Introduction

An estimated 13.9 million trademark applications covering 18.1 million classes were filed worldwide in 2021 alone, adding up to 73.7 million active trademark registrations at 149 IP offices, according to the World Intellectual Property Organization (WIPO) report. Due to the rapid increase in the number of new small businesses, there exist numerous overlaps in names and logos between different companies. This often leads to situations where two businesses will use similar trademarks without knowing about the others’ existence, until

Sometimes the goods or services sold under the same trademarks are offered in different geographic areas, are unrelated, or utilize different trade channels. In such cases, business owners can benefit from so-called “co-existence agreements”. A well-drafted co-existence agreement can be used as an effective strategy for quick trademark dispute resolution and efficient brand building.

What is a Trademark Co-Existence Agreement?

Trademark co-existence describes a situation in which two different enterprises use a similar or identical trademark to market a product or service without necessarily interfering with each other’s businesses, according to the WIPO.

Successful co-existence agreements usually limit each trademark owner to use the trademark in a way that suits both parties. The agreement must set forth in detail the rights of the respective trademark owners and how confusion in the marketplace will be avoided. Trademark co-existence agreements usually include the following information:

1. All parties bound by the agreement; 
2. The exact trademarks and/or logos which are to coexist;
3. Who has the right to the domain names, media use of the trademark, and any modifications made to the trademark;
4. Which party has the right to use the trademark when expanding territory or product line;
5. Whether international use of the trademark is permissible, and under what conditions;
6. The licensing or assigning of the trademark to third parties;
7. The rights and responsibilities if one party abandons the use or rights to the copyright;
8. Consequences for breaches of the co-existence agreement.

When is Co-Existence Agreement beneficial for the brand?

Co-existence agreements make solid business and financial sense in many situations, and both parties can strike a fair compromise when using an identical or similar trademark. Co-existence of trademarks provides the parties with an opportunity to save money on marketing expenses and avoid lengthy and expensive litigation processes, which can lead to increased quality of the products as well as lower prices for consumers. 

Complications can arise when one party already has certain advantages over the other in the marketplace. In one case, a smaller business with a trademark may seek to use a similar or identical trademark of a more established company in a related industry. In most cases, there is significantly less incentive for the bigger company to enter into a co-existence agreement. 

This is because, in a co-existence agreement, there is no way to control the quality of the goods or services the other party produces under a similar trademark. Suppose the quality of the other products is poor. In that case, the reputation of this poor quality can affect the overall perception of the trademark, which can be detrimental to businesses using similar or identical trademarks. 

The case of Apple Corps vs Apple Computer

The case of Apple Corps, the record company founded by the Beatles, and Apple Computer illustrates some difficulties of the co-existence agreements (see WIPO Magazine 3/2006). The two companies entered into a brand co-existence agreement in 1991. The agreement acknowledged the “similarity between their respective Trade Marks” and the parties’ wishes “to avoid confusion between their respective business activities and to preserve their respective Trade Mark rights. According to the terms of the agreement, Apple would not use its name and logo on any computer products “specifically adapted for use in the recording or reproduction of music or of performing artist works,” and both parties would not oppose or attempt to cancel the registration of their trademarks.

Apple Corps filed the lawsuit in 2003 after Apple Computer launched the iTunes online music store. The Beatles’ company charged that Apple Computer had violated a 1991 co-existence agreement. The Court, however, sided with Apple Computer, stating that the use of the apple logo “does not suggest a relevant connection with the activity that a record company” and that it was “a reasonable and fair use on and in connection with the service.”

Takeaway

Co-existence agreements can be effective tools to resolve trademark disputes under the appropriate circumstances. However, parties should take time to reflect on the pros and the cons and draft a list of all necessary details before committing to engage in such an agreement. If you would like to know more about trademark co-existence agreements and if they are right for your business, or need assistance with your trademark application, don’t hesitate to schedule a free consultation with an experienced trademark attorney today.

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