Usually, an entity registers their trademark to prevent consumer confusion and/or unpermitted use of their valuable branding. However, due to the sheer volume of new businesses annually and their tendency for rapid growth, it is not uncommon for two or more companies to use extremely similar marks without knowledge of the others’ existence. Most often, this occurs when companies operate in distinct geographic areas or provide entirely unrelated services. While racing to register a trademark and forcing the other company into re-branding is sometimes an option, many businesses may wish to avoid the potential risk of extended conflict and litigation (especially when considering the potential existence of a common law trademark). Instead, companies can enter into trademark consent or coexistence agreements allowing both parties to use – and often, to register – the relevant mark.
Trademark Consent Agreement
A trademark consent agreement is typically a simple contract where one party agrees to allow the use and/or registration of an overlapping trademark by another party. The parties also stipulate that their marks are not confusingly similar to consumers. Often this type of agreement is utilized when one business has received a refusal of registration from the U.S. Patent and Trademark Office (USPTO) or anticipates such a refusal.
The USPTO considers many relevant factors and evidence before coming to a conclusion on whether to allow a mark to register. In situations where the USPTO believes the applied-for mark is likely to cause consumer confusion with a previously registered mark, the USPTO will give great weight to a consent agreement between the applicant and the owner of the registered mark. However, the consent agreement should be sufficiently detailed with specific reasons and evidence why the parties involved do not foresee consumer confusion and explicit actions they will take to further minimize it. “Naked” consent agreements (containing only permission to register the mark and a brief statement that confusion is unlikely) are much less persuasive to the USPTO. In the end, a strong likelihood of consumer confusion due to extremely similar marks can defeat even the most detailed consent agreement.
Trademark Coexistence Agreement (“Concurrent Use”)
A trademark coexistence agreement is a more comprehensive arrangement that provides even greater protection than a simple consent agreement. Coexistence agreements typically add unique limitations on the locations, industries, and/or marketing methods in which two parties may utilize their respective marks. These specifications are in addition to the items included in the consent agreement above. Coexistence agreements are particularly helpful for businesses that are expanding and wish to avoid future infringement charges and/or litigation.
In order to submit a coexistence agreement to the USPTO, an applicant (the party seeking a trademark registration) must meet one of the USPTO’s following criteria for “concurrent use”:
- Concurrent use is ordered by a court;
- The owner of the conflicting mark’s registration consents to concurrent use; or
- The applicant first used its mark in commerce prior to the filing date of a conflicting mark’s pending application or a conflicting mark’s registration.
A trademark coexistence agreement should contain the following components:
- All parties bound by the agreement;
- The exact trademarks and/or logos which are to coexist;
- The domain names associated with and used by each party;
- A list of geographical areas in which coexistence is allowed and not allowed;
- Each party’s plan for relevant expansion of their enterprise;
- The start and end date of the agreement; and
- A provision establishing the jurisdiction of the agreement and the chosen method of dispute resolution.
Coexistence agreements function similarly to consent agreements in terms of the weight they are afforded by the USPTO. The more detailed and restricting the agreement, the more likely the USPTO will uphold its validity and permit the simultaneous use of the marks. However, customer confusion can still invalidate an otherwise legitimate agreement, especially in industries tightly linked with public interest such as healthcare. Also, in addition to evaluations of coexistence agreements by the USPTO, courts will likely strike down a coexistence agreement which has been found to have negative consequences on competition in the marketplace or that violates antitrust regulations.
Considerations When Choosing Between a Trademark Consent or Coexistence Agreement
Consent agreements are simple and quick. If trademark registration is urgent, a consent agreement is the way to go. If time is not an issue, a coexistence agreement provides greater risk management and is more likely to be upheld in court.
A simple consent agreement is usually cheaper because it involves less time and resources to draft. However, you get what you pay for and a coexistence agreement certainly provides more protection.
A party who is clearly a junior trademark user (not the first party to use a mark) might have no other option than to request a consent agreement from the senior trademark user (the first party to use a mark in commerce and, usually, to register it). However, if the bargaining power between parties is more even, a coexistence agreement detailing the issues important to both parties is likely in everyone’s best interests. Bargaining power with respect to trademark use can be created through senior user status, a famous or well-renowned mark, or ownership of additional marks that the other party might have interest in limiting.
Expected Changes in Business Structure
A business that intends to expand into new regions, industries, lines, or trademark designs should push for a coexistence agreement rather than a consent agreement. That way, the company can address potential risks they expect to become apparent in the future and pave the way for smoother growth. A consent agreement merely approves current use without addressing the inevitable evolution of the marks.