Resolution of Trademark Disputes: Coexistence Agreements, Consent to Registration, and Other Contractual Mechanisms

Introduction

A trademark is not only an intellectual property asset, but also an important commercial asset that affects brand recognition and its market position. The main function of a trademark is to distinguish the goods or services of one business from the goods or services of its competitors. That is why the use of similar designations or an overlap in the areas of activity of different brands may lead to trademark disputes and create risks for the implementation of a business strategy.

International and national legislation in the field of trademark protection defines the basic principles for the protection of intellectual property rights but does not establish an exhaustive list of ways to resolve conflicts between rights holders. In practice, alongside judicial protection, contractual mechanisms are widely used, allowing the parties to independently determine the conditions for the use of similar or potentially conflicting designations.

Agreements may serve not only as a means of resolving an existing dispute, but also as a strategic risk management tool, allowing the parties to move from responding to trademark infringements to the systematic use of contractual mechanisms for the prevention and resolution of conflicts. They make it possible to regulate the use of trademarks, preserve the commercial value of brands, minimise the risk of lengthy disputes and, under certain conditions, create a basis for the further coexistence of trademarks on the market.

Strategic use of agreements for managing trademark conflicts

The contractual resolution of a trademark dispute should be considered as a consistent process that begins with the rights holder identifying a potential infringement of its rights and assessing the associated legal and commercial risks.

At this stage, it is important to determine the nature of the conflict: the degree of similarity between the designations, the goods and services for which they are used, the territory of use, the risk of confusion, the scope of the parties’ rights, and the potential impact of the dispute on the further development of the brand. Engaging an intellectual property specialist makes it possible to assess not only the prospects for formal protection of rights, but also the possibility of resolving the conflict out of court.

The next step is to develop a protection strategy and a negotiating position. Depending on the circumstances, the parties may agree to discontinue a particular manner of using the designation, delimit the goods, services or territories, modify the visual elements of the brand, or establish other rules for its use.

The negotiations may result in the conclusion of an agreement: a trademark coexistence agreement; an agreement on consent to registration; a dispute settlement agreement and, in the case of court proceedings, a settlement agreement; an agreement on the transfer of exclusive intellectual property rights to a trademark; the undertaking of certain obligations; or another contractual arrangement adapted to the specific conflict. Such an agreement should clearly define the rights and obligations of the parties, the limits of permitted use of the designations, mechanisms for preventing new conflicts, liability for breach of the agreed terms, and the procedure for resolving future disputes. Effective contractual settlement consists not only in terminating a specific dispute, but also in creating a clear model for the parties’ further interaction and use of their brands.

Advantages of pre-trial dispute resolution

Pre-trial resolution of trademark disputes is consistent with established international practice for resolving business conflicts, whereby the parties seek not only to protect their rights, but also to preserve commercial relations, maintain control over the outcome of the dispute, and retain the opportunity for further development of their brands.

Such an approach makes it possible to reduce the costs and time required to resolve the dispute, mitigate reputational risks, better control the confidentiality of negotiations subject to appropriate contractual arrangements or the conduct of mediation, and avoid the uncertainty associated with court proceedings.

At the same time, contractual settlement gives the parties the opportunity to agree on flexible terms for the further use of trademarks, including defining the limits of use of the designations, the goods and services, territories, sales channels, or other conditions for the coexistence of the brands.

For businesses, this means the opportunity not only to resolve a specific conflict, but also to create a predictable model of interaction and minimise the risk of the dispute recurring.

Which trademark conflicts can be resolved by agreements

Contractual mechanisms may be applied at different stages of a conflict — from opposition to trademark registration to an existing dispute concerning its use.

In practice, agreements can most often be used to resolve conflicts related to:

• registration of an identical or similar trademark where earlier rights to the relevant or a similar designation already exist in a particular jurisdiction;
• registration of similar designations for identical or related goods and services where there is a risk of confusion between the brands;
• unlawful use of another person’s registered trademark without the rights holder’s permission in cases where such use may be prohibited by law, including as the name of a brand, product, or other commercial designation;
• overlap in the areas of use of trademarks that previously coexisted in different territories, markets, or in relation to different categories of goods and services;
• expansion of a business into new markets, where the rights of different owners to identical or similar designations begin to conflict in individual jurisdictions.

The approach of the World Intellectual Property Organization (WIPO) confirms that contractual mechanisms may be applied at different stages of a trademark conflict — from registration and oppositions to applications to infringement disputes. They are particularly important in international disputes, where rights to identical or similar designations may differ depending on the jurisdiction, while agreements between the parties make it possible to delineate the areas of use of the brands and determine the rules for their further coexistence.

Letter or agreement of consent to trademark registration as a conflict resolution instrument

One practical way of resolving a conflict at the stage of trademark registration is to obtain the consent of the owner of an earlier registered trademark or the holder of another earlier acquired right. In Ukraine, pursuant to Article 6 of the Law of Ukraine “On Protection of Rights to Marks for Goods and Services”, such consent may eliminate certain relative grounds for refusal of registration only provided that there is no possibility of misleading consumers. Such a mechanism may be applied, in particular, where an opposition has been filed against the registration of a new trademark or an earlier right constitutes an obstacle to its registration. In international practice, consent may be formalised as a letter of consent or as a more comprehensive consent agreement.

Consent does not necessarily have to be unconditional. The parties may agree on reducing or clarifying the list of goods and services, delineating the areas or channels of use of the designations, territories of activity, methods of brand presentation, or other rules aimed at reducing the risk of confusion. For example, the practice of the United States Patent and Trademark Office (USPTO) in assessing such agreements takes into account the separation of trade channels and areas of use, as well as the parties’ obligations to take measures to prevent confusion. In Ukraine, consent to registration may be formalised in any form, such as a letter, statement, or agreement specifying the parties, the relevant application or designation, and the goods and/or services in respect of which it is provided; in accordance with the applicable Rules, such consent cannot be withdrawn.

Thus, a letter or agreement of consent to trademark registration may not only resolve a specific registration-related conflict, but also establish in advance the rules for the further coexistence of trademarks on the market.

At the same time, a consent agreement for trademark registration or a trademark coexistence agreement does not guarantee automatic registration of the designation. In most jurisdictions, such an agreement is considered one of the factors in assessing the possibility of registration; however, the final decision remains with the relevant intellectual property authority. The intellectual property authority may refuse registration if other statutory grounds for refusal remain, in particular where there is a possibility of misleading consumers.

Trademark coexistence agreements: Establishing rules for the parallel use of brands

A trademark coexistence agreement allows owners of identical or similar designations to agree on the terms of their parallel use in the market. The parties acknowledge each other’s rights to the respective trademarks and establish boundaries, compliance with which is intended to minimise the risk of brand confusion and the occurrence of new disputes. This is precisely the approach to coexistence agreements described by WIPO.

Depending on the specific circumstances, the agreement may define:

• the specific verbal or graphic representation of each trademark;
• the goods and services in relation to which each party has the right to use its designation;
• the territories, markets, sales channels, or branding methods;
• restrictions on the use or registration of other similar designations for the agreed categories of goods and services;
• the rules for further business expansion and a mechanism for resolving possible new conflicts.

WIPO also draws attention to the fact that, when concluding such agreements, it is important to consider not only the parties’ current activities, but also the potential future development of their brands.

International practice confirms the flexibility of this mechanism and the possibility of its application for resolving complex cross-border trademark disputes. In different jurisdictions, parties use coexistence agreements to agree on the conditions for the use and registration of designations containing similar elements, as well as to prevent further conflicts. In more extensive disputes, such agreements may combine several legal instruments, including trademark coexistence, mutual licensing, transfer of certain proprietary rights, and withdrawal of specific oppositions, applications, complaints, or claims, where permitted by the applicable law, which allows the dispute to be comprehensively resolved without lengthy judicial and administrative proceedings.

Thus, a coexistence agreement allows the parties to move from a struggle for exclusivity of a designation to establishing clear rules for the parallel development of two brands.

Other contractual mechanisms for resolving trademark disputes

In addition to consent agreements and trademark coexistence agreements, other contractual mechanisms are also used in practice, allowing the parties to terminate a conflict or establish rules for the further use of brands.

Settlement agreements are applied when a dispute already exists between the parties, in particular regarding the infringement of trademark rights, registration of a disputed designation, or unfair use of a brand. If the dispute is already pending before a court, the parties may enter into a settlement agreement in accordance with procedural law; in commercial proceedings, such an agreement is approved by the court pursuant to Article 192 of the Commercial Procedural Code of Ukraine. Such agreements may provide for the waiver of claims, termination of relevant proceedings, payment of compensation, modification of the manner of use of the designation, or other terms agreed upon by the parties.

Licence agreements may be an effective solution in situations where the rights holder does not object to the use of the trademark by another person but wishes to control such use. In Ukraine, a licence agreement must, in particular, specify the methods of use of the trademark, the territory and term of the permitted use, and contain a provision that the quality of the licensee’s goods and services will not be lower than the quality of the goods and services of the owner of the certificate who exercises control over compliance with this condition. Requirements regarding the content of a licence agreement are also established by Article 1109 of the Civil Code of Ukraine.

The transfer of exclusive proprietary intellectual property rights to a trademark may be used where the parties conclude that the most effective solution is to concentrate the rights in the hands of one owner. Such a mechanism is often applied in cases where one of the parties is interested in full control over the designation or where further parallel use of the brands is impractical.

Obligations to discontinue or limit the use of a designation allow the parties to resolve situations where one of the parties agrees to refrain from a certain manner of using the trademark. Such arrangements may include discontinuation of the use of the brand, removal of certain elements of the designation, modification of the design, or restrictions concerning goods, services, or markets.

International practice confirms that parties often combine different contractual instruments depending on the nature of the dispute. Thus, in the practice of the World Intellectual Property Organization (WIPO), there are cases where the resolution of trademark disputes involved a combination of coexistence agreements, licensing, the transfer of certain proprietary rights, and the termination of judicial proceedings.

Thus, the choice of a contractual mechanism depends on the objectives of the parties: preserving the possibility of using the brand, entering new markets, discontinuing infringement, or the final allocation of trademark rights.

Limits of contractual resolution of trademark disputes

Despite the broad possibilities of contractual settlement, trademark agreements cannot eliminate all legal risks or fully replace the mechanisms of state protection of intellectual property rights.

One of the key limitations is that an agreement between rights holders does not always have binding force for a trademark registration authority. In different jurisdictions, such agreements may be assessed differently: from being recognised as a sufficient ground for overcoming objections to being considered only as one of the factors in assessing the risk of confusion between designations.

In addition, the parties cannot eliminate by agreement the risks associated with misleading consumers, violation of public interest, or breaches of competition law. In Ukraine, particular assessment is required for provisions concerning the allocation of territories, markets, product ranges, sales channels, or customer groups, as, depending on the circumstances, they may fall under the prohibition of anticompetitive concerted actions provided for by Article 6 of the Law of Ukraine “On Protection of Economic Competition”. Therefore, when preparing such agreements, it is necessary to assess not only the mutual interests of the rights holders, but also the potential impact of the coexistence of brands on the market and consumers.

It is also important to consider that the effectiveness of an agreement depends on the level of its detail. A general consent to the use of a similar designation without defining specific rules of coexistence may be insufficient to prevent future conflicts. International practice is based on the need for a clear delineation of the areas of use of trademarks, including goods and services, territories, and other commercial parameters of the parties’ activities.

Therefore, contractual settlement is an effective tool for managing trademark conflicts; however, its effectiveness depends on the proper definition of the boundaries of coexistence, taking into account the requirements of a specific jurisdiction, and a comprehensive assessment of legal and business risks.

Key terms of an effective agreement on the resolution of a trademark dispute

The effectiveness of a trademark dispute settlement agreement depends not only on reaching an agreement between the parties, but also on the clear definition of the rules for the further use of the brands. It is the detailed specification of such terms that makes it possible to minimise the risk of the conflict recurring.

The key provisions of such agreements include:

• definition of the scope of use of trademarks — territories, markets, sales channels, methods of brand presentation, and categories of consumers;
• delineation of goods and services with an indication of the relevant classes of the International Classification of Goods and Services (Nice Classification);
• establishment of rules for the use of designations — permitted graphic representation, branding elements, domain names, advertising materials, and other methods of commercial use;
• definition of quality standards and control over the use of the brand, where one of the parties is granted the right to use the designation of the other party;
• regulation of future registrations and business expansion, including the procedure for filing new trademark applications or entering new markets;
• mechanism for responding to breaches of the agreement terms, including deadlines for remedying breaches, liability of the parties, and the procedure for resolving future disputes.

A legally well-structured agreement allows the parties not only to resolve an existing conflict, but also to create a stable model for the use of trademarks in the future. Therefore, the preparation of such documents requires a comprehensive assessment of the scope of trademark rights, the parties’ business objectives, market specifics, and potential scenarios for the development of brands.

The GOLAW team has practical experience in supporting trademark disputes and developing contractual mechanisms for brand protection. We assess the prospects for registration and protection of rights, develop pre-trial settlement strategies, conduct negotiations with other rights holders, and prepare letters and agreements of consent to registration, trademark coexistence agreements, licence agreements, dispute settlement agreements, and agreements on the transfer of proprietary intellectual property rights.

If your business is facing a trademark dispute, an opposition to registration, a risk of brand blockage, or the need to agree on the rules for the coexistence of similar designations, contact the GOLAW team. We will help you determine a legally secure and commercially viable settlement model before the conflict develops into lengthy court proceedings.

The article was written by:

Oleksandr Melnyk, Partner at GOLAW, Head of Corporate and M&A Practice, Attorney at Law

Nataliia Bilous, Attorney at Law at Corporate and M&A Practice at GOLAW