System for the recordal of prior trademark coexistence agreements

By Claire Zhao, Sanyou Intellectual Property Agency
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The World Intellectual Property Organization (WIPO) defines trademark coexistence as “a situation in which two different enterprises use a similar or identical trademark to market a product or service without necessarily interfering with each other’s businesses”.

From the perspective of lawfulness, trademark coexistence can be divided into statutory coexistence and agreed coexistence. This column will only look at agreed coexistence occurring in the course of a trademark granting procedure, namely a trademark coexistence agreement wherein application of Article 30 of the Trademark Law to determine similar trademarks serves as one of the factors considered.

The PRC Trademark Law, and the Implementing Regulations for the Trademark Law, are silent on trademark coexistence agreements. However, the Trademark Review and Adjudication Board (TRAB) studied the issue of a “coexistence agreement” in a rejection review case at the 24th TRAB affairs meeting in 2007.

 赵明珠 -CLAIRE ZHAO-三友知识产权代理有限公司-律师、商标代理人-Associate, Trademark Attorney-Sanyou Intellectual -Property Agency
Claire Zhao
Associate, Trademark Attorney
Sanyou Intellectual Property Agency

In Chinese examination practice, an applicant may submit a trademark coexistence agreement to the TRAB and the court or, alternatively, submit a coexistence consent letter unilaterally signed by the prior trademark rights holder instead of a trademark coexistence agreement. The TRAB and the court may accept such a coexistence agreement, provided that it does not harm the public interest. In the winning judgment in the Brooks trademark rejection review administrative case at the end of 2018, in which our agency acted as agent, the court recognized the trademark coexistence agreement submitted by the applicant and, on this basis, found that the applied-for trademark and the cited mark did not constitute similar trademarks. In fact, a transfer of the cited mark occurred in the course of this case. After securing a trademark coexistence consent letter signed by the original owner of the cited mark, the applicant, in anticipation of all eventualities, also asked the current owner of the cited mark (the assignee) to issue a coexistence consent instrument. Fortunately, the assignee of the cited mark agreed to issue a new coexistence consent letter, ensuring the smooth progress of the case.

This case got the author thinking: suppose an identical case had occurred between other entities, the new owner of the cited mark could have refused to sign the coexistence consent letter on the grounds that it was not aware, at the time it secured the prior trademark, that the trademark in question was coexisting with another trademark. So, considered from another perspective, if it is not expressly specified in the coexistence agreement that it is binding on parties with an immediate interest in the prior trademark, how is any potential trademark dispute between a party materially interested in the prior trademark (e.g., the assignee or exclusive licensee of the prior trademark) and the trademark registrant that applied later to be resolved?

The author would argue that, for the purpose of minimizing disputes, the legislative authority could draw on the licence recordal system described in the third paragraph of Article 43 of the Trademark Law, “when a registered trademark is licensed to another, the licensor shall report the trademark licence to the Trademark Office for the record, which the Trademark Office shall gazette. A trademark licence that has not been placed on the record may not defend against a bona fide third party”, to insert a provision in legislation for the recordal of trademark coexistence agreements (and/or coexistence consent letters) signed by prior trademark rights holders and third parties, so as to make such information publicly available. The reasonableness thereof lies in:

In terms of legality, such a system would not run counter to the objective of the Trademark Law to protect the interests of trademark rights holders and consumers.

Theoretically speaking, a trademark coexistence agreement will, in general, specify the parties’ product (service) items, sales territories and other such elements, and specify that the parties may not do anything that would prejudice the trademark rights, in essence placing limitations on the prior rights holder’s rights. Based on considerations of fairness, the interests of parties with a material interest in the prior trademark should be considered when executing a coexistence agreement.

Commercially speaking, a trademark coexistence agreement resolves the partitioning of the existing and future market situation and will have a profound impact on the business operations of the rights entities with a connection to the prior trademark. The trademark infringement dispute between Apple Inc. (formerly Apple Computer Inc.) and Apple Corp., whose main business revolves around the music of the Beatles, arose from the Apple trademark coexistence agreement executed by them in 1991. Although that agreement expressly demarcated the scope of use of their respective trademarks (Apple Computer Inc. not being permitted to use the Apple trademark on music products), in 2003, Apple Computer Inc. rolled out its iTunes online music store. The dispute arose from the differing ideas of the parties as to the nature of the iTunes products. This case demonstrates the importance of an enterprise anticipating future market developments when executing a trademark coexistence agreement.

In terms of the structure of the Trademark Law, such a system could achieve a structural balance between trademark coexistence, trademark transfer and trademark licensing systems. With respect to this, reference may be made to the provisions of Article 20 of the Interpretations of the Supreme People’s Court of Several Issues Concerning the Application of the Law in the Trial of Civil Trademark Dispute Cases on the validity of trademark transfers and trademark licences in the creation of a complementary system.

From the perspective of comparative law, pursuant to item (j) of the first paragraph of Article 207 of the Trademark Regulations of the Macau Special Administrative Region that came into effect on 13 December 1999 reading “authorization from the owner of previously registered marks or other industrial property rights with which the subject matter of the trademark being applied for could be confused, as well as from the holders of exclusive licences, if such exist, and their contracts do not waive their respective consent”, the Macau legislation, while embodying the creation of trademark coexistence consent letters as early as 1999, was taking into account the interests of sole prior trademark licensees as immediately interested parties.

A system for the recordal of the trademark coexistence agreements of prior rights holders is an issue worthy of debate. It is hoped that the humble opinions expressed in this column might have the effect of drawing serious attention to this issue

Claire Zhao is an associate and trademark attorney at Sanyou Intellectual Property Agency

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