In the world of commerce, disputes are inevitable and resolving them can be a complex matter. When the use of a trademark is in issue, the dispute often begins with a “cease & desist” letter wherein a trademark owner complains that the person or company to whom the letter is addressed has adopted a mark that has been confused or is likely to be confused with his mark and demands that such use cease. If the recipient of the letter is unwilling to comply, litigation may initially seem to be the only option. However, coexistence may be a viable and practical alternative for resolving the dispute.
Trademarks are registered and trademark rights are acquired for the products and services in association with which they are used. The link between the mark and the products and/or services is fundamental since the purpose of a trademark is to identify the source of the product or service to consumers. The scope of protection available to a trademark is thus limited to the commercial field in which it is used or in a field where the use of the similar mark could be expected to cause confusion.
For a small business, this may mean that the trademark can be protected only in connection with the exact field in which it is used. For a famous trademark, however, the scope of protection may be much broader since the mark may be used or expected to be used in association with a wide range of goods and services. For example, a famous mark may originally be used to identify a sports car, but it may then be licensed or otherwise expanded to be used on items such as clothing, candy, watches and perfumes.
Confusion is an essential issue when determining trademark rights. Whether marks are confusing or are likely to cause confusion is assessed by reviewing a number of factors, including:
- whether the trademarks consist of words or elements that are descriptive of the product as opposed to unique or coined elements,
- the length of time the marks have been in use,
- the extent to which the marks have become known to consumers,
- the nature and degree of similarity of the goods and/or services of each party to the dispute,
- the overlap in the trades of the two parties, including such factors as the manner and locations in which the goods are sold or services performed, and
- the similarity between the marks in appearance, sound and ideas suggested by them.
Of course, in some cases the trademarks in issue and the associated products or services are so similar that it is inevitable that consumers will be confused between them. In fact, it is not uncommon that an issue comes to light for the very reason that consumers have purchased the product of one company believing it to be the same as a product that they have purchased in the past and have lodged a complaint after realizing the mistake.
However, there are many cases where marks are similar (or even identical) but the field of business is sufficiently different that they may be used concurrently without causing any confusion to consumers. In such cases, long-term coexistence may be a viable option.
Where coexistence is possible, there are often benefits to entering into an agreement. When a potentially confusing trademark has been identified, proactive contact with the owner and an agreement to coexist can avoid the risk of a complaint, which could otherwise linger for many years. In addition, the outcome of litigation is always uncertain no matter how strong the case, and avoiding a courtroom battle by coming to an agreement will bring closure on that front as well. Moreover, the time and cost of litigation can have a substantial adverse impact on a business, both in terms of time spent on the issue and cost. An agreement to coexist can result in significant savings to both parties if litigation can be avoided.
While a coexistence agreement may be beneficial, it is not a good option in some circumstances. If the trademarks are very similar or the goods/services are very similar, the original trademark owner may be eroding his rights by permitting the coexistence of a mark that was adopted at a later date. For example, once the use of one similar mark is permitted, it may become much more difficult to argue later that other similar marks should not also be allowed to coexist. Moreover, the original rights holder may find that the terms of coexistence may hamper the expansion of his business in the future. These are issues that require careful consideration before entering into an agreement.
In appropriate circumstances, a coexistence agreement can resolve uncertainties and be beneficial whether entered into before or after a new business is commenced. Before launching a new product or service, a search may reveal a similar mark already in existence, and approaching the owner to determine whether coexistence will be acceptable can avoid the long-term threat of a complaint or the resulting difficulties before the issue arises. In cases where a complaint is received, a coexistence agreement can be a route to a speedy and mutually satisfactory resolution.
The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.