Iran is the second largest economy in the Middle East, despite years of international sanctions, and the market of more than 80 million people is highly consumer oriented. Demand for local and foreign products is consequently very high and the temptation to produce similar or counterfeit products (from foreign or local competitors) is very strong.
Foreign companies regularly face infringement of their IP rights in Iran, whether or not they are present there. They wonder how to protect their rights in a legal system that is mostly unknown to them.
This short article helps locate Iran within the international IP laws and norms context, and provides information on infringement patterns in Iran in order to help foreign companies monitor and protect their rights.
Iran and international IP laws and norms
Iran is a member of the World Intellectual Property Organization (WIPO) and has acceded to several international treaties such as the Paris Convention for Protection of Industrial Property, the Madrid Agreement and Protocol for International Registrations of Trademarks, and the NICE agreement for International Classification of Goods and Services. The Registration of Patents, Industrial Designs and Trademarks Law was passed in 2008. Iran has weak regulation for the protection of trade secrets and no regulation for utility models, which are normally protected under patent or design laws. Iran is not a member of the WTO nor is it a party to the Berne Convention for the Protection of Literary and Artistic Works.
Current infringement patterns in Iran
We currently observe the following infringement patterns:
- Unfaithful Registrations. The practice of registering similar trademarks, designs or patents, and enforcing them against competitors has significantly increased in the local market. There is a tendency to register trademarks of known foreign companies. In other words, some businesses use built brands rather than building their own brands. This behavior presents a severe challenge to international companies who are eager to enter the Iranian market in the future.
- Trolls. Patent, design and trademark trolls are emerging in the market. They register trademarks, patents or designs, and enforce them against businesses. Brands which do not watch the IP market are more vulnerable to such practices.
- Copycats. Copying product packaging of competitors to increase sales is becoming a pervasive infringement pattern. Since Iran is not a party to the Berne Convention, and foreign companies do not have copyright in Iran, confronting copycats is more challenging. However, this is less of a problem if the foreign company has registered its packaging as a trademark or design.
Current IP risk exposure for foreign companies (whether or not present in Iran)
Whether or not a foreign company is present in Iran or does business with Iran, there are a few legal risks specific to Iran, which need to be managed.
- Unused trademarks. Due to US sanctions and economic pressures on Iran, IP courts are adopting a conservative approach to IP lawsuits. For example, if an international brand does not have any activity in Iran, their criminal trademark lawsuits against Iranian companies would usually fail. The courts' reasoning is that if the registered trademark is not being used in Iran, the consumer does not know it, and consequently the consumer would not be confused by the false trademark. According to Iranian laws, if a trademark owner does not use the registered trademark for three years from its registration date, any interested person has the right to ask the court to cancel the trademark. These types of lawsuit are increasing.
- Madrid trademarks. There are many foreign companies, which use the International Trademark System (Madrid) to register their trademark in Iran. However, most of them miss a critical point. Unlike most countries in which trademark offices finalize the registration process, completing trademark registration in Iran needs the help of a local lawyer. If the registration process is not completed, the courts will not enforce trademark rights. The local lawyer is required to obtain a registration notice from the Trademark Office and pay official fees for publication of the notification in the Iranian Official Gazette. Any beneficiary has the right to oppose the registration within 30 days of publication. If no one objects, the registration process can then be completed by the local lawyer.
If you are a foreign company experiencing or suspecting infringement in Iran, we recommend you ask a local IP lawyer to watch the market and IP registrations. They will monitor the Official Gazette, oppose the registration of similar trademarks, and make an assessment of a potential infringer's business and registered IP assets. If you are not currently using your trademark in Iran, there is a risk that your competitors may apply for cancellation of the trademark. We highly recommend that you seek legal advice from an experienced IP lawyer to find a solution to this issue. Finalizing the registration process of international applications in Iran is a serious matter that foreign companies need to be aware of. If you are a manufacturer of consumer products, we recommend that you protect your product packaging under the trademark or design laws.
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