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Feature: Decree 99/2013/ND-CP on Sanctioning of Administrative Violations in the Field of Industrial Property

As previously reported by D&N International, Decree 99/2013/ND-CP («Decree 99») on Sanctioning of Administrative Violations in the Field of Industrial Property was issued on August 29, 2013 and came into effect as of October 15, 2013 replacing Decree 97/2010/ND-CP(«Decree 97») dated September 21, 2010.
It is worth reminding that the Law on Handling of Administrative Violations has been newly passed by the National Assembly of Vietnam and came into effect as of July 1, 2013 (handling of administrative violations had been previously governed by Ordinances). Upon the adoption of the new Law, all under-law regulations guiding the implementation of sanctions against administrative violations must be amended to comply with it. Hence, over the past months, the Vietnamese Government has carried out such work and issued a series of new  Decrees on sanctioning of administrative violations in various fields including intellectual property. Decree 99 on sanctioning of administrative violations in industrial property area was issued in this circumstance.
 
Decree 99 has amended the old Decree 97 by borrowing the main contents of the later and making no breakthrough changes. However, it is still of interest and importance for owners of industrial property rights (IPR) because administrative measures remain the most common route for them to enforce their rights in Vietnam. Of particular note, a number of provisions of Decree 99 may be considered as less favorable for IPR owners in comparison with Decree 97.

Below are the main changes under Decree 99 compared with Decree 97:
 
1.    Changes in monetary penalties: It can be said that the most remarkable change of Decree 99 compared with Decree 97 is the two-level monetary penalties depending on whether violation is committed by an individual or an organization (to comply with Article 3.1.e of the Law on Handling of Administrative Violations). Accordingly, violating organizations shall be fined twice as much as individuals for the same act of violation.
 
Specifically, the maximum fine to be imposed for an act of administrative violation in the field of industrial property remains VND 500 million (or US$ 23,800) that may only be imposed on organizations, whereas the maximum fine imposed on individuals is VND 250 million (US$11,900). Of note, under the old Decree 97, the maximum fine of VND 500 million (US$ 23,800) were applied to both organizations and individuals.
 
2.    Higher monetary penalties for acts of unfair competition in the field of industrial property : Decree 99 increases the amounts of fines for acts of unfair competition to the same levels as for acts of IPR infringement. As such, the maximum fine amount which may be imposed for unfair competition acts committed by individuals shall be VND 250 million (US$ 11,900) and VND 500 million (US$ 23,000) for unfair competition acts committed by organization (in case infringing goods or services are valued at over VND 500 million). Of note, the maximum fine amount for unfair competition acts under the old Decree 97 was VND 70 million (US$ 3,300).
 
3.    The duration for suspension of business operations may not exceed 3 months: As before, depending on seriousness of violation, additional penalties, such as confiscation of infringing goods and/or means, and/or suspension of business operations, may be imposed. Decree 99, however, provides that the duration of such suspension shall be from 1 to 3 months. Of note, under the old Decree 97, the duration of suspension might be longer, for example, from 3 to 6 months for the acts of «manufacturing, importing, trading, transporting, storing for sales of goods bearing counterfeit marks or geographical indications».
 
4.    More power given to enforcement authorities, especially customs and market management agency : Decree 99 gives more sanctioning power to competent enforcement authorities including Inspectorates of Ministry of Science & Technology, Inspectorates of Ministry Information and Communications, Market Management Agency, Customs, Police and local People’s Committees. Accordingly, heads of all above enforcement authorities shall now have power to impose the maximum fine amount of up to VND 250 million (US$11,900) on individuals and VND 500 million (US$ 23,800) on organizations. Meanwhile, under Decree 97, only heads of Inspectorate of Ministry of Science & Technology, Police and Provincial People’s Committees had such power, while other authorities had their power to impose fines limited to the maximum amount of VND 70 million (US$ 3,300).
 
In addition, under Decree 99, Vietnam Competition Authority is no longer included in the list of authorities competent for imposing sanctions against administrative violations in the field of industrial property, as it was under the old Decree 97.
 
5.    Provision on execution and forcible execution of sanctioning decisions: Decree 99 provides for more details on procedure for execution and forcible execution of administrative sanctioning decisions on application of remedial measures, such as change of enterprise names and/or withdraw domain names. Accordingly, in case a competent authority has issued a decision to change the registered name of an enterprise or withdraw a domain name for reason of IPR infringement, the infringer must, on their own, proceed with the required procedures for change of enterprise names at the business registration agency within 60 days, or procedures for withdrawing domain names at the domain name management organizations within 30 days counting from the effective date of the sanctioning decision. If the infringer fails to do so within the prescribed time limit,  the authority issuing the sanctioning decision shall request the relevant business registration agency or domain name management organization to withdraw the infringer’s certificates of business registration or/and domain names. It is worth reminding that the old Decree 97 also states that business registration agency and domain name management organizations bear responsibilities for execution of administrative sanctioning decisions regarding forcible cessation of acts of violation, regrettably it did not provide for detail of execution procedures leading to  difficult practical application of such measure.
 
6.    Abolishment of preventive measure to guarantee application of administrative sanctions: The old Decree 97 allowed the application of preventive measures to guarantee application of administrative sanctions in case where the act of administrative violation is likely to cause serious damage to consumers or the society, or where there is risk of destruction of evidences of violation or signs of evasion of liabilities (Article 32). Regrettably, this provision no longer exists under Decree 99.
 
7.    Transitional provision : With regard to acts of administrative violations in the field of industrial property occurred before the effective date of Decree 99 but revealed afterwards or are pending in an administrative sanctioning procedure, the provisions which are beneficial to the violators will be applied.