Settlement Options for Trademark Disputes

When faced with a trademark dispute or trademark conflict, parties are well advised to consider settlement options. There are many reasons to avoid litigation including, escalating litigation costs and the uncertainty of an unfavorable result. Both court proceedings and Trademark Trial and Appeal Board proceedings are lengthy, expense, and significantly interfere with a brand's marketing program and related activities. Besides from avoiding exorbitant legal expenses and achieving a speedy resolution, settlement of a trademark conflict has other advantages as well. An agreement can be prepared that meets the specific needs of the respective parties, you can eliminate the risk of an unfavorable result, you can maintain amicable relations between the parties, you can avoid producing confidential information and documents in discovery, and you can resume day-to-day business activities without too much interruption.

Parties are becoming more creative in finding resolutions. However, there are some basic options a party should immediately consider when faced with a trademark dispute at the Trademark Trial and Appeal Board. The first question to ask is can you amend the identification of goods and services in the trademark application or registration to avoid confusion? An applicant or registrant can sometimes clarify or limit (broadening the id is not allowed) the identification of goods and services. This can be done by deleting an item in the identification, restricting trade channels, placing restrictions on classes of consumers, or perhaps other limits could be placed on the goods or the scope of the services. Occasionally, it makes sense to broaden the identification and then, a new trademark application must be filed. Within the settlement documents, the Opposer or Petitioner would agree to refrain from opposing the new application or resulting registration and the applicant or registrant would agree to abandon the pending application or surrender the original registration.

Another option is to amend the trademark. If a party wishes to amend their mark, the amendment must not materially alter the mark and the specimens and drawing previously submitted must support the amended mark; otherwise a new trademark application will have to be filed. An applicant may amend the drawing if the specimens filed or the substitute specimens support the proposed amendment (the mark in the drawing must agree with the specimens). The general rule for "material alteration" is the amended mark cannot create a different commercial impression from the original mark (requiring republication for the purposes of opposition). However, there is an exception to this rule, if you add matter that was already the subject of a valid registration owned by the same party and covering the same goods or services, this will not be considered a material alteration.

Another feasible alternative for settlement is for the Applicant or Registrant to agree to either abandon its trademark application or surrender its registration. If the proceeding was not commenced yet, then voluntary abandonment is simple. If the proceeding was commenced, then the party is well advised to obtain the written consent of every adverse party to the proceeding, otherwise judgment will be entered against the applicant and it will have preclusive effect. The same rule applies to the surrender of a trademark registration. Likewise, an Opposer or Petitioner may agree to withdraw its proceeding for various reasons. For example, if an acceptable amendment is made to the goods or services in the trademark application or if the mark is modified, then this may prompt a withdrawal. Either proceeding (Opposition or Cancellation) may be withdrawn without prejudice if the answer was not submitted. Another example that may prompt a withdrawal of an opposition or cancellation proceeding would entail the parties entering into a settlement agreement. For more details on trademark settlement agreements see our webpages entitled, Resolving Trademark Disputes Without Litigation and Is A Co-existence Agreement The Right Choice For Your Brand?

Parties can also achieve settlement through assignments and licensing. A party that is faced with a prior application or registration can contact the owner of the conflicting mark in an effort to negotiate an assignment of rights or in the alternative, a license. See our webpage entitled Trademark Licensing for more information involving this subject. Lastly, it is possible to achieve a settlement in some cases, if the parties agree that a word or element of the mark is disclaimed. These are some of the settlement options that should be explored before proceeding with litigation. If you have any questions concerning a trademark dispute, please feel free to contact our office for a courtesy consultation.