Manufacturing and trading counterfeit goods in Vietnam have become a thorny issue that is one of the top concerns of the public and authorities at all levels. However, in reality, to bring a case to trial under the jurisdiction of the Vietnamese Criminal Code, there are difficulties for the police agency owing to the requirements regarding the constituents of the crime. The following is one of the typical cases that has been investigated and tried by competent state agencies.
1. Summary of the initial processing of the case
At 13:45 on September 10, 2020, Police in Vinh Phuc province, Vietnam detected three large cartons containing 1,080 boxes of cosmetics with the trademark “ESSENCE PEPTIDE” in a truck driven by Vo Van Ly. Mr. Ly could not provide invoices, nor the proof of origin of the goods and admitted that they were counterfeit cosmetics that were being transported to Hanoi for consumption, manufactured by his sister, Lam Thi Nhung.
The police subsequently raided Mr. Ly and Ms. Nhung’s houses and confiscated hundreds of cartons containing nearly 16,000 boxes of finished cosmetics with different trademarks.
In addition, the police agency also confiscated thousands of unfinished plastic bottles of cosmetics. On the same day, they searched Ms. Nhung’s storehouse and place of manufacture, where they found hidden items and instruments, and confiscated a used metal mixer, a black electronic scale as well as a variety of liquids, solutions, and powders used for producing counterfeit cosmetics that were stored in plastic bags, drums, plastic containers and plastic cans, …
2. Further investigation
Further investigation revealed that since 2018, due to trading in cosmetics on social networks, Ms. Nhung knew cosmetic protected trademarks such as Mask Milk Cream, Night cream, Detox Mask, and Essence Peptides that are popular with many consumers. As a result, she decided to manufacture counterfeit cosmetics of the above trademarks for the sake of profit.
To carry out the crime, apart from ordering cosmetic premixed ingredients, bottles, boxes, and labels with pre-printed names of the above cosmetic trademarks, Ms. Nhung also bought some genuine cosmetic products for copying the branding. Besides that, she hired 16 people in total to support the production of fake cosmetics, including Mr. Ly, who is the only other person who knew the truth behind this crime. After purchasing pre-mixed ingredients, bottles, and boxes with pre-printed trademarks, she instructed employees to pour cosmetic solutions into bottles, boxes and label them.
By the end of June 2020, to maximize profits, Ms. Nhung ordered an electric cosmetic mixer machine and ingredients to produce counterfeit items herself. Since the finished products were not as expected, Ms. Nhung bought pre-mixed solutions to fill and pack fake cosmeticsthen posted these products on social networks for sale at a much lower price than the genuine ones.
As mentioned earlier, on September 10, 2020, Mr. Ly was arrested when he was delivering fake cosmetics at Ms. Nhung’s request.
The investigation determined that the owners of the above cosmetic trademarks did not authorize nor license Nhung to manufacture, pack, and trade products bearing their trademarks.
According to the results of the Panel of Valuation in the Criminal Procedure Law, the value of total number of 16,000 boxes of fake cosmetics was worth over VND 1.3 billion (approximately US$ 56,522).
3. Trial
3.1. The People’s Procuracy’s standpoints
According to charge No. 78/CT-VKS-P1, dated October 22, 2021, the People’s Procuracy of Vinh Phuc province prosecuted Ms. Nhung and Mr. Ly for “Manufacturing and trading counterfeit goods” according to Article 192.3.a of the Criminal Code. Considering the nature and severity of acts against society, personal records, and roles of defendants in crimes, aggravating factors or mitigating criminal liabilities, the Procuracy recommended the following to the Trial Panel:
– Sentencing Defendant Lam Thi Nhung from five to six years in prison, confiscating VND 30,000,000 (approximately US$ 1,304) from the commission received from the crime, fining her VND 20.000.000 to 30.000.000 (approximately US$ 870 to US$ 1,304) and prohibiting her from carrying out works related to cosmetics for one to two years after the end of her imprisonment;
– Sentencing Defendant Vo Van Ly to two and a half to three years of suspended imprisonment and a probation period of 05 five years;
– Confiscating and destroying all the counterfeit cosmetics and ingredients used for manufacturing counterfeit cosmetics;
– Expropriating a used metal mixer and a black electronic scale.
3.2. The Trial panel’s standpoints
The Court considered that activities of criminal procedures instituted by police and prosecutors are legitimate; the acts of Ms.Nhung and Mr. Ly constituted “Manufacturing counterfeit goods” under Article 192.3.a of the Criminal Code. The defendants were accountable for committing dangerous acts against society, public order, infringing on the State’s market surveillance policy as well as producers’ and consumers’ legitimate rights and interests, causing public condemnation and discontent.
3.3. The Trial panel’s judgments
From the above standpoints, along with the consideration of the factors regarding aggravating or mitigating criminal liabilities and personal records of the defendants, in a judgment No. 05/2022/HS-ST dated January 21, 2022, The People’s Court of Vinh Phuc province determined the defendants to be guilty of “Manufacturing counterfeit goods” under Article 192.3.a of the Criminal Code. Accordingly, penalties for each defendant are as follows:
– Sentencing Defendant Lam Thi Nhung to five years in prison, the imprisonment duration beginning from the day on which the defendant was kept in temporary detention; confiscating VND 30.000.000 (approximately US$ 1,304) from the commission received from the crime; fines of VND 50.000.000 (approximately US$ 2,174); prohibition from carrying out works related to cosmetics for one year after the end of the imprisonment;
– Sentencing Defendant Vo VAn Ly to two years and nine months of suspended imprisonment and a probation period of five years following the imprisonment; confiscating VND 10.000.000 (approximately US$ 435) from the commission received from the crime; being supervised and educated by the People’s Committee of the local commune, Phuc Yen city, Vinh Phuc province during the probation period;
– Confiscating and destroying all the counterfeit cosmetics and ingredients used for manufacturing counterfeit cosmetics;
– Expropriating a used metal mixer and a black electronic scale.
4. Evaluation and Remarks
4.1. Constituent factors of “Manufacturing and trading of counterfeit goods”
Article 192.3.a of the Vietnamese Criminal Code:
“3. This offense committed in any of the following cases shall carry a penalty of seven to fifteen years imprisonment:
a) Where the production cost of counterfeit goods is VND 100,000,000 (approximately US$ 4,348) or over”
Article 192.3.a of the Criminal Code only states circumstances for determination of a criminal offense or the punishment range for this crime, but it does not specify what the constituent factors of this crime should be. Similar to other crimes, the factors constituting “Manufacturing and trading counterfeit goods” includes the objective element, the subjective element, the physical element, and the mental element provided in the Court’s guiding documents. For the crime in Article 192.3.a, the constituent elements of the crime are specified as follows:
– The objective element
“Manufacturing and trading counterfeit goods” infringe on the State’s market surveillance policy, manufacturers’ and consumers’ legitimate rights. The subject of this crime is “counterfeit goods”, including goods whose trademarks are forged;
– The physical element
The objective side of this crime includes the acts as follows: (1) manufacturing counterfeit goods including making, prepressing, printing, ordering, preliminarily processing, processing, extracting, recycling, assembling, mixing, portioning, dividing, filling, packing, and other actions aiming to produce counterfeit goods; (2) trading counterfeit goods including one, some, or all actions of offering, displaying, storing, maintaining, transporting, wholesaling, retailing, exporting, importing and other actions aiming to sell goods on the market. If, however, the traders did not know that the goods that they are trading are fake, that would not constitute this crime.
– The subjective element
This crime is committed by a person of 16 years of age and above who has a criminal capacity or a legal entity that meets the conditions for criminal liability.
– The mental element
This is a case of deliberate intent to a crime. The offender is aware of the danger to society due to the manufacturing and trading of counterfeit goods, but nevertheless knowingly committed such acts for self-seeking purposes.
4.2. Practical difficulties of investigation agencies when proving the crime of manufacturing and trading counterfeit goods in Vietnam
In fact, proving that the offenders are “aware of” counterfeit goods that they are manufacturing and trading, but committing such acts for self-seeking purposes, or not, is one of the most difficult tasks for the authorities. In case police authorities cannot prove the direct intentional fault of the offenders, cases are usually handled according to administrative remedies. This is the reason why the production and trading of counterfeit goods in Vietnam are generally handled by administrative measures rather than criminal measures. Going back to the above Ms. Nhung’s case, she is considered the mastermind of the case through the acts of preparing, organizing, and gaining from illicit profits. The 16 people who participated in making fake goods for her were unaware of their counterfeiting behavior, so they were not prosecuted for criminal responsibility. Mr. Ly is well aware of Ms. Nhung’s act of counterfeiting but still participated, thus he is considered an accomplice and must be prosecuted for criminal responsibility.
The case summarized in the judgment No. 05/2022/HS-ST dated January 21, 2022, started with the event on September 10, 2020, when the Police of Phuc Yen city searched Mr. Ly’s truck. However, in fact, before that date, the investigation agency had carried out the initial investigation, collected evidence in order to have legal grounds to search the defendants’ truck, and raid houses and storehouse on the same day, as well as prevented the defendants’ uncooperative behavior, refusal to give testimony or redirected his testimony to accidentally transporting fake goods without knowing it was fake, which would have led to the case only being handled by administrative measures.
The anti-counterfeiting activities in fact show that the handling of crime of manufacturing and trading counterfeit goods in Vietnam has been facing many difficulties, especially in proving the intentional fault of the offenders. Besides, crimes are increasingly more complicated and the lack of active prevention by the violated trademark owner stems from the fear of losing time and money to sue and denounce illegal acts.
Each and every day, Vietnam’s market management authorities detect an increasing number of cases related to counterfeiting and piracy, but only an insignificant number of cases are ever brought to court. In addition, administrative sanctions are not enough of a deterrent. It is necessary to refine the legal system regarding the crime of manufacturing and trading counterfeit goods in Vietnam, as well as raise trademark owners’ and consumers’ awareness and responsibility in fighting counterfeit goods, in order to better prevent and reduce trade fraud, intellectual property infringement and contribute to the stability, reform and development of the Vietnam market economy.
