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Trademark coexistence agreements: New facts are not reason enough to challenge their validity

By: Jorge Oria

September 15, 2022

Barcelona’s Province Court (Intellectual Property section 15) has confirmed in a recent decision (ECLI:ES:APB:2022:6656) that coexistence agreements remain perfectly valid means to settle trademark disputes. Although this position might not surprise many (see e.g., EUIPO’s cases R0590/1999-2 and R0132/2002-2 among many others) it is not so frequent to see court decisions where the extent of such validity is discussed.

Spanish practice:

 Not many cases involving coexistence agreements end in court. RENE BARBIER Supreme Court leading decision (ES:TS:1988:8806) is frequently cited in this regard. In that case, the Court confirmed the validity of a transactional agreement (i.e., the parties mutually withdraw their claims) against an invalidity action. The inter partes res iudicata effect of a transaction (§§  1809, 1816 Spanish Civil Code – SPC), impedes any court to decide on an identical case involving both parties.

Sometimes the parties challenge the agreement or its effects invoking the Spanish Civil Code rules about the “spiritual” interpretation of the agreements.  Since this means that what is written must align with the parties’ initial will, abundant interrogations, and further evidence are routine (§§1282 et seq. SPC).

The case:

For some years, the Italian company BENETTON, and the Ibiza-based company ICE MOUNTAIN (owner of the Ibiza disco OBEACH) discussed the compatibility of the following signs:

Trademark coexistence agreements: New facts is not reason enough to challenge their validity

The parties finally reached an agreement that put an end to the controversy.

It is worth mentioning that the Spanish company must cease and desist from using the sign and would not obtain any trademark protection for it. At the same time, it should not challenge the validity of Benetton’s trademarks in the future.

Sometime later, the Spanish company tried to obtain new trademark registrations that in Benetton’s view were neither compatible  (the company invoked the agreement and filed administrative oppositions).

A subsequent suit seeking the cancellation for non–use of the Italian trademarks was simultaneously filed before Spanish Courts and EUIPO. Benetton counterclaimed, asking for the enforcement of the prohibition on ICE MOUNTAIN and the immediate withdrawal of all filings and actions brought before EUIPO.

The debate:

 Although ICE MOUNTAIN did not discuss the validity and enforceability of the agreement, it said that since there was a new and different sign, the mandatory requirement of an “identical object” for the res iudicata effect (claimed by Benetton) was not met:

Trademark coexistence agreements: New facts is not reason enough to challenge their validity

However, the magistrates, in line with the Spanish Supreme Court (ECLI:ES:TS:2010:1874) confirmed that ICE MOUNTAIN’s strategy was unacceptable due to the impossibility of raising issues affecting pre-settlement situations. The obligation assumed by the Spanish company not to initiate actions “in any jurisdiction” which would challenge the registration of the marks bearing BENETTON’s logo was certain and clear and as such, enough to invalidate the suit.

Antitrust issues aside, coexistence agreements can be powerful tools to settle lengthy and complex trademark disputes. Some clients – and even trademark attorneys – draft easy terms (and even use templates) to quickly avoid opposition procedures. This is an ill practice that can lead to future problems, even years later. A coexistence agreement should be made to last for a long time because building a trademark, a clientele, and a reputation is not a question of days.

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