While the border measures in Saudi Arabia have proven to be more effective than those in the United Arab Emirates, the UAE market agencies tend to produce more consistent results than their Saudi counterparts
Saudi Arabia and the United Arab Emirates are often the top destinations for rights holders looking to expand in the Middle East. However, while the relatively high per-capita incomes of both countries make them attractive emerging markets, they also make them a tempting target for pirates and counterfeiters seeking to capitalise on the marketing efforts of others. To maximise returns and safeguard brand equity, rights holders should put in place efficient and cost-effective trademark enforcement programmes in order to discourage the counterfeiting, unauthorised use and imitation of their brands. Apart from traditional civil and criminal actions, which tend to be expensive, both the United Arab Emirates and Saudi Arabia offer a number of mechanisms for costefficient trademark enforcement, including administrative raids and seizures which can achieve results at the retail, wholesale and import levels when strategically managed. In order to take advantage of such measures, rights holders must have considered trademark protection in place. Although generally, trademark ownership in Saudi Arabia and the United Arab Emirates arises from use rather than registration, registration is required to enforce marks through the available administrative agencies. Market enforcement The most effective enforcement agency in Saudi Arabia is the Anti-commercial Fraud Department at the Ministry of Economy and Industry. A successful action by the department usually results in the seizure and destruction of the infringing products, a fine on the infringer and signed undertakings from the infringer not to repeat the offence. The advantages of filing a complaint with the department as opposed to seeking civil or criminal enforcement are that it is quicker to achieve an outcome, simpler to put together and considerably less expensive. Depending on the time of year (eg, things tend to slow down during Ramadan), a complaint can be reviewed and decided on within a week and a raid carried out in less than a month. The main limitations of a complaint with the Anti-commercial Fraud Department are that it is unlikely to succeed without the support of a trademark registration certificate. In addition, if the infringer refuses to sign the undertaking, the matter is transferred to the public prosecution for consideration. In terms of trademark registration, certificates should clearly depict an appropriate representation of the mark and a relevant description of the goods. However, the department may decline to act if these are not tied closely to the infringing conduct. As for those cases that are transferred to the public prosecution, while fines and imprisonment are not uncommon – especially when the infringing product poses health and safety risks or contravenes public order or morality – the rights holder is not a party to the proceedings and the proceedings themselves are not transparent. It can be challenging to follow up on the conduct of criminal proceedings in Saudi Arabia or to obtain copies of judgments. Indeed, there is little clarity for rights holders on what penalties were imposed on the infringer and – more importantly – whether destruction of the goods has been ordered. The United Arab Emirates also offers enforcement administratively through agencies such as economic departments, municipalities and the Ministry of the Economy. The choice of agency depends on the emirate, the nature of the infringing product and the ultimate objective of the action. Generally, administrative enforcement actions result in offenders being fined, the infringing goods seized and destroyed, and the file being closed without litigation. As in Saudi Arabia, administrative enforcement in the United Arab Emirates is a fast, easy and cost-effective process. In Dubai, administrative enforcement is a welcome alternative to the traditional police or criminal routes because the administrative agency itself often deals with the costs, logistics and approvals for storing and destroying seized counterfeit products, which saves the rights holder substantial expense and effort. However, in addition to the requirement of trademark registration, administrative decisions are limited, so that if an offender does not comply, the rights holder’s only recourse is to file a new complaint. While administrative agencies do issue fines, threaten to suspend or not renew trade licences and block local sponsors from sponsoring other businesses in cases of non-compliance, these measures are usually ineffective against seasoned infringers. A popular and effective administrative measure in Dubai is the six-month open complaint with the Department of Economic Development. Pursuant to a written complaint by a rights holder, the department proactively monitors the market, reports traders offering suspect counterfeit products and carries out raids and seizures. It is also possible to feed the department leads on specific targets, subject to reasonable fees. This system has proved extremely effective for a number of rights holders and is definitely something that all rights holders should consider implementing as part of their anti-counterfeiting strategy for the United Arab Emirates. Cedar White Bradley www.WorldTrademarkReview.com August/September 2014 World Trademark Review 113 Although Dubai has the most operative system compared to the other two emirates, there are two deficiencies that must be resolved for it to become more effective and reach international standards. The first is that unless the importer has confessed that its goods are counterfeit, a sample of the original, genuine product is required to effect a seizure or the shipment will be released back onto the market. This causes problems for luxury brand owners, as each sample may cost thousands of dollars. The second has to do with disclosure. Unlike in Saudi Arabia, information on importers and exporters is not disclosed at the time of filing the complaint and shipping documents are not made available to rights holders at any point. The only pertinent information given is that included in the seizure decision, which is usually limited to the name of the importer – often, the name of an individual. Further, Dubai Customs has begun to issue decisions to re-export seized counterfeit goods rather than ordering their destruction. The underlying issue appears to be that available landfills are approaching saturation and other forms of disposal may have adverse environmental consequences. However, there is still hope, as the new Anti-commercial Fraud Law – which is pending approval at the ministerial level – has been amended explicitly to provide for the destruction of products that are categorised as counterfeits. Notwithstanding uncertainty as to what products will fall within this classification and the fate of products that fall under the classification of ‘fraudulent and/or corrupt’, this revision is much welcomed and is clearly a step in the right direction. While the available border measures in Saudi Arabia have proven to be more effective than those in the United Arab Emirates, the UAE market enforcement agencies tend to produce more consistent results than their Saudi counterparts. Clearly, there is room for improvement in both countries; but despite this, rights holders with a sound strategy in place can still rely on these measures to enforce their trademarks effectively and efficiently. Even if the budget does not permit a comprehensive programme, rights holders can still achieve results by concentrating their efforts on the best measures that each country has to offer. For example, one rights holder was able to achieve results despite a limited budget by focusing expenditure on border protection in Saudi Arabia and then passing on intelligence on the source of the seized counterfeit products to the Dubai Department of Economic Development. WTR Ras Al-Khaimah and Sharjah. The recordal procedures and costs are the same for all three customs authorities. These border measures constitute a cost-effective means of curbing the flow of counterfeit product into the United Arab Emirates. Once a shipment is detained, the process is quite efficient and usually results in a decision on the fate of an uncontested shipment within a few months. However, there are shortcomings. For example, there is no unified customs recordal programme for all seven emirates and, as mentioned, only three of the seven emirates have a programme in place. Further, the Dubai, Ras Al-Khaimah and Sharjah systems are independent of one another, so in order to seize products at all three borders, three separate recordal applications must be filed – one in each emirate. Dubai Customs seems to be the most effective at regularly detaining suspect shipments; there is hardly any noticeable activity by the Ras Al-Khaimah and Sharjah Customs. Border protection Both the United Arab Emirates and Saudi Arabia offer programmes for seizing counterfeit products at their borders before they can be dispersed throughout the internal markets. While there has been some recent concern regarding the re-export of counterfeit goods seized by Dubai Customs (discussed below), the authorities are well aware of the implications for rights holders and are reconsidering the underlying legislation. As with administrative market enforcement, trademark registration is a requirement to take advantage of the border protection measures available in the United Arab Emirates and Saudi Arabia. There is no formal customs recordal procedure in Saudi Arabia and it is within Customs’ discretion whether to notify rights holders of suspect shipments that are detected during their inspections. While Saudi Customs has no formal recordal system in place, it does have an effective informal system, which has several benefits. A rights holder need only notify Saudi Customs of its trademarks in one central location, after which notification is circulated to all customs offices at each of the country’s 32 ports of entry. Another important advantage is that once a rights holder confirms the counterfeit nature of a suspect shipment and files a complaint seeking its seizure and destruction, its is provided with the corresponding shipping documents, including the usually elusive bill of lading, which discloses details of the exporting and importing parties, as well as the port of origin, carrier and shipping route. However, Saudi Customs has two main shortcomings. The first is that it is extremely difficult to organise centralised training for all 32 customs posts – more often than not, rights holders must carry out training at each point of entry. An effective way around this is to focus training efforts and budget on the main points of entry (ie, King Khalid International Airport and the Dry Port in Riyadh, King Abdul Aziz Airport and the Islamic Seaport in Jeddah, King Fahed International Airport and King Abdul Aziz Seaport in Dammam). The second is the substantial delay in the destruction of seized shipments and the uncertainty surrounding the ultimate fate of such shipments. Indeed, the author is not aware of any destruction of counterfeit goods being made by Saudi Customs since the launch of this programme back in 2010. Among the seven emirates of the United Arab Emirates, trademark recordal systems have been introduced in only three – Dubai, Country Correspondent: Middle East Taj Kunwar Paul Senior consultant firstname.lastname@example.org Taj Kunwar Paul leads the anticounterfeiting team at Cedar White Bradley. She has been practising IP law since commencing her legal career in 2001 in India and now has over nine years of experience in the Middle East and North Africa. Before joining Cedar White Bradley in 2010, Ms Kunwar Paul spent over five years working with a boutique media and entertainment law firm in Dubai. Her practice focuses on litigation and anti-counterfeiting, and she regularly advises on brand protection, licensing and franchising, as well as on the management of multi-jurisdictional portfolios.