UAE Approve New Anti-Commercial Fraud Law

29 Jan 2017

ABU DHABI - A new Federal Law has been approved recently by the UAE President, H.H Sheikh Khalifa bin Zayed Al Nahyan, for combating commercial fraud. The new Law No. (19) of 2016 has been published in the Official Gazette on December 15, 2016, and has come into force the following day replacing Law No. 4 of 1979. 

The law brought many positive developments and features, as it meant to step up efforts to fight fraud and trade in fake goods, with unscrupulous inland and free zone traders. It has also provided more precise definitions of the term (Goods) as it categorizes goods into merely Goods, Adulterated Goods, Spoilt Goods, and Counterfeit Goods.

The law provides a broader definition for counterfeit goods stating that counterfeit goods are “The goods that, without permission, bear a trademark that is identical or similar to the legally-registered trademark.” Under this definition, not only identical trademarks fall under the scope of the violation of the law, but similar trademarks are included as well.

However, the anti-fraud law leaves no certainty on how the trademark shall be determined whether it is sufficiently similar with a registered trademark or not, as this shall be determined upon the decision of the Higher Committee for Combating Commercial Fraud, which will be established under the provisions of this law to be affiliated to the Ministry of Economy and which will be responsible of reviewing reports related to counterfeit goods cases. 

Furthermore, the law also grants the Higher Committee the right to hire consultants and experts as it deems appropriate, which means that the Higher Committee may hire a trademark expert who shall determine whether the confiscated goods bear a similar  trademark or not. Nevertheless, the law states in Article 5 that the opinion of the expert is considered as supplementary, and the final decision shall be issued by the Higher Committee.  

Meanwhile, it is not clear yet whether the hired expert will examine only the similarity degree between the imitated trademark and the registered trademark, or he shall also investigate the public’s confusion further. 
A main development in this new law is the heavy stipulated penalties, where it imposes an imprisonment up to two years and fines that would reach 250,000 Dirham ($68, 500) or both, in addition to the destruction of the counterfeit goods. The new law further provides for a higher fine that reaches up to 1 million Dirhams ($274,000) if the counterfeit products are in the nature of or related to human foods, animal foods, medical drugs, agricultural crops or organic foodstuffs.

Another major development according to Article 4, is that the law provides the authorities with the right to request all information, documents and invoices related to the counterfeit goods, and traders are obliged to comply with such requests. 

Pursuant to Article 6, a Sub-Committee shall be set in each Emirate who shall study reports on fraud cases referred to it by the specialized authorities and take the appropriate measures. In addition, the Law grants the concerned persons the right to appeal the verdict of the Sub-Committee to the Higher Committee in order to challenge the resolutions of closure. However, the right of appeal according to Article 7 is limited to the closure of the violating facilities.
Moreover, the new law regulates settlements with respect to breaches of the law. In this regard, a request for settlement must be made by the offender to the Sub-Committee, and the amount payable in settlement shall not be less than double the minimum fine set forth in this Law. In case the offender rejects a settlement, the Sub-Committee shall transfer the matter to the Public Prosecutor for further prosecution. The Executive Regulations and Resolutions are yet to be published which shall provide further specifications on how the law shall be implemented.

The new law is defiantly a positive step towards IP enforcement framework in the UAE, and is expected to boost the effectiveness protection mechanisms which reflects the country’s commitment to provide businesses and brand owners with a competitive environment. 

By Laith Abu-Qauod/ Legal Counsel at TAG-Legal Dubai

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