Protecting Trade Secrets in Vietnam

Introduction

Trade secrets are among the most valuable yet vulnerable assets of any business. In Vietnam, where employee mobility is high and enforcement can be challenging, proactive protection is essential. This article by Attorney Vo Thien Hien outlines the legal framework and practical strategies.

Legal Framework

Definition

Under Vietnam's Intellectual Property Law, trade secrets are information that:

  1. Is not generally known or easily accessible
  2. Provides a competitive advantage to its holder
  3. Is subject to reasonable protection measures by the holder

What qualifies?

  • Customer lists and pricing strategies
  • Manufacturing processes and formulas
  • Business plans and financial data
  • Software algorithms and source code
  • Supplier agreements and terms

What does NOT qualify?

  • Publicly available information
  • General industry knowledge
  • Employee skills and experience

Protection Mechanisms

1. Non-Disclosure Agreements (NDAs)

With employees:

  • Must be specific about what information is confidential
  • Should define duration of obligations (typically 2-5 years post-employment)
  • Include remedies for breach (injunction + damages)

With business partners:

  • Define the scope of confidential information
  • Specify permitted use
  • Include return/destruction obligations

2. Non-Compete Agreements

Vietnam law does NOT explicitly regulate non-compete agreements. However:

  • Courts generally recognize reasonable non-competes
  • Must be limited in scope, geography, and duration
  • Must include compensation for the restriction period
  • Overly broad clauses may be unenforceable

3. Internal Controls

  • Access controls (need-to-know basis)
  • Digital security (encryption, access logs)
  • Physical security (locked areas, visitor policies)
  • Employee training on confidentiality
  • Exit interviews with confidentiality reminders

Employee Obligations

During employment

  • Employees have an implied duty of confidentiality
  • Strengthen with explicit confidentiality clauses in employment contracts
  • Define what constitutes company information vs. personal knowledge

After employment

  • Contractual obligations survive termination (if properly drafted)
  • Former employees cannot use or disclose trade secrets
  • However, they CAN use general skills and knowledge

Remedies for Misappropriation

Civil remedies

  • Injunction to stop the misappropriation
  • Damages (actual loss + lost profits)
  • Reasonable attorney fees
  • Destruction of infringing materials

Administrative remedies

  • Complaint to the IP enforcement authorities
  • Fines up to 500 million VND
  • Seizure of infringing goods/materials

Criminal remedies

  • Available for serious cases
  • Imprisonment up to 3 years
  • Fines up to 1 billion VND

Practical Recommendations

  1. Document your trade secrets: Maintain a register of confidential information
  2. Mark documents as confidential: Physical and digital marking
  3. Limit access: Compartmentalize information
  4. Use robust NDAs: Tailored to Vietnamese law
  5. Monitor departing employees: Conduct exit procedures
  6. Act quickly on breaches: Delay weakens your legal position

Conclusion

Trade secret protection in Vietnam requires a combination of legal agreements, internal controls, and swift enforcement. The cost of prevention is far less than the cost of misappropriation.

Contact Attorney Vo Thien Hien at Apolo Lawyers for tailored trade secret protection strategies.