By Brent Rasmussen
Tuesday 20th of December 2016.

A common refrain in today’s press is that Saudi Arabia’s economy is in crisis. While substantial challenges are indeed present, the Kingdom of Saudi Arabia remains the world’s largest exporter of petroleum, is showing signs of being committed to a robust economic diversification program, has among the world’s largest balance of foreign currency reserves, and, when adjusted at purchasing power parity, its GDP ranks Saudi Arabia just behind South Korea.

It comes as no surprise then that many Western brand owners see Saudi Arabia as a strategic market. What many of them fail to anticipate, however, is the extent to which the Kingdom’s traditional culture influences modern concepts like trademark rights.

Here are five things that all Western brand owners should know about registering, using, and enforcing their trademarks in Saudi Arabia.

  1. Shari’a is the uncodified, supreme law of Saudi Arabia

Many misconceptions persist in the West over the meaning of Shari’a (or Islamic law). Shari’a is not a codified system of laws. Instead, it is derived from the Qur’an and the traditions (Sunnah) of the Prophet Mohammad by religious scholars (the ulema) who have been trained in one or more schools of Islamic jurisprudence.

Saudi Arabia applies a conservative form of Shari’a, one that forms the foundation of the Kingdom’s legal system. Indeed, Saudi Arabia’s basic legal charter identifies the Qur’an and the Sunnah as the country’s constitution. Consequently, no law, administrative decision, or court judgment in Saudi Arabia can be seen as running contrary to Shari’a.

  1. Trademarks that are contrary to Shari’a cannot be registered

Saudi Arabia is a first-to-file country. With limited exceptions for ‘well-known’ marks, brand owners seeking to protect or enforce their trademarks in Saudi Arabia must therefore first obtain a trademark registration.

The Kingdom’s trademark law prohibits the registration of certain categories of marks, including those seen as “violating public morals or public order” or those that are “identical or similar to symbols constituting a pure religious nature”. In practice, this means that marks referencing banned substances (eg, pork or alcoholic beverages) or those seen as having a sexual connotation (eg, words like ‘SEXY’ or ‘KISS’) are regularly refused. In addition, marks that incorporate non-Islamic religious symbols, such as the Christian cross, are almost universally refused.

  1. Trademarks cannot be registered with goods and services that are forbidden by Shari’a

Under the Saudi interpretation of Shari’a, certain goods and services that might seem commonplace to Western brand owners and consumers are forbidden. For example, pork products and alcoholic beverages are banned in the Kingdom. So are nightclubs, movie theatres and casinos.

Saudi Arabia’s trademark law does not specify what goods and services are forbidden and which are not. Nor does it contain an express provision prohibiting the registration of trademarks with goods or services that have been banned from the country. Nevertheless, the Trademark Office’s electronic filing system is programmed to filter out forbidden goods and services from new applications. Some goods like tobacco products (which are technically forbidden in Saudi Arabia) have been known to survive the filing process only to be blocked later by the Trademark Office or the courts.

  1. Saudi courts routinely refer to Shari’a in adjudicating trademark matters

Saudi administrative courts hear disputes in which government departments are involved. This includes trademark cancellation actions and opposition appeals (which involve the Ministry of Commerce and Investment, where the Saudi Trademark Office is situated). The judges who staff these courts are trained in Shari’a and regularly refer to it in their decisions.

Some of the most commonly-cited Shari’a principles include the following:

  • There should be neither harming nor reciprocating harm
  • Deception and anything that may mislead people is forbidden
  • Damage and any excuse for corruption should be avoided

Perhaps taking a cue from the courts, brand owners have been known to infuse their court arguments with references to Shari’a. Experience has shown, however, that if a brand owner’s case is not well grounded in the trademark law, courts will generally be unpersuaded by appeals to Shari’a.

  1. Goods and trademarks not permitted under Shari’a face a high risk of seizure by Saudi Customs

Western brand owners who struggle to register their marks in Saudi Arabia because of Shari’a might be tempted to do business there without any trademark registrations. This strategy is generally not advisable in any first-to-file jurisdiction. But brand owners seeking to do business in Saudi Arabia who find themselves in this predicament may understandably feel that they have no other choice (apart from a costly rebrand of their product lines).

Brand owners who undertake this strategy of foregoing the trademark registration process may find some success with Saudi Arabia’s neighbours. For example, alcohol is forbidden under Shari’a in the United Arab Emirates (UAE). The UAE Trademark Office will not grant trademark registrations covering alcoholic beverages. In practice, however, the distribution, sale and consumption of alcohol is permitted (though tightly regulated).

Not so in Saudi Arabia. Not only is the distribution, sale and consumption of alcohol strictly forbidden in the Kingdom, it also has a very active Customs Department who enforces a ban on the importation of alcohol and other forbidden goods and marks, including pork, gambling machines and devices, and products bearing images of the cross and other non-Islamic religious symbols.

In sum, Saudi Arabia presents brand owners with significant opportunities and potential challenges. Brand owners can mitigate the risks associated with many of these challenges by educating themselves on the fundamentals of Saudi culture—particularly that of Shari’a.