Legal Considerations For Tech Startups In The UAE: IP, Licensing, Compliance, And More

As an ecosystem with a vibrant tech community, fostered by its business-friendly legal framework and a world-class environment, the United Arab Emirates (UAE) is an ideal launchpad for tech startups. In the first quarter of 2025, UAE tech startups set a major record, with an 865% year-on-year increase, raising $872M. Hence the answer to, “Why is everyone investing in UAE startups right now?”

However, for launching a startup in the UAE and operating it efficiently requires certain core legal considerations, especially in areas such as intellectual property, licensing, and ensuring the startup’s compliance with all the prevailing laws.

Understanding the Legal Landscape for Tech Startups in the UAE

Companies in the UAE, including tech startups, can be constituted either in the UAE free zones or on the mainland. These tech startups are regulated by various legislations, entailing even federal laws specific to each free zone or the mainland, designed to support innovation and transparency.

Federal Decree by Law No. (32) of 2021 Regarding Commercial Companies: The Federal Decree by Law No. (32) of 2021 is one of the primary legislations that deals with the formation and governance of commercial companies in the UAE. The act seeks to establish a modern regulatory framework that also fosters digital integration and strategic scaling of technology-based businesses.

Department of Economic Development: The DED plays a crucial role in regulating entities in the mainland, allowing them full access to the UAE market. Since 2021, similar to most free zones, the mainland entities also benefit from 100% foreign ownership in most activities.

Free Zones: The free zones, such as the DIFC, ADGM, DMCC etc, offer advantages like 100% foreign ownership, tax exemptions, and streamlined licensing, making them ideal for tech startups and international trade. Startups established in these free zones, along with the primary legislations, shall also be regulated by the mandates and regulations unique to their free zones.

Hence, for startup companies, aligning their legal strategy with the local federal law and free zone regulations becomes important.

Along with the aforesaid laws, the regulatory frameworks, including the Federal Decree-Law No. 47 of 2022 on Corporate Tax, and Federal Decree-Law No. 33 of 2021 (UAE Labour Law), shall also be of significance. For Tech startups handling user information, compliance with the Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data (PDPL) shall be mandatory.

Intellectual Property (IP) Protection: Register your Trademarks

For most companies, especially the tech startups, their intangible assets such as the software, digital products, brands, algorithms, etc., plays invaluable significance. Hence, entailing the IP protection through the classic Trademarks, Patents, Copyrights and Trade Secrets comes with utmost importance.

In the UAE, trademarks are regulated by the Federal Decree-Law No. (36) of 2021 on Trademarks.With Startups rapidly coming up, and businesses becoming more dynamic and highly competitive, here, your business’s brand can often give you a cutting-edge advantage as:

• Distinguishing your products from others, making them stand out from your competitors.
• Trademarks are often associated with the quality, reliability and credibility of the brand, thereby building your brand image and goodwill.
• A registered trademark shall be protected from brand infringements and any unauthorised use of your trademark, avoiding potential legal conflicts.
• IP assets are invaluable corporate assets of a business, hence providing your enterprise an additional revenue.
• Secured IP assets enhance your startup’s value, attracting investors and partners.

Some of the key legal considerations to ensure an effective trademark protection of your startup are:

• Conducting a thorough trademark search in the local and international trademark databases before formally registering your mark. This helps you in ensuring that marks similar to your proposed mark does not exist in the market.
• Choosing a distinctive and unique mark, meaning your chosen trademark shall not be identical or deceptively similar to other marks in the market.
•  Proper Registration of the chosen trademark, as registration offers a broader scope of enforceability, ensuring exclusive enjoyment of your trademark rights.
• Continued monitoring, trademark searches and IP audits, ensuring that there are no conflicting trademarks in the market.
• Undertaking timely renewals of your registered mark, thereby securing your trademark throughout the lifetime of your business. The UAE Federal laws mandate that a trademark be renewed every 10 years from the filing date.

Licensing and Commercial Contracts

While forming and establishing your tech startup, its registration with the appropriate authority remains one of the foremost and fundamental steps. Along with such registration, the startup shall also obtain specific licenses for activities covering its tech operations.

The UAE Free Zones, like the ADGM and the DIFC, are actively promoting and fostering support for tech startups. For example, the initiative of the Tech Startup Licence in the ADGM is a notable one. It is a full commercial license entailing a discounted fee structure that allows local and international entrepreneurs to easily launch their innovative entity in Abu Dhabi. While the license offers benefits like subsidised license fee structure for your startup for up to five years of the initial operations of the proposed entity, obtaining the license requires the applicant to meet certain eligibility requirements as listed by the ADGM.

Legal considerations in licensing also include factors such as IP licensing agreements, wherein the IP owner enters into an agreement with a third-party authorising such party to access and use their intellectual property, generally under certain conditions. It is crucial to note that the agreement shall cover key essential terms such as:

• Type of intellectual property.
• The scope of the licensee’s right to use the IP.
• The timeframe for which the license is granted.
• The specific products, services, or fields where the licensed IP can be used.
• Compensation the licensee must provide to the licensor.
• Provision clearly stating that the licensor shall retain the ownership of the IP.
• Clauses that require the licensee to adhere to specific quality control and quality standards.
• Confidentiality and non-disclosure statements.

For tech startups, other commercial & technology contracts shall also be crucial. this includes (but is not limited to) Software licensing agreements, Service Level Agreements (SLAs), Technology development/outsourcing agreements, Data processing agreements etc.

Regulatory Compliance for Tech Startups: Data protection and privacy

As mentioned earlier, for Tech startups in the UAE handling user information, compliance with the Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data (PDPL) shall be mandatory. Its compliance ensures the confidentiality of information, protects the privacy of individuals, and facilitates data processing and management in the UAE with clearly established rules. 

• The entity processing the data shall obtain a valid consent of the data subject, capable of being proved by the data controller.
• The data processing shall be undertaken in a fair, transparent and legal manner.
• It shall be undertaken only for the specific purpose to which the data subject has consented to, and such purposes shall be lawful.
• The entity processing the data shall conduct regular data audits and take safeguards and appropriate technical measures to prevent illegal access or unauthorised processing, breaches, or infringements of personal data.
• Mandatory impact assessments shall be conducted to evaluate the impact of the proposed processing operations on personal data involving high risks.
• Appointing a Data Protection Officer (DPO), who shall ensure the entity’s compliance with the existing laws, advise the controller or processor on data management, and also act as a point of contact for the UAE Data Office.

Free zones may entail laws specific to their jurisdictions. While data protection in DIFC is regulated by the DIFC Law No. 5 of 2020 (As amended by DIFC Laws Amendment Law DIFC Law No. 2 of 2022), in the ADGM, the nodal legislation is the Data Protection Regulations 2021.

For tech startups, especially in a dynamic and competitive ecosystem, robust legal planning, particularly in IP protection, appropriate licensing, and evolving regulatory compliance, comes with utmost importance. Here, engaging legal experts ensures comprehensive compliance, mitigates risks, and strengthens investor confidence in an increasingly regulated digital ecosystem, ensuring your entity’s sustainable growth.