A BRIEF OVERVIEW : TRADEMARK COEXISTENCE AGREEMENTS

The International Trademark Association defines a coexistence agreement as “an agreement by two or more persons that similar marks can coexist without any likelihood of confusion; allows the parties to set rules by which the marks can peacefully coexist.” In other words, a trademark coexistence agreement sets forth the understanding of the owners of two similar marks as to their allowed uses and any limitations or obligations of each owner.  It enables the parties to control the boundaries surrounding the peaceful coexistence of marks without creating confusion for consumers.  The marks may be identical or just similar, and may be in used in connection with either related or unrelated goods/services, and in the same or different markets. The parties may decide to limit the use and expansion of identical marks to a specific type of good or service, or to a certain geographical area.

The USPTO will refuse to register a mark if there is a likelihood of confusion with another mark that is registered or pending. A likelihood of confusion exists when consumers would be confused as to the source or origin of the products or services being advertised under the two marks.
Coexistence agreements are submitted to the USPTO. Upon approval, an application that may otherwise have been denied due to a likelihood of confusion will proceed to registration.

Before entering into a coexistence agreement, parties should consider and evaluate the risks and advantages involved. Here are some of the benefits and risks associated with coexistence agreements.

Benefits:

• Resolve conflict and avoid risk by deciding terms and conditions for use and registration of marks
• Save costs by preventing litigation between parties
• In case of trademark opposition, facilitate approval of registration
• Create certainty, and allow company to strategize and plan business expansion in accordance with the terms of the agreement
• Secure lasting existence of the mark in corresponding markets along with uninterrupted marketing of the products/services to the public

Risks:

• The use of identical marks for related goods and services may cause dilution of trademarks
• The agreement does not guarantee there will not be consumer confusion. There may be a possibility that coexisting marks create confusion in customers, more so if the marks are used for products or services in the same/similar category
• Negative impact on the brand as a result of bad reputation generated by the other party
• If the agreement does not sufficiently address the future of brand use and the role of new technology, future disputes between the parties may arise
• Reduced flexibility in terms of business growth, e.g., a party may not be allowed to step into a different market if the agreement lays down restrictions on use and registration of the mark

Term to consider include territorial limits of each party, which party holds the right to license and/or assign the mark (if they are identical names), limitations on the types and categories of goods/services, requirements for the goods/services, information that must be included or is prohibited from being included with marketing material, which party can venture into international business and register the mark internationally, which party owns the rights to domain name(s) and variations of the mark, and the consequences of any breach including relief and damages.

A trademark coexistence agreement may be a good way to prevent disputes and uncertainty, and still allow you to protect the goodwill of your mark.  It is critical for parties interested in using a trademark coexistence agreement to carefully evaluate the pros and cons, and the imminent and future effect the agreement could have on their businesses.