Non-Compete Agreement In Labor Contract

The principle “freedom to work” is recognized and respected by the Labor Code 2012. However, this regulation may harm legitimate business interests of employers when employees, during the performance of the laborcon tract or especially after the termination of the labor contract, reveal the business or technology secrets to compete with the employers. Therefore it is necessary to create the limits on the freedom to work, for the purpose of preventing workers from revealing employers’ business or technology secrets. Law in many countries around the world has recognized “Non-Compete Agreement” as a tool to enforce security programs.

The Labor Code 2012 and sub-law documents do not mention to the definition of “Non Compete Agreement”, but make the provision that: “When an employee performs a job which is directly related to business or technology secrets as prescribed by law, the employer may reach a written agreement with the employees on the content and duration of protection of business or technology secrets, and benefits and compensation in case of violation by the employees”.

The definition of “Non-Compete Agreement” is inferred by explaining the provisions of law and referred to the articles of legal experts. “Non-Compete Agreement” is a legal contract between an employee and an employer, for a purpose of preventing the worker from competing directly or working for a competitor during the performance of the labor contract or especially after the termination of the labor contract. Thereby, we can infer that only when employers have business or technology secrets, they have the right to make Non-Compete Agreement. Moreover, the legitimate business interests that are protected must be legal, unique, influence the maintenance, stability and development of business activities.

Analyzing the provision “Non-Compete Agreement”, we can conclude that, the employees adjusted by the “Non-Compete Agreement” is the worker who is directly involved in business or technology secrets (such as the senior managers, senior technicians and others are obliged to keep business or technology secrets). The Labor Code 2012 has regulated that the “Non-Compete Agreement” must be on text.

The provision of Non-Compete Agreement is necessary for employers to protect business or technology secrets, but it is difficult for workers to find job after the contract terminates. Therefore, Non-Compete Agreement should balance the interests between employers and employees by setting reasonable limits in time, geographic scope and particular industry or activity.

(i) For restriction on time, the Labor Code 2012 does not specify restriction period or the point of starting restriction period. This is entirely upon the parties. However, Non-Compete Agreement can not be enforced unless it specifies a reasonable restriction period. Referring to the law of some European countries (Germany, France) and Asian countries for example in China, the maximum restriction time is 02 years, to ensure that employees have conditions to find new jobs.

Moreover, it provides opportunities for employers to motivate, improve the technology and business secrets to develop. On the other hand, law in some other countries distinguishes between highly skilled workers (group 1) and unqualified employees (group 2). Spanish law is a typical example, the maximum restriction period is two years for workers in group 1 and six months for group 2.

(ii) Restriction on geographic scope is not regulated in Vietnamese law. Meanwhile, most countries such as France, China and Russia all regulate that the restriction is on the whole country. However, due to differences in society, economic and education conditions, Vietnam can hardly regulate like that. On the other hand, when making the provisions of the restrictions on geographic scope, it is necessary to base on the performance of the company, the method of production, the size of and the type of company.

(iii) For restriction on particular industry or activity, most courts tend to consider the work that employees will work in the new labor contract. Normally, if the new job is similar to the old one, it will not be approved by the court. Under the Labor Code 2012, the content of restrictions on particular industry or activity when employees enter into agreement include: (i) obligation to keep trade information confidential (business secrets, technology secrets) ; (ii) not be able to work for the competitor of former employers or to conduct his own business competing with former employers.

Labor Code in our country does not specify the scope of the restriction on particular industry or activity, it depends entirely on the will of the parties. Non-Compete Agreement can not be applied to all jobs, but only to those who hold business and technology secrets. For every type of work there will be a different range of restrictions. The scope of the restriction is not exceeding the employees’ professional capacity and ensuring the opportunity of works in the future.

The benefit that employees receive when signed the Non-compete Agreement can be the opportunity for promotion, high salary, and commendation if the Non-Compete Agreement is made while the labor contract is valid. If the Non-Compete Agreement is applied after the labor contract terminates, employees shall receive the compensation. The amount of compensation is upon the agreement of the parties and must be satisfactory with the restriction of job opportunities. There are some cases that employees may not be entitled compensation are to violate the Non-Compete Agreement or die or prison sentence.

According to the Labor Code 2012, in case of violating the non-compete contract, employees have obligation to compensate, but it does not give specific compensation amount as well as the method of compensation. In order to claim compensation, employers must demonstrate these following factors: (1) the violation of the Non-Compete Agreement; (2) actual damage (the lost revenue and profit of the employer); (3) the causal relationship between the infringement and the damage; (4) fault of the employee. The amount of compensation must correspond to the amount of lost revenue or profit. In addition, employees must return the non-owned assets that are exploited and developed to compete with former employers. Moreover, employees must repay the compensation and other benefits paid by former employers if agreed in the agreement.

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Application of Administrative Measures to Protect Intellectual Property Rights

Since joining WTO, Vietnam has been coping to comply with the international commitments in general and intellectual property area in particular. In order to ensure fair legal environment and the benefits of intellectual property right holders, the Vietnam laws provide a number of ways in which holders can apply the following methods to protect their intellectual property rights:

Negotiation: requesting organizations, individuals committing infringement acts of intellectual property rights to terminate the infringing acts, apologize, publicly rectify and compensate damages;

Using administrative remedies: requesting the competent agencies to handle infringement acts of intellectual property rights;

Filing claim at court or arbitration center: initiating a lawsuit at a competent court or an arbitrator to protect their legitimate rights and interests;

Negotiation is often used in the first step to request the violator to stop the infringement of intellectual property rights. However, this measure is not potentially effective because it dependents on goodwill and cooperation of the violator as well as the legal basis, evidences that you can provide to demonstrate and warn of violating acts.

Relating to the dispute settlements, due to high costs, complicated procedures and extended time, this measure is not commonly selected as the best treatment.

In Vietnam, intellectual property infringement is mainly dealt with through administrative measures. Depending on their functions and responsibility, competent state management agencies deal with infringements of intellectual property rights as per request of the IP holders Currently, through the following agencies:

Inspectorate of the Ministry of Science and Technology;

Economic Police of the Ministry of Public Security and;

Market management of the Ministry of Industry and Trade.

In case of dealing with infringements of intellectual property rights in Vietnam, the holders should carry out the following steps:

1.Submission of a written request to terminate an infringement of intellectual property rights:

This step is optional to save costs for the infringed party as well as deal with the infringement on the basis of goodwill and cooperation. The infringed party should send documents, including a persuasive Cease and Desist letter and evidences, to the violator for the purpose of requesting them to terminate the violation and commit not to repeat the infringement in the future. In fact, many intellectual property right holders have reached their goals at this step providing that they can collect enough proof.

2.Requesting the competent state agencies to handle acts of infringement of intellectual property rights:

In this step, the infringed party must prove both its ownership to the intellectual property and information, evidence of the infringement by the infringing party.

The application of administrative remedies is effective handled, so it should be preferable to filling a lawsuit. After requesting the administrative agency to penalize the infringing party, the right holder still remain their right to initiate a lawsuit in court to claim of damages. Actually, the combination of administrative measures and lawsuits at court would be more effective for intellectual property right holders.

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The Benefits of Mediation Services in Vietnam

The process of integrating with market economy is developing strongly, which creates many opportunities for businesses to extend their operation and cooperate with international companies. As a result, dispute arising is inevitable. To coincide with benefits, especially information confidentiality under parties’ agreement, commercial mediation is one of the commercial alternative dispute resolution which is more and more popular.

Commercial mediation is a dispute resolution negotiated by parties and the mediator is the third party as an intermediary to support parties to resolve dispute under the regulations of Decree 22/2017/ND-CP on February 24^th, 2017. Following the regulations, commercial mediation can be negotiated by parties before, after or at any time of dispute resolution process. By Decree 22, commercial mediation is applied in cases of a dispute between parties with at least one party practicing commercial activities or another dispute under the laws can be resolved by the commercial mediation. Moreover, participating in commercial mediation is voluntary and all the information of mediation shall be kept secret under parties’ agreement, provided that agreement’s content is legal.

Commercial mediationis becoming a popular dispute resolution because of its simple and flexible procedure, economical cost for parties. Parties have chance to choose a suitable procedure and avoid complicated legal procedure. Under the law on parties’ self-determination to choose any mediator and a place to proceed procedures, which helps parties select a mediator with professional skills on dispute resolution. Furthermore, parties could reach an agreement with good will and cooperating spirit. Both still continue to develop and protect business relationship because of parties’ benefits. Under the Decree, all the information involving dispute must be kept secret, unless parties have written agreement or current law has other regulations.

Under the law, parties are entitled to choose a mediator to resolve dispute. According to Decree 22/2017/ND-CP, commercial mediators include commercial case mediators and mediators from commercial mediation institutions selected by the parties or appointed by a commercial mediation institution at the request of disputing parties to support them to resolve dispute pursuant to regulations of this Decree. A person who wants to become a mediator must qualify conditions of Article 7 of Decree 22. Apart from general moral standards following Law on Civil, mediators must have a university or higher qualification and at least two years of working experience in their educated discipline, also mediation skills as well as legal understanding, knowledge of business and commercial practice. Instead of bringing the case to court, which parties cannot predict the result, even inextricable, choosing a mediator who is knowledgeable and experienced could help parties resolve dispute smoothly.

Pursuant to Civil Procedure Code 2015, time for resolving commercial disputes belonging to the jurisdiction of the Court could take years. Meanwhile, choosing mediation, parties take less time to resolve dispute. Moreover, dispute is absolutely resolved by parties’ agreement because in the mediating procedure, with mediator’s support, parties can show their decision on dispute resolution. Then, they can save significant cost.

Another benefit of dispute resolution is that parties decide themselves how to resolve dispute and can know the result. This is a prominent advantage of dispute resolution compared with other resolutions, which have unpredictable result. Importantly, mediation is a private procedure so that parties’ name is not revealed publicly during mediating procedure, decrease hazards to parties’ business reputation.

According to Investment Climate Advisory Services of the World Bank Group, Alternative Dispute Resolution Center Manual: A Guide for Practitioners on Establishing and Managing ADR Centers, mediating resolution has brought many benefits. For individual benefits, mediation reduces the need for enforcement proceedings to ensure one party complies with an agreement, since the parties enter into their settlement agreements consensually. For private sector benefits, mediation enhances private sector development by creating a better environment for business. It lowers the direct and indirect costs that businesses incur in enforcing contracts and resolving disputes.

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ADR & Mediation Services in Vietnam

A lack of awareness about the benefits of mediation leads to huge amounts of money being spent by businesses on court proceedings.” “But it is not just about financial and time costs; it’s also about relationship costs. Lengthy legal proceedings mean hundreds of thousands of broken commercial relationships,” said Arnaldo Abruzzini, Secretary General of Eurochambers.

The advantages of alternative dispute resolution processes such as commercial mediation, conciliation, and arbitration over litigation are numerous.  Disputing parties can expect to benefit from less costly and much faster process, with commercial proceedings seldom taking longer than a week, the ability to maintain amicable relationships with one another (and save face), and full confidentiality in the process. The legislative basis for mediation is noted to improve and countries, such as Vietnam, have pursued mediation reforms as a response to contemporary demands.

At ANT Lawyers we have a team of qualified mediators and arbitrators who have years of experience working with difficult situations and who will guide you through the process to reach a settlement that works for you both, financially and commercially.

Our mediators are accredited by leading organisations from Canada and USA.

ANT Lawyers ADR & Mediation Services offer mediation and conflict resolution services to assist businesses, employers, groups, organizations in resolving disputes, differences and conflict, and promote the use of ADR and Mediation through training services.

ANT Lawyers is supported by a team of experienced mediator, attorneys with qualification and skills handling full range of legal services relating to ADR & Mediation in Vietnam.

Let ANT Lawyers help your business in Vietnam.

Contact Us for ADR & Mediation Services

provided by qualified mediators and lawyers, supported by field experts

via email ant@antlawyers.vn, office tel (+84) 24 32 23 27 71 or talk to our partner directly at + 84 912 817 823.

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Regulation on Grid Connected Solar Power Investment Project

The Ministry of Industry and Trade has recently issued Circular 16/2017/TT-BCT on project development and the model purchase contract for solar power projects.

Accordingly, the grid connected solar power investment projects are regulated as follows:

– The investor can only set up a solar power investment project included in the provincial and national level solar-power development plan; or provincial and national power development plan that are approved.

– The contents of the solar power investment project must comply with the regulations on management of investment in construction and the following requirements:

+ Evaluate the impact of solar power project connection plan on the power system in the area.

+ Having equipment connected to the SCADA system or moderation information so that the forecast information on electricity output can be transmitted per hour to the regulated agency.

– The equity ratio of grid connected solar power projects should not less than 20% of the total investment.

– The area of long-term land use shall not exceed 1.2 ha/01 MWp.

Circular 16/2017/TT-BCT takes effect on October 26^th2017.

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Is intellectual property dead?

Intellectual property is far from dead. Trademarks are worth billions of dollars and copyright is at the root of the entertainment industry around the world. The example you cite probably refers to patents.

Patents are valuable for enhancing profit if you have a success in the marketplace. Patents will not make your product succeed with consumers. But if you have a success and have an effective Patent, then you can continue to charge higher than normal prices. This will give your business greater value if you wish to sell - out.

Unfortunately, although investors often insist that you have patents or pending patent applications, for the greater part these prospective patent rights will not have a meaningful impact on competitors in the marketplace. Perfectly valid patents issue that have “loopholes”. Of course if they cover irrelevant features then competitors will not be bothered by them. They will just omit marketing competing products that include the irrelevant feature.

Accordingly, Intellectual Property is not dead. But whether it is relevant is highly conditional, particularly in the case of patents.

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Hau Giang Reduces 50% Investment Licensing Time

Hau Giang province affirmed to speed up administrative procedures reformation, reducing 50% of the time for granting investment licenses and business registration, creating favorable conditions for investors when they set up business.

In which, Hau Giang province is calling for investment in 7 key projects, including industrial zone infrastructure development, hi-tech agriculture and ecotourism… with a total investment of nearly 300 million USD.

According to the vice chairman of Hau Giang People’s Committee, besides the policies in accordance with general regulations, localities also have their own incentive mechanisms for investors such as tax incentives, land rent exemption and reduction, investment support for manufacturing, preservation and processing facilities…, especially projects for sustainable development of agriculture and high technology application…

Furthermore, Department of Planning and Investment of Hau Giang province affirmed that the local authorities will shorten the maximum time for carrying out procedures, creating favorable conditions for enterprises and investors. Specifically, the business registration procedure is 3 days according to the law, but the locality can complete in 1.5 days. Regarding the investment policy, the law regulates 32 days but it is shortened to 15 days by the locality; time to receive and appraise for issuing investment certificate is only 3 days; discounted 2 days as prescribed.

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How can I obtain a patent which is universal all over the world?

First off, let me be a little picky about your terms. You want to know about a patent that is worldwide, not universal. There are no patents on Jupiter.

There also is not a worldwide patent right. Each country (or the few groups of countries who form these groups for patent purposes) has its own patents that grant patent rights in those countries. Even if you filed an application and obtained a patent in every country that has patents, you still wouldn’t have worldwide coverage because there are some countries without a patent system.

It is not likely that you need patent rights in every country anyway, so it all works out.

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How to Obtain Business Registration Certificate in Vietnam?

How to establish a joint stock company or limited liability?

Every organization and individual wishing to set up a foreign owned company in Vietnam shall need to meet some specifics conditions as promulgated under the Law on Investment and Law on Enterprise.  In specific areas being considered as conditional investment, the investor shall also need to consult with the law governing the area of investment. Once the investment registration certificate is completed, the investor has the obligation to apply for enterprise registration.

The procedure to register for a certificate of enterprise registration of a joint stock company or limited liability with two or more members are herein mentioned:

Dossiers:

i) Application form for enterprise registration

ii) The company’s charter.

iii) A list of founding shareholders and shareholders being foreign investors/ a list of capital contribution members.

iv) Valid copies of:

Copies of the ID card or other ID papers of founding shareholders and foreign investors/members being individuals; list of authorized representatives of foreign shareholders being organizations.

Decision on establishment, certificate of business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations.

If shareholders are foreign organizations, the copy of the certificate of business registration or an equivalent document must be notarized, legalized and authenticated.

The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

State Authority: Business registration office of the province where the enterprise’s headquarters is situated.

Period: within 03 working days from the full receipt of the dossiers

Result: Business registration office shall issue the certificate of enterprise registration or if the application is not satisfactory, business registration office shall inform the applicant of necessary revisions and supplementation to company.

In general, Vietnam government encourages foreign direct investment.  If the investor faces challenges at state authority, whom do not issue notification or request of supplementation to the application for enterprise registration, the investor cold lodge a complaint as prescribed by regulations of law on complaints and denunciation to the state authority to protect its right in doing business andinvestment in Vietnam. A law firm in Vietnam with expertise in both business registration and dispute resolution could assist the investor in the process.

The enterprise is entitled to do business from the issuance date of the certificate of enterprise registration. For conditional business lines, enterprises are entitled to engage in conditional business lines if they satisfy all conditions and are capable to maintain fulfillment of such conditions throughout their operation

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Are there any differences in filing a Trademark application in Vietnam as compared to your home country?

The legal protection of Trademark is based on the principle of territoriality. That means each nation is free to regulate the use of intellectual property on its own territory. For instance, it can only grant protection titles to the domestic brands while denying foreigners. In order to overcome such problems, nations around the world have been reaching and signed a number of international treaties which was built on the principle of territoriality. There was a remarkable achievement that nations established certain rules that all member States must respect. Member States shall protect trademarks of companies of other member States as if they were his own citizen (so called principle of national treatment). In other words, assuming that Vietnam and France are member States, Vietnam is bound to treat French enterprises the same rules that it applies to Vietnamese firms. As a consequence, there are not any differences in principle when filing a Trade mark application in Vietnam as compared other State members. However, practically, for filing a Trade mark application in Vietnam, there might some additional requirements or language of necessary documents as following:

1.Right to register marks: According to Article 89 Law on intellectual, foreign individuals not permanently residing in Vietnam and foreign organizations and individuals without production or business establishments in Vietnam could not file applications for Trademark registration by themselves but through their lawful representatives in Vietnam by POA (Power of Attorney).

2.Solving the language barrier: Foreign individuals permanently residing in Vietnam and foreign organizations and individuals whose production or business establishments are in Vietnam could file applications for Trademark by themselves. However, the language barrier might be the problem because Applicants shall fill a standard form in Vietnamese and submit this form to the NOIP accompanies by documents evidencing the registration right, the priority right or other documents supporting the application. All these documents could be made in another language but shall be translated into Vietnamese at the request of the State administrative body for industrial property rights

To be accepted, the sample of the Trademark must be clearly described by words in order to clarify elements of the mark and the comprehensive meaning of the mark, if any; where the mark consists of words or phrases in a foreign language, such words or phrases must be translated into Vietnamese.

3.Time for request your priority claim: Priority claim shall not be automatically recognized in Vietnam, therefore the claim for the priority right must be clearly stated in the application accompanied by a copy of the first application certified by the first IP office.

4.Applying “First to use” or “first to file” principle: In Vietnam, “first to file” principle is applied, that is far cry from so-called “first to use” countries. The “first to file” principle means rights in a trademark generally are acquired only through registration therefore a trademark owner can apply to Trademarkregistration without having used it anywhere and at any time. Kindly be advised that if you come from the United States, the Philippines, Australia, and New Zealand where trademark rights are generally acquired through use.

All in all, these treaties built up a harmonized system that benefits the international firms to protect their Trademark outside of the home nation. The local qualified Intellectual property Agent might support the international firms in overcoming the barrier of language and these additional requirements.

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