Trademark coexistence agreements

Trademark coexistence agreements are particular type of contracts, frequently used to settle the relationships between the holders of identical or similar trademarks.

Article 20 of the Italian Industrial property Code forbids third parties the use of

“signs which are identical or similar to a registered trademark for identical or similar goods or ser-vices” and forbids the use of “identical or similar signs for goods or services which are not similar whether the registered trademark enjoys in the State of renown”

unless there is the consent of the owner of the registered trademark.

The proprietor of the mark, therefore, may allow the coexistence on the market of trademarks which are potentially confusable with its own, provided that there is not a risk of misleading the public: an insurmountable limit must be seen in the ban of deceiving public, as stated in the Article 21, paragraph 2 of the Italian Industrial Property Code, according to which:

“it is not permitted to use the trademark in a manner contrary to law or, in particular, so as to create a likelihood of confusion in the market with other signs … or to induce, however, mislead the public”.

Examples of trademark coexistence agreements

Coexistence agreements are characterized by a large variety of content, but they are intended to govern the relationships between the owners of trademarks and to avoid the risk of deception to the public. Some examples of provisions you can find in a coexistence agreement are the following:

• Clauses of limitation regarding the use and registration of trademarks in some classes or with re-gard to some products / services.
  It is generally the proprietor of the later mark to undertake not to use/register its trademark for some goods and/or services, but there may be cases of undertaking by both parties of the contract.
  One of the most famous cases of trademark coexistence agreement was the agreement between Apple Crops and Apple Inc. The first owned by The Beatles, the famous British musical band, the second owned by Steve Jobs, owner of one of the most famous companies in the world of com-puters and more. The agreement provided that Apple Corps would have tolerated the presence of Apple incorporation’s brand on condition that this latter will never enter in the music industry. But then Itunes and Ipod were born. In this article you can find the whole story:
• Clause of limitation on the territory:
  for example, the owner of the mark “x” will undertake not to use or file trademark applications in one or more Countries. Sometimes, this undertaking may be mutual, i.e. the owner of the mark “x” undertakes not to use or file its trademark in a Country (for instance, in Japan) in exchange of the undertaking of the owner of the trademark “y” not to use and file its trademark in another Country (for example, Russian Federation)
• Clause regarding the method of use of the mark:
  for example, the owner of the mark “x” under-takes to always use its trademark in combination with the words “white” and “green” and never alone;
• Clause of mutual assistance:
  for example through the provision of the undertaking to grant letter of consent to the registration of the other party’s trademark, if necessary.

Trademark coexistence agreements: a clothing case

In its judgment n. 10 of February 4, 2015, the Italian Board of Appeals stated about the validity of trademark coexistence agreements and about the relationship between coexistence agreements and the risk of confusion or association among the marks covered by the agreement.

In the event which generated the matter in question, the marks in comparison were almost identical (there was, in theory, the risk of confusion) but some years ago their respective owners signed a coexistence agreement authorizing the holder of the later trademark to use its sign for the products included in the category of clothing, with the exception of “clothing specifically intended for cyclists”.

The validity of coexistence agreement was challenged by the owner of the earlier marks, who filed an opposition against trademark application filed by the owner of subsequent trademark.

During its examination, the Italian Patent and Trademark Office upheld the opposition and denied relevance of the coexistence agreement, arguing that the same

“could not be considered binding on third parties other than the contracting parties. Undoubtedly these agreements generate obligations on the parties, but they are not capable in themselves of es-tablishing the absence of a likelihood of confusion to the detriment of consumers”.

Italian Board of Appeal (“Commissione dei Ricorsi”) has taken a different position, considering the reason given by the Italian Patent and Trademark Office insufficient to deny the validity of the co-existence agreement and stated that

“the current coexistence agreement between the parties is able to exclude actual risks of confusion or association between the marks in question”.

On one hand, the Italian Board of Appeals recognizes the correctness of the assumption according to which the coexistence agreements have effect only between the parties, but on the other hand states that the problem of the effectiveness against third parties essentially arises for the transmis-sibility to third parties of the obligations generated by the agreement, with particular reference to the case of the sale of company. In the case in question, therefore, the problem does not arise since the parties which originally executed the coexistence agreement (and not other parties) are directly involved.

The opinion of the Italian Board of Appeals is that we cannot deny relevance to a coexistence agreement when we determine the likelihood of confusion between the marks.

The Board of Appeals specifies that

“More precisely, it must be considered that coexistence agreement can be said valid only if, and in-sofar as, prevent for the future the risk of confusion for the public. If, in fact, the content of the agreement allows a confusable and deceptive use of the marks, the same agreement should be considered void for illegality of the cause (contrary to public policy statement). In addition, a specif-ic reason for invalidity could be find in the incompatibility of the agreement with the prohibition of agreement restricting competition”.

How to enter into a trademark coexistence agreement

Eva Troiani law firm can certainly assist you in the signing of a trademark coexistence agreement. We suggest to get in touch with professionals in IP sector because, in addition to the prohibition of misleading the public and because of their nature of agreements, they must comply the legislation governing them.