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Negotiating trade
mark settlement
and co-existence
agreements
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20/06/2021 Negotiating trade mark settlement and co-existence agreements
n our practice we see a lot of trade mark settlement and co-existence agreements being
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entered into, often when one party requires the other’s consent in order to get its
trade mark registered. It is important, while keeping the immediate goal in mind, to
consider the broader, long-term effects of the terms of the agreement on each
party’s business. In this article, we set out the key considerations that we take into
account in negotiating and drafting settlement and co-existence agreements for our
clients.
PARTIES
Who should sign the agreement? This should be the parties that own the relevant trade
marks, but are there any other users of the trade marks that need to either be bound by,
or have the benefit of, the agreement? Should each party be required to ensure that its
related entities comply with the agreement? Do consents granted under the agreement
extend to use by related entities, licensees and franchisees?
What trade marks of each party does the agreement apply to? How does it allow for
future changes and developments in those trade marks? Because settlement and co-
existence agreements are generally perpetual, you need to take into account changes to
each party’s trade marks over time. We recommend being careful when extending the
agreement to trade marks other than those that each party currently uses.
What goods and services are carved out for each party? Just the goods and services that
party uses its trade marks on at the moment? A broader category that captures areas
that party may move into the future? Again, we recommend being careful when
extending the agreement to goods and services other than those that each party
Often a settlement or co-existence agreement arises when one party has difficulty
registering its trade mark. In seeking consent to that registration, the parties should
carefully consider whether the consent should only extend to registration of the
competing trade marks or use of those trade marks as well. If the parties consent to use,
then they are effectively granting a licence under their own trade marks. This decision
should not be taken lightly, particularly if the arrangement only comes about because
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20/06/2021 Negotiating trade mark settlement and co-existence agreements
TERRITORY
What territory does the agreement apply in? We recommend that this be considered
early in the negotiations, as we have seen negotiations become difficult when one party
changes the territory late in the piece. Also consider whether you need to get local law
You need to be clear and precise about what future uses and registrations each party is
For example, you don’t want to end up being obliged to consent to an application or use
in an area you now operate in. Generally, it is better to agree to provide consent to
registrations, rather than use, and in particular areas, rather than agreeing to provide
What, if any, obligations not to use a trade mark in relation to particular goods and
services is each party willing to commit to? What is the long-term impact of agreeing not
You don’t want to end up not being permitted to use your trade mark in relation to goods
and services you now trade in. Generally, it is better to agree to provide consent for
particular areas, rather than agree not to use your trade mark in relation to particular
NO CHALLENGE CLAUSES
You should consider whether any obligations not to challenge the other party’s IP are
EU, except in the context of settling a dispute. Even in the context of a dispute, they are
not always enforceable. An alternative is to provide that a party can terminate the
TERMINATION
Because settlement and co-existence agreements don’t generally have a fixed term, we
insolvency. But also consider what other termination rights should be included. Should a
party be able to terminate if the other party ceases to use the trade mark the agreement
relates to?
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CONFIDENTIALITY
We generally provide that the terms of the settlement are confidential. But you should
consider whether there is any other confidential information that has passed between the
parties that should be protected.
COMPETITION/ANTI-TRUST LAWS
As you negotiate, you should consider whether the settlement terms give rights to any
competition or anti-trust law issues. For example, does the agreement contain any terms
that:
ASSIGNMENT
What should happen if one party transfers its trade marks to a third party? Should it have
to ensure that third party is bound by the agreement? What should happen if one party
sells its business to a third party? Should it be able to transfer the agreement to the
buyer without consent? What if the buyer is a competitor of the other party? We
recommend including a general prohibition on assignment, with specific exceptions to
We see many agreements which contain clauses stating that the agreement ‘enures to
the benefit of successors and assigns’ or similar. While that type of clause may have legal
effect in certain jurisdictions, in most common law countries (ie, New Zealand, Australia,
United Kingdom), it is questionable at best what legal effect this has. We recommend
being explicit about what happens if the trade marks or relevant business are transferred.
We think it is better to state that, in those circumstances, the seller or assignor has to
ensure the purchaser or assignee expressly agrees to be bound by the terms of the
agreement.
trade mark settlement and co-existence agreements, and can provide specialist advice
that is useful, practical, accurate and timely. If you need assistance in negotiating a trade
mark settlement or coexistence agreement, get in touch with one of our experts below.
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Trade marks
Our trade mark experts can advise you on the availability and
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