Trademark licensing in Uzbekistan: contract terms and IP Center registration

In 2023 an Uzbek coffee-shop chain signed a "trademark licence" with a franchisee in Samarkand. The papers were signed, seals stamped, monthly royalties flowed. Fourteen months later the franchisee opened a second outlet under the same mark, stopped paying, and argued he had no obligation at all — he was, he said, using the mark under a separate verbal arrangement with someone else. The chain's lawyers walked into court holding the signed contract and lost at first instance: the agreement had never been registered at the Intellectual Property Center, which under Uzbek law means it had no effect against third parties — and in this dispute the "third party" turned out to be the very franchisee citing other arrangements. A year and a half of royalties, and all the brand control written into the contract, stayed on paper that bound nobody. This article is about how not to sign that paper.

What a licence is — and how it differs from an assignment

A trademark licence is permission from the rights holder for another party to use the mark within defined limits: a territory, a list of goods and services, a term. The rights holder stays the owner. The licensee gets the right to use, nothing more.

That is the opposite of an assignment, where the exclusive right transfers to another party permanently. After assignment the original owner loses every tie to the mark. After a licence, the owner remains in charge — free to use the mark, grant other licences, audit quality, and collect fees.

A licence is the main instrument for scaling a brand without losing control. Franchising, distributor networks, co-branding, contract manufacturing under a third party's mark — all are licensing variants with different bolt-on obligations. Under Part IV of the Uzbek Civil Code a trademark licence must be in writing. An oral arrangement creates no rights to the mark — only an awkward fallout when the parties part ways.

No IP Center registration, no licence

This is the trap that costs honest rights holders judgments every month. The Law on Trademarks, Service Marks and Appellations of Origin requires every trademark licence to be registered at the IP Center at the Ministry of Justice. Without that registration, the contract is not deemed concluded as against third parties.

In practice that means:

• The licensee cannot rely on the contract before customs. Customs will not stop counterfeit shipments on the licensee's request, because the registry does not list him as an authorised user.
• The licensee cannot sue infringers directly. Courts ask for proof of registration before granting standing.
• The rights holder cannot rely on the licensee's use to defeat a non-use cancellation. If the mark sits idle for three years it can be revoked. Use only through an unregistered licensee does not count as use of the mark.
• Tax authorities may disallow the licensee's royalty deduction as a payment without proper legal basis.

Any party who learns of the missing registration gets leverage. Worst of all, the gap usually surfaces a year or two in — once royalties are paid, claims accumulated, obligations entangled, and the "contract" turns out to be paper.

What gets registered is exactly what was signed. To change it later you re-register a supplemental agreement. More on the IP Center's role in mark examination is covered in our guide to trademark registration.

Three licence types — choice drives the price

Uzbek practice uses three forms:

Exclusive licence gives the licensee a monopoly within the agreed scope. The rights holder may not use the mark in that segment and may not licence the same scope to anyone else. Top of the price scale, typically 5–10% royalty on licensee revenue plus a lump-sum fee. Suited to a country-wide exclusive distributor or a regional master franchisee.

Non-exclusive (simple) licence lets the rights holder keep using the mark and grant unlimited further licences. The default for franchise networks where dozens of outlets share the same mark. Royalty 2–6% on revenue, smaller lump sum.

Sole licence is the hybrid: the licensee is the only outside user, but the rights holder reserves the right to use the mark himself. Less common, mostly in co-branding deals or where the rights holder keeps producing in parallel with the licensee.

If the contract is silent on type, Uzbek law treats it as a simple licence. That favours the rights holder and surprises the licensee who may have expected exclusivity. Always spell out the type.

What must be in the contract

Without any of the following the IP Center will return the contract for redrafting — and a court may later treat it as never concluded:

1. Parties — full corporate identifiers, TIN, registered addresses; for foreign parties, an apostilled (or legalised, for non-Hague states) extract from the home country's commercial register.
2. Subject matter — trademark certificate number (or international registration number designating Uzbekistan), NICE classes, and the specific goods and services within each class if you are not licensing all of them.
3. Licence type — exclusive / simple / sole, spelled out.
4. Territory — all of Uzbekistan or named regions. Carve-outs such as "all of Uzbekistan except such-and-such oblast" are accepted by the IP Center.
5. Term — fixed period or for the life of the registration. A licence term cannot exceed the registration's term; when the mark is renewed for the next 10 years, the licence must be re-recorded too.
6. Royalty and payment mechanics — lump-sum and/or periodic payments, formula for revenue-based royalties, accounting periods, currency, bank details, deadlines. For foreign licensors, a clause on the applicable tax regime (see below).
7. Quality control — the licensee's obligation to follow the licensor's standards, the licensor's audit rights, and the consequences of breach (warning, penalty, termination).
8. Sublicensing — permitted or forbidden. Default is forbidden. If permitted, on what conditions, with or without prior written consent, who collects royalties from sublicensees.
9. Termination triggers and process — non-payment, quality breach, bankruptcy, breach of confidentiality, voluntary exit notice period.
10. Governing law and dispute resolution — Uzbek law and the Economic Court (or the International Commercial Arbitration Court at the Chamber of Commerce and Industry of Uzbekistan) are the standard pair. Foreign licensors can specify London or Stockholm arbitration, but enforcement inside Uzbekistan is faster through a local court.

Quality control — the clause where naked licences break

A "naked" licence is one without genuine quality control by the rights holder. The mark is handed over for use, but the licensor does not police what the licensee does under it. Uzbek law treats naked licences harshly, like most legal systems: a trademark the owner does not control stops performing its basic function of identifying the source of the goods. The consequences:

• A competitor — or the licensee himself — can challenge the registration as having "lost distinctive character through acts of the rights holder".
• In litigation against a third-party infringer, the licensor cannot prove the mark unambiguously links to him.
• At renewal, the IP Center's examination can demand evidence of use with adequate quality oversight.

What counts as proper control: documented quality standards (specifications, brand book, technical specs), regular audits (yearly minimum, quarterly is better), a procedure for remediation, and the right to suspend the licensee's use of the mark on a critical non-conformity. A bare clause that "the licensee shall comply with the licensor's standards" with no audit mechanism is the naked licence in its worst form.

Registration cost and timing

The state fee for registering a trademark licence is roughly 5 base calculation units (BCU) at the time of filing — currently in the bracket 1,700,000–2,000,000 UZS. For agreements with a foreign party the fee is around 7 BCU. Every later amendment, extension, assignment of the agreement, or material variation pays a separate fee and goes through a fresh registration.

IP Center review time is up to one month by statute. In practice the first registration takes 3–6 weeks because the examiner almost always returns the contract for wording fixes: a vague subject, NICE classes that don't match the registration, no operative quality-control clause. Each round adds 2–3 weeks.

Add the patent attorney's fee. Foreign licensors must file through an accredited representative — there is no DIY route. Fees for a single contract typically run 600–1,200 USD. Full budget per contract: roughly 3–5 million UZS for an Uzbek resident, 1,500–2,500 USD for a foreign licensor.

Full legal support and contract drafting sits under PACT's trademark services.

Tax: royalties, VAT, withholding at source

For a resident licensee, royalties are a deductible expense provided the contract is registered and properly documented (invoices, acceptance acts). VAT is charged and recovered on the usual rules.

For foreign licensors the critical item is withholding tax. Uzbekistan withholds 20% on royalties paid to non-residents under the Tax Code. That rate can be reduced by a bilateral double-taxation treaty (DTT). As of mid-2026 Uzbekistan has DTTs with more than 50 jurisdictions; typical royalty rates are 10% (Russia, Kazakhstan, Turkey, UAE), 5–6% (Germany, UK, Singapore, Switzerland), and 0% in narrow industrial-IP cases.

To use the DTT rate, the licensor must provide the Uzbek paying agent with a tax-residency certificate for the same calendar year as the payment. Without that certificate, the paying agent is required to withhold the full 20% — even if a DTT exists.

One more piece: a royalty payment to a non-resident is a foreign-exchange operation cleared through the bank's currency-control desk. Contract, invoices, and acceptance acts have to track; the bank may ask for proof of IP Center registration before releasing payment.

Where rights holders most often lose money

From the past three years of cases, four recurring mistakes:

• Signed the contract, forgot to register. When the relationship sours, the unhappy party raises the missing registration and the whole agreement freezes. Fix: registration is the first operation after signing, not the last. Better still, draft the contract so the parties' obligations only take effect from the date of registration at the IP Center.
• Vague quality-control clause. The contract says "the licensee shall comply with the licensor's standards" without specifying which standards, who approves updates, or how audits run. By year three the licensee is drifting on quality and the licensor has no enforcement tool. Fix: attach the brand book and technical standards as exhibits, with the licensor's right to unilaterally update them.
• Licence covers NICE classes that aren't in the registration. The mark is registered in classes 35 and 43; the contract licenses class 30 (foodstuffs). The IP Center refuses to register. Fix: cross-check the certificate before signing — what classes are actually protected — and extend the registration first if needed.
• Foreign licensor missed the residency certificate. The contract assumes a DTT rate of 5%; the licensee withholds the full 20% because the certificate arrived in December while payments started in January. Refund of the difference is technically possible but takes 6–12 months and is not guaranteed. Fix: request the residency certificate on the first business day of the year, ahead of any payment.

If the mark is not yet registered, it cannot be licensed — an application creates no exclusive right. A preliminary agreement that the licence will take effect upon issuance of the certificate is workable. A related mechanism for objections during examination is covered in our piece on provisional refusals.

Key takeaways

• A trademark licence in Uzbekistan is in writing and registered at the IP Center — without registration it has no effect against third parties.
• Three types: exclusive, simple, sole. Silent contract defaults to simple.
• Mandatory clauses: parties, subject, type, territory, term, royalty, quality control, sublicensing, termination, governing law.
• Without genuine quality control the mark can be invalidated for loss of distinctiveness.
• State fee around 5 BCU (1.7–2.0 million UZS); total budget 3–5 million UZS for a resident, 1,500–2,500 USD for a foreign licensor.
• IP Center review: one month by statute, 3–6 weeks in practice.
• 20% withholding on royalties to non-residents; DTT lowers it only with a valid residency certificate.

Frequently asked questions

Can the contract be registered retroactively? You can file at any time, but the effect against third parties starts from the date of IP Center registration, not the date of signature. The gap between signing and registration cannot be retroactively "covered" by the licence.

Do intra-group licences need to be registered? Yes. Tax authorities and courts treat intra-group licences with the same rigour as third-party deals. An unregistered licence to a subsidiary is a future tax-deduction dispute and a future "no use of the mark" challenge waiting to happen.

Can a licensee assign the licence to a third party without the licensor's consent? No, unless the contract expressly says so. Assignment, sub-rooming, or sublicensing of the licence requires either the licensor's consent or an unambiguous permission in the original contract. A sublicence granted without a basis is void.

What happens to the licence when the mark is sold? The licence survives. The new owner inherits the contract terms — the mark transfers with its encumbrances. To end the licence the new owner must find a contractual basis (quality breach, non-payment) or negotiate a buy-out.

Can we license a Madrid registration without an Uzbek national registration? Yes, provided the international registration designates Uzbekistan. The IP Center registers licences on the basis of an extract from the WIPO International Register. More on the Madrid mechanics is in our Madrid-versus-national filing comparison.

What if the licensee starts filing similar marks under his own name? This is a classic hostile move, especially from bad-faith franchisees. A well-drafted licence contains an outright ban on the licensee registering similar marks. Breach is a ground for immediate termination and for an opposition against the licensee's application at the IP Center. Without such a clause the fight is harder but not impossible — through a bad-faith challenge against the licensee's filing.

How often should we run quality audits? At least annually, documented. Active franchise networks run quarterly scheduled audits plus complaint-driven inspections. Documentation (reports, photos, acceptance acts) matters more than frequency: one documented incident with a documented response weighs more than ten formal "everything's fine" records.

Licensing is a brand-growth instrument, but only when the contract actually works. A signed and non-functional contract is worse than no contract: it gives both sides a false sense of protection that evaporates the moment protection is needed. Planning to licence a mark, or sitting on a contract you are no longer sure about? PACT's trademark team will review the document and put it into a form that holds.