Author: Do Nhat Anh [1]

English translation: Le & Tran Team

Abstract:

The Criminal Code in 2015 stipulates 02 crimes for which commercial legal entities must be criminally responsible for infringing intellectual property rights: Crime of infringing upon copyright and related rights (Article 225) and Crime of infringing upon industrial property rights (Article 226). In this article, the author analyzes provisions of the Criminal Code on the criminal liability of commercial legal entities for these two crimes, points out some inadequacies, and thereby proposes and recommends to complete.

Keywords: Commercial legal entity committed crimes: intellectual property infringement: technology property rights infringement

Received: 26/9/2023; editing completed: 14/10/2023; accepted for publication 16/10/2023

1. Problems in the provisions on the attributions of guilt against a commercial legal entity guilty of infringing upon copyright and related rights (Article 225 of the Penal Code)

Clause 4, Article 225 of the 2015 Penal Code, amended and supplemented in 2017 (2015 Penal Code) stipulates: “A commercial legal entity that commits an offense specified in this Article shall be fined as follows: a) Performing one of the acts specified in Clause 1 of this Article.”

To determine whether a commercial legal entity (Commercial legal entity) is criminally liable for the crime of infringement of copyright and related rights. First of all, it is necessary to determine  whether or not the commercial legal entity  satisfies 4 conditions for being criminally liable  for crimes in general (Clause 1, Article 75  of the 2015 Penal Code) and satisfies the criteria for culpability for the crime of copyright infringement,  relevant rights (Clause 1 of Article 225), specifically:

  • Copy works, sound recordings, video recording tables. This is the act of making one or more copies of a work or sound or video recording by means or in any form, including making copies in electronic form.
  • Distributing to the public copies of works, copies of sound recordings, and copies of video recordings.

The offender may commit either act or both of the aforementioned acts. When committing objective acts of a crime, the subject is not allowed (without consent) of the subject of copyright or related rights. In other words, when a commercial legal entity performs the act of copying a work, sound recording, video recording, or distributing to the public a copy of the work, a copy of a sound recording, or a copy of a video recording, it is without the consent of the owner of the copyright or related right.

The above acts are considered criminal only if they commit one of the acts specified in Clause 1 of Article 225 with a commercial scale or make ill-gotten profits from VND 200,000,000 to less than VND 300,000,000 or cause damage to copyright holders, related rights from VND 300,000,000 to less than VND 500,000,000 or goods for infringement worth from VND 300,000,000 to less than VND 500,000,000 copper; make principal profits from VND 100,000,000 to less than VND 200,000,000 or cause damage to copyright holders, related rights from VND 100,000,000 to less than VND 300,000,000 or infringing goods worth from VND 100,000,000 to less than VND 300,000,000, but have been administratively sanctioned for one of the acts specified in Article 225 or have been convicted of this offense,  has not had their conviction cleared, but also violated.

It should be noted that copyright and related rights infringed by criminal acts must be protected in Vietnam. For copyright, authors and copyright owners entitled to copyright protection in Vietnam include Vietnamese or foreign organizations and individuals whose works are first published in Vietnam but have not yet been published in any country or published simultaneously in Vietnam within thirty days from the date such work is first published in another country; in addition, foreign organizations and individuals whose works are protected in Vietnam under international copyright treaties to which the Socialist Republic of Vietnam is a contracting party[2]. For related rights, sound recordings and video recordings protected in Vietnam are sound recordings,  video recordings of producers of sound recordings or video recordings of Vietnamese nationality, or sound or video recordings of producers of sound recordings or video recordings protected under treaties to which the Socialist Republic of Vietnam is a contracting party[3].

The difference between the objective act of the offending individual and the criminal commercial legal entity is that for a commercial legal entity, an objective act is an act that is carried out on a commercial scale or makes an ill-gotten profit of VND 200 million or more or causes damage to the copyright holder,  related rights of VND 300 million or more or infringing goods worth VND 300 million or more. This quantitative value for commercial legal entities is 3-4 times higher than the quantitative value for individuals (depending on each case) to distinguish between administrative violations and criminal violations. Specifically, for individuals, objective acts of this crime are acts carried out on a commercial scale or making ill-gotten profits of VND 50 million or more or causing damage to copyright holders, related rights of VND 100 million or more, or infringing goods worth VND 100 million or more.

In addition, the lawmakers also added a case which determined charges based on the identity mark of the commercial legal entity. As for individuals, there is no provision for determining charges based on signs of bad character. That is, in cases where a commercial legal entity illegally profits from VND 100 million to less than VND 200 million or causes damage to copyright holders, related rights from VND 100 million to less than VND 300 million, or infringing flower goods worth from VND 100 million to less than VND 300 million,  but have been administratively sanctioned for one of the acts specified in Article 225  of the Penal Code or have been convicted of this offense, have not yet had their convictions cleared, but also violated, shall be subject to criminal liability.

A study of the guilty signs of the crime of infringement of copyright and related rights shows that Clause 1 of Article 225 still has some shortcomings. Concrete Examples:

Firstly, according to the provisions of Article 225 of the 2015 Penal Code, when determining the signs of guilt to determine the offense for acts of a commercial legal entity, in terms of quantitative signs – the threshold for criminal punishment of this person, it must be based on Clause 4 of this Article. The above provision contradicts the science of criminal law on constituting a crime. Accordingly, the basic offense constitutes a characteristic sign of a particular crime to serve as a legal basis for determining the offense and distinguishing between one crime and another as well as distinguishing it from the offense. “Every crime must have an underlying criminal component.”[4] Crimes may be committed by different subjects, but when determining the offense that the subject’s conduct satisfies, it must be based on constituting the underlying crime.

For the crime of infringement of copyright and related rights, constituting a fundamental crime specified in Clause 1, Article 225 of the 2015 Penal Code. In terms of legislative techniques, Clause 4 of Article 225 provides for a separate quantitative sign applicable to the subject being a commercial legal entity, that is, in this case, the lawmaker has prescribed two basic offenses for the same crime (Clause 1 applies to individuals and Clause 4 applies to Commercial Legal Entities). Each offense has only one factor constituting an underlying offense to prescribe the characteristic hallmark of guilt of this offense, it is not possible to prescribe two factors constituting an underlying offense for the same offense. The provision that a commercial entity is criminally liable for a specific crime does not change the nature of the indication of guilt of the particular crime. “It is impossible for some reason to add an indication to the offense when prescribing the criminal liability of a legal entity. The addition of such an indication of guilt is not only contrary to the nature of the provision of criminal liability of a legal entity but has without justifiable grounds limited the scope of criminal liability of a legal entity, diminishing the significance of the provision of criminal liability of a legal entity.”[5] A legal person is always criminally liable through criminal acts committed by natural persons, without criminal acts committed by natural persons, there is no criminal liability for legal persons.”[6] Therefore, the determination of an offense against a commercial legal entity must still be based on the constituent of the basic offense prescribed for the whole person, it is not possible to provide for a second basic offense constituent applicable to the commercial legal entity.

On the other hand, the quantitative level for violations of a commercial legal entity to be considered a crime is 3-4 times higher than the quantitative level for an individual’s conduct to be considered a crime. Such provisions do not guarantee equality between subjects subject to criminal liability. Therefore, the author argues that  Article 225 of the 2015 Penal Code should be amended in such a way as to stipulate only “a quantitative level” to determine whether an offense is considered a crime or not, regardless of whether the subject of the crime is an individual or a commercial legal entity committing a crime (i.e. only one constitutes a basic crime, paragraph 1 of Article 225 applies to individuals, commercial entities that commit crimes).

Secondly, for the sign “commercial scale”.

On January 11, 2007, Vietnam officially became the 150th member of the World Trade Organization (WTO). From this point on, Vietnam must implement its commitments in WTO documents, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). Specifically, Article 61 of the TRIPS Agreement stipulates the internalization obligations of member states as follows: “Parties shall provide for the application of criminal procedures and penalties to impose at least in cases of deliberate counterfeiting of trademarks or infringement of copyrights on a commercial scale. The prescribed sanctions shall include imprisonment and/or fines sufficient to prevent trespassing, corresponding to the penalties imposed for offenses of equal severity in appropriate circumstances, sanctions shall also include imprisonment,  confiscation, and destruction of infringing goods and any other materials and means primarily used in the commission of the crime. Members may prescribe criminal procedures and penalties applicable to other cases of infringement of intellectual property rights, especially cases of intentional infringement and infringement on a commercial scale.”

Compared to the 1999 Penal Code, the “commercial scale” distinction in the 2015 Penal Code continues to constitute a basic crime of intellectual property infringement[7], but there has been a change in the manner in which it is regulated. This indication of culpability is only one of the indications for intellectual property infringement crimes. However,  the 2015 Penal Code concretizes the sign of “commercial scale” by specifically describing the quantitative level of “amount of ill-gotten gains” “value of damages to rights holders” or “value of infringing goods”.[8] Therefore, it is unnecessary to retain the distinction or label of “commercial scale” as an indication of the guilt of this crime. Currently, there is no document explaining nor offering guidance on what is “commercial scale”. Therefore, according to the author of the Penal Code, the distinction of “commercial scale” should be omitted in Articles 225 and 226.

2. Problems in regulations on indications of guilt against commercial legal entities guilty of infringement of industrial property rights (Article 226 of the 2015 Penal Code)

Similar to the case of determining that a commercial legal entity is criminally liable for the crime of infringement of copyright or related rights, for the case of a commercial legal entity being criminally liable for the crime of infringement of industrial property rights, this entity in addition to satisfying 4 conditions for criminal liability for crimes in general (Clause 1, Article 75 of the Penal Code in  2015) must also satisfy the indications of culpability for the crime of infringement of industrial property rights (Clause 1, Article 226 of the 2015 Penal Code).

Article 226 of the 2015 Penal Code provides for a separate clause on quantitative indications – indications of culpability to apply to commercial legal entities (Clause 4, Article 226  of the Penal Code).

Objective acts of crime are acts of infringement of industrial property rights to trademarks or geographical indications currently being protected in Vietnam, objects that are counterfeit trademarks or geographical indications. According to the 2005 Law on Intellectual Property, industrial property rights to trademarks and geographical indications are considered to be protected in Vietnam if industrial property rights to such trademarks and geographical indications are established based on decisions on granting protection certificates by competent state agencies according to procedures registered by the provisions of the 2005 Law on Intellectual Property or recognized international registration under treaties to which Vietnam is a contracting party. Particularly for famous trademarks, industrial property rights to famous trademarks are established based on use, regardless of registration procedures[9]. The scope of acts of infringement of industrial property rights to trademarks or geographical indications is specified in Article 129 of the Law on Intellectual Property. For example, using a sign identical to a protected trademark for goods or services similar to or related to goods or services on the list of registrations attached to such trademarks, if the use is likely to confuse the origin of goods and/or services; or use protected geographical indications for products that originate from geographical areas bearing geographical indications, but such products do not meet the standards of specific properties and qualities of products bearing geographical indications.

An act of infringing industrial property rights to a trademark or geographical indication being protected in Vietnam is only considered a crime if it is carried out on a commercial scale or makes ill-gotten profits from VND 200 million to less than VND 300 million or causes damage to the owner of a trademark or geographical indication from VND 300 million to less VND 500 million or infringing goods worth from VND 300 million to less than VND 500 million; earns profits from VND 100 million to less than VND 200 million or causes damage to owners of trademarks or geographical indications from VND 100 million to less than VND 300 million or infringing goods worth from VND 100 million to less than VND 300 million but have been administratively sanctioned for this act or have been convicted of this crime, has not had their conviction cleared but also violated.

Research on the signs of guilt applied to the crime of infringement of industrial property rights shows that Clause 1, Article 226 has 2 inadequacies similar to the crime of infringement of copyright and related rights (Clause 1, Article 225). Therefore, for this crime, the author proposes that the 2015 Penal Code should provide for uniform quantitative levels for criminal handling of individuals and commercial legal entities committing crimes, not to accommodate     2 different quantitative levels of the same act in the guilty indication of a specific crime,  At the same time, the phrase “commercial scale” should be removed from the guilty indication criteria of this crime, because in fact, its connotation has been concretized in Clause 1, Article 226 of the 2015 Penal Code.

3. Some other problems

As mentioned above, the lawmaker has concretized quantitative signs in constituting basic crimes of intellectual property infringement in 03 cases: 1) Ill-gotten gains; 2) The value of infringing goods; 3) Damage to the right holder. However, even with the concretized signs of guilt in one of the three aforementioned cases, in some cases of serious infringement of intellectual property, authorities still face difficulties in identifying quantitative signs for criminal penalties, concrete instances:

First, on signs of ill-gotten gains. The main starting profit is earned from advertising revenue that other businesses pay for through posting their ads on their website. Most of the time, the advertising fee for the website is done through international intermediary payment services such as PayPal, and Skrill.      Many international payment services based abroad such as PayPal currently have their headquarters located in Silicon Valley, San Jose, California USA. It is difficult to access documents to prove ill-gotten gains in these cases.

Secondly, on damage to rights holders. Material damage under Article 204 of the 2005 Law on Intellectual Property includes losses of property, loss of income, profits, losses of business opportunities, and reasonable costs to prevent and remedy damages. According to the current law, if one wants to take criminal action, they must prove the damage to the property owner. But at present, there are no guidelines on how to calculate damages to web movies without permission from rights holders. From the above analysis, the author recommends that the Council of Judges of the Supreme People’s Court soon provide guidance on how to identify and evaluate signs of “amount of ill-gotten gains” or “value of damages to rights holders” or “value of infringing goods” for some cases involving problems as analyzed above. Based on these guidelines, the procedural authority has sufficient legal grounds to determine charges and decide on the correct penalties for crimes of infringement of intellectual property rights.

On the condition of criminal liability of a legal entity – the fourth condition (the statute of limitations for prosecution of criminal liability has not expired). The provision of the statute of limitations for examination of criminal liability for offenses committed in the name of a commercial legal entity still encounters problems, leading to difficulties in the criminal handling of commercial legal entities in practice, because the provisions of the law on the statute of limitations for criminal liability are related to the law on classification of crimes (Clause 2, Article 27 of the Ministry Criminal Law 2015)[10]. According to  Article 9 of the Penal Code, the classification of crimes committed by commercial legal entities shall comply with the provisions on the classification of crimes committed by individuals in Clause 1, Article 9 of the  Penal Code. As can be seen, the basis for classifying crimes is based on the highest level of the penalty frame. The problem is that for a commercial entity committing a crime, the classification of crimes will be problematic if a legal entity is subjected to a penalty frame that provides for a definite suspension of operation or permanent suspension of operation[11] because this type of punishment is not provided for in Article 9 as a basis for classifying crimes. As a result, it leads to problems in the application of the law to calculate the statute of limitations for criminal prosecution of commercial legal entities committing crimes. If violations of a commercial legal entity are detected in a timely manner , i.e. not for too long a duration from the time of violation, the above inadequacy does not arise, because then it is not necessary to determine whether the violation of the legal entity still has a statute of limitations for criminal prosecution. Thus, it can be said that this is an inadequacy of the Criminal Code when regulating conditions for criminal liability of commercial legal entities. Therefore, the author finds that the pertinent authority should soon issue guidance on this issue.

[1] Court Academy Instructor

[2] Clause 2, Article 13 of the Law on Intellectual Property 2005

[3] Clause 2, Article 17 of the Law on Intellectual Property 2005

[4] Prof. Dr. Nguyen Ngoc Hoa, Monograph “Crime and Constituent Crime”, People’s Police Publishing House 2005, p.113.

[5] Prof. Dr. Nguyen Ngoc Hoa (Ed.), Monograph “Criminal liability of commercial legal entities – Perception needs consistency?”, Judicial Publishing House, 2020, p.31.

[6] Prof. Dr. Le Cham, “On provisions relating to criminal liability of legal entities in the General Part of the Penal Code 2015”. Procuratorial Journal, No. 22/2016

[7] Article 225 of the Penal Code 2015 stipulates: “Any person without permission of copyright or related rights holders who intentionally commits one of the following acts, infringes upon copyright or related rights being protected in Vietnam on a commercial scale or makes ill-gotten profits from VND 50,000,000 to less than VND 300,000,000 or causes damage to copyright holders,  related rights from VND 100,000,000 to less than VND 500,000,000 or infringing goods worth from VND 100,000,000 to less than VND 500,000,000, market ….. Article 226 of the Penal Code 2015 stipulates: “Any person who intentionally infringes upon industrial property rights to trademarks or geographical indications being protected in Vietnam whose subjects are counterfeit goods with trademarks or geographical indications on a commercial scale or make ill-gotten profits from VND 100,000,000 to less than VND 300,000,000 or cause damage to personal owners signs or geographical indications from VND 200,000,000 to less than VND 500,000,000 or infringing goods worth from VND 200,000,000 to less than VND 500,000,000, then…”.

[8] See also: wto.org

[9] Clause 3, Article 6 of the 2005 Law on Intellectual Property

[10] Clause 2, Article 9 of the Penal Code stipulates: “Crimes committed by commercial legal entities shall be classified based on the nature and degree of danger to society of the offense as prescribed in Clause 1 of this Article and corresponding provisions for crimes specified in Article 76 of this Code.”

[11] For example, Clause 6 of Article 188 of the Penal Code stipulates criminal liability for commercial legal entities as follows:

d) Committing an offense specified in Clause 4. This shall be fined from VND 7,000,000,000 to VND 15,000,000,000 or suspended from operation for a period of from 06 months to 03 years;

đ) Having committed an offense specified in Article 79 of this Code, its operation shall be permanently suspended….”