K-V Economic Cooperation Project Enhancing Effectiveness of IPR

발간번호 KOTRA18-057

2017 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam Project Title Enhancing Effectiveness of Intellectual Property Rights (IPR) Enforcement in Vietnam

Prepared by Korea Invention Promotion Association(KIPA)-Korea Intellectual Property Strategy Agency(KISTA) Consortium

Supported by Ministry of Economy and Finance (MOEF), Republic of Korea

In cooperation with Ministry of Industry and Trade (MOIT), Socialist Republic of Viet Nam KOTRA Ha Noi Office and KOTRA Ho Chi Minh Office

Project Directors Wonsok Yun, Executive Vice President for Economic Cooperation & Trade Affairs, KOTRA Headquarters Hyungwook Kim, Director General, Development Cooperation Department, KOTRA Headquarters

Project Manager Jiwon Lee, Development Cooperation Department, KOTRA Headquarters

Project Officer Jahyun Kim, Development Cooperation Department, KOTRA Headquarters

Researchers

Korea Kwanyoung Kim, Ph.D., Senior Research Fellow, KIPA (Principal Investigator) Yusun Park, Ph.D., U.S. Attorney, Senior Research Fellow, KIPA Youngbo Shim, Ph.D., Senior Research Fellow, KISTA Jaeheon Lee, Ph.D., Research Fellow, KISTA Mimi Kim, U.S. Attorney, Researcher, KISTA Seokhyeon Choi, Researcher, KISTA

Viet Nam Tran Quynh Anh, Director of International Cooperation Division, Market Surveillance Agency, MOIT Vu Xuan Binh, Deputy Director of Counterfeiting Division, Market Surveillance Agency, MOIT Pham Mai Phuong, Official of International Cooperation Division, Market Surveillance Agency, MOIT Contents

Contents

Chapter 1 Protection of Vietnam’s Intellectual Property Rights ·································· 1

Part 1 Background ··········································································································· 3 Part 2 Status of Progress ······························································································ 6 Part 3 Objective ················································································································ 7 Part 4 Expected Benefits ································································································ 9

Chapter 2 Analysis of Current Status of Vietnam’s Intellectual Property Right ···· 11

Part 1 Analysis of Current Status of Vietnam’s Intellectual Property Right ······ 13 1. Status of Application and Registration of Intellectual Property Rights in Vietnam ··········································································································· 13 2. Society’s Perception about Intellectual Property Rights in Vietnam ········ 20 3. Understanding of Level of Intellectual Property Rights in Vietnam ········· 21 4. Analysis of Causes of Current Status of Infringements of Intellectual Property Rights in Vietnam ············································································ 22 5. Analysis of Types of Infringement of Intellectual Property Rights in Vietnam ··········································································································· 24 6. Details of Infringement of Intellectual Property Right in Vietnam ··········· 26

Part 2 Understanding the Current Status of Intellectual Property Rights Legal System in Vietnam ···························································································· 27 1. Vietnam’s Intellectual Property Rights related Laws ·································· 27 2. Duties and Rights of Government Bodies in relation to Intellectual Property Rights ··································································································· 33 3. Definition and Type of Counterfeited Products in Vietnam ························ 40

i K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Part 3 Understanding the current state of copyright law and system in Vietnam ····························································································································· 41 1. Status of the Vietnamese Copyright Law ······················································ 41 2. Laws of Vietnam Concerning Copyright Infringements ······························· 42 3. Duties and Powers of Vietnamese Government Agencies related to Copyright ·············································································································· 48 4. Vietnam Infringement Case Analysis ······························································ 50

Chapter 3 Investigation and Analysis of Copyright and Intellectual Property Infringement Cases in Vietnam ······································································ 55

Part 1 Investigation and Analysis of Infringement Cases of Intellectual Property Rights in Vietnam ······························································································ 57 1. Escalating Trend of Countermeasures against Intellectual Property Rights in Vietnam ··········································································································· 57 2. Type of Infringement of Intellectual Property Rights in Vietnam ············· 61 3. Investigation and Analysis of Trademark Infringement Cases in Vietnam ··········································································································· 62

Part 2 Investigation and Analysis of Copyright Infringement Cases in Vietnam · 71 1. Penalties for Infringement of Copyright in Vietnam ···································· 71 2. Escalating Trend in Punishment of Copyright Infringement in Vietnam ·· 74 3. Infringement of Vietnamese Music Copyright ··············································· 76 4. Copyright Infringement in Vietnam Online Books ········································ 77 5. Violation through Online Illegal Content Sites in Vietnam ························· 78 6. Violation through Online Illegal Game Sites in Vietnam ···························· 80 7. Infringement through Illegal Software Distribution in Vietnam ················· 81 8. Investigation and Analysis of Infringement Cases in Vietnam ··················· 84

Part 3 Case of Orion Chocopie in Vietnam ······························································· 95 1. Manufacture and Export of Orion Chocopie Forged Products ··················· 95 2. Repackaging Substandard Units of Genuine Product ·································· 98 3. Partial Distortion of Orion Chocopie Trademark ········································ 100

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Chapter 4 The Survey on the Infringement on the Intellectual Property Right of Korean Companies entering Vietnam ·························································· 105

Part 1 Current State of Intellectual Property Rights of Korean Companies in Vietnam ········································································································ 107 1. Investment Trends of Korean Companies entering Vietnam. ··················· 107 2. Survey on the Status of Counterfeit Goods of Korean companies in Vietnam ········································································································· 110 3. Survey on the Protection of Intellectual Property of Enterprises entering Vietnam ·············································································································· 115

Part 2 Survey on the Status of Counterfeit Goods of Korean companies in Vietnam ········································································································ 121 1. Survey Overview ······························································································· 121 2. Survey Result and Analysis ············································································ 126

Chapter 5 The Proposal of Protection Policy for Vietnamese Intellectual Property Rights ······························································································· 149

Part 1 The Government-level of Policy Recommendation for IPR Protection in Vietnam ········································································································ 151 1. Suggestion of Structure / Prevention side Policy ······································ 152 2. Suggestion of Structure / Crackdown side Policy ····································· 153 3. Suggestion of Structure / Punishment side Policy ···································· 153 4. Suggestion of Strategy / Prevention side Policy ········································ 154 5. Suggestion of Strategy / Crackdown side Policy ······································· 154 6. Suggestion of Strategy / Punishment side Policy ······································ 155 7. Policy Sharing aspect for Vietnamese Intellectual Property Protection · 155

Part 2 The prevention against the Infringement on the Intellectual Property of Companies entering Vietnam and their Response Strategies ············ 157 1. The Enhancement of Market Research ························································ 157 2. The Exposure of Competent Authorities ······················································ 157 3. The Enhancement of Cooperation with Customs ······································· 158

iii K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

4. The Promotion of Warning and Notification Activities ······························ 159

Part 3 The Response Strategy for Companies entering Vietnam ······················· 159 1. The Establishment of Crackdown Cooperation System against those Imitating Illegally in Korea. ·········································································· 160 2. The Co-development of Response Strategy considering the type of Product and Pusiness ····················································································· 161 3. The Minimization of Risk through the Intellectual Property ···················· 161

Reference ······························································································································· 163

Appendix ································································································································· 165

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List of Tables

Table 2-1. Types of Infringement of Trademark in Vietnam ·········································· 26 Table 2-2. Infringement of Industrial Property Rights in Vietnam ································ 29 Table 2-3. Types of Counterfeited Products in Vietnam ················································· 40 Table 2-4. Types of Counterfeited Products in Vietnam ················································· 44 Table 2-5. Types of Copyright Infringement in Vietnam ·················································· 46 Table 2-6. Vietnam’s Major Paid Sound Recording Sites ················································ 52 Table 3-1. Comparison of attorney’s fees for civil, criminal, administrative procedures ············································································································ 60 Table 3-2. Vietnam’s major paid music streaming sites ················································· 86 Table 4-1. Korea’s top 10 investment sectors in Vietnam ··········································· 108 Table 4-2. Change in the purpose of Foreign investment in Korean Manufacturing Industry by Period ····························································································· 109 Table 4-3. Global Intellectual Property Rights Index Scores of Vietnam ··················· 111 Table 4-4. Top 10 technical fields that apply for patents in Vietnam ······················· 114 Table 4-5. Number of counterfeit product control cases in 2016 ······························· 114 Table 4-6. Trademark applications in Vietnam by country ··········································· 115 Table 4-7. Survey on export of counterfeit goods in Vietnam ····································· 116 Table 4-8. Enforcement of Intellectual property rights in Vietnam* ··························· 117 Table 4-9. Main task of IP-DESK ······················································································ 120 Table 4-10. Korea’s Trade volumes by country ······························································ 122 Table 4-11. Survey content and questions ······································································· 125 Table 4-12. Survey Responses ···························································································· 126 Table 4-13. Result of survey on damage possibility from imitation products ·········· 127 Table 4-14. Korean cosmetics imitation products sold in Vietnam MUMUSO (Apr. 2018) ········································································································ 129 Table 4-15. Types of Counterfeit products detected in Vietnam, 2004 ~2012 ··········· 130

v K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Table 4-16. Possibility of damage due to similar Vietnamese products ···················· 132 Table 4-17. Preventative actions against counterfeit products ····································· 133 Table 4-18. Types of intellectual property retained to prevent imitation products ·· 133 Table 4-19. Distributor for limitation and counterfeit products ··································· 134 Table 4-20. Type of counterfeit product cases occurring in Vietnam ························· 135 Table 4-21. Type of damage from imitation products ··················································· 136 Table 4-22. Amount of damage due to counterfeit products ······································· 136 Table 4-23. Method of counterfeit product detection ····················································· 138 Table 4-24. Distributor for imitation and counterfeit products ···································· 139 Table 4-25. Companies that possess a counterfeit response department ················· 139 Table 4-26. Companies that have an employee to respond to counterfeit ··············· 140 Table 4-27. Crisis awareness of Korean companies on counterfeit goods ················ 141 Table 4-28. Companies that have conducted training to distinguish between authentic and counterfeit goods ··································································· 142 Table 4-29. The most effective to respond to Vietnamese imitation products ········· 143 Table 4-30. the most necessary preventative measure ················································· 144 Table 4-31. The most ideal result of administrative and legal response ·················· 145 Table 4-32. Need of corporate support ············································································ 145 Table 4-33. Policies that the Korean government should pursue to prevent imitation products and support for damaged companies in Vietnam ···················· 146

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List of Figures

Picture 2-1. Number of Patent Applications in Vietnam ················································· 14 Picture 2-2. Number of Patent Registrations in Vietnam ··············································· 14 Picture 2-3. Trend of Number of Application of Utility Model Rights in Vietnam ····· 16 Picture 2-4. Number of Application of Utility Model Rights in Vietnam ······················ 16 Picture 2-5. Trend of Number of Registration of Utility Model Rights in Vietnam ··· 17 Picture 2-6. Trend of Number of Application of Trademarks in Vietnam ··················· 17 Picture 2-7. Trend of Number of Registration of Trademarks in Vietnam ················· 18 Picture 2-8. Classifications of Patent Applicant per Applicant Type in Vietnam ········ 18 Picture 2-9. Classifications of Utility Model Rights Applicant per Applicant Type in Vietnam ·············································································································· 19 Picture 2-10. Vietnam’s Adjacent Countries and Regions with Fake Product Entries ·············································································································· 23 Picture 2-11. Types of Copyright Infringement in Vietnam ············································· 51 Picture 2-12. User Forecast for Vietnamese Music Downloading and Streaming Services ············································································································ 51 Picture 3-1. Statistics on administrative procedures related to industrial property rights ·················································································································· 59 Picture 3-2. Comparison: Korean product and MUMUSO product (1) ·························· 64 Picture 3-3. Comparison: Korean product and MUMUSO product (2) ·························· 65 Picture 3-4. Comparison: Korean product and MUMUSO product (3) ·························· 66 Picture 3-5. Comparison: Korean product and MUMUSO product (4) ·························· 67 Picture 3-6. Incorrect Use of Korean Letters on a MUMUSO Product ······················ 68 Picture 3-7. Example of MUMUSO using Korea in its name ····································· 69 Picture 3-8. MUMUSO website and the wearing of the Korean “hanbok” at the opening ceremony ···························································································· 69 Picture 3-9. Orion trademark infringement cases ···························································· 70

vii K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Picture 3-10. Average use of illegal software ··································································· 81 Picture 3-11. Percentage of illegal software installations in Asia Pacific ··················· 82 Picture 3-12. Vietnamese music downloading and streaming revenue forecast ········· 85 Picture 3-13. User Forecast for Vietnamese Music Downloading and Streaming Services ············································································································ 85 Picture 3-14. Viet Giai Tri Case ··························································································· 89 Picture 3-15. www.phim47.com Case ·················································································· 90 Picture 3-16. www.phim.li website case ············································································· 91 Picture 3-17. www.mp3.zing.vn Web site case ·································································· 92 Picture 3-18. Trademark application related to Chocopie in Vietnam ·························· 96 Picture 3-19. Counterfeit product control and trademark application cancellation case related to Chocopie ·············································································· 97 Picture 3-20. Example of replicating insufficient article of Chocopie ··························· 98 Picture 3-21. Comparison of 12 genuine Chocopie package and 8-unit counterfeit products ··········································································································· 99 Picture 3-22. Chocopie design patents in Vietnam ························································ 101 Picture 4-1. Number of patents filed in Vietnam by country ······································ 112 Picture 4-2. Trend of patent application by major countries ······································· 113 Picture 4-3. Korea’s yearly investment status in Vietnam ············································ 122 Picture 4-4. MUMUSO Homepage ······················································································ 128 Picture 5-1. Policy Recommendation Model ···································································· 152

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K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

CHAPTER 01

Protection of Vietnam’s Intellectual Property Rights

Part 1 Background

Part 2 Status of Progress

Part 3 Objective

Part 4 Expected Benefits

i Chapter 1 Protection of Vietnam’s Intellectual Property Rights

Chapter

Protection of Vietnam’s 1 Intellectual Property Rights

Part 1 Background

As the importance of mutually beneficial economic cooperation in which both countries can win-win is increasing in relation to the trade-related economic cooperation with developing countries, Vietnam as a developing country demanded for detailed trade-related economic cooperation assistance as a condition for the execution of FTA with Korea. Vietnam demanded for a strategic approach to the use of economic cooperation projects as a negotiation card to the FTA market opening, and she is showing high interests to such assistance for the purpose of improved competitiveness in the market opening sectors. Looking at the current status of Korea-Vietnam trade and investment, while our export for 2015 decreased by 8% compared to the previous year, our export to Vietnam recorded USD 27.8 billion (the trade value between the two countries in 2015 is USD 37.6 billion), which is an increase by 24.3%. The number of our businesses entering Vietnam as of the end of 2015 is 4,619 with the accumulated investment value of USD 45.1 billion. Korea can be said to be Vietnam’s number one trading country. At the moment when the constant pursuit of industrial cooperation with Korea for the purposes of improved investment environment for attracting investments from

3 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Korean companies and industrial growth such as technology development, etc. via the execution of Korea-Vietnam FTA in December 2015 is accelerating, there is a need for policies that can preemptively resolve our businesses’ difficulties in entering, exporting and investing in Vietnam and can lead to further assistance for our businesses’ more entries to Vietnam as a developing country. In connection to the foregoing, there are detailed pursuits of economic cooperation projects between the two countries through the Korea-Vietnam FTA Economic Cooperation chapter and the related implementation agreement. In relation to the foregoing, in April 2016 the First Korea-Vietnam FTA Economic Cooperation Implementation Committee agreed to launch projects for improvement of Vietnam’s capacity to implement the FTA in 2017, and the major details of implementation agreement of Korea-Vietnam FTA Chapter 13 Economic Cooperation are as follows. The first point is drawing an agreement on the pursuit of economic cooperation projects in the size of USD 5 million through the implementation agreement of Korea-Vietnam FTA Chapter 13 Economic Cooperation. The second point is to focus on manufacturing industry, industrial technology, agriculture, fishing industry, forestry, standard technology regulations, country of origin, custom procedure, intellectual property rights (“IPR”),1 growth of small and medium sized enterprises (“SMEs”), statistics, fair competition, and investment among others as major areas of cooperation. The third point relates to a method of cooperation between the two countries, namely use of technology support, information exchange, and joint businesses. In particular, in relation to the IPR sector, strengthening of cooperation in the IPR sector between Korea and Vietnam means that, in relation to copyright, trademark and patent right, etc., they are focused on securing a level of protection that is higher than those provided under the WTO’s IPR agreement and providing valid remedies for infringements. The details of Korea-Vietnam cooperation in the IPR sector can be largely divided into copyright on the one hand and trademark and patent right on the other hand. First, in case of copyright, establishing a system for stronger protection of the

1 This project concerns cooperation in the IPR sector and it concerns a task of exploring ways to improve Vietnam’s IPR protection based on a survey of IPR infringements and distribution of counterfeited products that occur in Vietnam in relation to the strengthening of capabilities for use and implication of Korea-Vietnam FTA.

4 ∙ Korea Trade-Investment Promotion Agency Chapter 1 Protection of Vietnam’s Intellectual Property Rights relevant right-holders when Korean contents (Hallyu) are distributed in Vietnam is becoming an issue.2 Secondly, in case of trademark right, it means securing the brand competitiveness of our export products and agreeing to a provision that promotes transparency of trademark administration.3 Thirdly, in case of patent right, providing remedies for those applications that were refused due to a ground that invention was notified in advance by relaxing the requirements of patent notice exemption is becoming an issue. Furthermore, it can be said that including within the scope of unfair competition the prohibition of commercial activities that can be misled with other person’s trademark, reputation, and quality, etc. is being discussed. In terms of enforcement in relation to the foregoing, there is a discussion over relaxing of burden of proof over amount of damages under the judicial compensatory damages system and having an express provision for seizure and discarding of items that infringe IPRs among others. As our businesses’ entries to Vietnam increase following the execution of Korea-Vietnam FTA, it can be said that we need to – not only ultimately resolve the issues faced by our businesses in Vietnam such as Vietnam companies’ occupation of our popular trademarks, distribution of forged and fake products, and Vietnamese government’s delay in remedy of rights – devise a strategy to strengthen our IPR in the Vietnamese market and convey our related know-how, and we need an approach that ultimately strengthens Vietnam’s capacity to protect intellectual property.4

2 Guarantees the exclusive reproduction right of producer, performer, record producer and broadcaster and confers the right to claim for compensation in relation to use of record on performer and record producer. 3 Well-known trademarks are protected prior to their registration so as to prevent malicious pre-occupation of trademark, and protects forms of product/packaging as a trademark as well. 4 The Vietnamese government not only employed active opening and investment policies such as lower corporate tax, relaxation of corporate law, relaxation of investment prohibition rules, simplification of investment permission procedure, abolishment of obligation to use corporate seals, and permission of foreigners to own housing, etc. but it is also trying to expand foreign invested businesses’ entries to Vietnam by reducing tariffs through various bilateral and multilateral negotiations such as involvement in TPP, execution of Vietnam-EU FTA, and the launch of ASEAN Economic Cooperation.

5 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Part 2 Status of Progress

For Korea-Vietnam trade, the trade size has grown by more than 70 times since the establishment of diplomatic relations in 1992. In 2015, even though the worldwide trade conditions became worse such as slowing down of the worldwide economy and fall in oil price, Korea’s trade with Vietnam increased by 23.8% due to our export to local production bases and increase of re-import – rendering Vietnam as Korea’s number 1 trading country amongst ASEAN. Korea is Vietnam’s number four major exporting country behind the US, China, and Japan, and the number two major importing country behind China. The export value of FDI businesses active in Vietnam increased by 17.7% compared to 2014, and as of 2015 the proportion of FDI businesses amongst Vietnam’s total export value is 68.8% - it can be said that they made a very high contribution to the growth of Vietnam’s export.5 Although Vietnam is under the socialist regime, she is actively pursuing integration with the world economy by announcing her market economy and through active attraction of foreign capital and export. She introduced the market economy aspects in a genuine manner by selecting the “doimoi” policy in 1986, and since the WTO entry in 2007 she is actively participating in entering into FTAs with countries and discussions for TPP. Vietnam has a dual industry structure consisted of export-driven manufacturing industry centered on foreign-invested businesses with trading countries including Korea and traditional agricultural/fishery industry. The proportion of FDI businesses in export and import is 60% (export 67% and import 57%). The major export products are industrial products such as mobile phone (number one in export; effect of Samsung Electronics), textile, computer and shoes, fisheries, rice, coffee, and crude oil, etc. and the industrial structure is generally consisted of agriculture and fishery (18%), manufacturing and construction (39%), and service (43%). Based on relatively stable foreign currency exchange rate, price level and constant attraction of foreign investment, she has been enjoying an

5 The proportion of export value of FDI businesses per annum are 2011 49.4% → ’12 55.9% → ’13 61.3% → ’14 62.5% → ’15 68.2%.

6 ∙ Korea Trade-Investment Promotion Agency Chapter 1 Protection of Vietnam’s Intellectual Property Rights economic growth of 5% or higher every year and she expects constant economic growths in future. Due to expanding Korea-Vietnam trade, the importance of IPR in Vietnam is growing every day and competition between businesses in the global market environment is becoming fiercer. As a result, each business’s effort to protect its know-how and have them protected within the ambit of IPR law is becoming stronger, and it is showing the tendency of conflicts between businesses with contrasting interests. In particular, in relation to the IPR issues, it leads to cases of losses to the generation of revenues for businesses due to stealing of technologies and launching of copycat products. In other words, it can be said that there are frequent infringements of our businesses’ industrial property rights (patent, trademark, and copyright, etc.) in developing countries like Vietnam.

Part 3 Objective

Because Vietnam’s legal structure and business perspectives on the overall industrial property rights fall behind compared to developed countries, the reality is that there are frequent infringements of IPRs of businesses that have entered Vietnam.6 Based on the territorial principle, businesses intending to enter Vietnam need to register their IPRs in advance prior to the genuine commencement of business in Vietnam – regardless of whether they registered their IPRs in Korea. In particular, in relation to trademark infringements, which is the most frequent infringement amongst IPR infringements, there are cases in which our businesses registered their trademarks in Korea, and when they are selling their products in Vietnam, they receive a warning letter about trademark infringement from a local Vietnamese business and a demand to stop their export to Vietnam as well as a monetary payment as a consideration for the transfer of trademark. Furthermore,

6 As patent infringements by Southeast Asian countries against our businesses increase day-by-day, Vietnam needs to quantify the value of damages suffered by our businesses and carefully review the subject and type of infringements as well as distribution routes of infringed products.

7 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam many of IPR infringement cases in Vietnam are frequently committed by Vietnamese partners that distributed the relevant products at the time of entries to Vietnam; thus, it is necessary to clearly confirm the registered location of IPR at the time of contract. Due to the risk of IPR infringement, our businesses’ entries to Vietnam could shrink and it could have negative effects on the attraction of foreign capital by Vietnam. Thus, there is a need to strengthen Vietnam’s IPR protection. There is a need to establish the preventive system against forged products, which is one of the difficulties of Korean businesses in the Vietnamese market, and there is a need to strengthen the capabilities of related local intellectual property organizations for the protection of IPR. Following the expanded entries to Vietnam by our businesses, it is required to resolve the issues they face such as Vietnam companies’ occupation of popular trademarks, distribution of forged and fake products, and Vietnamese government’s delay in remedy of rights, etc. In relation to IPR infringements in Vietnam, it is necessary to devise countermeasure methods of infringed businesses in Vietnam for prevention and response over IPRs by examining the details of infringement cases regarding how their IPRs were infringed such as the types and areas of infringement, subject of infringement, amount of infringement, and form and reasons of infringement, etc. At the same time, the level of preparation of businesses intending to enter Vietnam and their approach strategies to the Vietnamese market also need to be devised from the perspectives of stronger IPR protection. Ultimately, the objective of this task is to make a link so that it could be drawn up in the form of development of stronger IPR protection policy by Korean and Vietnamese governments following the execution of Korea-Vietnam FTA. At the same time, there is a need to convey our IPR protection know-how to Vietnam and strengthen Vietnam’s intellectual property protection capability, which are necessary for the formation of basis that will allow mutual Win-Win for Vietnam and Korean businesses in Vietnam. We intend to summarize the difficulties and suggestions of Korean businesses in Vietnam, examine the IPR protection system over our businesses in Vietnam, and offer a basic material for the establishment of policies for protection of our businesses’ overseas IPR in future. To emphasize, it is necessary to establish the preventive system against fake products, which is one of

8 ∙ Korea Trade-Investment Promotion Agency Chapter 1 Protection of Vietnam’s Intellectual Property Rights the difficulties of Korean businesses in the Vietnamese market, and strengthen the local related organizations’ capabilities for the protection of IPR.

Part 4 Expected Benefits

The expected benefits of trade-related economic cooperation projects for stronger IPR protection in Vietnam can be viewed in microscopic perspectives and macroscopic perspectives. From microscopic perspectives, sharing of IPR issues of Korean businesses with Vietnamese public officials and providing an opportunity for improved mutual understanding will be possible, and it will be possible to provide a support so that we can understand the types of fake products and distribution structure in Vietnam as well as the status of crackdowns and remedies for the purpose of resolution. At the same time, it can contribute to the reduction in amount of losses following the reduced number of infringements of IPR of Korean businesses and more swift remedies of rights. In the meanwhile, the expected benefits from macroscopic perspectives are measuring the level of recognition of creation and protection of intellectual property rights by Vietnamese businesses and citizens and providing opportunities for raising awareness. The establishment of methods of protection of core technologies and intellectual properties of Korean businesses in Vietnam would be possible as well as active exchange of technologies and intellectual properties between Korean and Vietnamese businesses. At the same time, it can form a foundation of active exports and investments between the two countries pursuant to the raising of awareness and establishment of protection methods of intellectual property. By raising awareness of Vietnamese companies and citizens about the protection of intellectual property, we can support the businesses of Korean businesses that are already in Vietnam and that intend to enter Vietnam. The establishment of methods of protection of core technologies and intellectual properties of Korean businesses in Vietnam would be possible. It would seek active exchange of technologies and intellectual properties between Korean and Vietnamese businesses.

9 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

It can also form a foundation of active exports and investments between the two countries pursuant to the raising of awareness and establishment of protection methods of intellectual property. By surveying the status of infringements of not only those businesses that entered Vietnam but also our businesses that are exporting overseas, we intend to draw up case studies and analyses of precedents and implications. We intend to summarize the difficulties and suggestions of Korean businesses and examine the IPR protection systems of IPR-developed countries over their own businesses in Vietnam – thereby providing a basic material for the establishment of policies to protect our businesses’ overseas IPRs.

10 ∙ Korea Trade-Investment Promotion Agency Chapter 1 Protection of Vietnam’s Intellectual Property Rights

K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

CHAPTER 02

Analysis of Current Status of Vietnam’s Intellectual Property Right

Part 1 Analysis of Current Status of Vietnam’s Industrial Property Right

Part 2 Understanding the Current Status of Industrial Property Rights Legal System in Vietnam

Part 3 Understanding the current state of copyright law and system in Vietnam

11 Chapter 2 Analysis of Current Status of Vietnam’s Intellectual Property Right

Chapter Analysis of Current Status of Vietnam’s Intellectual Property 2 Right

Part 1 Analysis of Current Status of Vietnam’s Intellectual Property Right

1. Status of Application and Registration of Intellectual Property Rights in Vietnam

The tendency of number of applications and registrations of industrial property rights in Vietnam is increasing every year. The number of patent applications filed in Vietnam by non-residents (foreign businesses) overwhelmingly exceeds the number of patent applications filed in Vietnam by residents. In terms of the number of patent registrations, the number of registrations by non-residents also overwhelmingly exceeds those by residents. In other words, it can be said that the proportion of patent application by foreigners is about 8 times larger than locals and the proportion of patent registration by foreigners is about 17 times larger than locals.

13 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Picture 2-1. Number of Patent Applications in Vietnam

Source : Vietnam NOIP 2016 Annual Report of Intellectual Property Activities

Picture 2-2. Number of Patent Registrations in Vietnam

Source : Vietnam NOIP 2016 Annual Report of Intellectual Property Activities

The number of patent applications by residents is proportionate to the country’s technology development ability. The number of patent applications by non-residents is proportionate to the importance of relevant country to foreign businesses.7 Thus,

7 松尾淳一, “ASEAN の知的財産事情,” 日本貿易振興機構（JETRO）バンコクセンター, p.3.

14 ∙ Korea Trade-Investment Promotion Agency Chapter 2 Analysis of Current Status of Vietnam’s Intellectual Property Right it is difficult to say that Vietnam’s technology development ability is at a significantly developed stage; however, considering the number of patent applications and registrations by non-residents, it can be seen that Vietnam is a very attractive investment target by foreign businesses. On the other hand in case of utility model rights it can be seen that, except 2008, the number of applications of utility model rights by residents is about 2 times more than non-residents and it is continuing to increase. Utility model rights is one of industrial property rights that confers exclusive right for technological design. Under the Vietnam’s IPR Act, it needs to meet three conditions of novelty, usability in industry, and known by many, which are largely similar to patents.8 However, compared to patents, utility model rights requires a lesser level of creativity and there is no pre-review to a protection condition. Thus, a small technological innovation that is difficult to meet the condition of creativity from the perspectives of technology, capital, and personnel, etc. needs to be protected by utility model rights.9 In case of large-sized companies of developed countries, they apply for patents based on large-sized technological foundations that can meet the creativity condition required under the patent system and thus they have many number of patent applications. However, in case of developing countries like Vietnam, technological innovations of small scale can be protected by utility model rights and thus it seems the number of applications of utility model rights is high. When these small technological innovations are accumulated, they can be as important as inventions. Thus, it is necessary to protect them so that they do not lose desire for technological innovations or there does not arise a tendency to keep R&D outcomes confidential.10

8 Vietnam IPR Act Article 58(2) 9 Daehwan-Goo, “Effective Method of Protection of Small Invention under Utility Model System”, Seoul National University Law Journal, v.46(4), p.250. 10 Daehwan-Goo, “Effective Method of Protection of Small Invention under Utility Model System”, Seoul National University Law Journal, v.46(4), p.250.

15 K-V Economic Cooperation Project Enhancing Effectiveness of IPR Enforcement in Vietnam

Picture 2-3. Trend of Number of Application of Utility Model Rights in Vietnam