The GCC Trade Mark Law is a unified law dealing with the protection, enforcement and commercialisation of trade marks across each of the GCC member states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE). To date, the GCC Trade Mark Law has been enacted in Kuwait and Bahrain, with Saudi Arabia set to follow shortly. With substantial increases in official fees accompanying the introduction of the Law in Kuwait and Bahrain, this article considers whether increased official fees are inevitable when the Law is introduced in Saudi Arabia, and then in Oman, Qatar and the UAE.
The story so far – Kuwait and Bahrain
Kuwait was the first to implement the GCC Trade Mark Law on 28 December 2015. At the same time, it introduced across the board increases to the official fees payable to the Kuwaiti Trade Mark Office. For example, the charges for:
- registering a trade mark (from filing through to registration) increased from approximately USD 80 to USD 1,035 (an increase of 1,100%);
- renewing a trade mark registration increased from USD 18 to approximately USD 1,032 (an increase of 5,500%); and
- opposing a trade mark increased from USD 18 to approximately USD 316 (an increase of 1,600%).
Then, on 29 May 2016, Bahrain implemented the GCC Trade Mark Law, and this was also accompanied by across the board increases in the official fees charged by the Bahrain Trade Mark Office. For example, the charges for:
- registering a trade mark (from filing through to registration) increased from USD 320 to USD 1,725 (an increase of 440%);
- renewing a trade mark registration increased from USD 160 to USD 1,725 (an increase of 980%); and
- opposing a trade mark increased from USD 55 to USD 530 (an increase of 860%).
These are very significant increases and has led to speculation that further increases are on the way when the GCC Trade Mark Law is implemented in the other GCC member states.
Further background – A track record of high official fees
The above summary only covers very recent history. The Trade Mark Offices in the GCC countries have traditionally charged high official fees compared with their counterparts outside the region, and these fees have been increasing.
Since 2010, all of the GCC countries except Oman and Qatar have increased their official fees for filing and registering trade marks. The official fees for registering a trade mark (from filing through to registration) now exceeds USD 1,000 in each of the GCC countries except Oman and Qatar.
An economic perspective – A desire to diversify government revenues
When considering the issue of official fees, it is also important also to look at the broader economic perspective.
In many countries, government departments operate under a mandate to cover their costs on a stand-alone and non-profit basis. On this basis, creating a surplus can be a problem, and this has resulted in official fees being decreased by some Trade Mark Offices in order to avoid excessive surpluses being built up.
The GCC states have operated on a virtually tax free basis for decades, with governments using a variety other means to generate revenues. The generation of a surplus by a government department is far from a problem – it is a positive contribution to government revenues.
With oil-prices high, the diversification of government revenues has not been a high priority for some of the GCC countries. There have been long-standing discussions to diversify government revenues through the introduction of taxes. However, while revenues remained strong, there was no real pressure to move these discussions forward.
Now, with oil prices lower than they have been for years, these discussions have seemingly made progress, with the introduction of a GCC sales tax reported to be planned for 2018.
It seems a coincidence that the GCC Trade Mark Law is in the process of being implemented at the same time as a decision has been reached to introduce a sales tax across the region. However, this coincidence does highlight that the diversification of government revenues is very much a high priority topic in the region at the moment, and that this is set to continue.
It is therefore unsurprising that we have seen fee increases in Bahrain and Kuwait when they implemented the new Law, and we can expect each of the GCC member states to review their official fees at the time they implement the Law.
Official fees under the GCC Trade Mark Law – what next?
As stated at the beginning of this article, the GCC Trade Mark Law is a unified law. It is founded on the principle of consistency – with the same law being in place in all six GCC member states.
However, this principle of consistency is subject to an exception when it comes to the fixing of official fees. The very last provision of the Implementing Regulations to the GCC Trade Mark Law (Article 40) provides each member state with the discretion to determine whatever official fees it wishes to charge under the Law.
Accordingly, although Kuwait and Bahrain have introduced substantial increases in official fees when implementing the GCC Trade Mark Law, there was no obligation on them to do so. Each of the GCC member states has the flexibility to fix whatever official fees it wishes.
It appears likely that Saudi Arabia will be the next to implement the GCC Trade Mark Law. On 1 July 2016, the GCC Trade Mark Law and its Implementing Regulations were published in the Saudi Arabian Official Gazette, and it appears likely the Law and Implementing Regulations will come into force in Saudi Arabia within three months (i.e. by the end of September 2016).
The official fees published in Saudi Arabia do not show an across the board increase. Instead, this is more of a mixed bag with, for example:
- registering a trade mark (from filing through to registration) decreasing from USD 1,865 to USD 1,735 (a decrease of 7%);
- renewing a trade mark registration increasing from USD 1,600 to USD 1,735 (an increase of 8%); and
- opposing a trade mark increasing from zero to USD 535.
Putting this into context, the official fees in Saudi Arabia were already some of the highest in the region. It is therefore perhaps not surprising that Saudi Arabia seemingly does not see the need to increase its official fees to the same extent as occurred in Kuwait and Bahrain.
This is, however, encouraging as we await the implementation of the GCC Trade Mark Law in each of Oman, Qatar and the UAE.
It is also worth bearing in mind that the purpose of introducing a tax regime is, of course, to diversify government revenues so that they are less reliant on income from oil and gas. Whether, in the medium term, this also takes pressure off individual government departments to raise revenue remains to be seen.
However, it is certainly possible that we are currently witnessing a peak in official fees in the GCC countries and that, over time, they decrease to levels which are more in line with countries outside the region.