Trade Mark Co-Existence Agreement: Why Is It Important?

Author: Ian Aldridge, Progressive Legal

Are you a business owner considering a trade mark co-existence agreement? We understand that you may want to take this approach to avoid potential disputes in the future, however it’s crucial to understand what the agreement is and why it’s so important.

On this page, we’ll discuss everything you need to know about a trade mark co-existence agreement and why we recommend seeking legal advice when it comes to putting one forward.

What is a trade mark co-existence agreement?

A trade mark co-existence agreement is a contract between two trade mark holders that sets out the terms under which they will continue to use their trade marks.  

A trade mark co-existence agreement is a proactive way to avoid trade mark disputes in the future, potentially saving businesses from recurring legal disputes as a result of their use of an identical or similar brand.  

Trade Mark co-existence agreements may take the form of a letter of consent or a formal contract.  

These agreements usually specify the rights and obligations of both parties, as well as the geographical area and product/service categories over which the trade marks will be used. In some cases, trade mark holders may also agree to certain restrictions on the use of their trade marks, such as using them only in certain font sizes or colours.  

Ultimately, trade mark co-existence agreements offer a practical solution for companies who are expanding their businesses and using similar trade marks. By proactively entering into these agreements, companies can avoid the costly legal fees associated with litigating trade mark infringement claims. 

It also provides certainty between the parties about being able to co-exist in the market without offending the other, so long as they play by the rules of the agreement. Otherwise, a business could change its mind and then suddenly initiate proceedings. 

Issues to consider when drafting a co-existence agreement

Below is a table setting out some issues to be aware of when drafting a co-existence agreement:  

Contract vs. letter of consent

Letter of consent

In certain circumstances, it may be appropriate to seek the consent of a current registered trade mark owner to be able to “co-exist” on the IP Australia trade mark register.

A letter of consent is a document which can be provided to the Registrar in order to demonstrate that one party has consented to the other parties’ use of a trade mark cited as objection by IP Australia. A co-existence agreement may be not always be necessary if the cited mark’s owner agrees to provide a letter of consent.  

Sometimes, prior to a co-existence agreement being drafted, a letter of consent is sent from an applicant to the owner of the cited trade mark. From this, parties may enter into negotiations regarding the use of the mark and the need for a co-existence agreement may arise depending on the complexity of those negotiations. 

Another example of a situation which requires a letter of consent is where: 

1. party A has applied to register a mark; 
2. party A has an adverse report issued to it under s 44 of the Act, on the basis that a similar mark owned by party B is already on the register; 
3. party A and B enter into a dispute regarding party A’s use of the mark; 
4. a co-existence agreement is settled between the parties; and 
5. party A submits a letter of consent to the Register, to which the Register has discretion to accept an application under s 44(3)(b) of the Act, on the grounds of “other circumstances”.  

If you’ve received a letter seeking consent, it’s best to get legal advice about the implications and whether or not to provide the consent. At the end of the day, you can’t ordinarily force someone else to consent to your trade mark registration. If if this has happened to you, make an enquiry below to get in touch with our experienced trade mark team.

Contract

As a contract agreement is legally binding, a formal contract might make your contractual coexistence agreement stronger than a letter of consent. This type of agreement is generally used when both parties have a registered trade mark for the same or similar products or services and there is a risk of confusion among consumers.  

The trade mark co-existence agreement should contain all the details required in a letter of consent, including the names and addresses of the parties, the trade marks contained in the agreement, and any limitations on trade mark use. This type of agreement is legally binding on both parties, so it is critical to be careful when drafting the terms of the agreement and have a specialist advise your business. 

A formal trade mark co-existence contract recognises the rights of both parties to use the trade marks contained in the agreement for marketing purposes.

For example, the contract can include a division of the geographical scope in which each party to the agreement may use the trade mark, methods in which the trade mark may be used, or classes of goods and services that the trade mark may be used for.  

A difficulty sometimes with trade mark co-existence agreements lies in anticipating future business plans. It can be hard to predict the trajectory of a business to ensure the parties to the co-existence agreement do not overlap on each others’ territories.

However, a trade mark co-existence agreement can be a helpful tool for managing competing trade marks and ensuring that both parties can continue to use their trade marks in a way that does not infringe on the other party’s rights. Learn more about trade mark infringement here.

Is a trade mark co-existence agreement the right choice for your brand?

The trade mark co-existence agreement in contract form sets out the ways in which the parties will use their trade marks, so that there is no confusion between the brands.

It is important to remember that a trade mark co-existence agreement does not change the trade mark rights of either party. Each party still owns their trade mark and can use it however they wish, within the parameters of the agreement.  

The key point of a trade mark co-existence agreement is that it allows both parties to use their trade marks without fear of infringement. This can be an attractive proposition for businesses who want to expand their brand but are worried about running into legal problems, or just want to avoid them.

It’s certainly a good risk mitigation strategy if there is someone else out there that may be close but not currently a threat.  

The benefits and risks of a trade mark co-existence agreement

There are many benefits to entering into a co-existence agreement.

Firstly, it can resolve a trade mark dispute without the need for costly and time-consuming litigation. Secondly, it can provide clarity and certainty for both parties regarding the use of their trade marks. Thirdly, it can allow both parties to continue using their trade marks in the same market, which can be important for maintaining brand recognition and consumer loyalty. 

However, there are also some potential items to consider.

For instance, by agreeing to a trade mark co-existence agreement, you could be inadvertently weakening or “watering down” your own trade mark rights (and potentially the value). This is because you are essentially giving your permission for another party to use a similar or identical trade mark. As a result, your trade mark may become diluted and harder to enforce against third parties.  

You should also bear in mind that, by agreeing to a co-existence agreement, you could be limiting the expansion of your own business if you agree to restrictions on how and where you can use your trade mark.

For example, you might agree not to use your trade mark in certain territories, or to only use it for certain products or services. Before entering into a trade mark co-existence agreement, it is important to weigh up the pros-and-cons carefully and seek professional advice. 

Should I use a co-existence agreement template?

The contract should be carefully drafted by an expert to ensure that it meets the relevant legal requirements and addresses all key issues.

Without a well-drafted agreement, both parties risk having the agreement rejected by a court, certainly increase the likelihood of a potential Federal Court case and/or Trade Mark opposition proceedings which are notoriously lengthy, time consuming and costly. This could lead to significant legal costs and damage to business relationships.

Therefore, it is essential that trade mark co-existence agreements are skilfully drafted to avoid any potential problems down the road. 

Key takeaways

In Australia, trade mark co-existence agreements often take the form of a letter of consent. A letter of consent is a helpful way to use a similar trade mark to another business without infringing their trade mark.  

However, a trade mark co-existence agreement in contract form can prove useful to avoid any future trade mark disputes between parties. A formal trade mark co-existence contract may be a better long-term solution between parties that are using an identical or similar trade mark in a shared marketplace, as it helps to avoid the likelihood of confusion and provides a roadmap for future conduct. 

However, you should obtain proper legal advice about the pros-and-cons of these agreements in consultation with trade mark counsel before committing to engage in such an agreement. Our experienced trade mark lawyers can provide you with the necessary guidance during negotiations of co-existence terms to ensure you preserve your vital trade mark rights. 

If you need help with a trade mark co-existence or consent proposal, request our advice below or give us a call on 1800 820 083.

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