Everything from the signboard outside down to the napkins bears the official emblem of the top international coffee chain. But in Baghdad, looks are deceiving: The “Starbucks” in the Iraqi capital is unlicensed.

Real Starbucks merchandise is imported from neighboring countries to stock the three cafes in the city, but all are operating illegally. Starbucks filed a lawsuit in an attempt to shut down the trademark violation, but the case was halted after the owner allegedly threatened lawyers hired by the coffee house.

Be careful, he told them — and boasted of ties to militias and powerful political figures, according to U.S. officials and Iraqi legal sources.

“I am a businessman,” Amin Makhsusi, the owner of the fake branches, said in a rare interview in September. He denied making the threats. “I had this ambition to open Starbucks in Iraq.”

After his requests to obtain a license from Starbucks’ official agent in the Middle East were denied, “I decided to do it anyway, and bear the consequences.” In October, he said he sold the business; the cafes continued to operate.

Starbucks is “evaluating next steps,” a spokesman wrote Wednesday, in response to a request for comment by The Associated Press. “We have an obligation to protect our intellectual property from infringement to retain our exclusive rights to it.”

The Starbucks saga is just one example of what U.S. officials and companies believe is a growing problem. Iraq has emerged as a hub for trademark violation and piracy that cuts across sectors, from retail to broadcasting and pharmaceuticals. Regulation is weak, they say, while perpetrators of intellectual property violations can continue doing business largely because they enjoy cover by powerful groups.

Counterfeiting is compromising well-known brands, costing companies billions in lost revenue and even putting lives at risk, according to businesses affected by the violations and U.S. officials following their cases.

Qatari broadcaster beIN estimated it has lost $1.2 billion to piracy in the region, and said more than a third of all internet piracy of beIN channels originated from companies based in northern Iraq. The complaint was part of a a public submission this year to the U.S. Special 301 Report, which publicly lists countries that do not provide adequate IP rights.