Nepal's 'First to File' Principle in Trademark Law Explained

If you are evaluating Private vs public company in Nepal, trademark protection should be part of your entry strategy from day one. Nepal follows a strict “first to file” principle under its trademark regime. That means the first applicant to file a mark usually wins, even over prior users.

For foreign companies entering Nepal, this changes everything.

Structure, timing, and compliance matter. In this guide, we explain:

• The difference between a private and public company in Nepal
• How Nepal’s first-to-file trademark system works
• Why entity structure affects IP ownership
• Legal risks foreign companies often overlook
• A compliance roadmap for 2026

Let’s break it down clearly and practically.

Understanding Private vs Public Company in Nepal

Before discussing trademarks, we need to understand how company structure works in Nepal.

Company formation in Nepal is governed primarily by the Companies Act 2006. Foreign investment considerations are governed by the Foreign Investment and Technology Transfer Act 2019 (FITTA 2019).

What Is a Private Company in Nepal?

A private company in Nepal:

• Limits share transferability
• Cannot invite the public to subscribe shares
• Requires a minimum of 1 shareholder
• Has fewer disclosure obligations

This is the most common structure for foreign investors.

It offers flexibility, control, and lower regulatory burden.

What Is a Public Company in Nepal?

A public company:

• Can invite public subscription
• Requires a minimum of 7 shareholders
• Faces stricter reporting obligations
• Must comply with securities regulations

Public companies are regulated by the Securities Board of Nepal (SEBON).

For most foreign companies entering Nepal, a public structure is unnecessary unless planning a listing or capital market raise.

Quick Comparison: Private vs Public Company in Nepal

Insight: 90%+ of foreign investors entering Nepal choose a private limited company structure for operational efficiency and control.

Nepal’s “First to File” Principle in Trademark Law Explained

Nepal follows a strict “first to file” trademark system.

Trademark protection is governed by the Patent, Design and Trademark Act 1965.

Under this framework:

The party that files first generally obtains legal ownership — regardless of who used the mark first.

This surprises many foreign businesses.

Why “First to File” Matters

If a local party registers your brand name before you:

• You may lose rights to your own brand in Nepal
• You may need to rebrand locally
• You could face infringement claims
• Litigation becomes expensive and uncertain

Unlike common law jurisdictions, prior use alone does not guarantee protection.

How Company Structure Affects Trademark Ownership

This is where Private vs public company in Nepal becomes strategically important.

Trademark applications must be filed in the name of:

• The parent foreign company
• The Nepal subsidiary
• A local authorized entity

Choosing the wrong entity creates ownership and repatriation issues later.

Scenario 1: Filing Under Foreign Parent

Pros:

• Centralized IP ownership
• Easier licensing

Cons:

• Requires local representative
• May complicate enforcement

Scenario 2: Filing Under Nepal Private Company

Pros:

• Strong local enforceability
• Clean compliance trail
• Aligns with FITTA 2019 approvals

Cons:

• IP sits locally
• Requires clear intercompany licensing

For foreign investors setting up a private limited company, we typically recommend structured IP flow documentation.

Step-by-Step: How to Register a Trademark in Nepal

Here is the typical process:

1. Conduct a trademark search
2. File application at Department of Industry
3. Examination by registrar
4. Publication in Industrial Property Bulletin
5. Opposition period (if any)
6. Registration certificate issued

The key risk window is between your decision to enter Nepal and your filing date.

Delay creates vulnerability.

Common Mistakes Foreign Companies Make

• Filing company incorporation before trademark protection
• Allowing distributors to file trademarks
• Registering under individual director names
• Ignoring class strategy
• Failing to monitor oppositions

These mistakes often arise from poor coordination between legal and market entry teams.

Timeline and Strategic Sequencing

For foreign companies comparing private vs public company in Nepal, the ideal order is:

1. Preliminary name search
2. Trademark filing
3. FDI approval (if applicable)
4. Company incorporation
5. PAN and tax registration

This sequencing protects your brand before public exposure.

Trademark Classes and Business Scope Alignment

Nepal follows the Nice Classification system.

However, foreign companies often under-file.

For example:

• Tech firms file only software class
• But forget training, consulting, and SaaS services

A proper class strategy prevents later conflicts.

Enforcement Environment in Nepal

Nepal’s IP enforcement has strengthened over the last decade.

However:

• Court proceedings can be time-consuming
• Injunctions require strong documentation
• First-to-file documentation is decisive

Early filing significantly improves your legal position.

Private vs Public Company in Nepal and Investor Risk

From a risk architecture perspective:

Private companies:

• Offer controlled shareholding
• Protect strategic IP decisions
• Reduce regulatory exposure

Public companies:

• Increase disclosure
• Add compliance complexity
• Are rarely necessary for first-phase entry

For foreign investors, simplicity reduces IP risk.

Risk Matrix: Entity Structure vs Trademark Exposure

Strategic Insight: Private structures provide faster brand protection alignment under Nepal’s first-to-file regime.

Legal References Supporting First-to-File

Under the Patent, Design and Trademark Act 1965:

• Registration grants exclusive rights
• Priority is based on filing date
• Opposition procedures protect earlier registrants

Foreign investment structuring must align with FITTA 2019 and Companies Act 2006 to ensure lawful ownership.

How to Protect Your Brand Before Entry

Foreign companies should:

• Conduct availability search
• Reserve company name
• File trademark immediately
• Draft intercompany IP agreements
• Align trademark owner with tax planning

Do not wait for product launch.

Frequently Asked Questions (People Also Ask)

1. Is Nepal a first-to-file country for trademarks?

Yes. Nepal follows a first-to-file system under the Patent, Design and Trademark Act 1965. The first applicant generally gains legal ownership, even over prior users.

2. Should I register a trademark before company incorporation in Nepal?

Yes. Filing early protects your brand from third-party registration. Many foreign companies file trademarks before completing incorporation.

3. What is better: private or public company in Nepal for foreign investors?

A private company is usually better. It offers lower compliance burden, more control, and better alignment with FDI structures.

4. Can a foreign company own a trademark in Nepal?

Yes. Foreign entities can register trademarks directly or through authorized representatives in Nepal.

5. How long does trademark registration take in Nepal?

Typically 8–18 months, depending on objections or opposition. Filing date protection begins once application is accepted.

Practical Advice for 2026 Market Entry

If you are evaluating Private vs public company in Nepal, do not treat trademark protection as secondary.

It is foundational.

A clean entry model includes:

• Structured entity planning
• Early trademark filing
• Class expansion strategy
• IP assignment clarity
• Compliance mapping

Foreign companies that plan early avoid litigation later.

Why This Matters More in 2026

Cross-border filings are increasing.

Local opportunistic filings are rising.

Digital brands are particularly vulnerable.

Nepal’s market is growing, but IP awareness is uneven.

This creates risk.

And opportunity.