Barreda Moller writes...

Trademark Coexistence Agreements and Letters of Cosent: new precedent of mandatory compliance for its acceptance in Peru

A universally widespread practice in Trademark Law is the execution of Trademark Coexistence Agreements and Letters of Consent, particularly when an objection is raised against an application for registration of a trademark which could be confusable with a previously registered trademark. By virtue of these documents, the owner of the trademark cited as impediment for the registration of the mark subsequently applied for, allows the registration of the latter, the trademark owner being able to establish the conditions under which this authorization is conferred. The negotiation of these agreements allows, in practice, giving solution to conflicts between private parties. Certainly, the competent authorities frequently reserve the right to accept these Trademark Coexistence Agreements and Letters of Consent, mainly when it is determined that there will not be confusion risk in the market with respect to the trademarks in issue.

With the idea of providing more objective criteria with regard to the acceptance of Trademark Coexistence Agreements, the Trademark Authority has issued a precedent of mandatory compliance adopted by Resolution No. 4665-2014-TPI-Indecopi of December 15, 2014 and published in the official gazette “El Peruano” on February 11, 2015, in virtue of which are established the specific requirements that trademark coexistence agreements must contain. Thus, it is established that for the authority’s approval of a trademark coexistence agreement, it must contain certain minimum conditions such as:

a) Information of the signs that are subject matter of the agreement, indicating the word and figurative elements that composed them, as well as the products or services to which said signs are referred (as registered and/or applied for).

b) Delimitation of the territorial scope in which the agreement will be applicable.

c) Delimitation of the products or services which will be distinguished in the market by the signs that are subject matter in the coexistence agreement. For that purpose, it will be necessary that the parties request the effective limitation of the products and/or services in the respective registrations and applications.

d) Delimitation of the way of use and/or display of the signs.

e) State the consequences in case of failure to comply with the agreement.

f) Establish the mechanisms for the settlement of controversies in case of any dispute between the parties.

The precedent of mandatory compliance establishes that trademark coexistence agreements not containing the minimum conditions above indicated will not be accepted by the administrative authority; nevertheless, it is worth mentioning that the abovementioned does not determine that agreements which do contain such minimum conditions will be automatically approved, since the authority must evaluate if what has been agreed by the parties comply or not with the purpose of the agreement.

The purpose of said precedent of mandatory compliance is to reduce the most the confusion risk between two or more signs in compliance with the protective role that the administrative authority has to take in order to prevent that the consumers’ general interest be affected. In this sense, trademark coexistence agreements will be valid and binding for the parties provided that they do not violate imperative rules, such as legislation of defense of the competition or those protecting consumers with respect to practices that could be misleading. For this, it will be necessary that the agreement contains measures and provisions destined to reduce the risk of consumer confusion with respect to the origin of the products or services concerned.

It was expected that the trademark authority offered clear parameters for the approval of trademark coexistence agreements reducing the so variable discretionary power that existed in this regard but, as it has been specified that the compliance with the minimum conditions to be included in the coexistence agreements does not imply that they will be automatically approved but that anyway all the agreements will be submitted to the rigorous scrutiny of the authority, we believe that the principle of contractual freedom is affected since, in practice, the very broad discretionary power of the authority cannot be reduced and, therefore, arbitrariness interdiction cannot be achieved.

We note in the criterion adopted by the trademark authority an excessive diligence in defending the public interest, aimed at guaranteeing that consumer may differ the products or services from one or another competitor by the branding, without the possibility of any error when, in this particular issue which concerns us, this interest normally coincides with the private interest of the entrepreneurs of protecting their exclusive right in their respective trademarks that distinguish their corresponding products or services, being logical, from this perspective, that none entrepreneur will seek when executing a trademark coexistence agreement that his/her trademarks be confused with those of his/her competitors despite the possible similarity that may exist between them, and if such similarity did not exist in any degree, then it would lack purpose to execute the agreement.

It is worth mentioning that the precedent of mandatory compliance, which is being commented herein, establishes that the Trademark Office will not accept the presentation of Letters of Consent since, on the one hand, Article 56 of Legislative Decree 1075 only makes reference to Coexistence Agreements and, on the other hand, it is affirmed that Letters of Consent are unilateral expressions of will which are not enshrined in said article. In our opinion, such consideration corresponds to an equivocal interpretation of the rules.

The fact that Letters of Consent are not expressly mentioned in the law does not imply that said expressions of will are by themselves legally invalid. No legal provision prevents the owner of the trademark that, in the legitimate excercise of its property right, grants a Letter of Consent to a third party in order to use or register a similar trademark under the legal principle proposed by the well-known jurist Hans Kelsen that “what is not expressly prohibited is allowed,” included in the Political Constitution under the epigraph that “Nobody is obliged to do what law does not order, nor prevented from doing what law does not prohibit” (Article 24 literal a). In this case, what is within the competence of the trademark authority is only to determine if the public interest of the consumer could be affected in case the similar trademark was sought to be registered, protected by a Letter of Consent and, if so, to deny the applied-for registration by rejecting the acceptance of said letter.

The validity of the granting of a Letter of Consent only demands the compliance with the general requirements for the validity of the legal act, that is, capable agent, physical and legally possible object, lawful purpose and compliance in the way established by law under penalty of nullity. If these requirements are complied with, the act must be considered completely valid. In conclusion, contrary to what is stated in the precedent of mandatory compliance, which is being commented herein, Letters of Consent should be accepted by the trademark authority unless it is determined that the consumer public interest could be affected by their content since, in such a case, the licit purpose of the legal act would not be complied with.

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