Vietnam: Fashion Law 2021

The textile and garment industry is a vital part of Vietnam's economy, and the country has emerged as one of the top textile producers and apparel exporters in the world. Although the industry had been hit hard by the COVID-19 pandemic, government policy support and effective tools to protect IP rights in the fashion space are reasons for investors to be optimistic about the industry's post-pandemic future in Vietnam.

 

1 . What are the main intellectual property legal tools available to protect fashion products?

1.1. Trademarks and non-traditional trademarks


Under Article 4.16 of Vietnam's Law on Intellectual Property (IP Law), a trademark is any sign used to distinguish the goods or services of different organizations or individuals. Signs eligible for registration as trademarks must be visible signs in the form of: letters; numerals; words; pictures; or images, including three-dimensional images, or their combinations, presented in one or several given colors. Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which took effect in Vietnam in early 2019, soon will also be registrable.


Provided that these requirements are met, there are also a number of "non-traditional" trademarks worth mentioning for the fashion industry, as follows.


Color mark. Color per se is not registrable in Vietnam. However, the combination of colors can be registered as a trademark, provided that it is distinctive (not too simple or too complicated, not imposed by the nature of the product or necessary to achieve a technical result, etc.). Otherwise, secondary meaning through extensive use must be proven.


Black-and-white mark. The protection of black and white marks may extend to color variations, as the protection of a black-and-white trademark is limited to the content of the mark (word/figurative elements). Therefore, the use of a mark in color may be accepted as the use of the registered mark in black and white. However, this does not apply when color plays a crucial role in giving the sign distinctiveness.


Shape mark. A shape mark is registrable as a three-dimensional mark in Vietnam. To be registrable, the shape mark must not be the conventional shape of the product or its container, as stipulated in Article 74.2(b),(c) of the IP Law. Otherwise, secondary meaning through extensive use must be proven. However, if a three-dimensional sign is the shape/container of the goods on the list of goods/services but it is combined with another distinctive element(s), the shape will be protected as a whole with the exclusion of, and disclaimer on the sign being the shape/container of the goods.


Pattern mark. A pattern mark is regarded as a device mark, and is registrable if it is distinctive (not too simple or too complicated, etc.), and capable of identifying the origin of the goods/services.


"Made in". The "Made in Vietnam" mark is regarded as a descriptive sign, and is not registrable separately. If the applicant is not a Vietnamese entity or does not have an address in Vietnam, this sign is considered deceptive and will be refused according to Article 73.5 of the IP Law.


Unregistered mark. Well-known or widely-used marks are protected in Vietnam without registration and can be effective in the prevention of registration and use of similar marks for similar goods or dissimilar goods (in the case of well-known marks) if the use of such infringing marks is aimed at taking advantage of the well-known mark or may dilute the well-known mark, according to Article 74.2. (i) of the IP Law.


1.2. Design as an alternative or addition to TM registration


A variety of fashion products have been filed in Vietnam for design protection, such as shoes and sandals (Locarno classification 02-04), bags (03-01), clothes (02-01 to 02-07), jewelry (11-01), watches (10-02), and so on.


There are no design laws/regulations specific to the fashion industry. Fashion product designs are governed by the Hague Agreement and Vietnam's IP Law and its guiding legislation.


1.3. Copyright as an alternative or addition to TM registration


Under the IP Law, if a work belonging to the closed list of copyrightable works stipulated in Article 14 is created personally by the author(s) without copying others' works and is fixed in a material form, it is copyrightable in Vietnam (assuming it meets the minimum creativity threshold), irrespective of the registration procedure.


In the fashion industry, objects such as fashion designs, product designs, and drawings would be protectable as works of applied art if they meet the above criteria. For protected works, the moral rights will be protected for an indefinite term, while the economic rights will be protected for 75 years from the first date of publication, or 100 years from the fixation date if the work has not yet been published within 25 years from the fixation date.


A copyright registration could be pursued as an alternative or addition to trademark registration, especially when there is a question as to the inherent distinctiveness of the objects, which is a requirement for protection as a trademark.


The online database of the Copyright Office of Vietnam (COV) shows a large number of registered copyrights for works related to the fashion industry, such as designs of purses, handbags, and watches.


1.4. Any other pertinent IP rights?


Patents. Clothing, headwear, footwear, and accessories such as jewelry, belts, bags, watches, and eyeglasses are all eligible for patent protection in Vietnam.


There are no patent laws/regulations specific to the fashion industry. Fashion product and process inventions are regulated by the following:


  • Paris Convention;

  • Patent Cooperation Treaty (PCT);

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);

  • Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure;

  • Resolution No. 102/2020/QH14 regarding ratification of EVFTA; and

  • IP Law.

Geographical indications. Geographical indications are relevant to the fashion industry in terms of protecting unique handicrafts and fashion articles originating from a specific location and consisting of a specific quality or reputation. Under Article 4.22 of the IP Law, a geographical indication is a sign which identifies a product as originating from a specific region, locality, territory, or country.


Geographical conditions relevant to a geographical indication mean natural and human factors decisive to reputation, quality, and characteristics of products bearing such geographical indication, including natural factors (such as climatic or ecological) and human factors (skill and expertise of producers, and traditional production processes of localities).


Quality and characteristics of products bearing a geographical indication are defined by one or several qualitative, quantitative, physically, chemically, or microbiologically perceptible criteria which can be tested by technical means or experts with appropriate testing methods. In Vietnam, the "Hue" palm-leaf conical hat and Isan Thailand traditional silk are protected geographical indications.


2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distribution, and advertising fashion products?

2.1. Manufacturing fashion products


License agreements and Non-Disclosure Agreements (NDAs). License agreements are appropriate contractual arrangements and commonly used in manufacturing fashion goods in Vietnam whereby the licensor (e.g., a designer or a company that has developed fashion goods) grants the licensee the ability to use the licensed intellectual property right (IPR) owned by the licensor to produce and sell fashion goods upon payment of a consideration, without transferring ownership. Article 144 of the IP Law requires that a license agreement must be established in the form of a written contract and must consist of the following terms:


  • full names and addresses of the licensor and the licensee;

  • grounds for licensing;

  • contract-type;

  • licensing scope, including limitations on use rights and territorial limitations;

  • contract term (duration);

  • licensing price; and

  • rights and obligations of the licensor and the licensee.

Normally, the licensor will need to disclose information that might influence the decision of the prospective licensee to enter into the license agreement; for example, the licensor's ownership of the IPR and the validity thereof, so a Non-Disclosure Agreement (NDA) will normally be entered into before negotiating and drafting the license agreement. Under an NDA, an undersigning party will normally be required to maintain the confidentiality of information exchanged during the contractual relationship. The will include clauses relating to governing law, dispute resolution, penalties for disclosure, duration, and language.


Subcontract agreements / in-house manufacturing. There is no definition of a subcontract agreement in the area of fashion under the laws of Vietnam. However, it is commonly understood that a subcontract agreement refers to any contract or proposed contract entered by a primary contractor and subcontractor whereby that subcontractor agrees to provide to the primary contractor services, works, or goods or any part thereof in order to support such primary contractor in the execution of the main contract executed between it and the project owner.


As the subcontract agreement may involve the sharing of the usage of the IPRs, it is crucial to not only clearly stipulate how the subcontractor will be enabled to use IPRs (e.g., scope/cases of using the IPRs), but also set out consequences for infringement and breach of contract. The subcontractor must strictly comply with all the primary contractor's instructions under the subcontract agreement.


2.2. Distributing fashion products


Agency agreement. Subject to an authorization by the principal, an agent is allowed to act in the name and for the benefit of the principal to enter into and perform a transaction under Articles 134 and 138 of Vietnam's Civil Code. A transaction established and performed by the agent with a third party in accordance with the scope of representation gives rise to the rights and obligations of the principal. Agency agreements must be in writing. This is a fiduciary relationship and as such the agent is required to act under the principles of loyalty and good faith. The agent may enter into and perform civil transactions only within the scope of representation on the basis of contents of representation provided under the agency agreement.


Co-branding and co-marketing. Co-branding or co-marketing agreements are commonly used by parties to achieve greater exposure and more effective results in helping a brand reach a wider audience. These agreements will include clauses that clearly set out the rights and obligations of each party in relation to brand positioning and marketing work, royalties, compensation for damages, governing law, and dispute resolution forum.


2.3. Advertising fashion products


Employing fashion models. Under a contract where a model is a contracting party, it is necessary to clearly define the scope of the model's duty (for example, being on time for photoshoots, avoidance of any scandals), and it is crucial for the other contracting party to have a right to use of the model's image.


Social media, influencers, and brand ambassadors/celebrities. Influencer contracts will normally be entered into by an advertiser and an influencer to promote the advertiser's goods or services. In addition to clauses clearly stipulating the rights and obligations that the influencer will be required to perform in relation to the promotion of the brand and its products, the influencer contract should also include a key clause detailing the "code of conduct" of the influencer when promoting the products (e.g., actions that influencers will commit not to perform in order to protect the personal image of the influencer and the image of the brand that he/she is representing), and an indemnification clause in case the influencer breaches his/her commitments/obligations. The right to early termination of the contract by either party should also be clearly provided.


Advertising standards, relevant authorities, and advertising practice. The principal regulatory body for advertising activities is the Ministry of Culture, Sports, and Tourism. Ministries and ministerial-equivalent bodies and People's Committees at all levels also have responsibility for the management of certain advertising activities.


There are no advertising rules that apply specifically to the fashion industry in Vietnam. However, all advertising activities in the fashion industry are highly regulated by the Vietnamese government in accordance with the Law on Advertising, which applies to all advertising activities in Vietnam.


3 . What regulations govern online marketing and how are the rules enforced?


Marketing and advertising activities, in general, remain heavily regulated by the Vietnamese government. Legally, Vietnamese entities and branches of foreign companies in Vietnam (except for representative offices) have the right to advertise their goods and/or services or to hire other third-party service providers to do so. Offshore companies can only hire Vietnamese advertising service providers.


Fundamentally, marketing/advertisement in fashion is not restricted in the mass media in general or online in particular. The Law on Advertising and Decree No. 181/2013/ND-CP are the main regulations governing online marketing in Vietnam. However, in practice, arbitrary enforcement and interpretation of the regulations continue to hinder the development and spending of the advertising industry.


Furthermore, Decree No. 91/2020/ND-CP on fighting spam messages, spam email, and spam calls set out regulations regarding unsolicited messages sent by email and mobile phone. This decree requires prior consent from the intended recipients for advertising emails, text messages, and phone calls and restricts the number of advertising emails that may be sent to an email address in a 24-hour period. The decree also sets out certain details and requirements of each advertising email or text message sent.


A new regulation, Decree No. 38/2021/ND-CP on penalties for administrative violations involving cultural and advertising activities, took effect on 1 June 2021 and imposes some restrictions on online advertising. These restrictions appear to create unfair competition between Vietnamese companies and global advertising giants like Facebook and Google who do not have to abide by Vietnamese laws and will not need to make changes to their ad format.


A draft decree to amend Decree 181 is (as of 2021) in the legislative process. This draft decree targets cross-border advertising activities on the Internet such as websites, social networks, and applications having users in Vietnam, and seeks to address advertisers' obligations to ensure offshore entities' compliance with Vietnamese laws and regulations on advertising.


3.1. Consumer protection regulations


For the time being, the Law on Protection of Consumer Rights together with the Law on Advertising and the Law on Product and Goods Quality are the regulations on consumer protections in Vietnam. There are no regulations on consumer protection specifically for the fashion industry.


In general, consumer protection rules in Vietnam include the following:


  • Protecting personal information and data privacy for consumers.

  • Prohibiting traders from carrying out aggressive sales techniques or engaging in behavior that amounts to harassment of consumers or taking advantage of consumers.

  • Providing obligations on third parties who provide information about products to consumers (such as media organizations through their advertising services) and setting out the potential liability of those third parties to ensure the information supplied to consumers about a product is complete and accurate and to require the traders to provide the same.

  • Requiring traders to exchange goods or offer a refund during the warranty period where the warranty has been called on more than three times but the fault remains unresolved.

  • For defective goods, traders must promptly take all necessary measures to stop the supply of the defective goods on the market and must make a public announcement that the goods are defective. Traders (which can include a manufacturer, importer or supplier) are liable to pay compensation for loss and damage if the goods which they supply are defective and cause loss of life or damage.

  • Establishing dispute resolution (negotiation, mediation, arbitration, or court) between consumers and traders and providing settlement of consumers' complaints.

  • Any clause that seeks to exclude the statutory liability of the trader, or restricts the rights of consumers to complain, or allows a trader to unilaterally change the price, will be deemed invalid. Consumers must be given sufficient time to study the terms and conditions in a trader's standard-form contract or general trading conditions; and

  • certain standard-form contracts relating to essential goods and services must be registered with the Ministry of Industry and Trade.

3.2. Physical store and online store layout