I recently spoke to Patsy Day, an intellectual property attorney from Rouse Legal based in Ho Chi Minh City, Vietnam. Rouse is a leading global intellectual property firm, with offices in more than twenty countries. Rouse has been handling IP cases in Vietnam since 1997.
TN: Which sectors are most infringed?
PD: The sectors where we see most infringements are alcohol, clothing and pharmaceuticals. As the Vietnam market becomes more sophisticated, so do the infringements. Infringers have also become more IP savvy and we are seeing a move away from direct copying to “lookalikes”.
TN: What is important for companies entering the country?
PD: Vietnam has made considerable progress over the last couple of years with regards to intellectual property rights. However, there is still a gap between the law and the implementation of the law. This is important, as companies need to have confidence that their IP rights will be protected. Franchising is essentially an IP driven business and franchisors are concerned that they won’t be able to control their franchisees or stop third parties from imitating their brands.
TN: What advice would you give to franchisors?
PD: Protect your intellectual property. Register your trademarks, domain name and any copyright. Do your due diligence and pick a partner that understands the importance of IP. Get a strong contract in place with your franchisee. Many international franchisors use their standard agreements which have been developed over the years. This is a good thing as it makes it easier for the in-house legal department to manage. However, it is important to run it by a local lawyer. For example, some standard agreements have very detailed insurance provisions. The insurance market in Vietnam is still developing and the franchisee may not be able to obtain the level of insurance you require. You could be putting an obligation on them that, from a practical point of view, they cannot adhere to.
TN: How can franchisors assist franchisees with regards to IP rights?
PD: Education is very important. Communicate to franchisees the key objectives you would like to achieve with your brand. Franchisees need to have clear guidelines on how to use your brand properly.
TN: How can you track your brand?
PD: Do regular audits and keep an eye on the use of your brand. Ensure that the standards are being maintained. For many companies, their brand is essentially their biggest asset. You want to have control over your brand.
TN: For many companies, parallel imports are also a big issue. What can they do?
PD: It is very difficult to stop parallel imports because it is not illegal. Products are just imported through a different channel. Some brand owners will identify the weak link in their supply chain by tracing back the parallel products and then rely on contractual obligations to control the flow. It is, however, critical that you register your own trademarks. In the past a more relaxed attitude was to allow the distributor to register your trade marks in their name. However, when the relationship goes bad it is very difficult to recover your trademarks.
TN: The Danone and Wahaha trademark dispute in China was followed by many industry observers. What are the lessons for Vietnam?
PD: Do your due diligence carefully and deal with intellectual property disputes as they arise. Ensure your contracts have carefully drafted IP transfer clauses and that any intellectual property rights that are meant to be assigned, are in fact assigned and any licences registered, as appropriate. It is also important to look at the structure of your business in Vietnam and what role you will play in the company. In some cases a joint venture might not be the right option so companies should explore, for example, licensing agreements.