Guide to the DIFC IP Law
The DIFC Intellectual Property Law No. 4 of 2019 (the “IP Law”) and the Intellectual Property Regulations, have important implications on DIFC entities and those contracting into DIFC. All entities in DIFC shall be aware of the IP Law and shall ensure that it abides by its provisions. Violations of the IP Law have serious implications on any DIFC entity.
Set out below are some important points with respect the IP Law for guiding purposes.
1. Purpose of the IP Law
Intellectual property rights are legal rights related to the protection of intangible assets arising from the creations of the mind. Intellectual property rights provide its owner exclusivity over the commercial exploitation of the product or the service to which these rights relate. Intellectual property rights are considered among the most important and valuable assets related to businesses, particularly those in the innovation and technology related sectors, as it provides an important competitive edge over competition through the legal exclusivity provided for the exploitation of these rights.
The IP Law provides a robust mechanism for the protection and enforcement of such valuable assets, which creates an environment that respects intellectual property rights, protect IP owners and foster innovation and creativity.
2. Application of the IP Law
- The IP Law applies in the jurisdiction of DIFC and regulates all intellectual property related issues and disputes falling within the DIFC jurisdiction.
- The IP Law regulates the main intellectual property rights, namely; Patent, Utility Certificates, Designs, Trademarks, Copyright and Trade Secrets.
- The IP Law does not create any registry for the registration of intellectual property rights. Any registered IP rights in the UAE, under Federal IP Laws, continue to be recognised and protected under the IP Law.
In order to protect your intellectual property rights, you need to register the same, where applicable, with the Federal authorities in the UAE.
3. Commissioner of Intellectual Property
- The Commissioner of Intellectual Property (“Commissioner”) is responsible for the administration of the IP Law and enforcement of the intellectual property rights within.
- Any issues related to the enforcement of the IP Law shall be raised directly with the Commissioner in accordance with the IP Law and applicable regulations.
- The Commissioner has the powers to receiving and deciding on all complaints filed in connection with the Law in DIFC, and imposing fines for non-compliance with this Law and the Regulations. The Commissioner in investigating a complaint has the powers to inspect premises, seize infringing goods and materials, appoint experts to assist in the investigations.
4. Ownership of IP within an employment context
Pursuant to the IP Law, copyright works (i.e. literary, scientific and artistic works) created by an employee in either of the following scenarios, shall be owned automatically by the employer; (a) if the work was created by the employee within the scope of employment, pursuant to an employment agreement; or (b) if the employee uses the experience, information, instruments or materials of an employer in creating such Work.
A work is considered to be within the scope of employment, if the copyright work was:
- Produced within the employee’s scope of normal duties or within the course of duties falling outside the employee’s normal duties, but specifically assigned to the employee, and the circumstances in either of those cases were such that the copyright work might reasonably be expected to result from the carrying out of such duties; or
- Produced within the employee’s scope of duties and the employee had an obligation, at that time and as part of his duties and responsibilities, to further the interests of the employer.
All other copyright works created by an employee that are unrelated to the business of an employer or the employer’s experience, information, instruments or materials, shall vest exclusively with the employee.
Under the IP Law, it is possible for the employer and employee to diverge from the “by default” provisions and agree on different terms surrounding the ownership of copyright works, however it is imperative that these terms be written – ideally, incorporated into the employment agreement in question.
Ownership of copyright in employment relationship applies also to any “work-for-hire” arrangement.
Inventions, Patents and Designs.
Ownership of Inventions (Employment Frame).
The ownership of inventions in the course of employer-employee relationships has been regulated in the IP Law, which is generally in line with the UAE Federal Patent Law however with more detail and clarity on the different scenarios applicable and some important shifts to tailor these to the needs of FinTech based companies in DIFC.
The IP law provides for three scenarios:
- Invention falls within the employee’s scope of employment: if an Invention is made within the scope of employment by an employee pursuant to an employment contract the employer will be the owner of the Invention, unless agreed otherwise between the employer and employee in writing. An Invention is deemed to be made within the scope of employment, if: (a) the Invention was made in the course of the normal duties of the employee, or in the course of duties falling outside the employee’s normal duties, but specifically assigned to the employee, and the circumstances in either case were such that an Invention might reasonably be expected to result from the carrying out such duties; or (b) the Invention was made in the course of the duties of the employee and, at the time of making the Invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had an obligation to further the interests of the employer.
- An Invention falls outside an employee’s scope of employment but relates to an employer’s business. If an invention falls outside an employee’s scope of employment, however it related to the employer’s business or professional domain and has been conceived by the employee using primarily the employer’s resources, the Invention shall belong to the employer, however the employee shall be entitled to a fair compensation.
- An Invention falls outside an employee’s scope of employment and is not related to an employer’s business or developed using employer’s resources.
If an invention falls outside the scope of employment and does not relate to the employer’s business or professional domain and has not been conceived using the employer’s resources, then the Invention belongs to the employee.
Employers in DIFC are recommended to review their employment contract and make necessary amendments to comply with the IP Law in this aspect.
5. Trademarks vs. trade names
- The IP Law regulates the conflict between trademarks and trade names and considers the registration of a trade name that is identical or similar to a registered or well-known trademark to be a violation of the IP Law.
- Entities currently operating in DIFC or looking to set up in DIFC should ensure they conduct a trademark clearance search at the Ministry of Economy and consider any unregistered, but well-known, to avoid exposing themselves to a legal claim on the basis of their trade name conflicting with, and infringing on, others’ trademark rights.
- Penalties for infringing on a trademark by using an identical or similar trade names are fines and possibility of suspension of trade license. This is in addition to the compensation for any damages caused to the trademark owner.
- The Commissioner of Intellectual Property have the right to issue a direction to resolve any such conflicts.
DIFC entities or entities looking to set up in DIFC shall ensure their trading names do not infringe upon any registered or well-known trademark.
6. Trade secrets
The IP Law provides express provisions on the protection of trade secrets (i.e. all forms of information of an entity) from misappropriation; including, but not limited to, acquiring a trade secret using improper means (i.e. in contravention of the law or contractual obligations), or disclosing or using a trade secret acquired by another person through improper means and disclosing a trade secret by a person who knows, or ought to have known, that it was a trade secret and had been acquired by accident or mistake.
Trade secrets are only considered protected under the IP Law if:
- The information involved is actually a trade secret (i.e., all forms of information of an entity); and
- The information has actual or even potential economic value from not being known to others who in turn could obtain economic value from its disclosure or use; and
- The person lawfully in control of the trade secret (i.e., a person having the right of its disclosure, use and storage) has taken reasonable measures to keep information a secret. Whilst the Law does not highlight what constitutes reasonable measures to keep the trade secret a secret, entities should consider, amongst other things, encrypting files, implementing password protections and restrictions on remote access to trade secrets, as well as stamping or marking information as “Confidential Information” or a “Trade Secret”.
7. Infringement of the intellectual property rights
Patents, Utility Certificates and Designs
Patent infringement test.
The new IP Law introduces important concepts and principles to the enforcement of patents, utility certificates and designs in DIFC, which comes to provide clarity and predictability to the parties subject to patent infringement disputes in front of the DIFC Courts.
- Infringement Test - Doctrine of Equivalence. The new law clearly sets aside the literal infringement test, and expressly recognises the “doctrine of equivalence” as applicable test of infringement. A claimed invention under the patent is considered infringed even if the alleged infringed product or process does not fall literally within the scope of the claim, but nonetheless is equivalent to the claimed invention. To determine whether the alleged infringed product or process is an equivalent of the claimed invention, the latter needs to be interpreted in light of the entire specification and drawings of the patent.
- Contributory Infringement – Cooperation and Inducement. Direct infringement occurs when all the elements of the claimed invention are practiced by the same alleged infringing party within DIFC. In addition to the classical direct infringement, one of the important contributions to the patent section of the IP Law is the introduction of contributory infringement as an act of patent infringement reprehended under the law. The IP law considers that, even in absence of direct infringement, cooperating with another party for an act of infringement and inducing another party to commit an act of infringement are both reprehended infringement acts, even if the inducer or the cooperating party is located outside DIFC.
- Infringement of a Process of Manufacturing (reversal of burden of evidence). Another important principle introduced is the reversal of the burden of evidence when the subject matter of the patent is a process of manufacturing, and the patent owner can show prima face evidence that a product is manufactured using the patented process but cannot through reasonable efforts establish full evidence if the patented process was actually used to manufacture the product. In this case, the burden of evidence shifts to the product owner to prove that he did not use the patented process to manufacture the product. This is a very important principle of computer-implemented inventions which constitute the heart of FinTech related patents.
The IP Law prescribes hefty administrative fines for infringement of patents that may reach up to US$35,000, and a possible suspension of trade license. This is in addition to the compensation to be awarded by Court for the damages occurred due to the infringement.
- i. Any unauthorised use of any copyright or related rights without permission of its owner would be considered an infringement and accordingly a violation of the IP Law.
- ii. The IP Law introduces a number of exceptions or “fair uses” of the copyright, which include, but not limited to: a) certain uses of copyright works for educational purposes; b) making copies of computer programs for back-up or archiving purposes; c) certain uses of copyright works for criticism and analysis; d) publication of certain works by newspapers, periodicals or broadcasting organisations. As fair uses are exceptions to the protection it applies in a very limited form and in fulfilment of certain conditions.
The IP Law prescribes hefty administrative fines for infringement of copyright that may reach up to US$40,000, and a possible suspension of trade license. This is in addition to the compensation to be awarded by Court for the damages occurred due to the infringement.
- The IP Law provides for certain acts that constitute infringement, including but not limited to a) unlawfully using in anyway a registered or well-known trademark; b) unlawfully using in anyway a trademark that is confusingly similar to a registered or well-known trademark; c) counterfeiting or imitating a registered or well-known trademark; d) dealing in any way with counterfeited products
- The IP Law prescribes hefty administrative fines for infringement of trademark that may reach up to US$30,000, and a possible suspension of trade license. This is in addition to the compensation to be awarded by Court for the damages occurred due to the infringement.
Infringement of any intellectual property right is a serious violation of the law and will result in imposing administrative penalties as well as compensation toward damages occurred due to infringement.
Conduct your due diligence before using any copyright work, trademark, invention that belongs to a third party, and ensure you always get proper permission, if required, to avoid the risk of infringement.
8. Intellectual property infringement complaints
Complaints for intellectual property infringements shall be filed with the Commissioner of Intellectual Property. The Intellectual Property Regulations provide the process and requirements for filing a complaint.
- Complaint form; this includes details of the intellectual property right subject to the infringement; facts, legal grounds and demands.
- Documents related to the ownership of the intellectual property right; this may include, registration certificates, agreements…. etc;
- Evidence of the infringement;
- Payment of complaint fees;
- Undertaking letter; the complainant shall provide an undertaking to cover all costs that might be incurred throughout a complaint process.
The Commissioner of Intellectual Property will consider the complaint and will conduct all required investigations to establish the infringement. Investigations may include, inspection of the Respondent premises, conducting meetings with the parties to the complaint or appointing an expert to provide an opinion in the subject matter of the complaint.
After concluding the investigations, the Commissioner of Intellectual Property will issue a direction in accordance with the IP Law and Regulations.
9. DIFC Court
- The DIFC Court has jurisdiction to look into disputes related to IP, except for disputes related to the registrations of IP rights, which are subject to the jurisdiction of the UAE Federal Courts.
- The remedies available through DIFC Courts are injunctions and compensation for damages occurred due to the infringement.