IP Licensing in the UAE: Trademark, Patent, Copyright & Software

A licence lets one party use another’s intellectual property without transferring ownership – the engine of most commercial IP exploitation, from a brand licence to a software subscription. In the UAE the rules differ by IP type. A trademark licence is governed by the Trademarks Law (Federal Decree-Law No. 36 of 2021): it must be in writing and notarised, but – a helpful change under the 2021 law – recordal in the register is no longer mandatory for the licence to be relied on. Patents and other industrial property are licensed under the Industrial Property Law (Federal Law No. 11 of 2021), where licences may be exclusive or non-exclusive and recordal is required. Copyright and software are licensed under the Copyright Law (Federal Decree-Law No. 38 of 2021). The commercial architecture – exclusive vs non-exclusive, field of use, territory, royalties, quality control and term – is contractual, but it sits within those formalities and within competition and tax rules: royalty flows carry corporate-tax and transfer-pricing consequences, and in a free zone, patent and software royalties can qualify for the 0% rate while brand/trademark royalties cannot. Confirm the current position before relying on it.

A guide to licensing intellectual property in the UAE – trademark, patent, copyright and software licences, the exclusive/non-exclusive choice, royalties and quality control, and the tax and competition overlay.

At a glance

• Licence = use, not ownership – distinct from an assignment (a transfer of the right itself)
• Trademark licences (FDL 36/2021): in writing and notarised; recordal no longer mandatory to rely on the licence; quality control essential
• Patent / industrial-property licences (FDL 11/2021): exclusive or non-exclusive; recordal required
• Copyright & software (FDL 38/2021): licence the economic rights; software via EULA / SaaS terms; moral rights stay with the author
• Architecture: exclusive / sole / non-exclusive; field of use; territory; term; sub-licensing; royalties
• Tax overlay: royalties are deductible at arm’s length; the UAE currently applies 0% withholding tax; in a free zone, patents and software royalties can be qualifying income (0%), trademarks cannot
• Competition: exclusivity and territorial restraints should be checked against UAE competition law

1. What licensing is – and how it differs from assignment

A licence is a permission to use intellectual property on agreed terms, while the owner keeps the underlying right; an assignment, by contrast, transfers ownership outright (covered on our IP Assignment page). Licensing is how most IP earns its keep: a brand owner licenses a franchisee or distributor, a technology company licenses its patents and software, a content owner licenses its copyright works. The legal treatment in the UAE is not uniform across IP types – trademarks, patents and copyright each have their own statute and their own formalities – so the first step in any UAE licensing exercise is to identify which rights are being licensed and therefore which rules apply. The sections below take each type in turn, then turn to the commercial architecture and the tax and competition overlay that apply across all of them. Because a licence leaves ownership with the licensor, it is also the natural tool where a business wants to monetise IP while retaining and controlling the asset – including from a UAE holding company, as addressed on our IP Holding Structures page.

2. Trademark licensing

A licence to use a registered trademark in the UAE is governed by the Trademarks Law (Federal Decree-Law No. 36 of 2021). The 2021 law sets two practical rules. First, the licence must be in writing and duly notarised. Second – and this is a welcome simplification from the previous regime – recordal of the licence in the trademark register is no longer a precondition for the parties to rely on the licensed relationship; the licence is effective between licensor and licensee without the formal register entry. Recordal can still be useful for transparency and to put third parties on notice, but it is no longer the gatekeeper it once was. The other essential feature of a trademark licence is quality control: the licensor must retain and exercise control over the quality of the goods or services sold under the mark – both because the brand’s value depends on it and because uncontrolled “naked” licensing can undermine the mark. A trademark licence should therefore define the permitted goods/services, the territory, the term, the quality standards and the licensor’s audit rights, and address what happens to the licensee’s use of the mark on termination. Brand royalties also carry a specific tax consequence noted in section 7.

3. Patent and industrial-property licensing

Patents, utility certificates, industrial designs, integrated-circuit layouts and undisclosed information are governed by the Industrial Property Law (Federal Law No. 11 of 2021), which sets out the framework for licensing them. A patent (or other industrial-property right) may be licensed on an exclusive or non-exclusive basis, and the law contemplates recordal of the licence – so, unlike the relaxed trademark position, a patent licence should be recorded to be fully effective against third parties. A patent licence raises issues a brand licence does not: the scope of the licensed claims, field-of-use restrictions, improvements (who owns and who may use enhancements developed during the licence), sub-licensing, and technical assistance and know-how that usually accompany the patent. Where the licence is bundled with the transfer of technical know-how and training, it shades into a technology-transfer agreement (covered on its own page). The Industrial Property Law’s protection of undisclosed information is also the statutory anchor for the confidentiality obligations that any patent or know-how licence must contain.

4. Copyright and software licensing

Copyright works – software, written and artistic works, databases, audiovisual content – are licensed under the Copyright Law (Federal Decree-Law No. 38 of 2021). A copyright licence grants the use of specified economic rights (reproduction, distribution, communication to the public, adaptation) for a defined scope, while the author’s moral rights generally remain with the author. Software is the most common subject in practice and is licensed across a spectrum: traditional end-user licence agreements (EULAs) and enterprise licences; SaaS and cloud subscriptions (which are really licences to access and use, often with data-processing and service-level terms layered on); and open-source components, whose licence conditions must be tracked and complied with in any product that incorporates them. A software licence should address the permitted use and users, the territory and term, source-code and escrow arrangements where relevant, maintenance and support, warranties and liability, and data and security obligations. As with patents and software more broadly, copyrighted-software royalty income has a favourable free-zone tax treatment noted below.

5. The licence architecture – exclusivity, field, territory and term

Across all IP types, the commercial architecture of a licence is built from a common set of levers. Exclusivity is the first: a licence may be exclusive (only the licensee may use the right in the defined scope, excluding even the licensor), sole (the licensee and the licensor, but no one else), or non-exclusive (the licensor may license others too). The field of use narrows the licence to particular products, industries or applications; the territory confines it geographically; and the term fixes its duration and the renewal mechanics. Sub-licensing – whether the licensee may grant rights onward, and on what terms – must be addressed expressly, since it is not assumed. These levers are how the parties allocate value and risk: an exclusive, broad, long licence transfers much of the commercial benefit (and is priced accordingly), while a non-exclusive, field-limited licence keeps the licensor’s options open. Getting the scope precisely defined is what prevents the most common licensing disputes – over whether a particular use was permitted.

6. Royalties, payment and quality control

A licence is usually a revenue arrangement, and the royalty structure is central: a one-off or upfront fee, running royalties (a percentage of net sales or a per-unit amount), minimum guarantees, milestone payments, or a combination. The agreement should define the royalty base precisely (what counts as net sales, what deductions are allowed), the reporting and payment cadence, and the licensor’s audit rights to verify the figures – under-reporting is a frequent source of dispute. Quality control runs alongside payment as the other recurring obligation, most acutely for trademark and franchise licences (where it protects the brand and the mark’s validity) but also for patent and software licences (where standards, certification and compliance matter). A well-drafted licence ties the two together: the licensee pays for the right to use the IP and undertakes to use it to the licensor’s standards, with reporting, audit and step-in or termination remedies if either obligation is breached.

7. Tax, competition and the cross-border dimension

Licensing sits inside the UAE’s tax and competition frameworks. On tax, royalties paid are generally deductible if set at arm’s length, and the UAE currently applies a 0% withholding tax, so outbound royalty payments are not presently subject to UAE withholding – but related-party royalties must satisfy transfer-pricing documentation and arm’s-length pricing under the Corporate Tax Law. The free-zone treatment is the sharp point: income from qualifying intellectual property – patents and copyrighted software (and rights equivalent to a patent) – can be qualifying income taxed at 0% for a Qualifying Free Zone Person under the modified-nexus rules, whereas marketing IP such as trademarks is excluded and the related royalty income is taxed at 9%. This materially affects where and how IP is held and licensed, and is developed on our IP Holding Structures page. On competition, exclusive and territorial licence terms, and restraints on the licensee, should be checked against UAE competition law, which can bear on exclusivity, market-sharing and resale conditions. And for the firm’s clients the picture is usually cross-border – a licence between a UAE entity and an Indian or other group company – so the recordal, exchange-control and withholding position in the other jurisdiction must be coordinated alongside the UAE terms.

8. Drafting and enforcing the licence

A robust UAE licence pulls these threads together. It identifies the licensed rights precisely (which marks, patents, works), states the formalities for that IP type (writing and notarisation for trademarks; recordal for patents), and sets the architecture – exclusivity, field, territory, term, sub-licensing. It fixes the royalty and the reporting, audit and quality-control regime; allocates improvements and IP ownership; and includes confidentiality (anchored in the undisclosed-information provisions and reinforced by an NDA where appropriate). It addresses warranties, indemnities and liability, the term and termination triggers, and what happens on termination to the licensee’s use and any sub-licences. Finally it chooses the governing law and forum – onshore courts, arbitration, or DIFC/ADGM – deliberately. Enforcement of a licence is, at bottom, a contract and IP-infringement matter: a licensor faced with use outside the licence can pursue breach of contract and, where the use exceeds the grant, infringement of the underlying right. Licensing therefore connects directly to the rest of the cluster – assignment (where ownership moves rather than use), confidentiality, technology transfer, and the holding structure that owns the IP being licensed.

Key points at a glance

Frequently asked questions