A new law aimed at combating counterfeit goods and other commercial fraud has been approved by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.
The new law, issued by Shaikh Khalifa on December 12 and published in the official gazette, replaces the Commercial Fraud Law and is intended to enhance the existing intellectual property rights (IPR) enforcement mechanism.
The law, which took effect immediately, imposes tougher penalties on counterfeiters. The maximum penalty under the new law is a jail term of up to two years and/or a fine of as much as Dh1 million.
Legal experts said the law enhances brand owners’ rights, citing articles that make it an offence to possess counterfeits, even where the IPR holder is unable to prove that the counterfeiter intends to sell them.
A federal committee to combat commercial fraud will be set up. It will have sweeping powers to close down offending businesses, be they inland or in free zones, and bring to task officials of these firms, once the existing draft bill turns into law, according to Federal National Council.
The law will cover fraud in goods, contractual jobs and services offered by businesses across the UAE, including free zone companies.
The committee, which will report to the Ministry of Economy, will work out anti-fraud strategies and policies, study reports of fraud submitted by competent authorities and take decisions on it. Subcommittees with powers to close down offending businesses for up to two weeks; order confiscating of goods and reach a settlement with businesses involved or refer cases to the court will also be created in each emirate.
Subcommittees will follow up destruction, recycling or return of confiscated goods to exporters. Substandard goods may be seized for a month by these committees and a decision to get these goods released is taken by the court after a settlement is reached over how goods may be disposed of and the fine paid.
The new law reserves the maximum penalties for pharmaceutical and food products, but even those who deal in counterfeit goods outside of these categories may be fined up to Dh250,000. The authorities are also empowered to close stores that sell counterfeit goods, and repeat offenders may have their trade licences cancelled.
“Anyone who deceives or attempts to deceive another party by means of fraud in human food, animal feed, medicines, crops or natural products may be punished. Anyone promoting by any media means or possessing fraudulent and/or deceitful products may also be punishable under this law,” states the law.
The same penalty would be imposed on offenders who fail to obey decisions by subcommittees regarding human food, animal feed, medicines, crops or natural products. Legal experts said a jail term of up to six months and a fine amounting to two times the price of the goods involved would be imposed in case of other fraudulent goods. The only law on commercial fraud which was in practice in the country was drafted in 1979. It called for a maximum jail term of two years and maximum fine of Dh10,000 for cheating a customer by delivering goods that are different to what is ordered
Legal experts said the law is meant to step up efforts to fight fraud and trade in fake goods, with unscrupulous inland and free zone traders facing up to two years in jail, a Dh1 million fine and being named and shamed at their cost.
Traders in counterfeit goods will be penalised even if buyers knew about these goods ahead of the transaction, stated the law.
The law empowers the court to order confiscation or destruction of food, medical drugs, crops and tools. Under the law, the court may also order publishing the convictions in two local Arabic and English dailies with the convicts bearing the cost.
The court may also order the business of offenders to be closed down for up to six months. If a business is a department store, only the offending department will be shut down. Repeat offenders may face revoking of their trading licences and double penalties.
Fraud may also be applicable in cases where products have been adulterated or an attempt to adulterate products is detected.
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