INDUSTRIAL PROPERTY PROTECTION ACT 2024 · HENGAM IP & LITIGATION
Under Article 113 of Iran’s Industrial Property Protection Act 2024, a trademark owner that licenses its mark is liable to consumers and third parties for the licensee’s goods or services — unless the owner proves it exercised effective and sufficient quality-control supervision. The rule reverses the burden of proof and puts documented supervision at the centre of every trademark licence in Iran.
What does Article 113 say?
Where a license to exploit the mark is granted to another, the owner of the mark is liable, vis-à-vis consumers and third parties, for the acts of the licensee in exploiting the mark by way of quality control — unless they prove that they exercised effective and sufficient supervision over the quality of the goods or services of the licensee.INDUSTRIAL PROPERTY PROTECTION ACT 2024, ARTICLE 113
In plain terms: license your mark, and you answer to the public for what the licensee does with it — unless you can prove you supervised quality.
Who is liable, and for what?
The mark owner (the licensor) is liable to consumers and third parties for harm caused by the licensee’s use of the mark. That liability applies by default. Once a claimant shows a licence existed and the licensee’s use caused the harm, the burden shifts to the owner to prove supervision. The policy is plain: an owner who lends its mark to another’s goods should stand behind those goods to the public.
Does Article 113 affect the trademark’s validity?
No. Iran’s IP Act protects the mark’s validity elsewhere: Article 114 voids a transfer that misleads the public, and Article 110 allows invalidation for non-use or misleading use. There, weak control endangers the mark itself. Under Article 113 the registration is untouched; the owner simply pays damages to an injured consumer. Note the contrast with Article 109: the licensee’s authorised sale is not an infringement, yet the owner still answers for it. An owner can hold a perfectly valid mark and still be liable.
Why the reversed burden of proof matters
“Unless they prove” is not a light burden. The owner must establish supervision to the court’s satisfaction — most safely read as a burden of persuasion until the executive by-laws or the courts clarify it. The practical effect is blunt: uncertainty runs against the owner. A thin or after-the-fact record loses.
What counts as “effective and sufficient supervision”?
Control in fact, not on paper — and matched to the risk of the product. A licence can reserve every inspection right, but none of it helps if the owner never used those rights or kept no record. What discharges the burden is control actually exercised: samples reviewed, inspections carried out, complaints examined, non-conforming goods stopped.
How can a licensor limit liability under Article 113?
Two things carry the defence: real controls in the contract, and a record proving you used them.
Draft usable controls — quality specifications, pre-market sample approval, scheduled audits, complaint review, corrective-action and termination rights. Execute the licence before a notary and register it (Articles 57, 58 and 116); an unregistered licence does not bind third parties, and the licensee may not sub-license unless the contract allows it. Add indemnity and insurance to allocate the cost between the parties — a cost that, under Article 72, covers the full loss including lost profits.
Above all, keep a supervision file: dated inspection reports, sample approvals, complaint logs and responses, corrective-action correspondence. Keep the rights in the agreement and the proof of exercise in a separate, retained record — because it is the record, not the clause, that answers the question Article 113 asks.
KEY TAKEAWAYS
- Article 113 makes the trademark owner liable to consumers and third parties for a licensee’s goods or services.
- The liability is presumed; the owner escapes only by proving effective and sufficient quality-control supervision.
- It concerns liability, not validity — a valid, uncancellable mark offers no protection here.
- Contemporaneous supervision records are the licensor’s strongest defence.
Frequently asked questions
Does Article 113 apply to all trademarks?
It applies to ordinary marks that can be licensed. Article 115 bars any licence of a registered collective or certification mark, so the Article 113 exposure does not arise from those.
Can a licensor avoid liability by contract alone?
No. Contractual control rights are necessary but not sufficient. The owner must prove that supervision was actually exercised, supported by a contemporaneous record.
Who bears the burden of proof?
Once a licence and causation are shown, the burden shifts to the licensor to prove supervision — most safely treated as a burden of persuasion pending the by-laws.
This commentary reflects the Industrial Property Protection Act 2024. As the Act’s implementing regulations have not yet been issued, some points of practical application discussed here may be clarified or altered once they are published. This article is general in nature and is not legal advice on any specific licence or dispute. For advice on a particular licensing arrangement, please contact the firm.
Sadegh Shamshiri
Sadegh leads on legal strategy and represents high-profile clients in IP litigation and enforcement — across trademarks, patents, designs, copyright, and domain names, including complex multi-jurisdictional disputes.