This chapter forms part of the Anti-counterfeiting Law Over Borders Comparative Guide 2022. The Law Over Borders comparative guides provide essential information on law and legal practice across the world in an easy-to-use digital format that allows readers to quickly compare the legal frameworks of different jurisdictions. Anti-counterfeiting is a practical and comprehensive guide providing answers and insight into how businesses can protect their brands from counterfeiting and the grey market. In the following guide Munir Suboh and Felicity Hammond look specifically at anti-counterfeiting in the UAE.
The United Arab Emirates consists of seven emirates which are Abu Dhabi (the Capital), Dubai, Ras Al Khaimah, Sharjah, Fujairah, Ajman and Umm Al Quwain, which are all part of the Federal Constitution. This constitution prescribes the relationship between the federation and each emirate, and sets out the legal framework. Federal Laws and regulations apply to all of the emirates whereas local laws and regulations are specific to each emirate and only concerns matters where the Federal Law is silent.
The UAE operates under a civil law system. The legislation is formed by codified statutes and their implementing regulations. The judiciary’s role in a civil law system is to establish the facts and apply the relevant legislation on a case by case basis, as the judgments of higher courts are not binding on lower courts. The court system does not permit the use of juries however, court sworn experts are often appointed to provide their opinion to the judge, especially in cases of a specialized subject matter. All proceedings before local courts, except special courts Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), are conducted in Arabic and all proceedings are generally conducted by a series of written memos with little oral advocacy involved.
For counterfeiting, the federal legislation stipulates criminal, civil and administrative liability. The core provisions are in many legislations, such as:
• Federal Decree Law Number 36 of 2021 on Trademarks.
• Federal Decree Law Number 38 of 2021 on Copyrights and Neighbouring Rights.
• Federal Decree Law Number 34 of 2021 on combatting Cybercrimes.
• Federal Decree Law Number 43 of 2021 concerning Goods Subject to the Prohibition of Proliferation.
• Federal Law Number 19 of 2016 on Combatting Commercial Fraud.
• Federal Law Number 24 of 2006 concerning Consumer Protection.
• Federal Law Number 18 of 1993 concerning the Commercial Transactions Law.
• The Unified Customs Law (Regulation) for the Arab States of the Gulf Cooperation Council of 2003.
• Federal Law No. (3) of 1987 Promulgating the Penal Code.
The UAE is also party to many international treaties that relate to intellectual property such as the Berne Convention, the Paris Convention, the Rome Convention, the WIPO Copyright Treaty, Patent Cooperation Treaty, the TRIPS agreement and the Madrid agreement and protocol.
1. CRIMINAL PROSECUTION & CIVIL ENFORCEMENT
1.1 Criminal prosecution
Illegal use of a trademark or any related fraudulent acts can attract criminal penalties under the UAE Penal Code and Federal Laws.
Criminal complaints for counterfeit goods can be reported to either the criminal intelligence departments (CID) within the police or the public prosecution. Upon receipt, the public prosecution will review the complaint and decide whether to issue arrest warrants to allow for raid action or further investigation. The CID/police officials, upon approval from the public prosecution, will raid the concerned premises, seize products, collect evidence and search for leads and information from any suspects at the scene. Following the raid, they will prepare a case file consolidating all evidence, statements and forensic reports from a laboratory which is then referred to the public prosecution to review and decide upon.
In the event goods are seized from the premises, they may be stored in official police storage or at the expense of the brand owners until proceedings are finalized. The practice varies from one emirate to another. Once the criminal file is transferred to the public prosecution, the investigation continues to review the charges. The public prosecutor may order further interrogations or investigations of the accused and will then issue a decision as to whether this matter should be transferred to the criminal court.
If the matter is transferred to criminal court, criminal proceedings are held before a summary judgment is issued. When counterfeiting is confirmed, the court imposes sanctions on the infringing parties (i.e., imprisonment and/or fine).
The offenses committed in the case of counterfeit goods may vary depending on the circumstances of each case. Historically, law enforcement addresses counterfeit trade issues based on the provisions of the UAE penal code which stipulates minimal penalties.
According to the newly enacted UAE Trademark Law of 2021, whoever conducts the acts below will receive a penalty of imprisonment and a fine of between AED 100,000 to AED 1,000,000, or either of the two penalties:
• Forges a Trademark that was registered in accordance with the provisions of this Decree-Law…etc.
• Knowingly uses a forged or counterfeit Trademark for commercial purposes.
• Puts on his goods or uses in respect of the services he provides, in bad faith, a Trademark owned by others.
• Possesses tools or materials with the intent of using them to forge or counterfeit registered or well-known Trademarks.
• Knowingly imports or exports goods bearing a forged or counterfeit Trademark.
Further, under Article 50 of the same law whoever “sell or offers for sale or circulation or possesses with the intention of selling goods or offers the provision of services carrying a forged, an imitated, or unlawfully put or used Trademark, despite his knowledge thereof” will incur a penalty of imprisonment of up to one year and/or a fine of between AED 50,000 to AED 200,000. In the event of reoffending, the penalty shall be twice the maximum penalty prescribed for the crime.
The criminalization of counterfeiting can also be found in other laws and regulations. For instance, the Commercial Fraud Law makes it an offence to “import, export, re-export, manufacture, sell… market or trade, fake, corrupt or counterfeit commodities”. Any person found guilty of commercial fraud shall be sentenced to up to two years in prison and/or a fine of up to either AED 250,000 or AED 1,000,000.
The UAE Copyright Law of 2021, Article 40(1) stipulates a penalty of imprisonment of at least six months and a fine of between AED 100,000 and 700,000 for whomever commits actions such as (for example):
• Unlawfully manufacturing or importing, for the purpose of sale, any counterfeit work or copies thereof.
• Unlawfully disrupting or impairing any technical protection or electronic data aiming at regulating and managing the rights prescribed by this Decree-Law.
• Downloading or storing in the computer any copy of the computer programme or applications thereof or databases, without obtaining a licence from the Author.
In practice, the investigating authority would require a UAE trademark (or other right) registration certificate prior to conducting an investigation. Copyrights may not require local registration although having this will ease and expedite the process. The authorities also require proof of infringement. The investigating authority will conduct their own investigations into the matter, subject to adequate cause for investigation, and issue their findings.
In terms of representation in criminal proceedings, the owner of intellectual property rights are advised to file a civil case in conjunction with the criminal proceedings. In the event no civil case is filed in conjunction, the criminal matter would be handled by the prosecution exclusively without the IP owner having authority to attend court.
Whilst there are some specialised IP divisions and judges, there are no standalone courts (federal or local in UAE) that are established to solely handle and receive either civil or criminal intellectual property claims.
1.2 Civil enforcement
Brand owners may bring civil actions against a defendant for infringement of their intellectual property rights. They may claim compensation and other statutory civil remedies, namely seizure, destruction, cancelation of an
infringing trademark or trade name, publication of judgment and/or closure of infringing business.
Civil IP cases will be handled by the civil court of the emirate in which the offence occurred or in which the offending party is incorporated/located. A plaintiff will have the option to choose which court to file the civil claim under so long as they have a sufficient basis for jurisdiction in that emirate. Free zones such as DIFC and ADGM in the UAE have their own courts, based on common law system, and operate more akin to English system. Cases can go through
the three stages of dispute providing the value of claim is within adequate jurisdiction for appeal and cassation stages.
In order to file a complaint, the plaintiff must have:
• An appointed legal representative, i.e., attorney(s) and advocate(s).
• A valid Power of Attorney (legalized up to the UAE embassy).
• A registration of concerned IP right, with exception to copyrights.
• Evidence about the violation and infringement of IP rights.
• Evidence of damage and tort in order to claim compensation.
• Full details about the defendant(s), including correct names, addresses and so on.
In infringement and/or counterfeit matters it is likely that the judge will refer the case to a court appointed expert for their report on technical points, i.e., IP and/or accounting experts. The courts are entitled to appoint as many experts as it considers necessary to substantiate their decision.
Whilst experts cannot hold any party in contempt, a parties’ failure to cooperate with experts would not reflect well and could affect the decision of the expert.
In practice, the judge often follows the opinion of the expert and their input is considered a very important element to the case. The judge will then issue its decision on the matter and may order remedies.
IP owners can best protect themselves by acquiring local registrations in all classes of interest.
Some of the available remedies for civil claims in the UAE include:
• Attachments (a preemptive measure similar to an injunction).
• Confiscation and destruction of infringing goods, machineries and all materials used to produce the illegal products.
• Publication of decision in Official Gazette or Arabic daily.
• Closure of infringing parties’ business for up to six months (this is unlikely to be ruled though).
• Monetary damages (compensatory not punitive as this is not available in UAE).
• Payment of court fees in full.
• Recovery of attorney fees. Full recovery is not usually granted but partial recovery can be requested as part of actual damages.
• Moral Damages as part of available equitable remedies under the UAE laws.
Under the applicable civil transactions laws which govern tort and damages, a plaintiff, i.e., IP owner is eligible to pursue and claim damages in infringement and counterfeiting cases. The awarded damages should be appropriate and based on the actual damage that was sustained by the IP owner.
Whilst loss of profits are available as a remedy in some limited circumstances, the court is unlikely to award for any hypothetical loss.
1.3 Grey market and counterfeit goods
The UAE Trademark Law does not explicitly contain any provisions concerning parallel imports or grey market goods. That said, the Doctrine of Exhaustion is applicable in the UAE. As such, IP owners are limited in their options to control the resale of their products unless the products are contrary to regulatory requirements and conditions.
Products in some sectors, for example, medicines, require government approval to be commercialized in the UAE. Similarly, the packaging and products information should be compliant with the conditions of the UAE consumer protection law and other regulations. If the imported products violate any of the above conditions, the IP owner will have cause to object and prevent the import of such products into the UAE market. There are several precedents where an importer was subject to criminal sanctions for parallel imports on this basis.
Nevertheless, under the UAE Commercial Agencies Law, a registered commercial agent can take action against the importer of parallel goods within the scope of its agency and claim damages from the importer. Criminal liabilities cannot be pursued by the agent unless it can be proved that importation would violate regulatory requirements.
The legislative landscape for sanctions against counterfeit products is substantial in the UAE. For instance, it is an offence to provide an “incorrect description of the good or service” or to make any misleading advertisement in relation to the good or services under the Consumer Protection Law. Further, a supplier is obligated to ensure the good or service conforms to approved standards, public health and safety. The penalties imposed under this law can be up to AED 2,000,000 and a prison sentence of up to six months. Harsher penalties are utilised where the offence concerns food products, medical drugs and/or agricultural crops.
1.4 Criminal vs. civil enforcement
The process of pursuing criminal and/or civil actions in enforcing IP rights can be lengthy and more costly when compared with administrative enforcement options. Nevertheless, there are many benefits resulting from both actions, which can be summarized as follows:
Criminal action benefits
Criminal action helps IP owners to accomplish many goals, such as the following:
• Allows for criminal investigation against suspects.
• Immediate seizure of products under the supervision of IP owners.
• Allows seizure of other evidence, such as invoices, devices, and so on, which can provide more details of the extent of the offence.
• Allows for a travel ban to be placed on suspects whilst the proceeding is ongoing (which can last for months and in some cases for years).
• Establishes default civil liabilities against the convicted party once the criminal court affirms the crime and imposes sanctions.
• Allows for full control of the seized products by the IP owner, which assures transparency and an accurate calculation of damages.
• Allows for IP owners to seek seizure and destruction of the products and control the process.
• Allows for publication of criminal judgment amongst other sanctions, such as closure of the business premises for up to 6 months.
• Allows for imposing imprisonment and/or hefty fines.
Civil action benefits
Civil action helps IP owners to accomplish many goals, such as the following:
• Allows for the claim of monetary damages and other civil remedies.
• Assists in establishing precedent for IP owners, such as:
- confirming the infringement of look-alike products;
- confirming the mark as well-known;
- confirming ownership of a copyright work;
- confirming the infringement of copyrights.
• Allows the appointment of experts to investigate the matter and evidence in more detail before issuing an opinion to the court.
• Allows IP owners to seek preliminary and permanent injunctions, i.e., attachment orders.
• Allows IP owners to seek publication of judgment and communicate with the law enforcement authorities, such as border authorities or Ministries, to enforce or emphasize IP owner rights.
• Allows IP owners, in some circumstances, to recover either full or partial attorney fees as long as they are presented in a sound way.
• Allows the cancellation of conflicting trade names and to block some domain names, social media pages and any other mediums of online communication that facilitate counterfeit activities.
• Allows for multiple layers of dispute, so the case may be heard up to the Court of Cassation.
• Allows IP owners to utilise a criminal judgment in their favour to prove damages for their claims rather than going through the process of proving the harm again.
• Allows IP owners to pursue multiple defendants in one claim.
• Allows the submission of all types of evidence.
2. BORDER ENFORCEMENT
The Local Customs authority in each emirate have the full discretion to monitor and impose all measures at its borders, which means measures vary between emirates. In addition, there is a Federal Customs Authority that coordinates and acts as a regulatory reference for local Customs, supporting their dialogue and enforcing advanced measures. Having said this, all Customs dues, tariffs, and revenues from borders are typically received by the local emirate and hence they are locally governed and operated.
For Customs that have IP departments and are active with the IP owners (such as Abu Dhabi, Dubai, RAK and Ajman Customs authorities), they facilitate the recordal of rights as well as awareness programs. They receive complaints and officials have the powers to act ex-officio and report any suspected shipments to the IP owners. The counterfeit products are normally confiscated and destroyed. However, the Customs authorities have the right to decide to re-export the shipments to the country of origin. Applicable administrative fines vary depending on the quantity and nature of the counterfeit products but is usually double or triple the amount of the appropriate customs tariff for genuine products.
For ex-officio inspections and notifications, Customs report the suspected products and share samples with the IP owner to generate an authentication report. They then provide a grace period of 3-10 days to respond and file an official complaint. The official complaint requires payment of official fees and submission of genuine corresponding samples. Thereafter, the Customs case progresses internally until a resolution is issued, as explained above.
Alternatively, when a seizure is initiated based on IP owners proactive action and complaint to Customs, the authorities may act directly after the payment of complaint fees and/or require payment of a security deposit to cover expenses. As soon as the initial inspection of a consignment is done, the IP owners are given a period to assess and verify the authenticity of products/goods before the customs case progresses further, or the shipment gets released if no violation is found.
All costs for storage, demurrages and handling of products, if incurred, are covered by the products importers/shipping agents in ex officio notifications. For complaints filed by the IP owners, the security deposit, when collected, is used to cover any logistic fees or expenses incurred to complete the initial inspection in case the products are confirmed to be legitimate.
When products are confirmed to be counterfeit and a judgment is issued, the IP owner is entitled to claim a refund of any security deposit that was collected by customs authorities.
The destruction of products is normally pursued by the IP owner once the resolution is issued in its favor. The IP owner should work with third party service providers to complete the process. However, some customs authorities, such as Dubai Customs, have worked on some Memorandum of Understandings (MoUs) with service providers that handle recycling of counterfeit products seized by Customs, which should support IP owners to achieve a smooth process of destruction.
Enforcement using Customs measures is prompt and a relatively cost-effective action in comparison with a court action. Moreover, the fact there is a system in place gives the IP/brand owners an opportunity to protect their IP rights which does not exist in other countries or jurisdictions.
The downsides of the current measures would be the lack of frequent notifications to IP/brand owners as more resources at the inspection frontline are required. Customs departments deal with a vast number of shipments as the UAE is considered one of the busiest logistic hubs in the region. Therefore IP owners need to be persistent in advocating for their rights.
The information made available to brand owners can be limited but with some effort and proper dialogue, IP owners can and have been able to have access to some strategic information against counterfeiters, such as country of origin, destinations, names of importers, value of shipments amongst other data.
Once information is revealed, it can be used to support further investigation initiatives and/or legal actions before the courts.
When importers are caught importing counterfeit products, the seizure and destruction of goods may be ordered. It is reported by the local authorities in UAE that more than 97% of all seizures made in 2020 were subject to destructions through recycling process. Other remedies by customs could include administrative fines as explained above.
Training is one of the most common ways of communication between IP owners and local customs authorities. The Brand Protection Group (BPG), a locally licensed non-profit body, is active in facilitating such opportunities to brand owners and organizes numerous trainings on an annual basis to different authorities and local law enforcement agencies.
This is a valuable and proactive step to work with the Customs departments to help them better serve IP/brand owners interests.
2.2 Recent trends and COVID-19
Locally, the COVID-19 pandemic has led to the closure of shops, point of sales, certain entertainment businesses, and so on. Internationally, the pandemic has led to counterfeit operations becoming more prevalent online, particularly on social media platforms and/or marketplaces.
We have seen an increase in concern regarding online piracy, especially from broadcasters and content owners. The pandemic increased the demand for home entertainment and as such, there were more occurrences of infringement online. This occurred in the form of IPTV boxes, apps, computer programs and domain names which circumvent technological protection measures to receive broadcasting. Other gaming mediums were also a cause of concern.
3. ONLINE ANTI-COUNTERFEITING ENFORCEMENT STRATEGIES
The coordination between offline and online activities has been a challenge for IP owners and their representatives. In emirates where the associated police departments work closely, the issue was easier to handle and complaints from IP owners could progress to achieve successful results alongside measures to tackle the offshore devices and technologies. This was achievable in both piracy and counterfeit cases and enforcement actions. Nevertheless, this could not be practically achievable in emirates that do not have such system in place and there is a challenge to enforce rights against online activities.
The Cybercrimes Law assists in providing legal grounds and statutory provisions to support enforcement actions against the use of technologies and devices. However, enforcement actions based on such provisions require careful navigation of know-how and experience.
For sales using the internet and/or digital means, the challenge is to connect the source with the entity/individual that is residing in the UAE to assert jurisdiction. Once this is confirmed, the liability can be assumed and alleged.
On the other hand, it is assumed in the Cybercrimes provisions that anyone who uses a website or other information network account to commit or facilitate a legally punishable crime will be sentenced to a jail term and/or a hefty fine that can reach to several hundreds of thousand AED. The promotion of goods through misleading advertisement is also an offence in the UAE laws and as such, the act of passing goods off as an original would fall under the remit of this law. Further, the act of benefitting from or facilitating the illegal use of broadcasting services will attract penalties of up to AED 1,000,000. The court may also order electronic surveillance of a defendant and/or the shutdown/ blocking of the offending sites or pages as necessary.
There are no standalone laws that particularly mention online counterfeiting and as such, the same legislation that applies to regular counterfeiting will be applicable. Furthermore, the provisions of the Cybercrimes Law are drafted broadly and likely to apply in the case of counterfeit goods, adding another layer of liability on defendants.
When faced with an online infringer that also has a physical storefront, if the investigation is criminal, the police or public prosecution would ordinarily visit any known premises of the defendant. If the crime occurs online, it is possible that they would decide to seize the relevant computers to investigate the matter further, without giving the defendants the opportunity to conceal evidence. In practice, it can be difficult to persuade investigators to act quickly in this regard.
Administrative authorities, such as Economic Departments, that enforce IP rights onshore can also assist IP/brand owners. They have some arrangements with telecom regulatory authorities to support blocking and/or takedown unlawful websites, applications and/or pages from being accessible to UAE users.
3.1 Domain names
The UAE issued its Domain Name Dispute Resolution Policy in 2010, which regulates disputes concerning domain names, their registration and renewal. Under the policy, a complainant may seek to remove an infringing domain name.
Under the same policy, the authority for deciding on disputes for top level or country level domains is the WIPO Arbitration and Mediation Centre, based in Switzerland.
The WIPO Arbitration and Mediation Centre has its own Uniform Domain Name Dispute Resolution Policy (UDRP) which governs the registration of domain names globally. This is being recognized and resolutions from WIPO in UDRP cases are very common to be used or advanced by IP owners to shut down or claim ownership against squatting domain names. The local courts also value and consider such decisions when issued in favor of IP owners.
In order for a registered domain name to be transferred or removed from the current owner, the complainant must prove:
• the domain name registered is identical, or confusingly similar to, a trademark or service mark in which the complainant has rights;
• the respondent has no rights or legitimate interest in respect of the domain name; and
• the domain name has been registered and is being used in bad faith and this can be assumed when the domain name is identical and/or confusingly similar to preregistered trademarks (however, it can be proven by any other means or evidences).
Once the complaint is submitted, the complaint is reviewed on a formality basis and if all is in order, the domain will be locked and the owner of the domain will be notified. The owner of the domain will be given a chance to respond to the allegations made by the complainant before a judgment is issued.
WIPO aims to review and decide on all claims on expedited basis. When judgment is issued, the decision is final and there is no process for filing a formal appeal before WIPO. For national level domain names (.ae), any further disputes can be submitted to the local courts.
3.2 Social media
Social media is a popular platform for the use of advertising and selling counterfeit goods in the UAE. There are many occurrences of Facebook, Instagram and Twitter profiles which are specifically set up to attract sales via this medium. Most social media platforms have developed their own policies and guidelines for counterfeit goods and intellectual property infringement takedowns. The forms can be found online and IP owners are required to fill in all relevant details of the infringement and/or sale of counterfeit goods. The complaint will then be reviewed by the relevant team and the concerned party will be informed to allow them the opportunity to defend themselves. Following this, a decision by the social media platform will be made.
Usually, where a registration is held (in any jurisdiction), it is a straightforward process to have any infringing content or pages removed.
As the metaverse is in its infancy, we are not aware of it being used to market counterfeit goods in the UAE. However, this is something we are monitoring and expect may occur in the future. NFTs are accessible to buy on the internet in the UAE via the usual marketplaces. Another challenge to IP/ brand owners is to consider and update their enforcement strategies to deal with new technologies.
4. ADDITIONAL INFORMATION
Being a federal country, each emirate supervises and implements its decentralized enforcement formalities and agencies to handle administrative enforcement actions. Free zones are generally handled by a Customs authority, nevertheless, criminal and civil actions remain an option to IP owners to take enforcement steps in such free zones areas.
When needed, law enforcement agencies in different emirates can coordinate, issue delegations and/or pass intelligence information that assists in IP protection. IP owners may need to take proactive steps to push for coordination between authorities, to ensure efficient outcomes.
The UAE provides a well-established enforcement system for IP owners in terms of both laws and enforcement process. Regardless of the challenge that IP owners face in this digital era, their ability to establish a productive dialogue
with law enforcement remains a privilege for them to utilize and progress. Legal representation is one of the key strategic factors to advance IP rights and set out their concerns in the right forum.
5. FREQUENTLY ASKED QUESTIONS (FAQS)
1. Do UAE courts refer cases to qualified and neutral expertise when ruling on IP litigations?
The UAE maintains a register of qualified experts across various specialisms which judges may call upon to provide their expert opinion. Under Federal Law No. 7/2012, there are specific requirements an expert must meet prior to featuring on the expert register. This includes holding a degree in the area of specialism, having more than 7 or 15 years of experience in the specialism (depending on citizenship status) and passing any procedures and/or tests as prescribed by the ministry. The expert must also swear an oath to perform with accuracy, honesty and sincerity. In terms of neutrality, the relevant legislation provides that an expert must not accept any request for expert opinion where they have had any history with either party to a dispute and they may not act where they have any particular direct or indirect personal interest in the case.
2. Do IP/brand owners have the power to enforce their rights against counterfeit products stored at free zones and/or arrive in transit to the UAE?
IP owners do have the authority to enforce their rights against counterfeit products that arrive in to or are stored at free zones in the UAE. However, the procedure and relevant authority for each free zone will differ. For example, for Jebel Ali Free Zone (JAFZA) the relevant customs department would be Dubai Customs and as such the IP owner would need to file a complaint in accordance with the procedure prescribed by Dubai Customs. Therefore, it is important for IP owners to check which customs authority is responsible for the particular free zone before a complaint can be filed.
3. Does law enforcement assist IP/brand owners with their concerns about digital counterfeiting and/or piracy activities?
There are several enforcement bodies in the UAE which are specifically created in order to handle digital crime activities. For example, Dubai has its own Electronic Crime (E-Crime) complaints process where individuals and/or IP owners may submit a complaint online. The sale of counterfeit goods online falls into the remit of an ‘electronic crime’ and as such, the Criminal Investigation Division (CID) will take action to investigate and act against online retailers, social media accounts and other sites promoting illegal activity of this nature. The CID, where it has jurisdiction, may block access to any websites that it considers to be in contravention of the relevant legislation.
The full guide, as published, can be downloaded here: The Global Legal Post: UAE Anti-Counterfeiting Guide.
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