Resolving Trademark Disputes Without Litigation

When trademark disputes arise trademark owners should consider the various types of written agreements that may be appropriate to resolve the areas of concern. Entering into a Consent Agreement, a Concurrent Use Agreement, a Coexistence Agreement, or a Licensing Agreement may allow you to avoid expensive litigation costs and an unpredictable result in Court. These types of agreements may also be submitted as evidence of record in a trademark prosecution at the United States Patent & Trademark Office (USPTO) or in a proceeding at the Trademark Trial and Appeal Board (TTAB).

In fact, the primary reviewing Court of the TTAB has demanded that these types of agreements, consent agreements in particular be given great weight. For more information on the Federal Circuit Court’s opinion on this topic see Bongrain International v. Delice de France, 811 F.2d 1479 1 USPQ2d 1775, 1778 (Fed. Cir. 1988). A Consent Agreement is defined in the Trademark Manual of Examining Procedure as an agreement between two parties wherein one party consents to the registration of a trademark by the other party or where two parties consent to each other’s identical or similar trademarks (TMEP §1207.01(d)(viii)).

Evidence of this nature can be incredibly persuasive when refuting a refusal to register at the USPTO. See In re Four Seasons Hotel Ltd., 26 U.S.P.Q.2d 1071, 1074 (Fed. Cir. 1993), where the Federal Circuit Court declared that in the absence of contrary evidence, a Consent Agreement is evidence that there is no likelihood of confusion. In order for the Consent Agreement to be valid, it must not be a “naked Consent Agreement”. A “naked agreement” is where one party merely consents to the registration or the use of the subject mark without an explanation as to why a likelihood of confusion will not result. A credible Consent Agreement will conclusively demonstrate that consumer confusion will not occur with simultaneous use of the two trademarks. Often confusion will not result because the goods or services are not closely related or the trade channels are different. Future disputes are typically not addressed in a Consent Agreement because the primary objective is to obtain trademark registration.

Concurrent Use Agreements are entered into when there are similar or identical trademarks used in conjunction with similar or identical goods or services, but the two parties using the marks agree to a geographic restriction. An applicant can request a geographically restricted trademark registration at the USPTO. The geographic restriction should eliminate any likely confusion in the marketplace. These agreements typically arise during trademark prosecutions.

Coexistence Agreements arise where both parties have established rights in a trademark in different geographic regions or for unrelated goods or services. The Coexistence Agreement may be rejected by a Court if it believes that consumer confusion can not be avoided. Typically, these matters arise when there is a merger or acquisition, product line expansion or geographic expansion. One of the disadvantages of this type of agreement is that there could be dilution of the trademark. It may become more difficult to enforce intellectual property rights against third parties, if you allow use of the mark under a Coexistence Agreement. Certain difficult issues will need to be addressed in the agreement, such as will there be restrictions on internet selling, who will own the domain name, what will be the limitations on the adoption of new derivative word marks, how will one party be able to prove abandonment of rights and who has the right to enforce the mark against third parties.

In contrast to the other types of trademark agreements discussed, a License Agreement allows for use of only one trademark. In addition, there will only be one trademark owner (the licensor) and the mark will be a source indicator for one source only. The critical aspect of any License Agreement is the licensor’s control over the quality of the licensee’s goods or services. A license may require a royalty on a percentage of sales or may be royalty free. It is important to take care in drafting the provisions of the License Agreement. The terms need to be sufficiently definite, so a Court can construe and enforce the license.

The attorneys at our firm have experience resolving trademark disputes. One of the Agreements discussed herein (a Consent Agreement, a Concurrent Use Agreement, a Coexistence Agreement or a License Agreement) may facilitate a resolution in your trademark dispute. If you are interested in learning more about alternative methods of trademark dispute resolution, kindly contact one of our New York trademark attorneys for a courtesy consultation.