Protecting Franchise Trademarks in Vietnam: Enforcement and Legal Remedies

In today’s competitive business landscape, protecting intellectual property rights has become crucial for franchise businesses operating in Vietnam. As the country continues to attract international franchises, understanding the legal framework and enforcement mechanisms for trademark protection is essential for sustainable business operations.

Legal Framework for Trademark Protection in Vietnam

Vietnam’s trademark protection system is governed by a comprehensive legal framework that includes both domestic laws and international treaties. The primary legislation, the Law on Intellectual Property, provides robust protection for trademark owners, including specific provisions for franchise operations.

Key Legal Provisions

• Law on Intellectual Property (as amended)
• Civil Code provisions on intellectual property rights
• Vietnam’s commitments under international IP treaties

Common Types of Trademark Infringement in Franchise Operations

According to Clause 1, Article 129 of the Law on Intellectual Property, Franchise businesses in Vietnam frequently encounter various forms of trademark infringement that can significantly impact their brand value and market position

1. Counterfeiting: Unauthorized reproduction of a franchise’s trademark on low-quality goods damages the brand’s reputation, leading to consumer distrust and potential revenue loss.
2. Unauthorized Use: Using a franchise’s trademark without permission, particularly in sectors like food and beverages, dilutes the brand’s exclusivity, potentially confusing consumers and harming the brand’s image.
3. Similar Marks Causing Confusion: Trademarks that closely resemble an established franchise brand can mislead consumers about the origin of products or services, weakening the franchise’s brand identity and potentially diverting business.

Enforcement Mechanisms

Administrative Actions

Administrative measures provide a relatively quick and cost-effective solution for trademark infringement:

• Market surveillance operations: Involves monitoring the market for counterfeit or infringing products, providing fast detection and cost-effective enforcement. 
• Customs border control measures:
• Suspension of customs procedures for goods suspected of trademark infringement
• Inspection and monitoring to detect goods showing signs of infringement
• Authorities will impose fines ranging from VND 10,000,000 to VND 20,000,000 on individuals who commit acts of trademark infringement.(Decree 99/2013/ND-CP amended by Decree 46/2024/ND-CP):

Additionally, the following measures must be taken to remedy the consequences:

• Compulsory removal and destruction of the trademark;
• Authorities must destroy infringing materials and means if they cannot remove the infringing elements, or they must destroy infringing goods that pose risks to human health, livestock, crops, or the environment.
• Compulsory change of the business name and removal of infringing elements in the business name.

Civil Litigation

The court applies the following civil measures to handle organizations and individuals committing acts of intellectual property infringement (Article 202 Law on Intellectual Property):

• Compelling cessation of infringing acts;
• Compelling apologies and public corrections;
• Compelling the fulfillment of civil obligations;
• Compelling compensation for damages;
• Compelling the destruction, distribution, or non-commercial use of infringing intellectual property goods (without affecting the ability to exploit the rights of the intellectual property rights holder).

Criminal Prosecution

In severe cases of commercial-scale infringement, authorities may initiate criminal proceedings, which can result in penalties under Article 226 of the Criminal Code.

• Criminals:

• Fine (50.000.000 – 1.000.000.000 VND)
• Community sentence
• Prohibition from holding certain positions or doing certain works
• Fine if no administrative penalties are imposed (20.000.000 – 200.000.000 VND)
• Corporate legal entities committing crimes:

• Fine (500.000.000 – 5.000.000.000 VND)
• Suspension of operation

• Prohibition from operating in certain fields;
• Prohibition from raising capital
• Fine if no administrative penalties are imposed (100.000.000 – 500.000.000 VND)

Legal Remedies Available

Compensation for Damages

Trademark owners can claim various types of damages: Article 584 of the Civil Code stipulates the grounds for liability for compensation of non-contractual damages.

In the case where trademark owners prove that the intellectual property infringement has caused material damage, they have the right to request the court to determine the compensation amount based on one of the grounds specified in Article 205.1 on Intellectual Property Law.

Article 589 Civil Code stipulates that damage caused by infringement of property rights includes:

• Property that has been lost, destroyed, or damaged;
• The benefits associated with the use or exploitation of the property that have been lost or reduced;
• Reasonable costs to prevent, limit, and remedy the damage;
• Other damages as provided by law.

In addition, the trademark owner may also request compensation for damage to reputation (Article 592 of the Civil Code), which includes: 

• Reasonable costs to limit or remedy the damage;
•  Actual income lost or reduced; 
• Other damages as provided by law.

Clause 2, Article 205 on Intellectual Property Law stipulates that if the plaintiff proves that the intellectual property infringement has caused emotional distress, they have the right to request the court to determine the compensation amount, which can range from VND 5,000,000 to VND 50,000,000, depending on the extent of the damage.

Injunctive Relief

Courts can issue temporary and permanent injunctions to (Article 199, 202 Law on Intellectual Property Law):

• Stop Ongoing Infringement: Temporary injunctions provide immediate relief by halting ongoing infringement, preventing further harm to the IP holder’s reputation and assets.
• Prevent Future Violations: Permanent injunctions prevent the defendant from repeating the infringing act, ensuring long-term protection and deterring future violations.
• Secure Evidence: Injunctions actively preserve crucial evidence that might otherwise be destroyed or hidden, strengthening the IP holder’s case and increasing the chances of a favourable outcome.

Preventive Measures for Franchise Businesses

Registration Strategies

Implementing comprehensive trademark registration strategies:

• Early registration ensures exclusive rights and prevents trademark squatting.
• Cover all relevant classes to protect all goods and services the business offers or may offer.
• Regular portfolio reviews ensure trademarks are updated, and maintained, and gaps in protection are addressed.

Monitoring and Enforcement

Establishing effective monitoring systems:

• Market surveillance helps detect counterfeit goods and unauthorized use.
• Online monitoring tracks e-commerce and digital platforms for infringements.
• Collaboration with local authorities strengthens enforcement through customs controls and legal actions.

Best Practices for Trademark Protection

To maximize trademark protection in Vietnam, franchise businesses should:

• Maintaining comprehensive trademark registrations to ensure legal protection across all relevant goods and services, preventing unauthorized use.
• Implementing strong contractual protections in franchise agreements to ensure franchisees adhere to trademark usage guidelines and protect brand integrity.
• Establishing clear guidelines for trademark usage to maintain consistency and prevent improper use that could harm the brand.
• Conducting regular trademark audits to detect infringements early, ensure trademarks are properly registered, and update protections as needed.
• Building relationships with local enforcement authorities to enhance trademark protection, improve enforcement actions, and prevent counterfeit products from entering the market.

Conclusion

Achieving effective Trademark Protection for International Franchises in Vietnam requires a thorough understanding of local laws and proactive strategies. While challenges exist, the legal framework provides various tools for trademark protection. Success in trademark enforcement often depends on prompt action and utilizing appropriate legal channels.

For franchise businesses looking to protect their trademarks in Vietnam, consulting with experienced IP professionals is essential to develop and implement effective protection strategies.

Do you need expert help protecting your trademarks in Vietnam? Contact our specialized intellectual property team at Harley Miller Law Firm for a comprehensive consultation on safeguarding your franchise trademarks.

Ep6 Vietnam’s Legal Framework for Franchise Trademarks

Harley Miller Law Firm ”HMLF”

Head office: 14th floor, HM Tower Building, 421 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.

Phone number: +84 937215585

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