Supplementing sanction competence for Customs in handling intellectual property infringement

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The shipments of milk infringing intellectual property right were seized at Cat Lai Port by the Customs.

In the end of December 2017, Ho Chi Minh City People's Committee issued Decision No. 6300/QD-XPHC to fine Pham Nguyen Confectionery and Food Processing Co., Ltd VND 162 million and destroy all the exported goods registered for trademark protection in Vietnam. This Decision closed the handling and long process of nearly 2 years with many stressful meetings between concerned parties.

Previously, in January 2016, Customs Branch of Sai Gon Zone 1 collaborated with Anti smuggling and Investigation Department (the General Department of Vietnam Customs) to implement physical inspection for shipment exported by Pham Nguyen Confectionery and Food Processing Co., Ltd and detected signs of infringing intellectual property rights with the Choco Pie trademark. Hence, Customs Branch of Sai Gon Zone1 issued a decision on suspending Customs clearance for this shipment.

The exported shipment included 1,200 boxes of Choco Pie weighed 3,825.6kg, valued at US $ 8,624.1. The assessment results by Vietnam Intellectual Property Research Institute (under the Ministry of Science and Technology) determined that Pham Nguyen Confectionery and Food Processing Co., Ltd were in breach of the intellectual property rights of Choco Pie trademark which was registered for trademark protection and granted by the Intellectual Property Department to Orion Corporation (South Korea). Because the sanction for exported goods infringing intellectual property was beyond the competence of the Customs, thereby, under the instruction by the Ho Chi Minh City People's Committee, the Customs transferred the case dossier to Market Management Branch of Ho Chi Minh City for consideration and settlement. However, due to the confusion in handling the case by competent authorities the case was prolonged.

In this case, the act of manufacturing products using trademarks which have been registered for trademark protection is clear. The producer as exporter did not hide its infringement, even sued Customs Branch of Sai Gon Zone 1 to the Administrative Court for compensation for damage due to the Decision on suspending Customs procedures for the above mentioned shipment.

According to Mr. Dang Thai Thien, Deputy Head of Customs Control and Supervision Division- Ho Chi Minh City Customs Department, Decision on handling of Ho Chi Minh City People's Committee closed the long process of nearly 2 years with many stressful meetings between concerned parties, even complaints and petitions to the Administrative Court. The case showed that the Customs have no competence to fine administrative violation for the act of exporting goods infringing intellectual property rights, leading to prolonging administrative settlement and arising difficulties and imposing pressures on the Customs. If the Customs was authorized to fine administrative violation for the above mentioned infringement cases, the settlement would not have been prolonged for nearly 2 years, troubling concerned parties. The competent authorities need to study to supplement competence for the Customs in this field.

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In the settlement process, the Ho Chi Minh Science and Technology Department consulted the Inspectorate of the Ministry of Science and Technology. This authority said that the measures for administrative settlement were not applied to businesses producing goods infringing on trademark right for export and not for domestic consumption. Mr. Thien said that this facilitated the production of goods infringing intellectual property for export to other countries. If being detected by the countries, the reputation of Vietnam goods would be reduced, and Vietnam might become the manufacturing centre of counterfeit goods and of intellectual property infringement goods. If Vietnam’s law does not provide settlement for these acts as stated by Ministry of Science and Technology, with the role as the advisory authority in the implementation of the Law on Intellectual property in Vietnam, the Ministry must propose the Government to supplement it into Decree on administrative settlement in the field of intellectual property right to prevent the export of goods infringing intellectual property.