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Effects of new Intellectual Property Regulations (IPR) on foreign-invested groups in Vietnam

Over the past time, the legal system on intellectual property in Vietnam has been developed, amended and supplemented, thereby creating a basic legal foundation to regulate issues related to protection and enforce intellectual property rights (IPR). In the face of the requirement of an increasingly extensive and comprehensive international integration process, the legal system on intellectual property needs to continue to be improved to protect the intellectual property rights of products and interests of foreign investors when participating in the Vietnamese market.

1. IP system and activities of foreign investment, technology transfer

1.1. Activities of foreign investment

A multinational company has many different options for entering into foreign markets. They can invest directly (i.e. directly choose investment locations, build factories and operate production), or enter into joint ventures with local businesses through capital contribution, technology and human resources. The investor’s choice of form of investment and business depends on the market and the legal system of the host country, in which the IP protection system plays an important role. The characteristic of multinational companies is that they often own very large intangible assets, of which technology is one of the most important types of intangible assets.

From the standpoint of intellectual property rights, famous trademarks and patents are inventions that establish a company’s reputation and are integral to its operations. Multinational companies tend to build companies with 100% of their capital in countries with strong IP protection systems, for investors, the advantage of this form is that they can protect secrets technology and trademarks well, its disadvantages are that it is expensive, does not take full advantage of the advantages that the locality offers, and the invested country does not learn management skills as well as production methods export.

1.2. Activities on technology transfer

IPR also affects technology transfer. Technology here is classified into easy to imitate and difficult to imitate. The type of technology that is easy to imitate usually includes the technology of copying music, producing toys, and so on. The pharmaceutical and computer software industries frequently employ technology that is hard to replicate. In general, medical machinery and equipment products are often difficult to imitate. Regardless of their sophistication and complexity, all products have the potential to expose technological secrets or be replicated.

A strong IP protection system can limit copying and counterfeiting and increase the cost of imitation. Any country that has built a strong IP protection system will be able to receive advanced technologies for the development of the country. In contrast, countries with weak IPR protection systems will only have the opportunity to accept technologies that have been invented for a long time, even outdated and have lost their exploitation value.

IPR also affects technology transfer. Technology here is classified into easy to imitate and difficult to imitate. The type of technology that is easy to imitate usually includes the technology of copying music, producing toys, and so on.

2. A new important milestone in the process of perfecting IP policies and laws

The revised Law on Intellectual Property (IPR) also took effect from January 1. In particular, the revised law focuses on 7 major policies, including policies affecting IP rights of Foreign Invested Enterprises (FIE) in Vietnam. The amendments and supplements to the IP Law in 2022 focus on seven major groups of policies, including: 

(1) Ensuring clear regulations on authors, owners of the World Heritage, performers, and owners of the copyright in cases of transfer, transfer of copyright and related rights; 

(2) To encourage the creation, exploitation and dissemination of inventions, industrial designs, layout designs and plant varieties created from scientific and technological tasks using the State budget; 

(3) Facilitating the process of carrying out the procedures for registration of international property rights, management, and establishment of industrial property rights; 

(4) Ensuring an adequate and balanced level of IPR protection; 

(5) Strengthening the effectiveness of IP support activities; 

(6) Improve the effectiveness of IPR protection activities; and 

(7) Ensure full and serious implementation of Vietnam’s international commitments on IP protection in the integration process.

The revised Law on Intellectual Property (IPR) also took effect from January 1. In particular, the revised law focuses on 7 major policies

3. New IPR – Big push on policies to promote foreign investment

3.1. Regulations related to procedures

The IPR continues to improve regulations related to procedures, reduce the composition of documents and time taken when registering IP rights, even in the case of automatically establishing rights without having to register as in the field of author rights, related rights. This makes the registration process faster, more convenient and more transparent, thereby encouraging FIEs to increase the registration of intellectual property rights in Vietnam. Accordingly, greater transparency and compliance with international commitments is a solid basis for foreign-invested enterprises when investing in Vietnam to protect, exploit and enforce their IP rights against infringements and violations.

3.2. Other noteworthy regulations for FIE in IPR

Some notable regulations such as allowing organizations and individuals to register copyright and related rights through the online system; or supplement regulations related to the simplification of industrial design descriptions when conducting registration procedures.

Before that, many fake goods flooded the Vietnamese market, causing damage to businesses large and small. With the newly revised IPR, the customs authority can take the initiative if, during the inspection, supervision and control process, it is discovered that there are grounds to suspect that imported or exported goods are contraband or counterfeit in terms of intellectual property. This helps to improve the efficiency and feasibility of IP protection activities. 

Furthermore, the active implementation of Vietnam’s international commitments regarding IP protection during its integration process has captured the interest of foreign partners and investors in the region. This method of incorporating international obligations has greatly increased the level of Intellectual Property Rights (IPR) protection in Vietnam, thus bringing it closer to par with the standards of developed nations across the globe. As an illustration, one can consider the obligations and privileges of businesses that offer intermediary services within the realm of digital communication networks. This may involve taking on the responsibility of initializing the suspension of customs procedures for products suspected of being counterfeit. The ultimate aim is to attract foreign investments while simultaneously safeguarding intellectual property protection.

With the newly revised IPR, the customs authority can take the initiative if, during the inspection, supervision and control process, it is discovered that there are grounds to suspect that imported or exported goods are contraband or counterfeit in terms of intellectual property.

4. Conclusion

In general, Vietnam has joined and signed many international trade agreements, whereby when amending the IP Law, there are additional provisions, such as content related to trademark protection. The internalization of international commitments on intellectual property is very important, contributing to bringing the IP legal system closer to the common standards of the world, and creating a healthy and competitive business environment to attract foreign investors, thereby helping Vietnam confidently integrate into the global playing field. 

HMLF legal services

Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: 0937215585
Website: hmlf.vn
Email: miller@hmlf.vn

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