Decree creates database of trade names

Laws - Choosing a name is one of the most important steps in starting up a new business. When choosing a name, there are normally two main concerns: the meaning of the name and its availability for use. Since there are countless businesses in existence, it is a challenge to select a name which beneficially shapes the identity of a business while avoiding infringement of other trade names or trademarks.

In Viet Nam, where awareness of intellectual property rights remains relatively low, businesses have traditionally focused on the meaning and wording of a name, ignoring the need to ensure that it can legitimately be used. This has led to a number of infringements of trade names, both deliberate and accidental.

To counter this problem, the new Decree on Enterprise Registration, which took effect on June 1, provides that a company must not use a trade name, trademark or geographical indicator belonging to another entity as its company name.

Previously, a company was prohibited from using an identical or confusingly similar name only to one within the same city or province. The new decree has extended the geographical scope to cover the entire country, meaning that a business can no longer register a trade name in Ha Noi if the same trade name is already in use in HCM City.

Prior to the new decree, business registration offices within each city or province maintained separate company registration databases, with only Ha Noi, HCM City and Da Nang having online databases. In line with more developed jurisdictions, the new decree now provides for one comprehensive national company registration database.

Business registration offices will be responsible for uploading information on companies that have been granted business registration certificates. While this sounds workable, the database will take some time to compile, and it will have to be continually updated to ensure that there is no time lag between business registrations and subsequent searches.

Compiling the database will be made more complex by the need to include registrations from smaller or more remote provinces which may only have paper filing systems in place.

The resolution of trade name disputes in Viet Nam has historically been relatively difficult. The new decree seeks to address this problem.

The regulation of trade names is dealt with by two separate authorities: the Business Registration Authority (BRA) and the Enforcement Authority (EA).

Under the new decree, when a company is found to have infringed upon a third party’s trade name, mark or geographical indicator, the IP rights holder can request the BRA to issue a cease-and-desist order, requiring the infringer to change the name. If the infringer fails to comply within two months, the BRA will notify the relevant EA.

Despite this new regulation, the practical resolution of disputes is likely to remain challenging due to the possible need to work with two separate authorities, causing delays and an increased burden on the rights holder.

If found in breach, however, the infringing party will be held responsible under the law and will be compelled to change its name. A fine may also be imposed. The grounds for determining the breach will be in accordance with the Law on Intellectual Property.

The new decree therefore sends the message that,when choosing a company name, a business must take proactive steps to ensure that it does not infringe upon another entity’s rights.

Meanwhile, IP rights holders need to protect themselves by registering their trade names and trademarks. They should also conduct periodical company name searches to detect any infringements at an early stage so that disputes can be resolved more quickly and easily.