Contract Law

Trademark coexistence agreements

Last updated: 17.12.2019. This publication fully complies with the provisions of the new Law on Marks and Geographical Indications, promulgated on 13.12.2019.

Trademark (known in business circles as a „brand” or „brand name”) is a sign used to identify and distinguish the goods of one manufacturer or seller from those of another sign used to identify and distinguish the goods of one manufacturer or seller from those of another and can be presented in the State Register of Marks in such a way that it is possible to clearly and accurately determine the subject of the protection granted with the registration. The trademark is considered as an effective economic instrument for a producer due to the fact that it allows him to differentiate his goods and services from those of competitors. A strong and well-established trademark can be one of the most valuable assets of a company as it has the power to decrease the cost of entry into new markets. The main aim of trademark law is to create strong trademarks, which benefit their owners as well as the consumers. Also one of the most important reasons for trademark protection is to prevent consumer confusion. However, the practice shows that there are many registered similar trademarks in the same product category. In this case, to coexist peacefully in the market and at the same time avoid consumer confusion, companies with potentially infringing trademarks agree to enter into coexistence agreements.

The International Trademark Association (INTA) gives a definition of the trademark coexistence agreement as “an agreement by two or more persons that similar marks can coexist without any likelihood of confusion; allows the parties to set rules by which the marks can peacefully coexist. To use the same mark in connection with the same or similar goods or services, usually limited by geographic boundaries”.

When should a company enter into a coexistence agreement?

This part of the article will outline the most common cases in which a company shall consider entering into a coexistence agreement.

1. When companies start to expand their markets they initiate contact with another company in order to protect themselves from infringing someone else’s earlier trademark rights or also having someone else infringing their right. In this case, a company is advised to consider the option of entering into a coexistence agreement with another company if there is a chance another company that has a similar trademark to be trading (or is already trading) in a way that might confuse its consumers. A company shall also consider entering into a coexistence agreement when it decides to expand its activities into other markets.

2. The trademark coexistence agreements have existed in practice for many years as a proactive effort to create a solution for potential infringements and avoid expensive and lengthy litigation. By entering into a coexistence agreement the proprietors of similar trademarks define the extent of their respective rights.

3. Coexistence agreements can be also used when a company is selling off a subsidiary or it has been broken up into smaller units and each party wants to have rights in the original company name.

Benefits of entering into a trademark coexistence agreement

One of the advantages of entering into a coexistence agreement is securing the continued existence of the company’s trademark in the corresponding market. The other benefit of entering into a coexistence agreement is that the parties can save money on marketing expenditures, which leads to lower prices for customers and increased quality of the products. Avoiding expensive litigation is another advantage of coexistence agreements as these agreements are entered into to keep up the positive economic effect of the existing trademarks.

What should the trademark coexistence agreement include?

It is very important a good coexistence agreement be drafted by an experienced professional in order future disputes to be avoided because one shall be aware of the fact that these types of agreements cover both trademark law and contract law. In this case, the most common trademark law issues that have to be considered during the negotiations and drafting are related to consumer confusion, public interest, and competition law as well as consideration of different consumer groups. As regards to competition law issue, it is really very important that the agreement shall not restrict the competition. The parties have to be sure that the agreement preserves the interests of both parties in order to secure that it will not be broken in the future.

The agreement shall also include the following information:

– a starting date and end date;
– clear identification of the parties;
– clear identification of the trademarks;
– a complete list of goods and services for which the trademarks shall be used;
– which domain names are covered;
– areas the parties operate;
– areas the parties are planning to expand to;
– likelihood of confusion;
– rights and obligations of the parties;
– geographical locations where the parties are allowed and respectively not allowed to operate in;
– date of revision of the agreement;
– the consequence of non-use;
– termination clauses;
– dispute resolution clause;
– governing law clause.

Finally, when companies are in the process of creating trademarks, good advice is to contact a trademark attorney to make a comprehensive preliminary trademark search in order to avoid infringement of earlier trademarks. They shall also think strategically for the development of their brand. When similar trademarks are found during the preliminary search, one of the ways for the coexistence of similar trademarks is the negotiation and drafting of a trademark coexistence agreement. In cases, which require entering into a coexistence agreement, in order to avoid future disputes between the parties as well as due to the many peculiarities of contract and trademark law that have to be considered in the drafting of this type of agreement, the assistance of an intellectual property attorney with experience in this area is recommended to be sought. The intellectual property specialist in Bulgaria Krasimira Kadieva will gladly assist you with the negotiation and drafting of the trademark coexistence agreement due to the fact that she has succeeded in her practice negotiated and drafted such kind of agreements.



Legal Disclaimer: This material prepared by Krasimira Kadieva aims to provide information about trademark coexistence agreements. It does not constitute a legal opinion and cannot be interpreted as individual consultation on any concrete facts or circumstances. The advice of an intellectual property specialist should be obtained for specific questions and situations. For more information on the above-mentioned issues and individual consultations, please contact Krasimira Kadieva at 00359 882 308 670 or make an inquiry using the contact form of this website. Krasimira Kadieva is a Bulgarian and European trademark and design attorney. She can assist in negotiating and drafting of coexistence agreements.

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