The following scenario is common when a business owner attempts to register a trademark with the United States Patent and Trademark Office (“USPTO”): The business owner decides upon a seemingly unique business trademark. The business owner conducts a quick internet search for similar trademarks being used in the same industry, and does not find anything. Confident in the uniqueness of the mark, the business owner files for registration of the trademark with the USPTO, pays the required fee, and presumes the application will fly through the registration process with a hitch. A few months later, the business owner receives an “office action” from an Examining Attorney at the USPTO.
The office action states that the business owner’s mark cannot be registered because of an arguably similar mark that was previously registered with the USPTO, which, according to the USPTO Examining Attorney, is likely to cause confusion in the marketplace. The business owner is not persuaded by the USPTO Examining Attorney’s logic. The business owner has never heard of the arguably similar mark, and does not believe that anybody will be confused by the other mark. Nevertheless, the business owner does not want to spend significant time and money hiring lawyers to argue against the USPTO Examining Attorney’s position. The business owner would prefer to simply agree with the other mark owner that both marks can peacefully coexist in the marketplace, because there is little, if any, chance of confusion in the marketplace. The business owner wonders, can I bypass the USPTO Examining Attorney’s registration refusal if I get the consent of the other mark owner to registration of my mark? The answer is yes, so long as the other mark owner is willing to enter into what is commonly referred to as a “joint consent agreement” allowing both marks to register with the USPTO.
Trademark joint consent agreements allow owners of potentially confusing trademarks to both register their marks with the USPTO, and continue use of their marks in their respective industries. Such agreements can vary in length and complexity, but the general goal of a consent agreement is to avoid a future likelihood of confusion between the marks. The provisions of an agreement usually correspond with one or more of the likelihood of confusion factors established by case law, including the similarity of the marks themselves, the similarity of the goods and services associated with the marks, and the established and likely to continue trade channels the marks will be used in.
By using these likelihood of confusion factors as a framework, parties to a consent agreement can delineate the differences between the existing uses of their marks or agree to new restrictions on the uses of their marks to avoid a likelihood of confusion in the future. For example, if two companies use similar marks to sell dental services/products, but one company sells dental services and products to individual consumers at a dentist’s office, while the other sells bulk dental products to dental professionals, it may make sense for the parties to agree to restrict the use of their marks to their existing trade channels in order to avoid future likelihood of confusion.
On the other hand, if the companies sell their products to the same customers, they might each agree to use their marks only in close proximity with their respective company brand names (called house marks), only in a particular color or stylized font, or only with a disclaimer. Other possible avenues for distinction include defining discrete geographic markets or restricting use to specific categories of products or services.
So long as the parties specifically describe why there is no likelihood of confusion between their respective marks, and set forth a plan to avoid any future confusion, caselaw is clear that a consent agreement between the parties is to be accorded substantial weight by the USPTO Examining Attorney. The case law further indicates that in order for a registration refusal based upon likelihood of confusion to be affirmed despite the existence of a consent agreement between the parties, the USPTO must put into the record evidence which tends to negate the underlying assumptions in the consent agreement, and/or point out that the consent is contradictory on its face. Absent this type of evidence, the trademark should proceed to registration.
Although joint consent agreements can be a useful way to avoid litigation and achieve trademark registration, they should be entered only after considering their potential impact, not only for the dispute at issue, but for future disputes as well. When a consent agreement is all that stands between settlement and litigation, it may be easy to overlook the potential impact that an agreement might have further down the road. Take the case of Apple Corps Ltd., the holding company that owns the Beatles’ record label, and Apple, Inc., the computer company. In the early 1980’s, as part of the settlement of a trademark dispute with Apple records, Apple computer reportedly agreed not to enter the music business. Of course, decades later, Apple computers entered the music business in a big way through the online iTunes music store. Presumably, a subsequent agreement was reached between the parties (at substantial expense to Apple computer) that allowed Apple computer to use the “Apple” trademark in connection with the iTunes music store.
Because joint consent agreements restrict the parties’ trademark rights and possibly impact future business plans, the provisions should be drafted narrowly. Parties should give thought to their current and future business plans, including markets to which they might expand. Consent agreements can lead to expedient resolution of business disputes, but they should only be entered after weighing the potential drawbacks and possible effect on future business plans.