It is necessary to set appropriate limits in the protection of trade names

For many years, the first-to-file principle has been considered the pillar of the trademark protection system in Vietnam. This principle brings transparency, simplicity and high predictability to business entities: whoever applies first, if the protection conditions are fully met, will be entitled to the establishment of rights. However, the practice of resolving trademark disputes increasingly shows that this principle no longer operates in isolation. In parallel with registered trademarks, trade names – an object of rights that do not need to be registered – are playing an increasingly important role, even potentially undermining the ability of the dossiers under examination to be granted trademarks.

The practice of resolving trademark disputes increasingly shows that this principle no longer operates in isolation.

The core issue is not whether trade name protection is right or wrong, but rather that: In the context of trade names being used more and more widely as a mark attached to products, packaging, advertising, and marketing activities – i.e., operating as a de facto trademark – whether the law should continue to protect trade names with Wide scope without imposing proportionate legal limits?

Principles of first filing and "exceptions" from trade names

Vietnam's Intellectual Property Law clearly establishes the principle of filing the first application for a trademark. According to Article 90 of the Law on Intellectual Property 2005 (amended and supplemented in 2022),[1] the right to register a trademark belongs to the organization or individual that files the first valid application. This regulation reflects the spirit of the registration system: the right is established through administrative procedures, publicly and searchably.

However, at the same time, the Intellectual Property Law designed a parallel protection mechanism for trade names. Clause 2, Article 74 of the Intellectual Property Law stipulates that a trademark is considered indistinguishable if it is identical or similar to another person's trade name that has been used before, in case the use of the trademark may cause confusion about the business entity. In addition, Article 129.1(d) of the Intellectual Property Law also considers the use of a sign that is identical or similar to another person's trade name, causing confusion about the business entity, is an act of infringing on intellectual property rights.

Thus, structurally, Vietnamese law has acknowledged that trade names that have been used first may create legal barriers to trademarks registered later. The problem arises that, unlike trademarks, trade names do not need to be registered for intellectual property, do not have a centralized database on intellectual property, and are not subject to the appraisal of distinguishability before being used. This means that the principle of first filing, although existing in legal documents, can still be significantly affected in practice.

Trade names that operate as trademarks: the gap of the legal mechanism

Theoretically, a trade name is a sign used to distinguish business entities from each other in the same business field and area. However, in the modern market economy, trade names rarely exist only on business registration licenses. In fact, trade names are often printed directly on products, appearing in advertisements, websites, social media, and marketing campaigns. At that time, for consumers, trade names are no longer just a sign of business identification, but become a sign of identity of goods and services, in accordance with the core function of the trademark.

In many cases, a trade name is invoked as a "prior right" to object or request trademark cancellation, even though the subject using the trade name has never carried out trademark registration procedures. This creates a legal paradox that trademarks must meet strict standards for distinguishability, duplicate searches, and classification of goods, while trade names, while in practical use as trademarks, are not subject to equivalent standards.

The case involving the TONGFANG trademark is a typical illustration[2]. In this case, the pre-use element of a trade name associated with an enterprise was invoked to oppose the registration of a trademark in Vietnam by another enterprise. Although it does not go into every detail of the case, the TONGFANG dispute shows a clear trend: trade names, if proven to have been used first and have a certain level of recognition, can become a barrier to trademark registration, despite the first-filing principle.

The United States clearly defines the functions of trade names and trademarks

The United States is often considered the epitome of the first-to-use system. However, it is worth noting that US law makes a clear distinction between trade names and trademarks.

Under 15 U.S.C. §1127 (Lanham Act),[3] a trademark is defined as any word, name, symbol, or device used in commerce to identify and distinguish one entity's goods from another's. The right to a mark arises from the use of such mark to distinguish goods and services in trade.

Meanwhile, trade names are mainly protected through unfair competition regulations. U.S. law does not implicitly consider the use of a business name to create trademark rights. Only when a trade name is used in a way that makes consumers identify it as a sign of the origin of goods or services, can it be protected as a trademark.

This approach presents an important limitation: a trade name does not automatically become a trademark if it does not meet the distinctive function in commerce. This is a mechanism to help prevent trade names from being used to evade legal requirements for trademarks.

European Union protects trade names but sets clear thresholds

The European Union applies a first-to-file model for trademarks, similar to Vietnam. However, EU law sets clearer limits on the invocation of trade names.

According to Article 8(4) The European Union Trademark Regulation (EU) 2017/1001[4]), an application for registration of an EU trademark may be challenged on the basis of a previously unregistered right, including a trade name, if, under the respective national law, that right gives the subject the ability to prohibit the use of a later registered trademark. In other words, not every trade name can be used to hinder trademark registration; Only trade names that have reached a certain level of commercial use and protection are recognized.

Source: the Journal of Intellectual Property and Innovation

In addition, the EU strongly develops the doctrine of bad faith registration. Article 59(1)(b) of the European Union Trademark Regulation (EU) 2017/1001 allows for the invalidation of a trademark if it can be proven that the applicant had bad faith at the time of filing, in particular when they knew of the existence and prior use of another mark on the market (which may include a trade name). This mechanism allows the EU to strike a balance between protecting registered trademarks and preventing counterfeiting and confusing trade names, without infinitely expanding the scope of protection of trade names.

Is it necessary to set a limit on trade names in Vietnam?

Compared with the above-mentioned legal systems, it can be seen that Vietnam is protecting trade names in a relatively broad way, while not establishing clear enough criteria and limits. This leads to three main consequences.

Firstly, this reduces the predictability of trademark registration. Specifically, applicants, even after fully searching the trademark database, may still face legal risks from undisclosed trade names.

Secondly, not limiting the scope of trade name protection can create an incentive to avoid trademark registration. Business entities can choose to only use the actual trade name, but still expect to enjoy the same level of protection as the trademark.

Third, the failure to set a clear boundary between trademark and trade name protection may increase disputes and compliance costs, as the boundary between trade names and trademarks is currently not defined by clear quantitative legal criteria.

From international experience, the author believes that some orientations can be drawn for Vietnam related to the restriction of trade name protection, specifically:

First of all, it is necessary to clearly define the criteria for a trade name to be invoked in a trademark dispute, including the actual level of use (continuous use time, frequency and scale of transactions, revenue associated with the trade name,...), geographical scope of use (clearly defining the business area (local,  regional, or nationwide), do not implicitly infer the nationwide scope just from business registration,...) and the ability of consumers to identify (whether the trade name is used as a sign to identify goods/services, the degree of cohesion between the sign and the commercial origin in the perception of customers,...).

Second, when a trade name is used as a trademark, the law should encourage or require trademark registration to maintain long-term priority rights.

The conflict between trademarks and trade names reflects the tension between the formality of the intellectual property protection system and the dynamic practices of the market. The principle of first filing still needs to be maintained as the pillar of the trademark protection system, but it cannot operate effectively if the trade name is given a wide scope of protection without commensurate legal limitations. The establishment of reasonable limits on trade names, based on international experience and domestic practice, is a necessary step to ensure a balance between trade fairness and legal stability of Vietnam's intellectual property system.

Lawyer Nguyen Nhat Duong

HM&P Law Firm

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