TRADEMARK CO-EXISTENCE AGREEMENTS: HERE’S HOW THEY WORK
When two different trademarks are identical – or even similar – the owners of the trademarks may enter into a co-existence agreement. A co-existence agreement can settle trademark disputes stemming from different owners using similar trademarks. Successful co-existence agreements usually limit each trademark owner to use the trademark within a geographic area, with unrelated products, or within different and distinct trade channels. The agreement must set forth in detail the rights of the respective trademark owners and how confusion in the marketplace will be avoided. Any party about to enter into a co-existence agreement must weigh the pros and cons of the limitations of the use of the trademark.
WHAT IS A TRADEMARK CONSENT AGREEMENT
A consent agreement is one type pf co-existence agreement. Trademark applicants may introduce a consent agreement into the record of a trademark prosecution for the purpose of obtaining registration. Often, a consent agreement is the trademark applicant’s best option for convincing the Examiner that the proposed mark is unlikely to cause confusion in the marketplace. The Examiner considers that the parties to a consent agreement are most affected by the potential for consumer confusion in the marketplace; if both parties declare consumer confusion is unlikely, the Examiner may be more inclined to grant the shared use of the trademark.
WHEN CAN CO-EXISTENCE AGREEMENTS BE DETRIMENTAL TO MY TRADEMARK?
Co-existence agreements make solid business and financial sense in many situations, and both parties can strike a fair compromise when using an identical or similar trademark. Complications can arise when one party already has market advantages over the other in the marketplace. In one scenario, a junior user of a trademark may seek to use the similar or identical trademark of an established or senior user in a related industry. There is little the junior user could do to induce the senior user to enter into a consent agreement – and the results could be detrimental to the senior user of the trademark.
Diluting the trademark rights enhances the problems associated with enforcing trademark rights against third parties. Weakening the value of the trademark can have negative consequences when growing or selling a business. In a co-existence agreement, there is no way to control the quality of the goods or services the other party associates with the trademark. If the quality of the other products is poor, the ensuing bad reputation becomes attached to the trademark too – which can damage the reputable party’s brand and business.
KEY COMPONENTS OF A SUCCESSFUL CO-EXISTENCE AGREEMENT FOR TRADEMARK USE
The drafting of a co-existence agreement requires skill and careful attention to minute details when determining which entity can use the trademark, and under what circumstances. The first consideration is avoiding consumer confusion. A court can reject a trademark co-existence agreement if it determines consumer confusion is inevitable; failing to provide sufficient detail can have devastating consequences if litigation becomes necessary.
A well-crafted trademark co-existence agreement will address the entire life-cycle of the goods and services associated with the trademark. At a minimum, the co-existence agreement should address these eight conditions:
- The use of the domain name, media use of the trademark, and any modifications made to the mark;
- Which party has the right to use the trademark when expanding territory or product line;
- Whether international use of the trademark is permissible, and under what conditions;
- The licensing or assigning of the mark to third parties;
- The rights and responsibilities if one party abandons the use or rights to the copyright;
- The enforcement of all provisions;
- Consequences for breaches of the co-existence agreement;
- Venue selection to settle disputes.
Under some circumstances, a co-existence agreement can settle trademark disputes quickly, with reduced out-of-pocket costs. Both parties contemplating a co-existence agreement to share trademark use must move deliberately throughout the drafting of the agreement to fully explore and weigh the consequences of each provision before finalizing the terms and conditions.
Trademark owners must safeguard the value of their marks, and to avoid negative long-term consequences that could negate any short-term gains from a co-existence agreement. An attorney experienced in trademark and intellectual property is an invaluable asset when devising a strategy for any agreements concerning trademark use.