Intercompany IP licensing: what IP managers need to know

Intercompany IP licensing: what IP managers need to know

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Intercompany IP licensing is the contract that lets a subsidiary use the brand, patents or software owned by its parent or by a group IP company. When that licence is missing, vague or unrecorded where the law requires it, the problem is not only a tax file: the subsidiary’s use may be hard to attribute to the owner, the licence cannot be relied on against third parties, and infringement actions can stall on standing. This guide is for in-house IP managers in groups that operate across Europe, Latin America and Africa.

Key takeaways

  • In the EU, Spain and Mexico, use of a mark with the owner’s consent counts as use by the owner, but you must be able to prove that consent.
  • Recordal decides whether the licence can be relied on against third parties: the EUIPO, the OEPM, Brazil’s INPI and Mexico’s IMPI all link third-party effects to registration.
  • A licence recorded in WIPO’s International Register has no effect in Brazil, Chile, Colombia or Mexico; it must be recorded with each national office.
  • Default rules on who may sue differ: in the EU and Spain the licensee needs the owner’s consent; in Mexico the licensee may act unless the contract says otherwise.
  • For tax purposes, legal ownership alone does not decide who keeps the return, so the IP and transfer pricing versions of the licence must match.

Why intercompany IP licensing is an IP problem, not just a tax one

Most groups end up with ownership in one entity and use in many: the parent or holding company files the trade marks and patents, and local subsidiaries sell, manufacture or provide services under them. The licence is what connects the two. In practice it is often drafted by transfer pricing advisers to support a royalty, with a schedule of “intangibles” that does not match the actual registrations, classes or countries.

The IP consequences show up later: in a non-use cancellation, in court or customs files that ask who may act, in due diligence, or when a subsidiary is sold.

Does use by a subsidiary count, and when is the licence effective against third parties?

The table summarises the rules in the main jurisdictions of the corridor, taken from the texts of each law.

Jurisdiction Use by the licensee Recordal and third parties
EU trade mark Use with the proprietor’s consent is deemed use by the proprietor (EUTMR, Art. 18(2)). Licences are entered in the Register on request of either party (Art. 25(5)) and have effect against third parties in all Member States only after entry, save against those who knew of them (Art. 27(1)).
Spain Use with the owner’s consent is treated as use by the owner (Trade Marks Act 17/2001, Art. 39.4). A licence can be relied on against third parties in good faith only once recorded at the OEPM (Art. 46.3).
Brazil The owner keeps the right to control the specifications and quality of the goods (Law 9.279/1996, Art. 139); the licence need not be recorded to serve as proof of use (Art. 140, para. 2). The licence must be recorded with the INPI to have effects against third parties, from the date of publication (Art. 140).
Mexico Use by the licensee is considered use by the owner (Federal Law on the Protection of Industrial Property, LFPPI, Art. 244). Under the new LFPPI Regulations, recordal in IMPI’s Technology Transfer Register is a condition for effect against third parties, not for validity (Art. 193; entering into force on 22 July 2026).
International registrations (Madrid) Depends on the law of each designated member. A licence can be recorded once at WIPO on form MM13, but Brazil, Chile, Colombia and Mexico have declared that such recordal has no effect there.

In short: an unwritten licence may still work between the companies, but the group must prove consent, and an unrecorded one may be ignored by a later buyer or creditor acting in good faith.

What should an intercompany licence contain?

At a minimum, the licence should cover:

  1. Parties and rights by number. Exact legal names as they appear in each register, and a schedule of registrations and applications by number and country, not a generic list of “intangibles”.
  2. Scope. Goods and services, territory and exclusivity that match how the subsidiary actually trades, and the classes that are actually registered.
  3. Sublicensing. Under Spanish law a licensee cannot sublicense or assign the licence unless agreed (Art. 48.3). Regional subsidiaries that appoint distributors need that permission in writing.
  4. Quality control. Brand guidelines and the right to inspect. Brazil expressly preserves the owner’s control over quality (Art. 139), and Mexico requires the licensee’s goods to be of the same quality as the owner’s (LFPPI, Art. 242).
  5. Enforcement. Who acts against infringers, with what consent and at whose cost. The default differs by country: in the EU and Spain the licensee needs consent, while an exclusive licensee may sue if the owner fails to act after formal notice (EUTMR Art. 25(3); Act 17/2001 Art. 48.7); in Mexico a licensee may act as if it were the owner unless the contract provides otherwise (LFPPI, Art. 243).
  6. Improvements and local filings. Who owns developments, local-language versions of the mark and any filings a subsidiary makes on its own initiative.
  7. Royalty, term and exit. Royalty mechanics aligned with the transfer pricing analysis, and what happens on termination, change of control or divestment.

Recording intercompany licences: where and how

  • EUIPO and OEPM: either party can request recordal; prioritise the entities that actually use the mark.
  • WIPO (Madrid): one request on form MM13 covers the designations of an international registration. WIPO’s Guide to the Madrid System notes that Rule 20bis does not cover sublicences, and the declarations of Brazil, Chile, Colombia and Mexico mean a separate national recordal there.
  • Mexico: the request must include a signed copy of the agreement, which may omit royalty clauses, confidential commercial information and technical annexes (Regulations, Art. 21). IMPI must decide within two months (LFPPI, Art. 240), and a deficiency not cured within two months leads to rejection (Regulations, Art. 23).
  • Brazil: recordal with the INPI takes effect against third parties from its publication.

How do tax and IP fit together in intercompany licensing?

The OECD Transfer Pricing Guidelines (2022 edition, paragraph 6.42) state that legal ownership of an intangible, by itself, does not confer the right to retain the returns from exploiting it; the return depends on functions performed, assets used and risks assumed across the group. In other words, the tax analysis looks past the register, but the register still decides who can enforce, who must prove use and whose name appears in a dispute. Both views have to describe the same rights, the same entities and the same territories. Tax advice itself sits with your tax advisers; our part is making sure the IP schedule and recordals are right.

What this means for your business

  1. List every entity that uses a group mark, patent, design or software, and in which countries.
  2. Match that list against the registrations and the intercompany agreements in force.
  3. Standardise one licence template with country riders for enforcement, quality control and recordal.
  4. Record licences where third-party effect matters, starting with Mexico, Brazil and the EU, and calendar renewals of the recordal.
  5. Keep evidence of use by each subsidiary filed by mark and country, ready for non-use challenges.

If your group needs this mapped across several offices, our cross-border IP strategy and portfolio structuring team can audit the licences against the registers and coordinate the recordals.

Where groups get intercompany licensing wrong

  • Relying on a Madrid recordal for Latin America. It does not reach Brazil, Chile, Colombia or Mexico.
  • Schedules that do not match the registers: wrong owner name, expired registrations, missing countries or classes.
  • Silent enforcement clauses, so the default rule of each country decides who can sue, sometimes against the group’s intention.
  • Subsidiaries filing marks in their own name without a clause on ownership and assignment back to the group.
  • Leaving the licence untouched after a restructuring or sale, which leaves the buyer, the seller and the register telling three different stories.

These issues appear when tax, legal and IP advisers each hold a different version of the same licence; one coordinated review avoids fixing them in the middle of a dispute or a deal.

Frequently asked questions

Do I need to record an intercompany licence?

Not for the licence to be valid between the companies, but recordal decides whether it can be relied on against third parties. The EU, Spain, Brazil and Mexico all link that effect to registration. For international registrations, a recordal at WIPO does not take effect in Brazil, Chile, Colombia or Mexico, so national recordal is needed there.

Does a subsidiary’s use protect the mark from non-use cancellation?

Generally yes: in the EU, Spain and Mexico, use with the owner’s consent counts as use by the owner, and Brazil does not require recordal for the licence to serve as proof of use. The weak point is evidence. Keep the written licence and dated proof of the subsidiary’s use for each mark and country.

Can the subsidiary sue infringers itself?

It depends on the country and the contract. Under EU and Spanish law a licensee needs the owner’s consent, although an exclusive licensee may act if the owner fails to do so after formal notice. In Mexico a licensee may act as if it were the owner unless the contract says otherwise. Draft the clause deliberately for each territory.

Can IP Global Guard review and record our intercompany licences?

Yes. We audit the licences against the registers, draft or adapt the IP terms, and prepare and coordinate recordals before the EUIPO and OEPM, directly where our professionals are entitled and otherwise through qualified representatives, with WIPO, and through coordinated local correspondents before the INPI, the IMPI and other offices.

How IP Global Guard can help with your group’s licences

Intercompany licences sit between tax, legal and IP, which is why they are so often incomplete. IP Global Guard, the IP services line of META Channel Corporation Limited, reviews them against the registers and handles the recordals with one strategy and one billing relationship across more than 25 jurisdictions; see our coverage in Europe, Latin America and Africa and our licensing and IP transactions work.

Send us your current intercompany agreements and the list of entities using the group’s marks and patents. We will tell you where the gaps are and which recordals to prioritise. Ask our team for a licence review.

This article is general information, not legal advice; it does not replace tax advice or an assessment of your specific case.

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