The regional trademark offices in the Middle East, including the local UAE trademark office, receive thousands of trademark applications on a yearly basis. The ratio of approved and registered trademarks has been increasing significantly over the last few years, due to a less conservative examination approach that has been in place. This has effectively increased the number of registered trademarks, resulting in more controversial newly registered trademarks in the market.
Hence it would be essential to conduct clearance searches prior to trademark registration, as this would help the owner to identify any obstacles that may arise at an early stage and assist trademark owners to select and register more distinctive trademarks. Nonetheless, the chances of facing oppositions from third parties’ objections and cancellation actions still remain a serious risk for newly registered marks.
In the UAE, the non-use cancellation is relevantly rare and not commonly raised in trademark disputes because of the flexibility to produce evidences by trademark owners to prove such use. Historically, there was no tax control on sales of products or services and therefore parties could produce evidences to demonstrate internal sales within the UAE.
As per the Trademark Law (Federal Law No. 37/1992) and its amendments by Federal Law No. 8/2002 of “Trademark Law”, which establishes a statutory ground according to Article 22 for disputed parties the right to order the cancellation of a trademark, if it was proved that the trademark wasn’t used during five consecutive years. This is not applicable if the owner of trademark establishes that the non-use is due to a reason beyond his control, such as import restrictions and imposed governmental conditions are considered reasons beyond control.
Cancellation request against a registered trademark will shift the burden to the trademark owner to submit proof of use. With the increasing number of unused registered trademarks in the UAE, the trademark attorneys find themselves obliged to come up with newly innovative and creative steps to overcome such silent threat for their registered trademarks. It is imperative to find suitable and legally sound mechanisms to produce adequate evidence to prove active trademark use.
In this context the analysis is kept to a minimum, by simply highlighting the impact of non-use under these two conditions i) objection by third parties to newly applied marks by legitimate trademark owners; and ii) impact of tax regulations in the UAE on evidences to proof of trademark use.
Objections by third parties are always expected during the opposition period. Where the trademark applicants may face an opposition within 30 days period from the date of publishing their approved marks in the local official gazette. Whilst trademark applicants usually focus on traditional defenses, which includes lack of similarity between marks, prior ownership and/or use of applied mark, to overcome such oppositions, it will soon become very important to test whether the owners of preregistered trademarks has met the requirement of usage and can produce evidence of use according to Article 22 of the Trademark Law.
As many parties’ squat or pirate large number of other’s trademarks with the purpose to blackmail the legitimate right holders, it seems that many owners of preregistered trademarks may have no true intention to use such marks, and therefore, contribute to the increasing number of non-use registered trademarks, which makes it unlawful. Hence, it is recommended for trademark applicants who face an opposition or objection by holders of preexisting registered marks must consider whether such trademarks are vulnerable for cancellation on a non-use basis. Evidences for use can be produced whether in form of marketing expenditures, actual direct sales, signed agreements to appoint third parties for a jurisdiction, advertisement expenses, logistic movement by way of imports and exports for goods and so forth. This has given some flexibility to overcome the proof of actual usage in traditional way, yet actual effort and evidences need to be prepared and produced by trademark owners. Legitimate trademark owners will likely be willing to invest and build such evidences to maintain their registered rights.
As the UAE, and other neighboring countries, are introducing and implementing a platform of tax system, such as Value Added Tax (VAT) and Tax Procedures laws, the proof of use needs to be aligned with the declared sales and alleged revenues from such use. Therefore, the trademark owners will have to pay attention to the evidences submitted in any proceedings, whether in the UAE or elsewhere, to prove the actual use, fame of their trademarks and ensure their submission tally with their declarations made to the relevant tax authorities in the UAE. In addition, the VAT and UAE tax system will assist parties to cross examine any submission or allegation of use submitted by the trademark owner to prove the authenticity of such use.
The expense of facing cancellation for non-use proceedings five years after the date of registration can be avoided if trademark registrants are prepared for such claims. To be in a solid position to defend a claim based on Article 22, there are five conditions that should be met: (1) the trademark in use is the subject matter of the registration; (2) The trademark is in-use within the normal course of the trade license; (3) It is within the UAE territory including UAE free zones or onshore territory; (4) The trademark is used in relation to the goods or services identified by registration; and (5) by the trademark owner or a properly appointed entity or person as determined in the Trademark Law.