Licence Agreements in Industrial Property Law

Licence agreements are the central instrument for the commercial exploitation of trademarks, patents, designs and know-how in Turkey – whether vis-à-vis distribution partners, licensed manufacturers, franchisees or group companies. The legal bases are the licence provisions of the Industrial Property Code No. 6769 (SMK), supplemented by the general contract law of the Code of Obligations, copyright law for software and work licences, and competition and tax law. This article explains the drafting, registration and pitfalls of licence agreements with a Turkish dimension.

Table of contents

• Which types of licence does Turkish law recognise?
• Which form and registration requirements apply to the licence?
• Which rights and obligations should be regulated?
• What role do quality control and product liability play in trademark licences?
• Who may take action against infringers?
• Which competition law limits apply to licence agreements?
• Which tax aspects apply to cross-border licences?
• What are the consequences of terminating the licence?
• How does the licence differ from franchise and authorised dealer models?
• What are the most common mistakes in practice?
• Why must the mutual obligations in the licence agreement be clearly regulated? An example from practice
• Conclusion

Which types of licence does Turkish law recognise?

Registered IP rights – trademarks, patents, utility models and designs – can be licensed for the entire territory of protection or parts of it, for all or individual goods and services, and for a limited period. The law distinguishes the simple (non-exclusive) licence, under which the right holder may continue to use the right itself and grant further licences, from the exclusive licence, under which this is excluded. Absent an agreement to the contrary, the licence is deemed non-exclusive; the grant of sub-licences requires express permission. These statutory rules of interpretation make precise contract drafting indispensable – whoever wants exclusivity or sub-licensing rights must agree them expressly.

Which form and registration requirements apply to the licence?

Licence agreements over registered IP rights require written form. Recordal of the licence in the TÜRKPATENT register is not a condition of validity between the parties, but it is a condition of effectiveness against third parties acting in good faith: only the recorded licence is secured against a subsequent acquirer of the IP right and reliably documented in legal transactions. For recordal, the agreement or a notarised extract with a certified Turkish translation must be filed; for foreign exchange and tax reasons as well – for instance to evidence royalty payments abroad – the documented, recorded licence is advantageous. For software licences, the copyright form rules additionally apply: written form and individual enumeration of the rights granted.

Which rights and obligations should be regulated?

• Subject matter and scope: IP rights with register numbers, licensed products and services, territory, exclusivity, sub-licences and intra-group use
• Remuneration: lump sum, turnover-based royalties with a clear assessment basis, minimum royalties, the licensor's bookkeeping and audit rights
• Use obligations: the licensee's duty to exploit – important for the trademark use requirement, since use by the licensee is attributed to the proprietor
• Maintenance of the right: responsibility for renewals and annuities, cooperation in office proceedings, no-challenge clauses within the competition law limits
• Confidentiality and know-how protection, improvements and the allocation of rights in them
• Term, grounds for termination, consequences of termination including sell-off periods and destruction of materials

What role do quality control and product liability play in trademark licences?

In trademark licences, the licensor has its own interest in – and under the law the power of – securing the quality of the goods manufactured or services rendered by the licensee; the licensee is obliged to use the mark in a quality-compliant manner. The agreement should regulate quality standards, sample and approval processes, control rights and the consequences of violations concretely – not only to protect brand value but also because of the liability risks: the proprietor of a trademark affixed to the product can be held liable as manufacturer under product liability law. Labelling requirements ("manufactured under licence from ...") and insurance clauses complete the protection concept.

Who may take action against infringers?

Standing to sue for infringement lies with the right holder. The exclusive licensee may – unless the contract provides otherwise – bring in its own name all infringement actions available to the proprietor. The non-exclusive licensee cannot do so directly: it must request the proprietor to sue and may bring its own action, upon notice to the proprietor, only if the proprietor does not sue within three months; where substantial damage is imminent, it may apply for preliminary measures. This statutory allocation of roles should be specified contractually – including information and cooperation duties, cost allocation and the distribution of awarded amounts in the event of infringement.

Which competition law limits apply to licence agreements?

Licence agreements are subject to the Turkish Competition Act No. 4054, modelled on EU antitrust law. For technology transfer agreements there is a block exemption of the Competition Authority which – following the model of the EU TTBER – contains market share thresholds and lists of impermissible hardcore restrictions: impermissible are in particular price fixing, certain market and customer allocations, and restrictions on the licensee's own research; blanket no-challenge clauses and excessive grant-back clauses are also critical. Exclusivity and territorial protection clauses can be structured within the limits of the exemption. For licensors with market power, the prohibition of abuse must additionally be observed. The competition law review therefore belongs in every licence negotiation with a Turkish dimension.

Which tax aspects apply to cross-border licences?

Royalties paid from Turkey to foreign licensors are in principle subject to Turkish withholding tax; the double taxation treaty between Turkey and Germany caps the rate for royalties at ten percent, and comparable rates apply under the treaties with Austria and Switzerland. Added to this are VAT under the reverse charge mechanism and, for intra-group licences, the transfer pricing rules with documentation duties and the arm's length principle. Gross-up clauses, tax certificate mechanisms and the alignment of the royalty rate with the transfer pricing documentation should be built into the contract from the outset.

What are the consequences of terminating the licence?

Upon termination of the licence, the right of use ends; continued use is IP infringement with all civil and, where applicable, criminal consequences. The agreement should provide for orderly transitions: sell-off periods for stock, return or destruction of advertising materials, moulds and tooling, cancellation of the register licence, domain and social media transitions, and post-contractual confidentiality. In long-standing distribution licences it must be examined whether the licensee can claim an indemnity for the customer base built up, by analogy with commercial agency law – Turkish case-law applies the indemnity claim correspondingly to comparable continuing distribution relationships.

How does the licence differ from franchise and authorised dealer models?

The trademark licence is frequently a building block of broader distribution systems whose legal classification determines the applicable protective rules: in franchising, ongoing support, system and control duties are added to the trademark and know-how licence; Turkish law has no dedicated franchise act, but the case-law applies the principles of the commercial agency indemnity correspondingly to the termination of long-standing franchise relationships. For the authorised dealer, the sale of goods in its own name is paramount, and the trademark use is an ancillary licence. The choice of model determines indemnity claims at contract end, the competition law yardsticks and the scope of permissible controls – it should be made deliberately and the contract drafted consistently with the model actually lived, since in a dispute the courts look to the actual implementation, not to the contract's heading.

What are the most common mistakes in practice?

• The licence is not recorded with TÜRKPATENT – when the IP right is sold to a third party, the licensee is left unprotected.
• "Exclusive" is agreed without regulating the consequences: the licensor's own sales, minimum turnover and reversion mechanisms are missing.
• The royalty base ("net sales") remains undefined – discounts, returns and intercompany sales become a permanent dispute.
• Audit rights exist on paper; without procedural rules (notice, auditor, cost allocation in case of discrepancies) they are blunt.
• Quality control is not lived – brand value erodes and the product liability exposure grows unnoticed.
• Hardcore competition law clauses (price fixing, absolute territorial partitioning) render central parts of the contract invalid.
• Withholding tax and transfer pricing documentation are discovered only in the tax audit – without a gross-up clause, at the licensor's expense.

Why must the mutual obligations in the licence agreement be clearly regulated? An example from practice

The judgment of the Ankara Regional Court of Appeal (20th Civil Chamber, E. 2024/703, K. 2026/1004, judgment of 15 May 2026) on a damages claim arising from an exclusive trademark licence draws the boundaries between the rights of the licensee and the licensor: expenses incurred by the licensee to increase brand awareness cannot be claimed back from the licensor; absent an express contractual provision, no obligation of the licensor to compensate arises in this respect. The decision shows that rights and obligations left undefined in the licence agreement can lead to substantial disputes years later.

The most critical points in trademark licence agreements – and generally in patent, utility model and design licences – are: whether the licence is exclusive or non-exclusive, whether the licensee is entitled to file trademark applications, the term and scope of the agreement, the power to grant sub-licences, quality control obligations and the termination provisions. If these questions remain unregulated, conflicts stretching over years threaten – for instance where the licensee cannot claim the value of its investments or the use of the trademark stalls.

We support our clients comprehensively in licence agreements over trademarks, patents, utility models and designs and eliminate these risks from the outset: scope, term, transfer of rights, standing to sue and quality control are regulated in detail in the contract design – keeping the brand and its use protected, securing our clients' business operations and removing the ground from under later disputes.

Conclusion

In Turkish law, licence agreements combine register-law requirements – written form, recordal for third-party effect – with contractual freedom whose limits are drawn by competition, tax and commercial law. The statutory rules of interpretation (non-exclusive licence in case of doubt, allocation of standing to sue, attribution of use) should never be left to chance but regulated expressly.

For foreign licensors, three points are particularly important: recordal of the licence with TÜRKPATENT, the competition-law-compliant structuring of exclusivity and restrictions, and the tax-optimised structuring of the royalty flows under the double taxation treaties.

The IP/IT team at GEMS Schindhelm drafts and negotiates trademark, patent, design and know-how licences with a Turkish dimension, handles recordal and competition law review, and represents licence parties in disputes arising from licence relationships.