Agency Agreement In Saudi Arabia
For the trademark owner, registering a license agreement helps to rely on the owner`s use of the trademark to ensure that its registration does not become vulnerable to attacks for non-use. For the licensee, this can make it possible to act directly against an offender in his own name. In addition to the requirement to register agency contracts under the Agencies Act, saudi Arabia`s Trademark Law (such as Royal Decree No. . M/21 of 28.05.1423H) (Trademark Law) requires that trademark licenses be registered with the Saudi Trademark Office. Although the registration of a trademark license with the Saudi Trademark Office may be considered a formality requirement, the non-registration of the agreement may have material consequences for both the trademark owner and the licensee. Typically, parties to trademark licenses register summary agreements (registered user agreements) in order to simplify the registration process and keep the commercial terms of the trademark license out of the registry. This announcement is a timely reminder for trademark owners to become aware of the legal framework that applies in Saudi Arabia to the registration of commercial agent contracts and trademark licenses. 1.
The agreement must be concluded directly without an intermediary outside its country of origin with the original manufacturer of the goods or the holder of services under the Agency or his representative in his country of origin, in order to be valid for registration; and this is a separate requirement regarding the registration requirement under the Agencies Act. In the event that a commercial agent agreement contains a license to use a trademark, the agreement (or an agreement in short form) should be registered with both the Ministry and the Saudi Trademark Office. As a result, many commercial officers who have not yet registered their agreements with the ministry are taking steps to become compliant. If the relationship between the trademark owner and the commercial agent is not yet properly documented, this means that the commercial agent can turn to the trademark owner to correct the situation. In particular, the commercial agent may attempt to enter into a commercial agent contract regarding the importation, marketing and sale of branded goods in Saudi Arabia. Alternatively, the commercial agent may try to enter into a summary agreement (or a short letter of power of attorney) to be registered with the ministry (which contains only relatively basic provisions). As a general rule, Saudi courts would not compensate for termination or non-extension, even with respect to „goodwill”, unless there is a breach or the contract expressly provides for such compensation. In addition, loss of profits or other consequential damages, in accordance with Sharia (Islamic rules), is not refundable in Saudi Arabia. As a result, compensation in the event of denunciation is decided on a case-by-case basis by saudi courts and in accordance with Sharia law and the agreement. Trademark owners should therefore ensure that agreements (including synthesis agreements and letters of attorney) drawn up for registration purposes are carefully reviewed in order to avoid difficulties in the future. Trademark owners should also not overlook the requirements and potential benefits of registering trademark licenses in Saudi Arabia. The definition of a commercial agent according to the law is broad and includes agents, distributors and franchisees….