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The HWASUNG Trademark Case

SH-VINA Cable Co., Ltd vs. Thien Phu Industrial Co,. Ltd.   The pending dispute between SH-Vina Cable Co.,Ltd and Thien Phu Industrial Co.,Ltd. over the ownership of the trademark HWASUNG has raised some important questions about the application of the Vietnamese Trademark Law, especially those relating to the «first to file» principle and grounds for cancellation of a registered trademark.
Facts
Thien Phu Industrial Co.,Ltd., situated at 22 Nguyen Huy Tu street, Hai Ba Trung district, Hanoi, is the holder of the trademark HWASUNG for electric cables and electric equipments in class 9 under the registration certificate n° 67384 dated October 19, 2005 and the trademark HEE SUNG under the certificate n° 62539 for products in class 9. Thien Phu has also filed an application for registration of the trademark SEOUL for products in class 9. Of note, all these trademarks are identical to the trade names and trademarks used by South Korean companies.
SH-Vina Cable Co.,Ltd, situated at Section 1, Khai Quang IZ, Vinh Yen town, Vinh Phuc province, is a 100% foreign owned company, established according to the Investment License n° 65/GP-VP issued on October 28, 2004 by Vinh Phuc People’s Committee for the purposes of fabrication and distribution of electric and telephone cables in Vietnam. SH-VINA is owned by three South Korean companies, namely HWASUNG, SEOUL và SIMEX.
According to SH-VINA, from 2002 to 2006, HWASUNG Company imported electric cables bearing the trademark HWASUNG from Korea into Vietnam and distributed them through its local agents. This activity ended when SH-VINA began production of local cables bearing the trademark SH-HWASUNG. On May 25, 2006 SH-VINA filed with the National Office of Intellectual Property (the NOIP) an application for registration of the trademark HWASUNG which has been refused on the ground that it is identical to the one registered in the name of Thien Phu.
In the second half of August 2006, upon to Thien Phu’s requests, Hanoi Market Management Unit 5 and Hanoi Police conducted inspection in the territory of Hai Ba Trung district and seized a large quantity of electric and telephone cables bearing the trademark SH-HWASUNG owned by the two main distributors of SH-VINA, namely Duy Tan Electric Material Company and Duy Yen Trade Company. The seized goods have been sealed, transfered to a state warehouse for detention.
In the begining of September 2006, SH-VINA filed with the NOIP a request for cancellation of the trademark HWASUNG in the name of Thien Phu on the grounds that it is identical to the trade name of the South Korean company HWASUNG, and that the trademark HWASUNG had been used in Vietnam before the filing date by Thien Phu. To support SH-VINA, Vinh Phuc People’s Commitee sent an official letter to the NOIP and the Central Steering Board 127 urging these two authorities to take necessarty measures to protect the legitimate interests of the foreign investors, permit the circulation of their products on the market to avoid the possible negative effects on SH-VINA and its 100 employees, as well as on the investment environment in general.
Upon receiving SH-VINA’s cancellation request and its supporting documents, the NOIP issued the official letter n° 2170/SHTT- TTKN in which it confirmed the exlusive right of Thien Phu over the disputed trademark in the whole territory of Vietnam. However, it added that a trademark registration may be cancelled if the plaintiff has sufficient arguments and evidences.
So the case is still pending and for the moment it’s not clear whether the NOIP will cancel Thien Phu’s trademark or dismiss SH-VINA’s request. D&N International will follow the case and report its new developments in the next issues.
Comments
Once again this case shows that many Vietnamese companies, including foreign invested enterprises, are not sufficiently aware of the importance of their trademark registration. According to the «first to file» principle which is clearly stated by law, a trademark should belong to the first person who has filed an application for its registration with the competent authority. In this case, though established in October 2004 and having intention to use the mark HWASUNG, SH-VINA has been slower than Thien Phu in proceeding with its registration procedure. As results, it has become a defender in counterfeiting procedures and is obliged to engage a trademark cancellation action which is costly, time consuming and incertain. Thus this must be a precious lesson for all companies operating in Vietnam.
From legal point of view, the HWASUNG case has raised the following issues :
1. Applicable law: The trademark HWASUNG was registered on October 19, 2005, i.e. before the the IP Law took effect (on July 1, 2006). Thus, according to its transitional provisions (Article 220.3), the validity of the trademark is governed by the law and regulations applicable at the moment of its registration, i.e. including Decree 63 on Implementation of the Civil Code with regard to Industrial Property and Decree 54 on the Protection of some Industrial Property Rights including trade name right.
2. SH-VINA’s request for cancellation of the Thien Phu’s trademark is based on the two following grounds:
Thien Phu’s trademark is identical to the trade name of the South Korea company HWASUNG: According to Article 6(f) of Decree 63, to be protected, a trademark must « not be identical or confusingly similar to a protected trade name of another person ». SH-VINA has invoked Article 2.1 and 14.2 of the Decree 54 in order to prove that the trade name HWASUNG was protected in Vietnam at the moment Thien Phu filed the application for registration of HWASUNG. Article 14.2 provides that a trade name can not be protected if « it is confusingly similar to another one being in used previouly in the same business sector by another person ». Article 2.1 assures the protection in the Vietnamese territory of foreign trade names in the same conditions as domestic ones.
  • The trademark HWASUNG had been in use before Thien Phu filed the application for its registration. In Vietnam, except cases of well-known trademarks, rights over a mark can only be established on the basis of registration with the competent state authority. The use of a mark does not establish rights over that mark. In addition, because HWASUNG and SH-VINA are not the same company, the use of the mark by HWASUNG can not be assimilated to the use by SH-VINA, even though the first is a parent company contributing 40% of capital in the second.
  • So the question raised in this case is whether SH-VINA could legitimately invoke the trade name of HWASUNG company and the use of the trademark HWASUNG by that company to cancel the registered Thien Phu’s trademark. The NOIP’s decision will hopefully answer to these questions.
3. In fact, SH-VINA might also request cancellation of Thien Phu’s trademark HWASUNG on the ground that it has been filed in bad faith. However, it is usually difficult to prove the bad faith of the applicant, especially if the two parties have never entered into business relation. Although Thien Phu has filed several trademarks which are identical to South Korean companies’ trade names and trademarks, the question is whether the fact of filing such trademark is sufficient to prove the bad faith of the applicant.

The decision of the NOIP and other authorities will clarify the above raised questions. But until then, Thien Phu will remain the legitimate owner of the trademark HWASUNG and therefore has the right to engage anticounterfeiting procedures including seizure of suspected infringing goods, as the NOIP has rightly confirmed in its official letter.

(10/2/2007)