VIETNAM: NIKE RAIDS IN HANOI - SMALL STEP IN THE

1. SUMMARY: In November 2003, the Ministry of Trade's
Market Management Bureau (MMB), in cooperation with Nike's
Brand Protection Specialist, raided 21 private sport shops
and a state-owned knitwear factory, confiscating more than
1,200 counterfeit items. Two months later, the MMB
destroyed all of the goods it had confiscated. While the
number of goods destroyed represents only a fraction of the
total number of counterfeit Nike products available
throughout Vietnam, Nike representatives termed the raids a
victory. Building on this successful operation, Nike is
working to formalize future cooperation with the MMB on IPR
enforcement in Vietnam. End Summary.



2. On October 1, Nike Vietnam formally requested the MMB
raid shops in Hanoi that sell counterfeit Nike products.
After a short consultation with other GVN IPR agencies, the
MMB's deputy director, Mr. Vuong Tri Dung issued a decision
to perform the raids. On October 7, a team of MMB
inspectors, in conjunction with Nike's Brand Protection
Specialist, raided 21 private sport shops and the state-
owned Hanoi Knitwear Factory, confiscating 229 pairs of
shoes, 244 shirts, 558 pairs of socks, 32 pairs of shorts,
16 hats and six kilograms of Nike labels. All of the shops
were forced to remove Nike advertisement boards and commit
not to violate Nike's trademark in the future.



3. On January 9 MMB's Mr. Dung and representatives from the
Economic Police, (Note: Another IPR enforcement agency,
under the Ministry of Public Security. End note.) the
People's Procuracy, and the Finance Department of Hanoi,
supervised the destruction of all of the seized products.
This is the first time that the GVN has destroyed
confiscated counterfeit Nike products. In the past,
infringers were simply required to remove the infringing
labels or signs. In its news release, Nike expressed its
appreciation for the MMB's decisive actions. MMB did not,
however, levy any fines against the companies that were
raided. MMB told econ assistant that fines of between VND
20 million and VND 100 million (USD 1275 to USD 6375) will
be levied only if any of the stores violate Nike's trademark
again.



4. Since September 2003, Nike has made it a priority to
develop a strong cooperative relationship with the MMB and
credits the success of these raids to its ongoing efforts.
In early October, Nike organized a two-day training session
for ten MMB officials on how to identify counterfeit goods.
Nike also provided MMB officials with information on
Vietnam's IPR commitments in the U.S. Vietnam Bilateral
Trade Agreement (BTA) and how IPR is related to Vietnam's
WTO accession.

Basis for Future Cooperation


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5. Nike has had a representative office in Ho Chi Minh
City since 1995. In 2003, Nike exported about USD 550
million worth of shoes and USD 70 million worth of garments
from Vietnam. All of Nike's production is for export.
Only 4 retailers in Hanoi and 6 shops in Ho Chi Minh City
are licensed to distribute Nike products and all merchandise
for legitimate sale in Vietnam is imported. Nike takes
stringent methods to prevent theft of its trademark -
including destroying all remains and "seconds." Despite
these efforts, Nike faces rampant infringement of its
trademark throughout Vietnam. Counterfeit products are
widely available in all major cities. Additionally,
according to local Nike reps, some counterfeit products may
be exported to neighboring countries including Cambodia and
Laos.



6. With the goal of building on the success of these
raids, Nike is now working with the MMB to draft a proposal
on cooperation. Under the terms of the proposal, the MMB
will be responsible for conducting a specific number of
raids per year on a regular basis. At the same time, Nike
will establish a fund for those activities and provide more
training for MMB officials. The MMB expects to conclude the
agreement next week. Moreover, the Ministry of Trade has
suggested using the MMB's cooperation agreement as a model
document for other provinces and cities' Market Management
Bureaus.



7. Comment: Nike has a considerable investment in Vietnam
and is working hard to establish good cooperation with the
GVN on IPR issues. Although Nike and the GVN have a long way
to go to ensure full protect of Nike's trademark, this raid
and the efforts to conclude a cooperation agreement are a
good first step. The raids also demonstrate that it is
possible for IPR-dependant industries to establish
cooperative relationships with the GVN on IPR enforcement.
Despite being plagued by widespread counterfeit products,
Nike remains upbeat about its operations in Vietnam.



8. Comment continued: The lack of punitive fines in these
cases is disappointing. The GVN remains reluctant to levy
fines large enough to deter future infringement. Mission
will continue to monitor GVN IPR enforcement efforts and
encourage the GVN to take stronger measures against
violators.

BURGHARDT