Assoc. Prof. Dr. Phan Hoai Nam and Bui Huy Thong, LL.M.
Faculty of International Law, Ho Chi Minh City University of Law
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Applicable law in cross-border intellectual property disputes
Territoriality and choice of law in digital environment
The digital environment is fundamentally changing the way intellectual property (IP) rights are created, exploited and protected, while also contributing to a rapid increase in cross-border disputes. For Vietnam, integration into the digital economy poses significant challenges from the perspective of private international law, particularly in determining the applicable law, given the tension between the territorial nature of IP rights and the borderless nature of the Internet.
The openness and global connectivity of the Internet have reduced the effectiveness of traditional territorial principles in regulating, monitoring and addressing infringements of IP rights. As a result, a single act of online IP infringement may simultaneously be subject to different legal systems, making the determination of the applicable law complex and contentious. The mismatch between the territorial nature of IP law and the borderless nature of the digital environment may result in the application of the laws of multiple countries, creating legal uncertainty and increasing compliance burdens and risks for actors operating online. The choice of the applicable law or jurisdictional agency may also affect the outcome of the resolution of a dispute, given the significant differences among countries in their IP and private international laws.
In addition, the absence of harmonised international rules on jurisdiction and choice of law has facilitated “forum shopping”, whereby parties seek out the jurisdiction most favourable to their interests. This practice may lead to unpredictable judicial outcomes, create risks of unfairness and undermine legal predictability. The need for legal harmonisation, stronger international cooperation and the development of effective alternative dispute resolution mechanisms has therefore become increasingly apparent.
Practice in Vietnam clearly reflects these challenges. The lawsuit brought by VNG Corporation against TikTok Inc. before the People’s Court of Ho Chi Minh City in 2020 provides a useful illustration. VNG alleged that TikTok had unlawfully used 150 sound recordings owned by Zing, a subsidiary of VNG, in more than 11 million videos on the platform, and sought compensation of over VND 221 billion.
In terms of jurisdiction, a Vietnamese court could establish its jurisdiction on the basis of Article 469.1.dd of the 2015 Civil Procedure Code, on the ground that the subject matter of the dispute, Zing’s IP rights, constituted “property located within the territory of Vietnam”. However, this was only the first and simplest of a series of complex legal issues raised by the case from the perspective of private international law.
The question of the applicable law under Article 679 of the 2015 Civil Code, which recognises the principle of lex loci protectionis, i.e., the law of the country where protection is sought, is particularly difficult when the alleged infringement occurs simultaneously in dozens of countries in which TikTok operates. Moreover, TikTok Inc. is a legal entity registered in the United States and has neither its head office nor its assets in Vietnam, meaning that the service of judicial documents and the enforcement of any judgment, if rendered, would face serious practical obstacles.
The VNG-TikTok case is consequently not merely a copyright dispute; it also exposes a fundamental gap in Vietnam’s private international law framework for dealing with cross-border IP disputes in the digital environment.
Principles for determining the applicable law in cross-border IP disputes
Three main principles commonly used to determine the applicable law in cross-border IP disputes include territoriality, lex loci protectionis, and party autonomy.
Territoriality
Territoriality is a fundamental principle of international IP law. IP rights generally have effect only within the country where they are granted or protected and do not automatically extend to other jurisdictions. This principle allows each country to develop an IP regime suited to its own legal and economic conditions and provides an important basis for determining the applicable law in cross-border disputes. In the digital environment, however, IP rights infringements can easily extend beyond national borders, creating conflicts between different legal systems.
Lex loci protectionis
Under the principle of lex loci protectionis, IP rights are protected under the law of the country where protection is sought or registration is made. This reflects the territorial nature of IP protection and demands rights holders to comply with the legal requirements of each jurisdiction where protection is claimed. Although the Berne Convention and the TRIPS Agreement have sought to harmonise relevant rules, IP rights remain largely dependent on national legal systems. The European Union (EU) has expressly incorporated this principle into Article 8 of the Rome II Regulation, under which the law of the country where protection is claimed will apply to IP disputes.
However, the principle becomes harder to apply in the digital environment. A single online infringement may affect several countries at once, potentially requiring courts and rights holders to deal with multiple legal systems. Differences in the scope, duration and enforcement of IP rights may further complicate cross-border disputes. This has increased calls for more flexible rules better suited to digital and transnational infringements.
Party autonomy
The party autonomy principle allows parties to an IP contract to agree on the applicable law. It reflects freedom of contract and can improve predictability and legal certainty in cross-border transactions.
However, such freedom is not unlimited. Certain mandatory rules protecting authors, performers or other parties may still apply regardless of the law chosen by the parties. The EU law, for example, places limits on contractual arrangements that would undermine certain statutory protections.
In the digital environment, party autonomy has become increasingly important because IP transactions often take place across multiple platforms and markets, creating a more flexible and predictable framework for international transactions. It can help the parties reduce legal risks, improve predictability and facilitate interaction between different legal systems. However, its application remains limited in disputes involving IP rights infringements, particularly where registered rights such as patents and trade marks are governed by the law of the country where protection is sought.
Vietnam’s legal framework and comparative approaches to determining the applicable law
Vietnam has actively integrated into the international IP framework through its participation in major agreements such as the TRIPS Agreement, the Berne Convention, the Paris Convention, the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements require participating states to guarantee that their domestic legal systems are capable of resolving IP disputes fairly, effectively and without discrimination.
However, these instruments do not provide specific choice-of-law rules and generally leave the determination of the applicable law to domestic legal systems. Vietnam has made progress in incorporating international standards into its Civil Code and Law on Intellectual Property, but the existing rules remain insufficiently detailed to address complicated disputes arising in the digital environment, particularly those involving cross-border infringements.
Vietnam’s current legal framework provides a legal basis for determining the applicable law in disputes involving foreign elements. The Law on Intellectual Property stipulates the establishment and protection of IP rights on the basis of territoriality, while the 2015 Civil Code regulates civil relations involving foreign elements. Article 679 of the 2015 Civil Code states: “Intellectual property rights shall be determined in accordance with the law of the country where protection of such rights is sought.” In the digital environment, however, its application may become challenging when an infringement takes place across several jurisdictions at the same time.
Although Vietnam has adopted other laws relevant to online activities, including the laws on cybersecurity and electronic transactions, the handling of cross-border IP infringements in the digital environment continues to pose significant challenges. Hence, the application of Article 679 of the Civil Code to online disputes may give rise to legal uncertainty, highlighting the need for clearer and more flexible rules appropriate to an increasingly interconnected digital environment.
To address the challenges posed by cross-border IP disputes in the digital environment, different legal systems have developed approaches aimed at balancing territorial protection with the need for greater flexibility, notably in the EU law and the Kyoto Guidelines.
The EU generally applies the principles of territoriality and lex loci protectionis. Under Article 8 of the Rome II Regulation, non-contractual obligations arising from IP infringements are ruled by the law of the country where protection is claimed. For unitary EU IP rights, such as EU trade marks and community designs, the law of the Member State where the infringement occurs may apply to matters not expressly governed by the EU law.
This approach provides a relatively clear legal framework, but it can become arduous to apply to online infringements affecting several countries at a time. In such cases, courts may have to consider the laws of multiple Member States, increasing legal complexity and litigation costs. To address this, the EU has adopted harmonisation measures, including Directive 2001/29/EC on copyright, the EU Trade Mark Regulation and the Community Design Regulation, which establish common standards across the EU and help reduce differences in the handling of cross-border infringements.
While the EU law largely retains a territorial approach to determining the applicable law, the Kyoto Guidelines offer a more flexible approach to cross-border disputes. Adopted by the International Law Association in 2020, the Guidelines provide non-binding guidance on private international law issues involving IP rights. They retain the principle that IP rights are generally regulated by the law of the country where protection is sought, while introducing more flexible approaches for cross-border disputes.
In particular, Kyoto Guideline 21 sets out rules on the choice of law applicable to IP disputes. One notable feature is the exclusion of renvoi, meaning that only the substantive rules of the chosen law of a country are applied, without reference to that country’s conflict-of-laws rules.
Where an IP contract does not contain a choice-of-law agreement, the Guidelines give priority to the law of the country most closely connected with the contract, taking into account such factors as the parties’ habitual residence and the place where the principal contractual obligation is to be performed at the time the contract is concluded. In contractual disputes, the law ruling the contract determines matters such as validity, content and liability. However, it cannot alter the nature of an IP right if the law of the country where protection is sought provides, for instance, that the right is non-transferable. Where infringement is also involved, the two sets of rules may need to be applied together: the law governing the contract to determine contractual liability, and the law of the country where protection is sought to determine whether the IP right has been infringed upon.
Proposed solutions for Vietnam
The EU’s experience suggests that Vietnam should work towards a more transparent and coordinated regional legal framework, particularly within ASEAN and, more broadly, within Asia, to facilitate the resolution of cross-border disputes. The EU has developed a relatively comprehensive framework through instruments such as Rome I and Rome II Regulations, which enhance legal predictability for businesses and individuals, reduce conflicts of laws and promote greater consistency in judicial decisions among Member States.
Meanwhile, the Kyoto Guidelines offer a more flexible approach that may be particularly relevant to the digital environment. Rather than relying solely on territoriality, the Guidelines allow greater consideration of the law of the country “most closely connected with” the contract or dispute. This approach better reflects the borderless nature of the Internet, where a single infringement may have effects in more than one country. For example, in an online copyright dispute affecting multiple jurisdictions, a court may consider applying the law of the country with the strongest factual connection or the most significant commercial impact.
Drawing on these two approaches, several specific reforms should be taken into account.
First, Article 679 of the 2015 Civil Code should be amended to adopt a more flexible approach that distinguishes between different categories of IP rights. For registered rights, such as patents, trade marks and industrial designs, the principle of the law of the country where protection is sought should continue to apply. For rights arising automatically, particularly copyright, in digital disputes, greater consideration could be given to the law of the country “most closely connected with” the creation of the work or the alleged infringement. Relevant factors used for identifying such connection could include the country where the greatest economic or commercial harm occurs, the country where the largest number of affected users is located, and the location of the main server, and other factors recognised in international practice. Such an approach could help address the limitations of a rigid territorial rule in the digital environment.
Second, Vietnam should issue specific guidance on how to determine the “place of occurrence of infringement” in the online environment. Such guidance should take into account both technical factors, such as server location and IP address, and substantive factors, e.g., economic impacts, number of affected users, and place where the rights holder suffers the principal harm. Clearer rules would help reduce disputes over jurisdiction and provide a basis for effective cooperation with foreign authorities.
Third, the nation should consider incorporating relevant international standards into domestic law, particularly the principle of “the closest connection” and mechanisms allowing a single law to be applied in appropriate cases involving multi-country infringements (as stated in Article 21.2 of the Kyoto Guidelines). Selected elements of the EU’s Rome II framework on non-contractual obligations in the field of IP in cyberspace could also be considered. Such reforms could make the country’s conflict-of-laws rules more predictable and better suited to digital disputes.
Finally, Vietnam needs to actively pursue bilateral and multilateral agreements dealing exclusively with online IP disputes, particularly with major partners such as the United States, the EU, Japan, the Republic of Korea and Singapore. Such agreements could address the recognition of choice-of-law agreements in IP transactions as well as the recognition and enforcement of civil and commercial judgments relating to online IP infringements. Expanding international cooperation in these areas could help reduce litigation costs and delays while improving the legal climate for technology businesses and global content creators.-
[1] The full text of the Vietnamese version of this article is published on the Vietnamese Journal of Legal Sciences, issue No. 06(02)/2026.
