In 2016, some key changes were introduced in the Gulf Cooperation Council region (Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates).
Here, we look at what these key changes could mean for you in terms of enforcement of intellectual property rights.
New copyright law in Kuwait
In November 2014, Kuwait was moved from the US Trade Representative (USTR)'s Special 301 Report Watch List to the Priority Watch list, on the basis that it was not adequately and effectively protecting intellectual property rights - in particular because of non-deterrent penalties, and non-compliance of Kuwait's copyright law with international standards. Kuwait is the only GCC country to appear on the U.S. watch lists.
In May 2016, Kuwait responded to the USTR's concerns by issuing a new copyright law (Law number 22 of 2016), which increases penalties, including imprisonment and fines in the event of the unauthorized use of an author's work. The new law has increased prison sentences to between six months and two years (compared to one year maximum in the former law), and fines to between $1,650 and $165,200 (compared to $1,650 maximum in the former law). The new law also provides for the temporary closure of establishments for a maximum period of three months and the permanent withdrawal of their trade license in case of repeated offenses.
The question remains whether the judicial authorities will, in practice, impose stronger penalties for copyright violations.
UAE moving a step closer to the set-up of a collection body
UAE Copyright Law allows collective management of copyrights but it also provides that the societies administering authors' rights and neighbouring rights must not perform any activities in the UAE before being licensed from the Ministry of Economy.
However, to date, there is no collection body duly licensed by the government to grant licenses in the UAE on a collective basis and manage the collection of royalties on behalf of rights owners for the public performance of music in the UAE. It means that companies wishing to play music in the UAE (such as hotels, outlets, malls, radios, TV channels) need to identify, negotiate, contract and pay individual copyright owners, publishers and/or record companies to obtain the relevant licences, which is administratively burdensome.
As a result, various companies in the UAE have been refusing to pay licensing fees for public performances of music until a collective licence agency is licensed by the Ministry of Economy, although the argument is not legally valid.
Based on the foregoing, the International Intellectual Property Alliance (IIPA) has recommended in its 2016 report that the UAE be placed on the USTR's Special 301 Report Watch List until the establishment and operation of a collecting society in the UAE.
However, the recent introduction of fees to set up and operate collection agencies could be an indication that the Ministry is considering licensing a collecting society to operate in the UAE. Twofour54, the Abu Dhabi government's media focussed free zone, supported by the music industry across the region, is advocating and lobbying for a collection agency in the UAE. It recently submitted to the Ministry of Economy an application for an operating license for a music rights collective licensing organization (EMRL).
To conclude, it is important to note that some publishing and record companies in the UAE have launched blanket music initiatives to allow users to obtain a license to cover the public performance of their music repertoire.
Implementation of the GCC Trade Mark Law in Kuwait, Bahrain and Saudi Arabia
Important changes have been introduced in the GCC region further to the implementation of the GCC Trade Mark Law (the Law). The Law has now been implemented in Kuwait (in force since December 28, 2015), Bahrain (since May 29, 2016), and most recently Saudi Arabia (with effect since September 29, 2016). It is expected to come into force in the remaining GCC Countries by the end of 2017. We have set out below some the major changes that are expected under the Law.
The provisions of the GCC Trade Mark Law supplement the existing GCC Unified Customs Law, which does not expressly contain a section on procedures for intellectual property infringement.
It is interesting to note that the provisions of Article 38 of the Law related to the notification and withholding procedures of goods suspected of infringing IP rights are largely inspired from the EU Council Regulation n°608/2013 concerning customs enforcement of intellectual property rights (the "Regulation"). It even goes beyond since Article 38 expressly deals with goods in transit, unlike the Regulation.
Under Article 38 of the Law, rights owners are entitled to request suspension of suspect shipments with Customs, including goods in transit, as follows:
- A right holder shall be entitled to lodge an application in writing with the customs authorities of each GCC Member State for the suspension of the withholding of infringing goods.
- The customs authorities may, at their own initiative or upon the application of the right holder, order the suspension of the release of the goods imported, exported or in transit as soon as they enter the customs territory if it has acquired prima facie evidence are counterfeit or bear a trademark confusingly similar or identical to a registered mark in a manner that is misleading to the public.
- If so, they shall notify the right holder and the importer of the suspension of the release and, upon the right holder's request, the identity of the consignor, the importer and the consignee, and the quantities withheld.
- Customs may release the goods withheld if the right holder fails, within ten working days from the notification of the withholding of the goods, to inform Customs of the beginning of civil or criminal proceedings ("legal proceedings leading to a decision on the merits of the case").
Further, courts may order the destruction of any infringing goods at the expense of the importer, unless destruction poses serious damage to environment or public health, in which case the goods shall be disposed outside the channels of trade.
However, the provisions of Article 38 do not apply to small quantities of goods of a non-commercial nature contained in travellers' personal luggage or dispatched in small consignments; or to goods put on the market in the exporting country by or with the consent of the right holder. This means that parallel imports cannot be seized by customs authorities.
Prior to the implementation of the Law in Bahrain and in Kuwait, customs had no authority to seize counterfeit goods without a court order, which resulted in goods being returned to the port of origin.
The seizure of goods in transit is currently not authorized in Qatar, UAE and Oman, where the Law has not yet been implemented, thus reducing the efficiency of border protection. Implementation of the Law in those states will therefore represent a significant step forward.
In most GCC countries, the local law provides for precautionary measures, in the form of attachment orders, enabling the seizure of the specific goods identified in a court order. However, such precautionary measures do not stop the infringement or prevent the infringement from occurring.
Article 40 of the Law goes further. It allows right holders to obtain an order from the court on an ex parte basis for a precautionary injunction to stop or prevent the infringement.
The Law provides for the destruction of the infringing goods and of the materials and tools used in the counterfeiting operation. This already existed as a remedy under most of the local laws of the individual GCC States. The Law, however, also provides for new remedies that were not available under most of the local laws of the individual GCC States.
By way of example, pursuant to Article 41 of the Law, courts may in civil claims, award damages to the right holder to compensate for the direct injury suffered as a result of the infringement, and may include a recovery of the infringer's profits. In most GCC states, a right holder could not, previously, seek to recover the profits made by the infringer. Under the Law, courts may also order the infringer to disclose the identity of any other parties involved in any aspect of the infringement. This is also a new remedy.
As a further example, courts may order an injunction against the infringer to stop the acts of infringement, including exporting infringing goods or allowing imported infringing goods to enter trade channels. Previously, even if, as a matter of practice, GCC courts would grant orders to stop, most local laws in the GCC did not expressly provide for injunctions as part of the remedies that could be sought by claimants.
Penalties for infringement
As a general observation, in the GCC region, traders of counterfeits remain undeterred by the current penalties. Articles 42 and 43 of the Law provide for a significant increase in the maximum sanctions to be applied in trademark infringement cases:
- a fine of between USD 1,333 and USD 267,000 and/or imprisonment for between one month and three years, where a person counterfeits a registered trademark in a manner which misleads the public and affixes this mark to its products;
- a fine between USD 270 and USD 26,600 and/or imprisonment for between one month and one year where a person knowingly sells goods which feature a counterfeit or unlawfully affixed trademark.
In case of a repeated offence, the penalty may not exceed double the maximum penalties and the business may be closed for between 15 days and 6 months.
In contrast, in the UAE, where the Law has not been implemented yet, the current local law provides only for a maximum imprisonment penalty of one year and a maximum fine of USD 2,275.
It remains to be seen, however, whether penalties will now go up over time. At present the courts tend to issue the fines of the lowest possible amount.
In 2016, the UAE showed its continuing efforts to remain a leading country in the field of protection of intellectual property rights in the MENA region.
The Global Competitiveness Report issued by the World Economic Forum for 2015 to 2016 ranked the UAE 22nd in the world for IP rights protection.
UAE new anti-commercial fraud law
On December 13, 2016, a new law (the Federal Law number 19 of 2016 on Anti Commercial Fraud or "FLACF") aimed at combatting commercial fraud came into effect. It replaces the Federal Anti-Commercial Fraud Law of 1979.
The FLACF is intended to enhance the existing intellectual property rights enforcement mechanism, as intellectual property right violations have grown in importance since the first Commercial Fraud Law was drafted in 1979. It also represents a step forward in combatting commercial fraud, with specific provisions regarding food and pharmaceuticals.
Some of the key amendments include tougher penalties for counterfeiters. The new law provides for imprisonment sentences of up to two years, and fines up to AED 1,000,000 (USD 275,000), for anyone dealing with counterfeit goods. It is important to note, however, that the maximum penalties are reserved for pharmaceutical and food products.
The FLACF applies to both onshore and offshore businesses, including free zone companies in the UAE.
Online complaints with the Dubai Department of Economic Development (DED)
The Dubai DED has recently implemented an online filing system for complaints. The system allows right holders to upload UAE registration certificates allowing the officials to voluntarily monitor the market for any counterfeit products, and to file online complaints. This is a smooth, effective and efficient way for right holders to file complaints and obtain reports.
Recordal of trademarks with customs
The UAE was one of the first GCC State Members to introduce recordal of trade marks with Customs. Once recorded, trade marks are placed on a watch list, and the relevant customs authority then notifies the right holder or its representatives of goods suspected of infringing the trademark rights.
Customs recordals are available in five of the seven emirates of the UAE (namely, Dubai, Ajman, Ras Al Kaimeh, Sharjah and very recently, Abu Dhabi). Recordals have to be sought in each emirate; there is no central recordal system.
Except for Abu Dhabi, Custom recordals are valid for the term of the trademark registration, and therefore will need to be renewed when renewing the trade mark registration.
In Abu Dhabi, the recordals are valid for 12 months from filing the applications for customs action and will need to be renewed every year.
Specialised IP court circuits
Further to Ministerial Resolution number 137 of 2016, a specialised IP division has been set up at the federal level at the Abu Dhabi Court of First Instance, to handle intellectual property rights disputes.
Judge Jasem Saif Buasaibah, head of the judicial inspection department, stated that:
"The move reflects the country's interest in protecting intellectual property rights and making quicker and more effective decisions in intellectual property rights-related disputes".
We are already seeing the benefit of this. Cases are progressing to a first instance decision in approximately six months, which is half the time it used to take. Also, some of the decisions being issued have shown an increased awareness of and experience in dealing with complex IP issues.
Qatar Patent Grievances Committee
In April 2016, the Qatari Cabinet approved the establishment of a Patent Grievances Committee. The Committee is charged with handling enforcement and litigation concerning patent registrations and compulsory licences to exploit inventions. It is be headed by the Director of the Patent Office and composed of representatives from the Ministry of Economy and Commerce, Qatar Foundation for Education, Science and Community Development, and Qatar Chamber of Commerce.