Trademark Coexistence Agreements

It should be emphasized that prevention is better – and cheaper – than cure. One of the most basic precautions when selecting and registering a new trademark is to perform the most comprehensive research possible, using professionals familiar with the task. A thorough trademark research should minimize the risk of a company facing a similar brand in the market. But no research is foolproof. Confusing identical or similar marks may be found later if the search network was not sufficiently widespread or if it did not include other categories of goods and services that could affect the viability of the proposed mark. Similarly, a search might overlook unregistered trademarks, as in many countries well-known trademarks are protected, even if they are not registered. Coexistence agreements can be an effective way to resolve trademark disputes when the risk of customer confusion or negative impact on the intellectual property of both parties is low. The problem is that the cards are almost all in the hands of one party. Companies should also be aware of competition and antitrust rules: courts may conclude that their confusing similar brands for similar products affect competition in the market. Trademark owners must protect the value of their trademarks and avoid negative long-term consequences that could negate short-term gains from a coexistence agreement. A lawyer with experience in trademarks and intellectual property is an invaluable asset in developing a strategy for trademark use agreements.

A consent agreement is a type of coexistence agreement. Trademark applicants may include a consent agreement in the registry of a trademark suit to obtain registration. Often, a consent agreement is the trademark applicant`s best option to convince the examiner that the trademark he proposes does not create a likelihood of confusion with the trademark cited against his application. It does not generally deal in depth with long-term coexistence, but restricts the rights of the party requesting consent. Unless proven otherwise, a consent agreement is considered proof that there is no likelihood of confusion. The reason for this is that the parties most affected by the potential consumer confusion claim that there will be no confusion. Drafting a coexistence agreement requires skill and attention down to the smallest detail to determine which company is allowed to use the trademark and under what circumstances. The first consideration is to avoid confusion among consumers. A court may reject a trademark coexistence agreement if it considers that consumer confusion is inevitable; Failure to provide sufficient information can have devastating consequences if litigation becomes necessary.

A coexistence agreement occurs in a scenario in which two trademark owners have developed rights to identical or similar trademarks. This type of agreement aims to resolve a possible trademark dispute. Often, goods or services are offered in different geographical areas, are not linked or use different business channels. The agreement must set out in detail the rights of the respective parties and how to avoid confusion in the market. Any party in the process of concluding a coexistence agreement must weigh the pros and cons of the agreement. The purpose of a trademark coexistence agreement is that trademarks are often used by several companies in « good faith. » The absence of a formal agreement does not undermine any company that uses the brand, as is the case in various parts of the world. However, as businesses grow, overlaps may develop and both parties may have significant rights to use the trademark. In some cases, companies that develop and use the same or a similar trademark usually enter into a coexistence agreement to avoid using the trademark in an undesirable or counterfeit manner.

Coexistence agreements can provide practical solutions for companies that fear being sued for trademark infringement, as proactive agreements can avoid the high cost of litigation. [1] A company that intends to expand into new regions, industries, lines or brand designs should push for a coexistence agreement rather than a consent agreement. This allows the company to address the potential risks it expects to see visible in the future and pave the way for more fluid growth. A consent agreement only allows current use without addressing the inevitable development of trademarks. The process of selecting a brand should be carried out with caution and foresight, carrying out the most comprehensive research possible, preferably with the help of a specialist. If, despite these efforts, a conflict with the same or a similar brand arises in the market, a coexistence agreement may prove more profitable than a legal confrontation. While this does not mean that it is always better to capitulate and accept coexistence in the face of litigation, litigation may be the only appropriate response in certain situations. It is for the proprietors of trade marks to assess, on a case-by-case basis, what would be appropriate in view of their particular situation.

The case of Apple Corps, the record company founded by the Beatles, and Apple Computer2 illustrates the difficulties (see WIPO Magazine 3/2006). The two companies entered into a brand coexistence agreement in 1991. This provided that Apple Computer would have the exclusive right to use its Apple trademarks « on or in connection with electronic products, computer software, data processing and transfer services »; while Apple Corps would have the exclusive right to use its own Apple trademarks « on or in connection with any current or future creative work whose principal content was music and/or musical performances, regardless of the means by which such works were recorded or communicated, whether material or intangible. » Although both companies have confusing similar brands, they identified one area where they differed, namely. . . .