Brand Licence Agreement (Pakistan)

A Brand Licence Agreement in Pakistan governs the use of the rights granted, fixing the royalties payable and the conditions attached to the licence.

The Trade Marks Ordinance 2001 (Ordinance No. XIX of 2001) provides for the registration of trademarks at the Trade Marks Registry, which is a division of IPO-Pakistan operating under the Ministry of Commerce. Section 2(1)(z) of the Trade Marks Ordinance 2001 defines a trademark as a mark capable of being represented graphically and capable of distinguishing goods or services of one person from those of others. Registered trademarks in Pakistan are protected for an initial period of ten years and may be renewed indefinitely for successive ten-year periods under Section 38 of the Trade Marks Ordinance 2001.

Section 50 of the Trade Marks Ordinance 2001 governs trademark licensing in Pakistan. A registered trademark may be licensed to use the mark either in connection with all goods or services for which it is registered or in connection with some of those goods or services, and for the whole or part of Pakistan. Section 50(7) of the Trade Marks Ordinance 2001 requires that a trademark licence be in writing and signed by or on behalf of the licensor. Section 51 of the Trade Marks Ordinance 2001 provides for registration of trademark licences — a registered user (licensee) may be recorded in the Trade Marks Register upon application by the registered proprietor (licensor), and registration of the licence gives the licensee additional rights including the right to sue infringers independently in appropriate circumstances.

The Copyright Ordinance 1962 may also be relevant where the brand includes copyrighted artistic works — logos, brand imagery, distinctive packaging designs, or advertising materials — as the Brand Licence Agreement should address copyright licensing alongside trademark licensing. The Trade Marks Ordinance 2001 and Copyright Ordinance 1962 are supplemented by the Patents Ordinance 2000 and the Designs Ordinance 2000 where brand elements include patented or registered design elements.

IPO-Pakistan administers the Trade Marks Registry and processes trademark registration, renewal, opposition, and rectification applications. IPO-Pakistan has offices in Karachi and Islamabad and accepts applications under the Nice Classification of Goods and Services (as adopted in Pakistan) for trademark registration. Pakistan is a member of the World Intellectual Property Organisation (WIPO) and has acceded to the Paris Convention for the Protection of Industrial Property — international trademark holders may claim priority in Pakistan within six months of their home country application under the Paris Convention.

Brand Licence Agreements in Pakistan that involve payment of royalties to foreign brand owners attract withholding tax obligations under Section 152 of the Income Tax Ordinance 2001 — the Pakistani licensee must withhold tax at the applicable rate on royalty payments to non-residents and deposit the tax with the Federal Board of Revenue (FBR). Double taxation avoidance agreements (DTAAs) between Pakistan and the licensor's country of residence may reduce the withholding tax rate.

A Brand Licence Agreement in Pakistan becomes necessary in multiple commercial, regulatory, and investment situations involving the use of a third party's brand.

A Brand Licence Agreement is needed when a Pakistani company wishes to manufacture and sell products under a foreign brand name — for example, a Pakistani consumer goods manufacturer seeking to produce and market products under a recognised international brand in the Pakistani market. The agreement grants the manufacturer the right to use the brand's trademark, packaging, and marketing materials on Pakistani-made products.

A Brand Licence Agreement is required when a master franchisee or sub-franchisee relationship is established and the franchisor's brand is one of the key assets being licensed. While a thorough Franchise Agreement governs the overall relationship, the Brand Licence Agreement specifically addresses the trademark rights — its terms are often incorporated into the Franchise Agreement or executed as a separate instrument recorded with IPO-Pakistan's Trade Marks Registry.

A Brand Licence Agreement is needed when a large Pakistani corporate group — such as a holding company — wishes to formally licence its brand and trademark to its subsidiaries and associated companies, establishing a documented intra-group licensing arrangement that determines royalty payments, quality standards, and termination rights on an arm's-length basis, as required by FBR's transfer pricing provisions under Section 108 of the Income Tax Ordinance 2001.

A Brand Licence Agreement is required when a Pakistani retailer or distributor is authorised by a brand owner to operate branded stores, outlets, or shop-in-shop formats — such as authorised dealerships for automotive brands, electronics brands, or fashion brands — where the use of the brand name and visual identity in retail operations must be governed by a formal agreement.

A Brand Licence Agreement is needed when a Pakistani company acquires a licence to use a well-known brand for co-branding, co-marketing, or joint promotional campaigns — for example, a bank licensing a payment card brand (such as Visa or Mastercard under their licensing arrangements) or a food company licensing a character brand for a limited-edition product.

A Brand Licence Agreement is required when an entrepreneur acquires the right to use a local Pakistani brand that is owned by another party — for example, when a new business operator acquires a licence to use an established local brand name in a city where the brand owner does not currently operate, enabling geographic brand extension without full acquisition.

A valid Brand Licence Agreement in Pakistan under the Trade Marks Ordinance 2001 and the Contract Act 1872 must contain the following essential elements.

Party Identification: Full legal names of the licensor (brand owner) and licensee; SECP company registration numbers; National Tax Numbers (NTN) registered with FBR; and — for registered trademarks — the trademark registration number(s) in the Trade Marks Register at IPO-Pakistan, the registration class(es) under the Nice Classification, and the goods or services covered.

Grant of Licence: A precise description of the rights granted — specifying whether the licence is exclusive (only the licensee may use the brand in the territory), sole (the licensor may also use the brand but no other licensees are permitted), or non-exclusive (the licensor may grant the same rights to others). The grant clause must identify the licensed marks — including the trademark, logo, trade name, service mark, and any associated copyrighted materials — and specify the exact goods or services in connection with which the brand may be used.

Territory: The geographic scope of the licence — whether Pakistan-wide, limited to specified provinces (Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan), limited to specified cities (Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, Quetta), or limited to specified distribution channels (online sales only, retail only, wholesale only).

Term and Renewal: Duration of the licence — aligned to the trademark registration validity period (ten years) or shorter; automatic renewal provisions; and conditions for renewal, including submission of updated quality compliance reports and continued payment of royalties.

Quality Control: Mandatory quality standards for goods or services sold under the licensed brand — including product specifications, ingredient standards, manufacturing process requirements, and the licensor's right to audit the licensee's facilities. Section 50(4) of the Trade Marks Ordinance 2001 requires that a registered user agreement make provision for quality control by the registered proprietor — failure to maintain genuine quality control can result in the trademark becoming vulnerable to cancellation for non-use or deceptive use.

Royalties and Payments: The royalty rate — expressed as a percentage of net sales, a fixed per-unit fee, or a fixed annual fee — payment frequency, currency (PKR or foreign currency), and bank account details. For royalty payments to foreign licensors, the agreement must address withholding tax obligations under Section 152 of the Income Tax Ordinance 2001 and any applicable DTAA rate reduction.

IPO-Pakistan Registration: A commitment by the licensor to register the Brand Licence Agreement with the Trade Marks Registry at IPO-Pakistan as a registered user agreement under Section 51 of the Trade Marks Ordinance 2001, providing the licensee with enforceable rights against infringers.

Termination: Events triggering termination — including breach of quality standards, insolvency, non-payment of royalties, or commission of infringement; the notice period for termination; and post-termination obligations including cessation of brand use, return of materials, and disposal of branded stock.

Forms-legal.com provides this Brand Licence Agreement (Pakistan) template as a starting point. Licensors and licensees entering significant brand arrangements — particularly cross-border licences or exclusive territorial licences — should engage an Advocate enrolled at the Lahore, Sindh, or Islamabad Bar Council who specialises in intellectual property law, and should register the agreement with IPO-Pakistan's Trade Marks Registry to protect their respective rights.

Additional compliance elements for a Brand Licence Agreement (Pakistan) used in Pakistan include: Under the Companies Act 2017, the Securities and Exchange Commission of Pakistan (SECP) maintains the register of Pakistani companies. Section 16 of the Companies Act 2017 governs company incorporation. The Contract Act 1872 governs general contractual obligations. The Federal Board of Revenue (FBR) administers corporate tax under the Income Tax Ordinance 2001. The High Courts (Lahore, Sindh, Peshawar, Balochistan, Islamabad) have original and appellate jurisdiction. Forms-legal.com provides this template as a starting point for Pakistan-compliant documentation.