Dragon Mart, Dubai’s huge wholesale and retail free zone shopping complex for goods of Chinese origin, has been a major source of counterfeit goods ever since it opened in December 2004. Recent enforcement activity by the Department of Economic Development (DDED), however, suggests that the problem is finally being tackled more effectively.

 

Background

 

Although Dragon Mart was recognised, almost from the outset, as a major source of counterfeit goods, the history of enforcement has been somewhat patchy. During the first couple of years, Nakheel, the property developer responsible for the complex, developed and implemented anti-counterfeiting procedures. It included a clause in the standard tenancy contract that prohibited dealing in counterfeit products and, in the event that tenants breached the contract, Nakheel had the right to seize and destroy the counterfeit products and to require the tenants to sign undertakings not to infringe in future. In practice, however action against infringers was rare and difficult. Nakheel then signed a Memorandum of Understanding with Dubai Customs pursuant to which Dubai Customs would have jurisdiction over Dragon Mart. Dubai Customs was more active in enforcing the rights of IP owners – in particular, the rights of brand owners who had recorded their marks with Customs.

 

In a further development in brand owner enforcement in the free zone, complaints relating to IP infringement have, since early this year, been handled by the DDED.

 

Enforcement by the DDED

 

The DDED procedure requires a Complaint to be filed on the basis of specified trade mark registrations. On receipt of the Complaint, DDED Inspectors may carry out pro-active inspections and seizures. Brand owners may also supply information to the DDED about traders suspected to be dealing in counterfeit products.

 

The penalties imposed by the DDED include a fine, which may vary from AED500 to AED25,000 (approx. US$135 to US$6,800) depending on the number of previous offences and the infringer’s co-operation during the inspection and post-inspection. For repeat offenders, trade licences may not be renewed or the trader’s premises may be closed for a period of time. Seized counterfeit goods are destroyed. There are, however, still limitations in relation to the DDED’s ability to inspect the warehousing facilities contained within Dragon Mart and penalties are rarely linked to the quantity of goods seized.

 

In addition to the DDED, Dubai Police continue to have jurisdiction over some matters in Dragon Mart and may be an appropriate avenue for larger targets or where criminal prosecution is the desired outcome.

 

Our Comment

 

The involvement of the DDED in enforcement activity in Dragon Mart, and the activity it has undertaken so far, has been welcomed by brand owners. In the space of a few short months, Dragon Mart has gone from being one of the most challenging areas of Dubai to one in which on-the-ground action can be included in any enforcement campaign.

 

For further information, please contact Chad Dowle.