24 May
2018

Procedures and strategies for anti-counterfeiting: United Arab Emirates

Al Tamimi & Company

Al Tamimi & Company

For many years, the United Arab Emirates has had one of the most active anti-counterfeiting regimes in the Middle East and Africa.

The United Arab Emirates is a federalised country consisting of seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Umm al-Quwain and Fujairah. For many years, it has had one of the most active anti-counterfeiting regimes in the Middle East and Africa. This in turn has contributed to the United Arab Emirates becoming the location of choice in the Middle East for the launch and marketing of international brands. In addition, the United Arab Emirates – specifically Dubai – has emerged as an international centre for transit trade. However, the prestige of being a transit hub also involves being targeted as a point of entry for the re-export of counterfeit goods. UAE seaports reportedly handle over 20 million containers a year, with the Jebel Ali Port in Dubai dominating that figure. Dubai’s ports, state-of-the-art transport and free-zone infrastructure make it an attractive route for counterfeit shipments and transit traders. Rights holders are investing heavily in enforcement throughout the United Arab Emirates, more so than in any other country in the Middle East and Africa. The United Arab Emirates has put significant effort into developing its legal infrastructure with respect to the protection and enforcement of trademarks.

Legal framework

In 1992 the United Arab Emirates promulgated its first federal trademark law – Law 37/1992 (the Trademarks Law), which was amended in 2002 to align the regime with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The 2002 amendments meet international standards of trademark protection, provide for the registration of trademarks in respect of goods and services, and recognise and provide broad protection for well-known trademarks.

The Trademarks Law is the main statute providing enforcement options. However, other pieces of UAE legislation provide various mechanisms for enforcement against infringing conduct, including:

  • the Anti-commercial Fraud Law (19/2016);
  • the Civil Transactions Law (5/1985);
  • the Penal Code (3/1987) and its amendments; and
  • the Gulf Cooperation Council (GCC) Unified Customs Law.

Despite the relatively recent introduction of the trademark regime, the United Arab Emirates has proved to be a fast learner, particularly when it comes to trademark enforcement. There is already a rich body of case law, with courts handing down principles to establish tests for what constitutes trademark use, infringement, confusing similarity, well-known trademarks and likelihood of confusion. The courts are also adept at issuing confiscation and destruction orders, as well as fines.

The United Arab Emirates is a signatory to various IP treaties and a member of international trade organisations, and has been a member of the World Trade Organisation since 1996. In the field of trademarks, it is a signatory to:

  • the Paris Convention for the Protection of Industrial Property;
  • the World Intellectual Property Organisation Convention; and
  • the TRIPs Agreement.

Border measures

Since the UAE government signed and ratified the GCC Unified Customs Law, enforcement at the borders has become an option. Pursuant to Article 55 of the GCC Unified Customs Law, UAE customs inspectors may now investigate any consignment to ensure that it conforms to its attached documentation. The current legislation allows customs officials to seize and block goods that are counterfeit or that violate a trademark registered in the United Arab Emirates.

As the United Arab Emirates is a federal state of seven emirates, the customs authority falls under the jurisdiction of each individual emirate. As such, the supervision, management and regulation of Dubai’s borders, for example, fall under the jurisdiction of the Dubai Customs Department, which has a different structure to the customs departments of other emirates. Understandably, differences exist from one emirate to another in terms of border measures with regard to processes, efficiency, responsiveness and experience. In addition, there is no unified customs body allowing a single action covering the entirety of UAE ports. Moreover, while the customs authorities of some emirates can accommodate complaints for trademark enforcement without needing a court order, others require a confirmed court order before they will stop a container and examine its contents.

For several years, the emirates of Dubai, Sharjah, Ras Al Khaimah and, more recently, Abu Dhabi have had established IP departments within their respective customs departments. Dubai, Sharjah and Ras Al Khaimah already accept the recordal of trademarks and action enforcement complaints. That said, there are major differences between the IP system at Dubai Customs and those of other emirates. Dubai Customs offers continuous training to its inspectors and has a sophisticated set of anti-counterfeiting system controls in place.

The remedies available for customs complaints are fines, seizure of counterfeit goods and destruction through recycling or re-export of the seized goods. Re-export has been a major issue in the United Arab Emirates, and extensive discussions have been ongoing between Customs, the government and stakeholders in order to resolve the issue.

Rights holders are advised to engage extensively with customs authorities, as experience suggests that this can prove fruitful in improving levels of monitoring at the border and enhancing enforcement outcomes. While the remedies imposed by Customs are limited to fines and seizures, depending on the emirate concerned, this enforcement option can bypass the need for a court order for the seizure and destruction of counterfeit goods.

Criminal prosecution

Criminal complaints against counterfeiting activities can be pursued in the United Arab Emirates through either the police or the public prosecutor. In some emirates, such as Dubai, the police have a special department to handle economic crimes, commercial fraud and trademark infringement. On receiving a criminal complaint, the police will conduct a raid, collect evidence, interrogate the suspects and refer the case to the public prosecutor. Prosecution will lead to further proceedings, interrogation sessions and a decision – depending on the facts and evidence – on whether to transfer the case to the criminal court. At the hearing, only the public prosecutor and the defendants appear before the court. However, rights holders may be officially represented when filing a civil claim joined to the criminal complaint.

The criminal complaint process – which involves police inspection, interrogation and holding in custody – has proved an effective deterrent against traders who are not intimidated by the idea of paying a fine. The remedies of a criminal complaint include penalties and confiscation and destruction of the infringing goods. Penalties under the Trademarks Law range from fines of at least Dh5,000 (approximately $1,370) to a jail term of up to one year – although in practice, the penalty is usually limited to a fine.

However, the recent introduction of the Anti-commercial Fraud Law brings a significant increase in penalties, which can more effectively and robustly combat fraud relating to intellectual property. The Anti-commercial Fraud Law considers dealing with counterfeit goods as an act of commercial fraud. It also expands the scope of counterfeit products to include goods bearing trademarks that are similar – not only identical – to registered trademarks.

The Anti-commercial Fraud Law provides for hefty penalties aimed at creating a real deterrent to potential infringers. Article 12 of the law penalises anyone who commits commercial fraud with a jail sentence of up to two years and/or a fine ranging from Dh50,000 to Dh250,000 ($13,700 to $68,000). There are exceptions for counterfeit products which risk affecting human health (eg, counterfeit medicine), where the fine ceiling is increased to Dh1 million ($ 272,500) and a two-year jail term. Article 18 of the Anti-commercial Fraud Law also allows the courts to close offending establishments for a period of up to six months.

Another important aspect of the Anti-commercial Fraud Law is the introduction of provisions on the disclosure of information relating to counterfeit goods. Under Article 4 of this law, a trader must submit all commercial books and ledgers detailing information and trade data for the infringing goods in its possession. This is of great importance to brand owners seeking to go beyond the local retailer and go as far as eliminating the manufacturer that engages in mass production and exports regionally or even globally.

While the Anti-commercial Fraud Law came into force in 2016, it has not yet been implemented properly, as the relevant implementing regulations have yet to be issued.

Many leads and important evidence can be lost during raids. However, with a strong legal presence during raids, some brand owners manage to seize computer files necessary to establish the history of the counterfeiting operation, as well as the names of suppliers and customers. This is useful not only for identifying targets for future raids, but also for convincing the court when it comes to awarding damages and when deciding what penalty to impose in order to deter future counterfeiters.

Civil enforcement

A civil action against infringers can be filed jointly with a criminal complaint, after a criminal case is decided or even without a criminal case being initiated. If a civil action is pursued alone, there is also the option of obtaining attachments against the infringing products through the court. The rights holder must submit a copy of the UAE trademark registration certificate, as well as any supporting evidence of the violation. If attachments are granted, the plaintiff (ie, the rights holder or its legal representative) must file a formal civil claim within eight days of the court’s order for attachment, failing which the attachment will be revoked and the defendant may seek damages for the illegitimate seizure and/or attachment.

In practice, civil courts are unwilling to award high damages, even in cases of counterfeiting. Rights holders should always prove the actual tort, damage and the relation between the wrongful act and the damage in order to claim compensation; otherwise, the court will order only minimal damages, the average being Dh20,000 ($ 5,500) as moral damages. There are no statutory or punitive damages set out in the Trademarks Law.

Despite this, many rights holders seek damages in order to put further pressure on counterfeiters and to recoup some of the costs that they have incurred in storing the counterfeit goods pending a court decision. Further, civil claims allow the rights holder to seek the imposition of a travel ban on the infringer, provided that the statutory conditions exist.

Administrative complaints and enforcement petitions

The local economic development departments of most emirates have established special divisions for consumer protection and commercial compliance. These departments entertain administrative complaints against shops that trade, merchandise, manufacture or sell counterfeit goods. Dubai has taken the lead in this area, with the Dubai Economic Development Department having established a clear, efficient and accessible complaints system that allows trademark owners in the United Arab Emirates to enforce their rights promptly within the emirate. Once a shop is found guilty of trading in counterfeit goods, fines will apply and gradually increase if the offence is repeated, which could also lead to the shop’s temporary closure. The economic departments of Sharjah and Abu Dhabi have also introduced this enforcement option.

Documentation and evidence showing that counterfeits are being traded and that suspected shops are involved are necessary in order for the complaint to be admissible. Remedies in such cases involve fines of at least Dh15,000 ($4,000), confiscation and/or destruction of the counterfeit goods.

The administrative complaint has proved to be a preferable action for brand owners faced with counterfeiting, as it is quick and more cost efficient. In addition, the fines applied by the economic development departments are higher than those imposed by criminal courts (which are usually limited to the minimum provided by the Trademarks Law).

Anti-counterfeiting online

Court actions are available as a remedy for online infringement if the rights holder can associate the infringer with a local entity or individual in the United Arab Emirates. In some cases, this can result in a website being blocked until a decision is reached on the infringement matter.

A specialised police division tasked with countering electronic crimes is responsible for investigating online links and websites involved with counterfeit goods in the United Arab Emirates. The division may take steps to block such links from being accessible to UAE internet users, which can mitigate the consequences of online counterfeiting.

With the rise of e-commerce and increasing sales through social media websites, the Dubai Department of Economic Development has been actively tackling online counterfeiting by:

  • monitoring such e-commerce and social media sites (eg, Instagram, Facebook, Snapchat); and
  • taking immediate action against Dubai-based persons selling counterfeit goods through such sites and pages by closing them down and imposing fines against their owners.

The Dubai Department of Economic Development has closed more than 8,000 pages and accounts on social media websites since it started operations against online counterfeiting in 2016.

Preventive measures/strategies

Rights holders can take several preliminary steps in the United Arab Emirates to support enforcement efforts. These vary depending on the nature of the products. However, in light of practice and precedents, the following strategies and measures are necessary elements of a solid enforcement programme.

Recordal with customs authorities and training

Some customs authorities allow rights holders to record their registered trademarks in the United Arab Emirates. This recordal includes basic information about the trademark, along with specimens of use. The materials are saved electronically and remain accessible to all inspectors. The authorities also run useful workshops. While rights holders are advised to request special training offsite, it is difficult to get all customs inspectors together in one room outside of the scheduled training workshops organised by the customs department. Such workshops are typically attended by field customs inspectors and enforcement officials from other government bodies; therefore, rights holders should participate and raise their profile with officials in order to increase awareness of their trademarks. Not only must customs authorities be engaged, but also other enforcement authorities such as the departments of economic development in the different emirates and the police.

Market investigation

Rights holders should retain a market investigator to monitor the market and determine potential sources of counterfeits. From experience, the best market investigators tend to come from the sales force of the rights holder’s own staff.

Registration of packaging and three-dimensional designs

Rights holders should consider registering packaging and labels as three-dimensional marks. This has proved to be an important step in countering passing off, trade dress and lookalike infringements. The UAE Trademarks Office has been advanced in accepting non-traditional trademark applications.

Pharmaceuticals

In addition to the available general legal options, rights holders in the pharmaceutical sector may report any cited infringements to the Ministry of Health, which is responsible for inspecting pharmacies.

Although the United Arab Emirates is a small country, a considerable amount of domestic enforcement focuses on anti-counterfeiting. With the law being relatively young, this regime has been developed by a proactive government, along with an exceptionally high number of enforcement actions. Rights holders have contributed positively to the development of this regime and will probably continue to protect their rights in this lucrative market. Rights holders need to choose their battles carefully in assessing which enforcement route to pursue and investing in an appropriate anti-counterfeiting programme.

Manel Ben Said assisted in the preparation of this chapter.

Al Tamimi & Company

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Sheikh Zayed Road, PO Box 9275

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United Arab Emirates

Tel +971 4 364 1641

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Web www.tamimi.com

Omar Obeidat
Head of intellectual property
o.obeidat@tamimi.com

Omar Obeidat is a partner and head of intellectual property at Al Tamimi & Company. His IP specialisation covers advisory, enforcement, litigation and prosecution. He also specialises in competition law, regulatory affairs, compliance and consumer protection. He regularly trains judges, prosecutors, government enforcement and administration officers on IP law. He sits as a board member of the Brand Owners Protection Group, is a committee member of the International Trademark Association, a trustee and board member of the Dubai Advisory Board for Intellectual Property and a member of the advisory board for the Middle East North Africa Franchise Association. He was recently appointed to the board of directors of the International Association for the Protection of Intellectual Property – UAE Chapter and sits on the steering committee for the Global Entrepreneurship Monitor.

Rasha Al Ardah
Senior associate
r.alardah@tamimi.com

Rasha Al Ardah is a senior associate at Al Tamimi & Company specialising in IP rights in the Middle East. She advises clients on the protection of trademarks and assists in building and developing their brands, through managing trademark portfolios and advising on the appropriate use and enforcement of rights. She has extensive experience in managing and handling cross-jurisdictional disputes before courts throughout the region. Experienced in anti-counterfeiting activities, she has assisted clients in this regard in the United Arab Emirates and in developing regional anti-counterfeiting strategies for clients across the Middle East, including challenging jurisdictions such as Iraq. She has been active in the international trademark community and served on different committees of the International Trademark Association, including the Anti-counterfeiting Committee.

Ahmad Zaza
Senior associate
a.zaza@tamimi.com

Ahmad Zaza is a bilingual (Arabic and English) senior associate at Al Tamimi & Company with extensive experience in copyright and trademarks in the Middle East and North Africa region. With over 10 years’ experience in the Middle East, he advises both local and international clients across a broad range of sectors including fast-moving consumer goods, mobile phones, luxury fashion, auto manufacturing, real estate, electronics, technology, hospitality, finance and many others. He has in-depth experience in managing cross-jurisdictional disputes including opposition actions, cancellation and infringement cases before courts throughout the region, and has assisted clients in setting strategies for taking action against serious infringers and major competitors.