A Coexistence Caveat for Junior Users

Many trademark disputes are resolved by coexistence agreement – a contract whereby two trademark owners agree to use similar trademarks, but with certain limitations in place to avoid a likelihood of confusion in the marketplace. Ideally, a trademark owner wants to negotiate such an agreement from the standpoint of the “senior user” (that is, the trademark owner who is first to use and/or acquire rights in a trademark); the senior user is typically in a better position, legally, to limit the junior user’s activities and thus “holds all the cards.”

In many instances, a senior user will require a junior user to forego federal registration of its trademark and only allow coexistence as to use. But, in agreeing to do so, the junior user deprives itself of several key benefits, including presumptions of ownership and validity of the trademark, both of which are advantageous in a trademark infringement action with respect to the burden of proof.

However, in today’s e-commerce-driven marketplace, where counterfeits and other unauthorized uses of trademarks abound, a federal trademark registration is often required to take advantage of several rights protection mechanisms, including:

• Customs and Border Patrol (CBP) – recording a federal registration with CBP enables a trademark owner to block importation of counterfeit goods bearing the registered trademark;
• Amazon Brand Registry – this registry offers registered trademark owners protections from counterfeits and trademark hijacking, and gives the trademark owner added control over the listing of products on the site that use the registered trademark;
• Trademark Clearinghouse – recordation of a federal registration with the Clearinghouse enables a brand owner to register its trademark as a domain name during “Sunrise” or early-bird registration periods for new top level domains (TLDs), and to receive notice when a third party has registered the recorded trademark as a domain name;
• Domain Name Disputes – for the most part, a federal registration is required to file a complaint under the Uniform Rapid Suspension (URS) Policy, and a federal registration makes it easier to show that a Complainant has rights in a trademark for a complaint under the Uniform Dispute Resolution Policy (UDRP). The latter is particularly important where the trademark at issue could be argued to be descriptive;
• Takedown requests – many takedown policies on e-commerce websites require a federal registration in order for the takedown request to be actionable.

The takeaway is that if you find yourself in the position of junior user in negotiation of a coexistence agreement, and your brand is subject to counterfeiting and other unauthorized uses, think twice before agreeing to not federally register your trademark. And, if the senior user digs its heels in and insists on no registration in the United States, consider negotiating for (1) registration of the trademark in other jurisdictions, (2) registration of a stylized mark, as opposed to a mark in standard character, and/or (3) registration of goods and services of lesser concern to the senior user to provide at least some level of protection. For the most part, registrations in other jurisdictions, and for trademarks in stylized forms, will still allow a trademark owner to take advantage of the rights protection mechanisms discussed above, giving even a junior user the ability to police and take action to stop abuses of its brand.

This article appeared in the June 2019 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.