Trademark consent to use agreements are routinely used by trademark attorneys to secure registration of trademarks in the U.S. Trademark Office. Such agreements are also called also called coexistence agreements, or live and let live agreements. A trademark consent to use agreement can be viewed as a “friendly” settlement agreement–friendly in the sense that there is often no litigation pending. The parties simply agree in advance to avoid any risk of confusion between their respective goods or services of the parties by setting forth terms under which both parties may maintain both use and registration of their respective marks.
How the Trademark Consent to Use Agreement Comes About
Trademark consent to use agreements come arise in variety of fact patterns. Two common scenarios include:
- A trademark application is rejected by the Trademark Examiner on Section 2(d) grounds, namely likelihood of confusion with a prior pending application or existing registration. The goods and/or marks are not identical, and the rejected applicant seeks agreement from the cited third party registration to enter into a consent agreement. In cases where there is clearly no overlap of consumers, or the goods do not move in the same marketing channels, a consent to use can serve both trademark owners.
- An application to register a trademark is examined and approved for publication by the Trademark Examiner. Upon publication, an opposition by a third party is filed seeking to prevent the mark from proceeding to registration, alleging prior use of a confusingly similar mark. Settlement often includes some type of co-existence provisions to avoid future risks of consumer confusion.
However seemingly routine, a trademark consent to use agreement is not to be entered into lightly. There are pitfalls for the unwary including risks the agreement will be deemed insufficient to avoid confusion, resulting in a refusal of the Trademark Office to accept the agreement and reverse its refusal to register. A trademark consent to use agreement should be used only when it is clear there truly is no likelihood of confusion, and the parties have agreed upon steps to insure future confusion in the market does not occur.
The Most Famous Trademark Consent to Use Agreement
Not every trademark consent to use agreement is reached outside of the court house. Moreover, the long-term consequences can be quite unexpected, as well have huge financial impact. The most famous example of a trademark consent to use agreement was the 1981 agreement between The Beatles and Apple computers.
The Beatles launched their record label APPLE RECORDS in 1968, featuring not only the Beatles music, but also albums from the likes of James Taylor, Bill Preston and Badfinger.
Apple computers launched in 1977, and in 1978 Apple Corps sued Apple Computers for trademark infringement. The parties entered in to a trademark consent to use agreement in 1981, in which Apple agreed it would not use the mark APPLE in connection with music. History of Apple Corp v Apple.
Apple Records and Apple Computers were in court at least twice more over Apple Computer’s alleged breach of the original agreement. First, Apple Corps sued Apple Computers in 1989 and settled in 1991 for $26.4 million. In the 1981 agreement, Apple Computers agreed it would not use the Apple name or logo in connection with computer products “specifically adapted for use in the recording or reproduction of music or of performing artist works,” or in connection with any “apparatus specifically designed and intended for synthesizing music.” (Apple Computer sued its liability insurer for failing to defend it in the suit brought by the Beatles’ Apple Corps. Therein, the court references the language of the 1981 consent agreement).[note]Industrial Indem. Co. v. Apple Computer, Inc., 79 Cal. App. 4th 817, 95 Cal. Rptr. 2d 528 (1st Dist. 1999)[/note]
Another trademark consent to use agreement was reached in 1991, but in 2004 after the launch of iTunes, the Beatles sued again in London claiming breach of the consent agreement. Read their 1991 agreement. The London court ruled that Apple’s use of the logo on the iTunes website did not violate the 1991 agreement reserving exclusive rights to use of the logo for recorded music to the Beatles. Read the High Court Decision. In 2007, Apple Computers paid enough to secure rights to market the Beatles catalog as well as an assignment of the Apple Records trademarks.[note]Wall Street Journal, February 5, 2007[/note]
The Apple scenario is an extreme one, with hundreds of millions of dollars at stake for both sides. However, it underscores the import of taking co-existence agreements seriously, with a view to the future and the unexpected actions of one or both parties down the road.
TIME TRAVELER & TIME TRAVELER BLONDE
(Blondes don’t always have more fun)
A recent TTAB decision, In re Bay Street Brewing Company, Serial No. 85826258, involving TIME TRAVELER BLONDE beer underscores that a trademark consent to use agreement between the parties may not be enough to guarantee confusion will not exist. In some cases confusion cannot be avoided and the TIME TRAVELER marks for beer may finally be such a reported case. The applicant Bay Street Brewing sought to register TIME TRAVELER BLONDE for beer in Class 42. The Examiner cited the mark TIME TRAVELER for beer, ale and lager as a bar to registration under 15 U.S.C. 1052(d). The Examiner, and the Board on appeal, rejected the agreement of the parties and found confusion prevented registration. It is arguable in this instance the TTAB was correct, since the marks and the goods are identical save for the descriptive, not protectable element “Blonde” which is used to describe a color of beer.
Despite the execution of a consent agreement, there are no guarantees the agreement will be accepted by the Trademark Examiner, or approved on appeal by the Trademark Trial and Appeal Board. The Trademark Office and the Trademark Trial and Appeal Board have a history of rejecting these agreements from time to time, and the Federal Circuit has chastised them on several occasions for doing so where there is a clear agreement of the parties that addresses the potential issues in the market.
In some cases, a license agreement between the parties may be the only solution. “[I]f the goods of the parties are likely to be attributed to the same source because of the use of the same or a similar mark, a license (not merely a consent) is necessary to cure the conflict.” [note] See 1 J. McCarthy, Trademarks and Unfair Competition § [18:25], at 866 (2d ed. 1984).[/note]The key difference between a license and a consent agreement is that a license requires quality control on the part of the licensor. A consent agreement requires no quality control.
Trademark Consent to Use Agreement — only one Dupont factor
Consent agreements relate to only one of the 13 Dupont factors [note]In re E. I. du Pont de Nemours & Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973).[/note] The agreement is but one part of the full duPont analysis used by courts to assess the likelihood of confusion.
The DuPont case does not make it a ‘given’ that experienced businessmen, in all cases, make an agreement countenancing each other’s concurrent use of the same or similar marks only in recognition of no likelihood of confusion of the public. One must look at all of the surrounding circumstances, as in DuPont, to determine if the consent reflects the reality of no likelihood of confusion in the marketplace, or if the parties struck a bargain that may be beneficial to their own interests, regardless of confusion of the public.
In re Mastic Inc., 829 F.2d 1114, 4 USPQ2d 1292 (Fed. Cir. 1987).[note]Dupont, routinely cited by Trademark Examiner’s in nearly every 2(d) likelihood of confusion rejection, also involved a review of a trademark consent to use agreement. In Dupont, the CCPA (now the Federal Circuit) reversed a refusal to register RALLY for a polishing and cleaning agent for automobiles based on likelihood of confusion with an existing registration of RALLY for all-purpose detergent. In the consent agreement, the parties had agreed to limit their marketing and sales to their respective markets, namely the automobile market and the general cleaning market.[/note]
In Part 2 we will examine drafting guidelines to insure a fully Dressed Consent Agreements, and how to avoid the “Naked Consent.”