Ownership of the two automobile companies is 100 per cent foreign. The pharmaceutical company (Traphaco) was a state-owned company until 1999 then it became a joint stock company (according to State policy for State-owned companies). Other companies in the manufacturing sector (Duy Loi and Sannam) are private companies. Duy Loi is a small firm but the others are large enterprises in Vietnamese terms.6 Traphaco has 797 employees including 18 masters of pharmacy; 140 pharmacists and doctors; 60 employees with bachelor degrees in science and economics and the rest are skilled workers.
5 Level 2 means the industry has the capacity to produce several kinds of generic medicine; most other medicines have to be imported. Level 3 means that the industry has the capacity to produce generic medicines and also export several kinds of medicine.
6 Small and medium-sized enterprises are firms that have fewer than 300 employees and capital is less than 10 billion VND (approx. 625,000 US dollars).
[Impact of the Intellectual Property System on Economic Growth ]
118 The company’s R&D unit has 19 employees and there is a vice-director in charge of IP-related issues.
VMEP has a total of 1649 employees, among whom there are 68 R&D employees (4.1 per cent) and three employees in charge of IP activities. Honda Vietnam has more than 1000 employees and does not have an R&D unit in Vietnam. The company hires a law consultancy to deal with IP-related issues. Duy Loi is a small company and has around 100 employees. The director is the company’s major designer. A law consultancy is also hired by the company for IP-related issues. Employees of the Sannam group total more than 400. The company has a well-staffed R&D department especially for design: however, there are only two employees including the general director in charge of IP activities. In general, all the companies studied, with the exception of Honda, have their own researchers or designers for R&D activities.
However, not all of them have a dedicated IP unit; they usually use the services provided by consultants.
In 2005, the pharmaceutical firm had only made one application for IP protection (trademark registration).
From 2006 to date, it has been preparing for several utility solution applications. Most of the company’s IP applications have so far been trademark registrations (114 trademarks registered from 1989-2005).
This reflects the weak R&D capacity of the company as well as the pharmaceutical sector in Vietnam as a whole. The automobile sector has painted a more positive picture of IP application.
VMEP has recently applied for four patents (2006), 14 industrial designs (2007) and three trademarks (2007). In total, from 1993-2006, VMEP applied for 140 patents, 63 of which have been granted. In 2006, Honda owned 46 patents, 30 industrial designs and five trademarks, granted by and registered at the Vietnam National IP Office. However, all applications are made by head office in Japan and it also owns the patents granted. The number of patents applied for and granted to Honda in Vietnam from 1994-2006 is huge, about 533 patents, 214 industrial designs, 114 trademarks.
Duy Loi, a small domestic manufacturer in Vietnam has made fewer IP applications than other companies.
From 2000-2006, it made 19 applications for patents with eight granted, four applications for industrial designs with one granted and three trademarks registered. Although this is not a large number, the patents are very important ones and have helped them to earn good profits. The other domestic manufacturing company - Sannam has also had some important patents granted. From 2002-2006, the company was granted three patents for industrial designs and 64 trademarks were registered.
In general, the case studies in the automobile sector have many more applications for patent, utility solutions and industrial designs. Other companies in the manufacturing sector (including pharmaceuticals) have only made a few applications on patents and designs, their IP applications being mainly limited to trademark registration.
3.2. Results of the Analysis
Three companies were established before the 1995 reform: however, it is noteworthy that three years later, the number of applications for patents had not measurably increased. It was only five years later (since 2000) that this number started to increase markedly. Traphaco, a long-established pharmaceutical company, only latterly started to pay attention to IP. The local company case studies showed that firms established more recently like Duy Loi and Sannam are more interested in IP issues than Traphaco (see Table 2).
Another point in the case of Duy Loi is that, since the start, a patent for industrial design is essential to its business. However, Duy Loi is only one of a number of small, local firms that is aware of the importance of IP protection. The two FDI motorcycle companies show that they are more active in IP protection:
[Impact of the Intellectual Property System on Economic Growth ]
their IP applications are much higher than other local companies. In fact, FDI companies are generally 119 likely to pay more attention to IP issues than local companies. Local companies, especially small and medium-sized enterprises are usually weak in R&D activities, not often having an R&D unit; therefore there is little IP-creation and protection activity. In addition, local firms in general lack knowledge and awareness of the importance of intellectual property (NISTPASS, 2006).
However, in this research, all the companies studied were more or less aware of its importance. Each company had at least one or two employees in charge of IP activities. Moreover, they are able to use consultancy services provided by law firms for their IP activities including patent applications as well as pursuing lawsuits. There are more and more law firms practicing IPR law in Vietnam; however, they are more familiar with trademarks than patents and related issues.
It is also noteworthy that all the cases studied have at some time been faced with IP infringement. The two motorcycle companies’ industrial designs and trademarks, especially those of Honda, have been infringed by several local companies. Many of trademarks have also been infringed by other local pharmaceutical companies. Sannam experienced difficulties when one of its Chinese partners infringed its trademark, in addition to other local instances of infringement. Duy Loi has succeeded in two lawsuits in Japan and the US relating to industrial design infringement. The company has also experienced difficulties brought about by competitors in the domestic market.
Source: NOIP
In the case studies in general, companies in the automobile sector have shown they are more active in IP creation and protection than companies in other sectors. Large enterprises have more IP assets than small and medium-sized enterprises. This has also happened in the case of FDI companies in comparison with local companies. In all the cases studied, IP assets have shown the vitally important contribution they make to the company’s performance. However, in no case is there clear evidence about economic growth resulting from IP reform in 1995 or, indeed, any other reform. Companies look forward to further IP reforms in the future, especially enforcement of the 2005 IP Law.
Table 2.Number of IP Applications of Companies Studied, 1993-2006
[Impact of the Intellectual Property System on Economic Growth ]
120