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Tuesday, July 11, 2017

Article 31 of the Gulf Cooperation Council Trademark Law, which is applied in Saudi Arabia, states that "[a] contract licensing the use of a trademark shall only be valid, unless it is written, and it is not a must to be recorded in the Trademarks Register." The Law further elaborates that "[i]f same is recorded in the Register, the method of recording and announcement shall be determined in the Executive Regulations."

Hence, the question arises if it is mandatory to record trademark licenses in Saudi Arabia? Given that the Law does not stipulate that license recordal is mandatory, then the answer is clearly no. Is this a recommended practice, however? The short answer is yes, it is recommended to record licenses with the Saudi Trademark Office. In other words, recording is advisable in order for the license and the rights of the licensee to have effect against third parties. Furthermore, failure to record an agreement may have the following implications:                                                                                                                       

  1. It can undermine attempts by the licensee to enforce rights against infringers who are claiming to be using the mark in good faith. However, failure to record a license does not mean that the licensee will not be able to bring a Court action against a counterfeiter or another party who infringes a mark in bad faith.
  2. It can undermine attempts by the licensee to enforce rights against any cancellation action brought by a third party based on non-use. In principle, ineffective use of a trademark in Saudi Arabia within five consecutive years preceding date of filing for cancellation will subject a trademark registration to cancellation on the grounds of non-use.

Another issue worth noting is whether local municipal authorities in Saudi Arabia will require a license recordation to allow the use of the mark on signboards by the licensee in their respective jurisdictions. Some municipal officers might insist on having the license recorded with the TMO, while others are more flexible and only require a signed agreement between the two parties, as per the Law.

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