Law Regulating Unfair Competition Practices in Vietnam

Korea also has an Unfair Competition Prevention and Trade Secrets Protection Act since 1961 (last amended in February 2001), however, Chapter V of the Monopoly and Fair Trade Regulation Act of 1980 (last amended in 2004) stipulates a series of unfair trade practices including from transaction location, discrimination, exclusion of competitors, solicitation of customers of other businesses, abuse of position in transactions, transactions with terms that restrict or hinder the business activities of partners, transactions with unreasonable preferential terms and other acts that threaten fair trade activities.

It can be seen that the above countries have consulted and inherited many legal systems to build regulations on unfair competition, reflected in many different regulatory documents with different approaches. On the other hand, it is also necessary to see that these countries have applied regulations to suit their socio-economic conditions, and have consciously used regulations on unfair competition as "sweeping provisions" to overcome or limit the incorrect operation of market institutions in each country. Examples include acts of buying at unreasonably high prices and selling at unreasonably high prices in Articles 6 and 7 of the Japanese Regulations on Unfair Trade Practices or acts of assisting others with special benefits, or other companies with advances, loans, labor, real estate, stocks and bonds, intellectual property, or transactions with significant preferential terms... in Clause 7, Article 23 of the Korean Monopoly and Fair Trade Regulation Act, which are provisions aimed at preventing internal transactions, subsidies and cross-subsidies between divisions of the same economic group that may affect the general competitive environment of the economy.

1.2.3.4 Countries with transition economies

For countries transitioning from a centrally planned system to a market mechanism, the process of developing laws against unfair competition has its own characteristics to ensure that relevant subjects, including enterprises and management agencies, have the conditions to become familiar with and adapt to market activities in the new environment. Regulations on unfair competition also reflect the general legislative movement in these countries.

In Russia and Eastern Europe, along with the rapid and radical change of socio-economic institutions, anti-unfair competition laws were also enacted with full components according to OECD standards. Legislators considered anti-unfair competition laws as a fundamental factor to promote the economic reform process.

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Article 10 of the Law on Competition and Restriction of Monopolistic Behavior in the Commodity Market 1991 (last amended and supplemented in 2005) prohibits unfair competition practices including providing false, misleading or distorted information that may cause damage or loss of reputation to other businesses, acts that confuse consumers, acts that infringe upon intellectual property rights or trade secrets of other businesses, etc.

In China, with the gradual economic reform process, the development of anti-unfair competition laws has also gone through stages. While legislators have been hesitant to develop laws on competition restriction and anti-monopoly (the Anti-Monopoly Law of the People's Republic of China was only enacted in 2007), since 1993, China has had a separate law on anti-unfair competition, which stipulates in detail various types of misleading behavior, infringement of trade secrets, false advertising, etc. Notably, in this law, some anti-competitive behaviors such as selling below cost, imposing unreasonable conditions, collusive bidding, etc. have been adjusted with the view that they are unfair competition behaviors. Article 6 of the Law prohibits public utility enterprises and other enterprises with natural monopoly positions from obstructing competition in the market, and Article 7 of the Law prohibits state agencies from abusing their power to force enterprises to trade or prevent the circulation of goods.

CHAPTER 2

CURRENT STATUS OF LAW AGAINST UNFAIR COMPETITION IN VIETNAM

2.1. Laws regulating unfair competition practices in Vietnam

2.1.1. Misleading instructions

Concept

Article 130 of the 2005 Law on Intellectual Property stipulates that commercial indications are signs and information intended to guide the trade of goods and services, including trademarks, trade names, business symbols, business slogans, geographical indications, packaging designs of goods, and product labels. The act of using commercial indications includes the act of attaching such commercial indications to goods, packaging of goods, means of service, business transaction documents, advertising means; selling, advertising for sale, storing for sale, importing goods with such commercial indications attached.

According to Article 40 of the Competition Law 2004, misleading indications can be understood as indications containing misleading information about trade names, business slogans, business symbols, packaging, geographical indications and other elements that distort customers' perception of goods and services for the purpose of competition.

Manifestations of misleading directive behavior

According to Article 40 of the Competition Law 2004, misleading indications include two specific violations:

Firstly, the act of using misleading instructions is when a business uses instructions containing misleading information about trade names, business slogans, business symbols, packaging, dealer instructions, etc., distorting customers' perception of goods and services for the purpose of competition.

Second, the practice of marketing products that use misleading indications.

With these two acts, the violating enterprise has caused customers to confuse their products with those of other enterprises by using instructions containing information that distorts customers' perceptions, making them unable to distinguish the products of the violating enterprise from the confused products.

When participating in the market of goods and services, businesses, for their own selfish motives, have sought every way to compete with the products and services of rival businesses by confusing customers in general and customers of rival businesses in deciding to use their products and services.

through unfair competition by enterprises creating indications on products that can be confused with similar products of other enterprises.

Processing form

Enterprises using misleading instructions will be fined from VND 5,000,000 to VND 1,000,000.

10,000,000 VND in the following cases:

Using instructions containing misleading information about trade names, business slogans, business symbols, packaging, and geographical indications to distort customers' perceptions of one's own goods and services and those of other businesses for competitive purposes;

– Trading in goods and services using the above-mentioned misleading indications.

Enterprises violating one of the following cases will be fined from

10,000,000 VND to 20,000,000 VND:

– Related goods and services are food items, medical equipment, medicines for human disease prevention and treatment, veterinary medicine, fertilizers, animal feed, pesticides, plant varieties, livestock and medical and health care services;

– Related goods and services are circulated and supplied within two or more provinces or centrally-run cities.

In addition to the above fines, violating enterprises may also be subject to one or more additional penalties and remedial measures:

– Confiscation of exhibits and means used to commit the violation, including confiscation of all profits gained from committing the violation;

– Forced public correction.

Practice of using misleading instructions

The act of using misleading indications is mainly manifested through violations related to commercial indications (trade names, business slogans, business symbols, packaging designs of goods, product labels, geographical indications). Competition reality shows that, not only in the past (before the promulgation of the Competition Law 2004) but also at present, these violations are still quite common, increasingly sophisticated, manifested in many forms, focusing on acts of causing confusion about names, origin of goods, geographical indications, product labels and industrial designs.

First, acts of causing confusion about the name of origin of goods and geographical indications: Unfair competition acts that infringe on the name of origin of goods, although not as common as many other types of unfair acts, are not

rare, focusing on places with "unique famous specialties", a typical example is the name of origin "Hai Hau fragrant rice" printed on the packaging of many types of rice not originating from Hai Hau district of Nam Dinh province; or the case of using confusing indications about the origin of goods by Young Titan Company Limited (Taiwan) for two products: Royal Reserve Old 21 Rare Premium Whiskey produced in the US and Crowley blended Whiskey produced in France with the brand and packaging "Scotch Whiskey" in English and Chinese. Long-standing reputable geographical indications in the world market such as Made in Japan, Made in USA, Made in Italy, Made in UK, Made in Korea... are also often exploited to attach to products manufactured in Vietnam, appealing to the foreign goods preference of the majority of Vietnamese consumers. Products using these confusing geographical indications are often very diverse, from clothes, rice cookers to cosmetics, shoes...

Second, confusing acts regarding trademarks (counterfeit goods), packaging, industrial designs: It can be said that these are very common and quite diverse violations in the market. Confusing acts regarding trademarks are all focused on famous brands, because this is considered a particularly important business advantage, creating a comparative advantage in products. Products that use confusing instructions regarding trademarks are very diverse, from drinking water, washing powder, machinery to pharmaceuticals... For example, in the case of Lavie mineral water, there are currently many "siblings" such as: Lavile, Lavige, La vise; the drug product Decolgen (of the Philippine Pharmaceutical Company) now has 7 similar brands: Decoagen, Debacongen, Devicongen... with the pill design also embossed with identical embossed diamonds.

Third, about counterfeit and fake goods: For example, currently 80% of motorcycle spare parts sold on the market are of domestic origin, but are labeled with foreign brands. According to Pham & Associates (P&A) (a company hired by Honda to protect industrial designs), through investigation, there are currently 17 Honda machine parts that are counterfeit or copied on the market.

Through a survey of the common types of violations in the form of confusing instructions as above, we have the following comments:

Firstly, the use of misleading indications has been quite common, focusing on a number of violations of trade names and geographical indications, and it is also worth noting that the use of misleading indications in the form of trademarks and industrial designs is also quite common.

Second, acts of infringement of industrial designs and trademarks are not yet regulated in the 2004 Competition Law.

2.1.2. Infringement of trade secrets

Concept

Trade secrets are information obtained from financial and intellectual investment activities, which have not been disclosed and are capable of being used in business.

Trade secrets as defined in Clause 10, Article 3 of the Competition Law 2004 have the following basic characteristics:

First, the information is not common knowledge.

That is, the general public and interested parties cannot access and learn information through conventional means and methods.

Second, it has the potential to be applied in business and, when used, gives the holder of the information an advantage over those who do not possess or use the information.

The economic value of information comes from its secret and non-publicity. Once the information is disclosed, everyone knows, the commercial value of the information and the competitive advantage it brings to the owner will no longer exist. This characteristic also requires the information to have general business application value, not necessarily linked to scientific and technological progress, and this criterion will be assessed in real circumstances. For example, information such as a list of customers or business partners of a business can be considered a trade secret of that business, because the information can bring competitive advantage even though it does not represent the "intellectual" or "creative" element. This is also an aspect that explains why trade secrets are included in the regulatory framework of the law against unfair competition.

Third, the owner must take reasonable steps to ensure that the information is not disclosed or easily accessible.

This last feature requires the owner or legal holder of a trade secret (through a contract or authorization) to keep the information confidential by taking necessary measures to prevent the public and interested parties from accessing, learning, collecting and disseminating the information. This also means that subjectively, the owner himself must be aware of the confidential nature of the information. If the owner is not aware of confidentiality, unintentionally due to negligence or proactively providing information to others, then even if the trade secret has real value, the law will refuse to protect it.

Acts of infringement of business secrets as prescribed in the Competition Law 2004 include the following acts:

Firstly, the act of accessing and collecting information belonging to a trade secret by going against the security measures of the legitimate owner of that trade secret.

This is a typical form of trade secret infringement, where the infringing party actively approaches and collects information by breaking the security measures of the person who has the secret. The law against unfair competition prohibits the access and collection of

information that is a trade secret without the consent of the owner of that trade secret. For example, the act of unauthorized access to a system where the source (computer) storing the trade secret is owned by another business.

Second, the act of disclosing or using information that is a trade secret without the permission of the owner of the trade secret.

This type of conduct is mainly directed at third parties who do not directly appropriate the trade secret from the owner or legal holder of the secret, but may receive it from the direct appropriator, other third parties, or from public sources after the secret has been disclosed. Even in cases where this person receives the information in good faith, the law does not allow them to continue to use or circulate the information to others.

A relatively common example of this behavior can be given as follows: an individual, after a period of working for a manufacturing enterprise and knowing the business secrets of that enterprise, discloses them to another enterprise or uses them for himself to establish an enterprise based on the use of information about the business secret without the permission of the owner of the business secret.

Third, acts of violating a confidentiality contract or deceiving or taking advantage of the trust of a person with a confidentiality obligation to access, collect and disclose information belonging to the business secret of the owner of that business secret.

A confidentiality agreement is a contract under which one party to the contract has the right to access confidential business information of an owner but is obliged to keep that information confidential. A party with a confidentiality obligation who discloses information about a business secret to a third party is considered to have violated the business secret according to the provisions of the law. In addition, the law also stipulates that any act of taking advantage of an existing relationship to deceive or take advantage of the trust of a person with a confidentiality obligation to obtain confidential information about a business secret and then disclosing that information to a third party is also considered to have violated the business secret.

Fourth, the act of accessing and collecting information that is a business secret of another person when that person carries out procedures according to the provisions of law related to business, product circulation procedures or by opposing the security measures of state agencies, or using that information for business purposes, the purpose of applying for a license related to business or product circulation.

Manifestations of trade secret infringement

a) Accessing and collecting information belonging to a trade secret by counteracting the security measures of the person legally controlling that trade secret.

b) Disclosing or using information that is a trade secret without the permission of the owner of that trade secret.

c) Violating a confidentiality contract or deceiving, inducing, bribing, forcing, seducing, or taking advantage of the trust of a person with a confidentiality obligation to access, collect, or disclose a trade secret.

d) Accessing and collecting information belonging to the applicant's business secrets under the procedures for applying for a business license or product circulation license by going against the security measures of the competent authority.

e) Using or disclosing a trade secret even though knowing or having the obligation to know that the trade secret was obtained by another person in connection with one of the acts specified in the above points.

f) Failure to perform the confidentiality obligations prescribed in Article 128 of the Law on Intellectual Property.

Processing form

The specific penalties for infringement of trade secrets are as follows:

1. A fine of from VND 10,000,000 to VND 30,000,000 shall be imposed for one of the following acts:

a) Accessing and collecting information belonging to a trade secret by counteracting the security measures of the legitimate owner of that trade secret;

b) Disclosing or using trade secret information without the permission of the trade secret owner;

c) Accessing and collecting information that is a trade secret of another person when that person carries out procedures according to the provisions of law related to business, product circulation procedures or by opposing the security measures of state agencies or using that information for business purposes, applying for licenses related to business or product circulation.

2. In addition to the penalty under Clause 1, the violating enterprise may also have the exhibits and means used to commit the violation confiscated, including the confiscation of profits earned from committing the violation.

Practice of trade secret infringement

In Vietnam, the concept of trade secrets as well as the issue of protecting and preserving trade secrets are still quite new and not really taken seriously. Sanctions for trade secret infringement are not really strict (mainly applying civil and administrative measures). The reason is that trade secret infringement rarely has a big impact on consumers and the whole society but only affects its owner, so the best measure for businesses to protect their trade secrets is to establish their own security strategies and techniques. In addition, the current trade secret infringement is extremely diverse and difficult to detect and regulate; the level of competition

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