Analysis Those seeking a fake Birkin bag or Louis Vuitton wallet for a special price know to head to the shopping district in Dubai's Karama area.
War against counterfeit goods in UAE hots up
The "Karama special" is no secret. Those seeking a fake Birkin bag or Louis Vuitton wallet for a special price know to head to the shopping district in Dubai's Karama area. Officials at the commercial compliance and consumer protection section, within the Dubai Department of Economic Development (DED) know that too, and conduct monthly raids on the stores, says Atiq Khamis, the DED's commercial protection specialist.
It hardly disrupts the trade. "After the raids, they will stop showing any counterfeit goods in the stores," Mr Khamis says. "But when it gets quiet, then they start slowly displaying their stuff in the shop." Shop owners are fined from Dh500 (US$136.12) - for small quantities and first-time offences - to Dh20,000, but "our fines are really not that punitive ? it's not a deterrent", he says. "They make more money by selling counterfeit goods."
Seizures of counterfeit goods in the UAE are increasing. Dubai's consumer protection section is launching more raids and its counterpart in Abu Dhabi is looking to boost its staffing and budgets as well. But until heavier fines and a GCC-wide solution are implemented, sales of fake purses, shampoo and mobile phone accessories will continue to grow, industry insiders say. In the first half of this year, Dubai consumer protection officials seized 616,500 counterfeit items, an increase from the 570,072 items seized in the whole of last year.
The figures are growing in the capital as well, with 3,345 fake items confiscated in the first five months of this year, compared with the 5,250 seized last year, according to Abu Dhabi's consumer protection department. The trade in fake goods across the UAE is worth an estimated $500 million annually, according to the Ministry of Economy. But a study in 2006 by the Brand Owners Protection Group (BPG), which represents brands such as Nestle, British American Tobacco and Estee Lauder, estimates it could be as much as $670m.
Omar Shteiwi, the chairman of the BPG and the regional intellectual property adviser for Nestle Middle East, says it is a problem that also poses a risk to public safety. "We should all stand up in a very strong way and not let it go," Mr Shteiwi says. "Imagine if a consumer is buying food products thinking it is genuine, but it is not. Food, or medicine, or anything we consume, these products are not fit in most cases for human consumption and can cause serious health hazards."
And with the economic downturn, the amount of counterfeit goods on the market could increase as consumers search for bargains. "The problem will be increased because of expenses. People don't want to spend cash," Mr Shteiwi says. "This is a serious issue now where government and big brand owners and law enforcement authorities should come together." Last month, Dubai Customs and the BPG signed an agreement with Asian officials to work more closely to prevent the flow of copied goods.
Abu Dhabi's consumer protection department plans to at least double its staffing and budget, says Mahmoud al Baloushi, the acting head for consumer protection at the Abu Dhabi DED. It is part of the move to incorporate the capital's Department of Planning and Economy into Abu Dhabi DED, a new entity with a bigger mandate. Brand owners are increasingly seeking ways to protect their intellectual property and registering their brand names and logos with the Federal Government, says Abdulla al Shehi, the commercial protection director at the Dubai DED.
There are now 95,298 brands and trademarks registered with the Ministry of Economy, which gives local consumer protection departments the power to seize counterfeits of that brand, Mr al Shehi says. Mr Khamis says the key to battling the problem is heavier fines for counterfeit sellers and distributors. "If this was applied, it would deter people." A unified GCC trademark law proposing fines and imprisonment was passed in the UAE in March 2007 after Sheikh Khalifa bin Zayed, the President of the UAE, issued a decree ratifying it.
But the law will not be put into force until all other GCC countries approve its introduction, says Omar Obeidat, a partner at Al Tamimi law firm, which specialises in intellectual property. The approval process is being hampered by earlier free-trade agreements in some GCC countries, such as the agreements Bahrain and Oman have made with the US. "There are so many parties involved ? and these are not parties all sitting at the same table," Mr Obeidat says.
The legislation is slowly working its way through the system, and is more than halfway through the refining process, he says. "It's much better than what we have," Mr Obeidat says. "The most important deficiency in the current trademark laws are the low penalties ordered by the courts, rendering trademark infringement cases a crime worth risking." Mr Shteiwi says BPG is anxiously awaiting the law's introduction. "This law is a dream for all brand owners," he says. "You are talking about raising the fine of Dh10,000 to ? Dh100,000. Even if we just implement the Dh100,000 fine, it will be significant."
While raids are increasing, the DED's commercial protection department does not have enough inspectors to keep up with Dubai's growth, and those selling counterfeit goods are finding ways to continue to sell them, Mr al Shehi says. Traders are keeping most of their counterfeit goods in nearby flats and directing customers from their stores to look at them. "We're facing this problem with the residents' flats because we don't have the right to go into the residence," Mr al Shehi says.
Shuichi Kanno, of Casio's brand management section and intellectual property department, says the problem stems from a lack of awareness about counterfeit goods on the part of traders and consumers. "They call the counterfeit products 'duplicate' and the genuine products 'original'," Mr Kanno says. "They are not interested in handling of illegal or not illegal products. Their interest is profit only. Their consumers' interest is also price only."
Mr Shteiwi says awareness in the UAE is increasing but fully addressing the issue will require a co-ordinated effort. "Everybody needs to play a positive role. Either the brand owners or the consumers or the courts. Everybody is part of getting through this problem." firstname.lastname@example.org