Facing civil remedies due to improper use of a registered trademark in Vietnam

Background: 

Dong Phuong Trading and Production Co., Ltd. (“Dong Phuong Company”), a Hanoi-based company, is the owner of the following trademark in Vietnam:

Trademark:                

Class:                          07, 09 and 11

Registration No.:        107919

Registration date:       25/08/2008

Status:                        Registered, effective until 01/08/2027

Another entity, A Sanzo Vietnam Electronic JSC” (“A Sanzo Company”), a company in Ho Chi Minh City, Vietnam, is the owner of the following trademark in Vietnam:

Trademark:                

Class:                          7, 8, 9, 11, 20, 21 and 35

Registration No.:        221067

Registration date:       07/03/2014

Status:                        Registered, effective until 09/11/2022

In 2015, Dong Phuong Company detected that A Sanzo Company used the sign “” (“Asanzo, device”) to affix on various products such as television, air conditioners and other consumer goods and planned to take action against A Sanzo Company for selling products bearing the sign “Asanzo, device” in various products and business means. To initiate proceedings, they requested a bailiff service provider to document the evidence of alleged infringement. In August 2015, Dong Phuong Company submitted a request for assessment conclusion on trademark infringement with the Vietnam Intellectual Property Research Institute (“VIPRI”). The VIPR concluded that “Asanzo, device”, affixed on A Sanzo Company’s website, televisions, cookers, electric pressure cookers, hot water bottles, signboards and vans was an infringing element over the mark “Asano, device” in the name of Dong Phuong Company.

Based on the VIPRI’s assessment conclusion, Dong Phuong Company submitted petitions for handling alleged IPR infringement by A Sanzo Company with Vietnamese administrative enforcement authorities. In the absence of enforcement actions taken by the administrative enforcement authorities against A Sanzo Company, Dong Phuong Company filed a lawsuit with a Court in Ho Chi Minh City for hearing the case.  Dong Phuong Company requested that the Court  demand A Sanzo Company to cease the infringement, make a public apology and pay a damage of VND 500 million (approx. US$ 25,000).

In defence, it was pleaded, inter alia, by the Defendant that:

(i) the mark “” affixed on A Sanzo Company’s goods and business means was completely different from Dong Phuong Company’s mark “” in respect of structure, color, visuality and pronunciation ;

 (ii) use of the mark “” was lawful because A Sanzo Company was the owner of the mark “” under Trademark Registration No. 221067, granted on 07 March 2014 and its was valid until 9 November 2022.

In addition, A Sanzo Company made a counter-claim against Dong Phuong Company stating that the groundless lawsuit had harmed A Sanzo Company’s reputation and position in the market. Further, Dong Phuong Company requested provisions of internal turnover statistics from A Sanzo Company’s sales agents which caused a further negative impact on the defendant’s business. Thus, A Sanzo Company requested that Dong Phuong Company make a public apology and pay a compensation of VND 300 million (approx. US$ 15,000).

In the first-instance judgment, the Court held that the Defendant had to cease the infringement, make a public apology and pay VND 100 million (approx. US$ 5,000) as a compensation to the Plaintiff. The Court also rejected the Defendant’s counterclaim.

Unsatisfied with the first-instance judgment, on 30 May 2018, both the Plaintiff and the Defendant appealed thereagainst, making the case be heard under appellate proceedings in 2019. The Appellate Panel found that the first-instance ruling had only accepted the compensation amount based on reasonable grounds because the Dong Phuong Company had not been able to give clear evidence proving their damages. This made it difficult to determine how the Defendant earned a profit from infringed actions. In addition, the Panel did not accept the Defendant’s appeal and decided to keep the first-instance ruling.

In a nutshell, after reviewing the whole case, the appellate Court rejected the appeal initiated by the Plaintiff and the Defendant and upheld the first-instance ruling in which the Defendant was ordered:

 (i) to cease the infringement, 

(ii) to make public apology and (iii) to pay VND 100 million (approx. US$ 5,000) as a compensation to the plaintiff.

Noteworthy points from the case:

• Use of a trademark varied from its registration placed the trademark owner under risks of civil infringement claims. Vietnamese laws and practice do not have a clear definition of “proper use” of a registered trademark. However, as a member of the Paris Convention, Vietnam adopts Article 5.C.2 of the treaty, which provides for using a mark “in form differing in elements, which do not alter the distinctive characters of the mark in the form in which it was registered […] shall not entail invalidation of the registration and shall not diminish the protection granted to the mark”. From the case, it is quite clear that the enforcement authority of Vietnam and also Vietnamese courts consider and make assessment on trademark similarity, based mainly on the actual use of the trademarks and not just their registered versions. In the case in question, the pleading on a registered standard-font mark by the Defendant to defend against the infringement claim was not accepted by the Court.

• A registered trademark in Vietnam does not guarantee that use of such mark by the right holder is lawful if it is not properly used. Proper use of a registered trademark is critical, as improper use of may put the owner at risk of infringement of another’s registered trademark.

• Clear evidence to prove damages is very important if the IPR holders wish the court to accept request for damage compensation in a civil lawsuit in Vietnam. The proof of damage based on which compensation is made must be clear and legitimate evidence, showing the direct causal nexus between the infringement and the damage. Practice indicates that most claims for damages filed by the IPR holders were dismissed because they are not considered as actual losses directly caused by acts of IPR infringement to the IPR holders in Vietnam. The compensation ordered by the Court to be paid by the infringer to the IPR holder is, therefore, not considerable.