Fighting Trademark Squatters in Vietnam: Bad Faith Under Circular 23 and Article 96

Trade mark squatting has long been one of the most serious brand-protection challenges in Vietnam. The country’s strict first-to-file system created fertile ground for opportunistic filers who registered well-known foreign marks with no intention of genuine commercial use, then demanded payment from the legitimate owners or blocked their market entry. The 2022 amendments to the IP Law and the subsequent Circular 23/2023/TT-BKHCN have, for the first time, given trade mark owners a dedicated legal weapon to fight back: bad faith as an independent ground for refusal and invalidation.

The New Legal Framework

Article 96.1(a): Invalidation on Bad Faith Grounds

Under Article 96.1(a) of the amended IP Law, a registered trade mark may be completely invalidated if the applicant filed the application in bad faith. This is a new ground for cancellation that did not exist under the previous IP Law. Before 2022, the only reference to dishonesty was a brief mention of “dishonesty by the applicant” in the context of limitation periods for invalidation — and it was not an independent basis for action.

Article 117.1(b): Refusal During Examination

Bad faith is also available as a ground for refusing protection during the examination process. If IP Vietnam determines, during the substantive examination of a pending application, that it was filed in bad faith, the application may be refused outright.

Circular 23, Article 34: The Two-Part Test

Circular 23, issued by the Ministry of Science and Technology, provides the detailed guidance on how bad faith is assessed. Under Article 34 of Circular 23, an applicant is considered to have acted in bad faith if the evidence simultaneously satisfies two conditions:

1. Knowledge: At the time of filing, the applicant knew or had a basis to know that the trade mark they applied for is identical or similar to another party’s mark that is widely used in Vietnam or recognised as well-known in other countries, for identical or similar goods or services.
2. Dishonest intent: The applicant filed the application with the intention of exploiting the goodwill of the existing mark, obstructing the legitimate owner’s market access, or creating leverage for resale of the registration.

Both conditions must be met. Knowledge alone is not sufficient; there must also be evidence of dishonest purpose. Conversely, dishonest intent without evidence that the applicant knew of the prior mark will not satisfy the test.

Evidence of Knowledge

To establish that the applicant “knew or had a basis to know” about the prior mark, the claimant typically submits evidence such as:

• Business relationships: Sales contracts, agency agreements, distribution arrangements, correspondence, or other documentation showing a prior commercial relationship between the parties.
• Industry presence: Evidence that the prior mark was widely visible in the relevant industry in Vietnam, such that any participant in that sector would have been aware of it.
• Online visibility: Evidence that the prior mark had a substantial online presence accessible from Vietnam, including websites, social media, and e-commerce platforms.
• International recognition: Evidence that the mark was recognised as well-known in other countries, making it implausible that the applicant was unaware of it.

Evidence of Dishonest Intent

Proving intent is inherently more difficult, but the following patterns are commonly cited:

• Pattern of filings: The applicant has filed applications for multiple marks belonging to different foreign brand owners, suggesting a systematic squatting strategy rather than coincidental similarity.
• Demand for payment: The applicant has contacted the legitimate owner to offer assignment of the registration for a fee.
• No commercial use: The applicant has not used the mark in connection with any genuine commercial activity.
• Blocking behaviour: The applicant has used the registration to threaten or block the legitimate owner’s market entry.

Procedural Pathways

Bad faith can be invoked at three stages:

• Opposition: During the five-month opposition period following publication of a trade mark application, any third party may file an opposition on bad faith grounds.
• Third-party observation: Even after the opposition period, a third party may submit observations to IP Vietnam at any time before the mark is granted, citing bad faith as a concern.
• Invalidation: After registration, the legitimate owner may file an invalidation request with IP Vietnam under Article 96.1(a). Notably, the limitation period for invalidation on bad faith grounds applies “throughout the entire validity period” of the registration — there is no time bar.

Current Practice

It is important to note that the bad faith provisions are relatively new, and IP Vietnam’s practice is still developing. As of early 2025, IP Vietnam’s examiners have reported an increasing volume of opposition and invalidation requests based on bad faith, accompanied by substantial supporting documentation. However, the complexity of these cases and significant backlogs mean that precedent is still being established. The assessment remains case-by-case, and outcomes are not yet fully predictable.

Strategic Recommendations

• File your marks in Vietnam before entering the market: Prevention remains more effective than cure. The first-to-file system means that the best defence against squatters is to register before they do.
• Monitor IP Vietnam’s database: Watch for third-party filings of marks identical or similar to yours. The five-month opposition window is your first line of defence.
• Preserve evidence of prior use and relationships: If you discover a squatter, gather all evidence of your mark’s use and recognition in Vietnam, any business relationship with the applicant, and any pattern of squatting behaviour.
• Act promptly: While there is no time bar for bad faith invalidation, the longer a squatter’s registration remains on the register, the more entrenched their position becomes.

Key Takeaway

The 2022 IP Law amendments and Circular 23 have given Vietnam a dedicated legal framework for combating trade mark squatting. The two-part test — knowledge plus dishonest intent — provides a structured basis for opposing or invalidating bad faith registrations. However, the evidentiary burden falls on the legitimate owner, and the most effective strategy remains proactive filing to prevent squatting from occurring in the first place.