New Commercial Companies Law: impact on trademark owners

There are two major issues to be considered by brand owners in the United Arab Emirates pursuant to the new Commercial Companies Law (2/2015).

First and foremost, holding companies, which were introduced by the new law, can now be legally established in the United Arab Emirates to trade and act under certain objectives. According to a newly introduced amendment to the law, a holding company can be established in order to acquire industrial property rights, such as trademarks, to utilise and lease the same to subsidiaries or to other companies. In the past, brand owners used to establish offshore companies or free zone entities to undertake this holding role, but this is no longer necessary for local companies and entities. The law allows brand owners to set up holding companies to own all their IP rights and such companies can be established onshore.

In addition, trademark owners have long faced problems when it came to taking action against similar trade names promptly and effectively. The new law introduced an administrative mechanism whereby brand owners can challenge registered trade names before the competent authority. The law allows trademark owners which have also registered their trade names in any of the UAE emirates to seek the cancellation of identical or confusingly similar trade names that may cause confusion among the public.

Alternatively, the UAE trade names registrar can, at his sole discretion, review and assess the similarity between conflicting trade names and grant the owner of a conflicting name or names a grace period of 30 days to change the name. In the absence of a response within the 30-day period, the registrar may enforce the change without the consent of the trade name owner.

For the sake of clarity, trade names in the United Arab Emirates are registered locally in each emirate; the registries in each emirate are not connected to a uniform database, in contrast to the Trademarks Federal Registry. In other words, and in light of the current system, an identical trade name may be registered in two emirates by two different entities, which can cause a serious conflict of rights. Since there are a substantial number of trademarks registered as trade names, this has been a significant concern for brand owners in the United Arab Emirates. The only option in the past was to seek the cancellation of a conflicting trade name before the competent court, as administrative proceedings were available only if the registrant of the conflicting trade name complied voluntarily. This used to have a serious financial and practical impact on brand owners; however, with the new law, trademark and trade name owners can seek the cancellation of conflicting trade names via administrative proceedings, and receive a binding, enforceable and prompt decision.

Munir Suboh, Al Tamimi & Company, Dubai