IPO Pakistan Trademark License Recordal: Section 70 Registered User Guide

Master trademark licensing in Pakistan. How to draft and record a Section 70 Registered User agreement with IPO Pakistan to protect brand equity and facilitate SBP royalty remittance.

By Syed Asad Hussain Zaidi · 10 September 2026

Trademark Licensing in Pakistan For international franchises, multinational corporations, and growing local enterprises, licensing a trademark to a third party (such as a local manufacturer, distributor, or franchisee) is a core business strategy. However, in Pakistan, simply signing a private licensing contract is highly risky. Under the Trade Marks Ordinance 2001, trademark licenses should be officially recorded with the Intellectual Property Organization (IPO) of Pakistan through the Registered User mechanism. This guide explains why and how to record your trademark licenses in Tax Year 2026-27. --- What is a Section 70 Registered User? Under Section 70 of the Trade Marks Ordinance 2001, a person other than the registered proprietor of a trademark may be registered as a "Registered User" for all or any of the goods/services for which the trademark is registered. This statutory mechanism officially recognizes the licensee's right to use the mark. More importantly, it creates a legal fiction: any use of the mark by the Registered User is deemed to be use by the proprietor. Why is this critical? In Pakistan, a trademark can be cancelled for "non-use" if the proprietor hasn't used it for a continuous period of 5 years (Section 38). If a foreign company owns the mark but only a local Pakistani licensee actually uses it, a competitor could file to cancel the mark. But if the licensee is a Registered User, their use protects the foreign owner's trademark from cancellation. --- The Dangers of Unrecorded Licenses (Naked Licensing) Granting a license without proper quality control and without recording it with the IPO is termed "naked licensing." Naked licensing can destroy a trademark's distinctiveness. If the public no longer associates the trademark with a single source of consistent quality, the mark becomes generic or deceptive, leading to a loss of trademark rights entirely. By filing for Registered User status, the proprietor is forced to submit an affidavit detailing the "degree of control" they exercise over the licensee, thereby legally proving that quality control exists. --- The Registration Process (Form TM-50) To record a license, the proprietor and the proposed licensee must jointly apply to the Registrar of Trade Marks. Required Documents Form TM-50: The official application form for the registration of a Registered User. The License Agreement: A duly executed, stamped, and notarized copy of the franchise or licensing agreement. Affidavit of Control: A sworn statement by the proprietor detailing: The relationship between the parties. The degree of control the proprietor exercises over the permitted use (e.g., quality audits, formula strictures, brand guidelines). Whether the licensee is the sole registered user or if others can be appointed. The duration of the permitted use. Power of Attorney: Authorizing the IP attorney to act on behalf of the parties. [!IMPORTANT] The Registrar will closely scrutinize the Affidavit of Control. If the Registrar believes the agreement facilitates trafficking in trademarks or lacks sufficient quality control, they have the statutory power to refuse the Registered User application. --- State Bank (SBP) Royalty Remittances For foreign franchisors licensing their marks to Pakistani companies (e.g., international fast-food chains, apparel brands), royalty payments must be remitted outward in foreign currency. The State Bank of Pakistan (SBP) heavily regulates foreign exchange outflows. When a Pakistani franchisee approaches their commercial bank to wire royalty fees abroad, the bank will demand proof of the underlying IP rights. While the SBP Foreign Exchange Manual has modernized, having the franchise agreement officially recorded with IPO Pakistan, and providing the Registered User certificate, acts as ironclad proof to commercial banks and the SBP that the royalty remittance is legitimate and backed by recognized statutory rights, preventing compliance delays. --- Frequently Asked Questions (FAQs) Can I license an unregistered trademark? While you can enter into a private contract for an unregistered mark, you cannot record a Section 70 Registered User with the IPO. Only registered trademarks (or pending applications in some contexts) can utilize the statutory Registered User mechanism. Does a Registered User have the right to sue for infringement? Yes, subject to any agreement to the contrary. If the proprietor refuses to sue an infringer, the Registered User can institute proceedings in their own name, joining the proprietor as a defendant. How is the license cancelled? The Registrar can cancel the registration of a Registered User upon the written request of the proprietor, or if the license period expires, or if the user breaches the quality control terms. Are royalties subject to withholding tax? Yes. Under the Income Tax Ordinance 2001, royalties paid to non-residents are subject to withholding tax (typically 15%, though Double Taxation Agreements like the UK-Pakistan DTAA may reduce this rate). Proper documentation is required to claim treaty benefits.