THE SITUATION OF MANUFACTURING AND TRADING IN COUNTERFEIT GOODS; DANGERS TO SOCIETY AND RELATED LEGAL SANCTIONS

I. What are counterfeit goods?

According to the provisions of Clause 7, Article 3 of Decree No. 98/2020/ND-CP dated August 26, 2020, which regulates administrative penalties for violations in commercial activities, production, trading of counterfeit goods, banned goods, and protection of consumer rights:

"7. "Counterfeit goods" include:

a) Goods with usage value, utility that do not conform to the natural origin, name of the goods; goods with no usage value, utility or with usage value, utility that do not conform to the usage value, utility that has been announced or registered;

b) Goods where at least one of the quality indicators or basic technical characteristics or the quantitative amount of the main substance creating the usage value, utility of the goods is only 70% or less compared to the minimum level specified in technical regulations or quality standards that have been registered, announced for application, or indicated on the label, packaging of the goods;

c) Counterfeit drugs as stipulated in Clause 33, Article 2 of the 2016 Law on Pharmacy and counterfeit medicinal ingredients as stipulated in Clause 34, Article 2 of the 2016 Law on Pharmacy;

d) Veterinary drugs, plant protection drugs without active ingredients; without sufficient types of registered active ingredients; with active ingredients different from those stated on the label, packaging of the goods; where at least one of the active ingredient contents is only 70% or less compared to the minimum level specified in technical regulations or quality standards that have been registered, announced for application;

đ) Goods with labels or packaging indicating false names, addresses of organizations or individuals manufacturing or importing, distributing goods; counterfeiting circulation registration codes, announcement codes, barcode numbers of the goods or counterfeiting packaging of other organizations or individuals; falsifying the origin, source of goods or the place of production, packaging, assembly of goods;

e) Counterfeit stamps, labels, packaging of goods."

Thus, goods are considered counterfeit in one of the following cases:

(i) Goods with usage value, utility that do not conform to the natural origin, name of the goods; goods with no usage value, utility or with usage value, utility that do not conform to the usage value, utility that has been announced or registered;

(ii) Goods where at least one of the quality indicators or basic technical characteristics or the quantitative amount of the main substance creating the usage value, utility of the goods is only 70% or less compared to the minimum level specified in technical regulations or quality standards that have been registered, announced for application, or indicated on the label, packaging of the goods;

(iii) Goods with labels or packaging indicating false names, addresses of organizations or individuals manufacturing or importing, distributing goods; counterfeiting circulation registration codes, announcement codes, barcode numbers of the goods or counterfeiting packaging of other organizations or individuals; falsifying the origin, source of goods or the place of production, packaging, assembly of goods;

(iv) Counterfeit stamps, labels, packaging of goods.

II. Current Situation of Manufacturing and Trading in Counterfeit Goods:

In recent years, the situation of producing and trading in counterfeit and pirated goods in Vietnam has become increasingly complex, with growing scale and sophistication. Counterfeit goods are not limited to fashion and cosmetics but have also spread to essential items such as food, medicines, medical equipment, electronic components, etc. Notable cases include the production of fake Kera vegetable candy, fake powdered milk, fake Nam Ngu fish sauce, and so on.

According to data from the National Steering Committee 389, in 2023, functional forces discovered and handled over 100,000 cases of violations related to smuggling, producing, and trading in counterfeit goods, collecting thousands of billions of Vietnamese Dong for the state budget. However, this figure is just the tip of the iceberg.

III. Dangers of Counterfeit Goods to Individuals and Society

Counterfeit goods seriously affect many aspects of social life:

For consumers: Counterfeit goods, especially pharmaceuticals, functional foods, and medical equipment, can cause serious harm to human health, well-being, and even life.

For the economy: Counterfeit goods distort the competitive environment, affect the reputation of legitimate businesses, and reduce consumer confidence in domestic products. Even when buying chicken eggs to eat, people are afraid of mistakenly buying fake chicken eggs; when buying rice, they are afraid of mistaking it for plastic grains...

For society: The production and trading of counterfeit goods are often linked to organized crime, creating an environment that fosters other illegal acts such as money laundering, tax evasion, bribery, etc.

IV. Legal Provisions on Handling the Production and Trading of Counterfeit Goods

Vietnamese law provides relatively comprehensive regulations to handle acts related to the production and trading of counterfeit goods, including:

The 2015 Penal Code (amended and supplemented in 2017):

• Article 192 stipulates the crime of "Producing and trading in counterfeit goods" with the highest penalty of up to 15 years in prison (Clause 3, Article 192).
• Article 193 stipulates the "Crime of producing and trading in counterfeit food, foodstuffs, food additives," with the highest penalty of up to 15 years in prison (Clause 3).
• Article 194 stipulates the "Crime of producing and trading in counterfeit curative drugs, preventive drugs," with the highest penalty of Life imprisonment or death penalty (Clause 4, Article 194).
• Article 195 stipulates the "Crime of producing and trading in counterfeit animal feed, fertilizers, veterinary drugs, plant protection drugs, plant varieties, animal breeds," with the highest penalty of up to 20 years in prison (Clause 4).

Law on Handling Administrative Violations: For acts that have not reached the level of criminal prosecution, violators may be fined from several million to hundreds of millions of Vietnamese Dong, have exhibits and means of violation confiscated, have business licenses revoked, be subject to suspension of operations, etc.

V. Some judgments on the crime of Producing and Trading in Counterfeit Goods:

1. Judgment No.: 227/2021/HS-ST dated November 16, 2021, of the People's Court of Ho Chi Minh City

• Penalty: Truong Chi T sentenced to 09 (nine) years in prison for the crime of "Producing and trading in counterfeit goods." The prison term is calculated from May 31, 2019. Additional penalty: the defendant Truong Chi T is compelled to pay the amount of VND 30,000,000 (thirty million dong) to the state budget.

• Penalty: Pham Thanh R sentenced to 07 (seven) years in prison for the crime of "Trading in counterfeit goods." The prison term is calculated from May 31, 2019. Additional penalty: the defendant Pham Thanh R is compelled to pay the amount of VND 20,000,000 (twenty million dong) to the state budget.
• Penalty: Tran Xuan N sentenced to 04 (four) years in prison for the crime of "Producing counterfeit goods." The prison term is calculated from May 29, 2019.
• Penalty: Nguyen Thi Le U sentenced to 03 (three) years and 06 (six) months in prison for the crime of "Producing counterfeit goods." The prison term is calculated from the date the defendant began serving the sentence.
• Penalty: Dang Le D sentenced to 02 (two) years and 07 (seven) months in prison for the crime of "Trading in counterfeit goods." The prison term is calculated from May 29, 2019.

2. Judgment No.: 348/2022/HSST dated September 12, 2022, of the People's Court of Hanoi city on producing counterfeit goods

• Application: Point đ, Clause 2, Article 192, Points b, s, Clause 1, Clause 2, Article 51, Point g, Clause 1, Article 52; Article 54; Article 50; Article 17; Article 38 of the Penal Code, penalty: Duong Van H 02 years and 06 months in prison. The prison term is calculated from the date of temporary detention, temporary custody on January 21, 2022.
• Application: Point a, Clause 1, Article 192; Points b, s, Clause 1, Clause 2, Article 51; Point g, Clause 1, Article 52; Article 54; Article 50; Article 17; Article 38 of the Penal Code, penalty: Tran Van T 07 months and 22 days in prison.

• Judgment No.: 05/2021/HS-ST dated January 21, 2021, of the People's Court of Thanh Mien district, Hai Duong province on producing counterfeit goods

• Penalty: Defendant Nguyen Van H 45 (forty-five) months in prison, the prison term is calculated from the date of temporary detention on September 28, 2020.

VI. Conclusion:

The act of producing and trading in counterfeit goods is not merely an act of commercial fraud but also a serious threat to public health, economic development, and social order. In the context of integration and development, raising consumer awareness, strengthening inspection, supervision, and strictly handling violations are extremely urgent.

The law needs to be enforced strongly, combined with social prevention measures to create a transparent, healthy, and safe business environment for the people. Government authorities at all levels need to strengthen the management of production and business activities for organizations and individuals. Legal and ethical education and propaganda are needed so that producers and businesses, in addition to profit, always have the mindset of "I am for everyone".

 

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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