Vietnam: Vietnam Current Industrial Property Law - New Changes To The Prior Industrial Property Legislation

1. Patents And Utility Solutions

Micro-organism has been removed from the list of subject matters excluded from protection ¹, and procedures for obtaining protection of micro-organism is provided in Regulation No. 308/DK.

Also, under old patent law, "inventions contrary to social interests, public order and morality, and humanity" were defined as subject-matters excluded from the protection, but they are not included in the list of subject-matters excluded from the protection under new law.

Categories of inventions and utility solutions including device, process, substance and the use of a known device, process, substance in order to perform a new function, which were defined clearly in the prior law ², are now only mentioned in the provision concerning unity of invention of the implementation guide No.308/DK .³

Criteria for protection of inventions remain unchanged. However, criteria for protection of utility solutions are changed substantially as follows:

• Worldwide novelty ⁴replaces local novelty as provided by the prior law.

Under prior law, to be patentable, a utility solution could only be new in Vietnam. The past practice showed that, in some cases, this kind of patent had obstructed foreign technology transfer into Vietnam. This was because taking benefit from the weak point of the old law, some invention pirates had successfully obtained protection for old technical solutions owned by others and then demanded unreasonable royalty for the use of the ones by their true owners. The new law, therefore, does overcome the above obstruction.

• Inventive step ⁵ is not required.

Under the old law, to be patentable, a utility solution should not have been obvious to a person having ordinary skill in the art.

• Requirement of applicability is not limited to the existing technological conditions ⁶, but extended to the future one ⁷.

There are several changes in the examination procedures of patent or utility solution applications. Under prior patent law, a patent or utility solution application is automatically examined both as to form and as to substance ⁸. The new law, however, provides a deferred examination system ⁹.

Under current law, a patent application is first to be examined as to form, and then on a separate request, to be examined as to substance. This means that examination as to form is still conducted automatically, and what can be deferred under the new law is the substantive examination.

The substantive examination are only conducted with the applications which have been accepted as to complying with formal conditions and upon a request by the applicant or a third party within 42 months from the priority date if the application is filed for patent for invention, or 36 months from the priority date if the application is filed for patent for utility solution ¹⁰ and payment of prescribed fees.

After the application has been accepted as to formal conditions and published in the Official Gazette of Industrial Property, if no request for examination as to substance is filed, the examination as to substance of the application is deferred.

Another change of the examination procedures is publication of the applications which are accepted as to form ¹¹. According to that, if no request is made for a publication earlier or later than a deadline stipulated by the law, all applications for inventions or utility solutions which are accepted as to complying with formal conditions are published in the Official Gazette of Industrial Property in the 19th month counted from the priority date for opposition purposes. This gives a chance to third parties who find the invention does not meet requirements set forth by the law and the grant of patent for the invention may cause damages to them or to society, to give their opinion on whether or not to grant the Letter's Patent to the invention ¹².

Search to ascertain the state-of-art on priority date is also available. Such a search is conducted by a request of the applicant after the examination as to complying with formal conditions completed and upon payment of prescribed fees ¹³.

The new examination procedures will allow the applicants to have more time to consider their benefit coming from their inventions as well as the need to pursue the patent applications. Moreover, it does significantly reduce the unnecessary works of examiners and helps them to solve the backlog's problem which has remained unsettled for years.

In accordance with prior patent law, duration of a patent for invention was 15 years and for an utility solution was 6 years from the filing date or priority date of the application if the Paris Convention priority is claimed ¹⁴. Under current law, duration of a patent for invention or utility solution ¹⁵ are changed as follows:

1. Patent for an invention is effective from the grant date until the end of 20th year as from the filing date, instead of 15 years from the priority date under the prior law.
2. Patent for a utility solution is effective from the grant date until the end of 10th year as from the filing date, instead of 6 years from the priority date under the prior law.

It is to be noted that the terms said in the above (1) and (2) fix the terminal date of the effective protection of the patent. The reference to the filing date is merely a basis for calculating the termination date.

Since protection may commence only from the date of grant of the patent, and there is a period between filing and grant, it requires the need of a provisional protection from the date of publication of application.

Such a temporary right of the applicant was not provided under prior law and it is now regulated by Paragraph 2, Article 10 of the Decree No. 63-CP, the content of which will be analyzed when discussing the shortcomings of the current industrial property legislation.

The provision concerning temporary rights of the applicant states that, during the period from the date of publication of the application in the Official Gazette of Industrial Property to the date of grant of patent, if any person commences to use an invention, utility solution identical to the invention, utility solution described in the application, the applicant has the right to notify that user of the fact that a patent application for the invention or utility solution concerned has been filed by the applicant with the National office of industrial property . After a patent has been granted, if the person using the invention or utility solution continues the use notwithstanding notice having been given, the patent owner shall be entitled to request such user to make compensation equivalent to the payment for the transfer of the right to use of the relevant industrial property object (licence) to other persons in a similar period.

The new law provides that the inventor(s) - employee(s) has a right to remuneration, in the absence of agreement between the parties, which is not less than 10% of the economic value obtained by the patentee's use of the invention, or 15% of any other benefit derived from the invention by the patentee - employer, while it was 8% of the same under the prior law.

2.1 Title Of Protection

The most substantial change to the design law is that certificate of registration of design does no longer exist. What are now granted are patents for design and design protection is considered analogous to patent protection.

The public examination ¹⁶ of industrial designs has been replaced by the full examination conducted by the National Office of Industrial Property ¹⁷. However, industrial design applications are still published in the Official Gazette of Industrial Property after having been accepted as to form ¹⁸ for opposition purposes. This new system is a significant change, which will help to reduce a huge number of litigation in the past as a result of the abuse of the exclusive rights in non-novel designs obtained by design pirates.

Duration of a patent for design is effective from the granting date of the industrial design until the end of the 5th year counted from the filing date ¹⁹. The provision of 5 year term of protection which may be extended by two further consecutive 5 year terms remains unchanged.²⁰

Since design protection is considered analogous to patent protection, within the period from the date of publication of the patent application for design to the grant date, the design owner has also temporary rights to their design.

Such a temporary right of the applicant was not provided under the prior law, however, it is now regulated by Paragraph 2, Article 10 of the Decree No. 63-CP, the content of which is mentioned in the above paragraph (1.6) of Patent section.

The new law provides that the designer(s) - employee(s) has a right to remuneration, in the absence of agreement between the parties, which is not less than 2% of the economic value obtained by the patentee's use of the design, or 15% of any other benefit derived from the design by the patentee - employer, while it was 1,5% of the same under the prior law.

Because of the adoption of the patent approach, for the first time in Vietnam, to design protection, non-voluntary licenses are also imposed on the owner of a patented design.

In comparison with patents and designs, there have not been many substantial changes concerning trademark matters. Except some mistakes rather than changes, the following are remarkable changes:

In addition to the grounds for which a mark can not be granted protection, listed by the prior law, the current trademark law does not also permit the following marks to be registered:

• Marks that are identical or confusingly similar to a well-known mark regardless the mark is registered or not;
• Marks that are identical or confusingly similar to a protected trade name or a registered appellation of origin;
• Marks that are identical or confusingly similar to a registered industrial design or a design for which an application with earlier priority has been filed;
• Marks that are identical or confusingly similar to a copyrighted character or work;

The new law clearly states that individuals or legal entities legally permitted to carry on trading activities shall have the rights to file applications for the trademarks attached to the goods they are marketing provided that the manufacturer of the goods does not use that trademark in Vietnam, nor objects to the filing ²¹.

It may be said that under the new law, applicants having the rights to file trademarks are no longer limited to the ones who manufacture the goods but the authorized trading persons can also do it, and therefore, the importance of the Business License which was very essential document under the prior law is now significantly reduced.

A new provision relating to trademarks is that international trademarks are protected from the date of their publication in the Vietnam Official Gazette of Industrial Property until the end of the term of the international registrations set forth by Madrid Agreement ²² which Vietnam acceded to.

This provision is in conflict with Article 4 of the Madrid Agreement, according to which the protection of the international trademark in each of the contracting countries shall be the same as if the mark had been directly deposited there.

In the past, even though the prior trademark law did not permit the assignment of trademark applications, in fact, trademark applications had been allowed to be transferred by decision of the National Office of Industrial Property. This gap of the law has now been corrected by paragraph 2.e of Article 14 of Decree No.63-CP which stipulates that rights in industrial property applications including trademark applications may be assigned.

Differing from the prior law which provided the priority date as a basis for calculating the term of validity of a trademark registration, the new law, however, stipulates that the term of validity of a trademark registration extends for a period of ten years from the date on which the application is filed in due form and protection runs from the date trademark registration is granted.

Under the previous law, (which still applies to registered trademarks, the applications for which were filed before 1 July 1996 until the next renewal of these trademark registrations), a cancellation action may be filed against a registered mark if the mark was not used in Vietnam during the five year period immediately following the registration date.

It should be noted that under the prior law, (i) if a registered trademark was used during the five year period following the registration date, it would never be subject to cancellation based on non-use even if after that period it could not be used, and (ii) if a registered trademark was not used during the five year period following the registration date, it would be vulnerable to be cancelled on non-use basis even if after that period it is actually used.

However, under the new law, a trademark registration may be cancelled on the ground of non-use only if the mark has been registered at least five years and was not used in Vietnam during the five year period immediately prior to the filing of the cancellation action and the owner has no legitimate excuse for non-use. If a trademark has not been used for more than five years, but no cancellation action against it was filed, it can become invulnerable once re-used.

For the first time, the IP law of Vietnam clearly states that importation of goods bearing a registered mark without the trademark owner's authorization is an infringement of the rights of the trademark owner ²³.

This new provision is very important for the competent authorities to take border measures against counterfeits and trademark infringing goods.

The protection of Appellations of Origin of Goods was stipulated in the Decree on protection of Industrial Property promulgated in 1989. In practice, however, due to lack of explanatory and guiding regulations, the acquisition of the rights in this kind of Industrial Property was not realized. Under the current Industrial Property legislation, this shortcoming has been overcome, namely procedures for obtaining the protection of Appellations of Origin of Goods has been established and it has enabled the National Office of Industrial Property to set up a staff which is responsible for this matter and open the register of this form of industrial property.

Moreover, the term of protection has also been changed. That is, the certificate of registration of Appellation of Origin of Goods now is effective from the grant date until the end of 10th year counted from the official filing date and may be extended for unlimited consecutive terms, 10 years each ²⁴. Under the prior law, the term of protection of Appellation of Origin of Goods runs as of the grant date and is unlimited in time ²⁵.

5.1 Duration Of A License Agreement

One of the most vital changes to the provisions concerning Transfer of Industrial Property Rights is that duration of license agreement must be matched to the term of validity of the title of protection of the Industrial Property object ²⁶, while it should not have been no longer than 7 years as required under the prior law ²⁷. This new provision has been stipulated as a result of a long dispute between the National Office of Industrial Property and the foreign investors and its promulgation has now met completely the need of industrial property owners.

The prior law provided that if either party is a foreign one, a license contract or assignment must be lodged with the Ministry of Science, Technology and Environment (MOSTE) for approval.

The new law, however, divides the conditions for which a license agreement or assignment should be approved, into two cases as follows:

• If the licensee/assignee is a state-owned-entity or a joint-venture with state capital contribution and the other party is an individual or non-State entity,
• If the licensor /assignor is a Vietnamese party and the licensee/assignee is a foreign party.

It should be noted that (i) if in the past, a license agreement or assignment between the licensee/assignee being a state-owned-entity or a joint-venture with state capital contribution and the other party being a Vietnamese individual or non-State entity should not have been lodged with MOSTE for approval, now it must be approved by MOSTE, and (ii) under the prior law, if the licensor/assignor was a foreign individual or entity and the licensee/assignee was a Vietnamese individual or non-State entity, the license agreement or assignment should also have gone through the approval process, however, the new law does not require the same in this situation or in other words, from now on, license agreements or assignments between the licensor/assignor being a foreign individual or entity and the licensee/assignee being a Vietnamese individual or non-State entity , should not be approved by MOSTE.

The deadline of 30 days from the signature date under the old law, now has been extended to 60 days from the same under the new law, and even can be extendable if the delay is justifiable.

Restricted conditions for transferring the Industrial Property rights which have been, for the first time, stipulated in the industrial property law, are the following:

• co-owners of industrial property rights may assign their part of rights upon the consent of the other co-owners, or if the other co-owners do not consent to such an assignment, but they could not be ready to accept the assignment and have no justifiable reasons for not consenting the assignment.

• assignment of trademark rights is permitted only if such an assignment could not cause confusion as to the source or quality of the goods and/or services bearing the mark.

Transfer of the right to use by the decision of the competent state authority is stipulated in Article 802 of the Civil Code and detailed in Article 51 of the Decree No. 63-CP. The non-voluntary licensing itself is not a new provision as it was provided by Article 20 of Decree No. 84-HDBT promulgated in 1990. However, among others, one important provision of the prior law which was the provision concerning non-voluntary license based upon interdependence of patents, now does not longer exist under the new law.

One new provision is that if the parties disagree on conditions and term of the non-voluntary license, MOSTE is entitled to impose the ones including the royalty which under the prior law should be decided by the court .²⁸

The "first-to-file" principle which was vague under the prior law, now has been strictly stipulated in Article 16 of the Decree No. 63-CP.

Inheritance of inventions, utility solutions, industrial designs and trademarks which was not permitted under the prior law, has become available for the first time in Vietnam in accordance with paragraph 2, Article 796 of the Civil Code.

With regard to the inheritance of rights in a trademark, there are certain conditions ²⁹ which the successor in title should meet that are as follows:

• Rights in a trademark can be inherited to a sole individual or legal entity, and

The successor in title should have had the right to file the trademark application, or in other words, it should have been licensed to carry on the legal manufacturing or trading activities.

Under the new law, there is a special provision regulating the matter of certification and notarization including certification and notarization of documents, signatures, copies and translations which had never been provided in the previous industrial property law ³⁰ and the details of this provision will be discussed in the next chapter.