It is best practice to record trade mark licences at the relevant trade mark office, but recordal is often viewed as an expensive and time-consuming formality with little practical benefit to the brand owner. As such, recordal is regularly missed, delayed or left down to the licensee. Whilst this may not have any negative consequences in most countries, brand owners should be aware that failure to record a licence in the UAE can have fatal consequences and lead to cancellation of the trade mark registration concerned.
Trade Mark Licences in the UAE
The general position for trade marks is: use it or lose it. Use by consent (e.g. by a licensee) is sufficient to maintain a trade mark registration in most countries. However, it is not that straightforward in the UAE and brand owners cannot automatically benefit from licensee use. Unless that licence is recorded with the UAE Trade Mark Office, the use is considered ‘unauthorised’ so is not taken into account in non-use cancellation proceedings.
Supreme Court Decision
Earlier this year, the UAE Federal Supreme Court held that a trade mark can be revoked for non-use where that mark is only used under licence and that licence has not been recorded at the UAE Trade Mark Office.
UAE trade mark law is set to change soon with new legislation being considered. However, it remains to be seen whether there will be any changes to the issue of licences.
The Supreme Court decision has implications for trade mark owners that do not use their marks in the UAE but instead license them to local licensees or franchisees, joint venture partners or other third parties. Brand owners in this type of situation should ensure that all licences are recorded at the UAE Trade Mark Office.
If a registration is cancelled on the basis of non-use, despite the mark being used in the UAE by a licensee, the brand owner risks irreparable damage to its relationship with the licensee and could potentially find itself in breach of the licence or other agreements. The issue is also critical in the context of an enforcement action. When faced with an infringer, brand owners may need to think twice about enforcing a registration if that registration could be counter-attacked and revoked for non-use, even though it is being used under licence in the UAE. If a brand owner has to wait until a licence has been recorded before it can take action against an infringement, this could mean significant delays and loss.
What should brand owners do?
Use of a mark by a licensee will not be sufficient to defeat a non-use cancellation action in the UAE. Trade mark owners using their marks only through a licensee should ensure that they or their licensees record licences at the Trade Mark Office without delay. It would be sensible to expressly provide for the recordal in the trade mark licence itself, so that it is clear who has the obligation to attend to (and pay for) recordal and the timescale for doing so.
In order to record a licence in the UAE, documents must be legalised. Any licence, whether short-form or not, should be drafted carefully to ensure full compliance with UAE law. In view of the potentially fatal consequences of getting this wrong, it is crucial to seek local advice where a brand owner has or wants to put in place a licence in the UAE.
Co-authored by Jack Rigelsford