Letters of Consent: a comparative view on EU and Latin America Trademark system

By Franco de Barba. Trademark Attorney and Spanish Industrial Property Agent. 

The trademark registration process prevailing in European countries has for many years now, removed the examination that must be carried out by the Trademark Office: the one referring to the existence of earlier trademarks in the name of third parties. This examination has then only been mostly reserved for absolute prohibitions. According to this system, the relative prohibitions of earlier marks will only be examined when a third party filed an opposition to the trademark application filed for registration.

From a procedural point of view, this system prevents the Administration from citing prior mark where there is no conflict of interest between the parties. In this sense, the Administration will not have to point automatically to previous trademarks when the owner has no interest in opposing the new application. It should also be pointed out, that this system contributes to a faster and more efficient process, under the assumption that the nature and meaning of the prohibitions of registration are primarily public in the case of absolute grounds for refusal, and of a private nature in the case of relative prohibitions. The latter are classified this way precisely because they protect private rights. Consequently, their defense should not be imposed during the prosecution of an application but left in the hands of the interested parties, who are protected through the opposition procedure or the exercise of the nullity action to protect their legitimate interests and rights.

This system, more generalized in Europe, differs from the system prevailing in Latin America and in the USA where it is generally considered that, in addition to protecting the private interests of trademark owners, relative prohibitions also fulfill a function of public interest. Thus, a trademark constitutes not only a sole and exclusive monopoly in favor of its owner, so that the owner use it in an exclusive way, but it also has the essential function of guaranteeing the consumer or the end-user the identity of origin of the product or service under the said trademark. This fact permits the end-user to distinguish the product under one trademark from others having a different origin without any possible confusion. Moreover, it constitutes also a guarantee that all the products or services designated with the said trademark have been manufactured under the control of an only company, which is responsible for the quality of the product.

This justifies, therefore, that the Administration is able to automatically apply the relative prohibitions, and not only because of a third party opposition. This fact should consequently limit the possibility that the holders of the rights, which are identified automatically as cause for rejection, may be able to influence in the examination procedure, being the purpose of the said procedure to protect the public interest and therefore the rights of the consumer.

Certainly, one of the strategies that allows overcoming the summons of a previous trademark by default is the submission by the applicant of a consent letter, or coexistence agreement, by means of which the holder of the previous rights authorizes the applicant of the new brand to register and use that brand in the market. Although according to the examiner both signs are similar and at risk of confusion. This possibility may surely clash with the underlying philosophy behind the exercise by default of relative prohibitions by the Administration, unless there is a real coexistence agreement that, due to the conditions imposed on the use of the contested trademark, allows the examiner to assess the impact that the use of the new brand may have on the consumers, as well as to determine the absence of potential harm to them.

In many cases trademark offices, assessing each particular case in a specific manner, may accept a simple letter of consent from the owner of the previous rights in order to overcome an objection based on relative prohibitions. In other cases, as we already mentioned before, it is required a greater commitment from both parties in order to protect the interests of the consumer in a market that is more complex every day.

It is necessary in this regard to make reference to the judgment of the Court of Customs and Patent Appeals of the USA (E.I. du Pont de Nemours & Co., 476 F.2d 1357, 1362, 177 USPQ 563, 568 (C.C.P.A. 1973), making the following statement: “When those most familiar with use in the marketplace and most interested in precluding confusion enter agreements designed to avoid it […] it is difficult to maintain a subjective view that confusion will occur when those directly concerned say it won’t.”

In Mexico, the manner of acting of both the IMPI and the Sala Especializada of the TJFA was, for many years, that neither the coexistence agreements nor the consent letters were accepted on the grounds that acting this way would provide security and certainty to the consumers and that said documents were not even stipulated by the Industrial Property Law. However, after the amendment to the Mexican Industrial Property Law, published on May 18, 2018 in the official journal Diario Oficial de la Federación, which entered into force on August 10, 2018, this possibility was made available again.

Regarding the Andean Community, in its decision from May 11, 2018 (TJCA, Decision nº 187-IP-2017), the Cour of Justice reminded that such agreements, although they may resolve the conflict between the holders of the signs, must protect the general interest of the consumers in order to be effective and accepted by the proper national offices. Said agreements must eliminate the risk of confusion emerging from the identity or the similarity.

In this case, the following requirements must be met for the trademark coexistence to take place: (i) the existence of identical or similar trademarks registrations in the subregion; (ii) the existence of an agreement between the parties; (iii) the adoption of the necessary preventive measures to avoid confusion among the consumers by the parties, as well as providing the sufficient information about the origin of the products or services; (iv) the registration of the agreement in the proper national office; and, (v) the compliance with the rules on trading practices and competition promotion.

In any case, the Court reminds that the signing of private agreements, e.g., consent letters, is not a case for the acceptance by default of the trademark coexistence, because the administrative or judicial authority must always protect the public interest avoiding the risk of confusion for the consumer.

Keeping in mind that in the vast majority of the Latin American countries prevails the opinion that relative prohibitions have a public function by protecting the consumer from confusion, agreements containing just the consent of the holder of a prior registration for a new registration and containing just maybe the statement that the likelihood of confusion is considered unlikely, are often regarded as less convincing than agreements detailing the specific reasons why the parties believe that there is no likelihood of confusion, particularizing the measures adopted to avoid it effectively in the market.