GCC Trademark Law Coming Soon

By Saba Al Sultani, Associate, and Rob Deans, Partner, Clyde & Co LLP, Dubai, United Arab Emirates.

The reality of a regional trademark law in the Middle East came a step closer with the approval in May 2014, by the Cabinet of Ministers in Saudi Arabia of the revised draft of the Trade Mark Law of the Gulf Cooperation Council States (the GCC Trade Mark Law).

Initially scheduled for enactment in 2006, the draft law was put on hold while a number of its provisions were renegotiated. This process is now complete and a revised draft of the law has been published.

Enactment and timing

The GCC Trade Mark Law has been drafted on the basis that it will apply in the six states that make up the GCC, namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The publication in the GCC Gazette states that the law will become effective six months after the GCC Trade Cooperation Committee (comprising the Trade Ministers of each GCC member state) issues the law’s implementing regulations. However, it will also need to be enacted by the legislature of each GCC state.

To date, only Bahrain, Saudi Arabia and, more recently, Qatar, have taken steps to enact the law, but the other GCC states are expected follow suit. If they do, the law could become a reality within a few months.

A unitary or a unifying law?

The GCC Trade Mark Law is a unifying, not a unitary law in that it sets out a single set of provisions which will apply uniformly across all GCC states with respect to the registrability, registration and enforcement of trademark rights. It does not, however, provide for a single (unitary) registration or enforcement system. The Trade Mark Office of each GCC state will continue to receive applications and register trademarks on a national basis. Registering a trademark in all six GCC states will still require filing six separate national trademark applications.

The GCC Trade Mark Law does not envisage setting up a single GCC trade mark office or a single court or enforcement authority for dealing with trademark disputes.

Maintaining a unified approach

Despite the adoption of unified provisions across the GCC states, it is inevitable that national courts will adopt different interpretations of the law unless some form of central court or other body is established in order to ensure a consistent interpretation of the law's provisions.

Article 51 of the law anticipates this problem by providing that the GCC Trade Cooperation Committee has the power to interpret the law. However, it remains to be seen how this will work in practice. Will issues of interpretation be referred to the GCC Trade Cooperation Committee in the same way that the national courts of EU member states refer issues to the Court of Justice of the European Union (CJEU)? Once issued, the law’s implementing regulations may clarify the position by setting out procedures for bringing such matters before the GCC Trade Cooperation Committee.

Key provisions

The GCC Trade Mark Law includes a number of provisions which amend the current position in some or all of the GCC states and which promise to improve the region’s trademark registration and protection system. Some of the key provisions include:

The definition of a mark

Article 2 expressly includes some forms of non-traditional trademarks, (e.g. color, combinations of color, sounds and smells) in its definition of a mark. These express references suggest it will be possible to secure registrations for such marks in GCC states. However, once the law comes into force, it will be interesting to see the extent to which the trade mark offices in the GCC states are prepared to grant registrations for such marks.

Multi-class filings

At present, it is only possible to file applications covering a single class in each of the GCC member states; none allows for multi-class applications.

While the 2006 draft of the law expressly stated that a trademark application may not include more than one class, this was deleted from the 2013 draft. This development, however, only hints at the possibility of being able to file multi-class applications in the GCC states. Such a move would constitute a major shift in trademark practice in these countries but would be advantageous for applicants in that it would offer a more cost-effective and administratively less burdensome way of seeking protection for their marks in numerous classes.

Examination and opposition

At present, most national trade mark offices in the GCC states do not consider goods and/or services in different classes either when examining a trademark application or during the course of trademark opposition proceedings.

However, Article 9 of the 2013 draft of the law states "goods or services listed in the same class may not necessarily indicate similarity. Likewise, goods or services listed in different classes may not necessarily be dissimilar".

It will be interesting to see what guidance the implementing regulations provide on this change and how it is applied by trademark examiners, should it come into force.

Well-known marks

The GCC law boosts the protection of well-known marks in that it prohibits the registration of marks which constitute a "reproduction, an imitation, or a translation of a well-known mark or an essential part thereof" in relation to identical/similar goods and/or services (Article 3). The law also prohibits the registration of such marks in relation to dissimilar goods and/or services where the use of the mark would indicate a connection between those goods and/or services and the owner of the well-known mark, and that might damage the owner’s interests.

This provision goes further than the 2006 draft of the law which only mentions translations of well-known marks and does not address the possibility of registering such marks for dissimilar goods or services.

The 2013 draft of the law also sets out the criteria for determining whether a mark is well-known. Article 4 states that "the duration and extent of any registrations or use of the mark, the number of countries where it has been registered or recognized as a well-known mark, the value associated with the mark and the extent to which such value helps promote the goods and/or services to which it applies" shall also be considered. This will favor owners of well-known marks who will have increased scope to argue that their marks meet the required criteria.

Exclusivity

The GCC Trade Mark Law expressly provides that "the owner of a registered trade mark shall have the exclusive right to use its mark and to prevent third parties from using its mark, or any identical or similar mark" in relation to identical or similar goods or services and in a manner which is likely to mislead the public (Article 17).

Importantly, the law also provides that a likelihood of misleading the public will be presumed when a mark identical to a registered trademark is used in relation to identical goods or services. This removes the need for a trademark owner to establish confusion where an identical mark is being used in relation to identical goods. In these circumstances, the onus will be on the defendant to demonstrate that its use of the mark does not cause confusion.

This change should have a real impact in that it will enable trademark owners to enforce their rights in straightforward cases and avoid the protracted legal proceedings involved in establishing confusion.

Infringements

Rights holders will be comforted by the knowledge that with a view to deterring and, where necessary, preventing infringements from occurring, the law includes significant penalties for trademark infringement.

In line with current laws in the GCC, the law focuses on combating the counterfeiting of trademarks; both those that are registered and those that are unregistered (Article 42). It further allows action to be taken against the use of identical and similar marks in relation to the same or similar goods or services.

The law also restricts (Articles 42, 3.11 and 3.12) the use of trademarks that would indicate a connection with the goods or services of the holder of a registered mark; and which would damage the interests of the trademark holder or diminish the value of associated goods or services.

In addition, the law allows for criminal penalties to be applied in infringement cases. Specifically:

• where a person forges a registered trademark in a manner which misleads the public and affixes the mark to its products – a fine of not less than SR5,000 and not exceeding SR1,000,000 (approximately US$ 267,000) and/or imprisonment for between one month and three years;
• where a person knowingly sells goods which bear a forged, counterfeit or unlawfully affixed trademark – a fine of not less than SR1,000 and not exceeding SR100,000 (approximately US$26,000) and/or imprisonment for between one month and one year;
• in the event of a second infringement – the penalty may not exceed double the maximum specified penalties and the premises will be closed for fifteen days to six months.

Moreover, damages may be awarded in civil claims which may include a recovery of profits from the infringer (Article 41) who may by order of the court be required to disclose the identity of any third parties involved in any aspect of the infringement.

Rights holders may also apply to the competent court when an infringement occurs or obtain appropriate provisional measures, including an injunction, "to stop or prevent the infringement from occurring".

Parallel imports

The GCC Trade Mark Law provides (Article 39) that the powers granted to customs authorities to seize infringing goods (pursuant to Article 38) do not allow customs to seize goods which have been put onto the market in the exporting country by or with the consent of the rights holder.This provision appears to be focused on parallel imported goods, such that parallel imports cannot be seized by customs authorities under the GCC Trade Mark Law.

However, this restriction in relation to parallel imported goods is stated as applying to Article 38, without mentioning any other provisions of the GCC Trade Mark Law. Accordingly, other remedies (such as a right to claim damages under Article 41) may potentially be available to trade mark owners in relation to parallel imported goods. Given the prevalence of parallel imported goods in the GCC states, these provisions may well receive a great deal of scrutiny by brand owners seeking to combat parallel imports in the region once the GCC Trade Mark Law comes I nto force.

An improved system

The introduction of the GCC Trade Mark Law will, without doubt, significantly improve the process of registering and protecting trademarks in the GCC region. Brand owners will benefit from a more efficient and streamlined system, although much will depend on the detailed interpretation and practical application of the law.

The implementing regulations will be important, as will the procedure for ensuring that a unified position is applied throughout the GCC states, whether this is maintained by the GCC Trade Cooperation Committee or otherwise.

As we get closer to the enactment of the law (and then once the law comes into force), many of the provisions discussed in this article will come under increased scrutiny. The take-away message for those brand owners with an interest in the GCC is currently "watch this space".