What is IP Licensing?

Intellectual property (IP) licensing refers to the practice of authorizing third parties to use, manufacture, sell or distribute IP assets such as patents, trademarks, designs or copyrights in exchange for agreed-upon compensation. Through licensing, IP owners can monetize their intangible assets while retaining ownership rights. Licensees gain legal permission to commercially exploit the licensed IP within defined parameters.

In Nepal, IP licensing allows rights holders to grant permissions for others to utilize their registered IP assets as per mutually agreed terms and conditions. This enables IP owners to expand the reach and commercialization of their intellectual property while maintaining control over how it is used.

IP Licensing in Nepal

The Patent, Design and Trademark Act 2022 (1965) (PDTA) provides the legal framework for licensing of intellectual property rights in Nepal. Section 21D of the PDTA explicitly allows for the transfer of ownership or provision of approval for use of patents, designs and trademarks registered in Nepal.

According to Section 21D(1), the owner of a patent, design or trademark may transfer ownership or provide written approval for its use to another party. This establishes the legal basis for IP licensing arrangements in Nepal.

To execute an IP license, the licensor (IP owner) and licensee must file a joint application with the Department of Industry (DOI), stating the facts of the licensing arrangement and paying the prescribed fees. The DOI then reviews the application and may approve the license, allowing the licensee to use the IP asset as per the terms agreed.

International IP Licensing in Nepal

Foreign companies can license their IP assets for use in Nepal. However, the IP rights must first be registered in Nepal through an authorized representative before they can be licensed locally.

The PDTA allows for registration of patents, designs and trademarks that are already registered in other countries. Foreign IP owners must file an application with the DOI along with proof of registration in their home country. Once registered in Nepal, these IP assets can then be licensed to local entities.

Rights of Trademark Owners in Nepal

Trademark owners in Nepal have several exclusive rights as per the PDTA:

• Right to use the registered trademark
• Right to authorize others to use the trademark through licensing
• Right to take legal action against unauthorized use of the trademark
• Right to sell, transfer or assign ownership of the trademark
• Right to renew the trademark registration

These rights allow trademark owners to commercially exploit their marks and prevent infringement by third parties in Nepal. The exclusive rights last for 7 years from the date of registration and can be renewed indefinitely.

License Agreements for IP in Nepal

A License Agreement is necessary to formalize the usage of Intellectual Property specifying the following:

• The IP asset being licensed
• Scope of the license (exclusive/non-exclusive)
• Territory covered
• Duration of the license
• Permitted uses of the IP
• Payment terms (royalties, license fees etc.)
• Quality control measures
• Confidentiality obligations
• Termination clauses

The agreement must be in writing and signed by both parties. It’s advisable to have the agreement drafted or reviewed by a qualified IP attorney to ensure all key aspects are properly addressed.

Registration of License Agreements

As per Section 21D of the PDTA, IP license agreements must be registered with the Department of Industry to be legally enforceable in Nepal. The licensor and licensee need to jointly file an application with the DOI, submitting:

• The license agreement
• Prescribed application form
• Power of attorney (if filed through a representative)
• Proof of IP registration in Nepal
• Prescribed fees

The DOI will examine the application and register the license if all requirements are met. Registration provides public notice of the license and makes it binding on third parties.

Enforcement of Intellectual Property Rights in Nepal

IP rights holders can enforce their rights against infringement through both civil and criminal remedies in Nepal. The key enforcement mechanisms include:

1. Filing complaints with the DOI against infringement of patents, designs and trademarks.
2. Initiating civil lawsuits in courts for IP infringement and claiming damages.
3. Filing criminal complaints with police for counterfeiting and piracy offenses.
4. Seeking interim injunctions from courts to stop ongoing infringement.
5. Requesting customs authorities to seize imported counterfeit goods at the border.
6. Sending cease and desist notices to infringers before taking legal action.

The DOI has powers to investigate complaints, conduct raids, seize infringing goods and impose fines on infringers. For more serious offenses, criminal prosecution can be initiated through the police and public prosecutor.

Penalties for IP Law Violations in Nepal

The PDTA prescribes the following penalties for IP infringement:

• Patent infringement: Fine up to NPR 500,000
• Design infringement: Fine up to NPR 50,000
• Trademark infringement: Fine up to NPR 100,000

Additionally, the court can order seizure and destruction of infringing goods. Repeat offenders face higher fines and possible imprisonment. The Copyright Act 2002 provides for fines up to NPR 100,000 and imprisonment up to 6 months for copyright infringement.

Protection of Intellectual Property in Nepal

To protect IP rights in Nepal, rights holders should:

1. Register their IP assets (patents, designs, trademarks) with the DOI.
2. Use proper IP notices and markings on products/packaging.
3. Maintain robust internal controls to safeguard trade secrets.
4. Monitor the market for potential infringement.
5. Take swift action against detected infringement.
6. Educate employees, partners and licensees about IP protection.
7. Include strong IP clauses in all business agreements.
8. Consider recordal of IP rights with Nepal customs.
9. Maintain proper documentation to prove ownership/use of IP.

Proactive protection measures can help prevent infringement and strengthen enforcement actions when required.

Renewal of Intellectual Property in Nepal

Timely renewal is crucial to maintain IP rights in Nepal. The renewal requirements are:

• Patents: Renewable twice for 7 years each. Must be renewed within 35 days of expiry.
• Designs: Renewable twice for 5 years each. Must be renewed within 35 days of expiry.
• Trademarks: Renewable indefinitely for 7 year periods. Must be renewed within 35 days of expiry.
• Copyright: No renewal required. Protection lasts for life of author plus 50 years.

Late renewal is possible within 6 months by paying additional fees. Failure to renew leads to automatic cancellation of the IP right.

IP Investigations and Disputes in Nepal

IP investigations in Nepal typically involve:

• Market surveys to detect infringing products
• Online monitoring of e-commerce platforms
• Supply chain investigations to trace counterfeit sources
• Test purchases to collect evidence
• Trap purchases using marked banknotes

For IP disputes, mediation is encouraged as a first step. If unresolved, cases can be filed with the DOI or courts. The DOI has powers to hear cases related to patents, designs and trademarks. Copyright and trade secret cases are heard by district courts. Appeals against DOI decisions can be filed with the High Court within 35 days.

Read More:

• Trademark Registration in Nepal
• Intellectual Property Law in Nepal
• Trademark Law in Nepal
• Patent Law in Nepal
• Industrial Design Law in Nepal
• Highlights of Copyright Act, 2002
• Highlights of Patent, Design & Trademark Act, 1965
• Copyright Law in Nepal

Also Read: Copyright Act, 2002 Patent, Design and Trademark Act, 1965

Laws and Authorities Governing IP in Nepal

The key IP laws in Nepal are:

• Patent, Design and Trademark Act 2022 (1965)
• Copyright Act 2002
• Patent, Design and Trademark Rules 2033 (1976)

The main authorities are:

• Department of Industry (DOI) – For patents, designs, trademarks
• Nepal Copyright Registrar’s Office – For copyright
• Department of Customs – For border measures
• Nepal Police – For criminal enforcement
• Courts – For civil litigation and appeals

Nepal is also a member of the World Intellectual Property Organization (WIPO) and party to the Paris Convention and TRIPS Agreement.

Conclusion

In conclusion, Nepal has an established legal framework for IP licensing and enforcement, though there is scope for further development. Rights holders must be proactive in registering, protecting and enforcing their IP assets in the country.

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Disclaimer: This material is presented solely for informational purposes, without constituting legal advice, counsel, or solicitation, and no liability shall arise from any actions, omissions, or reliance on its contents, directly or indirectly, in any manner whatsoever, irrespective of the jurisdiction or specific circumstances.