New GCC trademark law sparks change across the region

The revised draft of the Gulf Cooperation Council States (GCC) Trademark Law was approved by the Cabinet of Ministers in Saudi Arabia on May 19 2014, following its publication in Bahrain on February 27 2014. The law would provide a unified trademark regime for the six GCC states of Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates.

The law has been in draft form since 2006, but was put on hold until recently while certain provisions were renegotiated. Such delays are understandable, given the major changes to local legislation and practice that each GCC state will need to undertake in order to implement the law.

So far, only Bahrain and Saudi Arabia have taken steps to enact the law. However, it appears likely that over the next year or so Qatar, Oman and the United Arab Emirates will also enact the GCC Trademark Law. If so, there is a real possibility that the law could be implemented in all GCC states before the end of 2015.

Changes required for each GCC state

The law is designed to replace local trademark laws and will be enacted separately by each GCC state. Each state will be responsible for implementing and interpreting the law. Unlike the GCC Patent Law, the GCC Trademark Law does not provide for the establishment of a central GCC Office.

As a result, there will be no unitary trademark registration which would cover all six GCC states. Six separate registrations will still be required to provide protection across all six states.

The unified nature of the law should mean that one set of rules governs the trademark application process, oppositions and the enforcement of trademark registrations throughout the region.

However, in practice there may still be differences in how the law is implemented and interpreted in each state. This is particularly the case in relation to areas of trademark law and practice on which the GCC Trademark Law is silent (eg, the classification of goods and services). Article 51 provides that the commercial cooperation committee shall have the power to interpret the law, which indicates that some form of central body will be set up in order to deal with the interpretation of the law across all six states. However, it remains to be seen how this will work in practice – for example, whether such a committee will act as a central appeal body whose decisions will be implemented by each state.

While some provisions will remain unchanged in all GCC states (eg, the five-year period of non-use before a trademark registration becomes vulnerable to cancellation on the grounds of non-use), in most cases each provision of the GCC Trademark Law will mean a departure from the current legislative framework in at least one GCC state.

This article focuses on one major amendment to the current legislative framework in each GCC state which would take place should the Trademark Law be enacted.

 

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Saudi Arabia

Opposition procedure

Under the current trademark law in Saudi Arabia, any interested party may file an opposition before the Board of Grievances (which is equivalent to a court of first instance) within 90 days of the publication date.

Once an opposition is filed, the board will notify the opposing party of the first hearing date. Currently, the Ministry of Commerce and Industry is added as a defendant to all opposition proceedings and a representative from the ministry usually attends each opposition hearing.

More often than not, the ministry will file a counter-statement maintaining that it did not err in accepting the application for registration. Although the applicant may submit a counter-statement during the proceedings, this is rare. Usually, the only parties to attend the hearings are representatives for the opponent and the ministry.

Under the GCC Trademark Law, this process will change almost entirely. Under the law, an opposition must be:

• filed with the relevant authority within 60 days of the date of publication;
• served on the applicant by the relevant authority within 30 days of receiving the opposition;
• replied to by the applicant within 60 days of the date of receiving notification from the relevant authority, failing which the application should be deemed abandoned; and
• appealed to the court within 30 days of the date on which the relevant authority issues a justified decision

The ‘relevant authority’ is defined in the law as “the ministry in each of the GCC states in charge of the commercial affairs and competent to enforce this law”.

On the basis that Saudi Arabia appears to be implementing the GCC Trademark Law in full, the trademark opposition process will become the responsibility of the Ministry of Commerce and Industry and not the Board of Grievances. This will mean that the ministry can no longer be party to the opposition proceedings (as it will instead need to take on the role of an appellant body). In addition, the trademark applicant will need to play a more active role as defendant in the opposition and, at the very least, submit a counter-statement within the stipulated 60-day period to prevent its application from being deemed abandoned.

Once the counter-statement has been filed, the next step will be for the relevant authority to issue a justified decision on the opposition. Under Article 15 of the law, the relevant authority may issue the decision after hearing the applicant and the opponent, or only one of them if this is deemed appropriate.

The law is silent as to when it will be deemed appropriate to hear only one of the parties’ submissions. It is therefore likely that full arguments will be required either in the opposition statement or in the counter-statement from the outset, in order to ensure that at least the main grounds or defence to the opposition are considered by the relevant authority.

The law is also silent as to whether further submissions or evidence can be submitted in support of an opposition once the opposition/counter-statement has been filed. In Saudi Arabia, it is possible to submit further submissions and/or evidence at each of the scheduled hearings. By contrast, in the United Arab Emirates it is possible to submit further submissions and/or evidence at any time until a decision is issued by the hearings officer.

It therefore appears that the intention of the GCC Trademark Law is to establish a consistent approach to the opposition framework, but to leave each GCC state with the discretion to develop its own practice with respect to accepting further submissions and/or arguments during the opposition proceedings (to the extent that this will not be dealt with in the implementing regulations).

United Arab Emirates

Enforcement provisions: Customs

Article 38 of the GCC Trademark Law contains robust provisions relating to the enforcement of trademark rights through Customs. These appear to supplement the existing GCC Common Customs Law together with relevant local laws (eg, the Dubai Customs Law).

In essence, these provisions:

• expressly authorise Customs to seize goods which are being imported, exported or in transit (either on their own initiative or the application of a rights holder);
• require Customs to notify the rights holder of any seizure;
• require the rights holder to issue legal proceedings within 10 days of receiving notification of the seizure, failing which the goods will be released; and
• require the court to destroy any goods which are found to be infringing, except where the court may consider this to be inappropriate or where the destruction of the goods may pose serious damage to the environment or to public health (in which case the goods may be disposed of outside commercial channels).

Interestingly, Article 39 of the law introduces defences to the provisions set out in Article 38. In particular, the customs provisions in Article 38 do not apply to small quantities or goods of a non-commercial nature contained in a traveller’s personal luggage or sent in small consignments.

On the face of it, this defence seems to be aimed primarily at small quantities of counterfeit goods obtained by travellers overseas and then brought into the country for their own personal use. However, it could be construed much more widely to apply to small quantities of counterfeit goods or counterfeit goods sent by post or courier. If the two limbs of this provision are read in isolation, this defence may have far-reaching implications for the enforcement of trademarks in all GCC states.

This is particularly important given the trend towards counterfeiters sending relatively small quantities of counterfeit goods which have been ordered over the Internet by courier or through the postal system. Article 39 makes it potentially arguable that this conduct will be lawful.

Enforcement provisions: penalties

Article 42 of the GCC Trademark Law provides for a substantial increase in the maximum penalties available for trademark infringement.

Currently, the following penalties may be imposed for trademark infringement under Articles 37 and 38 of the UAE Trademark Law:

• a minimum fine of Dh5,000 (approximately $1,365) and/or an unspecified term of imprisonment for a first infringement; and
• a minimum fine of Dh5,000 (approximately $1,365) and the closure of premises for between 15 days and six months for a second infringement.

However, the GCC Trademark Law sets out the following penalties:

• a fine of between Sr5,000 and Sr1 million (approximately $267,000) and/or imprisonment for between one month and three years where a person counterfeits a duly registered trademark in a manner which misleads the public and affixes this mark to its products; and
• a fine of between Sr1,000 and Sr100,000 (approximately $26,000) and/or imprisonment for between one month and one year where a person knowingly sells goods which bear a counterfeit or unlawfully affixed trademark.

In the case of a second infringement, the penalty may not exceed double the maximum limits specified for the offence. In addition, the premises shall be closed for between 15 days and six months.

Enforcement provisions: injunctions

Under Article 41 of the UAE Trademark Law, it is possible to obtain an attachment order without notice against an infringer as a precautionary measure before full court proceedings are initiated. This is directed at seizing only those specific goods contained in the order itself once an infringing act has been identified.

By contrast, Article 40 of the GCC Trademark Law enables rights holders to apply to the competent court on an ex parte basis upon the occurrence of any infringement or “for the avoidance of any threat of infringement” to obtain one or more appropriate provisional measures, which specifically include a measure to stop or prevent the infringement from occurring.

Article 40 represents an important change as it provide a specific remedy for rights holders to obtain an injunction in order to prevent infringements from occurring based on the threat of an infringement, rather than having to wait for an infringement to have taken place.

Kuwait

Priority claims

Unlike the other five GCC states, Kuwait is not currently a contracting party to the Paris Convention for the Protection of Industrial Property. In addition, its trademark law provides no form of priority claim which can be made from a previously filed application for the same mark in a foreign country.

Article 11 of the GCC Trademark Law provides that an applicant which has applied for a trademark in a country that is a signatory to a multinational treaty to which a GCC state is a party may claim priority within six months of the date of filing the earlier corresponding application.

As a result, Kuwait will be obliged to recognise priority claims under the Paris Convention by virtue of the fact that the other GCC states are contracting parties to this treaty.

Article 11 provides that in order to make a valid priority claim, the application must be accompanied by a copy of the earlier application and a statement setting out the filing date, application number and country.

It is not clear whether such a copy will need to be notarised and/or legalised, which may be dealt with by the implementing regulations (once issued) or left to the national trademark office in each GCC state. However, under the Paris Convention, contracting parties are prohibited from requiring the authentication of a priority application.

In addition, recent changes to examination practices in Saudi Arabia (and, more recently, the United Arab Emirates) have meant that applications are being examined within a few weeks of the application date. As such, a non-priority application may be examined before a priority application for the identical or near-identical mark has been filed. While the priority application would have the earlier filing date, the subsequently filed application could proceed to acceptance or even registration before the priority application was filed.

While to some extent this problem is anticipated by the requirement under Article 11 to file a copy of the priority application at the same time as filing the application, this requirement is inconsistent with the Paris Convention, which allows applicants to file copies of priority applications within three months of filing the subsequent application.

Qatar

Classification of goods and services

Currently, Qatar classifies trademark applications by reference to the Seventh Edition of the Nice Classification, which entered into force on January 1 1997. As such, the classification system currently goes up only to Class 42, which creates difficulties when it comes to classifying services that fall within Classes 43, 44 and 45 in the subsequent editions of the Nice Classification.

With the enactment of the GCC Trademark Law, Qatar’s classification system may be updated for the first time in 17 years, potentially up to the Tenth Edition of the Nice Classification, which has been in force since January 1 2014.

However, the GCC Trademark Law is silent on the classification of goods and services. Until the implementing regulations are issued, it is very much a matter of wait and see as to whether Qatar will undertake a long-awaited modernisation of its classification system.

Currently, each GCC state is responsible for determining its own classification of goods and services, which has led to:

• different editions of the Nice Classification being adopted by each GCC state at different times;
• different approaches being taken as to how the Nice Classification should be implemented; and
• different approaches to how the class headings should be used.

For example, Saudi Arabia allows applicants to select certain goods and services from an exhaustive drop-down list which is based on an Arabic translation of the Nice Classification Guide (Tenth Edition) and can include the whole class heading as well as any number of items from the list. The UAE Trademarks Office, on the other hand, recently issued a circular confirming that an application for the class headings of the Nice Classification will be deemed to provide protection for all goods or services in that class.

If the implementing regulations do specify that all GCC states should follow a unified classification system, then hopefully this will reflect the current version of the Nice Agreement, and allow for the system to be updated when new editions of the Nice Classification are released.

Bahrain and Oman

Madrid Protocol

Bahrain acceded to the Protocol Relating to the Madrid Agreement on December 15 2005, which was closely followed by Oman’s accession on October 16 2007. As a result, Bahrain (in 2006) and Oman (in 2007) enacted new legislation to deal with the new requirements of the Madrid Protocol.

While the enactment of the GCC Trademark Law will mean that Oman’s and Bahrain’s trademark laws will be brought into line with those of the rest of the GCC states, in some ways the enactment of the GCC Trademark Law may potentially create more confusion as to how the Madrid Protocol will sit alongside local law and practice.

Earlier this year Bahrain published Law 6/2014, which will supersede the current 2006 law (until such time as it has been enacted by all six GCC states). Chapter 8 of the 2006 Bahrain trademark law is devoted entirely to implementing the Madrid Protocol in Bahrain. Article 42 of Chapter 8 states that when addressing the international registration of trademarks, the provisions set out in the Madrid Protocol will apply to any matter which is not covered by the Bahrain Trademark Law itself.

On the other hand, the GCC Trademark Law makes no mention of the Madrid Protocol and it is unclear whether the provisions of Bahrain Law 6 /2014 as they relate to the Madrid Protocol would prevail over those of the GCC Trademark Law in case of a conflict.

Oman’s 2007 Trademark Law contains no provisions that deal specifically with obligations arising from Oman’s accession to the Madrid Protocol. However, once the GCC Trademark Law is enacted in Oman, the same issues will arise. That is, in the event of a conflict between the GCC Trademark Law and the Madrid Protocol, there will be a question as to which legislation will prevail.

Article 51 of the GCC Trademark Law may provide the answer, as it states 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. The position may become clearer once the implementing regulations are issued, as these may set out procedures for bringing matters of interpretation before the committee.

Conclusion

The prospect of one unified trademark law for all GCC states is good news. In practice, it should mean that the trademark legislation of each state will be modernised and aligned. However, some of these changes may be unintended and should therefore be treated with trepidation until any interpretative issues are resolved.