Intellectual Property Law in DIFC

15 Apr 2022

“Intellectual property is a key aspect for economic development.”

- Craig Venter

Intellectual property (IP) refers to any original work by the human mind, such as an artistic, literary, technical, or science creation. Intellectual property rights (IPR) are the legal rights granted to the author or creator to protect his or her invention or creation over a certain period of time. These legal rights grant the inventor/creator or his assignee the exclusive right to completely use his invention or creation for a specified period of time.

A well-established fact is that IP plays a critical role in the modern economy. It has been conclusively settled that the intellectual labor involved with the invention should be given due consideration in order for the public good derived from it. There has been a significant increase in the costs of research and development (R&D), as well as the investments needed to bring a modern invention to market.

The stakes for technology developers have become very high. Therefore the need to protect information from unauthorized usage has become expedient, for at least a period of time, to ensure recovery of R&D and other related costs, as well as sufficient profits for continuous investment in R&D. IPR, is a powerful tool for protecting the inventor or creator of an IP’s investments, money, time and effort, since it gives the inventor or creator an exclusive right to use his invention or creation for a set period of time. Thus, IPR contributes to the economic development of a country by fostering fair competitiveness and encouraging industrial development and economic growth.


Legalities of IP Law in DIFC

His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, on November 21, 2019, adopted a new IP law for the Dubai International Financial Centre (DIFC) under DIFC Law Number 4 of 2019 DIFC Intellectual Property Law. The DIFC Authority introduced DIFC Law Number 4 of 2019 (Law), which is intended to promote the DIFC’s innovation economy by protecting and easing enforcement of regulation of IPR. Before the adoption of the Law, IP laws and rules for the whole United Arab Emirates (UAE) (including the DIFC) is implemented at both the federal and emirate levels, with IP disputes in the DIFC being resolved by the civil law system administered by the UAE Federal or other local Courts. The Law now provides that the DIFC Commissioner of IP and DIFC Courts, rather than the UAE Federal Courts, have authority over IP cases controlled by the Law.

The courts and rules of the DIFC are based on the English common law system. IP in the rest of the UAE, on the other hand, will continue to be regulated by UAE federal IP laws, with applicable cases resolved by federal and local courts, and thus the civil law system. The enactment of the Law established a new interface not only between federal and DIFC IP rules but also, in the case of a cross-border conflict, between the common and civil law systems as they apply to IP matters before the courts.

The DIFC IP Law protects and regulates all IPR, including patents, industrial designs, utility certificates and drawings, copyright, trade names, trademarks, and trade secrets. The Law was drafted in compliance with international best practices, taking into account the applicable UAE Federal laws governing the different types of IPR and in accordance with international treaties of which the UAE is a signatory.cThe legislation does not establish or introduce any registry processes for IPR within the DIFC, nor does it replace or overlap with current or existing registrations obtained from relevant offices at the UAE Ministry of Economy. On the other hand, it explicitly recognizes certain new IP doctrines and principles, such as fair use of trademarks and patents, works for hire, designation of economic rights associated with copyrights, parody, factors, and advanced measures to assess “well recognized” trademarks, violations of trade secrets, and reverse engineering. The following highlights are the main facets of the proposed Law, which has been drafted to closely comply with existing international treaties such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).


Recognition of IPR in UAE

Notably, the current legislation does not create any new IP offices but instead recognizes UAE registered IPR in the DIFC, including UAE registered patents, utility certificates, trademarks, industrial designs and drawings, copyrights, trade secrets, and trade names. This is a key feature of the Law since it does not impose an extra burden on the IP owners to register their rights within the area of DIFC; thus, all IP rights (such as trademarks and patents) registered in the UAE are legally enforceable within the DIFC. This guarantees that the Law will act in accordance with the applicable UAE IP laws and that IPR holders who wish to exercise their IPR in the DIFC must have registrations under Federal UAE laws.


Employee Inventions and Creations

The new legislation, reflecting its aim of foster innovation and creativity, elucidates the legal position on possession of copyright and innovations produced by employees. The Law assumes that the employer owns the rights of works produced by an employee either within the scope of their work or employment or by using the employer’s know-how and resources. In comparison, under the UAE Federal Copyright Law, the employer’s ownership of copyright is not assumed, and the power to assign ownership of subsequent or future works is also restricted.

Likewise, the Law allows for employer ownership of patents as long as the technology is developed within the scope of an employee’s work. Suppose an invention is made beyond the scope of work but applies to the employer’s industry and is made using the employer’s know-how and resources. In that case, the employer retains ownership of the invention. Employers should be aware that in this situation, the employee may be allowed to “fair compensation” for the invention, taking into consideration the employee’s remuneration, the economic value of the invention, and the gains to the employer from the invention.


Appointment of an IP Commissioner

The Law establishes a new position of IP Commissioner, which will be in charge of upholding the Law, resolving disputes, and issuing fines for infringement of IPR. The IP Commissioner will be appointed for a three-year term that may be extended. Dr. Tarek Hajjiri has been selected as DIFC’s first IP Commissioner. The IP Commissioner will be responsible for overseeing and implementing IP regulations within the Centre, settling disputes, and enforcing penalties for noncompliance.


Jurisdiction of the IP Commissioner and the DIFC Courts in Cases of Infringement

The IP Commissioner is in charge of implementing and executing the Law and any legislation imposing administrative penalties. Decisions of the IP Commissioner may be referred or appealed to the DIFC Courts. The DIFC Courts also have the jurisdiction to grant injunction orders and award damages for infringements of the Law.


Well-Known Trademarks

The Law establishes specific standards for determining whether a trademark is well-known, which are lacking in UAE Federal laws. The Law includes the following criteria:

  • The extent of public knowledge or recognition of a relevant sector
  • The extent, duration, and geographical range of any promotion of the goods or services to which the trademark applies
  • The extent, the duration, and geographical range of use and
  • The duration and geographical area of any registrations.


Penalties for IP Infringement

For violations of IPR, the Law imposes substantial penalties ranging from approximately AED 20,000 to AED 150,000. For example, someone who tries to use a well-known trademark without the registered owner’s permission faces approximately AED 55,000. Manufacturing, importing, selling, or exporting goods covered by a patent or utility certificate, or products derived from protected processes, will result in approximately AED 130,000 fine or penalty.