Dubai: Lack of strict deterrence is impeding the UAE's battle against counterfeit goods, claim industry experts.
And because strict action is rarely taken against offenders, counterfeiting activities have assumed frightening proportions in the country. Bizarrely, many of them involve the same gangs.
Industry experts reckon that up to 15 per cent of those caught with knock-off goods are "repeat offenders".
Omar Shteiwi, Chairman of the 33-member Brand Owners' Protection Group (BPG), feels that the "kid-glove treatment" meted out to counterfeiters enables them to continue defying the law with impunity by trading unabatedly in fake goods.
Dr Jamal Al Sumaiti, Director General of Dubai Judicial Institute, said: "In cases of repeat offenders, we can consider submitting possible changes to relevant laws to the review committee at the Ministry of Justice to toughen the punishment, especially since such offenders have a negative impact on the economy."
The UAE Trademark Law, passed in 1992, stipulates a jail term and/or a fine of not less than Dh5,000 for a person who infringes a legally registered trademark or imitates a trademark. The fine is doubled to Dh10,000 for repeat offenders.
Shtewi reckons this is no longer enough. "The law was amended in 2002 and 2006, but the minimum penalty hasn't changed once. A fine of Dh5,000 may have been a deterrent way back in 1992, not in this age," he said.
Malek Khalifeh, an intellectual property (IP) rights lawyer with Al Shaali and Co representing over 80 brands in the Middle East, believes that fines are hardly a deterrent and called for stricter measures.
"At least a one-month jail term for violators would make a big difference," he said, recalling a talk he had with a counterfeit goods trader who was willing to pay $2 million (Dh7.35 million) in fines in exchange for a one-month jail term.
Omar M. Obeidat, partner at one of the country's biggest law firms, Al Tamimi & Co, said his encounters with "repeat offenders" have "come by the dozen.
"We've reached a point where we are not progressing in the Trademarks Law implementation," said Obeidat. "Up until 2005, the courts handed out good deterrent penalties. Offenders were sent to jail for a period ranging from one to three months. Suddenly, we're back to square one, where all the judgments were confined to fines."
Obeidat cited a 2007 case when the Dubai Court of First Instance handed a one-month jail term to an offender, along with a Dh5,000 fine, only to reduce the fine to Dh1,000 and scrap the jail term following an appeal in 2008.
Rawan Sunna, an IP rights lawyer said shops in Karama, Naif and DragonMart are flooded with counterfeit goods.
According to her, most brand owners are reluctant to take them on because it's not cost-effective. Similar views are expressed by Shteiwi. "If a brand owner spends Dh50,000 on a case and in the end the offender is simply asked to pay a Dh5,000 fine - it's clear who the winner is," he said.
Major shipping point
According to a European Union report, Dubai is the world's third-highest shipping point for counterfeit medicines into Europe. Global sales of counterfeit medicines - of which much ends up in poor African countries - are estimated to reach $75 billion (Dh275 billion) by next year, nearly twice the 2005 figure, according to US government data.
Dubai Customs reported that trademark infringement cases jumped 36 per cent to 64 cases from January to March this year, from 47 cases in the same period last year. Mobile telephones and accessories were among the top items for which counterfeiting cases were filed this year - 14 - followed by auto spare parts and cigarettes, which accounted for six and five cases, respectively.
Part of the battle against counterfeit goods is education. In the last quarter of 2009, BPG aims to train over 700 customs officers in three Gulf countries, including 500 in the UAE.
Scott Butler, Chief Executive Officer of Arabian Anti-Piracy Alliance (AAA), which represents the motion picture and satellite TV industries, said Dubai's infrastructure makes it attractive for copyright violators.
"Dubai is a major transit/distribution point for counterfeit products. Imprisonment is the only deterrence. A fine of Dh5,000 to Dh10,000 is viewed as the cost of doing business."
In 2007, a massive raid on a Dubai-based Chinese trader's warehouse in Sharjah yielded a dozen 10-foot truckloads of fake vehicle parts. The items were seized and destroyed and the errant company was slapped with a Dh1 million fine. The company never paid the fine. Instead, they continued doing business as usual, discovered investigators in March 2009 when they seized 20 truckloads of fake auto parts from the same owners involving the same warehouse.
Also in 2007, Dubai authorities caught members of an Arab-Pakistani counterfeit medicines syndicate. Three were jailed, but remnants of the syndicate have regrouped and are active again, according to XPRESS sources.