Making criminals of pirates and counterfeiters

Le Quang Vinh of Bross & Partners examines the substantive changes to criminal law in Vietnam that promise to rein in counterfeiting and piracy

The signs for determining the crime of industrial property infringement under Section 171 of the 1999 Penal Code as amended in 2009, which may also relate to fake goods, include: (i) Intentionally infringing a registered trademark or geographical indication in Vietnam; and (ii) the infringement is committed on a commercial scale. The penalty applicable is a fine of between VND 50 million (USD 2,200) and VND 500 million (USD 22,000), or non-custodial reform for up to two years.

In cases of aggravating circumstances, such as committing a crime more than once or in an organised manner, the offender will be fined between VND 400 million (USD 17,600) and VND 1 billion (USD 44,000), or sentenced to between six months and three years in prison.

For copyright infringement, having penal bracket the same as that of Section 171, which may also include piracy, the elements for determining a Section 170(a) offence, under the 2009 Penal Code, are: (i) Reproducing works, phonograms, or video recordings, or distributing to the public copies of works, phonograms or video recordings; (ii) the infringement is committed on a commercial scale; and (iii) the act is committed without the permission of the rights owner.

In practice, however, between 2003 and 2007, no verdict relating to Section 171 or Section 170(a) was adjudicated by courts at all levels. Those who committed such acts, even though they related to trademark, geographical indication or copyright, were solely instituted, investigated, prosecuted and adjudicated under Sections 156, 157 or 158 of the 2009 Penal Code, which focuses on the manufacturing or trading in fake common goods, curative medicines and/or preventive medicines goods, animal feeds, fertilisers, and veterinary drugs goods.

It is worth noting that Section 170(a)- or 171-based criminal responsibility is imposed merely when the objective element “on a commercial scale” is met. Moreover, there is an overlap that has been never been confined adequately between counterfeit-related offences by each of Sections 156, 157 or 158 and IPR-related crimes under Section 170(a) or 171. These seem to be the principal reasons why there are very few IP rights crime criminally punished in Vietnam.

Corporate criminal liability

It is striking that the first time in its development of criminal jurisprudence and legislation, Vietnam accepted and passed the inclusion of a corporate criminal liability regime in the Penal Code in 2015. According to the National Assembly’s Resolution No 41/2017/QH14 of 20 June 2017, starting from 1 January 2018, the Penal Code will be amended to include:
All articles and provisions of the 2015 Penal Code applicable for procedures of instituting, investigating, prosecuting and adjudicating criminal cases and executing criminal judgements for offenders whose conviction take place from 12:00am of 1 January 2018
Where an offence occurs prior to 12:00am of 1 January 2018, and after which would have been either found, inquired into, prosecuted or judged while there was any article of the 2015 Penal Code providing for the omission of a crime, penalty or circumstance aggravating penal liability, or sets out a less severe penalty, or new circumstances arise extenuating penal responsibility or penalty exemption, in favour of the offenders then these articles will be applied accordingly
31 articles relating to corporate criminal liability in the 2015 Penal Code will not apply to the crimes committed by a corporation that had taken place before 12:00am of 1 January 2018

In parallel with the principle for individual or natural person criminal liability that has long existed in Vietnam’s criminal policy and legislation, the 2015 Penal Code incorporated a criminal liability regime for corporations. Kindly note that the term ‘corporations’ or its variants are construed narrowly, meaning commercial entities that are for profit only. It is also crucial to note that a corporation that is criminally liable does not exclude the possibility that individuals working for such a corporation will be criminally liable.

It is likely that Article 75 of the 2015 Penal Code, which requires the satisfaction of four conditions, is based on the regimes in other countries, such as the US, France, the UK and Japan. This originates from the doctrine of identification, which evolved in English law.

This doctrine, also known as the directing mind theory, states that the minds, collectively and individually, of the person or people who control and direct the corporation are, in law, the mind of the corporation itself. The four conditions are: (i) The conviction committed on behalf of such a corporation (ii) the offence made for the sake of such a corporation (iii) the crime committed on the basis of direction, instruction or approval of such a corporation; and (iv) the statute of limitation for penal liability examination does not expire.

The crime of copyright infringement, as set out in Section 225 of the 2015 Penal Code, of which Section 225(1) retains the precondition “on a commercial scale” but supplements other quantitative thresholds, is expected to remove a persistent and lasting obstacle that prevented competent bodies from issuing criminal charges for the past 10 years. In particular, those who without permission deliberately infringe on a commercial scale copyright or related rights and have gained illicit profits of between VND 50 million (USD 2,200) and VND 300 million (USD 13,200), caused damage to the copyright owner in the sum of between VND 100 million (USD 4,400) and VND 500 million (USD 22,000), or their infringing goods are valued between the same range, will be fined between VND 50 million and VND 300 million, or be subject to non-custodial reform for up to three years.

According to Section 225(4), corporations will be charged criminally and issued a fine of between VND 300 million and VND 1 billion (USD 44,000) when one of the above acts as applied to individuals is committed by the corporation and it has done so before. Where such acts made by corporations fall into Section 225(2), namely in an organised manner, committed more than twice or the infringing goods are valued at more than VND 500 million (USD 22,000), the corporation will be fined up to VND 3 billion (USD 132,000), suspended from doing business for a definite period of between six months and two years, or banned from practicing some activities. In terms of individual criminal liability, like Section 171 of the 2009 Penal Code, although the basic constitution of Section 226(1) keeps unchanged two subjects of crime, being registered trademarks and geographical indications, elements of crime have been extended and added, particularly infringing goods subject to criminal responsibility to include those counterfeits and geographical indications.

It seems there have been a link between the Penal Code and intellectual property law since the Agreement on Trade-Related Aspects of IP Rights’s (TRIPS) definition of counterfeit goods was transposed into Section 213 of Vietnam’s IP Law in 2005. As revised, it provides for: “Intellectual property counterfeit goods comprise goods bearing counterfeit trademarks and goods bearing counterfeit geographical indications, wherein counterfeit mark goods means goods or their packages bearing a mark or sign which is identical with or indistinguishable from a mark or geographical indication currently protected for those very goods, without permission from the mark owner or organisation managing the geographical indication.”

However, these ingredients are not enough for the purposes of criminal threshold except where it is proven that the offender infringed on a commercial scale or gained illicit profit, caused damage to the rights owner, or the infringing goods are worth a certain amount.
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