Enforcement of intellectual property rights under TRIPS agreement and compare with vietnamese law

EC:European Communities EU : Europeans Union G A T T: General Agreement on Tariffs and Trade IPRs: Intellectual Property Rights T R IP S : Trade-Related Aspects of Intellectual Property

HANOI LAW UNIVERSITY LUND UNIVERSITY

MASTER OF LAW THESIS

STUDENT: v u THI HONG YEN

1 Dr Bui Xuan Nhu

2.2 The definition of IPRs under TRIPS 13

2.3 The principles of enforcem ent of IPRs 15

2.3.1 Nation Treatment 16 2.3.2 M ost-Favored-Nation Treatment 16

2.4 The concept of enforcemnt of IPRS under TRIPS

2.5 Significance of effective enforcem ent of IPRs 17

2.5.1 Prom oting innovation and business com petitiveness 17 2.5.2 Preventing tax losses and m arket destabilisation 18 2.5.3 Ensuring consum er protection 18 2.5.4 Ensuring the maintenance o f public order 19

3 E N F O R C E M E N T O F IP R S U N D E R T R IP S A N D A C C O R D IN G

3.1 General obligations of enforcem ent of IPRs 21

3.2.1 Requirem ents o f civil procedures 23 3.2.2 Provisional measures 25 3.2.3 Civil remedies 31

3.2.3.1 Injunction to cease infringing activities 31

3.2.3.2 Compensatory remedies 32

3.2.3.3 Other remedies 35

3.3 Criminal procedures and remedies 36

3.3.1 Requirem ents o f crim inal procedures 36 3.3.2 Criminal remedies 39

3.3.2.1 Imprisonment and/or monetary fines 39 3.3.2.2 Other remedies 39

3.4 Administrative procedures and remedies 40

3.4.1 Requirem ents o f adm inistrative procedures 40 3.4.2 Adm inistrative remedies 42

3.4.2.1 An admonitory 42

3.4.2.3 Other remedies 43

3.5 Special requirement related to border measures 43

3.5.1 Requirem ents o f procedures at b order 43 3.5.2 B order measures 46

3.5.2.1 Suspension of goods enter in to channels of commerce 46 3.5.2.2 Other remedies 47

4 REAL SITUATION AND SUGGESTED SOLUTIONS TO IMPROVE ENFORCEMENT OF IPRS IN VIETNAM 49 4.1 Real situation of enforcem ent of IPRs in Vietnam 49

4.1.1 The p resent situation o f infringem ent o f IPRs Vietnam 49 4.1.2 Difficulties in IPRs enforcem ent in Vietnam 52

4.2 Suggested solutions to improve the Vietnamese law of enforcement of

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Section 2 briefly examines the background of T R IP S Agreement, the nature

o f IPRs, concept of enforcement of IPRs, the principles of enforcement of IPRs and significance of effective enforcement of IPRs in the context integrating of international economy

Section 3 concentrates the analyse part III of T R IP S about enforcement of IPRs Enforcement of IPRs includes formality procedures and remedies in the fields civil, administrative, criminal and remedies at border In addition, the paper compares provisions on enforcement of IPRs of Vietnam with requirements of T R IPS

Real situation and suggested solution of enforcement of IPRs in Vietnam are addressed in Section 4 before brief conclusions and recommendations in Section 5

The bibliography lists the key source materials used, together with details of

how lo obtain them.

My thanks are first due to Dr, Professor H a m Henrik Lidgard - Lurid University, to Dr Bui Xuan Nhu - Ha noi Law University fo r actively encouraging and advising me to write this thesis.

I am grateful to all those who spared time from their busy schedules to read one or more o f the draft chapters and valuable suggestions fo r the outcome

o f this thesis Many others made time fo r discussions with me and/or gave

me useful materials.

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EC:European Communities

EU : Europeans Union

G A T T: General Agreement on Tariffs and Trade

IPRs: Intellectual Property Rights

T R IP S : Trade-Related Aspects of Intellectual Property RightsUS: United States of America

W1PO: World Intellectual Property Organization

W TO : World Trade Organization

ICC: International Chamber of Commerce

1 Introduction

1.1 Rational

In order for Intellectual property rights (IPRs) to have any impact, the right holders must be able to act against infringer rapidly, effectively and in a cost-effective manner Enforcement is however, weak point in many countries which have adequate legislative IPRs on paper, but do not have the will, infrastructure or resources to help right holders to enforce these rights effectively

The Agreement on Trade Related Aspects of Intellectual Property Rights (T R IP S ) created a new level of international treaties concerning IPRs deal and improve substance standards and procedural enforcement of IPRs These provisions present considerable institutional changes not only for developing countries, but also for developed countries in various aspects, including their legislative, their judicial systems and their enforcement authorities Vietnam has applied for and requested accession to the Word Trade Organization (W T O ) The Working Party on Accession was established in January 1995 To become a member of W TO, Vietnam in obliged to accede to T R IP S

Over the years, the Government of Vietnam has attached great importance

to protection of IPRs The Government considers that the IPRs protection system is of great significance to the promotion of scientific and technological progress, culture prosperity and economic development For

Vietnam, IPRs protection is an important component part of its reform and open policies and its efforts to develop a socialist legal system In the present, trend of global economic integration and IPRs based commercial competition; the effective protection and enforcement of IPRs in nations have become vital important and is always a foremost interest of all IPRs owners and investors Today, Vietnam provides a rather comprehensive legal framework for protection of IPPs The basic IPRs legislation in Vietnam has been referred in the Civil Code of Vietnam, which took effect

on I July 1996 Provision guiding the implementation of Civil Code relating

to IPRs protection and enforcement are scattered in various Decrees and Circulars While the basic legal framework is in place to protect IPRs, but Vietnam market is still completely dominated and overwhelmed by piracy and counterfeiting To effective enforcement of IPRs, Vietnam has been confronted at three fronts, namely:

- Effective legal framework and environment to guarantee strong legal basic for enforcement Vietnam legal framework of enforcement of IPRs is not consistent, it difficult to put in to practice

- Expedition’s judicial and administrative processes to ensure availability

of remedies for right holders

- Public education to get staunch support for IPRs enforcement activities from relevant government agencies, stake holders and general public.Thus, the effective enforcement of IPRs is a challenge faced by Vietnamese government The increase in both the quality and quantity of counterfeits

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and pirated copies combined with increasing involvement of organized criminal syndicates presents a threat to rights holders and society The measures and procedures to ensure the enforcement of IPR.S are playing an important role.

1.2 Purpose

Because of above reasons this thesis will deal with Enforcement of intellectual property rights under T R IP S Agreement in relation to Vietnam Law Accordingly, the thesis aims at:

• Investigating the nature of enforcement of IPRs under T R IP S agreement

• Examining the systems of enforcement of IPRs in Vietnam including administrative measures, civil remedies as well as criminal sanctions, special measures at border, with respect to their compliance to the T R IP S ’s standards

• Finding ways to adapt the Vietnamese enforcement system to

T R IP S ’ standards while keeping in mind Vietnam interests on economic development

The ambition of this paper is to provide a comprehensive advice on the current development of the Vietnamese Law of enforcement o f IPRs which was amended to satisfy T R IP S Agreement’s requirement It is obvious that even the best law was has no value unless it is efficiently administrated and effectively enforced

1.3 Method

In order to produce detailed and accurate results in my research, both the analysis method and comparative method are to be applied As such, the paper is to investigate, describe and compare different approaches to the regulations of enforcement of IPRs in Vietnam and in T R IP S A comparative method will be used, not with the main purpose to highlight differences and similaries but, in order to advance the discussion and to underline the problems of the subject Each legal matter will be examined

as they apply to each step of the subject analysis Likewise, the use of the analysis method is particularly helpful and explicitly employed to conduct

a comprehensive logic of the enforcement of IPRs according to different procedures (such as civil procedures, administrative procedures, criminal procedures, special requirement at border )

Additionally, the enforcement system of IPRs in Vietnam made to be in compliance with the T R IP S Agreement Descriptive and synthetic methods are applied in order to present only the essential of what has been to be developed in these areas

1.4 Limitations

The doctrine of unfair competition, dilution, copyright, patent, and other areas of IP Law will not be discussed more than necessary for understanding the subject matter of this thesis Moreover, issues which are interesting but

of immediate concern of this discussion, such as the enforcement of IPRs in

EC, US and other countries will not examined Mechanisms and social - economical policies, education and training to effective enforce of IPRs also not addressed in this thesis

This thesis seeks to evaluate the possibilities of enforcement of IPRs limiting its analysis to the T R IP S ’s regulations and Vietnamese legislations In the near future, Vietnam will become a member of W TO; Vietnamese’s regulations have to consistent with and meet T R IP S ’s regulations The subject matters of comparison in this thesis are the T R IP S Agreement and Vietnamese Law An analysis of the T R IP S must therefore in some contexts include the situation in Vietnamese Law to be completing Additionally, these thesis only comments about procedures and remedies to enforce of IPRs, which has been to be stipulated in T R IPS Measures to enforce of IPRs involve civil, administrative, and criminal procedures and special requirement related at border measures The legal and practice perspectives of the enforcement of IPRs in real situation of Vietnam will be deeply research and

to find out some suggested solution to perfect Vietnamese Law

1.5 Previous research on enforcement of

IPRs under TRIPS.

Enforcement of IPRs is not completely a new phenomenon, however not many

studies have been made on this topic The first study to properly analyse the enforcement of IPRs was “ Enhance the role and capability of Court in IPRs enforcement in Vietnam” by Sciences Considerate Institute of Supreme Court (1999) This report is of prime interest since it can be considered to establish the ground of the subject and thereby acting as important reference to following studies, such as “ The T R IP S Agreement Drafting History and Analysis” (2003)

by Dannie Gravis and “ Intellectual property rights in the W TO and developing countries” (2000) by Jayashree Watal However, the report only mentions the enforcement of IPRs in one chapter Furthermore, many articles treating non traditional or non visual intellectual property rights include enforcement of IPRs in their analysis, but without going into any profound study

1.6 Content

As already indicated by the title, the thesis concentrates on the legal and practical issues concerning enforcement of IPRs under T R IP S Agreement in relation to Vietnam Law The thesis is divided in to four chapters

Chapter I : Introduction

Chapter 2: Overview of IPRs and enforcement of IPRs under T R IP S

Chapter 3: Enforcement of IPRs under T R IPS and according to Vietnamese law Chapter 4: Real situation and suggested solutions of enforcement of IPRs in Vietnam

2 Overview of IPRs and enforcement of IPRs under TRIPS

2.1 Brief history of TRIPS:

The title ‘trade-related aspects of intellectual property rights’ of this W T O agreement owes its origin more to the historical process of the negotiations

o f the Uruguay Round than to the actual content of the subjects covered There is actually nothing related to trade in this agreement; it is all about the protection of intellectual property rights (IP R s )'

A large number of countries participating in the negotiations had initially objected to the inclusion of IPRs in G A T T negotiations on the grounds that the subject was covered by another organisation, viz., the World Intellectual Property Organisation (W IP O ) and also because the G A T T had jurisdiction only in the field of trade As a compromise, the subject of the negotiations was termed trade-related intellectual property rights, and it was thought that

it would cover only the matters related to trade For a long time, several countries continued to oppose the inclusion of substantive matters of intellectual property in the negotiations, and kept on insisting that only the trade effects should be discussed But finally, it was agreed that all issues relating to IPRs, including the standards of protection, would be negotiated

In this process, the link with trade has almost vanished and yet the original name remains In this way, the agreement is called the Agreement on Trade- Related Aspects of Intellectual Property Rights ( the Agreement on

T R IP S )2

T R IP S is the result of seven years of negotiations - from September 1986 to December 1993, as part of the Uruguay Round of Multilateral Trade Negotiation of the GA T T These negotiations were launched at Punta del Este, Uruguay and formally concluded in April 1994 at Marrakesh, Morocco, along with the other negotiations of the Uruguay Round T R IP S came into force on the first day of 1995, with the establishment o f the W TO

T R IP S agreement inclusion was the culmination of a program of intense lobbying by the United State, supported by the EU , Japan and other first world states Also influential were campaigns of unilateral economic encouragement (under the Generalized System of Preferences) and coercion (under Section 301 of the Trade Act)3

With the increase in the production and international exchange of counterfeit goods, developed countries, representing the interests of famous

1 Bhagirath LalDas, The WTO-Aguide to the Framework for International Trade, Second edition (Zed Books Ltd, 2000, London and New York) p.p 355-356

2 Ibid, p.356

3 Agreement on Trade-Related Aspects of Intellectual property Rights, Available at

http://en.vvikipedia.org/wiki/Agreement_on_Trade-

Related_Aspects_of_Intellectual_ 2004-07-20

brands, sought disciplines in this area4 IPRs originally entered the Uruguay Round negotiations on the grounds that weak and variable standards distort international trade flows and interfere with global economic efficiency3 Preparations by developed countries for introducing an anti - counterfeiting code into G A T T disciplines began in earnest during the latter part of the Tokyo Round (The Tokyo Round began in 1973 and ended in 1979) The objective of this proposed code was to agree to border measures for the interception and eventual destruction of such goods outside the channels of commerce However, no agreement could be reached before the end of the round in 1979 as only the u s and EC support it At the 1982 Ministerial meeting of the GATT, only a limited agreement could be reached to consider this issue and authorize the Director General of the G A T T to discuss its legal and institutional aspects with his counterpart in the World Intellectual Property Organization (W IP O )6.

Taking advantage of the broad mandate of the Preparatory Committee set up

in G A T T in November 1985 for a new round of multilateral trade negotiations, the United States and Japan tabled proposals in early 1986 to include IPRs such as patents, trademarks, copyright, mask works and trade secrets and did not confine themselves to counterfeit trademarked goods The United States first pushed for an international code on counterfeiting, introducing it at the 1982 trade ministerial meeting, but there was little enthusiasm fot the initiative Four years latter, at the Uruguay Round meeting in Punta del Este, American negotiators, joined by representatives

o f the European Union and Japan, successfully introduced IPRs into the deliberations on global the trade rules8 The April 1989 text is provided in Appendix-2 It signalled a significant victory for the u s and other developed countries as all parties agreed that negotiations would encompass the provision of adequate and effective standards for enforcement ot and dispute settlement on IPRs Although the prefix ‘trade-related’ continued to

be used with IPRs, it was far from clear from the proposals on the table as to what non-trade related IPRs were9 Considering that both the u s and EC submissions of 1987-1988 had already argued that strengthened IPRs protection was the key to attracting foreign technology and investment and

to economic development, this did not seem to hold much promise for developing countries An agreement on trade in counterfeit goods was to be

4 Jayashree Watal, Intellectual property rights in the W TO and developing countries

(Kluwer Law International, 2000, Hague-London-Boston) p 15

5 Keith E.Maskus, Intellectual property rights in the global economy, Institute international economics, Washington, DC August 2000.

6W IPO , the specialized UN agency that deals with IPRs, administers, inter alia, two of the

oldest IPRs treaties, the Paris Convention for the Protection of Industrial Property, 1883 as revived up to 1967 and the Berne Convention for the Protection of Literary and Artistic Works, 1886 as revised up to 1971 These cover two important branches o flPR s, viz industrial property and copyright Industrial property includes patents, utility models, trade marks and industrial designs.

7 See footnote 4 p 19

8 See footnote 5, p 16

9 See footnote 4, p.27

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include, though not necessary, and a mutually supportive relationship was envisaged between G A T T and W1PO.

Dramatic progress was made in the T R IP S negotiations from July 1989 to December 1990, particularly in the second half of 1990 Developing countries had accepted the inclusion of norms and standards in the negotiations, leaving open only the question of whether the agreement would be lodged in G A T T or W IPO , and the related issue of cross­retaliation

The stage of rapid progress began in March 1990 when EC tabled a draft agreement on T R IP S, in treaty language, covering, standards, principles and enforcement issues This was followed by similar texts from the u s, Japan and Switzerland

The December 1991 text, prepared by Chairman Anell and the G A T T Secretariat, constituted their best judgement on what would be acceptable to all participants In the end, the text as of end 1991 is almost the same as final text The December 1993 text was adopted formally at Marrakesh, Morocco in April 1994

The T R IP S agreement constitutes the most significant strengthening ever of global norms in the intellectual property area Enforcement of T R IP S obligations amounts to a marked movement toward internationalharmonization of standards and a definite solidification of the international 10

regime

2.2 The definition of IPRs under TRIPS

The basic concept of intellectual property can be traced back as far as the

fourth century BC to Aristotle" Two main moral and philosophical

arguments for rewarding innovators have been used One stems from Hegel that an idea belongs to its creator because the idea is a manifestation of the creator’s personality or self The other from Locke- that the unpleasantness

o f labour should be rewarded with property

In today’s market - based economies, however, the rationale for protecting intellectual property is essentially utilitarian A piece of knowledge - whether the blueprint of harvesting wheat - unlike a physical object can be used by one person without limiting its use by others The widest possible dissemination of new knowledge, then, makes for the greatest economic efficiency But if everybody is free to access new knowledge, inventors have little incentive to commit resources to producing it IPRs transform knowledge from a public good into a private good Through enhanced market power conferred by the IPRs title, owners OÍ intellectual property can recoup their expenditure in creating new knowledge Creative minds and innovative firms thus have an incentive to engage in inventive activities This utilitarian argument provides the main rationale for the protection given by patents, copyright, plant breeders’ rights and several other types of

10 See footnote 5, p 16

11 Geoff Tansey,Trade, Intellectual property, Food and Biodiversity (Quaker peace & Service, 1999, London) p 3

IPRs The various forms of intellectual property differ in terms of the subject matter that may be eligible for protection, the scope and duration of protection, and possible exceptions to exclusive rights - reflecting society’s objective to balance the interests of producers and users of intellectual works.

What is intellectual property? In general, a right of ‘property’ is the power

to exclude The owner of an automobile, for example, has the power to exclude others from entering it or driving it Similarly, the owner of real property may build a fence around it and exclude others from entering it Intellectual property operates under much the same principles Although intellectual property rights control intangible products of the mind apart from their physical embodiment, they give the owner the same sort of rights

as owners of other kinds of property have: the rights to exclude others from access to or use of protected subject matter Creators can be given the right

to prevent others from using their inventions, designs or other creations-and

to use that right to negotiate payment in return for others using them These are “ intellectual property rights” 12

W hile intellectual property shares the exclusionary aspect of all forms of property, it has certain distinctive features First, it is intrinsically intangible Its essence lies in concepts, information, symbols, or creative expression, and therefore no physical boundaries can enclose or restrain it IPRs as a means of wealth creation in market economies13.Indeed, it is often impossible even to determine who possesses intellectual property, for doing

so would require reading minds In this respect intellectual property differs from tangible forms of property, such as automobiles and furniture, as well

as from real property, which may be guarded by tangible fence or other physical barriers

What is the most important is that intellectual property is an inexhaustible resource Many people may possess and use it without decreasing its practical value In contrast, only a single person or small group of persons ordinarily may possess or real or tangible personal property Any attempt by others to exercise rights of possession detracts from the use or value of that property in the hands of the rightful possessors With intellectual property, however, this principle does not apply Only one person at a time may possess a book, but many may possess and enjoy the intangible expression

in it, which is the subject matter of copyright protection Similarly, only one person at a time may possess the tangible embodiment of an invention, but many may possess its teaching, construct it, and employ it in industry, perhaps using different physical embodiments and different materials The fact that more than one person can possess or use the same intangible subject matter, without depriving any other possessor of similar use or enjoyment, makes intellectual property an inexhaustible resource or, in economic terms, a ‘free good’

At first glance, this intrinsic feature of intellectual property might lead to the conclusion that it is best exploited without legal protection, by disseminating it widely and allowing anyone to use it That approach,

12 Available at http:// www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm

13 Bruce A.Lehman, President International Itellectual Property Institute, Intellectual property as means of weath creation in market economies, 2002, 1IP1 p.2

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however, treats intellectual property as a ‘given’, an accomplished fact, and ignores the costs of creating it and bringing it to market1 IPRs have meaning only in a market economy15 Ignoring those costs in turn eliminates the incentive to incur them, and thereby eliminates the incentive for innovation and investment in innovation that underlies progress in the literary and technological arts.

A simple example demonstrates that a legal system lacking protection for works of authorship likely would produce a cost-price structure with no financial reward for authors, editors, and typesetters In order to make a profit from producing a new and creative literary work, a publisher musts recover the costs of writing, editing, typesetting, and printing it Normally this is done by amortizing the costs over the printing run A copyist, however, incurs only the cost of copying and printing, not the other more creative costs If the cost of copying is small-as is usually the case with modern technology-the copyist has only the printing cost to amortise over the publishing run In a competitive market, the copyist will sell each book

at the amortized cost of copying, plus a reasonable profit Market forces then will require the original publisher to sell at the same price or risk loss

of market share Therefore, to match the copyist’ prices, the original publisher will have to sell at the price of printing plus profit, leaving no room for the costs of editing and typesetting, let alone any royalty for the author If a publisher attempts to provide these costs out of its normal profit, investment dollars will flow from the publisher to copyists, who will be able

to offer a higher rate of return on investment Eventually, these market forces will drive true publishers of original works from the marketplace.The term ‘intellectual property’ is differently defined in various scholarships According to one scholar, as a term of art, ‘intellectual

property’ comprehends such diverse matters as patents, copyright, trade

secrets, trade marks, trade names, the action for passing off, trade libel and other associated rights16 On the other hand, another scholar holds that there

is no single generic term that satisfactorily covers all intellectual properties Among the definitions of intellectual property, the one given

by the World Intellectual Property Organization (W IP O ) may be the most authoritative and widely accepted W IP O defines ‘ intellectual property’ as comprising the following rights:

• literary, artistic and scientific works;

• performances of performing artists, phonograms and broadcasts;

• inventions in all fields of human endeavour;

17 w R Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights ( 2nd ed„ 1989), p.3

• protection against unfair competition and other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.

T R IP S id a subsidiary agreement to the Agreement establishing the W T O concluded under the Uruguay Round of the General Agreement on Tariffs and Trade negotiations As an integral part of the outcome of the Uruguay Round negotiations, T R IP S sets out standards relating various types of intellectual property and enforcement mechanics of intellectual property rights The Agreement prescribes minimum standards for Members in various areas of intellectual property Intellectual property rights are the rights given to people over the creations of their minds The T R IP S Agreement includes in its folds, seven types of intellectual property:

2.3 The principles of enforcement of IPRs

The T R IP S Agreement contains two general requirements applicable to all

kinds of intellectual property law The first-a requirement for national

treatment-has been a feature of international accords in the field of intellectual property for over a century The second is an innovation in the field of intellectual property law derived from the field of international trade: most-favored-nation treatment19

2.3.1 National Treatment

The first and most basic general requirement of the T R IP S Agreement is the requirement for national treatment National Treatment: Treating foreigners and locals equally20 B y virtue of that requirement, each Member of the

W T O must treat the nationals of every other Member as favorably as its own with respect to intellectual property, must not discriminate against foreign nationals of Members21 This requirement is general, subject only to exceptions in the T R IP S Agreement itself

18 T R IP S material on the W TO website Available at

http://www.WTO.org/english/tratop_e/trips_e/trips_e.htm

19 Jay Dratler, Intellectual property Law: Commercial Creative and Industrial Property

IP L C C IP 1 A.06, Volum 1, Chapter 1 A Available at http://www.international.westlavv.com

20 Available at http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

21 See article 3 of T R IP S Agreement

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There are, however, two explicit exceptions First, the T R IP S Agreement preserves exceptions to the national-treatment principles in certain preexisting conventions governing intellectual property" In particular, it leaves undisturbed previously approved deviations from national treatment under the Paris, Berne and Rome Conventions and the unratified W IP O Treaty on Intellectual Property in Respect of Integrated Circuit Second, limits the application of national treatment with respect to the rights of performers, producers of phonograms (sound recording), and broadcasting organizations (so-called neighboring rights to those rights proviede under

T R IP S Agreement It thus precludes Members that are not party to the Rome Convention from receiving full Rome Convention protection for their nationals through the back door, that is, without committing themselves to the obligations of the Rome Convention Finally, there is a general exception, which also applies to the requirement for most-favored-nation treatment, for procedures provide in multiliteral agreements conclude under the auspices of W IP O relating to the acquisition or maintenance of IPRs This exception, for example, validates the filing and other procedures of the Patent Cooperation Treaty and the Madrid (trademark) Agreement against claims that they violate the principle of national treatment

Lest there be confusion about what nationals are, the T R IP S Agreement provides two ways of defining the term First, there is a general definition, nationals are, in the case of a separate customs terriory Member of the WTO, person, natural or legal, who are domiciled or who have a real and effective industrial or commercial establishment in that customs territory With respect to particular kinds of intellectual property, however, the T R IP S Agreement relies on previous conventions to define the term National treatment is also a key principle in other intellectual property agreement

outside WTO

2.3.2 Most-Favored-Nation Treatment

The requirement for most-favored-nation treatment is an innovation with the

T R IP S Agreement Drawn from the field of international trade generally, this requirement goes farther than the requirement for national treatmnet It requires not only that each Member give other Members’nationals the same treatment as its own, but that each Member not prefer any other Member's nationals, or those of any nonmember country, over the nationals of any Member It thus precludes perferences against Members’ nationals in bilateral or smaller multilateral compacts with Members or nonmembers With regard to the protection of intellectual property, any advantages, favour, privilege or imminity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members25

This means that Members of the W T O must provided other Members’nationals not only the same treatment that they provide their own

nationals, but the best treatment that they provide nationals of any other country There are exceptions for26: (1) international agreements on judicial assistance or law enforcement of a general nature, not confined to intellectual property; (2) provisions of the Berne Convention (1971) or the Rome Convention for treatment based not on national treatment but on the treatment accorded in another country; (3) so-called neighboring rights (rights of performers, producers of phonograms, and broadcasting organizations not addressed by the T R IP S Agreement; (4) prior intellectual property agreements that are notified to the Council for T R IP S and do not constitute an arbitrary or unjustifiable discrimination against nationals of other members The requirement for most-favored-nation treatment is also subject to the acquisition or maintenamce of intellectual property rights.

2.4 The concept of enforcement of IPRs

under TRIPS

Generally, the enforcement of IPRs involves procedural formalities in a number of hierarchical forums Such formalities and procedures are designed to assit and help the owner of the rights not only to obtain them from the competent office, but also to enforce them by preventing their infringement by others, usually competitors27

Strict and effective enforcement of all IPRs is also an obligation under

T R IP S Agreement, which reqiures signatory states to make provisions that would help combat counterfieting and piracy In fact in almost all countries where the T R IP S obligations are to take effect at the begining, as well as very early in the present 21st century, it is in the area of enforcement that

one is to ensure that effective means are available to rights holders,

including expeditious remedies to prevent infringement as well as remedies that would be a deterrent to further infringements Improved and modernized legislation with increased standards of protection would be like

no protection at all, unless the rights provided in it can be effectively enforced

The most important contribution government can make to the effectiveness

of IPRs, it is provide speedy and cheap methods of enforcing them Continuity of socio-economic growth, and inductrial and entreprise competitiveness depend on high levels of protection and its enforcement The measures and procedures for enforcing IPRs were the subject of de facto harmonisation with the entry into force of the T R IP S Agreement, which lays down minimum provisions for the means of enforcing trade- related intellectual property rights These means comprise:

• the general obligation to put in place effective measures for enforcing IPRs, including measures for provisonal protection and remedies which have a deterrent effect;

• fundamental aspects of civil and administrative procedure: fair and equitable procedures, rules applicable to the production of evidence;

26 See footnote 19

27 Shahid Alikhan, Socio-Economic benefits of intellectual property protection in

developing countries, World Itellectual Property Organization, 2000, Geneva, p 153

16

• the establishment of certain civil (or administrative) remedies such

as injunctions, damages, seizure and destruction of infringing goods and, on an optional basic, the right of information;

• minimum requirements to be met by the [Drovisional measures for

in its national laws to enable right holders to enforce the IPRs establihed in Part II of the T R IP S Agreement 9

Enforcement is, in the ultimate analysis, a question of implimentation by the public services, consistency of local magistrates and an understanding by the concerned national offices30

T R IP S Agreement contains provisions on civil and administrative procedures and remedies, provisional measures, special requirements related

to border measures and criminal procedures, in a certain amount of detail, the procedures and remedies that must be available so that right holders can effectively enforce their rights

2.5 Significance of effective enforcement

If businesses, universities, organisations and the cultural sector are to be able to innovate and be creative under good conditions,it should be ensured that creators, researchers and inventors benefit from an environment favourable to the development of their activities, including as regards the new information and communication technologies In this context, the free movement of information should also be ensured and access to the Internet not made more difficult or costly by, for instance, imposing excessively heavy obligations on Internet intermediaries

Businesses, which often invest large amounts of money in research and development, marketing and publicity, must be in a position to recoup their investments Appropriate and effective protection of intellectual property helps to establish the confidence of businesse, inventors and creators in the Internal Market and is a powerful incentive for investment, and hence for economic progress

If counterfeiting and piracy are not punished effectively, they lead to a loss

of confidence amongst operators in the Internal Market as an area tor developing their activities and protecting theit rights The effect of this situation is to discourage creators and inventors and to endanger innovation and creativity in the world

destabilisation

Counterfeiting and piracy also do a great deal of damage to national economies and particularly in relation to industrialised countries, which results in a loss of revenue for the government and may give rise to multiple infringements of, for instance, labour legislation when the counterfeit or pirated products are manufactured in clandestine workshops by unregistered workers or sold on the street by clandestine workers This phenomenon is a genuine threat to the economic equilibrium of society since it can also lead

to destabilisation of the - sometimes very fragile -markets'’- In the multimedia products industry, counterfeiting and piracy via the Internet are

32 Commission of the European Communities, Proposal for a Directive of the European Parliament and of the council on measures and procedures to ensures the enforcement of intellectual property rights, Brussels, 30.1.2003 COM (2003) 46 final Available at

http://europa.eu.inưsmartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN

&rmmdoc-52003PC0046&model-guichetl

steadily increasing and, despite the relatively recent development o f the web, already represent considerable losses.

2.5.3 Ensuring consurm er protection

Consumer protection is a major concern in every country Striving for a high level of consumer protection, particularly as regards their health and safety,

is an essential element of every country Counterfeiting and piracy, and infringements of intellectual property in general, frequently impose insidiuos consequences for consumers

Depite the fact that the consumer, in some event, shows his complicity to this phenomenon, it largely is against his w ill against his w ill and, in any event, is always to his disadvantage Countrefeiting and piracy are generally accompanied by deliberate cheating of the consumer as to the quality he is entitled to expect from a product bearing, for instance, a famous brand name, since counterfeit or pirated products are produced without the checks made by the competent authorities and do not comply with the minimum quality standards When buying counterfeit or pirated products, the consumer does not in principle benefit from a guarantee, after-sales service

or effective remedy in the event o f damage Apart from these drawbacks, the phenomenon may pose a real threat to the health of the consumer (counterfeit medicines, adulterated alcohol) or to his safety (counterfeit toys

or parts for cars or aircraft) Other examples were cited in the consultation: defective medical material, detergents with caustic substances, adulterated antibiotics, carcinogenic substance in clothing, low-quality motor oil, toxic alcoholic beverages, defective household electric goods, ineffective anti­rabies vaccines, defective filters for diesel engines, etc

Harmonisation of national legislation on the means of enforcing intellectual

property rights will contribute to consumer protection and will be a useful addition to the existing legislative arsenal in this field

2.5.4 Ensuring the m aintenance of public order

Counterfeiting and piracy are a genuine threat to public order Apart from the economic and social consequences, this phenomenon infringes labour legislation (clandestine labour), tax legislation (loss of goverment revenue), heath legislation and the legislation on product safety Moreover, counterfieting and piracy are activities which to a certain extent go hand-in- hand with organised crime, which finds in these activities a low-risk means

of recycling and laundering earnings from other illicit trafficking (arms, drugs) Counterfieting and piracy, which were once craft activities, have become almost industrial-scale activities They offer criminals the prospect

of large economic profit without excessive risk In the context o f the Internet, the rapidity of illegal operations and the difficulty o f tracking the operations further reduce the risks for the criminal Nowadays, counterfieting and piracy , from a commercial perspective, are assumed to

be more attractive than drug trafficking, since high potential profits can be

33 Ibid.

obtained without the risk of major legal penalties Counterfieting and piracy thus appear to be a factor in promoting crime, including terrorism For the rest, the consultation of interested circles launched in many countries with the support of examples in the field of music and software, there appear links between counterfeiting and piracy and organised crime Hamonisation

o f the means of enforcing intellectual property rights will therefore help Member countries preserve public order

Strengthening and improving the fight against counterfeiting and piracy in the Internal Market are coupled with the horizontal measures taken in the field of justice and internal affairs and aimed at preventing and monotoring crime in line

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3 Enforcement of IPRs under

The general obligations on enforcement in Article 4 1 require that memebers

must have in place enforcement procedures that permit effective action against any act of infringement, and remedies which would constitute a deterrent to further infringements The importance of international trade is emphasized by the requirement that the procedures be applied in a maner, which avoids the creation of barriers to legitimate trade In other words, it should be a balanced enforcement approach that not only helps trade and free movement of legitimate goods, but also provides for effective enforcement

The T R IP S Agreement clarifies that Part III concerning enforcement of IPR s does not create an obligation to establish a special intellectual property enforcement system nor suggests any allocation of resources between enforcement of IPRs laws and other laws (Articles 4 1.5) Notwithstanding this, for example, Thailand has created a separate IP R Court, whose judges hear cases, and issue rulings, on IPRs matters It is called the Central Intellectual Property and International Trade Court inaugurated on December 1, 1997 and established under the Act for Establishment of a Procedures for Intellectual Property and Trade Court B.E.2539 (1996)37 In

34 See footnote 27 p 153

35 Available at http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm

36 11 PA Paper on Copyright Enforcement under the T R IP S Agreement, May 2004, p.2

37 See footnote 4, p.338

addition, some developing countries like Peru, Philippines have instituted special courts to try intellectual property cases With the increasingly complicated nature of IPRs, it will be interesting to watch this experiment to see whether it would becom an emerging trend There is much to be said both in favour of and against such special courts On the other hand, judicial authorities in developing countries may not have extensive knowledge of intellectual property law and its special requirements on enforcement Judges in special courts can be intensively trained and will gain this specialized knowledge and experience and it can be expected that the judgements originating from such courts will be coherent and consistent, thus making for greater legal security for IPRs holders On the other hand, apart from the quetion of additional resources, all intellectual property cases will have to queue up to receive the attention of a few special courts and this may be a problem in large countries where, even with regional dispersal, the number of special courts will probably be lower than regular courts Also, judges will not get the benefit of hearing other civil and criminal cases in order to apply common principles or norms to all cases In general, each country will have to decide on this issue on the basis on its circumstances and needs, as indeed T R IP S allows already.

The Agreement makes a distintions between infringing activity in general,

in respect of which civil judicial procedures and remedies must be available, and counterfeiting and piracy - the blatant and egregiuos forms of infringing activity - in respect of which additional procedures and remedies must also be provided, namely border measures and criminal procedures For this purpose, counterfeit goods are in essence defined as goods involving slavish copying of trademarks38, and pirated goods which violate

a reproduction right under copyright or a related right39

3.2 Civil procedures and remedies

3.2.1 Requirements of civil procedures:

• Fair and equitable procedures:

Article 4 1.2 requires that enforcement procedures be fair and equitable Article 42 details the definition of what constitute fair and equitable procedures These include fairness and equity to both parties to a civil dispute While the defendant must be protected by adequate written notice regarding the claims against him, both parties must be allowed independent legal counsels, must be permitted to substantiate their claims with all relevant evidence, must not be burdened unneccessary with mandatory personal appearances and must be permitted to keep information confidential, except if this is not permitted under the constitution itself.Most judicial systems, including those in developing countries, already follow such procedures

Vietnamese law of course provides for civil judicial procedures for the enforcement of IPRs According to Article 146 of Civil Procedures Code of

38 See Article 51(1,b) o fT R IP S

39 See Article 52(1,a) of T R IP S

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Vietnam, the plaintiffs writ commencing the action will be addressed to the court This will be served on the defendant, who will be given an opportunity to reply within 15 days from the date the court enroled an application and other related document In addition, Article 69 of this Code stipulates that further submissions may be made by each party If submissions do not contain sufficent details and fail to state the basis of the claim adequately, they may be treated as inconclusive.

Parties must generally be represented by independent counsel in intellectual property infringement cases in Vietnam Vietnamese Civil Procedures is conducted largely in written from, and where the party is represented, he need not appear in court

Also, Article 41.2 lays down that procedures for enforcement should not be unnecessarily complicated or costly, a provision directed more at developed than developing countries This may lead to encouragement of alternative dispute resolution in countries such as the us, where law suit on patent infringement can run into millions of dollars, although this may not necessarily lead to substantive lowering of costs40 Developing countries that are filing an increasing number of patents in the us have an interes in ensuring that cheaper alternatives are actually put in place41

• Requirements of evidence:

The demanders of effective enforcement of IPRs were concerned by the inability of right holders to obtain the relevant evidence that was in the possesion of the alleged infringer due to the lack of discovery proceedings However, many countries, including Germany and Japan, do not give judicial authorities such extensive powers42 As a compromise, under Article

43 judicial authorities were to be given the power to order the opposing party to produce only ’relevant’ evidence in its control that is ’specified’ by

the petitioner This does not go quite so far as the discovery proceeding in

U S courts, as petitioners have to first produce sufficient evidence to support their claims and to identify relevant evidence in the possesion of the other party In Japan parties may refuse to produce documents or material ordered

to be produced by a court for’ legitimate reasons’ such as self-incrimination

or revelation of technical or business secrets (revealed in the recent T R IP S Council review on enforcement)43 Protection of confidential information, must be ensured ” where appropriate” , where disclosure through the proceedings of ’’undisclosed information” would cause unneccessary damage or irreparable harm to a party44 The petitioner cannot use this procedure to eatablish whether or not infringement has occurred

Article 97 of Civil Procedures Code of Vietnam stipulates: The court does not disclose any evidence which relate to secrects of State, culture traditional of the nation, secrects related to job, to business, personality secret if the plaintiff have requirement However, there is wherein lack of provisions on manner to examine and protect confidentiality information

Thus, most of the holder rights does not want to bring cases to the court, because they are afraid that their secrect busines will to be disclosed to the public.

Under Article 43.2 where such evidence is not produced within a reasonable period without a good reason, judicial authorities shall have the right to make prelimilary and final decisions based on the evidence presented after giving both parties an opportunity to be heard

Article 79 of Civil Procedures Code of Vietnam, which is of great importance stipulates that the evaluation of evidence is a matter for the court The general principle of the Civil Code that obligations shall be carried out in accordance with the principles of loyalty and good faith is also applicable to evidence and proof-taking Where there is prima facie evidence o f an infringement of an IPRs, the operation of the rules already discussed may shift the burden of proof on to the defendant, or at least require him to provide evidence of certain matters Under Vietnamese law, according to article 309 of Civil Code 199 645, a defendant is under an increased obligation to explain the relevant facts, if unlike the plaitiff, he knows them and can reasonably be expected to state them If the defendant failed to do this, this would mean that although the pleadings of the plaitiff did not contain all relevant facts, they would be regarded as adequate

• Right of information

in addition, T R IP S Part III contains an optional provision in Article 47 on the right of information where members may provide that judicial authorities shall have the authority to order the infringer to inform the right holder of the identify of third parties involved in the production and distribution of infringing goods and services and of their channels of distribution This need not be done in cases where such a measure would be

disproportionate to the seriousness of the infringement An order by a court

has to be obeyed as otherwise the defendant could face punishment for contempt of court46 The defendant or third parties, such as customs officials

or others, could be directed to inform the right holder of details of the movement of infringing goods available from the records in order to trace the source of infringing activity Clearly, during the T R IP S negotiations many thought that such a provision would be a violation of the right of the defendant against self-incrimination and it was for this reason that such a provision was made optional In many countries, this would be a violation

of the constitution itself47 Note that the word used in this article is

’infringer’ and not ’oppsing party’ or ’defendant’48 This provision applies only once infringement has been reasonably eatablished Its pratical utility

to right holders is questionable as there may not be an additional obligation

to testify to the accuracy of the information and as the distributors and even manufacturers of most pirated and counterfeit goods can rapidly change location This is where right holders in countries that have Anton Piller type

45 Section 3 of Article 309 of Civil Code of Viet nam stipulates: ” The burden of proving no fault shall be under the obligation of the person who breaches the civil obligation"

of orders fare better as the suspected premises can be raided and evidence seized without prior warning.

According to Vietnames law, right of information! have not stipulated in any legal documents In Civil Procedure Code 2004 also does not issue this matter It is reason which cause ineffectively enforcemnt of IPRs, where right holder does not receive assistance from competent authorities

• Decisions on the merit of a case

Article 41.3 lays down that décidions on the merits of the case shall be preferably in writing, readed, based only on the evidence on which parties have had the opportunity of being heard and rendered to both parties without undue delay It is the normal practise in many countries that oral decisions are dispatched much later to both parties This provision is unlikely to prove controversial49

Article 236(3) of Civil Procedures Code of Vietnam stipulates that: When deliberation, the court only base oneself on document, evidence which examined, considered in court, result of interrogate in court and has to consider opinions from the person concerned, the investergaters In practice, some of courts have decided giving a verdict which bases on evidence which does not be examined in court, even the person concerned does not know this evidence

3.2.2 Provisional measures

Article 44 mandates W T O members to provide their courts with the authority to order injunctions and to prevent the entry into the channels of commerce imported, infringing goals However, an exception is allowed with regard to innocent infringement and use authorized by governmnet,

where remedies may be limited to adequate compensation.

Section 3 and Article 50 of T R IP S now lays down the provisional measures that W T O members are obliged to ensure The judicial authorities shall have the authority to order prompt and effective provisional measures, including, where appropriate, to:

• prevent infringement of IPRs from occurring,

• to prevent the sale of infringing goods through normal channels of commerce and

• to preserve relevant evidence regarding the alleged infringement

Ex parte orders are particularly useful where the alleged infringer is likely, upon notice, to shift or destroy the infringing goods and other evidence from the known premises, thus causing irreparable harm to the right holder This risk has to be demonstrated by the petitioners as has been particularly mentioned in Article 50.1 and 50.2 of T R IP S 50 The applicant shall be required to provide any reasonably available evidence so as to permit the court to establish with a sufficient degree of certainty that he is the right holder and that his right is being infringed or that such infringement is

49 See footnote 4, p.339

50 Ibid, p.344

imminent, [and to provide a security or equivalent assurance to protect the defendant and to prevent abuse]51

Preliminary remedies are important as, in many civil proceedings, the case may end after obtaining these This is particularly true where interlocutory injunctions may be obtained to prevent further infringement Most common law developing countries already had this standard, including the issuance

of Anton Piller orders of search and seisure and the Mareva Injunction to prevent the defendant from removing or disposing of his assets However, some civil law developing countries have to introduce these provisions specifically into their IPRs law or other laws

The A n ton P iller order

This order has been described as ’a nuclear weapon of the law’ It behoves all practitioners to use it with the care that the ultimate deterrnet requires The Anton Piller order was invented in England in 1975 by Hugh Laddie, although there is now a statutory basic for Anton Piller orders It is an ex parte order made in camera, always applied for in secret and without notice

practice has grown up of permitting the order to be served on any

person ’in apprarent control’ of the relavant premises, although the order should preferably be served on the defendant or a responsible employee of the defendant Serving on a person in apparent control

of the premises should only be applied as a last resort ( and is now only permitted where the solicitor appointed to supervise the execution of the order considers that it is impracticable to proceed with the search notwithstanding the absence of the defendant or a responsible employee) since such a person is likely to be unco­operative if he or she does not have proper authority to permit access and may not understand the nature of the order Generally, there is

no right to break the door down or to use force or to enter the premises, even though that refusal of permission will be in contempt

of court The closest that the courts have so far approached to a search warrant is in very exceptional circumstances, when the defendant was known to be out of the jurisdiction and the justice of the case did not permit a wait for his return In this instance, the

51 See footnote 44, p.307

52 Baker & McKenzie, Guide to Intellectual Property in the I.T.Industry ( Sweet&Maxwell, 1998), p.255

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court permitted the plaintiffs representatives to take a locksmith to the defendant's premises, break down the door and make good the damages afterwards;

• IT should be an order that the defendant hands over to the plaintiffs solicitors for safe keeping all relavant evidence, documents relating

to the business in infringing items, together with any infringing items on the premises including a requirement (if appropriate) that the defendant cause to be printed in human readable form from any computer programs on his machines (although the plaintiff and his representives may not themselves search the defendant’s computers unless they have sufficient exprience to do so without damaging the defendant’s system);

• It should be an order that the defendant discloses immediately relevant information relating to the supply of infringing items or services by or to him;

• It should be an order that the defendant discolses other premises within his control at which relevant information is kept, and admits the searchers to those premises;

Requirements fo r an o r d e r 3: The requirements for the grant of an Anton Piller order are still laid down by the Anton Piller case itself:

(a) there must be a ’’strong prima facie” 5 case of infringement

A ’’strong prima facie” case is something stronger than an arguable case, the court must be satisfied on the evidence before it that the plaintiff is more likely than not to win at the end of the day;

(b) the actual or potential damage to the plaintiff must be very serious if the order is not granted; and

(c) the ends of justice will not be met unless the order is granted,

because there is arisk that the defendant would destroy or remove

evidence of his apparent wrongdoing if he were given notice of legal proceedings in the usual way

Safeguards55: The new form of order codifies the traditional safeguards (for the protection of all parties) established in the cases and also incorporates further safeguards thought to be desirable The kye safeguards can be summarised as follows:

(a) The defendant or the person appearing to be in control of the premises is entitled to have the solicitor who serves the order (which will usually be the supervising solicitor) explain what it means in evereday language beforce allowing entry onto the premises The wording of the new form of order considerably facilites this task

(b) The defendant or person proposed to be served is entitled

to insist that there is nobody present on service of the order who could gain commercially from anything he might read or see on the defendant’s premises (unless the court has specifically stipulated that

53 Ibid, p.257

54 Prima facie, literally "at first sight” , means that upon provisional examination the

evidence submitted by or on behalf of the applicant would, in the absence of evidence to the contrary, be sufficient for him to prevail Sec Black’s Law Dictionary, op.cit.,at p.579

55 See footnote 52, p.260-261

certain persons from the plaintiff should be entitled to participation

in the service of the order)

(c) The defendant is entitled to refuse to permit entry before 9.30 a.m or after 5.30 p.m or at all on Saturday and Sunday The order may only be served between those stipulated times The defendant must allow the permitted persons to remain on the premises until the search is complete, and if necessary to re-enter the premises on the same or the following day in order to complete the search It is unclear whether or not a search which, if begun within the regulates times, may continue after 5.30 p.m In certain circumstances, it may be impracticable to effect service before 5.30 p.m ( particularly at residential premises) in which case a specific excemption ought to be sought to allow later access

(d) The defendant is advised to consult a solicitor as soon as possible Provided the defendant allows the supervising solicitor onto the premises, the defendant may:

(i) Seek legal advice, and apply to the court to vary

or discharge the order, provided it does so at once; and

(ii) Gather documents he believes may be privileged The supervising solicitor will assess whether they are privileged This may last two hours unless the supervising solicitor agree to a longer period

(e) The order will stipulate the number of persons entitled to enter the premises in addition to the plaintiffs solicitors and supervising solicitor

(f) The order must be served by the supervising solicitor and the search must be carried out in his presence and under his

supervision This is desirable since the supervising solicitor’s role is

to ensure that there is fair play between the parties Any unsupervised search may, of itself, give rise to potential conflict.(e) No items may be removed from the premises until a list of items to be removed has been prepared, a copy of the list supplied to the person served with the order and after he has been given a reasonable opportunity to check it

(g) The premises must not be searched, and items must not be removed from them except in the presence of the defendant or a appearing to be a responsible employee of the defendant (unless the supervising solicitor is satisfied that compliance with this provision

is impracticable)

(h) Following execution of the order, the supervising solicitor must prepare a report on the circumstances of the service and excution of the order and serve a copy on the plaintiffs solicitors, as well as producing a copy of the report to the court This can the stand

as an independent account of the execution which should considerably reduce the risk of a conflict as to what happened or what was said in the course of the search

(i) The plaintiffs solicitors are to return all documents and items obtained under the order as soon as possible and, in any event, within two working days of their removal

28