International Licensing Agreements in Turkey: Royalties, Intellectual Property Protection, Tax and Termination

Introduction

International licensing allows a foreign intellectual property owner to commercialise trademarks, patents, software, designs, copyrights and know-how in Turkey without permanently transferring ownership of those rights.

A Turkish licensee may be authorised to:

• Manufacture licensed products,
• Use a foreign trademark,
• Distribute branded goods,
• Access proprietary software,
• Use patented technology,
• Reproduce copyrighted material,
• Apply confidential technical knowledge,
• Grant approved sublicences.

In return, the licensee may pay:

• A fixed licence fee,
• An upfront payment,
• Continuing royalties,
• Minimum annual royalties,
• Milestone payments,
• Technical support fees,
• Maintenance fees,
• Revenue-sharing payments.

A licensing agreement should not be treated as a simple permission letter.

The agreement must determine:

• Which intellectual property rights are licensed,
• Whether the licensor actually owns those rights,
• Whether the licence is exclusive,
• Which products, services and territories are covered,
• Whether sublicensing is permitted,
• How royalties are calculated,
• Who bears Turkish withholding tax and VAT,
• Who protects and enforces the licensed rights,
• What happens when the agreement terminates.

A foreign licence template may also be affected by mandatory Turkish intellectual property, competition, tax, data-protection and public-policy rules.

What Is an Intellectual Property Licence?

A licence gives another person permission to use an intellectual property right without transferring ownership of the right itself.

The licensor normally remains the owner.

The licensee receives a contractually defined right to use the intellectual property within limits concerning:

• Territory,
• Duration,
• Product,
• Service,
• Customer group,
• Technical field,
• Sales channel,
• Purpose of use.

A licence must be distinguished from an assignment.

Under an assignment, ownership of the intellectual property right is transferred permanently or for the transferred part.

Under a licence, ownership remains with the licensor unless the agreement contains a separate and valid transfer provision.

Types of Rights That May Be Licensed

An international licensing agreement may concern:

• Registered trademarks,
• Trademark applications,
• Patents,
• Patent applications,
• Utility models,
• Registered designs,
• Copyrighted works,
• Software,
• Databases,
• Trade secrets,
• Manufacturing methods,
• Recipes,
• Technical information,
• Business methods,
• Domain names,
• Image and personality rights.

Different legal rules apply to different categories.

A clause stating that the licensee may use “all intellectual property” may be too vague, especially for copyrighted works where the economic rights granted should be identified separately and clearly.

Verify Ownership Before Signing

The licensee should verify that the licensor owns or controls the rights it promises to license.

The investigation should include:

• Registration number,
• Registered owner,
• Application status,
• Classes of goods and services,
• Territory of protection,
• Renewal date,
• Existing licences,
• Pledges and attachments,
• Opposition or cancellation proceedings,
• Authority to sublicense.

A parent company may own the trademark while an affiliate signs the licence.

A software reseller may have authority to distribute software but no authority to grant source-code, reproduction or modification rights.

The agreement should identify the exact basis of the licensor’s authority.

Turkish Protection Should Be Confirmed

An intellectual property right protected abroad is not automatically protected in Turkey in every respect.

Before granting Turkish rights, the licensor should check whether protection exists through:

• A Turkish national registration,
• An international registration designating Turkey,
• A European patent validated in Turkey,
• Copyright protection applicable under Turkish law and international conventions,
• Trade-secret protection based on confidentiality and unfair competition rules.

Turkish protection is especially important for trademarks, patents, utility models and registered designs because these rights are territorial.

A licence to use a trademark in Turkey may have limited commercial value if the trademark is not protected in Turkey or is registered in another person’s name.

Governing Law of International Licence Agreements

The parties may generally select the law governing their licensing agreement.

Under Turkish private international law, contractual obligations are governed by the law chosen expressly by the parties or clearly demonstrated by the contract and circumstances. The parties may select the governing law for the entire contract or only part of it.

A governing-law clause may state:

“This Agreement shall be governed by the laws of the Republic of Türkiye.”

The clause should be separated from:

• Court jurisdiction,
• Arbitration,
• Seat of arbitration,
• Law governing the intellectual property right itself.

Choosing Swiss law for the contract does not mean that Swiss law determines whether a Turkish trademark has been infringed.

Law Governing the Intellectual Property Right

Turkish private international law applies the law of the country for which intellectual property protection is requested.

Accordingly, questions concerning the existence, scope and infringement of a Turkish intellectual property right are generally determined under Turkish law.

The parties may agree to apply the law of the court to infringement-related claims only after the infringement has occurred.

This distinction is important:

• Contractual royalty dispute may be governed by the chosen contract law.
• Infringement of a Turkish trademark is assessed under Turkish intellectual property law.
• Registration and validity of a Turkish patent are determined under Turkish law.
• Remedies against unauthorised use in Turkey are subject to Turkish mandatory rules.

What Happens If the Parties Do Not Choose a Law?

If no law has been chosen, the applicable law is determined under Turkish conflict-of-laws rules.

The court may examine matters such as:

• Characteristic contractual performance,
• Licensor’s business establishment,
• Licensee’s business establishment,
• Place where the licence is commercially exercised,
• Overall connection of the relationship.

Because international licence contracts may combine intellectual property, technical assistance, supply and distribution elements, uncertainty can arise if the contract contains no governing-law clause.

The parties should make an express choice.

Trademark Licences

A Turkish trademark application or registration may be licensed for all or part of the goods and services covered by the registration.

The licence may be:

• Exclusive,
• Non-exclusive.

Unless the agreement provides otherwise, a trademark licence is treated as non-exclusive.

Under an exclusive licence, the trademark owner may not ordinarily grant another licence and may not use the trademark itself unless the right to continue using it has been reserved expressly.

The contract should identify:

• Trademark number,
• Classes,
• Goods and services,
• Territory,
• Sales channels,
• Exclusive or non-exclusive status,
• Licensor’s reserved rights,
• Sublicensing rights.

Partial Trademark Licences

A trademark licence does not need to cover the entire registration.

The parties may limit the licence to:

• Particular products,
• Particular services,
• Specific classes,
• Specific sales channels,
• Particular Turkish regions.

For example, a trademark registered for clothing, cosmetics and retail services may be licensed only for cosmetics.

The agreement should prevent the licensee from using the mark for unlicensed products merely because those products appear in the same registration.

Trademark Quality Control

The licensor has a legitimate interest in protecting the quality and reputation associated with its trademark.

The agreement may impose standards concerning:

• Product quality,
• Packaging,
• Advertising,
• Store presentation,
• Online use,
• Customer service,
• Safety,
• Approved suppliers.

Quality-control provisions should be specific and objectively measurable.

The licensor should also apply them consistently. Excessively discretionary approval rights may create commercial uncertainty and competition-law risk.

Patent Licences

A patent application or patent may be licensed under Turkish industrial property law.

Patent licences may also be:

• Exclusive,
• Non-exclusive.

Unless agreed otherwise, the licence is non-exclusive.

An exclusive patent licensee may receive the protected commercial field, while the patent owner’s own continued use should be reserved expressly where intended. Turkish law expressly permits patent applications and patents to be licensed in exclusive or non-exclusive form.

The agreement should identify:

• Patent number,
• Patent family,
• Claims or technology covered,
• Field of use,
• Territory,
• Manufacture,
• Sale,
• Import,
• Export,
• Research use,
• Improvements.

Patent Validity Risk

A registered patent may later be:

• Limited,
• Revoked,
• Declared invalid,
• Allowed to expire,
• Unenforceable in a particular territory.

The contract should regulate whether royalties continue if:

• The patent expires,
• Key claims are cancelled,
• A third party successfully invalidates the patent,
• The licensed product no longer uses the patented invention.

A royalty structure covering patents, know-how and trademarks together should separate the value attributable to each right where possible.

Otherwise, termination or expiry of one right may create a dispute over the entire royalty obligation.

Utility Model and Design Licences

Utility models and registered designs may also be licensed.

A design licence should identify:

• Registration number,
• Representations of the design,
• Products covered,
• Manufacturing methods,
• Colour and form variations,
• Territory,
• Duration.

TÜRKPATENT procedures allow licence transactions concerning registered industrial property rights to be recorded in the relevant register. Foreign-language licence documents submitted for recordation may require a sworn Turkish translation.

Copyright Licences

Copyrighted works may include:

• Software,
• Books,
• Photographs,
• Music,
• Films,
• Architectural works,
• Training materials,
• Advertising content,
• Technical drawings.

Turkish copyright law distinguishes between ownership of a physical or digital copy and ownership of economic rights in the work.

Purchasing a copy of software, a photograph or a design file does not automatically transfer the right to:

• Reproduce,
• Distribute,
• Adapt,
• Translate,
• Communicate to the public,
• Publish online.

Copyright-related agreements should be in writing and should identify the transferred or licensed economic rights individually and clearly.

Software Licensing

Software agreements require careful classification.

A software transaction may concern:

• Ordinary end-user access,
• Enterprise use,
• Cloud service,
• Source-code licence,
• Reproduction right,
• Distribution right,
• Modification right,
• White-label use,
• Software-as-a-service subscription.

The legal and tax outcome depends on the actual rights granted.

A payment for limited end-user access may be classified differently from a payment granting the right to reproduce, modify and distribute software commercially.

The agreement should not use the single word “software licence” without describing the authorised acts.

SaaS and Cloud Agreements

A cloud subscription may combine:

• Software access,
• Hosting,
• Data storage,
• Maintenance,
• Technical support,
• Updates,
• Cybersecurity services.

The agreement should determine:

• Whether software is installed locally,
• Where data is stored,
• Service levels,
• Availability,
• Security obligations,
• Backup,
• Data export,
• Termination assistance.

Tax classification may depend on whether the Turkish customer receives intellectual property rights or merely accesses a service.

GİB guidance distinguishes between transactions involving intellectual property rights and ordinary services or business profits according to the substantive rights supplied.

Know-How Licences

Know-how may consist of confidential technical or commercial information such as:

• Manufacturing formula,
• Production parameters,
• Recipes,
• Quality-control methods,
• Source code,
• Technical drawings,
• Customer methods,
• Testing procedures.

A know-how licence should identify the information with enough precision to prove what was delivered.

The contract should regulate:

• Delivery method,
• Confidentiality,
• Permitted personnel,
• Security measures,
• Return or deletion,
• Independent development,
• Residual knowledge,
• Duration.

Information already public or generally known may not qualify for meaningful trade-secret protection.

Exclusive and Non-Exclusive Licences

Exclusive licence

The licensee receives exclusive rights within the agreed scope.

The contract should clarify whether exclusivity prevents:

• Licensor’s own use,
• Affiliate use,
• Existing customers,
• Government contracts,
• Online sales,
• Research use,
• Other sectors.

Non-exclusive licence

The licensor may grant the same or overlapping rights to other persons and may continue using the intellectual property.

Sole licence

International contracts sometimes use “sole licence” to mean that no other licensee will be appointed but the licensor may continue using the right.

Because terminology differs between legal systems, the contract should define the intended effect.

Territory

The licensed territory should be described precisely.

Possible territories include:

• Entire Republic of Türkiye,
• Specific province,
• Free zone,
• Particular customer market,
• Turkey and neighbouring countries.

A Turkish licence should also regulate:

• Exports,
• Online use,
• Cross-border customers,
• International marketplaces,
• Products manufactured in Turkey for sale abroad.

A licence limited to Turkey may permit manufacture in Turkey but prohibit export, or it may permit export only to named countries.

Field of Use

Technology may be valuable in several industries.

A patent or know-how licence may be limited to:

• Medical use,
• Automotive use,
• Consumer electronics,
• Industrial machinery,
• Defence,
• Agricultural use.

Field-of-use limitations allow the licensor to commercialise the same technology through different licensees in different sectors.

The technical boundary should be defined objectively to prevent overlap.

Sublicensing

The licence should state whether the licensee may grant rights to:

• Affiliates,
• Distributors,
• Manufacturers,
• Contractors,
• End users,
• Cloud providers.

The agreement should regulate:

• Prior consent,
• Form of sublicense,
• Royalty sharing,
• Responsibility for sublicensees,
• Termination effect,
• Audit rights.

A licensee should not assume that it may sublicense merely because it has an exclusive licence.

Turkish industrial property rules generally require appropriate authority before a licensee can transfer the licence or grant sublicences.

Licence Recordation With TÜRKPATENT

Trademark, patent, utility-model and design licences may be recorded in the relevant TÜRKPATENT register.

Recordation may be important for:

• Transparency,
• Proof of licensed status,
• Effect against good-faith third parties,
• Enforcement,
• Due diligence,
• Financing.

The licence may remain contractually valid between the parties even where it is not recorded, but failure to record may weaken its effect against third parties in situations governed by the Industrial Property Code.

TÜRKPATENT maintains a separate licence-recordation procedure and publishes an official fee for the transaction. For 2026, the official trademark licence recordation and renewal fee is TRY 9,870.

Who Should File the Recordation?

The agreement should allocate responsibility for:

• Preparing the application,
• Paying the fee,
• Providing translations,
• Updating changes,
• Recording termination.

The parties should also determine whether confidential financial terms will be excluded from the document submitted to the register where legally possible.

A short-form licence may be prepared for registration while the full commercial agreement remains confidential.

Royalty Structures

Royalty payments may be structured as:

• Percentage of net sales,
• Percentage of gross sales,
• Fixed amount per unit,
• Annual fixed payment,
• Minimum guarantee,
• Milestone fee,
• Lump-sum upfront fee,
• Combination of these methods.

The contract should define the royalty base carefully.

Net Sales Definition

A net-sales definition should address:

• VAT,
• Returns,
• Discounts,
• Rebates,
• Freight,
• Insurance,
• Customs duties,
• Marketplace commissions,
• Bad debts,
• Intercompany sales,
• Bundled products,
• Free samples.

A broad right to deduct all “costs” may allow the licensee to reduce royalties unpredictably.

A definition with no permitted deductions may cause royalties to be calculated on amounts never economically received.

Related-Party Sales

The licensee may sell licensed products to an affiliate at a low price and the affiliate may resell them at market value.

The agreement should prevent artificial reduction of royalties by requiring:

• Arm’s-length pricing,
• Royalty calculation based on affiliate resale,
• Comparable market price,
• Minimum unit royalty.

Related-party licence fees must also comply with Turkish transfer-pricing rules.

Minimum Royalties

An exclusive licence often includes a minimum annual royalty.

This protects the licensor against a licensee that obtains exclusivity but fails to commercialise the technology.

The agreement should state:

• Calculation period,
• First-year adjustment,
• Currency,
• Credit for actual royalties,
• Effect of supply failure,
• Regulatory delay,
• Force majeure,
• Consequence of shortfall.

Failure to meet the minimum may result in:

• Payment of the difference,
• Conversion to non-exclusive status,
• Partial loss of territory,
• Termination.

Royalty Reports

The licensee should provide periodic statements showing:

• Units produced,
• Units sold,
• Sales value,
• Returns,
• Permitted deductions,
• Royalty rate,
• Currency conversion,
• Amount payable.

The report should be delivered even where no royalty is due.

The licensor should not have to discover non-payment only through an audit years later.

Audit Rights

A royalty audit clause should regulate:

• Frequency,
• Notice,
• Independent auditor,
• Records examined,
• Confidentiality,
• Cost allocation,
• Underpayment threshold,
• Interest.

The licensor should not receive unrestricted access to unrelated competitively sensitive information.

The audit should be limited to information necessary to verify licence compliance and royalties.

Turkish Withholding Tax on Royalty Payments

Royalty payments made by a Turkish company to a non-resident foreign company may be subject to Turkish corporate withholding tax.

Under domestic rules, payments concerning copyrights, patents, concessions, business rights, trade names, trademarks and similar intangible rights may be subject to a 20% withholding rate.

An applicable double taxation treaty may reduce the rate, commonly subject to:

• Tax residence,
• Beneficial ownership,
• Classification of the payment,
• Required documentation.

GİB guidance confirms that royalty payments to non-resident companies are subject to domestic withholding rules and that treaty rates may reduce the tax where treaty requirements are satisfied.

Double Taxation Treaties

The applicable treaty should be checked country by country.

Treaty royalty rates are not identical.

The tax treatment may vary depending on whether the payment concerns:

• Trademark,
• Patent,
• Copyright,
• Industrial equipment,
• Know-how,
• Technical services.

The foreign licensor generally needs to demonstrate treaty residence through a valid residence certificate.

GİB guidance requires appropriate residence documentation, together with the necessary Turkish translation and certification, when treaty benefits are claimed.

Beneficial Ownership

Treaty protection usually requires the foreign licensor to be the beneficial owner of the royalty income.

A conduit company that merely receives the royalty and transfers nearly all of it to another entity may face challenge.

The Turkish payer should understand:

• Intellectual property ownership chain,
• Licensing chain,
• Recipient’s functions,
• Whether the recipient bears commercial risk,
• Whether the recipient may use the income freely.

A tax residence certificate alone may not resolve every beneficial ownership question.

Gross-Up Clauses

The agreement should state whether royalties are:

• Gross amounts from which Turkish tax is deducted, or
• Net amounts that the licensor must receive after tax.

A gross-up clause may require the Turkish licensee to increase the payment so the foreign licensor receives the agreed net amount.

The clause should also address:

• Treaty reductions,
• Refunds,
• Tax authority assessments,
• Failure to provide a residence certificate,
• Changes in law.

The licensee should not bear a higher gross-up cost caused solely by the licensor’s failure to provide required treaty documents.

Timing and Currency of Withholding

Turkish withholding obligations may arise when the relevant royalty is paid, accrued or recorded, depending on the applicable rule.

Foreign-currency royalties create additional exchange-rate issues.

GİB guidance indicates that exchange-rate differences between accrual and actual payment may affect the Turkish-lira tax base and additional withholding calculation.

The contract should identify who bears tax arising from currency movements.

VAT and Reverse Charge

The use of intellectual property or services supplied from abroad may be subject to Turkish VAT where the transaction is considered performed or benefited from in Turkey.

Where the foreign supplier has no Turkish VAT establishment, the Turkish recipient may need to declare the VAT as tax responsible through the No. 2 VAT return.

GİB guidance states that recipients in Turkey may be required to declare the full VAT on qualifying services received from abroad, including where the recipient does not otherwise have ordinary VAT registration.

The agreement should state whether fees are:

• Exclusive of VAT,
• Inclusive of VAT,
• Subject to reverse charge,
• Recoverable as input VAT.

Licence Versus Transfer for Tax Purposes

The tax treatment of a licence may differ from the permanent sale of intellectual property.

A software payment granting commercial use rights may be treated as a royalty, while a genuine permanent transfer of the entire ownership right may be classified differently under the applicable treaty.

GİB guidance distinguishes between software rights licensed for use and a documented transfer of ownership.

The contract should reflect the real transaction rather than using the word “sale” to describe a limited licence.

Transfer Pricing

Where the licensor and licensee are related companies, the royalty must comply with the arm’s-length principle.

Turkish transfer-pricing rules may apply to:

• Royalty rate,
• Upfront fee,
• Management fee,
• Technical service fee,
• Cost sharing,
• Trademark fee.

The parties should be able to explain:

• Commercial value of the right,
• Comparable agreements,
• Functions performed,
• Risks assumed,
• Development and marketing expenditure,
• Expected profit.

Turkish tax rules treat prices that differ from arm’s-length terms in related-party transactions as a potential transfer-pricing distribution of profit.

Transfer-Pricing Documentation

Related parties should preserve documentation such as:

• Comparable royalty study,
• Valuation report,
• Functional analysis,
• Legal ownership records,
• Development-cost information,
• Market analysis,
• Royalty calculations.

A group policy stating that all subsidiaries pay the same percentage does not automatically prove that the rate is arm’s length.

Different markets may have different:

• Brand value,
• Profitability,
• Marketing functions,
• Economic conditions.

Competition Law

Licensing agreements may restrict competition where they regulate:

• Production,
• Sales,
• Territory,
• Customers,
• Pricing,
• Competing technologies,
• Research and development.

Technology-transfer agreements involving patents, know-how or software may benefit from the Turkish technology-transfer block exemption if the statutory conditions are satisfied.

The applicable competition framework excludes certain serious restrictions from the exemption and may remove the benefit for all or part of the agreement.

Technology Transfer Agreements

The Turkish technology-transfer regime principally concerns agreements under which technology rights are licensed for the production of contract products.

Relevant rights may include:

• Patents,
• Know-how,
• Software copyright,
• Mixed technology packages.

The competition assessment may depend on whether the parties are:

• Competitors,
• Non-competitors,
• Operating in the same product market,
• Operating in the same technology market.

The parties should identify their market relationship before relying on a block exemption.

High-Risk Competition Restrictions

Potentially problematic clauses may include:

• Fixed resale prices,
• Restriction on the licensee’s ability to determine prices,
• Unjustified customer allocation,
• Output restrictions,
• Market sharing between competitors,
• Prohibition on challenging invalid rights,
• Restrictions on independent research,
• Obligations to assign unrelated improvements without compensation,
• Tying unnecessary products or licences.

A licence should protect the intellectual property without becoming a mechanism to divide markets or coordinate prices unlawfully.

Resale Price Control

A trademark or technology licensor that also supplies products may wish to control the licensee’s resale prices.

Fixed or minimum resale prices may constitute a serious competition restriction.

The licensor may generally use genuine recommended or maximum prices where they do not become mandatory through:

• Threats,
• Withdrawal of supply,
• Penalties,
• Rebate loss,
• Monitoring and pressure.

The contract should preserve the licensee’s lawful pricing independence.

Non-Compete Obligations

The licensor may seek to prevent the licensee from using competing technology during the agreement.

The restriction should be assessed according to:

• Necessity to protect know-how,
• Duration,
• Products,
• Territory,
• Market power,
• Parties’ competitive relationship.

A prohibition extending beyond what is necessary to protect confidential technology may fall outside the available exemption and require individual assessment.

Improvements

The licence should regulate inventions, modifications and improvements created during the relationship.

Possible structures include:

• Licensee owns improvements and grants a licence to licensor.
• Licensor owns all improvements.
• Ownership follows inventorship.
• Parties own jointly developed improvements.
• Each party owns improvements in its technical field.

The clause should distinguish between:

• Severable improvements,
• Non-severable improvements,
• General skills,
• Confidential know-how,
• Patentable inventions.

An automatic obligation to transfer every future development may create competition and validity concerns if it is excessively broad.

Patent Challenge Clauses

A licensor may attempt to prohibit the licensee from challenging the validity of the licensed patent.

Such no-challenge clauses require competition-law review.

The public interest in removing invalid rights from the register may conflict with an unrestricted contractual ban.

A more limited clause may permit the licensor to terminate an exclusive licence if the licensee challenges the right, subject to competition and good-faith analysis.

Confidentiality

A licensing agreement should protect confidential information separately from registered intellectual property.

The confidentiality clause should define:

• Information covered,
• Exclusions,
• Permitted recipients,
• Security,
• Disclosure required by law,
• Duration,
• Return and deletion.

Confidentiality may survive termination for as long as the information genuinely remains secret.

A clause should not attempt to classify publicly available information as confidential indefinitely.

Data Protection

Software and technology licences may involve the processing of personal data.

The parties should identify whether each party acts as:

• Data controller,
• Joint controller,
• Data processor.

The agreement should address:

• Processing instructions,
• Security,
• Sub-processors,
• International transfers,
• Breach notification,
• Deletion,
• Audit.

An intellectual property licence does not itself provide legal authority to transfer personal data abroad.

Warranties by the Licensor

The licensor may warrant that:

• It owns or controls the licensed rights,
• It has authority to grant the licence,
• The rights are valid and maintained,
• It has disclosed existing claims,
• The licence does not knowingly infringe third-party rights.

The licensor should avoid giving an absolute guarantee that no third party anywhere will ever allege infringement.

The warranty should reflect the due diligence actually performed.

Warranties by the Licensee

The licensee may warrant that it will:

• Use the rights only within scope,
• Comply with quality standards,
• Pay royalties,
• Maintain records,
• Avoid unauthorised sublicensing,
• Protect confidential information,
• Comply with law,
• Stop use after termination.

Third-Party Infringement Claims

The contract should establish a procedure if a third party alleges that the licensed product infringes another right.

The clause should regulate:

• Prompt notice,
• Control of defence,
• Settlement authority,
• Legal costs,
• Product modification,
• Replacement technology,
• Refund,
• Indemnity.

The licensee should not settle an infringement claim in a way that admits invalidity of the licensor’s right without approval.

The licensor should not control the defence while requiring the licensee to bear every cost regardless of outcome.

Enforcement Against Infringers

The agreement should state who may act against third-party infringement.

Questions include:

• Must the licensee notify the licensor?
• May an exclusive licensee sue?
• Who controls litigation?
• Who pays costs?
• How are damages divided?
• Can the licensee settle?

The legal standing of an exclusive licensee may differ from that of a non-exclusive licensee.

The agreement should be coordinated with Turkish industrial property rules and the recorded licence status.

Contract Duration

The term should not exceed the economic or legal life of the licensed right without addressing expiry.

For example:

• Trademark may be renewed repeatedly.
• Patent has a limited legal term.
• Copyright duration is governed by statute.
• Know-how may remain protected only while secret.

The agreement should state what happens if one right expires while others continue.

Renewal

Renewal conditions may include:

• Timely payment,
• No material breach,
• Minimum performance,
• Updated royalty rate,
• Renewal of underlying registration,
• Compliance with quality standards.

The contract should state whether renewal is:

• Automatic,
• Optional,
• Subject to mutual agreement,
• Subject to objective criteria.

A clause suggesting guaranteed renewal while granting the licensor unrestricted discretion may generate a good-faith dispute.

Ordinary Termination

The agreement should provide a notice mechanism for indefinite or renewable relationships.

The notice period should consider:

• Licensee investment,
• Manufacturing facilities,
• Regulatory approvals,
• Inventory,
• Customer obligations,
• Dependence on the licensed technology.

A very short notice period after substantial licensor-approved investment may expose the terminating party to damages claims under the governing law.

Immediate Termination

Serious breaches may justify immediate termination.

Examples include:

• Non-payment,
• Unauthorised sublicensing,
• Use outside territory,
• Disclosure of know-how,
• Trademark misuse,
• Counterfeiting,
• Insolvency,
• Corruption,
• Loss of required licence,
• Repeated quality failures.

Remediable breaches should generally be subject to:

• Written notice,
• Cure period,
• Clear evidence.

Effect of Termination

The agreement should state what happens after termination.

Possible obligations include:

• Stop all use,
• Remove trademarks,
• Return technical documents,
• Delete software,
• Disable access,
• Destroy confidential copies,
• Pay accrued royalties,
• Submit final report,
• Permit final audit,
• Transfer domain names,
• Return registrations.

Sell-Off Period

A licensee may hold licensed inventory when the agreement ends.

The parties may allow a limited sell-off period subject to:

• Full royalty payment,
• Existing quality standards,
• No new manufacture,
• Defined time,
• Accurate reporting.

A sell-off period may be inappropriate after termination for:

• Counterfeiting,
• Safety violation,
• Serious trademark misuse,
• Confidentiality breach.

Accrued Royalties

Termination does not normally eliminate royalties already earned.

The licensee may remain responsible for:

• Unpaid royalties,
• Minimum royalty shortfall,
• Interest,
• Audit adjustment,
• Tax.

The licensor should not calculate post-termination royalties on sales not authorised by the agreement without clarifying whether those sales are treated as licensed sales or infringement.

Wrongful Termination

A wrongful termination may generate claims for:

• Lost profit,
• Unrecovered investment,
• Unsold stock,
• Regulatory expenditure,
• Customer liabilities,
• Contractual penalty.

The claimant must prove:

• Breach,
• Causation,
• Recoverable loss,
• Amount,
• Mitigation.

Continued Use After Termination

Continued use of the intellectual property after the licence ends may constitute:

• Breach of contract,
• Trademark infringement,
• Patent infringement,
• Copyright infringement,
• Unfair competition,
• Trade-secret misuse.

The licensor may consider:

• Interim injunction,
• Cessation,
• Evidence preservation,
• Damages,
• Recall or removal of products.

Dispute Resolution

The agreement should select:

• Governing law,
• Court or arbitration,
• Seat,
• Language,
• Number of arbitrators.

Licensing disputes are often suitable for arbitration because they may involve:

• Confidential technology,
• International parties,
• Specialist evidence,
• Cross-border enforcement.

However, Turkish courts may retain authority over matters such as:

• Validity and cancellation of Turkish registered rights,
• Certain registry matters,
• Non-arbitrable disputes,
• Urgent interim measures.

Mandatory Commercial Mediation

Commercial payment and compensation lawsuits in Turkey generally require mandatory mediation before litigation.

Licence-related claims may include:

• Unpaid royalties,
• Damages,
• Audit differences,
• Tax indemnity,
• Wrongful termination compensation.

A lawsuit seeking cancellation or invalidity of a registered intellectual property right may require a different procedural classification from an ordinary monetary dispute.

Practical Drafting Checklist

An international licensing agreement should address:

1. Parties and signing authority.
2. Ownership of the intellectual property.
3. Registration numbers.
4. Type of right licensed.
5. Exclusive or non-exclusive status.
6. Territory.
7. Field of use.
8. Products and services.
9. Manufacturing rights.
10. Import and export rights.
11. Online use.
12. Sublicensing.
13. Quality control.
14. Know-how transfer.
15. Improvements.
16. Confidentiality.
17. Royalty base.
18. Minimum royalties.
19. Reporting.
20. Audit rights.
21. Withholding tax.
22. VAT.
23. Transfer pricing.
24. Recordation.
25. Warranties.
26. Infringement claims.
27. Enforcement rights.
28. Duration and renewal.
29. Termination.
30. Sell-off period.
31. Post-termination obligations.
32. Governing law.
33. Court jurisdiction or arbitration.

Licensor Checklist

Before granting a Turkish licence, the licensor should:

1. Confirm Turkish protection.
2. Verify ownership and renewal dates.
3. Identify existing licences and security rights.
4. Determine exclusivity.
5. Reserve necessary internal use.
6. Define quality standards.
7. Establish royalty reporting.
8. Plan Turkish tax treatment.
9. Review competition restrictions.
10. Decide whether to record the licence.
11. Protect know-how.
12. Plan enforcement and termination.

Licensee Checklist

Before signing, the licensee should:

1. Verify the licensor’s title.
2. Review Turkish registration status.
3. Confirm the scope of exclusivity.
4. Identify reserved customers and channels.
5. Review sublicense authority.
6. Calculate withholding tax and VAT costs.
7. Review minimum royalties.
8. Confirm technical support.
9. Assess patent-expiry and invalidity risk.
10. Review improvement ownership.
11. Check termination and sell-off rights.
12. Avoid excessive post-term restrictions.

Frequently Asked Questions

Can a foreign company license intellectual property directly to a Turkish company?

Yes. Turkish tax, intellectual property, competition and possible permanent-establishment consequences should be reviewed.

Must the foreign licensor establish a Turkish company?

Not merely to grant a licence. The structure of activities performed in Turkey may nevertheless create additional registration or tax issues.

Is a foreign trademark automatically protected in Turkey?

Not always. Turkish or international protection designating Turkey should be verified.

Can a trademark application be licensed?

Yes. Both registered rights and qualifying applications may be licensed under Turkish industrial property law.

Is a trademark licence exclusive automatically?

No. Unless otherwise agreed, it is non-exclusive.

Can the trademark owner continue using the mark under an exclusive licence?

Only where the right to continue use has been reserved expressly.

Can a patent be licensed?

Yes. Patent applications and patents may be licensed exclusively or non-exclusively.

Can the licensee grant sublicences?

Only where the agreement gives sufficient authority.

Must the licence be recorded with TÜRKPATENT?

Recordation is not always required for contractual validity between the parties, but it may be important for effect against third parties, enforcement and transparency.

What is the 2026 trademark licence recordation fee?

TÜRKPATENT lists the 2026 licence recordation and licence renewal fee as TRY 9,870.

Can software be licensed?

Yes. The agreement should specify whether the licensee receives end-user access, reproduction, adaptation, distribution, source-code or cloud-access rights.

Is every software payment a royalty?

No. Classification depends on the actual rights and services supplied.

Must copyright rights be stated separately?

Copyright-related economic rights should be identified individually and clearly in writing.

How are royalties calculated?

They may be based on sales, units, fixed amounts, minimum payments or milestones.

What should be deducted from net sales?

The contract should define deductions such as VAT, returns, discounts and freight expressly.

Are royalties paid to a foreign company subject to Turkish withholding tax?

Domestic Turkish rules may impose 20% withholding. A double taxation treaty may reduce the rate where its conditions are satisfied.

Is a residence certificate required?

It is generally required to apply a reduced treaty rate.

Is VAT payable on a foreign licence?

The Turkish recipient may need to declare reverse-charge VAT where the right or service is used or benefited from in Turkey.

Who bears withholding tax?

The contract should state whether the royalty is gross or net and whether a gross-up applies.

Do related companies need a transfer-pricing study?

Related-party royalties should be supported as arm’s-length transactions. Documentation and comparable analysis may be required.

Can the licensor fix the licensee’s resale price?

Fixed or minimum resale prices may create serious Turkish competition-law risk.

Can a licence prohibit competing technologies?

A proportionate restriction may be possible, but its necessity, duration and market effect require competition analysis.

Who owns improvements?

The agreement should define ownership. There is no safe assumption that every improvement automatically belongs to the licensor.

Can the licensee challenge the patent?

A no-challenge provision requires careful competition and validity analysis.

What happens if the patent is invalidated?

The agreement should regulate whether royalties cease, continue for know-how or are adjusted.

Can the licensor terminate for non-payment?

Yes, subject to the agreement, notice and any applicable cure period.

Can the licensee sell existing inventory after termination?

Only if the agreement grants a sell-off period or the parties agree later.

Can the former licensee continue using the trademark during litigation?

Not merely because a dispute exists. Continued unauthorised use may constitute infringement.

Can licence disputes be arbitrated?

Contractual licensing disputes may generally be arbitrated. Validity, cancellation and certain registry matters may require separate analysis.

Is mediation mandatory?

Qualifying commercial payment and compensation lawsuits generally require mediation before filing in Turkey.

Conclusion

International licensing agreements provide an effective method for commercialising intellectual property in Turkey without transferring permanent ownership.

The agreement must first identify the exact rights being licensed.

A general reference to “technology,” “brand” or “software” may be insufficient.

The contract should identify:

• Registration numbers,
• Copyrighted works,
• Software modules,
• Patent claims,
• Know-how documents,
• Permitted use.

Trademark and patent licences may be exclusive or non-exclusive. Unless the contract provides otherwise, the licence is generally non-exclusive.

An exclusive licence should state whether the licensor reserves the right to continue using the intellectual property.

Sublicensing should also be regulated expressly.

Licence recordation with TÜRKPATENT may strengthen transparency and third-party effectiveness. The parties should allocate responsibility for the application, translation and official fees.

The royalty clause should define:

• Royalty base,
• Permitted deductions,
• Related-party transactions,
• Minimum payments,
• Reporting,
• Audit.

Payments to a foreign licensor may be subject to Turkish withholding tax. Domestic rules may impose a 20% rate, while an applicable double taxation treaty may reduce it if residence and beneficial-ownership conditions are satisfied.

Reverse-charge VAT may also apply where the licensed right or foreign service is used in Turkey.

Related-party licences must comply with transfer-pricing rules and the arm’s-length principle.

Competition law should be reviewed where the licence restricts:

• Pricing,
• Output,
• Customers,
• Territory,
• Competing technologies,
• Research,
• Improvements.

Intellectual property protection does not give the parties unlimited freedom to divide markets or control resale prices.

Termination provisions should address:

• Accrued royalties,
• Final audit,
• Inventory,
• Sell-off,
• Deletion of software,
• Return of know-how,
• Trademark removal,
• Customer obligations.

Continued use after termination may create both contractual liability and intellectual property infringement.

The safest international licensing structure is one that coordinates intellectual property ownership, commercial scope, tax, competition law and post-termination enforcement from the beginning.