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    Articles

    How to Enter into Trademark Coexistence Agreement


    2018/2/1|Articles

    In the trademark registration practice of China, both the trademark authority and the people’s court think the registration of an applied-for trademark shall be subject to statutory examination even if the trademark applicant has submitted the trademark coexistence agreement. Thus, the trademark coexistence agreement can only act as evidence in the corresponding proceedings, while the authority or court may decide whether to accept such evidence and what facts can be affirmed thereby if such evidence is accepted. As the registration of an applied-for trademark involves not only the private interests of the parties concerned but also the public interest of consumers, the authority or court shall pay more attention to the fact that whether the permission of trademark coexistence will lead to the confusion among consumers. Therefore, the parties concerned shall, apart from making distinctions in the form of a trademark, enter into a proper coexistence agreement so as to prove that trademark coexistence will not harm the interests of consumers. In addition, a well-written coexistence agreement is good for protecting interests of the parties concerned in their contractual relationship. The following is our opinions on how to enter into a well-functioning trademark coexistence agreement.
     
    I. Legal nature and role of coexistence agreement
    The basis of entering into a coexistence agreement is to know its legal nature and its role in trademark registration. The coexistence agreement is a contract between the parties concerned for confirming their corresponding relationship of rights and obligations, and is subject to the Contract Law. A coexistence agreement has the following basic role: on the one hand, it can specify the rights and obligations of both parties related to trademark coexistence and clarify the legal liability for violation; on the other hand, it can convince the trademark authority or the court that the cited trademark holder agrees not to raise an objection against the applied-for trademark and that both parties agree the performance of such agreement can distinguish consumer groups and prevent misleading consumers. The specific clauses of a coexistence agreement shall also be based on its legal nature and role. Logically, no other person pays more attention than the cited trademark holder to the fact that whether there will be confusion of his goods or services among his consumer groups because of trademark coexistence. In another word, the reference of a fact recognized by the cited trademark holder provides a better factual basis than the subjective opinion of the examiner or judge. If the examiner or judge does not accept the fact referred to by the cited trademark holder, he or she must produce more persuasive evidence or factual basis.
     
    II. Basic clauses of coexistence agreement and their functions
    1. Statement of facts or “whereas clauses”
    Generally included in the preface of an international contract, the statement of facts or whereas clauses are more useful in a coexistence agreement by specifying the background of such agreement. If the parties concerned include a parent company and its subsidy or have established a joint venture, the statement of such a fact can enable the competent authority or court to understand the economic basis of an agreement between them and to consider the possibility of consumers’ confusion caused by trademark coexistence on such a basis. If the parties concerned have entered into a coexistence agreement for historical reasons, they shall first prove the fact that the past dispute has been settled under agreed conditions, while the competent authority or court shall respect their decision so as to maintain the economic relationship between them.
     
    2. “No objection” clause
    As the paramount purpose of the parties concerned for entering into a coexistence agreement is to facilitate the applied trademark’s registration, it is necessary to agree in such agreement that the cited trademark holder has the obligation of raising no objection against trademark registration. However, as there must be “consideration” in a contract, it must be specified that the premise of such obligation is that the trademark applicant strictly perform such agreement. If the trademark applicant fails to perform his obligations as agreed, the cited trademark holder may choose to:
     
    (1) directly make an agreement that the coexistence agreement will be automatically dissolved if the trademark applicant fails to perform his obligations or fails to perform as agreed, making the coexistence agreement a “contract with dissolving conditions” in the meaning of the Contract Law. Of course, the coexistence agreement’s validity has no substantial impact on the competent authority or court when considering the applied-for trademark’s registration, but at least the cited trademark holder can use it as an excuse for objection to the applied trademark without being held the breach liability. Besides, the cited trademark holder can use the corresponding evidence to prove that the trademark applicant’s use of trademark in violation of the agreement is an important factor for the confusion among consumers.
     
    (2) or make an agreement that the cited trademark holder is entitled to dissolve the agreement if the trademark applicant is in breach. Enjoying the “right to dissolve a contract as agreed” in the meaning of the Contract Law, the cited trademark holder may decide to unilaterally dissolve the agreement once the factual conditions mature. According to the Contract Law, the cited trademark holder may send a notice of dissolution to the trademark applicant, and the coexistence agreement shall be dissolved upon the delivery of such notice to the trademark applicant. Where the trademark applicant has objection to the dissolution, he may apply to the people’s court or adjudication organ for confirmation. Whatever the confirmation decision is, the cited trademark holder may raise an objection against the applied trademark based thereon. Of course, if the “breach accusation” of the cited trademark holder is not supported, it shall be decided whether the cited trademark holder shall be held reliable for his objection according to the specific circumstances.
     
    (3) or claim his “fulfillment demurring right” under the Contract Law if the trademark applicant is in breach, raise an objection against the applied-for trademark, and make a “breach accusation” against the trademark applicant. Though the competent authority or court has no right to decide whether such “fulfillment demurring right” is tenable, it can affirm the fact that the cited trademark holder has raised an objection against the applied-for trademark after entering into the coexistence agreement, making clear that whether such behavior goes against the coexistence agreement is not the focal point, and specify that it has the power and responsibility to independently examine whether the applied-for trademark can be registered.
     
    3. Clause on confirmation of applied-for trademark
    Such clause shall refer to both trademarks and make an explicit definition of the applied-for trademark, so as to clarify the obvious differences between them (e.g. the following two trademarks); 

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