- Summary of the Case
Mr. X and Mr. Y are not only next-door neighbors but also close friends who share the ambition of building technology startups in a high-tech urban area. In 2024, Mr. X established a hardware technology startup specializing in the manufacture of IoT-enabled smart home appliances. While preparing to launch a premium air purifier product line, he faced significant pressure to develop an elegant and modern industrial design within a limited budget and timeframe.
While searching for design inspiration on the Internet, Mr. X came across a detailed technical drawing of a product design uploaded by an independent foreign designer on Behance. Seeking to save hundreds of millions of Vietnamese dong in research and development (R&D) costs and accelerate product commercialization, Mr. X mistakenly assumed that any design publicly available online constituted public property. He therefore copied the design, commissioned Mr. Y—who owned a local precision mechanical workshop—to manufacture production molds, and proceeded to produce the first batch of 1,000 units.
In early 2026, shortly after the product was launched and generated substantial commercial revenue, a multinational corporation—which had acquired the exclusive rights to the industrial design—issued a cease-and-desist letter and initiated legal proceedings before the competent court. The claimant requested the seizure of all infringing products, compensation for damages, and destruction of the manufacturing molds. As a result, Mr. X’s startup faced the imminent risk of bankruptcy.
Panicking, Mr. X accused Mr. Y of negligently leaking confidential product information during the manufacturing process. Mr. Y, outraged by the false allegations and the fact that his workshop had also become subject to investigation, severed all personal ties with Mr. X. The conflict escalated into physical altercations and repeated acts of vandalism against each other’s business premises, seriously disrupting public order and ultimately leading local law enforcement authorities to place both parties under criminal investigation.
- Legal Perspective – “A Robust Legal Shield”
Copyright Infringement of Technical Drawings
Under Point (g), Clause 1, Article 14 of the Law on Intellectual Property of Vietnam 2005 (as amended in 2025), technical drawings, artistic works, and applied art works constitute copyright-protected subject matter. Pursuant to Clause 1, Article 6 of the Law on Intellectual Property 2005, copyright protection arises automatically from the moment a work is created and fixed in a tangible form.
Accordingly, reproducing, adapting, or using such technical drawings for commercial manufacturing without the authorization of the copyright owner constitutes copyright infringement under Article 28 of the Law on Intellectual Property.
Infringement of Industrial Design Rights
Where the product appearance has been granted an Industrial Design Patent (Industrial Design Registration Certificate), manufacturing products whose appearance is identical or not substantially different from the protected design constitutes infringement of industrial design rights under Articles 124 and 126 of the Law on Intellectual Property 2005.
Civil Liability and Available Remedies
Pursuant to Articles 202 and 205 of the Law on Intellectual Property 2005, an infringer may be subject to various civil remedies, including:
- Immediate cessation of the infringing acts;
- Destruction of infringing products;
- Removal or destruction of infringing manufacturing molds;
- Compensation for both material damages and moral damages.
Compensation may amount to up to VND 500 million or be calculated based on the actual losses suffered by the right holder together with the unlawful profits gained by the infringing party.
Regarding Mr. Y’s manufacturing workshop, unless it can demonstrate that it acted in good faith and had no knowledge of the infringement, it may also incur joint civil liability under the Civil Code 2015.
- Psychological, Educational, and Management Perspectives – “The Human-Centered Solution”
Psychological and Educational Perspective
Material Greed and the “Shortcut” Mentality
Mr. X was driven by short-term financial incentives and sought to minimize production costs without compensating the original creator for intellectual labor. The misconception that “anything found online is free to use” reflects a distorted understanding of intellectual property ownership and technological assets, ultimately leading to unintentional misappropriation of intellectual creations.
Deficiencies in Copyright Awareness within the Startup Ecosystem
Many young entrepreneurs in Vietnam possess strong technical expertise but lack adequate education in business ethics and intellectual property law. They often underestimate legal risks in the digital environment and mistakenly believe that Internet resources may be freely exploited without legal consequences.
Management Perspective
Failure in Intellectual Property Risk Management
Intellectual Property (IP) represents one of the most valuable assets of any technology startup. Building an entire manufacturing operation upon unlawfully copied intellectual property constitutes a critical failure of legal risk management. Mr. X not only jeopardized his own enterprise but also exposed his family’s assets and Mr. Y’s manufacturing business to significant legal risks.
Absence of an IP Clearance Procedure
A professionally managed technology company should implement a comprehensive IP clearance process before commencing mass production. All trademarks, industrial designs, technical drawings, software code, and other intellectual assets should be reviewed to ensure that no third-party exclusive rights are infringed.
The absence of such due diligence demonstrates inadequate corporate governance and immature risk-control mechanisms.
- Comprehensive Solutions Proposed by Expert Nguyen Huu Long
Step 1: Community Reconciliation and Immediate Legal Crisis Management (Short-Term)
Resolve the Neighborhood Dispute
Mr. X and Mr. Y should immediately cease all hostile conduct, including property damage, to avoid administrative penalties or criminal liability for destruction of property under Article 178 of the Penal Code 2015.
Mr. X should formally acknowledge his responsibility, undertake to indemnify Mr. Y’s workshop for any legal consequences arising from the infringement, and invite local community representatives to facilitate mediation in order to preserve the safety and well-being of both families.
Negotiate a Licensing Agreement
The startup should promptly submit a formal written response to the claimant acknowledging deficiencies in its design review procedures. It should request negotiations to obtain a commercial license for the industrial design or propose an equitable profit-sharing arrangement relating to the 1,000 products already manufactured, with the objective of reaching an amicable settlement and discontinuing the court proceedings in accordance with the principles of voluntary settlement under the Civil Code 2015.
Step 2: Restructuring R&D and Corporate Governance (Medium-Term)
Establish an Independent IP Compliance Department
The company should implement mandatory procedures requiring that every technical drawing, product design, software code, or other intellectual asset—whether internally developed or externally sourced—undergo an IP clearance review through the databases maintained by the Intellectual Property Office of Vietnam before entering production.
Standardize Manufacturing Agreements
All manufacturing and outsourcing agreements, including those executed with workshops such as Mr. Y’s, should be reviewed and updated to include:
- Intellectual Property Compliance Clauses;
- Confidentiality Agreements (Non-Disclosure Agreements – NDAs);
- Clear allocation of liabilities concerning intellectual property infringement.
Such contractual safeguards are consistent with Clause 2, Article 21 of the Labour Code 2019 and serve to protect the legitimate interests of all contracting parties.
Step 3: A Long-Term Lesson—Separating Personal Relationships from Business Assets
Legal certainty is the strongest protection for personal relationships.
Friendship and neighborly trust may provide the foundation for entrepreneurship; however, sustainable business operations must ultimately be governed by the rule of law. Proper contractual documentation, transparent accounting records, and legally secured intellectual property rights constitute the most effective safeguards against conflicts driven by financial interests.
EXPERT OPINION
This article has been prepared based on the professional consultation and legal expertise of Nguyen Huu Long, M.A., an expert in Leadership, Law, Psychology, and Education.
Through an interdisciplinary approach, we provide not only robust legal protection but also comprehensive solutions in intellectual property risk management, corporate governance, and psychological support, thereby contributing to the sustainable development of businesses and the wider community.
If you or your organization are facing similar legal challenges concerning intellectual property, land law, education, or other legal matters, please contact us through our website or hotline at 0898 627 762 for timely professional assistance.