RECOMMENDATION on Adding Guidelines for Determining "Bad Faith Filing” into the Circular Implementing the IP Law

The Intellectual Property Law now includes "bad faith" as a ground for refusing trademark registration. This critical mechanism counters trademark piracy, squatting (targeting partners or prior users), hoarding, and registrations intended to obstruct legitimate businesses.

However, "bad faith" is inherently subjective. Without uniform assessment criteria, its application risks being either too restrictive—diminishing its efficacy—or too broad, erroneously equating mere "prior knowledge of another's mark" with bad faith.

Therefore, we propose introducing a dedicated article on bad faith registrations into the Circular, alongside examination guidelines and model cases to ensure consistent enforcement.

I. Proposed Principles

a) Comprehensive Assessment: Bad faith must be determined through a global assessment of all relevant objective factors at the time of filing. No single circumstance alone automatically establishes bad faith.

b) Prior Knowledge vs. Bad Faith: The applicant’s actual or constructive knowledge of another party's mark is merely one factor and does not per se constitute bad faith. Additional evidence is required to prove an intent to usurp, obstruct, exploit, pressure, hoard, or obtain an unfair advantage.

c) Status of the Pre-existing Mark: The targeted mark need not be well-known, registered, or fully protected in Vietnam. Its legal status, scope of use, and degree of recognition are simply factors within the overall assessment.

d) Relevant Timeframe: Bad faith is assessed as of the filing date. Conduct prior to or subsequent to this date may serve as evidence to infer the applicant’s intent at the time of filing.

e) No Proof of Actual Injury Required: It is unnecessary to prove that actual damage was caused or that actual benefits were derived from the registration.

II. Draft Proposal for Additional Provisions to the Circular

Article ... Bad Faith Trademark Applications

1. A trademark application shall be deemed to be made in bad faith under Article 117(1)(b) of the Intellectual Property Law if, based on relevant objective circumstances at the filing date, there are sufficient grounds to establish that the applicant:

(a) Knew or had reasonable grounds to know of another person's prior rights, legitimate interests, or prior use of the sign, and filed the application to misappropriate, prevent, cause detriment to, or take unfair advantage of such rights, interests, reputation, or investment; or

(b) Devoid of a specific target, used the trademark registration procedure contrary to its purpose and function to obtain an unfair advantage or obstruct the legitimate trade of others.

2.       The determination of bad faith shall be based on an overall assessment of all relevant circumstances of the case. No single factor provided for in this Article shall per se be sufficient to conclude the existence of bad faith.

3.       In assessing whether the applicant knew or had reasonable grounds to know of another person's sign, one or more of the following factors may be considered:

(a) A current or former relationship between the applicant and the prior user of the sign, including agency, representation, distribution, manufacturing, supply, cooperation, joint venture, employment, consulting, or other commercial relationships;

(b) The applicant’s participation in negotiations, exchanges, transactions, or access to documents relating to the sign;

(c) The sign has been used for a substantial period or has a market presence that a person operating in the same business sector would normally be aware of;

(d) The sign has been registered, used, or promoted abroad, and circumstances indicate that the applicant actually knew or had reasonable grounds to know;

(e) The applied-for trademark is identical or highly similar to the prior sign, particularly featuring arbitrary, distinctive, or unusual elements that cannot be reasonably explained as coincidental;

(f)The applicant’s exposure to goods, services, websites, catalogues, trade fairs, advertisements, distribution networks, or other information sources relating to the prior sign;

(g) Other circumstances proving that the applicant actually knew or, under the specific circumstances, could not reasonably be presumed to be unaware of the prior sign.

4. In assessing a dishonest purpose or intention, one or more of the following factors may be considered:

(a) Filing the application to misappropriate a trademark, sign, or business goodwill established by another person;

(b) Filing the application to prevent a person who is legitimately using the sign from continuing such use or from seeking registration;

(c) Filing the application to compel the prior user to buy back, accept a transfer of, license, or pay remuneration for the sign;

(d) Filing the application to take advantage of the goodwill, reputation, commercial value, or customer-attracting power of another person's sign;

(e) Filing a stockpile of applications for trademarks or signs of multiple different entities without demonstrating a legitimate commercial purpose;

(f) Filing the application for a trademark of a partner, manufacturer, supplier, franchisor, subcontractor, or any person with whom the applicant has a business relationship, without authorization;

(g) Filing the application to establish grounds for blocking goods, requesting enforcement actions, exerting commercial pressure, or restricting the legitimate business activities of another person;

(h) Filing the application without an intention to use the trademark in accordance with its function of indicating commercial origin, but primarily to obtain an exclusive right for speculation, extortion, or gaining an unfair advantage;

(i) Concealing or providing untruthful information, or engaging in other conducts related to the filing that demonstrate a purpose of misappropriation or taking unfair advantage;

(j) Other circumstances indicating that the purpose of the application is contrary to the principles of honesty and fair commercial practices. 

5. The following circumstances, if taken in isolation, shall not be sufficient to conclude the existence of bad faith:

(a) The applicant’s actual or constructive knowledge that another person is using an identical or similar sign;

(b) The sign is similar to a sign being used or registered abroad;

(c) The applicant has not used the trademark at the time of filing;

(d) The specification of goods and services is broad in scope;

(e) The applicant holds multiple trademark applications;

(f)  A commercial dispute exists between the parties.

(g) Another person has used the sign priorly but has not established rights over that sign;

(h) The trademark is identical or similar to another person's sign, but the applicant demonstrates an independent creation or a legitimate commercial reason for choosing the sign. 

6. The person opposing, requesting invalidation, or asserting that the application was filed in bad faith shall bear the burden of providing initial documents, evidence, or arguments establishing a reasonable suspicion of bad faith. Once the evidence and objective circumstances form a consistent set of indicators sufficient to raise a rebuttable presumption, the applicant or the right holder shall be responsible for providing a reasonable explanation and documentation regarding the origin of the trademark, the reasons for its selection, and the commercial purpose of the registration. The failure to provide a reasonable explanation shall not per se be the sole ground for determining bad faith, but may be considered in conjunction with other evidence.

7. Bad faith shall be determined as of the filing date. Conducts occurring prior to or subsequent to the filing date may be used as evidence to establish the intention at the time of filing. 

8.  The determination of a bad faith application shall not depend on whether the other person's sign is a well-known trademark, has been registered, or fully satisfies the protection criteria in Vietnam. The legal status, scope of use, and degree of recognition are factors to be considered in the overall assessment.

9. It shall not be required to prove that the applicant has caused actual damage or has derived actual benefit from the registration.

10. Where bad faith is established only in respect of a part of the goods or services, the refusal or invalidation shall apply only to that part, provided that the remaining part can exist independently and there is no evidence that bad faith encompasses the entire application.

III. Proposed Examination Methodology – “The Three-Step Assessment Criteria”

- Step 1 – Knowledge: Determine whether the applicant knew or had reasonable grounds to know of another entity's sign, rights, or legitimate interests.

- Step 2 – Dishonest Intention: Determine whether objective circumstances demonstrate a purpose of misappropriation, prevention, exploitation, extortion, speculation, or gaining an unfair advantage.

- Step 3 – Overall Assessment: Consider the totality of circumstances and evaluate whether the applicant provides a reasonable, consistent, and credible commercial explanation for the selection and registration of the trademark.

In addition to the above criteria, it is proposed to recognize an independent branch of "abuse of the trademark registration system". Under this branch, identifying a specific targeted entity is not mandatory if the filing pattern and circumstances indicate that the registration procedure is used primarily for speculation, extortion, or gaining an unfair advantage contrary to the function of trademark rights.

IV. Recommendations for Practical Guidelines

It is recommended that the Intellectual Property Office of Vietnam (IP Viet Nam) issue an Annex or Examination Guidelines on bad faith, accompanied by model case scenarios, including:

- Registration of trademarks by agents or distributors;

- Registration of trademarks by partners;

- Foreign trademarks unregistered in Vietnam;

- Copying of logos, packaging, or distinctive elements;

- Situations where the applicant "could not have been unaware";

- Mass registration of trademarks belonging to multiple entities;

- Registration for the purpose of reselling to the prior user;

- Registration to exert pressure or block goods;

- Cases with a legitimate commercial reason; and

- Cases involving only the "knowledge" factor without evidence of a dishonest purpose.

The development of model case scenarios will assist examiners and relevant parties in predicting the application of the law, while limiting subjective or inconsistent interpretation of the concept of "bad faith."

V. Conclusion

We respectfully recommend that the Intellectual Property Office of Vietnam consider incorporating specific provisions on "bad faith trademark applications" into the Circular with the following approach: avoiding a closed definition; applying an overall assessment of circumstances; clearly distinguishing the "knowledge" factor from "dishonest intention"; allowing intention to be inferred from objective evidence; and ensuring that this mechanism does not become an arbitrary ground for refusal.

The guiding formula may be summarized as follows:

BAD FAITH = Objective Circumstances + Knowledge + Dishonest Intention

or, in cases of systemic abuse:

BAD FAITH =  Objective Circumstances + Abuse of the Trademark Registration System

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PHAM & ASSOCIATES

Pham Vu Khanh Toan, Attorney-at-Law, registed IP Attorney
Managing Director