E-commerce in the UAE: Intellectual property considerations (part 3)

25 August 2020

COVID-19 and global lockdown scenarios have inevitably changed the way we look at retail experiences generally and, more specifically, the way we shop. In fact, it has changed the consumer experience and expectations entirely. Whilst we have seen a portion of the population return to the physical shops as restrictions on movement have eased, it is anticipated that the pre-COVID numbers may never return. This is especially the case in the UAE, where the retail sector relies heavily on the presence of tourists. Due to various restrictions, including social distancing and other health and safety measures, combined with the increase of retailers and service providers moving their offering online (to some degree at least, if not in its entirety) means that the stage is firmly set for e-commerce to grow over the coming months and years.

Our Dubai team of lawyers, across the technology, intellectual property, corporate and commercial sectors, have written a series of articles focused on e-commerce in the UAE to share their experiences and thoughts on the region's e-commerce landscape; now and moving forward.

In this article, Jon Parker and Rachel Armstrong discuss the intellectual property considerations for taking a business online in the UAE.



E-commerce – Intellectual property considerations

As covered earlier in this series, more and more businesses in the Middle East region are moving online. This is taking place in a variety of ways. For example, traditional bricks and mortar stores are launching or expanding their online presence; we are also seeing new e-commerce businesses launching on a regular basis.

Whatever the circumstances, it is important for both new and existing businesses to consider the intellectual property ("IP") aspects which may arise, as they look to take advantage of this e-commerce boom.

There are a number of areas where IP rights need to be considered further, in order to ensure that the new or expanded services do not give rise to infringements or other potential issues for the business. Also, the business needs to protect the investments it is making in launching or expanding its e-commerce operations, which can be done through these important commercial assets.

Branding

Your e-commerce platform(s) will of course carry branding. For a new e-commerce business, it will need to ensure that the proposed brand is clear to use for the services of interest, in the country(ies) of interest, so that you will not infringe existing rights. This can mean conducting searches of the proposed name in the country(ies) of interest to see if any potentially conflicting rights exist.

If you are an existing business looking to move online, you should also check what protection, if any, you already have in place for your branding. This will help to determine whether there are any gaps in protection which should be filled. For example, if you will offer branded delivery services with the e-commerce platform, you may wish to clear and protect your brand for delivery services as well as retail services.

Consideration should also be given to where you envisage accepting orders from, the UAE only, or other countries in the region? You will need to search and considering registering your brand in the countries where you expect to offer your online services in the short-to-medium term, if you do not have adequate protection already in place.

As part of the move online, it also means that companies are no longer looking at only website sales, but also generating sales through social media platforms and also dedicated apps. This leads to a range of questions:

  • Is your preferred domain name available?
  • Do you need to consider local language options?
  • Are the hashtags you wish to use available or already in use by others?
  • Will the use of your brand for an app name potentially expose you to other companies already using the same or similar name for apps?

With the move online, companies which may not have overlapped in their offline operations, are now converging, which potentially increases the risk of confusion. For example, who would have thought that a computer manufacturer would run into IP issues with a record label? That is what happened when Apple moved into an online music store & digital music players, which brought them into conflict with Apple Records, the label set up by the Beatles.

This ultimately led to a settlement where Apple now licences the brand to Apple Records. If such convergence and branding issues can affect one of the world's largest brands, then it could happen to you.

Once the searches are conducted, and assuming all is clear, you should take steps to register your trademark(s) in order to preserve your interests in the brand and to protect your use going forward.

As Arabic is the official language of the region, though English in particular is commonly used, you should consider protecting the Arabic and English (or other language) variant of your brand(s).

Copyright

Copyright can impact an e-commerce business in many ways.

In creating the brand, or in amending an existing brand, did you work with a third party (such as a creative agency) for the logo? If so, under UAE federal law, steps will need to be taken to ensure that the underlying copyright etc in the logo is legally transferred to you.

This is the position not only with the logo, but with any rights being created for your e-commerce business by others, such as consultants or software developers.

Under UAE federal law, it is not always the case that copyright works are automatically owned by you as the commissioner. You must ensure that you make it clear at the outset, when working with third parties that you wish to own the >abbr title="intellectual property">IP rights being created. You will then need to put in place written agreements to ensure the rights created for you are transferred to your ownership. There will be certain background IP rights which have to remain with the software developer for example, but you should ensure there is a perpetual licence in place to you for such rights.

You must secure the IP rights being created for you by third parties, whether in the platform, marketing collateral, payment mechanisms, or the look and feel of the app or website, etc, so that you have control over what you can and cannot do in future. For example, if you do not obtain the underlying rights in the app, you may be tied to the original developer as they may retain ownership, which means only they may update or adapt the software in future.

Innovations

You may find that during the development stage or in the planning of the e-commerce business, you come up with innovative aspects which could help you in the operations of the new online business. It is important to ensure you maintain the secrecy of the innovation, as it if is made public, this will stop you from potentially protecting as a trade secret or as a patent.

If these innovations are new, useful, contain an inventive step and are not obvious, then it may be possible to consider patent protection. A patent is a time limited monopoly right, where the issuing government provides the applicant with exclusivity for the life of the patent (usually 20 years) in return for the invention being made public and free for all to use at the end of the term.

However, due to the technology becoming free for to all to use at the end of the patent term, the alternative, could be to keep the innovations confidential. This may help you protect them as trade secrets. This could be for aspects such as algorithms or working practices for example. The benefit of these compared to patents is that provided you put the relevant procedures in place to maintain secrecy, the right is not time limited. A trade secret should remain a trade secret until or unless you make it public.

Contractual aspects / IP policies

Has your company entered any IP specific agreements with other rights holders, where you have agreed not to use your brand in certain ways? If so, these need to be reviewed to ensure that you are free to move online without breaching such contracts.

If your business is to sell third party products, you will need to ensure that you have appropriate agreements in place to allow for your sales through e-commerce platforms. For example, if you have an agreement for the sales through bricks and mortar stores, does the agreement allow you to sell online?

Some product manufacturers may have distribution or sales agreement in place with different entities depending on whether it is online or offline sales. You therefore need to ensure that moving to online sales is not a breach of any agreement you may have, or would not lead to you receiving a warning letter from the official online distributor/the principal.

Where your website is a retail site for products you have been selling in store for many years, you will still need to put an IP policy in place so as to try and mitigate the risks as far as possible for selling the items online.

If you allow third parties to upload or sell through your platform, you also need to consider putting in place an IP policy, to include a takedown policy,

Rights holders will expect to see that there is a takedown policy so that if a potentially infringing item is found on sale, there are procedures which allows for objections/requests for removal. Also, in the IP policy you will make it clear that the third party uploading the products will be fully responsible for any potential infringements relating to products they have uploaded. This helps to minimise your potential risk/exposure to third party IP infringement claims.

You will also need to consider what quality control and other mechanisms you will have in place to help minimise issues for potential infringements. For example, will there be a process for checking authenticity/authorisation before items go live on the platform?

If you are a dropshipping website, you will need to consider whether the products from overseas meet with the regulatory requirements for the UAE, as if not, you as the retailer could face issues.

Also, if these are not products officially sold in the UAE, you must consider whether the brands will infringe existing rights in the UAE. If they do, this could mean you as the retailer faces infringement proceedings for selling the infringing brands in the UAE.

Closing

E-commerce provides significant opportunities to businesses. The very nature of the internet will mean that you are exposed to potential customers from further afield than a bricks and mortar store. In moving or launching online, consider the following:

  • Search and register your brand to protect your significant investment;
  • Consider further protection for innovations which come to light;
  • Ensure you secure ownership of the rights being created for you;
  • Audit your existing contracts to ensure you are free to move online;
  • Consider third party rights and limiting your exposure, especially if your model is to allow others to sell through your platform;
  • Dropshipping brings with it potential IP, regulatory and non-IP issues; and
  • Seek specialist IP legal advice at an early stage and prior to launch.

In taking these into account as part of your planning to move online, it will help to ensure you have the greatest possible chance of a successful launch of your online business.

We are well placed to advise on these matters and would be delighted to speak to you to find out more about your business and its operations and how we can support that in the UAE.

Read our other instalments of e-commerce in the UAE:


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