From “Domain Speculation” to… “Trademark Speculation”

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From “Domain Speculation” to… “Trademark Speculation”

About 10 – 20 years ago, when the Internet appeared and flourished in Vietnam, a business phenomenon called “domain name speculation” appeared and drove the attention of many people. Domain name registration only costs a few hundred thousands of Vietnam dongs, but reselling a domain name can earn from some hundred million to billions of Vietnam dongs. A huge number of articles from 2005, 2006 to the present about the phenomenon can be found on Google by searching the word “domain name speculation” or “sale and buy of domain names”. Amongst, there are some articles consider speculation activity from the legal perspective and suggest regulations for governing.

From the economic to legal perspective, speculation of the domain name has been governed by the law on intellectual properties and unfair competition. Accordingly, Joint Circular No. 14/2016/TTLT-BTTTT-BKHCN of the Ministry of Science and Technology (MOST) and the Ministry of Communications (MOC) has clarified questions about dealing with domain names which violate intellectual property law. This Joint Circular prescribes that the registration and use of a “.vn” domain name infringes the intellectual property law if it is “Duplicate or similar to the intellectual property of which the rights are protected (trademarks, trade names, geographical indications) and contents which are posted on the website contained the domain name also violates the intellectual property law”. 

The domain name gives under the following two principles: Whoever applies for the first domain name’s registration files will be a grant that the domain name first, the domain name will give to a single subject. After having the Circular above-mentioned, a subject who registers a domain name that is true under these two principles may still be a force to returning the domain name, recovering a domain name if it is identical or confusingly similar to a trademark that is protected.

As such, we understand that some cases of people deliberately take advantage of other’s trademarks to speculate the domain name and reselling them at high prices eliminate by Joint Circular No. 14/2016/TTLT-BTTTT-BKHCN. For example, Samsung Electronics Co., LTD Korea has been exclusively trademark of Sam Sung for the telephone industry in Vietnam, the samsungmobile.vn domain name registration behavior for resale to Samsung Electronics Co., Ltd. Korea is a violation of the law. At this time, domain name samsungmobile.vn will be revoked and preferred for Samsung Electronics Co., LTD. Korea registered.

But not all the cases of taking advantage of other’s trademarks to build and develop also leads to the same consequences. With the current legal system always exists loopholes, by their flexibility, some people will take measures to pass through that reminder to serve for their purposes. Instead of applying “domain name speculation”, now people have reached a higher level of “trademark speculation”.

The issue of a trademark registration certificate which is similar to the principle of issuing domain names, is based on the first-to-file principle as specified in Article 90 of the Intellectual Property Law of 2005 revised and amended in 2009 as follows:

  1. A protection title may only be granted to the valid application for registration of a trademark with the earliest filing date or priority date;
  1. Each protection title shall only be granted to the subject matter of a single application.

The “First to File” principle is not only applied in Vietnam but also in many other countries around the world. According to this principle, we have handled a case as follows: “Han Fang Company – a Taiwanese company, has manufactured tampon whose trademark is Natural Lady. It has been distributing this product to many markets, including Vietnam market since 2012. Hung Thanh Phat is a company in Vietnam that has submitted an application for trademark registration of Natural Lady at the National Office of Intellectual Property in 2014, while Han Fang Company submitted it in 2017. According to the first-to-file principle, although Hung Thanh Phat Company does not manufacture any tampon, it still became the owner of the Natural Lady trademark”. 

If being granted a Trademark Ownership Certificate, the owner shall have a great right, including the right to “Prevent others from using the trademark” and it is an exclusive right. Accordingly, because Han Fang did not agree to buy the “Natural Lady” trademark at the offering price of three billion Dongs, Hung Thanh Phat sent a dispatch to all supermarkets in Vietnam including Medicare, Vinmart, … to request supermarkets to remove, not to sell and not to circulate goods that their trademark is Natural Lady of Han Fang Company. They also have the right to request the state agency to handle administrative violations in intellectual property related to goods that their trademark is Natural Lady trademark of Han Fang company such as sanction of an administrative violation, destruction of goods, removal of the domain name, …

With this principle, many people have submitted for trademark protection of foreign brands that they know will enter the Vietnamese market, or for brands that have entered the Vietnamese market but have not yet registered or for prestigious Vietnamese brands with the consumer but have not yet registered. After that, they can sell it to the original brand owner at a high price to force them to either buy it at a high price or not to do business in the Vietnamese market. Compared to a domain name, controlling the whole market can be considered a great strength. These behaviors are considered “trademark speculation”. Thinking that “domain speculation” has gradually not happened, but “trademark speculation” has arisen. The Vietnam Intellectual Property Law of 2005 provides a basis for “trademark speculation” existing and developing.

Of course, this behavior has not only happened in Vietnam but also in all countries under the “First to File” principle. The law also has some provisions to restrict this behavior such as in the case of the Natural Lady trademark. On June 29th, 2018, the National Office of Intellectual Property made a decision to cancel of the effectiveness of the trademark registration certificate of “Natural Lady, photo” because Hung Thanh Phat Company’s behavior is dishonest, has confused about the origin of goods and has affected the prestige of the Han Fang company. This conclusion is based on Clause 2, Article 87 and Clause 3, Article 97 of the Intellectual Property Law, because Hung Thanh Phat Company is an importer, and a distributor of Natural Lady products manufactured and exported to Vietnam market by Han Fang Company, the registration and use of trademark of Hung Thanh Phat Company are dishonest and have caused confusion about the origin of goods. However, if an individual or other organization does not trade, distribute Natural Lady products manufactured by Han Fang Company, it cannot cancel that protection title under the above provisions.

In addition, Point d, Clause 1, Article 95 of the Intellectual Property Law mentioned that “If the trademark is not used by its owner or the licensee of the owner without justifiable reason for five (05) consecutive years prior to a request for termination of validity, except if use is commenced or resumed at least three (03) months before the request for termination”. Hence, a person who speculates in the trademark without using this trademark on the actual within five (05) consecutive years required to be terminated by the person wishing to use the trademark. However, the time of 05 years is too long for the waiting of the person who is manufacturing and trading this trademark. Properly, a reasonable cost for trademark acquisition would be their first choice.

Therefore, to limit the activities of “trademark speculation”, the most simple and cost-effective option for the enterprise at present is to “immediately register the trademark that they prepare to put into the manufacture and launch on the market. In addition to the “First to File” principle, please note the territorial principle, this principle mentioned that registration of protection in-country and territory trademark shall be protected in that country or territory”. If products in Vietnam want to enter the Chinese market, please submit for application for registration in this market before goods circulation.

 

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.