For hundreds of years the Middle East was a key staging post on the Silk Route linking Asia—with its luxurious silks and ceramics—with the markets of Europe. Now it is part of a new “junk route”, says Tel-Aviv-based Shlomo Cohen, one of the panelists on today’s session CM52—Middle East: Brand Protection in Difficult Times. “Israel is a major transshipment point for counterfeit goods made in Asia and sent via the Gulf states across the Middle East to the West Bank and through Israel onto Europe,” he says.

Statistics from the European Union support that view. Last year, the Commission revealed that China, India and United Arab Emirates (UAE) were responsible for more than 80% of all counterfeit medicines entering the EU in 2006. In the food sector Turkey remains the main source. But senior officials in the Commission admit that although Customs were able to identify where the goods had come from, it was difficult to prove where the products had been manufactured, given the increasingly circuitous routes being used by smugglers to avoid detection.

Transshipment and trade of counterfeit goods through the Middle East is a big problem for IP owners. The Gulf states, and the UAE in particular, are home to some of the world’s busiest ports and most dynamic economies. But while the free trade zones in the region help companies ship their goods around the world quickly and efficiently, they create headaches for IP counsel and Customs officials trying to stem the trade in fakes. Many of these contain fakes made in some of Asia’s most notorious counterfeit-manufacturing countries, which are then offloaded, split up and sent across the region to their ultimate destinations in Europe and the US.

The sheer volume of goods passing through the Middle East makes it very difficult for Customs officers in the region to contain the problem. In addition, political strife in a number of countries means that IP is a low priority for many officials. Says Cohen: “Considering the turmoil in the West Bank and Gaza, IP is not on the agenda there at all, let alone high up it.”

But it isn’t all bad news for IP owners. Since the implementation of the TRIPs Agreement, IP has been given a reasonably good level of protection across the Middle East, says Cohen. Many governments are keen to encourage IP-rich industries and are taking steps to attract overseas investors. In the area of IP, for example, the members of the Gulf Cooperation Council (Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE) have introduced a unified trademark law, while the emirate of Abu Dhabi has set up a new court specializing in economic issues—including IP rights—and the authorities in Sharjah are considering raising the administrative fines that the emirate levies on IP infringers.

Marketing to the Middle East

The countries of the Middle East together have a population that tops 200 million, making it an attractive market for IP owners. But when it comes to developing strategies for breaking into the market, IP owners should be careful not to fall into the trap of treating it as a single entity, warns Cohen: “There are a lot of dichotomies. There are some countries where per capita income is among the highest in the world, and others where it is among the lowest.”