The draft of the long-awaited Industrial Property Rights Bill proposes sweeping reforms aimed at curbing the rampant copying of patents, trademarks, and other industrial property rights in Nepal. The bill introduces harsh penalties, including the revocation of production licences and hefty fines, for those found guilty of infringement.

For years, opportunistic Nepali businesses have taken advantage of the brand value of internationally recognised companies. Examples of knock-off products abound: Coca-Cola competes with Club-Cola, Mountain Dew faces a suspicious rival in “Maintain Dew”, and KKFC mimics the global fast-food chain KFC. Confectionery items like Centre Fruit and Centre Fillz closely resemble popular originals. Even premium brands like Adidas and Nike are regularly counterfeited, with replicas sold openly in stores.

These practices have drawn criticism from multinational companies, which argue that the prevalence of copycat products has damaged their brand image and highlighted Nepal’s weak enforcement of intellectual property (IP) laws. The absence of a robust legal framework has also discouraged foreign direct investment (FDI), as potential investors see Nepal as a risky market with poor protection for industrial property.

If passed, the new legislation will replace the outdated Patent, Design, and Trademark Act of 1965. The Ministry of Industry, Commerce, and Supplies had prepared the draft in 2019, but the Covid-19 pandemic and subsequent political instability delayed its progress. The bill was registered in Parliament last Friday and is now available for lawmakers to review on the National Assembly’s website.

One of the bill’s central features is its focus on protecting well-known trademarks.

It allows the original trademark owner to file a complaint with the newly proposed Office of Industrial Property Rights if their brand is copied or misused. Following an investigation, if the claim is substantiated, the offending trademark will be revoked.

The bill warns against registering trademarks that imitate existing ones or create confusion among consumers. Infringing companies face fines ranging from Rs300,000 to Rs1 million. Additionally, such goods will be confiscated and destroyed, and further production prohibited.

Company chiefs will be personally liable for penalties under these provisions, which align with the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement and the Paris Treaty.

According to the bill’s drafters, as industrial production does not fall under criminal acts, the bill has not proposed jail or sentencing for those involved in brand infringement.

The draft also addresses trademarks in the pharmaceutical sector. If a drug’s name appears on the World Health Organisation’s list of generic medicines, it cannot be registered as a trademark in Nepal.

New businesses are required to publish a notice for public opposition detailing the name and logo within 35 days of applying for trademark registration. An examining officer will then inspect the application and prepare a report.

Once a trademark certificate is issued, businesses must start using the trademark in goods and services within three years. If it remains unused in that period, the trademark will be cancelled.

Further, if a trademark is found to be a copy of a well-known brand, it will be revoked regardless of the registration status. The bill also mandates periodic renewal of trademarks, with a registration fee of Rs10,000.

In a new provision, the bill allows a single company to register a series of trademarks for different goods and services. Interestingly, it also states that popular brands already doing business may not need to register their trademarks—a provision likely aimed at easing compliance for globally established companies.

The bill stipulates that any invention registered under an individual’s name cannot be copied, manufactured, sold, distributed, or stored without authorisation. Patent holders will enjoy the right to commercialise, transfer, or sell their patents, treating them like any other property.

If a patent involves a specific process or product, its unauthorised use—including for production, sales, or imports—will be strictly prohibited. In cases of suspected infringement, legal proceedings can be initiated by the patent owner.

The bill also outlines permissible limits of patent rights. These include non-commercial, personal use of a patented item, as long as such use does not harm the financial interests of the patent holder. Additionally, the proposed Office of Industrial Property Rights will have the authority to grant joint patents when two or more individuals are involved in the invention. Applications and registered patents will remain confidential until officially published.

Patent owners may also choose to relinquish their rights by formally notifying the office, which can then grant licences for broader public use. In specific cases, the office may issue mandatory licences based on the objective, necessity, and duration of the patent.

The bill includes comprehensive provisions for industrial design registration. Designs incorporating specific titles, colours, measurements, or layouts will not be approved if they already exist in Nepal or are protected elsewhere under the Paris Treaty. Owners of registered industrial designs will be allowed to sell or transfer these rights similarly to other forms of property.

Another significant addition is the provision for registering geographical indications—distinctive names that identify a product’s origin. Items registered under a geographical indication cannot be registered again as a trademark, providing clearer boundaries between the two legal categories.

The market reality in Nepal underscores the urgency of reform. Nearly every globally popular brand has a counterfeit counterpart on local shelves. From fizzy drinks to fashion, imitation goods are omnipresent, undermining both consumer trust and investor confidence.

Recently, Kiran Sakha, president of the Nepal-US Chamber of Commerce and Industry, expressed concern over the country’s lax enforcement of intellectual property laws. He warned that the unchecked proliferation of duplicate products has discouraged American companies from entering the Nepali market.

During the annual Nepal-US Trade and Investment Framework Agreement (TIFA) talks, US officials reiterated the need for Nepal to strengthen its IP protection regime. They argued that clearer laws and better enforcement would enhance investor confidence and open the door for greater participation by US businesses.

Experts say, if enacted and enforced effectively, the legislation could be a turning point in Nepal’s efforts to attract quality investment, and foster a healthier, more accountable business environment.