Have you ever noticed on the internet two businesses functioning under the same or similar trademarks?
This is not an uncommon occurrence, but if each business is producing different products or services, there is usually no problem. If the businesses are selling similar products and services in different geographical areas, there may not be a problem. The trademarks are still able to maintain their main function: to distinguish a company’s goods or services from its competitors.
However, with the internet, smaller brands are now competing nationwide or even globally. There is more potential for businesses to develop identical or similar trademarks and more potential for two businesses who previously co-existed without a problem to find that they overlap.
Even if there is no physical overlap, you may encounter digital overlap. You may both seek the same domain name or encounter trouble with consumers erroneously going to the competitor’s website. There may also be confusion caused by the use of a similar social media user name that impacts your brand’s reputation.
You can usually avoid this scenario entirely by performing a professional and thorough trademark search before registering. However, even with a search, you can encounter issues.
For example, your company may have expanded into a new geographic area. You may have begun offering products or services that you had not planned on when performing the original trademark search. Additionally, simple trademark searches can overlook unregistered trademarks, and trademarks are protected in some countries without registration.
If you find that another company is using the same or similar trademark for similar services or goods, you may want to consider a trademark co-existence agreement.
What Is a Trademark Co-Existence Agreement?
In a trademark co-existence agreement, both parties recognize the other’s right to the trademark and agree to terms that allow them to exist together in the marketplace.
The goals of this type of agreement are to resolve a potential trademark dispute, prevent future situations where the two trademarks overlap in an undesired or infringing way, detail the rights of both parties, and avoid confusion in the marketplace.
Each company must delineate their areas of current and future business, which can include:
- division of geographic territories (including internationally),
- delimitation of the goods and services on which each company can use the trademark,
- domain names and user names on social media,
- rights to license or assign the trademark, and
- the elements of each trademark (e.g., colors, standalone or used with other elements, graphical and typological elements).
The agreement should also include the duration of the agreement, a clause for how to settle possible future disputes, relief if one party breaches the agreement, and consequences for non-use of a trademark.
How It Works
Let’s look at an example of how a trademark co-existence agreement can work in the real world.
A company that makes beer files a trademark application with the US Patent and Trademark Office. The Examining Attorney refuses to register the beer trademark because of a wine that is produced and sold in another part of the country under a registered trademark that is similar. The USPTO considers wine and beer to be similar goods in commerce because both are beverages.
The beer company and the wine company enter into a coexistence agreement where they agree that the beer company will not make wine and the wine company will not make beer. They also agree to take reasonable measures to market and promote their respective goods and services in such a way as to mitigate any likelihood of confusion between their two brands.
The agreement is submitted to the USPTO for approval. Once the USPTO has approved the coexistence agreement, the trademark examining attorney will allow the trademark application for the beer company’s trademark to move forward towards registration.
Here is another example. A Canadian company that produces software for remote control starters for automobiles files a trademark application in Class 9 with the USPTO. A US company that produces software for data processing and owns a registered trademark in Class 9 with a similar name files a Notice of Opposition against the Canadian company’s trademark application.
To avoid a protracted litigation battle before the Trademark Trial and Appeal Board, the two companies enter into a Coexistence agreement where they agree not to expand into each other’s product lines. They also agree to take reasonable measures to market and promote their respective goods and services in such a way as to mitigate any likelihood of confusion between them.
Once the co-existence agreement is approved by the TTAB, the U.S. software company withdraws the Notice of Opposition against the Canadian company’s US trademark application.
The Potential Downsides
While agreeing to co-exist can be less expensive than a drawn-out legal confrontation, there are still potential downsides to consider first:
- If you have owned the trademark for a longer period, you may have more to lose.
- Trademark rights can be diluted if too many people are using the same or a similar mark for related goods and services.
- It can be more difficult to enforce your trademark against third parties.
- There may be a negative impact to the value of your trademark.
- You could be limited in your business’s expansion.
- Your brand could be negatively impacted if the other company develops a bad reputation.
It’s also important to note that an agreement can be invalidated if the courts consider it against the public interest. For example, two different medical products with the same trademark could pose a potential danger to public health, even if they operate in different locations.
Also, if similar trademarks for similar products could impact marketplace competition, anti-trust regulations could come into play. And an agreement could also be rejected if it doesn’t convince the court that consumer confusion is avoidable.
Trademark co-existence agreements can be an effective way to resolve disputes in some cases, especially as incidences increase in an internet world. Take the time to weigh the pros and cons, and always consult with an experienced intellectual property attorney.