Trademark coexistence agreements can be a cost-effective alternative to expensive and lengthy court proceedings. However, whether such an agreement makes sense and what content it should have always depends on the individual case.
At Schlun & Elseven Rechtsanwälte, our German intellectual property law team provides reliable advice based on the trademark and economic situation to provide the best possible protection. If a trademark coexistence agreement is the better alternative to litigation, our IP lawyers will draft it in detail to achieve long-term protection of the trademark.
The Legal Framework of Trademark Coexistence Agreements in Germany
A coexistence agreement is a civil law contract in Germany that resolves trademark disputes between two parties. The purpose of such an agreement is to enable the coexistence of both trademarks in the marketplace. These agreements aim to provide long-term solutions by clearly defining the different protection scopes and usage possibilities for each trademark on the German or international market.
For example, the trademark “Diesel” is registered both for textiles in the fashion industry and for vehicle fuel in Germany. In this case, the protection scope of “Diesel” is limited to its respective area of use, enabling both right holders to coexist on the market through clear regulation.
This approach applies not only to identical trademarks but also to those with similar appearances or pronunciations. In essence, it is relevant whenever there is a potentially elevated risk of confusion. Therefore, coexistence agreements present a viable option when the trademarks’ scope of protection can be clearly differentiated. Situations become problematic when a trademark has similar sound or appearance and is also registered for the same scope of protection. In such cases, drafting a coexistence agreement that satisfies both parties’ interests becomes challenging.
When agreement is not possible, it is common for one part to send a cease-and-desist letter to the other – the optimal outcome being the deletion of the competing trademark.
The Purpose of Trademark Coexistence Agreements
In Germany or elsewhere the deletion of a trademark generally requires a court order. Coexistence agreements serve as an alternative to litigation. In some cases, they are also negotiated during a trial. Legal proceedings represent an economic burden for businesses, making coexistence agreements both legally and economically prudent solutions. Ultimately, they provide flexible approaches to resolving complex trademark disputes on the German or international market.
Key Elements and Structure of Trademark Coexistence Agreements
Typically, coexistence agreements contain terms governing trademark usage. For example, they may include a partial waiver of trademark rights for specific goods and services. Additionally, they can establish regulations concerning the trademark regarding font, colour, size or other similar aspects are possible. Furthermore, these agreements specify legal consequences should either party violate the terms.
Coexistence agreements operate exclusively inter partes, meaning they bind only the contracting parties. If parties wish to extend these effects to potential legal successors, specific clauses must be incorporated into the contract. Beyond this limitation, both the formation and content of coexistence agreements fall under private autonomy, as with all civil law contracts in Germany. This means both parties enjoy freedom of contract and may decide whether to enter into a coexistence agreement and, if so, what terms to include. While sample templates can provide a foundation, it is essential to recognize that unique circumstances often require customisation. Consequently, relying solely on templates increases the risk of errors or, worse, omitting crucial regulatory content.
Protection Period and Right of Termination in Germany
Unlike license agreements, trademark coexistence agreements do not typically include provisions for ordinary termination unless specific cancellation clauses are incorporated into the contract. This is because trademark rights remain registered and can be extended for an unlimited period through payment of renewal fees. Consequently, the need to distinguish between potentially confusing marks persists. This consideration is particularly significant when the agreement’s purpose was to permanently resolve a dispute, especially in cases where parties have invested substantial resources in developing their trademarks, (LG München, Urteil vom 11.10.2022, Az. 33 O 10784/21.)
Extraordinary termination rights are generally restricted under German law. A possible exception might arise only in cases of substantial justification, (LG Braunschweig, Urteil vom 28.08.2013, Az. 9 O 2637/12.) However, if the party facing termination has fulfilled its contractual obligations, extraordinary termination will typically be prohibited, (LG München, Urteil vom 11.10.2022, Az. 33 O 10784/21.
Practice Group: German Intellectual Property Law
Practice Group:
German Intellectual Property Law
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