In detail

We set out below some key changes and revisions under Decree 46.

1. New sanctions and increased fines and penalties

• Decree 46 adds new sanctions for certain violations, which include the following:
• A fine ranging from VND 20,000,000 to VND 30,000,000 (approx. USD 800 to 1,200)  for the act of using patents, utility solutions, layout designs and industrial designs without paying compensation according to the provisions on temporary rights specified in Article 131 of the Vietnamese IP Law ("IP Law").
• A fine ranging from VND 500,000 to VND 1,000,000(approx. USD 20 to 40) for the act of using the licensed trademark on goods or packaging under a non-written trademark license — a provision that aligns with Article 141.2 of the IP Law, which requires the license of industrial property rights to be established in the form of a written contract.
• Decree 46 increases the fine range for infringing rights to trade secrets, as prescribed in Article 127 of the IP Law, to VND 50,000,000-100,000,000 (approx. USD 2,000 to 4,000). Previously, fines for trade secret infringements ranged from only VND 5,000,000 to VND 15,000,000 (approx. USD 200 to 600).

2. Clarification of infringing acts

• Decree 46 clarifies acts of infringement, which include trading, offering, storing for sale, displaying for sale, and transporting goods and services, as well as transiting counterfeit goods, stamps, labels or articles bearing counterfeit marks or geographical indications. However, "transportation" does not include transit of goods or services that infringe rights to trademarks, trade names, geographical indications, or industrial designs. This clarification also aims to align with Article 124 under the 2022 amended IP Law regarding the use of industrial property objects.
• The act of 'production,' which under Decree 99 included designing, manufacturing, processing, assembling and packaging, was extended under Decree 46 to include "other activities to make/produce infringing goods."

3. Clarification of law enforcement authorities

• The Department of Market Surveillance (DMS) is empowered to handle acts of producing, trading, offering, transporting, storing, and displaying goods (both counterfeit and infringing goods) in the domestic market.
• Meanwhile, Customs is entitled to handle administrative violations in the importation, transit, and transportation of goods within customs operating areas.

4. New preventive measures for domain names

• Decree 46 supplements the preventive measure of temporarily detaining domain names according to Article 125.1 of the Law on handling administrative violations, which establishes the process for handling administrative violations concerning the registration and use of domain names.
• This measure allows enforcement authorities to request (i) the Vietnam Internet Network Information Center under the Ministry of Information and Communications and (ii) domain registrars to coordinate, provide professional opinions and, most importantly, to maintain the status quo for the domain names at issue in the process of handling administrative violations.
• In this way, Decree 46 aims to prevent infringers from changing domain names and transferring them to other parties. This approach addresses past challenges faced by handling agencies when identifying the parties involved in domain name infringements.

5. Clearer guidelines for implementing supplementary sanctions and remedies

• The supplemental sanction of business suspension for one to three months can now be applied to a part or all of the business, starting from the effective date of the sanctioning decision.
• The revision reflects the provision under Article 25.2 of the Law on handling administrative violations, under which business suspension can be applied to part or all of a business.
• Moreover, the previous language in Decree 99 provided for the suspension of the infringer's business activities concerning "infringing goods/services." Decree 46 removes this term to enhance the practicality and effectiveness of sanction measures.
• Forcible release for noncommercial use or distribution of counterfeit goods, as a remedy, must adhere to the conditions outlined under Article 97 of Decree 65, which provides guidance on certain regulations under the 2022 amended IP Law, namely:
• Goods have use values that cannot harm human health, animals, plants, and the environment and are not cultural products with toxic content
• Infringing elements have been removed from the goods
• The goods' distribution or use is not aimed at making profit and does not unreasonably affect how holders of industrial property rights and rights to plant varieties use these rights, especially for humanitarian, charitable, or social benefit purposes
• Persons receiving the distribution or taking charge of the use are not the potential customers of the holders of industrial property rights or rights to plant varieties.

The above requirements also apply to ingredients, materials, and equipment used for the production and trading of counterfeit goods bearing trademarks, geographical indications, and goods infringing on industrial property rights and rights to plant varieties.

• Decree 46 requires explicit grounds for determining the amounts to be imposed for the remedies of: (i) forcible remittance of illicit earnings from committing administrative violations; (ii) forcible remittance of an amount equal to the value of the material evidence or means of administrative violation that have been sold, dispersed or destroyed contrary to law; or (iii) forcible payment of compensation.
• The remedy involving forcible confiscation of dispersed material evidence or means of violation has been amended as "forced restoration to original condition." This modification is justified as it enables the remedy's application across various types of violations under this Decree.

6. Implication and enforcement

• Decree 46 takes effect on 1 July 2024.
• For administrative violations in the field of industrial property that occurred before the effective date of this Decree but were later discovered or are being considered and handled, the government's decree on administrative sanctions in effect at the time of the violation will apply. However, if this Decree does not stipulate any legal liability or if it specifies a lesser legal liability, the relevant provisions of this Decree will apply.
• For decisions on administrative sanctions that were issued or fully implemented before the effective date of this Decree, and where organizations and individuals sanctioned under those decisions are still lodging complaints, Decree 99 will apply.

Our comments

• Decree 46 introduces revisions that are crucial to aligning the existing administrative sanction decree (Decree 99) with the recent changes to the 2022 amended IP Law. Additionally, the updates under Decree 46 seek to streamline the enforcement of industrial property rights and tackle unfair competition in domain names more effectively. Decree 46 also aims to significantly boost the capabilities of local law enforcement authorities.
• Last but not least, Decree 46 embodies Vietnam's ongoing commitment to safeguard Intellectual Property rights and reinforce measures to prevent administrative violations, in compliance with certain requirements under the CPTPP and EVFTA. 

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For further information and to discuss any specific topics under this Decree, please feel free to reach out to us.