Procedures and strategies for anti-counterfeiting: Saudi Arabia

Legal framework

The following laws, implementing regulations and ministerial decisions constitute the judicial and administrative framework for IP protection in Saudi Arabia:

• the Copyright Law, issued pursuant to Royal Decree M/41 of 2.7.1424H (30 August 2003), and its implementing regulations, issued pursuant to Ministerial Decision 1688/1 of 10.4.1425H (29 May 2004);
• the Gulf Cooperation Council (GCC) Trademark Law, which is to be adopted by all GCC member states – the new trademark law became effective in Saudi Arabia on 27 September 2016;
• the Anti-commercial Fraud Law (promulgated by Royal Decree M/19 of 23/4/1429H (29 April 2008));
• the Law on Trade Names, issued pursuant to Royal Decree M/15 of 12.8.1420H (20 November 1999);
• the Law on Commercial Data, issued pursuant to Royal Decree M/15 of 15.4.1423H (25 June 2002), and the Regulations for the Protection of Confidential Commercial Information, issued pursuant to Council of Ministers Decision 50 of 25.2.1426H (4 April 2005), as amended by Ministerial Decision 3218 of 25.3.1426H (4 May 2005), and as further amended by Ministerial Decision 431 of 1.5.1426H (8 June 2005);
• the GCC Patent Law;
• the Law on Patents, Layout Designs of Integrated Circuits, Plant Varieties and Industrial Designs, issued pursuant to Royal Decree M/27 of 29.5.1425H (17 July 2004), and its implementing regulations, issued pursuant to Ministerial Decision 118828/M/10 of 14.11.1425H (26 December 2004);
• the Competition Law 2004; and
• the Border Measures Regulations, issued pursuant to Ministerial Decision 1277 (3 July 2004).

International and regional IP agreements

Saudi Arabia is a member of the following international and regional IP conventions:

• the Convention Establishing the World Intellectual Property Organisation;
• the Berne Convention for the Protection of Literary and Artistic Works;
• the Paris Convention for the Protection of Industrial Property;
• the Universal Copyright Convention;
• the Arab Regional Copyright and Related Rights Agreement;
• the GCC Patent Law;
• the GCC Trademark Law; and
• the GCC Customs Union.

GCC Patent Law: In 1992 the GCC approved a patent regulation that established a unitary patent right covering all GCC countries. The GCC Patent Office was established in 1992 in Riyadh, Saudi Arabia and started accepting applications in 1998. The GCC patent regulations were amended in 2000, notably adding in a novelty requirement for patentability. A GCC patent is valid and enforceable in all GCC states with no need for further validation steps.

GCC Trademark Law: Unlike the GCC Patent Law, which is a unitary law, the GCC Trademark Law is a unifying law. As such, it does not create a regional route in the GCC for unitary registration of trademarks and there is no single platform for receiving trademark applications. Therefore, the national registration routes remain in place in the region. The law is not a self-executing law, which means that in order for it to have effect, each GCC member country must make legislative amendments to its national laws to incorporate any missing provisions of the GCC Trademark Law. In view of this, it is uncertain when the law will be fully implemented throughout the GCC region. The law became effective in Saudi Arabia on 27 September 2016.

GCC Unified Customs Law: On 1 January 2003 the GCC member states achieved an important step by establishing a customs union. All customs procedures (eg, the filing of customs declarations, the inspection of goods and the assessment and collection of customs duties) are thus conducted in the member state through which imported goods first enter the GCC. After completion of these customs procedures and subsequently affixing customs seals accompanied by a copy of the customs import declaration showing the value of the goods and payment of duty, goods destined for another member state may be released on their way. With respect to border measures, Saudi Arabia is one of the GCC member states most affected by counterfeit goods in transit. There is a pressing need to implement procedures to enable customs authorities to use ex officio power in detecting and seizing goods in transit that are suspected of infringing IP rights.

Border measures

The Saudi Arabian Ministry of Finance adopted border measures for the protection of trademarks and copyrights in 2004. According to government sources, the measures are in line with Section 4 Part III of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

Under these measures, Saudi customs authorities are authorised to act ex officio to suspend clearance of suspected counterfeit or pirated goods if there is prima facie evidence to this effect, and will notify the importer and rights holder (if their addresses are known) in compliance with Articles 51 and 52 of the TRIPs Agreement.

The customs authorities will forward samples of the imported goods to the competent officials at the Ministry of Culture and Information. The ministry may suspend clearance of the goods if there is evidence that they infringe IP rights and will notify the customs authorities, the importer and the rights holder (if their addresses are known) of the suspension.

The suspension of goods must be effected without prejudice to the protection of confidential information. In compliance with Article 57 of the TRIPs Agreement, the rights holder and importer may inspect samples of suspended goods to confirm the claim of the competent authorities.

Article 4 of the measures grants the customs authorities the right to ask the trademark owner to provide, free of charge, any information or assistance – including technical know-how and facilities – to determine whether the suspended goods are counterfeit.

Article 6 covers preventive measures and entitles the trademark owner to seek – at any time, even before filing a civil or criminal suit, and on the basis of a petition supported by an official trademark registration certificate – the issuance of a judicial order by the Board of Grievances (the relevant court) to seize the goods and suspend their customs clearance in accordance with Article 49 of the Trademark Law and Article 22.7 of the Copyright Law.

Under the measures, the seizure of goods may be based on either a judicial order by the Board of Grievances or a preventive seizure decision by the Ministry of Culture and Information. Within 10 days of its notification of the seizure by Customs, the party against which the preventive seizure order has been issued may file a request with either the circuit handling the case at the Board of Grievances or the competent body at the Ministry of Culture and Information to review the seizure. The body hearing the review request may revoke the seizure order or uphold its execution.

However, a preventive seizure order issued by the Board of Grievances or the Ministry of Culture and Information will be deemed null and void if the rights holder does not subsequently file a civil suit against the suspected infringer within 10 days of issuance of the seizure order. If the rights holder does not submit proof to the customs authorities that it has filed this civil suit, the customs authorities will clear the seized goods, provided that the other conditions of import and export have been met.

The customs authorities are entrusted with the enforcement of judgments by the competent body for the confiscation or destruction of infringing goods and are empowered to dispose of these goods through non-commercial outlets, unless instructed otherwise by the judicial or administrative authorities. Further, the customs authorities will not allow the re-export of counterfeit goods in an altered state or subject them to a different customs procedure, other than in exceptional circumstances.

Article 13 of the measures states that the parties concerned may contest decisions by the customs authorities regarding the application of these procedures before the Board of Grievances within 60 days of notification in writing or through publication if notification is not possible.

IP rights recordal with Customs

Saudi Customs has an internal IP rights unit which provides a database to facilitate enforcement against counterfeit goods.

It is possible to formally request customs surveillance to safeguard against counterfeiting and trademark infringement. This request requires recordal of the relevant trademarks with Customs. The recordal application is made through a local agent holding a memorandum of understanding with Customs.

Rights holders may file an unlimited number of IP rights recordals with Customs. It is also possible to file separate applications for a single IP registration or for groups of registrations. Copyrighted materials associated with patents are also recordable (eg, pamphlets, manuals, labels and packaging designs). Customs may stop goods in transit if they are suspected of violating IP rights.

Recordal allows the rights holder to receive immediate notifications from Customs regarding incoming shipments of goods that are suspected of infringing its IP rights and to file confirmation on the status and nature of such shipments. The recordal procedure has proved to be an effective measure to combat counterfeit goods entering the local market.

Criminal prosecution

Initiating criminal actions against trademark infringers is the exclusive responsibility of the general prosecutor; rights holders are not entitled to directly initiate or follow up such criminal actions.

Under the GCC Trademark Law and the Border Measures for Protection of Trademarks and Copyrights, the customs authorities are authorised to act ex officio or upon petitions from rights holders to suspend clearance of goods that are suspected of bearing infringing trademarks and to notify the importer and rights holder of the suspension. Customs will forward samples of the imported goods to the competent department at the Ministry of Commerce and Investment. If evidence of infringement is identified, ministry officials will suspend clearance of the goods and forward the file to the general prosecutor to initiate a criminal action against the importer before the Board of Grievances.

Under the GCC Trademark Law and the Anti-commercial Fraud Law, the Anti-commercial Fraud Department at the Ministry of Commerce and Investment is authorised to act ex officio or upon petitions from rights holders to seize from local markets any goods that are suspected of bearing infringing trademarks and forward the file to the general prosecutor to initiate a criminal action against the infringer before the Board of Grievances.

The Anti-commercial Fraud Department at the Ministry of Commerce and Investment is entrusted with enforcing judgments by the Board of Grievances for the confiscation of infringing goods. The infringing goods may be disposed of through non-commercial outlets, unless the Board of Grievances decides to destroy them. A wrongdoer may be punished with imprisonment for one month to three years and/or a fine of SR5,000 to SR1 million.

Civil enforcement

Any rights holder whose trademark has been infringed is entitled to file a civil action against the infringer before the competent commercial court in order to claim compensation.

Theoretically, there are no restrictions or preconditions under the GCC Trademark Law for filing a civil action against trademark infringers, although recent court practice indicates that a civil action will not be admitted if the applicant does not prove that it has previously filed a complaint against the defendant before the Anti-commercial Fraud Department at the Ministry of Commerce and Investment, and that the prescribed administrative measures have been exhausted.

The compensation awarded is subject to the principles of Sharia and the discretion of the commercial court.

Anti-counterfeiting online

Online counterfeiting is increasing in Saudi Arabia. In June 2017 the Ministry of Commerce and Investment issued a strong warning to the public to be cautious when purchasing products through websites and social media platforms.

The Ministry of Commerce and Investment regularly closes accounts on social media (eg, Facebook, Twitter, Instagram and Snapchat) which market fake goods. The ministry has also highlighted that fraudsters may face up to three years in jail and be fined up to SR1 million under the Anti-commercial Fraud Law and the Trademark Law.

To overcome the problem, the ministry has advised e-commerce websites and those that market their products on social media to register with the ministry’s maroof portal in order to verify the credibility of their products and business. Through this registration, the portal protects the rights of consumers and warns them about fake products. The portal also provides an evaluation of services and the quality of e-stores in Saudi Arabia, and presents the opinions of dealers and clients on such stores.

The provisions on improper and unauthorised use of trademarks also apply to use of a trademark on the Internet. Unfortunately, there have been many instances of fraudulent or wrongful registrations of domain names. A trademark owner may launch formal proceedings to restrain the use of a mark in domain names, hyperlinks, meta-tags and online ads and on websites. In addition to seeking court remedies, the trademark owner may file an action with the Saudi Arabian Communication and Information Technology Commission, which is empowered to hear disputes relating to ‘.sa’ domains.

Preventive measures/strategies

The most immediate and direct remedy available is the seizure and destruction of fake products. Under Saudi laws and regulations, counterfeiting cases are usually tried under the Anti-commercial Fraud Law. This is an administrative recourse meant to protect trademark owners pursuant to the principles of unfair competition. In accordance with this law, a complaint may be filed with the Anti-commercial Fraud Department of the Ministry of Commerce and Investment. Where sufficient grounds exist, ministry inspectors usually raid the stores suspected of involvement in counterfeiting activities. Notably, the legal basis for initiating a counterfeiting case is the protection of trademark rights in Saudi Arabia.

To initiate a counterfeiting case with the Anti-commercial Fraud Department, certain requirements should be satisfied. The most important of these is the identification of the stores and showrooms involved in counterfeiting activities. This can be secured by obtaining purchase receipts from the stores and showrooms. The trademark owner should also submit genuine and fake samples of the products in question. In addition, the Ministry of Commerce and Investment sometimes insists that the trademark owner’s complaint include a statement explaining the differences between the genuine and fake products. Finally, a power of attorney and copies of the relevant trademark registration(s) must be on file before the raid can be conducted. Under the Saudi enforcement regime, only licensed Saudi lawyers can appear before the courts and administrative authorities.

Filing a complaint with the Anti-commercial Fraud Department and the subsequent raids usually culminate in seizure and destruction of the fake products. Other penalties may also be imposed on counterfeiters.

Any allegation relating to the imitation of a registered trademark is beyond dispute if the alleged mark is identical to the registered trademark in question, as in such cases the fact of imitation is obvious and does not require further proof. Accordingly, these cases are usually resolved through an administrative action whereby any interested party may file a complaint with the Anti-commercial Fraud Department supported by a registration certificate together with evidence of the unlawful imitation. Therefore, it falls within the jurisdiction of the public prosecutor.

On the other hand, if the allegation relates to a mark that looks similar but not identical to a registered trademark, it may be disputed because the imitation is not obvious and must be proved before the court. Therefore, the trademark owner may file a statement of claim before the court to prove its allegation of unlawful imitation of its registered mark. This is a judicial recourse meant to protect the trademark owner’s rights pursuant to the principles of the Trademark Law. Both administrative and civil actions are effective; they provide for similar remedies, albeit with certain distinctions in accordance with the nature of the action.