Co-Existence Agreement
When a business faces the possibility of conflict and confusion due to similar names, logos or trademarks, it has a few options. One option is to do nothing and hope for the best. While this may not cause problems for some businesses, it's not recommended for growing businesses or those that want to avoid commercial risks.
Another option is to take legal action, where the owner of an earlier mark can oppose a later mark's registration or seek legal relief if the later mark is used. Even if the earlier mark owner chooses not to take legal action, the later business may still seek a declaration from a court that its name or logo does not infringe on earlier rights. The third option is for the businesses to discuss the potential problems and see if they can come to an agreement on how to prevent them from happening. This approach is known as coexistence.
When to Enter into an Agreement
A coexistence agreement can iron out a lot of uncertainties and difficulties before they occur. This may arise:- if you are aware that another business is trading, or about to do so, in a way that might confuse your customers or damage your business
- if you are worried that someone else is seeking to register a trade mark that might make it difficult for you to continue or expand your business
The same considerations may apply if a bigger business is selling off a subsidiary or broken up into smaller units, each of which wants to be able to make some use of the original business name.
As a rule of thumb, whenever you think that you might at some stage want to sue someone for using your:- Name
- Trademark,
- Goodwill
- Business get-up
Or whenever you think that they might want to sue you for the same reason, a coexistence agreement may be a good idea.
When Not to Enter into an Agreement
In principal, coexistence agreements enable businesses to protect their own legal interests and shape their own commercial destiny, rather than leaving disputed matters to a court ruling that may be expensive, unfavourable and slow in coming. But you should not enter into a coexistence agreement in the following situations:- if you have not yet sorted out your own business plan (since you may find that you have unduly limited the natural scope for expanding your business)
- if you cannot understand its terms and they have not been clearly explained to you
- if you do not own, or have no absolute right to control, the rights that you are agreeing not to enforce
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