By Nguyen Linh
In a significant development for international intellectual property (IP) protection, the United States Trade Representative (USTR) designated Vietnam as a “Priority Foreign Country” in its 2026 Special 301 Report. This is the most serious classification available under the Special 301 framework and is reserved for countries whose acts, policies, or practices are considered to have the greatest adverse impact on United States intellectual property rights holders.
The designation has drawn considerable attention, particularly because Vietnam has often been viewed as one of Southeast Asia’s rising manufacturing and technology hubs. Yet according to the USTR, persistent shortcomings in IP enforcement have raised concerns serious enough to warrant heightened scrutiny and the possibility of further trade action.
What is the Special 301 Report?
The Special 301 Report is an annual review conducted by the USTR that evaluates the adequacy and effectiveness of intellectual property protection and enforcement among U.S. trading partners. Countries may be placed on a Watch List, Priority Watch List, or in the most serious category, designated as a Priority Foreign Country.
Historically, the Priority Foreign Country designation has been used sparingly and often serves as a precursor to further investigations or trade measures.
Why was Vietnam Designated?
Contrary to what some may assume, the USTR’s decision was not based on a single infringement case or court judgment. Rather, the designation was based on what the report described as systemic and long-standing enforcement deficiencies across multiple areas of intellectual property protection.
The 2026 Special 301 Report identified five principal concerns:
- Failure to provide effective enforcement against online copyright piracy;
- Inadequate measures to combat widespread trademark counterfeiting;
- Weak border enforcement against infringing goods;
- Insufficient action against commercial software piracy; and
Insufficient enforcement mechanisms to combat unauthorized cable and satellite signal theft.
The report concluded that despite legislative reforms and public commitments, enforcement outcomes remained inadequate and failed to deter repeat infringement.
Online Piracy: The Central Concern
Perhaps the most prominent issue highlighted in the report was Vietnam’s continued association with large-scale online copyright piracy.
The USTR specifically referred to the operation of piracy-related infrastructure originating from Vietnam. One example cited involved the streaming infrastructure service known as “2embed,” which had been linked to numerous piracy websites. Although 2embed reportedly ceased operations in 2023, according to the USTR and submissions from right holders, successor services, including “MegaCloud,” allegedly emerged and continued facilitating unauthorized access to copyrighted content.
For rights holders in the film, television, music, and gaming industries, this recurring pattern was viewed as evidence that enforcement efforts had not produced lasting deterrence.
The report suggested that while individual piracy websites may be shut down, replacement services often emerge rapidly, allowing infringing activities to continue with minimal disruption.
Counterfeit Goods and Trademark Infringement
Beyond copyright concerns, the USTR also pointed to the widespread availability of counterfeit products in Vietnam.
Rather than focusing on a single counterfeit operation, the report highlighted broader enforcement concerns, including:
- Insufficient inspections and raids;
- Limited criminal prosecutions;
- Low penalties that fail to deter offenders; and
Continued availability of counterfeit products in both physical and online marketplaces.
Brand owners have long expressed concerns that counterfeit goods affect industries ranging from luxury products and electronics to pharmaceuticals and consumer goods.
The report indicated that stronger and more consistent enforcement measures are necessary to address these concerns effectively.
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Software Piracy and Weak Deterrence
Another area identified by the USTR was the use of unlicensed software in commercial environments.
According to the report, enforcement efforts against software piracy have remained limited, with relatively few inspections and enforcement actions compared to the scale of the problem.
The concern is not merely the unauthorized use of software itself but the broader message it sends regarding respect for intellectual property rights and regulatory compliance.
More Than Individual Cases
Importantly, the report was not built around a collection of high-profile lawsuits. Instead, it relied on a broader assessment of enforcement effectiveness, industry submissions, rights holder complaints, and recurring patterns of infringement.
This distinction matters because the USTR’s criticism was directed not only at infringers but also at the overall enforcement ecosystem. The report effectively argues that the issue is not whether Vietnam has IP laws on the books, but whether those laws are producing meaningful and sustained enforcement outcomes.
Why Stronger IP Enforcement Matters in Vietnam
As Vietnam continues to attract foreign investment, develop its digital economy, and position itself as a regional innovation hub, strong intellectual property protection becomes increasingly important.
Effective IP enforcement benefits more than foreign rights holders. It encourages local innovation, attracts technology investment, supports legitimate businesses, protects consumers from counterfeit products, and promotes confidence in the marketplace.
For Vietnamese businesses, stronger enforcement can help safeguard brands, proprietary technology, creative works, and trade secrets. For foreign investors, it signals that investments in innovation and intellectual property can be protected through reliable legal mechanisms.
What Businesses Should Know and Implement
Businesses operating in Vietnam should not assume that registration alone is sufficient protection. A proactive IP strategy is increasingly essential.
Key measures include:
- Establish ownership of key intellectual property assets at an early stage, including registering trademarks, patents, and industrial designs, and maintaining appropriate evidence of copyright ownership.
- Conduct regular market monitoring to identify counterfeit goods and unauthorized use of intellectual property.
- Implement robust software asset management programs to ensure all software used within the organization is properly licensed.
- Establish internal IP compliance policies and employee training programs.
- Protect confidential information and trade secrets through contractual safeguards and access controls.
- Monitor online platforms and digital marketplaces for infringement and unauthorized content distribution.
Develop enforcement strategies that include administrative actions, civil proceedings, customs recordals, and cooperation with local authorities where appropriate.
For a country with a GDP exceeding half a trillion US dollars and a population of more than 100 million people, effective intellectual property protection is not merely a legal obligation but an economic necessity. As Vietnam seeks to move further up the value chain and attract high-value investment in technology, digital services, advanced manufacturing, and innovation-driven industries, a robust IP enforcement framework will be increasingly critical to sustaining long-term growth and international confidence.
Should you or your business associates seek IP advice in Vietnam, please contact KASS International at hello@kass.asia.