Vietnam: Ignorance is not a strategy! – Part I

Despite being a success story in economic growth, Vietnam is not a prominent target on radar of most patent applicants. Vietnamese copycat companies are like submarines in stealth mode. They are not showing up on radar yet; but ignoring them may be a recipe for disaster. In this article, we explain the importance of protecting IP rights in the new member country of WTO.

It’s a less known fact that Vietnam is the second fastest growing economy in Asia. Second only to China and a little ahead of its closest rival India. Since beginning of the economic reforms in 1986, Vietnam has come a long way and made its mark in various industry segments, most notably in the textile sector. Vietnamese government has demonstrated its commitment towards economic liberalization and international integration thorough its 12 year-long struggle to join World Trade Organization (WTO).

Why Vietnam Matters

Since introduction of economic reforms in late 80s, Vietnam has consistently recorded high economic growth rate. Population below poverty line has fallen from 58% in 1994 to less than 20% in 2004. The literacy rate in Vietnam is impressive 88%. The nation has well educated and surprisingly young population. 50% of 85 million Vietnamese are below the age of 35.

Multinational companies like Unilever, Shell and Mitsubishi were quick to spot the potential of this young nation. They have been operating in Vietnam for years now. High-tech giants, from Intel to Canon, are setting up local operations. Intel has recently announced its plan to build a $300 million semi-conductor test-and-assembly plant north of Ho Chi Minh City, one of only six such factories in the world. Canon has announced its intention to build the largest inkjet printer factory in the world in Vietnam. The country had been a favorite destination for other industries alike e.g. most of the automobile giants already have local presence. Vietnam had also been a success story in telecom and Internet. Government estimates that 20% of the population is now connected to Internet.

On the other hand, Vietnam is also known for a large number of small and medium scale copycat companies. The country is home to a large number of small manufacturers, which often produce copied drugs of poor quality. It is becoming increasingly important to raise guards against these notorious companies. It is not surprising that many multi-national pharmaceutical companies have shown a keen-interest in protecting their patent rights in Vietnam. Most of the top 10 patent applicants in Vietnam are involved in the business of making pharmaceutical products.

If the above does not convince you of the rise of new Asian tiger, take a look at the economic data. In year 2006, the foreign direct investment in Vietnam topped USD 10 Billion. Vietnam stock market recorded a triple digit growth in year 2006. Fund managers from all over the world are flocking to Vietnam to surf on the rising economic wave.

On the international IP landscape, Vietnam is connected to the global community. It has been a member of Paris Convention since 1967, Patent Co-operation treaty (PCT) since 1970, Madrid Agreement since 1979 and Stockholm Conventions since 1967.

Vietnam joined WTO on 7th November 2006 as 150th member country. Being a member of WTO imposes various obligations under the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Vietnam amended its laws on 1st July 2006 to comply with TRIPs. The Intellectual Property regulations, which were formerly stipulated in the Vietnamese Civil Code, are now provided in a separate law called Intellectual Property Law. The introduction of the new unified Law on Intellectual Property marks a new milestone in the development of IP protection in Vietnam and contributes to Vietnam’s preparation in terms of legal instruments in the IP field. This also demonstrates Vietnam’s increasing concern over the IP protection and its efforts to improve its IP law system towards the regional and international standards.

The economic and industry indicators clearly show that if China and India are on top of your list for IP protection, Vietnam certainly deserves a place on your list. It may not be prudent to ignore Vietnam anymore.

In next part of this article, we will discuss the IP law structure and ways to protect IP assets in Vietnam.