Update IP administrative sanctions on industrial property from 2024

On September 30, 2024, the Minister of Science and Technology issued Circular 06/2024/TT-BKHCN amending Circular 11/2015/TT-BKHCN guiding Decree 99/2013/ND-CP regulating administrative sanctions on industrial property. This information is intended to guide the update of IP administrative sanctions on industrial property in Decree 46/2024/ND-CP dated May 4, 2024, amending Decree 99/2013/ND-CP. This leads to changes in the guiding Circular – Circular No. 11/2015/TT-BKHCN. Therefore, Viet An Law will state the regulations on some update IP administrative sanctions on industrial property from 2024.

Overview of Circular 06/2024/TT-BKHCN

• Amended document: Circular 11/2015/TT-BKHCN.
• Main content: Amendment of regulations on administrative sanctions on industrial property
• Date of issue: 30/9/2024
• Effective date: 15/11/2024
• Issuing authority: Minister of Science and Technology

Amendments and supplements to additional sanctions

Regarding the additional sanction of “suspension of operations”, one of the new points of Decree 46/2024/ND-CP amends Point c, Clause 2, Article 3 of Decree No. 99/2013/ND-CP from “Suspension of production and trading of infringing goods and services from 01 month to 03 months from the effective date of the sanction decision” to “Suspension of part or all of production, business and service activities from 01 month to 03 months from the effective date of the sanction decision”.

Therefore, Circular 06/2024/TT-BKHCN has amended the provisions of Circular 11/2015/TT-BKHCN on applying additional penalties prescribed in Point c, Clause 2, Article 3 of Decree No. 99/2013/ND-CP as follows:

• The person with authority to sanction administrative sanctions shall apply measures to suspend part or all of the production, business and service activities of the violating organization or individual according to the principle of suspending production, business, and service activities directly related to the administrative sanction.
• The measure of suspending all production, business and service activities of the violating organization or individual is applied in cases where all production, business and service activities are directly related to the administrative sanction.

Amendments and supplements on the application of measures to prevent and ensure the handling of administrative sanctions

Under the new regulations in Decree 46/2024/ND-CP, one of the acts of unfair competition related to domain names that is subject to administrative sanctions is: Possessing or using a domain name that is identical or confusingly similar to another person’s protected trademark, trade name or geographical indication that one does not have the right to use with bad intentions or taking advantage of the prestige and reputation of the corresponding trademark, trade name or geographical indication for illegal profit. Accordingly, this act may be subject to the preventive measure of “forcing the return of the domain name” (previously Decree 99/2013/ND-CP stipulated “forcing the change of domain name information or returning the domain name”).

To guide this new regulation in Decree 46/2024/ND-CP, Circular 06/2024/TT-BKHCN stipulates the application of preventive measures against unfair competition related to the possession and use of domain names as follows:

The person with authority to handle administrative sanctions shall consider, apply preventive measures, and ensure the handling of administrative sanctions by temporarily holding domain names upon receiving valid documents from the subject requesting the handling of unfair competition acts related to the possession and use of domain names, including:

• Propose to apply measures to prevent and ensure handling of administrative sanctions of “temporary domain name detention” (in a separate document or stated in a petition to handle unfair competition related to the possession and use of domain names);
• Power of attorney as prescribed in Article 23 of Decree No. 99/2013/ND-CP (if any);
• Documents and evidence proving unfair competition related to the possession and use of domain names.

New regulations on determining the value of infringing goods and services

Circular 06/2024/TT-BKHCN has abolished the provisions on how to determine the value of infringing goods and services that were amended in Article 4 of Decree 99/2013/ND-CP.

Accordingly, currently, the determination of the value of infringing goods and services is carried out according to the amended and supplemented provisions of Decree 126/2021/ND-CP, Decree 46/2024/ND-CP, and Article 60 of the Law on Handling of Administrative Sanctions 2012, amended and supplemented in 2020. Specifically:

Determining the value of infringing exhibits, which are goods infringing industrial property rights and counterfeit goods of intellectual property rights as prescribed in Clause 2, Article 213 of the Law on Intellectual Property, as a basis for determining the fine framework and the authority to impose penalties, shall comply with the following:

• List price or the price stated on the contract sales invoice or import declaration
• Price according to the announcement of the local financial authority; in case there is no price announcement, the price is according to the market price at the time of the administrative sanction;
• Cost of infringing goods if they are unsold goods.

Amendments and supplement regulations on determining illegal profits gained from committing administrative sanctions

Illegal profits gained from committing administrative sanctions are the benefits that organizations and individuals gain from committing administrative sanctions, including Money; valuable papers; and other assets.

Accordingly, the illegal profit in money is the total amount of money that an organization or individual receives from an administrative sanction and is calculated by the amount of money earned from the transfer and consumption of goods and provision of violating services after deducting the direct costs of the goods and services based on records and documents proving the legality and validity of such costs provided by the violating organization or individual;

Pursuant to Circular 06/2024/TT-BKHCN, the determination of illegal profits as money is done as follows:

Illegal profits are money equal to (=) the quantity of goods and volume of services transferred or consumed multiplied (x) by the unit price of goods and services minus (-) the direct costs of goods or services (if the violating organization or individual has complete records and documents to prove the legality and validity of such costs).

In which:

• The quantity of goods or volume of services transferred or consumed is determined based on the declaration of the violating organization or individual and the inspection and verification by the competent authority;
• The unit price of goods and services is determined based on the records and documents of the violating organization or individual. In case there are no records and documents for determination, the unit price is determined according to the market price of similar goods and services at the time of detecting the sanction;
• In case the quantity, volume, and unit price cannot be determined, the illegal profit is the total amount of money the organization or individual receives from the illegal transfer, consumption of goods, and provision of services.

Thus, if the previous regulation in Circular 11/2015/TT-BKHCN, the basis for determining the amount of money that an organization or individual in violation receives from committing an administrative sanction of industrial property only includes the quantity of goods and services illegally transferred, consumed, dispersed, or destroyed multiplied by (x) the unit price without deducting the direct costs of the goods or services, the new regulation has added a deduction for the direct costs of the goods or services (if the violating organization or individual has complete records and documents to prove the legality and validity of such costs).

Instructions for determining infringements of regulations on instructions for protecting industrial property rights

The act of giving false indications about the legal status of infringements of regulations on indications for protection of industrial property rights prescribed in Point b, Clause 1, Article 6 of Decree No. 99/2013/ND-CP is understood as providing misleading information that the subject is being protected by industrial property rights in Vietnam even though it is not or has not been protected, including cases where the subject has filed an application but has not been granted a protection certificate or the protection certificate has been revoked, terminated or expired at the time of making the indication on the goods, packaging of goods, and means of business.

Circular 06/2024/TT-BKHCN has new regulations guiding the determination of acts of false indication of legal status as follows:

• Replace the phrase “Printing on products, goods, packaging of goods, means of business, means of service misleading instructions about the products, goods, services bearing protected trademarks” with “Attaching on goods, packaging of goods, means of business misleading instructions about the goods, services bearing protected trademarks”.
• Supplement cases where the symbol ® is used on goods and packaging (including secondary labels for imported goods) and the goods and packaging (including secondary labels for imported goods) have truthful information about the trademark protection status in Vietnam, it is not considered an infringement of the provisions of Point b, Clause 1, Article 6 of Decree No. 99/2013/ND-CP.
• Supplement cases where goods and packaging use the symbol “P” or “Patent” and the goods and packaging (including secondary labels for imported goods) have truthful information about the patent protection status in Vietnam, it is not considered an infringement of the provisions in Point b Clause 1 Article 6 of Decree No. 99/2013/ND-CP.

In addition, for the act of false indication, which is the act of writing on goods or packaging of goods the phrase “produced under a contract for the use of industrial property objects of…” or instructions with similar meanings in Vietnamese or a foreign language (belonging to the act of false indication or failure to indicate goods produced under a contract for the use of industrial property objects as prescribed in Point c, Clause 1, Article 6 of Decree 99/2013/ND-CP), the new regulation has guided that this act must fall into one of the following cases:

• The user has not been legally transferred the right to use the industrial property object according to the provisions of the law;
• There is a contract for the use of industrial property objects between the parties but information such as the name or contract number in the instructions is incorrect.
• The act of not providing instructions is the act of not providing instructions on the goods or packaging of the goods that the products or goods are manufactured under a contract for the use of industrial property objects.

Identifying intellectual property infringement on the Internet

Previously, the determination of acts of infringement of industrial property rights was regulated in Decree 105/2006/ND-CP. However, this determination is now newly regulated in Decree 65/2023/ND-CP. Therefore, Circular 06/2024/TT-BKHCN has new regulations on how to determine acts of infringement of industrial property rights on the Internet. Specifically:

• The considered behavior occurring on the Internet when having all the elements specified in Clause 4, Article 72 of Decree No. 65/2023/ND-CP is also considered an infringement in the field of industrial property and is subject to administrative sanctions pursuant to Decree No. 99/2013/ND-CP.
• The domain name registrant who allows another organization or individual to use the domain name and knows or has reason to know that the organization or individual is using the domain name to commit the above infringement is also considered to have infringed and will be considered for punishment under the corresponding provisions in Decree No. 99/2013/ND-CP.

New regulations on the import of goods that infringe on industrial property rights

Previously, the parallel import was regulated in Article 18 of Circular 11/2015/TT-BKHCN. However, pursuant to the new regulation in Circular 06/2024/TT-BKHCN, the name has been changed to “import of goods infringing industrial property rights”.

Accordingly, the act of importing goods that infringe industrial property rights is subject to administrative penalties under Decree 99/2013/ND-CP, except in the following cases:

“The import of products by organizations or individuals whose owners or organizations or individuals have been transferred the right to use, including the transfer of the right to use under a mandatory decision, or by those who have the right to use the industrial property subject before the provisions of the Law on Intellectual Property, to the domestic or foreign market, without the consent of the industrial property right holder (parallel import), is not considered an act of infringement of industrial property rights and is not subject to administrative sanctions.”

Thus, the act of importing goods if it is a parallel import act is not considered an act of infringement of industrial property rights and is not subject to administrative sanctions.

Amendment and supplement to regulations on infringement handling procedures

Documents and evidence attached to the request for handling of infringement

For documents proving the right to request handling of infringement, the new regulation requires the following components to be included:

• Copies of certificates, protection titles, certificates, and other documents are considered valid if the rights holder presents the original for comparison or a copy certified by a competent authority or a copy certified by the authority issuing the original.
• Documents proving the ownership of a trade name are documents and exhibits proving the prior and legal use of the trade name in the business field and business area that meet the protection conditions;
• Documents proving ownership of a trade secret are documents proving that the organization or individual legally holds and has taken measures to secure information considered a trade secret;
• In case the contract for using industrial property objects, regulations on using collective trademarks, or licenses for using geographical indications do not contain any agreement or regulations restricting the right to request handling of infringement of the transferee, that person is allowed to carry out procedures to request handling of infringement, provided that the right owner does not have a written objection to the implementation of such procedures.

For documents and evidence attached to the application, including The explanation of the right holder (on revenue, reputation, advertising, evidence of widespread use, copies of certificates, protection titles in other countries) provided to the competent authority handling the case is considered valid if there is a commitment to take legal responsibility for the content and information of the explanation and the signature and seal (if any) of the right holder or the legal representative of the right holder.

Review and process requests for handling infringements

• The regulation that in case the request for handling of infringements does not have sufficient evidence of the infringement, the competent authority may request the parties to provide information, evidence, and explanations within ten days from the date specified in the notice is abolished. According to the new regulation, in case the parties’ explanations do not clarify the details of the case and at the request of one or more parties, the competent authority handling the case will organize direct work with the parties.
• Supplementing the authority of the agency handling the case to be able to conduct inspection, verification, collect evidence, determine the scope of protection of industrial property rights, and determine infringement acts according to the provisions of the law on intellectual property. If necessary, it can request competent authorities to conduct verification, collect evidence of infringement, request the state management agency of industrial property to provide professional opinions, or request industrial property appraisal to determine the scope of protection and determine the infringement elements.

Refuse, and stop processing requests for handling infringements in administrative sanctions

Refusal to accept the application is applied to the application for handling infringement submitted to the competent authority but is not eligible for acceptance in the cases specified in Clause 1, Article 28 of Decree 99/2013/ND-CP.

The suspension of processing of applications is applied to applications for handling of infringements that have been accepted in one of the cases specified in Clause 2, Article 28 of Decree 99/2013/ND-CP. The competent authority shall consider suspending the handling of violations when complaints or disputes arise in one of the following cases:

• When there is a document from the state management agency of industrial property regarding the acceptance or consideration of a request to cancel or terminate the validity of a protection certificate, or a complaint about the scope of protection of industrial property rights related to the subject in the request for the handling of infringement;
• When there is a court acceptance document on the case of infringement, complaint, or dispute over industrial property rights related to the subject in the petition for handling infringement;
• When there is a basis to determine the case whose content is related to the status of the right holder or a contractual dispute between the parties regarding the right to use an industrial property object.

Thus, Circular 06/2024/TT-BKHCN has added a basis for stopping the processing of applications, which is when there is a basis to determine that the case’s content is related to the status of the right holder or a contractual dispute between the parties regarding the right to use an industrial property object.

Above are some update IP administrative sanctions on industrial property from 2024. If you have any related questions, please contact Viet An Law for the best advice and support!