How Coexistence Agreements Work

In trademark law, coexistence agreements are contracts whereby two trademark owners agree to use their similar marks, but agree to limitations. For example, the two owners might agree that their respective goods or services will be offered in different geographic areas. A consent agreement is a type of a coexistence agreement that is usually shorter and is used mainly by trademark applicants as part of the documents needed to obtain registration. Sometimes the USPTO Examiner raises the possibility of “confusingly similar.” If the applicant can obtain a consent agreement, that will be considered evidence that there is no likelihood of confusion.

Coexistent Agreements are Contracts

A coexistent agreement is a contract and, as such, it must satisfy the legal requirements for a contract – offer, acceptance, consideration, meeting of the minds, performance, etc. Given the nature of trademarks and registration proceedings, coexistence agreements are written.

The purpose of the coexistence agreement is to set out the agreement of the disputing trademark owners about use of the marks. Most often, the coexistence agreement will limit the use of the similar marks to certain geographical territories or to certain types of good or products. Among the more famous examples is the coexistence agreement concerning California raisins. Back in the early 1910s, a dispute arose among California raisin growers over the trademarks “Sun-Maid” and “Sun-Kist.” In 1917, the respective parties settled their litigation by entering into a coexistence agreement. Under the terms of that contract, it was agreed that the California Associated Raisin Company would only use the trademark “Sun-Maid” on raisins and food products containing raisins. Otherwise, both “Sun-Kist” and “Sun-Maid” were off limits.

As time passed, the California Associated Raisin Company changed its name to Sun-Maid Raisin Growers. That company filed for bankruptcy and it (and the “Sun-Maid” trademark) gained new ownership. In the 1930s, the new owners learned of the coexistence agreement and wanted out from under it. The new owners said that they were a bona fide purchaser without knowledge of the coexistence agreement and that such was only binding on the previous parties to the agreement.

However, the Ninth Circuit said “no.” See case here. The court said the Sun-Maid Raisin Growers did not have a full-blown trademark. What they had was a trademark that was expressly limited. The court went on to say that the Sun-Maid Raisin Growers “… could not convey any right to the use of a trademark that it did not own, and that right had been expressly limited by the agreement of March 10, 1917, wherein the parties had agreed to limit the use of that trademark to raisins and raisin products.”

Consequently, the new owners had purchased through the bankruptcy proceeding only a trademark for use on raisin products.

So, as can be seen, trademarks are a type of property akin to land and that coexistence agreements “follow the trademark” even if the trademark is sold or assigned to a new owner.

As can also be seen, trademark coexistence agreements will be enforced by the courts. See also Am. Eagle Outfitters v. Lyle & Scott Ltd., 584 F.3d 575 (3d Cir. 2009) (holding that the parties’ agreement to consent to the registration of each other’s eagle marks was a binding contract); Waukesha Hygeia Mineral Springs Co. v. Hygeia Sparkling Distilled Water Co., 63 F. 438 (7th Cir. 1894) (enforcing an agreement that “fixes and defines the existing trademark of each” party — one to the “Hygeia” mark in connection with distilled water, and the other in connection with natural mineral or spring water).

Like other contracts, trademark coexistence agreements are transferable and/or assignable. Russell Road Food and Beverage, LLC v. Spencer, 829 F. 3d 1152 (9th Cir. 2016) (rights under coexistence agreement to “Crazy Horse” mark were transferable and enforceable).

Coexistence Agreements Must be Carefully Drafted

The main purpose of a coexistence agreement is to establish the rights and expectations as between the two competing trademark owners, but there is also the purpose of avoiding confusion among consumers. A trademark only works if it becomes associated in the minds of the consumers with your product.

Thus, a coexistence agreement must be crafted to avoid likelihood of confusion between the two similar trademarks. This can be done in several ways. For example:

  • Limiting use each mark to distinct geographical areas
  • Limiting use to certain trade channels (e.g., only online, via catalog, etc.)
  • Limiting use to certain holidays or times of the year
  • Limiting use to certain products (e.g., raisins and food containing raisins)
  • Limiting the methods of displaying the marks

As noted above, coexistence agreements are often presented to the USPTO as part of the registration application or in response to a concern raised by an Examiner. If the coexistence agreement is not well drafted, then the Examiner will reject the agreement and potentially reject the trademark application. An example is the trademark application discussed in In re Bay State Brewing Company, Inc., Serial No. 85826258 (February 25, 2016). At issue was the application to register TIME TRAVELER BLONDE for “beer.” The Examining Attorney raised a “likelihood of confusion” question because of a previous mark registered for TIME TRAVELER for “beer, ale and lager.” A consent agreement was reached and submitted to the Examiner with the expectation that the consent agreement would pave the way for registration. However, the Examiner rejected the consent agreement. Among other problems, the geographic limitations were not “real” limitations since each mark owner could use their mark in the other’s territory. As such, the consent agreement would not solve the “likelihood of confusion” problem.

Aside from limiting use of the competing marks to minimize likelihood of confusion, there are other issues that should be addressed in a coexistence agreement to avoid conflicts and litigation down the road. Among issues to resolve:

  • What is the length of the term of the coexistence agreement?
  • Which party has expansion rights (to new products or new territories)?
  • What about domain name(s) and/or use on social media?
  • Which party has the right to use variations of the mark?
  • What about rights to license or assign the respective marks?
  • What about international business use and filing for international trademarks?
  • What if one party abandons its mark? How is abandonment defined? What happens to the abandoned mark?
  • What are remedies for breach?
  • What is the venue for dispute resolution?

Coexistence agreements can be an effective manner to resolve trademark disputes when there is little risk of customer confusion or a negative impact on either side’s intellectual property. The problem is that the cards are almost all in one party’s hands.

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Revision Legal is a full-service IP law firm providing legal services related to trademarks, patents, copyrights, trade secrets and all types of litigation. We can be reached by using the form on this page or by calling us at 855-473-8474.

 

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