IP Licensing in the UAE: Elements of an Effective Trademark License in UAE 

Intellectual Property (“IP”) can help maximize the potential of your business. By serving as a source of competitive intelligence, it allows businesses to secure competitive advantages, generate revenues, attract investors, and mitigate relevant risks. IP protection is important for any business, regardless of its size. When IP is protected and managed effectively it can become a valuable commercial asset. Protecting your IP not only creates a right over the brand but can also be used as security to raise funds for growth of the business. 

IP Licensing is a method by which the owner of the IP Assets allows one or more third parties to use or exploit the respective IP rights for a specific purpose and under specific conditions and duration, in return for payment. The IP owner may allow a third party to exploit their IPs owned by way of an IP License Agreement. The owner of the intellectual property rights or person entitled to grant the license on the IP shall be the Licensor and the party to whom such a license is granted shall be the Licensee. 

IP License Agreements are of various types and include: 

1. Exclusive License: Agreement whereby the Licensor renounces to exploit himself and transfers the right to exploit its IPs rights and ownership for the manufacture and/or distribution of the goods and services to an exclusive and unique Licensee, under specific conditions and specific duration. The Licensee holds exclusive rights for a specified duration, and the Licensor cannot exploit the IP during that period. 

2. Non-exclusive License: Agreement whereby the Licensor transfers the right to exploit its IPs rights and ownership to several Licensees, under specific conditions and duration while conserving the right to exploit the IPR licensed himself or via others. The rights granted are subject to specific conditions and duration but do not limit the Licensor’s ability to license the IP to others. 

3. Sole License: Agreement in which Licensor transfers the right to exploit its IP rights and ownership to an exclusive and unique Licensee, under specific conditions and duration, while conserving the right to exploit the IP right licensed themselves. However, unlike the exclusive license, the Licensor retains the right to exploit the IP themselves as well. 

Some other effective types of IP Licensing include: 

1. Cross Licensing: Each party to the Agreement grants the other the right to exploit their respective IPs under specific conditions. (E.g.: Apple and Microsoft have had cross-licensing agreements which covered design patents, software features, etc.) 

2. Franchising: The franchisor allows the replication of its business concept in another jurisdiction and provides support and training to the franchisee. The business belongs to the franchisee who runs it for the franchisor against a standard fee. This type of agreement typically applies to services and can include IP rights licenses like trademarks. (E.g.: McDonalds, Subway, and similar corporations operate around the world through such franchises); 

3. Technology Licensing, etc.  

Licensing Agreements usually include payments by two methods: either as a lump sum payment or as a royalty fee. In case of a lump sum payment, the financial compensation that is to be paid by the Licensee shall be a fixed amount determined upfront and agreed to between the parties to the Agreement and shall be made as a one-time payment or in instalments. In case of royalty fee, a periodic fee paid by a Licensee for the utilization of the licensed IP right and shall be based on pre-determined criteria – such as fee per good/service sold under the License, percentage of sales, etc. 

An effective IP License Agreement shall be drafted in compliance with the UAE laws and shall be registered with the UAE IP Office. 

Trademark Licensing in the UAE: 

Trademarks are among the most valuable IP assets for businesses in the UAE, as they protect the company’s brand identity and public recognition. Trademark Licensing allows the trademark owner (or the Licensor) to permit another entity to use their trademark for commercial purposes under agreed terms. 

Federal Law No. 36 of 2021 on Trademarks (as the “Law”) and the Cabinet Resolution No. 57 of 2022 (as the “Implementing Regulation”) lays down procedures that need to be complied with to ensure effective Trademark Licensing in the UAE. Chapter 4 of the Law (Articles 30 to 34) deals with Contract Licensing the use of Trademarks by licensees. As per Article 30 of the Law, the trademark owner may license one or more physical or juristic persons to use the trademark, for all or some of the goods/services for which it is registered. As per Article 18 of the Implementing Regulation, the Licensing Contract shall be written and duly authenticated, certified and translated, if the original copy is written in a language other than Arabic.  

The Application for licensing the use of trademark shall include: 

1. Number of the registered trademark. 

2. Name and nationality of the trademark owner. 

3. Name, address, residence and nationality of the licensee. 

4. Licensed commodities and services. 

5. Licensing commencement date and expiry date. 

6. Geographical scope of licensing, if any. 

7. Duly translated, authenticated and certified licensing contract. 

8. Any documents or papers required by the competent department. 

The Trademark Office shall include in the Register the License to use the Trademark and shall provide the applicant with evidence thereof. It shall be published after payment of prescribed fees to the Trademark Office. 

An effective Trademark Licensing Contract shall include the following:  

1. Photo and description of the trademark. 

2. Number and date of registration of the trademark. 

3. Name, address and nationality of the trademark owner. 

4. Name, address and nationality of the licensee. 

5. Statement of the commodities or the services which use is licensed and their class. 

6. Commencement and expiry dates of licensing. 

7. Geographical scope of licensing (if any) 

Deletion/Removal of License: Registration of a trademark license shall be deleted from the Register at the request of the trademark owner, the Licensee, or a representative of either of them, after submitting evidence/documents as to the expiration or termination of such a License Contract.  The Trademark Office shall notify the other party of the application submitted to delete the license, and this party may object to the application for deletion. 

Restrictions on the license for use of Trademark: Restrictions may not be imposed on the Licensee to use the Trademark that do not result from the rights conferred by the Trademark registration or are not necessary to preserve these rights. However, the License Contract may include the following restrictions (Article 33): 

• Determining the scope of the territory or the term of use of the Trademark.  

• The requirements for effective quality control of goods or services.  

• The obligations imposed on the beneficiary of the license to refrain from any actions that may result in abusing the Trademark. 

The Licensee of the Trademark may not assign it to others or grant sub-licenses unless otherwise agreed upon with the Trademark owner (Article 34). 

Key considerations for Trademark Licensing: 

• Mandatory registration: Under the Federal Law on Trademarks (No. 36 of 2021), all trademark license agreements must be registered with the UAE Trademark Office to be legally valid and enforceable. Unregistered licenses may not be recognized in case of a dispute. 

• Use of Registered Trademarks: A trademark must be officially registered with the UAE Trademark Office before it can be licensed. Unregistered trademarks cannot be the subject of a licensing agreement. 

• Exclusive and Non-exclusive Licenses: The agreement must clearly define whether the Licensee has exclusive rights to use the trademark or if the Licensor retains rights to license the mark to multiple parties. 

• Duration of the License: The duration of the license granted shall not exceed the prescribed trademark protection period of the registered trademark. 

• Scope of Use: Agreement should specify the permitted use, including geographical scope, class of goods/services where it is applicable, and the duration of such license. 

• Due Diligence and Risk Management: Licensees should conduct due diligence to assess potential legal risks, and Licensors should ensure that their trademark is not misused or diluted through improper licensing practices. 

• Approval for Sub-Licensing: If sub-licensing is allowed, it must be explicitly stated in the agreement, along with any conditions or approvals required from the Licensor. 

• Payment Structure: The parties must agree on a compensation model, whether through lump sum payments, royalties, or a combination of both. 

• Legal Liability and Indemnification: The agreement should clearly define the liability of each party, including indemnification clauses to protect the Licensor against potential misuse of the trademark by the Licensee. 

• Renewal and Modification Terms: The contract should outline procedures for renewal, modifications, and conditions under which the license may be extended or renegotiated. 

• Third-Party Rights: If any third-party rights are involved in the trademark, the agreement should clarify their impact on the Licensee’s usage rights. 

• Governing Law and Jurisdiction: The agreement should specify that UAE laws govern the contract and outline dispute resolution mechanisms, such as arbitration or litigation before UAE courts. 

IP Licensing serves as a crucial mechanism for businesses to commercially exploit their intellectual property while maintaining control over its use. Whether through exclusive, non-exclusive, or franchising, a well-structured Trademark Licensing enables businesses to generate revenue, expand market presence, and strengthen their brand identity. A well-drafted agreement should define rights, obligations, scope, and financial arrangements to safeguard both the Licensor and Licensee. Given the legal complexities and strategic considerations involved, businesses should seek professional legal guidance to draft and register licensing agreements in compliance with UAE laws, ensuring their IP assets are effectively used for commercial success.