Understanding Copyrights and Patents in Nepal: A Legal Perspective

If you are comparing Private vs public company in Nepal, intellectual property protection should be part of your decision. Copyrights and patents shape valuation, investor confidence, and long-term scalability.

Foreign companies entering Nepal often focus on tax and compliance. Yet IP protection under Nepalese law can determine whether your technology, brand, or creative assets remain secure.

In this legal perspective, we explain how Nepal protects copyrights and patents, how the structure of a private or public company affects IP ownership, and what foreign investors must know before entering the market.

We reference Nepal’s governing laws, including the Patent, Design and Trade Mark Act and the Copyright Act, along with regulatory oversight by the Department of Industry.

Let’s break it down clearly.

Nepal’s Legal Framework for Intellectual Property

Nepal’s IP system is primarily governed by:

• Patent, Design and Trade Mark Act 1965
• Copyright Act 2002
• Related Rules and administrative guidelines issued by the Department of Industry

Nepal is also a member of the World Intellectual Property Organization (WIPO). However, its domestic framework remains registration-based and administratively driven.

Why This Matters for Foreign Companies

When choosing between a private and public company structure:

• IP ownership clarity impacts investor confidence.
• Corporate governance affects asset licensing.
• Disclosure obligations differ.
• Fundraising opportunities change.

A public company may attract institutional investors.
A private company offers tighter IP control.

What Is Copyright Protection in Nepal?

Copyright protects original literary, artistic, musical, software, and audiovisual works.

Under the Copyright Act 2002:

• Protection arises automatically upon creation.
• Registration is recommended for enforcement.
• The standard duration is the author’s life + 50 years.

Key Features of Nepalese Copyright Law

1. Automatic protection upon creation.
2. Economic and moral rights recognized.
3. Transfer allowed via written agreement.
4. Protection extends to computer software.

Foreign companies operating in Nepal must ensure:

• Employment agreements include IP assignment clauses.
• Software development contracts specify ownership.
• Cross-border licensing complies with tax regulations.

Failure to formalize ownership can create disputes during due diligence.

Patent Protection in Nepal

Patents protect inventions that are:

• New
• Involving inventive step
• Industrially applicable

Under the Patent, Design and Trade Mark Act 1965:

• Registration is mandatory.
• Initial validity is 7 years.
• Renewable twice for 7 years each.
• Maximum protection: 21 years.

What Cannot Be Patented?

• Scientific theories
• Business methods
• Medical treatment methods
• Contrary-to-public-morality inventions

Nepal follows a strict filing requirement. If you disclose before filing, you risk losing protection.

Private vs Public Company in Nepal: IP Control Implications

When evaluating Private vs public company in Nepal, IP governance becomes critical.

Private Company Characteristics

Governed under the Companies Act.

• Maximum 101 shareholders.
• Restriction on public share transfer.
• Less disclosure.
• Founder control remains strong.

IP Advantage:
Confidentiality and tighter asset control.

Public Company Characteristics

Also governed by the Companies Act 2006.

• Minimum 7 shareholders.
• Can raise capital publicly.
• Higher regulatory oversight.
• Financial disclosures required.

IP Consideration:
More transparency required during public offerings.
Patent portfolios may be scrutinized by investors.

Comparison Table: Private vs Public Company in Nepal (IP Perspective)

Insight:
If your core value lies in proprietary technology, a private structure often provides stronger control during early expansion.

Registration Process for Patents in Nepal

The process involves:

1. Filing application with Department of Industry.
2. Submission of specifications and drawings.
3. Examination.
4. Approval and registration.
5. Publication and issuance.

Processing time varies. Administrative backlog may occur.

Strategic Considerations for Foreign Investors

When entering Nepal:

You Must Evaluate

• Whether to incorporate locally or operate via branch.
• Where IP ownership will sit.
• Tax implications of royalty repatriation.
• Whether patents should be filed before market entry.

Common Mistakes

• Filing after public disclosure.
• Ignoring employment IP clauses.
• Failing to register software rights.
• Assuming international patents automatically apply.

They do not.

Nepal requires local registration.

Due Diligence Checklist for Foreign Companies

Before choosing a structure:

• Confirm patent registration status.
• Review copyright assignments.
• Verify licensing agreements.
• Assess pending disputes.
• Check renewal deadlines.

This becomes essential during FDI approval under Nepal’s foreign investment regime.

How IP Protection Impacts Valuation

Investors examine:

• Patent portfolio strength.
• Enforcement history.
• Ownership clarity.
• Revenue generated from IP licensing.

A public company listing requires higher scrutiny.
Private companies may delay disclosure but face similar investor questions during funding rounds.

Enforcement Mechanisms in Nepal

Enforcement includes:

• Civil litigation.
• Administrative complaints.
• Customs seizure in infringement cases.

Nepal’s IP enforcement system is evolving.
Foreign companies should maintain documentation.

Tax and IP Revenue Considerations

Royalty payments are subject to withholding tax under Nepal’s Income Tax Act 2002.

Foreign entities should:

• Structure cross-border licensing agreements carefully.
• Avoid permanent establishment exposure.
• Ensure compliance with foreign exchange regulations.

When Should You Choose Private vs Public Company in Nepal?

If you prioritize:

• Control → Private.
• Capital markets → Public.
• Confidential technology → Private.
• Large infrastructure funding → Public.

Your IP strategy must align with your corporate structure.

Frequently Asked Questions (FAQ)

1. Does Nepal recognize foreign patents automatically?

No. Foreign patents are not automatically valid in Nepal. Separate local registration is required.

2. How long does copyright protection last in Nepal?

It lasts for the author’s lifetime plus 50 years under the Copyright Act 2002.

3. Can a foreign company own patents in Nepal?

Yes. Foreign entities can register patents through authorized local representatives.

4. Is IP disclosure mandatory for public companies?

Yes. Material IP assets must be disclosed during public offerings and financial reporting.

5. Which structure is better for tech startups in Nepal?

Most tech startups prefer private companies for tighter IP control and simplified governance.