Manufacturer – Importer (or Distributor) is an indispensable symbiotic trade relationship in global business. Before doing business, the parties certainly have many agreements to express their will in the commercial relationship. However, in the course of doing business, there are countless cases of violations occurring regardless of whether the parties are bound by terms or not. Especially in the field of intellectual property, infringement of rights is increasing in number. Below is a typical case of infringement upon intellectual property rights that foreign manufacturers should pay special attention while doing business in the Vietnam market.
Since October 2013, Vietnam – Germany XXX Joint Stock Company (VG Company) is the exclusive importer of R**melsbacher GmbH (R**melsbacher Germany) for products bearing the trademark “R**MELSBACHER”. In 2013, Mr. T. is the CEO of VG Company, on behalf of the Company, was responsible to work with R**melsbacher Germany on matters related to these products. Taking advantage of his working position, Mr. T. allowed his wife, Mrs. Nguyen Thi Kh. (Mrs. Kh.), apply and register the trademark “R**MELSBACHER” in the name of Mrs. Kh.
After the trademark “R**MELSBACHER” was registered, Mr. T. and Mrs. Kh. stopped working for VG Company and set up Vietnam – Germany XX Joint Stock Company (Vietnam – Germany Company) to sell kitchen counterfeit products bearing the trademark “R**MELSBACHER”. Specifically, Vietnam-Germany Company imported counterfeit goods from China, affixed the word “Germany” below the word “R**MELSBACHER”, labeled showing the manufacturer’s information as R**melsbacher Germany on the back of the product and on the surface as well as the packaging of the product is displayed in German to deceive the consumers that this is an authentic product of R**melsbacher Germany. After that, the Vietnam – Germany Company mixed these counterfeit products into the same distribution system of VG Company to sell at lower prices and at higher discounts, to directly compete with genuine R**melsbacher Germany products.
In this regard, we advised R**melsbacher GmbH to execute two things to protect its intellectual property: Cancel the validation of the registered trademark “R**MELSBACHER” and demand the authorities to inspect and handle the trading of counterfeit products of Vietnam-Germany Companies to protect consumers. However, cases like these are not easily handled because, even though, the rights enforcement authorities have significantly improved in recent years but they are not effective enough, compared to more developed countries. Similarly, the cancellation process regarding IP rights at the IP Office usually takes a very long time and the result is uncertain.
On July 11, 2016, on behalf of R**melsbacher GmbH, we have filed Cancellation Request No. DN1-2016-00185 requesting invalidation of the Trademark “R**MELSBACHER” under Registration No. 248484. Alongside with filing cancellation, we have asked the Hanoi Market Management Agency to inspect and handle the act of trading counterfeit goods of Vietnam – Germany Company and the process is divided into two phases:
Phase 1, on December 27, 2016, the Market Surveillance Department of Hanoi conducted an inspection at the warehouse (also the head-quarter) of Vietnam-Germany Company at 1283 Giai Phong Street. The specific test results are as follows:
• Only for the shipment on July 5, 2016, Vietnam – Germany Company imported 820 electric double cookers, R**MELSBACHER solar cookers from China with a total value of nearly 1.4 billion dong (equivalent to about 60,000 USD). And at the time of the inspection, the majority of the above mentioned products had been consumed;
• At the time of inspection, Vietnam-Germany Company was labeling the name and the address of R**melsbacher Germany on 06 cookers code CT3410/IN imported from H** Electronics and Electrical Co Ltd (China);
• In the warehouse, there were 192 labels containing fake information, similar to the labels on the 06 stoves mentioned above.
The Market Surveillance Department of Hanoi confirmed that Vietnam-Germany Company had produced counterfeit goods and issued a penalty decision against Vietnam-Germany Company with the amount of 23,000,000 VND and forced this Company to remove all parts containing fake information from the products.
Phase 2, despite having sanctioned before, the Vietnam – Germany Company continued to commit violations at a higher level and on a larger scale. At the beginning of 2018, we continued to ask the Hanoi Market Management Authority to inspect and handle the trading of the counterfeit goods at two addresses: (i) the warehouse of Vietnam – Germany Company at 1283 Giai Phong Street, Hoang Liet Ward, Hoang Mai District, Hanoi and (ii) a kitchen apparatus store at: No. 223 Doi Can street, Doi Can ward, Ba Dinh district, Hanoi.
The inspection results are as follows:
• At the warehouse of Vietnam – Germany Company: the value of infringing goods is 750 million VND (corresponding to 270 electric cookers from R**MELSBACHER code CT3410/IN);
• At the store on Doi Can street: the value of infringing goods is VND 60 million; The Market Surveillance Department of Hanoi confirmed that Vietnam-Germany Company had been trading electronic cookers bearing counterfeit business name and address and issued a penalty of VND 45,000,000 against Vietnam – Germany Company and VND 22,500,000 against the store at Doi Can street as well as forced the infringers to remove all parts containing fake information from the products.
On April 24, 2018, the NOIP issued Decision No. 1191/QD-SHTT on cancelling against Reg. No. 248484. From the above incident, we can deduce that intellectual property is not the only tool to deal with IP infringements of rights in Vietnam. In this case, the Vietnam – Germany XXX Joint Stock Company trades in induction cookers with the name and address of R**melbacher Ltd. Co. (Germany). Moreover, even the contents of the “User’s manual” attached to each cooker series no. CT3410/IN, including the details of the name and address of “R**MELSBACHER Company”, was utilized by Vietnam – Germany Company to be exactly like the authentic products. At the time of handling, according to the provisions of Article 3.8.d, Decree 124/2015 / ND-CP dated September 15, 2017 amending and supplementing a number of articles of Decree No. 185/2013/ND-CP dated November 15, 2013 of the Government, “counterfeit goods” means “Goods with fake labels or packages of goods with counterfeit names and addresses of other business; forging trade name… of another business”.
Hence, at the time of handling, since R**melsbacher (Germany) had no right to the mark “R**MELSBACHER, device” (invalidation procedure not yet finished), we have assisted our client to handle the infringements using regulations on counterfeit goods. In addition, with the number of goods confiscated from Vietnam – Germany Company, we had absolutely grounds to request criminal handling (initial request). However, we realized that it is necessary to accelerate the process of invalidation of trademarks at the NOIP, therefore, we consulted our client to negotiate with the representatives of Vietnam – Germany Company, that we would only request for administrative proceedings if Ms. Kh. voluntarily withdrew Registration No. 248484, so that R**MELSBACHER company could rightfully become the owner of the trademark “R**MELSBACHER, device” in Vietnam.
BANCA CO LTD.
