Despite global shocks and forecasts of a global recession, economies in the Middle East exhibited “extraordinarily fast” growth in 2022, according to the World Bank. The countries of the Gulf Cooperation Council (“GCC”) – the United Arab Emirates (“UAE”), Saudi Arabia, Oman, Qatar, Kuwait, and Bahrain – all show commitment to further growth and place great value in diversification of their historically oil-and-gas-dominated economies, with digital transformation, artificial intelligence, robotics, cloud-first, and emerging technologies at the core of their strategic development.
Investments in digital technology in the region are projected to exceed $70 billion in the next three years, with the UAE, alone, projected to spend $20 billion. It is no surprise that many news outlets have reported Silicon Valley venture investors touring the Middle East, seeking to raise funds and build long-term cooperation. At the same time, it is worth noting that the GCC countries, themselves, form a significant market with a population of nearly 60 million, many of whom are young, educated, and of diverse national and cultural backgrounds – and who make extensive use of the internet and have a well-established appetite for luxury goods. (The Dubai-based Chalhoub Group projects personal luxury sales in the GCC to reach $11 billion this year, up from $9.7 billion in 2021.)
With new business opportunities in the region in mind, the protection of intellectual property (“IP”) rights becomes more crucial than ever. Here are some of the key considerations with respect to IP for new technologies (and for IP in other industries, as well) in the Middle East …
IP legislation in the region is relatively new.
Legislation on IP protection has been rapidly developing and being updated in the GCC countries in recent years. With these newly established or updated laws, the legislators usually cover the concepts that are customary for the U.S. and European approaches to IP rights, use, and protection, such as fair use of copyrights, work for hire, or well-known trademarks’ protection. However, the enforcement practices related to these issues is often sporadic and inconsistent. Given that there are usually no specialized IP courts in GCC countries and that IP-related cases are considered by either civil or commercial courts, it remains to be seen how the practice will evolve.
Also, an important distinction is that there are two layers of legislation in certain GCC countries, with special regimes applicable to the companies registered in the numerous free trade or export zones (special economic zones). The scope of applicable rules, their interpretation, and their enforcement practice would vary significantly depending on whether the matter under dispute is governed by the legislation of federal level or legislation of free zones.
The GCC countries are members of some international IP-related treaties, but not all of them.
During recent years, countries in the Middle East have shown their willingness to collaborate with the international community in protecting and enforcing IP rights and to foster innovation, creativity, and economic growth in the region. In this context, the GCC countries have become members of a number of important international treaties, such as the Berne Convention for the Protection of Literary and Artistic Works, the WIPO Patent Cooperation Treaty, and the Agreement on Trade-Related Aspects of Intellectual Property Rights.
However, Saudi Arabia, Qatar, and Kuwait, for example, are not parties to the Madrid Protocol, which means that they have only national systems of trademark registration in place for applicants. (Filing parties may use the national applications in these countries to claim priority for other jurisdictions, as well.) Notably, there are a number of regional treaties aimed at codification and modernization of laws in the IP sphere by covering GCC trademark and patent applications; the mechanisms suggested by these treaties are not yet fully in force in all GCC countries.
Religious considerations & local cultural values affect the IP strategy.
When considering IP strategy for the GCC market, companies would be wise to take religious considerations into account and be prepared for a thorough check on whether a slogan or invention, marketing initiative, or product, itself, may violate public order or morals. For example, in the UAE (like the majority of the GCC countries). it is not possible to protect trademarks for pork products or alcohol-related products or services. Furthermore, given the seriousness of defamation, slander, libel, and insult under UAE law, companies should be careful to avoid using any ambiguous, insensitive, or rude designations or those relating to religion.
Penalties for IP rights violation are severe.
The legislation in GCC countries usually provides for severe penalties for IP violations, including significant fines, seizures of infringing goods, or even imprisonment. A successful IP enforcement strategy includes close interaction with local authorities, such as police and customs. In Dubai, for instance, the Dubai Police, Dubai Customs, and the Dubai Department of Economic Development share the power to search for and seize counterfeit products.
Patent protection is usually based on absolute novelty principle.
A novelty requirement is standard among most national patent legislation, and patent law in the GCC countries usually imposes a require that the invention has never been disclosed to the public before the filing date through any medium (orally or in writing). The UAE has recently amended national patent law in an attempt to demonstrate the commitment to IP rights protection and allowed disclosures before the filing date by an inventor, or third parties who obtain information from an inventor, provided they occur within a 12-month grace period before the filing date.
EU & US law governed templates require localization.
Although IP-related documents governed by EU and/or U.S. law (e.g., license, franchise, joint development, cooperation, and other types of agreements) are generally enforceable in the GCC countries, it is highly recommended to have them reviewed for compliance with the local laws and to amend such documents accordingly.
Ksenia Andreeva is a partner at Morgan Lewis, who specializes in intellectual property matters. She advises on a wide range of transactional, regulatory, and commercial IP matters as well as disputes and enforcement of IP rights.
Valentina Semenikhina is a transactional lawyer at Morgan Lewis with more than 10 years’ experience advising international companies and sovereign investors on complex corporate transactions.
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