Litigation procedures and strategies: Saudi Arabia
Legislative framework and causes of actions
The following laws, implementing regulations and ministerial resolutions constitute the judicial and administrative framework for trademark rights protection in Saudi Arabia:
- The Trademarks Law of the Gulf Cooperation Council States – adopted by all Gulf Cooperation Council member states including Bahrain, the United Arab Emirates, Qatar, Kuwait, Oman and Saudi Arabia. The law entered into force in Saudi Arabia on 27 September 2016 by virtue of Royal Decree M/51 (26/07/1435H).
- The Implementing Regulations of the Trademarks Law of the Gulf Cooperation Council States adopted by the Commercial Cooperation Committee of the Gulf Cooperation Council States in June 2016.
- The Anti-commercial Fraud Law promulgated by Royal Decree M/19 (23/04/1429H corresponding to 29 April 2008).
- The Implementing Regulations of Anti-commercial Fraud Law issued by Ministerial Resolution 155 (06/01/1431H corresponding to 23 December 2009).
- The Border Measures Regulations issued pursuant to Ministerial Resolution 1277 (3 July 2004).
A person who holds a trademark registration in Saudi Arabia or who has priority through an earlier filing date has the legal right to oppose the registration of an identical or similar trademark by any other person in Saudi Arabia for identical or similar goods or services. The owner of an unregistered well-known trademark in Saudi Arabia has the same legal right to oppose the registration of the identical or similar trademark by any other person for the same goods or services in which the famous trademark is used.
A person with priority over a trademark in Saudi Arabia, whether by use or registration, has the right to file an action to cancel the registration of the later identical or similar registered trademark by any person in Saudi Arabia for the same or similar goods or services in which the trademark is used or registered.
A registrant of a Saudi trademark, as well as the owner of a famous trademark which is not registered in Saudi Arabia, has the legal right to file an action against any person to prohibit the use of an identical or similar trademark in Saudi Arabia for identical or similar goods or services.
The registrant of a Saudi trademark can keep its trademark on the watch list of the Saudi Customs Authority to prohibit any third party from importing goods into Saudi Arabia bearing an identical or similar trademark.
Alternative dispute resolution
The following treaties, laws and implementing regulations provide for alternative dispute resolution in Saudi Arabia:
- the Saudi Arbitration Law issued by Royal Decree M/34 (24/05/1433H corresponding to 19 March 2012);
- the Saudi Execution Law issued by Royal Decree M/31 (13/08/1433H corresponding to 3 July 2012);
- the Regulations of the Gulf Cooperation Council Commercial Arbitration Centre and the Arbitration Procedures adopted by the Saudi Ministerial Council Resolution 102 (20/04/1423H corresponding to 1 July 2002); and
- the Convention on the Recognition and Enforcement of Foreign Arbitral Award, New York 1958, ratified by Saudi Arabia on 19 April 1994.
The parties to a commercial contract are free to agree on the arbitration clause, whereby they refer any dispute that arises from the implementation or interpretation of the contract to an arbitration committee within or outside Saudi Arabia. In the same manner, the parties to a lawsuit before the Commercial Court can request the court to stay the proceedings and refer the dispute to an arbitration committee. However, in all cases, any accusation or issues of a criminal nature are exempt by force of law from the scope of the arbitration agreement.
If the arbitration is conducted within Saudi Arabia, the Commercial Court of Appeal is the competent court to admit the petition of arbitration and controls the arbitration proceedings. The final judgment issued by the Commercial Court of Appeal based on the arbitral award is enforceable in Saudi Arabia by a petition to be filed by the judgment creditor to the competent execution court.
If the arbitration is conducted outside Saudi Arabia, the foreign arbitral award is enforceable in Saudi Arabia by a petition to be filed by the award-creditor to the Riyadh Execution Court, provided that all legal requirements are satisfied, including the fact that the award does not violate any principles of Sharia law.
Litigation venue and formats
The court system in Saudi Arabia, as described under different Saudi laws, is composed of two independent parallel systems:
- the Administrative Court System; and
- the General Court System.
The Administrative Court System (also known as the ‘Board of Grievances’) is the court system which deals with disputes to which the public administration is a party. The hierarchy of courts in this system is as follows:
- The Administrative Court is the first-instance court in the Administrative Court System. Judgments issued by this panel are subject to appeal before the Administrative Court of Appeal.
- The Administrative Court of Appeal is the appellate authority in the Administrative Court System and is available in any main city in Saudi Arabia. The judgments issued by these panels are final and enforceable, unless an issue of law arises. In such case, the judgment is subject to further appeal by way of cassation before the Supreme Administrative Court.
- The Supreme Administrative Court is the highest judicial authority and ensures the correct application of the law and principles of Sharia law by the Administrative Court of Appeal.
Trademark disputes in Saudi Arabia are mostly administrative in nature and fall within the jurisdiction of the Administrative Court. Oppositions against acceptance of trademark applications, appeals against refusal of trademark applications and trademark cancellation actions are all administrative where the regulatory authority of trademarks is involved (ie, the Ministry of Commerce and Investment).
The hierarchy of courts in the General Court System is composed of the following levels:
- the General Court;
- the General Court of Appeal; and
- the Supreme Court.
The General Court, which is the first-instance court in the General Court System, is divided internally into the following specialised circuits:
- the Labour Circuit;
- the Criminal Circuit;
- the Commercial Circuit; and
- the Personal Matters Circuit.
Trademark infringement disputes fall within the scope of jurisdiction of the Commercial Circuit. The judgments issued by the Commercial Circuits are subject to appeal before the General Court of Appeal and the judgment of this court is final and enforceable, unless an issue of law arises in which case the judgment is subject to further appeal by way of cassation before the Supreme Court.
Damages and remedies
Under Saudi trademark law, there are clear provisions relating to the award of damages in trademark infringement cases. However, the award of damages is dictated by the principles of Islamic Sharia. The principles of Islamic Sharia require a heavy burden of proof to establish actual damage. An additional requirement for the award of damages is that the damage suffered by a claimant should be based on the infringing act of the defendant. The cause and effect relationship excludes the possibility of awarding speculated damages or unquantifiable damages (eg, damages claims against reputational harm).
Damages can be claimed in the statement of claims filed against infringement of the trademark. Saudi trademark law provides a non-exhaustive list of parameters for calculating damages as a guideline to the court. Award of damages to the plaintiff may be based on profit earned by the defendant and the value of goods or services infringed. Such value should be based on the retail price of such goods or services or any other criteria which the court deems fit under the circumstances.
In case of deliberate imitation of the established mark, the aggrieved party may claim for an award of adequate compensation other than the profit earned by the infringer. The court has the discretion to award any amount in compensation to the plaintiff. In practice, Saudi courts rarely grant compensation, due to the heavy burden of proof required under the Sharia principles.
If the defendant is declared liable for offences under the Trademark Law, in such cases, depending on the offence committed, monetary punishments can be between $270 and $266,700. A recidivist may be handed double punishments, as provided for each specific offence, and may also be obliged to temporarily close the business. The following acts, among others, are offences according to the law:
- counterfeiting or imitating a registered mark so as to mislead or confuse the public, or using in bad faith any counterfeited or imitated mark;
- identifying goods or services, in bad faith, with a mark owned by others;
- unlawfully inscribing a mark on papers or commercial documents as a representation that might lead to the belief that registration of such mark has been obtained;
- deliberately and in bad faith failing to affix the registered trademark on the goods or services that it distinguishes; and
- knowingly possessing tools or material intended to be used in the imitation of registered trademarks or famous trademarks.
A trademark owner has the choice to initiate the type of action available under Saudi laws. The type of infringement, type of claim and circumstances of the case should affect the choice of adopting the available routes. Usually, the infringement cases which are likely to prompt complex legal questions should be filed with the court. The following two options are available for any trademark infringement in Saudi Arabia:
- administrative action before the Anti-commercial Fraud Department in Riyadh; and
- the Commercial Court with jurisdiction over trademark infringement matters – a statement of claims must be filed before the court in writing.
In a few cases, courts have ruled out that filing a complaint before the Anti-commercial Fraud Department is a prerequisite for the Commercial Court to admit and review an infringement action. A statement of claim must be filed with the competent Commercial Court along with evidence, including proof that the plaintiff filed a complaint against the infringer before the Anti-commercial Fraud Department. The court usually takes two months to summon the defendant for the first hearing. Depending on the complexity of the issues in the case, its conclusion may take 15 to 20 months. If a claimant intends to claim for damages, in such cases the Commercial Court is the right option.
There are different types of remedy available under Saudi trademark law and the circumstances of the case will define which type of remedy that the court will deem fit to award. A claimant can request the following remedies available in an infringement action:
- an interim injunction and precautionary measures are available against the defendant, which may include imposing seizure on infringing goods, including all tools or materials involved in infringement, recording of revenue accounts resulting from infringement, preventing infringing goods from entering into commercial channels or export outside Saudi Arabia, and an order to stop the infringement until the final decision – in practice, Saudi courts rarely grant interim injunctions;
- a permanent injunction restraining the defendant from further infringement;
- an order to destroy all the infringing goods;
- an award of damages to the plaintiff, which, according to the law, should be based on profit earned by the defendant and the value of goods or services infringed – such value is based on the retail price of the goods or services or any other criteria which the court deems fit under the circumstances;
- the award of adequate compensation other than the profit earned by the infringer (in case of deliberate imitation of the established mark) – the court has the discretion to award any amount in compensation to the plaintiff, while in practice, Saudi courts rarely grant compensation due to the heavy burden of proof required under the Sharia principles;
- an order from the court to oblige the defendant to disclose information about all persons or entities who contributed to the infringement, either through the production or distribution of infringing goods; and
- financial penalties ranging between $270 and $266,700 may also be imposed (depending on the nature of the infringement) – such penalties may be doubled in case of repeated infringement.
Criminal prosecution can be initiated solely by a public prosecutor on recommendation from the Anti-commercial Fraud Department. The rights holder is entitled to file the complaint before the Anti-commercial Fraud Department against the infringer and the infringer is not entitled to join the criminal prosecution when established by the general prosecutor.
Under the law, interim and permanent injunctions are available for the rights holder. A rights holder may request a preliminary injunction in case of prima facie infringement. Such a request should be based on evidence of infringement based on registered trademark rights. The plaintiff must prove that until the final decision, there is a significant chance of irreparable damages to the plaintiff. In practice, Saudi courts rarely grant interim injunctions.
For a final injunction in an infringement action, the plaintiff must prove:
- its registered rights or, in the case of an unregistered trademark, the mark’s fame in Saudi Arabia; and
- that the defendant’s trademark is similar or identical, or has imitated the dominant part of the plaintiff’s trademark and that the defendant is not authorised to use the trademark.
In cases of cancellation action, the first requirement will remain similar to that stated above for infringement actions (ie, the rights of the plaintiff over the trademark must be established). In addition, the plaintiff must prove that the defendant has unlawfully registered the trademark and the period of registration does not exceed five years; otherwise, the plaintiff must prove the bad faith of defendant in registering the trademark. In a non-use cancellation action, it is the plaintiff that must prove, based on the market investigation, that the defendant has not used the trademark for five consecutive years in Saudi Arabia. Saudi courts usually demand an investigation report from an independent party at the cost of the plaintiff to prove its claim of non-use.
In any action based on the well-known mark, all the above elements should be proved by the plaintiff. If a well-known mark is actually used in Saudi Arabia, it is very convincing in proceedings. Over the past few years, Saudi courts have shown significant recognition towards unregistered well-known trademarks.
In infringement disputes, Saudi trademark law does not specifically state which acts would constitute non-infringement of a trademark; however, within the context of law and practice, possible defences may include the following:
- the defendant’s trademark is sufficiently distinguishable from the plaintiff’s mark – in practice, the defendant must prove that the difference between the two marks is significant and that the dominant part of the plaintiff’s mark is not imitated;
- the plaintiff’s trademark is subject to a disclaimer and such use does not constitute infringement;
- the defendant is using the mark for goods or services which does not conflict with goods or services covered under a registered trademark;
- the defendant’s use of the trademark is a descriptive use;
- the plaintiff’s trademark is unregistered and does not have fame in Saudi Arabia;
- the defendant has tradename registration and the right to use its tradename; and
- the defendant’s use of the mark is in good faith and without knowledge of the registration of a similar or identical trademark in Saudi Arabia.
The doctrine of laches is not recognised in Saudi Arabia in trademark disputes (except in ownership disputes where the law specifies time limits to challenge unlawful ownership clearly).
In infringement and cancellation or invalidation proceedings, the Court of Appeal is an appellate forum against first-instance court decisions. Within 30 days of issuing a decision, an appeal may be filed on point of law or point of fact, and new evidence may also be submitted. If the Court of Appeal accepts the appeal, it remands the case back to the first-instance court for retrial. A retrial may be on a specific observation as raised by the Court of Appeal, or for the case as a whole. A fresh decision by the first-instance court in a remanded case is appealable again to the Court of Appeal, in which case the Court of Appeal issues the final decision.
Appeal against refusal of trademark application and opposition proceedings are filed with respective trademark committees. The decision of the Trademark Appeal Committee and Trademark Opposition Committee can be appealed to an administrative court within 60 and 30 days respectively. The further appeal process is similar to the above.
Evidencing the case
Generally, trademark rights in Saudi Arabia are acquired through registration, therefore a registration certificate is the sine qua non to bring an infringement action. It is also the duty of the plaintiff to establish confusing similarity. In the case of unregistered well-known trademarks, the plaintiff is under an additional burden to prove that the mark is famous and that such fame extends to Saudi Arabia. Saudi trademark law stipulates criteria for establishing the fame of a trademark, which is the extent of its recognition by the concerned consumers as a result of:
- its promotion;
- the duration of registration or use;
- the number of countries of registration or fame; or
- the value of the mark and the extent of its impact on the promotion of goods or services for which the mark is used.
The following forms of evidence can be relied on in support of a trademark infringement claim initiated in court:
- documentary evidence (including samples or photographs of allegedly infringing items);
- expert evidence;
- oral testimony;
- survey evidence;
- a claimant must present any evidence on which it will rely at any time before the closing of hearings; and
- a party to the proceedings may request information that is within the possession or control of another party to the proceedings; however, it is solely within the discretion of the tribunal or court to ask for disclosure of any documents.
Saudi courts, at their own discretion, can appoint an expert for submission of the expert report without intervention from litigating parties. In such case, the expert’s fee will be paid by the litigating party as per instructions of the court.
It is possible to introduce surveys as evidence for the following issues:
- whether a mark is famous or well known;
- likelihood of confusion;
- actual use or non-use in the market; and
- volume of use in the market.
Survey evidence is easily acceptable and convincing before the court if it is produced by an independent licensed expert and authenticated by the Chamber of Commerce and Industry.