Although there is limited detailed reporting on software piracy rates in Vietnam, the Business Software Alliance (BSA) continues to classify Vietnam as a high-risk market. Vietnam’s law provides software owners the right to enforce their intellectual property through administrative, civil, and criminal actions. In our practice, the enforcement landscape heavily depends on the software owner’s active participation, particularly in warning and negotiations. However, these efforts often encounter great challenges due to the unique nature of Vietnam’s software copyright enforcement landscape.
In this article, we will highlight key insights into the challenges faced by the software compliance team in Vietnam and provide our suggestions to streamline the process.
Challenges in dealing with unauthorized users
Lack of strong deterrent penalties for unlicensed software use:
In software infringement cases, typically the goal is not to stop unauthorized users but to convert them into legitimate customers. This approach involves educating users about the legal risks of using unlicensed software and offering incentives for compliance simultaneously.
However, the process is complicated by the lack of strong deterrent penalties for unlicensed software use. Many companies, particularly local ones, are willing to gamble on minimal legal repercussions to reap the economic benefits of using unlicensed software.
High evidence requirement:
Gathering evidence of software infringement is often difficult. While phone-home technology can detect unauthorized software use, enforcement officers often struggle to interpret the data, delaying or complicating legal actions. Furthermore, specialized software is typically used by only a few engineers within the target company, requiring access to the premises to confirm ongoing use. Without solid evidence of infringement and the exact location of users, convincing enforcement authorities to raid suspected companies is highly challenging.
The violator’s denial
Infringing companies often claim that software use is limited to personal activities by temporary employees or non-commercial purposes, even when phone-home data shows regular, work-related usage during business hours. These arguments, though typically weak and ungrounded, may frustrate software owners and discourage them from pursuing the case.
Current Positive Trends
The government is making efforts to enforce these issues, especially through administrative and civil actions, although there have been no reported criminal cases in Vietnam yet.
Civil actions have become increasingly significant, with a notable rise in both the number of cases and the monetary damages awarded to software owners in recent years. In 2022 and 2023, several software piracy cases resulted in substantial damages, amounting to billions of VND for material damages, spiritual damages, and lawyer fees. In 2022, the People’s Court of Binh Duong awarded 4.6 billion VND (about US$185,000) in material damages—65 times the maximum administrative sanction. This signals a major shift in enforcing compliance, sending a much stronger deterrent message compared to administrative fines.
The upcoming establishment of a specialised IP Court is expected to strengthen civil actions against software piracy by addressing gaps in technical knowledge. This should lead to more consistent rulings and faster resolutions in complex cases, particularly regarding damages and search orders where regulations remain unclear. This improved legal framework could enhance software licensing compliance strategies, making copyright litigation more predictable.
More details about the establishment of the specialized IP Court can be found here.
Suggestions
The IP Court is expected to be operational after 1 January 2025, it is important to stay informed about developments and implications to adapt your piracy enforcement strategies effectively within the new court system.
Given the current reliance on software owners’ active participation, and the importance of negotiations, we believe the following actions will improve the chances of success in dealing with suspected infringers:
- Revising user agreements to include robust audit rights to provide additional leverage in negotiations.
- Understanding copyright and civil liability regulations can facilitate negotiations by addressing customer pushbacks and excuses.
- Gaining insights into the users’ operations is crucial for effectively adjusting negotiation strategies. Successful negotiations should address various aspects beyond legal and financial considerations, including potential reputational damage to the infringer. This process often requires the involvement of decision-makers at the management level, legal counsel, and IT staff to clarify technical aspects.
- While large-scale warnings help raise awareness, escalating legal actions against significant infringers or persistent violators sends a clear message, driving greater compliance. Citing these actions in warning letters can make them more persuasive, increasing the likelihood of converting unlicensed users to legitimate ones.
While challenges remain in enforcing software piracy laws in Vietnam, proactive government engagement, combined with improved legal mechanisms, will foster stronger intellectual property protection in the long run.
For further information, please contact:
Chris Bailey, Rouse
cbailey@rouse.com
