Use of trademarks on signboards in the GCC

15 May 2019

In the Gulf Cooperation Council (GCC)[1] countries, all traders require a permit in order to be able to display any branding or name on billboards or stores' signage. This is also true for a distributor/franchisee ("licensee") opening a store under a licensed brand. They will need to obtain a permit to be allowed to display the principal's (the trademark owner) trademark on store signage.

Often, the principal may not be aware of this, and only become aware when a request comes in from the local licensee. This can often be met with suspicion from the principal.

In order to obtain the permit for signage, the licensee needs to provide certain documents to the local authorities. This can vary from country to country, but also within the same country from emirate to emirate or from region to region.



In some countries, a notarised and legalised letter of authorisation from the principal is sufficient, whereas, in other countries, the local authorities may require proof that the license has been formally registered with the Trademark Office. This is particularly the case in Saudi Arabia.

As a general observation, in the region, international companies try to avoid registering trademark licenses so as to try and minimize the licensee being able to have any hold over the intellectual property rights in future (for example, by challenging any request from the trademark owner to de-register the license), or using a legalised trademark license to try and register themselves as a commercial agency.

Until recently, in almost all of the GCC countries, it was compulsory under the laws to record the trademark license agreement with the local Trademark Offices, in order for it to be effective against third parties. In theory, this is no longer required in Bahrain, Kuwait and Saudi Arabia following their implementation of the GCC Trademark Law under the local laws. Article 31 of the GCC Trademarks law makes it clear that provided the agreement is in writing, there is no requirement for it to be entered on the register. The remaining countries, Oman, Qatar and the UAE, have yet to fully implement the GCC Trademarks law, and so the provisions of the national laws still apply.

Whilst the GCC Trademark Law is clear that recordal is no longer required, in practice non-IP authorities are requesting proof that the license has been recorded against the trademark. One such example being Saudi Arabia, where the authorities have in a number of instances not granted any signage permits involving a licensed trademark, unless the trademark license has been formally recorded against the registration. It is possible that other local authorities may still require a short form user agreement recorded with the Trademark Office for the purpose of allowing the licensee to use the licensed trademarks for other purposes also.

We have summarized below, for each GCC country, the documents required by local authorities for a licensee to be authorised to use the licensed trademarks on stores' signage.

Where a registered license agreement (or a registered short form agreement) is mandatory, the licensor will need to take steps to mitigate the risks associated with the registration of the license agreement, as further explained below.

Also, where only a legalised license agreement or a legalised short form version is required by the local authorities, protective measures shall likewise be taken by the trademark owner to mitigate the risk of the agreement being registered without the trademark owner's consent.

1. Signboard permit requirements

Bahrain

  • A legalised authorisation letter from the trademark owner to the licensee allowing the licensee to use the mark on the signboard.

Kuwait

  • Certificate of trademark registration in Kuwait.
  • Any legalised document showing the relationship between the trademark owner and the licensee. This is usually satisfied by the licensee submitting to the Kuwait Municipality a simple (legalised) short form authorisation letter from the licensor, confirming that the licensee is authorised to use its trademarks in Kuwait.

Oman (registered license user agreement required)

  • Rental agreement.
  • Certificate of trademark registration in Oman.
  • Copy of the license user agreement together with a copy of the official letter issued from and authenticated at the Trademarks Office proving that such user agreement is registered with the Office.

In Oman, the GCC Trademark Law is not yet in force. Whilst the law has been published, it will only come into force following the publication of the Implementing Regulations in Oman. The implementation of the GCC Trademark Law may have an impact on the requirement of a registered user agreement for store billboards clearance.

Qatar (registered license user agreement may be required)

  • Certificate of trademark registration in Qatar or trademark user agreement recorded at the Trademark Office.

Saudi Arabia (registered license agreement may be required)

  • Copy of the license agreement with respect to the trademark at issue.
  • Potentially proof of recordal of the trademark license against the trademark registration.

It has not happened in all instances, but some officials will require proof that the trademark license has been recorded against the trademark register, before they will issue any permit for signage. Discussions have taken place pointing to the changes in the GCC Trademark law, but these have not persuaded the officials otherwise. As a result, it is more likely than not, that the Municipalities will require the recordal of the license before the signage permit is issued.

United Arab Emirates

  • Certificate of trademark registration in the UAE.
  • Legalised license agreement or legalised letter of authorisation from the trademark owner to the local licensee. Generally, we have found that the letter of authorisation has worked well with the UAE authorities.

2. Mitigating the risks of recordal

As a general rule, where there is no mandatory requirement for the license agreement to be registered for enforceability purposes of the license granted to the local partner, or for the purpose of allowing the local partner to do business under the licensed trademark(s), registration is something to be avoided.

Where registration of a license agreement (or short form license) is mandatory under local law or local practices (either for enforceability purposes, or signage purposes), it is of primary importance for the licensor to include in the license agreement protective provisions in order to keep control over the registration of such agreement with any government body. This can be done through inserting the appropriate language in the agreement. In particular, the agreement shall contain provisions pursuant to which the licensor has the right to cancel such registration upon expiration or termination of the agreement by either party for any reason, with the licensee agreeing not to contest such cancellation.

In this respect, it is common practice for the licensor to require the local partner, upon execution of the agreement, to execute and provide to it a notarised power of attorney for the purpose of amending or removing, on behalf of the licensee, upon expiration or termination of the agreement, any filings or registrations with any governmental authorities containing or pertaining to the use of licensor's name and trademarks, including the recordal of any license in the trademarks.

However, licensors must be aware that such PoAs are revocable at any time by the local partner. The steps the local partner must take to revoke the PoA may differ from country to country, but it should mean that a notice of revocation is sent to licensor.

Alternatively, where the licensor has a local subsidiary, one must note that, in certain GCC countries, some international companies have been able to overcome such issue by recording a license to the local subsidiary, which in turn will sub-license to the local partner. Proof of the license to the local subsidiary has been sufficient for obtaining permits.

For the sake of completeness, protective measures shall also be put in place by the licensor where only a legalised license agreement or a legalised short form version is required by local authorities since, where the agreement is legalised, there is a risk of the local partner registering it without the principal's consent. As a result, in such a situation, the agreement shall contain protective provisions to mitigate the risk of the agreement being registered.

The reason for this is to make sure that the local licensee does not try to use the legalised agreement to register it with the Trademark Office (whereas this is not mandatory), or to register itself as a commercial agent with the Ministry of Economy[2], which could make it difficult for the licensor to de-register the agreement in future.

Written by Vanessa Delnaud.

Footnotes

[1] The Gulf Cooperation Council which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates
[2] Which would have a significant and potentially highly positive impact on the rights of the local licensee, and on the enforceability of certain clauses of the agreement.


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