Trade mark co-existence agreements: Considerations for brand owners

A recent decision by the High Court in the case of C & J Clark International Limited (trading as Clarks) v Trek Bicycle Corporation has served as a reminder of the importance of keeping to the terms of historic co-existence agreements and the need for renegotiation if a business branches out into other areas. The case also highlights that informal arrangements discussed, for example, in meetings, are unlikely to overturn formal written conditions.

In brief, the dispute concerned the use of the work ‘TREK’. By means of a co-existence agreement entered into in 2001, an arrangement was reached whereby Trek could use the name for cycling goods and apparel, and Clarks could use it for footwear. Despite successful co-existence over many years, Trek’s expansion in 2016 into TREK-branded cycling shoes ultimately led to formal litigation.

Interpretation of co-existence agreements in UK trade mark law

Trek argued that cycling shoes were not footwear according to the agreement and that the term ‘footwear’ was not intended to include cycling shoes, since Clarks did not operate in that area. In addition, Trek claimed that it had informal consent from Clarks (via a 2018 meeting) to venture into that field. The Court disagreed, finding that ‘footwear’ includes shoes designed to be worn on the feet, regardless of specialisation and that the informal meeting discussion fell short of clear consent, especially in view of the formal, carefully negotiated written co-existence agreement.

Risks of co-existence agreements for brand owners

The case is a reminder of the benefits and drawbacks of co-existence arrangements; whilst they are a useful tool, providing the ability for potentially confusing trade marks to co-exist in the marketplace, these arrangements can impose unduly onerous restrictions on the use of a mark. Effectively managing these arrangements requires robust internal processes, to ensure compliance with the terms.

Drafting and future-proofing trade mark agreements in the UK

It is vital that any agreement includes the following points:

• Clearly identify the parties and the trade marks involved, including their registration status and the classes of goods and/or services they cover;
• Detail the commercial activities and geographical locations in which co-existence will be permitted;
• Set out any restrictions on use, such as limitations on online marketing or keyword advertising;
• Consider expansion plans and how the potential use of global websites for marketing will impact the arrangement. Future commercial strategies and emerging technologies should be considered;
• A start date and, if appropriate, end date must be included;
• Include a statement about which law applies and in which country any legal action should be brought.

In summary, whilst co-existence agreements can be a practical solution to avoid disputes, they require careful drafting so that each party’s rights are not disproportionately restricted. If drafted too tightly, the scope of a business’ expansion into new markets can be severely impacted.

Next steps 

If you would like advice on trade mark co-existence agreements or ensuring your arrangements remain fit for purpose, please contact a member of the Commercial and Technology team at [email protected].