication in a wide and stable manner in its lawful business activities in Vietnam and has its reputation and goods or services bearing such commercial indication known to consumers.

In a trade name based enforcement case, it is worth noting that under Article 19 of Circular No. 11/2015/TT-BKHCN, to enforce against a third party’s alleged infringement under unfair competition legislation, the IPR holder must provide substantiated proofs that:

+ He has used the trade name or unregistered mark in Vietnam before the third party’s use of signs confusing similar/identical the trade name or unregistered mark.

+ He has used the trade name or unregistered mark stably and widely used in Vietnam and become known by many consumers in Vietnam.

To substantiate that the trade name or unregistered mark have been stably and widely used in Vietnam and become known by many consumers in Vietnam, under Article 19.1(d) of Circular No. 11/2015/TT-BKHCN, the IPR holder is required to provide the followings:

  • information on advertising, marketing, display and exhibition of the products bearing the trade name or unregistered mark in Vietnam;
  • sale turnover for the products bearing the trade name or unregistered mark in Vietnam;
  • number of products sold concerning the products bearing the trade name or unregistered mark in Vietnam;
  • system of distribution agents, joint ventures and associated parties of the products bearing the trade name or unregistered mark in Vietnam;
  • investment scale for the products bearing the trade name or unregistered mark in Vietnam;
  • appraisal by state agencies, the mass media, selection by consumers, and other information showing the reputation of the business entity associated with the products bearing the trade name or unregistered mark in Vietnam in the business activities in Vietnam

Practice indicates that enforcement actions based on wide-use status of a trade name or an unregistered mark under unfair competition legislation is not certain. Despite availability of unfair competition legislation, handling an unfair competition case in Vietnam is more difficult and time-consuming because the ground/basis to request the Vietnamese enforcement authority to handle the case is based on wide-use evidence, not like based on a registered trademark. Thus, the Vietnamese enforcement authorities are often reluctant to base on the wide-use status of the mark to take actions against alleged infringement under unfair competition legislation.

With loose mechanism of naming a company in Vietnam, many infringers try to integrate trademark of others into their trade names to mislead customers. Inter-ministerial Circular No. 05/2016/TTLT-BKHCN-BKHDT has breathed new life into the current mechanism of resolving trade name disputes involving intellectual properties such as trademarks, trade names by describing in more detail the administrative measures to be used as a means of resolution. The enactment of Circular 05/2016/TTLT-BKHCN-BKHDT has created a clear legal frame for the MOST and the MPI on settling trademark-based infringing trade name. Accordingly, a sanction may be issued and enforced which (i) forces the infringer to change of the company’s name or forces the infringer to remove infringing elements from the company’s name; or (ii) revokes the enterprise registration certificate.

Please access the text of Circular No. 05/2016/TTLT-BKHCN-BKHDT to have more details.