Vietnam: Workshop on consultation of draft amendment of IP Law

In brief

On 12 January 2021, a workshop on consultation of the draft amendment to Vietnam IP Law ("Draft Law") was co-hosted by the Ministry of Culture, Sport and Tourism; the Ministry of Science and Technology; and the Ministry of Agriculture and Rural Development. The workshop attracted around 150 attendees from relevant authorities, corporations, law firms, associations and organization in various sectors. Given the in-depth coverage and comprehensive amendment provided by the Draft Law, most comments have been submitted to the drafting committee via position letters. We set out below selected notable issues of the Draft Law that have generated intense arguments during the workshop.


Contents

In more detail

  1. Estimated timelines of the Draft Law project

The drafting committee has announced the estimated timelines of the Draft Law project, as follows:

Timelines

Expected events

November 2020

Draft Law released for public consultation

June 2021

Finalization of the Draft Law following public consultation

October 2021

Submission of the finalized Draft Law to the National Assembly for review and debate

June 2022

Passing/enactment of the Draft Law

 

  1. Aim of the Draft Law

The Draft Law proposes changes to the current IP Law in order for it to comply with the duties and requirements under signed big trade pacts, such as the European Vietnam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), most recently the Regional Comprehensive Economic Partnership (RCEP), and the UK Vietnam Free Trade Agreement (UKVFTA).

The Draft Law is also expected to prepare Vietnam for its accession to other international IP treaties, such as the Marrakesh Treaty.

  1. Scope of amendment

The Draft Law proposes comprehensive revisions and/or supplement of 80 articles (including 13 new articles added to the current IP Law), covering the following:

  • General regulations
  • Copyright and related rights
  • Industrial property (patent, design, trademark, geographical indication)
  • Plant variety
  • Enforcement of IP rights
  1. Notable proposed changes under the Draft Law
    1. Copyrights

Royalty fees

The Draft Law introduces a new mechanism called “Price negotiation” to deal with outstanding issues in practice, such as where exploiting companies and collective management organization of copyrights (CMO) cannot reach an agreement on the royalty fees.

The initiative was based on Article 11bis of the Berne Convention, with the “price negotiation” legal term coming from the Law on Prices 2012.  For your reference, we set out below the definition of “price negotiation” as provided by the Law on Prices 2012:

Price negotiation means organization and intermediate action for the seller and the buyer of competent State agencies to negotiate on buy price, sale price of goods or services which satisfy conditions of Price negotiation at the request of one of parties or both of parties or as having request of the Prime Minister, ministers, heads of ministerial - level agencies, heads of Governmental agencies, presidents of People’s Committee of central-affiliated cities and provinces (hereinafter referred as provincial- level People’s Committee).

While the Draft Law does not provide price negotiation details in connection with royalty fee, a guiding decree is likely to follow once the Draft Law has been passed, in order to provide further details and application of this mechanism.

Exhaustion of distribution and import rights

The Draft Law recognizes exhaustion of distribution and import rights, as explained by the drafting committee, to allow parallel imports. In particular, a limitation on distribution and import rights has been introduced to exclude such rights from being exercised for the next distribution of works that have been duly distributed for the first time in the market.

The relevant associations from different sectors also raised their concerns and demands for a thorough review on the balance of public interest and exclusive rights of authors and owners in the current IP Law and the Draft Law during the workshop, as well as a possibility for a separate copyright law.

  1. Trademark

Sound mark

The Draft Law includes sound as an eligible sign for trademark protection. However, the Draft Law requires that sound sign must be presented in the form of graphics, which may be ambiguous and complicated to implement. We asserted that this regulation should be specified as “sound sign presented in form of musical notes or audio wave” for more feasible implementation.

Reduce the citation period for expired mark

Currently, an expired trademark will still become a citation within five years from its expiry date. The Draft Law proposes to reduce this period to three years. 

Suspension of examination

In practice, it is common for applicants to request the Trademark Office to suspend examination while they proceed with non-use cancellation against cited trademarks. This practice has now been recognized in the Draft Law.

New refusal ground for trademark

The Draft Law introduces a new ground for refusal of a trademark based on a plant variety name. 

Bad faith

Law firms raised concerns during the workshop that there is still no definition of “bad faith”, and that it is still not a ground for trademark refusal in the Draft Law.

The drafting committee promised to work on a decree to cover these outstanding issues in connection with “bad faith”.

Among other things, concerns have been raised that copyright has not yet been recognized as a refusal ground for trademark in the law. The inclusion of copyright as a refusal ground is very important in order to deal with the overlap between copyright (such as applied art work) and trademark, and especially the overlap of musical work and sound marks.

  1. Patent

Security control for inventions

There is a new article regarding security control of inventions before filings for grant of patents in foreign countries  on the grounds of security and national defense. The scope of this article covers any inventions of Vietnamese individuals and entities incorporated under Vietnamese laws. 

Given the broad scope and vague definition of security and national defense, both local corporations and foreign firms having R&D centers in Vietnam raised concerns over this proposed regulation. Local experts have warned that this regulation, if enacted, will be an obstacle for Vietnam in attracting foreign R&D investment into the country, in addition to the risk of losing such investment to neighboring countries.

Compensation for pharmaceutical-related patents

The Draft Law, in compliance with the EVFTA, proposes either of the two plans on compensation for patent holders due to the delay in granting approval for the circulation of drugs:

  • waiving annuity fees
  • allowing patent owners to collect licensing fees even after the patent has expired

The proposed amendment above has faced concerns raised by other stake holders because it may not comply with the EVFTA, which, in short, requires extension of patent validity in case of such delay. We set out below relevant articles of the EVFTA for your ease of reference:

Article 12.40 of EVFTA: Each Party shall provide for an adequate and effective mechanism to compensate the patent owner for the reduction in the effective patent life resulting from unreasonable delays1 in the granting of the first marketing authorisation in its respective territory. Such compensation may be in the form of an extension of the duration of the rights conferred by patent protection, equal to the time by which the period referred to in the footnote to this paragraph is exceeded. The maximum duration of this extension shall not exceed two years.

  1. Industrial design

Notable proposed amendments to the relevant industrial design regulations include:

  • simplifying requirements for applications for industrial design protection
  • allowing protection for partial design (i.e., a part of a complete product)
  • allowing delay in publication of design applications (maximum seven months)
  1. Plant variety

Current IP Law provides that subject matters of rights to plant varieties include reproductive and harvested materials. The Draft Law proposes to extend this scope to cover “products as processed from harvested materials of plant varieties”.

  1. Enforcement of IP rights

The Draft Law proposes to remove administrative action as an available option for rights holders in tackling IP infringement. On another plan, the Draft Law proposes to limit the administrative action to be available for infringement of copyright and related right, trademark, geographical indication and plant variety. 

Of note, administrative action is one of the most popular actions that rights holders have been using in tackling IP infringement due to its time- and cost-effectiveness.

The Draft Law is currently open for public consultation so that it could be finalized in June 2021. Please let us know if you have any inquiries regarding the Draft Law. 


1 For the purposes of this Article, an "unreasonable delay" includes at least a delay of more than two years in the first response to the applicant following the date of filing of the application for marketing authorisation. Any delays that occur in the granting of a marketing authorisation due to periods attributable to the applicant or any period that is out of control of the marketing authorisation authority need not be included in the determination of such delay.

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