You license a trademark in Nepal by entering into a written licence agreement with another party and recording that licence with the Department of Industry (DoI). Unlike a full assignment, licensing lets you retain ownership of the mark while granting another business the right to use it, usually for a fee or royalty. The process is governed by the Patent, Design and Trademark Act 1965, and getting the paperwork right is critical to avoiding disputes.
Key Takeaways
- Trademark licensing in Nepal means you allow someone else to use your registered mark while you remain the legal owner.
- Nepal's Patent, Design and Trademark Act 1965 explicitly recognises licensing and requires DoI recording to be fully enforceable.
- A written licence agreement is non-negotiable — verbal or informal arrangements offer almost no legal protection if things go wrong.
- Quality control and territorial scope must be spelled out in the agreement; a common mistake is skipping the quality clause.
- Unlike selling the mark outright, a licence can be exclusive or non-exclusive and typically lasts for a fixed term, renewable by agreement.
- The DoI treats unrecorded licences as legally fragile — if a dispute arises, the licensee may be unable to enforce rights independently.
- You should always search the trademark database before licensing, to confirm the mark is current, active, and not facing any cancellation threat.
What does it mean to license a trademark in Nepal?
Licensing a trademark means the registered owner — called the licensor — grants another person or business the right to use the mark in Nepal, under specific conditions, while retaining full ownership. This right is formally recognised under the Patent, Design and Trademark Act 1965, and the law treats it as distinct from an outright assignment. A common scenario: a Kathmandu-based clothing brand registers its logo and then licenses it to a manufacturer in Biratnagar, allowing local production while the brand owner stays in control. Without a licence, any use by a third party is technically unauthorised and could amount to infringement.
How is licensing different from assigning a trademark?
An assignment transfers full ownership of the trademark to another party — the original owner walks away with a one-time payment and gives up all future rights. Licensing, by contrast, is more like renting out the mark: you keep ownership, set the rules, and typically earn ongoing royalties. In Nepal, the DoI records assignments as a transfer of title, while a licence is noted as a permitted use by a third party. For most Nepali businesses, licensing is the smarter move when you want to expand into a new region or product line without losing your core brand asset. The law also makes it easier to terminate a licence than to unwind a poorly thought-out assignment.
Why would a Nepali business license its trademark?
Licensing opens revenue streams that don't require you to build a new factory, hire more staff, or directly enter a market you don't know well. You might license your restaurant brand to a franchisee in Pokhara, let a distributor use your spice trademark on packaged goods for export, or permit a manufacturer to produce merchandise bearing your logo. The arrangement can also be a practical way to settle a dispute — a business accused of infringement sometimes becomes a paid-up licensee instead of facing litigation. Whatever the reason, the deal must be documented properly, because the DoI and Nepal's courts will only enforce what's in writing.
Who can license a trademark in Nepal?
Only the registered owner of a trademark — or someone with a legally recorded right to act on the owner's behalf — can grant a valid licence. If your mark is not yet registered, you cannot give anyone a legally enforceable licence to use it; you could at most enter into a contractual promise, but that promise won't bind the DoI or survive a third-party challenge. The Patent, Design and Trademark Act 1965 makes registration the gateway to all statutory rights. Before you even think about licensing, run a trademark database search to confirm your mark is current, properly classified, and not facing a cancellation action. An unregistered or lapsed mark has nothing to license.
What are the essential clauses in a Nepal trademark licence agreement?
Your licence agreement isn't just a formality — it's the document that defines the whole commercial relationship. At minimum, it should cover scope of use (exactly which goods or services the licensee may offer under your mark), territory (all of Nepal, or a specific province or city), duration and renewal, royalty or lump-sum payment structure, quality-control standards, and grounds for termination. The quality clause matters enormously: if the licensee's products are substandard, your brand reputation — and the trademark's distinctiveness — can be damaged, sometimes beyond repair. We've seen disputes in Nepal where the licensor discovered, too late, that the agreement was silent on quality, and the courts offered limited recourse. Always include a clear right to inspect the licensee's premises and products, and a clause requiring the mark to be used exactly as registered.
Does Nepal require licence recording with the Department of Industry?
Yes — the DoI must record the licence for it to have full legal effect against third parties and for the licensee to be able to bring an action in its own name. Nepal follows the registered-user model: the licence doesn't need to be published in the Industrial Property Bulletin the way a new application does, but it must be entered on the trademark register. An unrecorded licence is still a contract between the parties and can be enforced between them under general contract law, but if a third party infringes the mark, the licensee standing alone may struggle to sue. The recording process involves filing the agreement along with a prescribed application form, the trademark registration certificate details, and a notarised power of attorney if you're using a representative. Our team can help you prepare and lodge the recording application — reach out through our contact page for guidance.
What documents are needed to record a trademark licence in Nepal?
The DoI typically requires the original licence agreement (notarised), a copy of the trademark registration certificate, the completed application form for recording a registered user, a power of attorney if an agent is handling the filing, and identification documents for both the licensor and licensee. If the licensee is a company, a board resolution authorising the arrangement is standard practice, mirroring what the DoI expects for a fresh trademark registration filing. Foreign licensors licensing to a Nepali entity should also provide a notarised copy of the home registration certificate. Presenting incomplete paperwork is a common delay point — a quick review before submission saves weeks.
How long does it take to record a trademark licence, and how long does a licence last?
Recording a licence with the DoI is generally faster than a fresh trademark registration — in straightforward cases you're looking at roughly four to eight weeks, though the DoI's current workload will dictate the actual pace. The licence itself lasts for whatever term the parties agree on, provided it doesn't exceed the remaining life of the trademark registration. Remember, a trademark registration in Nepal lasts seven years from the registration date and is renewable for further seven-year terms. If your mark expires and you don't renew it, the licence collapses with it. Use the renewal calculator to check when your next renewal window falls.
What legal basis governs trademark licensing in Nepal?
The Patent, Design and Trademark Act 1965 — specifically the provisions on permitted use and the prohibition against unauthorised use under Sec. 16 and the registered-user framework — supplies the legal backbone. Nepal is a first-to-file country, so all licensing rights flow from the registration, not from prior use. The Act doesn't use the word "license" in the standalone Western sense; instead it frames it as a use with the owner's written permission, which in practice operates as a licence. Nepal's obligations under the Paris Convention and TRIPS also support the recognition of licensing structures, and the DoI's practice aligns with international norms even where the statutory text feels sparse. For deeper statutory references, you can consult the Nepal Law Commission's official text of the Act.
Exclusive vs non-exclusive licences — which one fits your situation?
An exclusive licence means only the named licensee can use the mark in the agreed territory — even you, the owner, agree not to use it there directly. A non-exclusive licence lets you grant the same right to multiple parties, and you keep using the mark yourself alongside them. In practice, a franchisor granting an exclusive territory to a Pokhara franchisee will lean towards an exclusive licence; a brand licensing its logo to several promotional-goods manufacturers will use non-exclusive deals. Neither type is "better" — the right choice depends on your commercial strategy and how much control you're willing to give up.
Common mistakes when licensing a trademark in Nepal
A mistake we see often: the parties sign a loose memorandum of understanding and assume the DoI will treat it as a valid licence — it won't. Another frequent error is omitting the quality-control clause, which leaves the licensor with no legal lever if the licensee's goods turn out shoddy. Licensing an unregistered mark, or a mark that's up for renewal but hasn't been renewed, is another pitfall. Some businesses also forget to restrict the licence to the exact NICE class the registration covers; a licensee who uses the mark on goods outside that class can inadvertently create problems for the licensor. If you're unsure which class your mark is registered under, try the NICE class finder tool before you draft anything.
A realistic Nepal licensing example
Imagine a Bhaktapur-based handicraft company that has registered its brand name and logo under NICE Class 20 (furniture and decorative woodwork). It wants to expand into home textiles — cushion covers, table runners — but doesn't have a textile production unit. It licenses the trademark to a weaving cooperative in Palpa for five years, restricting use to Class 24 (textiles and textile goods), with a royalty based on quarterly sales, a right for the Bhaktapur company to inspect quality twice a year, and a clause that terminates the licence automatically if the cooperative fails to maintain the agreed craftsmanship standard. The licence is recorded with the DoI. This arrangement grows the brand's presence without the owner investing in new manufacturing — and because it's recorded, both sides have enforceable rights if something goes wrong.
What happens if a licensed trademark is infringed by a third party?
When the licence is properly recorded, the licensee can join the licensor in enforcement action or, in many cases, bring proceedings independently. The DoI acts as a quasi-judicial body for trademark disputes, and the courts can grant injunctions and damages under the Act. If the licence is unrecorded, the licensee's standing is far weaker. Practically speaking, most licensors take the lead in infringement matters, because their brand is the one at stake, and the licence agreement should spell out who bears the cost of enforcement. If you suspect unauthorised use of a mark you license or own, our team can help you assess the options — see our opposition and enforcement services for more detail.
What legal risks come with not recording a licence?
The biggest risk is the licensee's inability to sue infringers in its own name, but it doesn't stop there. An unrecorded licence also creates ambiguity in due diligence — if you ever want to sell the business or attract investment, buyers and investors will scrutinise the trademark register, and a missing licence entry looks sloppy. It can also cause complications if the licensor's registration lapses or is challenged. From a practical standpoint, recording the licence signals to the DoI and the market that this is a serious, arm's-length commercial arrangement, not an informal understanding that could be disputed later. The government filing fee for recording is modest, and the process is straightforward when the paperwork is in order.
How to get started with trademark licensing in Nepal
- Confirm your mark is registered and active. Run a search on the Nepal trademark database to verify the registration is current and correctly classified.
- Identify the right NICE class or classes. Make sure the licence covers only the goods or services your registration already protects. Use the AI NICE classifier if you're unsure.
- Draft the licence agreement. Cover scope, territory, duration, royalties, quality control, termination, and dispute resolution. Engage a professional for this — template agreements rarely fit Nepal's specific legal requirements.
- Gather supporting documents. Certificate of registration, board resolutions, notarised power of attorney, and identification documents for both parties.
- File the recording application with the DoI. Submit the agreement and documents, pay the prescribed government fee, and follow up until the licence is entered on the register.
| Factor | Licence | Assignment |
|---|---|---|
| Ownership of the mark | Stays with the original owner | Transfers fully to the buyer |
| Payment structure | Typically royalties or recurring fees | Usually a single lump sum |
| DoI recording required | Yes, for full enforceability | Yes — recorded as a transfer of title |
| Control over quality | Licensor retains quality oversight | New owner sets all standards |
| Duration | Fixed term, renewable | Permanent |
| Best for | Expansion without losing brand ownership | Exiting a brand or business line entirely |
In short, licensing your trademark in Nepal is a powerful way to grow revenue and brand reach without selling what you've built. The key is treating it as a formal legal transaction: start with a registered mark, put a robust written agreement in place, record the licence with the DoI, and stay vigilant about quality. Skipping any of those steps turns what should be a smooth commercial arrangement into a legal headache. If you're ready to take the next step, search your mark's current status or reach out to our team for help preparing your licence agreement and DoI recording application.
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