1. Preface

At present, in China’s trademark substantive examination system, China National Intellectual Property Administration usually rejects the application on the grounds that it is similar with the prior trademark of other persons. At this time, one of the means for the applicant to overcome the prior right is to seek the coexistence agreement issued by the prior right holder. In the case that both parties have a series of trademarks and each other’s trademarks have been rejected for many times due to the opposite party’s trademarks, both parties will usually reach a coexistence agreement on the series of trademarks. Therefore, how to review the trademark coexistence agreement, avoid legal risks, so that enterprises can successfully register trademarks in the future is particularly important. Here, we will discuss how to avoid legal risks and to make the coexistence agreements more completed from the perspective of examination. 

2. Function of the Coexistence of Agreement in Trademark Cases

The trademark coexistence agreement is an agreement whereby the owners of the trademarks of both parties agree to co-exist with each other on similar goods for one or more trademarks. There are two (2) main kinds of the trademark coexistence agreement, the first is a legal document issued by a trademark owner to the other party, agreeing that the other party’s trademark and its own trademark coexist on similar goods. The other is an agreement signed by the trademark right holders of both parties agreeing to co-exist in the market between the series of trademarks. Generally, this kind of agreement appears in review of trademark rejection, announcement of invalidation and review of rejection of registration. In the cases mentioned above, usually through the submission of coexistence agreement, to let their own trademark smoothly go through the examination, or successfully maintain their own trademark registration. 

However, regards to coexistence agreement of series trademarks, various conditions are usually agreed on the coexistence of trademarks of both parties. It is clearly stipulated in the Administrative Adjudication Guideline for Trademark Authorization and Confirmation issued by Beijing Higher People’s Court, in judicial trials, the court does not approve the coexistence agreement of agreed conditions. In this case, both parties often list the trademarks they agree to coexist in the appendix of the agreement and issue a sperate letter of agreement when a single trademark is rejected, to let the other party’s trademark pass the examination. 

3. Potential Legal Risks caused by the coexistence agreement of trademark

Although the trademark right belongs to private right and property right, the exclusive right holder can freely deal with it, but it is also strictly restricted by the trademark supervision authority. For example, the application for trademark registration cannot constitute similarity on the identical or similar goods with prior trademarks of others, which may result in confusion and misidentification among the public, cannot violate relevant laws and regulations, social orders, cannot mislead the public. Hence, although the coexistence agreement is a disposition of one’s private rights and interests by others, the Court and TRAB may not recognize the coexistence agreement if the two trademarks are highly similar or are absolutely prohibited from the use. Furthermore, one party’s use of unregistered trademarks also faces multiple legal risks, such as trademark infringement, punishment from trademark regulatory authorities, which are described below: 

1. The trademark examination authority does not recognize the coexistence agreement. That is, although two sides reached the coexistence agreement of the trademarks, the trademark examination authority still considers that both parties’ trademarks are highly similar, or considers one of parties’ application for trademark violated the public order, moreover, one party’s application for the registration has been rejected/declared for invalidation/ has not been granted for registration. 

2. Two parties have already filed cancelation, opposition, declaration of invalidation, review of not grant of registration and other legal action against another party’s trademark. However, after reached the coexistence agreement, the relevant action cannot be withdrawn due to deliberate delay by one party, the national trademark review has already made adverse judgement. 

3. Use of the trademark constitutes infringement. That is, when one party using the trademark, it infringed the third party’s legal rights or after concluded the coexistence agreement, deliberately copied another party’s trademark. At this point, the suspected infringer may claim that the coexistence agreement has not been defended, or in the name of the coexistence agreement still requires the genuine trademark right holder to issue the coexistence agreement. 

4. The trademark of one party actually has the absolutely prohibited article stipulated by the Trademark Law, its use has been investigated by the market supervision authority, one party should file defense based on the coexistence agreement and the status of registration of another party’s trademark. 

5. If the trademark of one party is transferred, and the obligee intentionally conceals the coexistence agreement or negligently causes the assignee to be unaware of the coexistence agreement, after the completion of the transferring, the assignee disregards the coexistence agreement and continues to file adverse legal actions against the relevant trademarks. 

IV. Matters needing attention of reviewing coexistence agreement of trademarks

For the legal risks mentioned above, special attention should be paid to the following aspects when reviewing the coexistence agreements of series trademarks: 

1. The conditions for reaching the coexistence agreement are clearly stipulated in the agreement. Generally, only when the two parties are engaged in different fields, two parties’ trademarks have been used in different fields, furthermore, they are different in terms of characters, appearance and sounds, then, two parties agree on the coexistence. In this case, the conditions for coexistence should be full stated to avoid ambiguity. 

2. Regard to “consenting to issue coexistence agreement”, that is, one of engagements parties’ application for the trademark registration has been rejected by China National Intellectual Property Administration due to another party’s cited trademark, another party agrees to issue and present Coexistence Agreement on a specific trademark, the time limit provided shall be agreed according to the circumstance to avoid deliberate delay. Also, concerned two parties can list specifically coexist trademark in attachments, and agree that if there is a need for a trademark to be registered in the future, it shall be handled in accordance wit the provisions. 

3. Regard to “consent to use”, that is, one of engagement parties’ trademark finally rejected by China National Intellectual Property Administration, concerned two parties agree that the rejected party shall have the right to continue to use relevant trademark in the original field and territory. However, in order to avoid the legal risks mentioned above, followings should be indicated: (1) The party in action should independently assume the duties posed by such kind of use, it should not be the defend grounds for infringement or improper use. (2) Another party’s trademark should not be copied or imitated during the use, or deliberately attempt to gain goodwill from another party. 

4. Regard to “no opposition”, that is, after reach of the coexistence agreement, both parties should not pose adverse legal actions to another party, i.e. opposition, declaration of invalidation, withdrawal of application. In the reality, if two parties have already filed actions against each other’s trademark, they shall also agree on the time limit for withdrawing actions, also agree that the withdrawing party should not deliberately delay or file wrong documents to cause the withdrawal failure. 

5. Regard to “transferring”, that is, the assignee should be informed of the coexistence as much as possible when the coexisted trademark under the name is transferred, avoiding the coexistence agreement cannot be realized after the completion of transferring. 

6. Regard to “responsibility of default”, aiming to obligations and duties mentioned above, the corresponding articles in terms of default and recission of agreement shall be set in coexistence agreement, that is, if the purpose of the agreement cannot be realized because one of parties violated duties or rights mentioned above, or one of parties is entitled to dismiss the agreement when another party intentionally fails to perform its main rights and obligations, and the non-breaching party is entitled to investigate corresponding liability for the breach of contract. 

7. Other articles, besides for articles mentioned above, it is also suggested to stipulate other more procedural provisions, i.e. applicable provision, dispute resolution clauses in the coexistence agreement. 

V. Conclusion

Currently, the coexistence agreement is more and more common to trademarks authorization and confirmation administrative cases, also it plays an increasingly important role. Courts and national TRAB are inclined to accept the coexistence agreement. As a practitioner in the trademark field, if a coexistence agreement is encountered, legal risks should be avoided by improving the content of the agreement during the review, so as to better safeguard the legitime rights and interest of customers. This paper is for reference only, hope to communicate and learn with you.