Co-existence agreements in Mexico - a window of opportunity
Co-existence Agreements
These days, trademark owners find it increasingly difficult to choose a trademark that is free for use and registration. World commerce is more crowded, so trademark owners sometimes find that the names or signs they choose to distinguish their products or services are already in use by other parties. However, similar or identical trademarks can coexist as long as each continues to perform its main function: to distinguish the goods or services for which they are used from those of their competitors.
The registration of marks that are similar or identical to others has been permitted when the similarity does not confuse consumers into being unable to identify the relevant goods or services. Coexistence agreements support this, since they describe 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.
In short, a coexistence agreement is any agreement between two or more parties that regulates concurrent use and registration of two or more trademarks of an identical or confusingly similar nature in a certain jurisdiction.
In such an agreement, the parties recognise each other’s right to their respective mark and agree the terms on which they may exist together in the marketplace. Coexistence may be based on a division of the territories in which each registrant may operate or on a delimitation of their respective fields of use.
The use of coexistence agreements around the world is increasing. The global economy permits trademark owners to sell their products or render their services in other jurisdictions outside their countries of origin. This often creates a problem when entering another country and finding out that a senior identical or similar trademark already exists.
Consequently, trademarks that had happily coexisted at one time may suddenly enter into a conflict. An alternative to this scenario may be to conclude a formal coexistence agreement in order to prevent the future use of the two marks—overlapping in such a way as to become undesirable or infringing.
The Mexican situation
Until recently, the submission of coexistence agreements was a common practice in Mexico to prevent a refusal for registration of the junior mark based upon the senior mark’s prior rights.
Unfortunately, for the past couple of years, the Mexican Institute of Industrial Property (IMPI) has rejected coexistence agreements in support of the registration proceedings of a junior trademark, arguing a duty to protect consumers from being misled into confusion if both marks are permitted. IMPI has closed the door to coexistence agreements not only for unrelated companies with identical or confusingly similar trademarks, but also for sister or associated enterprises with trademarks that share one common element.
This decision is irrational in preventing free trade between the parties, but also diverges from the points of view adopted by other international jurisdictions such as the US and OHIM.
Unlike what happens in Mexico, the United States Patent and Trademark Office (USPTO) gives great weight to consent agreements, reasoning that the parties to the agreement are most familiar with use in the marketplace and most interested in precluding confusion. In these situations, an agreement consenting to the registration of a mark must recite the reasons why the applicant and the owner of the senior mark believe there is no likelihood of confusion and how they intend to deal with an actual confusion that occurs.
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, case law is clear that a consent agreement between the parties is to be accorded substantial weight by the USPTO examining attorney. T
he 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 on record evidence that negates 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.
Moreover, a recent European decision upheld the terms of a coexistence agreement in the longrunning dispute between the US engineering company Omega Engineering Incorporated and the Swiss watchmaker Omega.
“The global economy permits trademark owners to sell their products or render their services in other jurisdictions outside their countries of origin. This often creates a problem when entering another country and finding out that a senior identical or similar trademark already exists.”
Given that IMPI no longer accepts coexistence agreements, a refusal for registration of a trademark application is subject to an administrative appeal to a higher-ranking officer of IMPI (these actions are often a complete waste of time) or an appeal (nullity petition) before the Federal Court of Tax and Administrative Justice (TFJFA), which has a specialised chamber for IP matters. This court has typically confirmed the decisions adopted by IMPI; consequently, a second and final appeal (called amparo directo) may be brought before the Circuit Court. However, there is still a window open for enterprises in need of protection throughout different related companies. Some courts at the circuit level have accepted coexistence agreements executed between related enterprises.
It is important to have in mind that these decisions are not binding, since not all of the chambers at the Circuit Court have dealt with the issue. Different courts may rule differently.
In 2010, the Fourth Circuit Court accepted a confusingly similar trademark after a coexistence agreement was executed, including information that the parties involved were part of the same economic group. This decision was based on Article 55 of the Intellectual Property Regulations, which define the circumstances when two or more enterprises are part of the same economic group. The court mentioned that IMPI and the TFJFA forgot to apply this article to the benefit of the applicant.
In addition, this court mentioned that if a coexistence agreement is executed between related companies, any authority studying the registrability of a trademark should grant into registration the proposed trademark. In these cases, it is obvious that there will be no confusion for the consumer since the coexistence of the trademarks will be aimed to signal a common interest and benefit for the related entities.
The Third Circuit Court has separately ruled that in order for an authority to consider a coexistence agreement between enterprises of the same economic group, the parties must prove the economic relationship.
In this case, the court argued that Mexican legislation has no express provision mentioning that a coexistence agreement has to be taken into account in order to grant into registration a confusingly similar or identical trademark. Therefore, there is no obligation to consider any of these documents at the time they study the registrability of a trademark. This is based on the fact that no agreement executed between private parties can be considered above the law.
Despite their differences, both decisions give weight to documents explaining the relationship between the parties with similar or identical trademarks.
We are aware that various tribunals around the globe weigh the validity of coexistence agreements differently. The decisions range from complete reliance on the terms of the agreement, to giving heavy weight to the agreement, to feeling free to invalidate an agreement if it is detrimental to public interest. Trademark examination offices around the world also have their own policies when it comes to allowing registration of marks for companies that have coexistence agreements.
Though the strict criteria adopted by IMPI is harmful to trademark owners around the world who wish to register their trademarks in Mexico, these recent Circuit Court decisions provide hope to multinational corporations that need to protect their trademarks in the name of different entities in Mexico.
Eryck Castillo is a partner of Uhthoff, Gomez Vega & Uhthoff, S.C. He can be contacted at: ecastillo@uhthoff.com.mx
Carolina Ponce is associate at Uhthoff, Gomez Vega & Uhthoff, S.C. She can be contacted at: cponce@uhthoff.com.mx
