A new law aimed at combating counterfeit goods has just passed through the UAE’s Federal National Council and is expected to become law shortly. This measure is part of the UAE’s drive to adopt international standards when it comes to IP crime, which is a particular concern in the run-up to EXPO 2020.
The new law, intended to enhance and strengthen (rather than replace) the existing enforcement system, has received a mixed reaction from brand owners. Although the new law is a positive step, there are also areas of concern.
Welcome measures include the establishment of a single cross-emirate body which is responsible for monitoring anti-counterfeiting. Currently, each emirate operates its own enforcement authority, leading to duplication of costs and effort.
Under the new law, it will also be an offence to possess counterfeits, even without proof of intent to sell.
The new law will introduce a tougher penalty regime, of up to two years imprisonment and/or a fine of up to AED 1 million (about US$275,000). The maximum penalties are reserved for counterfeiters of pharmaceutical and food products. Retailers should be aware that the authorities may ultimately close stores selling counterfeit goods, and repeat offenders may have their trade licences cancelled.
Certain aspects of the new law give cause for concern. First, the law does not allow action to be taken against look-alike products. To be deemed counterfeit, the products must bear an “identical” trademark, and the new law does not extend to any other type of IPR. This appears to be a significant limitation.
The new law also permits the authorities to return counterfeits to their country of origin, meaning that they could well be re-exported and sold. This appears to conflict with the UAE’s obligations under the TRIP’s agreement (which only permits re-export in exceptional circumstances). Returning counterfeits will simply displace the problem to another jurisdiction and does little to help brand owners remove counterfeit products from the supply chain.
On balance, the new law is a positive step towards the UAE’s adoption of global standards in the detection and enforcement of IP infringement. Brand owners have long complained that the penalties imposed for counterfeiting in the UAE do not act as a serious deterrent. It is also to be hoped that certain aspects of the law (most notably the provisions that allow counterfeits to be re-exported) will be re-examined, to ensure that the new draft law has sufficient teeth to reassure IPR-owning businesses that it will be used to clamp down on counterfeiting and not simply to displace the problem outside the UAE.