How Two Companies Can Share International Trademarks

Picture this: You’ve been successfully operating your business under your brand name for a few years. Your local trademark is registered, your customers recognize you, and everything seems solid. Then you discover that a company in another country has been using an almost identical trademark, and they’re planning to expand into your market. Or worse, you’re the one trying to expand internationally, only to find that your carefully built brand is already in use halfway around the world.

Before you panic or rush into expensive litigation, there’s a third option that savvy businesses can use: trademark coexistence agreements. These legal contracts allow two businesses to use similar or identical trademarks without stepping on each other’s toes.

What Are Trademark Coexistence Agreements?

A trademark coexistence agreement is essentially a peace treaty between two trademark owners. The contract recognizes both parties’ rights to use similar or identical marks, establishing clear boundaries for how each can operate.

These agreements require that both parties use their respective marks in good faith, meaning neither intentionally copied the other. Perhaps one company operated in Europe while the other was in Asia. Maybe one sold software while the other sold shoes. The trademarks could’ve coexisted in the first place because their markets didn’t overlap.

The alternative to a coexistence agreement is usually litigation, which can cost hundreds of thousands of dollars in a trial. By contrast, negotiating and drafting a coexistence agreement typically costs up to $10,000 in legal fees. Of course, these costs can balloon when dealing with multiple jurisdictions and complex international considerations.

When You Need a Coexistence Agreement Internationally

There are four common scenarios to consider, each of which might qualify for a coexistence agreement.

First, two companies in different countries can independently develop similar brands without knowing about each other. This is increasingly common as companies try to keep wraps on development details before coming to market, and ideas become less and less distinct from one another due to gradual market saturation.

Second, companies might create similar trademarks, but their low reach has naturally led them not to pursue international trademarks until recently. But when one or both decide to pull the trigger to expand, you can get into a potential conflict.

Third, digital commerce has made marketing globally much easier. Even if you don’t physically operate in certain countries, customers there can access your website, social media, and e-commerce platforms. This creates a gray area where trademark rights can conflict even without a traditional market presence.

Finally, there’s the acquisition or partnership scenario. When companies merge or form partnerships, they might discover trademark conflicts between each other or as a result of obtaining products or services in categories they didn’t use before.

The Limits of Coexistence Agreements

One of the most famous examples of a coexistence agreement both succeeding and failing comes from Apple Corps (The Beatles’ record label) and Apple Computer.

In 1991, these two companies created a coexistence agreement after years of disputes. The agreement seemed straightforward. Apple Computer would have exclusive rights to use Apple marks for electronic goods, computer software, and data processing services. Apple Corps would have exclusive rights for creative works involving music and musical performances. The companies would also keep using their distinctive Apple-based logos on their respective products.

Then came the iPod and iTunes in the early 2000s. Suddenly, Apple Computer wasn’t just making computers, but also distributing music. Apple Corps sued, claiming this violated the coexistence agreement. The court ultimately sided with Apple Computer, ruling that consumers wouldn’t confuse the iTunes software with Apple Corps’ music business. But despite the coexistence agreement, expensive litigation was involved.

As such, even the most carefully crafted coexistence agreement can’t perfectly predict how technology and business models will evolve. So, you must be vigilant and consult professional international trademark lawyers or services from the get-go to minimize the chances of future conflict.

What International Coexistence Agreements Contain

A solid international coexistence agreement needs to address significantly more variables than a domestic one. Here are the essential elements that should never be overlooked.

Geographic Boundaries

Unlike domestic agreements that might divide states or regions, international coexistence agreements must carefully define territories country by country. You can’t simply say “North America” and “Europe.” You need to specify exactly which countries each party can operate in.

But beyond that, you should also carve out service regions where neither party has gone to market yet. This allows each party to plan future expansion and prevent the need for costly renegotiation down the road.

Product and Service Definitions

The goods and services each party can offer under the trademark must be precisely defined, using international classification systems like the Nice Classification. Be specific about not just what you do now, but what you might do in the future. If you’re a software company today but might offer hardware in five years, that needs to be addressed in the agreement.

Quality Control Standards

When another company uses a similar mark, its reputation can affect yours. If they provide poor-quality products or services, customers might associate that negative experience with your brand.

Strong coexistence agreements include provisions about maintaining quality standards and brand integrity. While you can’t directly control another company’s operations, you can establish minimum standards and consequences for failing to meet them.

Digital and E-Commerce Provisions

This is where international coexistence agreements get particularly tricky. Domain names, social media handles, online advertising, and e-commerce platforms don’t respect geographical boundaries.

You need to explicitly address who can use which domain extensions, how each party can advertise online, and what happens when customers from one party’s territory access the other’s website. Without these provisions, the agreement becomes virtually unenforceable in the digital age.

Dispute Resolution Mechanisms

Successful coexistence agreements typically include mediation or arbitration clauses, often through third parties like the WIPO Arbitration and Mediation Center. According to WIPO statistics, 70% of cases are resolved through mediation, and a further 37% of arbitration cases settle. The alternative dispute resolution is far more effective than traditional litigation for these types of conflicts.

Good Candidates for Coexistence

As you might’ve noticed from the famous example above, these agreements work well only when markets are genuinely distinct. If one company operates in industrial machinery and the other in consumer electronics, even identical trademarks might coexist without confusion. But once they start encroaching upon each other’s territory, the line can blur until one side decides it’s had enough.

The contract is also valuable when both parties have strong, established rights. If the companies have existed in their respective markets for years, neither party has clear legal superiority. This makes a collaboration much more cost-effective than the potential loss of profit from litigation and settlements.

If you’re unsure if the other party will have the same good faith, contacting professional trademark protection services that understand both trademark law and international business operations ensures you get the best counsel and information before proceeding. Their goal is to either create a framework that allows both businesses to thrive while protecting your brand equity for years to come or to ensure your business stays protected.