Software Ownership Increasingly Tightened

Information from the interagency scrutiny team indicates that multiple checks have been taken over the past months at many types of companies, including foreign and local businesses, and computer dealers, most of which found to be in breach of software ownership at different degrees, such as foreign companies buying limited software licenses as cover-up.

An example was the spot check on a foreign-owned company based in Ho Chi Minh City, where the cross-department taskforce consisting of inspectors of the Ministry of Culture-Sports-Tourism (MCST) and Hi-tech Crime Police C50 (Ministry of Public Security) unveiled a large number of unlicensed software worth of billions. On the 44 checked computers, the inspectors found 124 illegally used applications, including Autodesk graphics design software such as AutoCAD, Adobe Photoshop, Microsoft’s popular software and even such low-cost software as the Lac Viet dictionary. Of these 124 applications, the company presented licenses for only 10 copies of Microsoft software.

Ironically, another wholly foreign-owned company specializing in manufacturing medical instruments, plastic and latex parts in Vietnam and for exportation, still tries to get around buying software licenses. MCST Deputy Chief Inspector Pham Xuan Phuc believes that wholly foreign-owned companies are those who know best about intellectual property laws, and still deliberately tries to infringe on and illegally use intellectual property that does not belong to them for their own gain.

However, both local and international intellectual property laws and penalizing frameworks for computer software intellectual property infringement are being tightened over time.

Illegal use of software may leave businesses facing penal crimes and harsh penalization by law. Also, copyright owners are entitled to other means in dealing with violation of their intellectual property rights, including taking legal actions under Article 198.1d, IP Law, and/or request a court order to force perpetrators to cease the illegal act, give a formal apology, take corrective actions, and pay for any damages done, including physical and legal costs in line with Articles 202, 204 and 205 of the IP Law. Damages are determined based on real losses incurred to the intellectual property right owner from the infringement.

According to international IP lawyers, exporters may face severe penalties when 36 US states adopt the Unfair Competition Act (UCA). This Act demands that all manufacturers and shippers around the world use legal and licensed computer hardware and software in any of their business activities. The underlying reason is that a company using illegal software will have an unfair pricing edge over the competition that uses licensed computer products.

Counselor Tran Manh Hung of Baker & McKenzie law firm hints that non-compliance will leave the following parties at risk of litigation: manufactures of products on sales in two different states (both as stand-alone products or as part of other products); third parties (e.g. retailers), or sales of products that may be considered as illegal in these states.

Hung also said that companies may also face legal actions against them by the competition anywhere in the world, or the state Attorney General (head of local judicial agency). Inability to prove the legitimacy of computer hardware or software use, or failure to cease using illegal computer products within 90 days following receipt of a formal notice may be subject to compensation, confiscation and more importantly, being ‘blacklisted’ for entering the US market.

This is a loud and clear message that intellectual property rights are being increasingly protected by governments for a healthy business environment for all. Deliberate wrongdoings by companies will sooner or later be caught, with the wrongdoers facing unimaginable consequences that include not just financial costs but also reputation and trust.