Trademark Licence Agreement: Template & Guide (Nepal)

A trademark licence agreement in Nepal lets a registered owner permit someone else to use the mark while keeping ownership. The twist most templates miss is that the permission is not purely private: Sec. 21D requires owner and user to apply to the Department of Industry together.

Key takeaways

• Sec. 21D(1) lets the owner "provide approval in writing" for another party to use a registered patent, design or trade mark.
• Sec. 21D(2) requires both parties to file a joint application with the Department, with the prescribed fee.
• Sec. 21D(5) has the Department record the approval and issue a note to the receiver.
• Sec. 16(2) makes unpermitted use of a registered mark an offence, and Sec. 19 adds a fine plus confiscation of the goods.
• The Act never uses the words licence, royalty, exclusivity, territory or quality — all of that is contract, not statute.
• A licence cannot outlive its registration: Sec. 18D gives seven years, renewable under Sec. 23B.

Is a trademark licence a private contract in Nepal?

Only half of it is. The commercial deal is a contract between two businesses, and nobody at the Department writes it for you.

But the permission itself runs through Sec. 21D. Sub-section (2) says that where parties intend to transfer ownership or to provide or receive approval for use, "both the persons shall file a joint application, stating the facts accordingly before the Department accompanied by the prescribed fees".

Sub-section (3) then says the Department "may transfer the ownership or provide approval of use". The Department is not merely noting your deal. On the Act's wording it is the body that grants the approval.

What does the Act actually call it?

Not a licence. The words licence, royalty, exclusivity, territory and quality appear nowhere in the Patent, Design and Trade Mark Act 1965. Sec. 21D speaks only of transferring ownership or providing "approval in writing for its use".

That absence is the most useful thing to know before you open a template. Nepal's statute supplies the permission mechanism and nothing else. Every commercial term you care about has to come from the contract.

It also means an imported template written for a jurisdiction with a statutory registered-user regime may assume machinery Nepal does not have. Read a borrowed document against Sec. 21D, not against its own headings.

Why does recordal matter legally, not just administratively?

Because of what sits on the other side of it. Sec. 16(2) says no one shall copy or use a registered trade mark in another's name "without transforming the ownership or written permission pursuant to Section 21D".

Sec. 19 then punishes a breach of Sec. 16(2) with a fine as per the gravity of the offence, ordered by the Department, together with confiscation of the articles and goods connected with the offence.

So the Sec. 21D route is not paperwork for its own sake. It is what makes a third party's use of your registered mark lawful rather than an offence, and that is worth settling before stock is printed.

How is a licence different from an assignment?

One clause covers both, which is exactly why they get confused. The practical split is simple: an assignment moves the mark, a licence moves only permission to use it.

If a transfer is what you actually want, our guide to the trademark assignment route covers the ownership side. For a single narrow task, an authorisation letter may be enough.

How do you get the approval recorded?

There is no Schedule form for a Sec. 21D application the way there is for a registration, so the sequence below reflects practice rather than a prescribed checklist. Confirm current counter requirements before you file.

1. Confirm the registered owner. Check the certificate and the register, and look the name up with the owner search tool or a formal clearance search before anyone signs.
2. Check every class involved. One brand may sit across several registrations, each with its own number.
3. Settle the commercial terms. Scope, duration, standards, payment and exit all have to be written, because the Act supplies none of them.
4. Have the agreement drafted and reviewed. Use a lawyer; a template is a prompt list, not a document.
5. Prepare the authority papers. A notarised Power of Attorney under Sec. 20 where an agent files, plus corporate authority for each company.
6. File the joint application. Both parties apply to the Department together with the prescribed fee, under Sec. 21D(2).
7. Keep the Department's note. Sec. 21D(5) has the Department issue a note to the receiver — store it with the certificate.

The fee schedule names a transfer fee and an endorsement fee for amendments on record, so confirm which applies to an approval of use with the Department of Industry rather than assuming.

What should the written approval make clear?

These are points to settle, not clauses to copy. Because the Act is silent on all of them, anything left vague is left to argument.

• The exact registration numbers and classes being licensed, not just the brand.
• Which goods or services the user may apply the mark to.
• Where it may be used, and through which sales channels.
• Whether anyone else — including the owner — may use it in the same scope.
• How the owner checks that the goods meet its standards.
• What happens to stock, signage and online listings when the arrangement ends.

Who drafts it matters. This page explains the statutory framework; the agreement itself is legal drafting and belongs with a lawyer who can see your commercial terms.

Does licensed use keep the registration alive?

This is the sharpest open question, and we would rather flag it than guess. Sec. 18C requires the Department to inquire into and cancel a registered trade mark "not brought into use within one year from the date of registration".

The Act does not say whether use by an approved user counts as use by the owner. There is no definition of use, and no saving clause for licensed use.

The cautious reading is that getting the approval on the register under Sec. 21D is also the way to show that the mark is in use with the owner's authority. Ask an advocate before relying on a licensee's trading to carry a dormant registration.

What happens when the registration expires?

The licence goes with it. Sec. 18D fixes the trade mark term at seven years from registration, and Sec. 23B(1) requires renewal within 35 days of expiry.

Sec. 23B(2) allows a late renewal inside six months on payment of a fine; after that the registration "shall automatically" be cancelled. Sec. 23B(3) permits a trade mark to be renewed any number of times for seven years at a time, unlike a patent or a design.

Put the renewal date in the agreement and say who is responsible for it. Our trademark renewal service tracks the term where an owner would rather not.

How many registrations does one brand licence touch?

Often more than the parties assume. Sec. 18A(2) requires a separate application for each NICE classification class, so one brand across food and restaurant services is two registrations with two numbers.

A licence that names only the brand therefore leaves it unclear which registrations are covered. List the numbers, and confirm each with the application number lookup. Where a registration is missing for an activity the user will carry on, the gap needs filing first — see how registration works.

Nepal is first-to-file, so a missing class is not fixed by the licensee's trading history. It is fixed by an application.

What if the mark is not registered yet?

Then there is nothing to license under Sec. 21D. The clause operates on a patent, design or trade mark that is already on the register, and Sec. 16(1) makes registration the way title is acquired in the first place.

Two parties can still contract around an unregistered brand, but the arrangement sits outside the Act. It gets no Departmental record, no note under Sec. 21D(5), and no answer to a Sec. 16(2) allegation later.

The practical move is to file first and license second, particularly where the user will invest in packaging or signage. If the mark is a logo, decide the filing format before you sign anything — our guide to filing a logo as a trade mark covers the choice.

What do foreign brand owners need?

A Nepali registration first. Sec. 21B says a trade mark registered in a foreign country is not valid here unless registered in Nepal, and Nepal sits outside the Madrid System, so there is no international registration covering the country.

Sec. 21C helps: the Department may register a foreign-registered mark without conducting enquiries where the foreign certificate is filed, and it extends Paris Convention facilities to the holder.

Then Sec. 20 lets the owner appoint an attorney or legal practitioner, which is how a foreign party signs into the joint application from abroad. Treaty membership is published by WIPO, and our registration service acts as the local agent.

The same logic runs the other way for a Nepali brand licensing into a neighbouring market: protection there needs its own national filing, as our note on registering a trade mark in India explains.

Should you use a template you found online?

As a prompt list, yes. As a document to sign, no — and not because templates are bad, but because the Nepali parts are the parts a generic template cannot know.

A borrowed agreement will not carry your registration numbers, will not reference Sec. 21D, and may assume a registered-user regime with statutory quality-control duties. Nepal has none of that in the Act.

Use the checklist above to prepare, then have the document drafted properly. Before you negotiate, confirm the mark is really registered and really owned by the party across the table using Nepal's published trademark record.

Common mistakes in Nepali trademark licensing

Each of these has the same root: treating the agreement as the whole transaction.

• Signing with a group company that is not the registered owner.
• Never filing the Sec. 21D(2) joint application, so the register contradicts the deal.
• Licensing "the brand" without listing registration numbers and classes.
• Assuming an imported template's registered-user clauses mean something here.
• Letting the registration lapse mid-term and discovering the licence has nothing under it.
• Printing the registered-mark symbol on goods outside the registered classes.

Where a third party is already using something close to your mark, licensing is the wrong tool entirely. If their application has been published in the Industrial Property Bulletin, the live question is the opposition window, not a contract. That is an opposition and enforcement matter.

What does this look like in practice?

A Kathmandu spice brand licenses a Birgunj manufacturer to make and pack under its registered logo. This is an illustration, not a real case.

The contract is signed, production starts, and nothing is filed. Two years later a competitor complains that the Birgunj packets are infringing. The manufacturer's defence is the owner's written permission under Sec. 21D — but the register shows no approved user, so the first job is explaining a gap instead of pointing at an entry.

The second problem is narrower and more expensive. The brand is registered for packaged spices only, and the manufacturer has started printing it on cooking oil. No contract term fixes a class that was never registered.

In short

Treat a Nepali trademark licence as two jobs. Get the commercial agreement drafted properly, then put the permission on the register through the Sec. 21D joint application so the Department's own record matches the deal. The consolidated Act is published by the Nepal Law Commission, and anything turning on legal effect should go to an advocate.

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Planning a licence, or discovering that an existing one was never recorded? Send us the registration numbers and the parties through our contact page and we will tell you what the Department will need.