In many countries, trademark registration authorities examine whether an application must be rejected because somebody else has already registered a similar trademark earlier. If the trademark application is rejected because of a prior trademark, it is possible to have the mark registered with the prior trademark owner’s consent.
Typically, the consent covers the applicant’s right to use and register the trademark for particular goods or services. These kinds of consent agreements are relatively common. It could be, for example, that the prior trademark is vulnerable for cancellation for various reasons (typically, for non-use), so the owner has no other real alternative than to grant a consent for the other party to use and register a similar trademark.
Registration authorities also typically require that any consent that is acceptable must be unequivocal, unconditional, and permanent.
Sometimes the question arises whether it is possible later to revoke a consent given to another party. Here’s one scenario: company A tells company B that company B can use a particular trademark that could be similar to the trademark of company A. After years of using and marketing the trademark, company B is told by company A that they now have to stop using the mark. Taking into account that company B has relied on A’s promise to accept the use and has spent a lot of resources (time and money) in building a brand, it seems unfair that they would have to suddenly stop using the trademark.
These kinds of situations arise from time to time. So, does company B have to stop using the trademark?
According to EU court, a trademark owner who no longer consents to the use of a similar mark by another party cannot be deprived from the possibility of asserting the exclusive rights conferred by a trademark. In other words, company A can rely on their trademark rights to prevent company B from using the mark if A no longer consents to the use.
While A is entitled to terminate the consent, it is still possible that A will have to pay damages to B if the consent has been withdrawn unlawfully. This is essentially a question that is decided by national law.
However, the mere termination of consent cannot be considered wrongly or abusive under national law. In other words, if company A decides to exercise the exclusive rights conferred to it by its trademark registration, this itself is not unlawful or grounds for damages: According to EU court, “national law cannot regard the exercise of a right provided by EU law in and of itself as wrongful or abusive”. In order for there to be liability for damages, there must be some other unlawful behaviour. The legitimate expectations of the user (company B) must be taken into account when withdrawing the consent. For example, company A must be a reasonable notice for the withdrawal.
Does company B have any legal options to continue use?
Once the consent is withdrawn, the parties are back to square one. Company B can defend its use on many grounds. It can argue that the marks are not similar or that the goods/services are not similar. It can also try to cancel company A’s trademark for non-use or lack of distinctiveness. In other words, it has all the same arguments as any company that is accused of trademark infringement. Whether these arguments are successful, is another matter. The fact that B has relied on A’s consent indicates at least that the marks and goods and services are similar. That said, B can always argue that it sought the consent as a matter of convenience rather than legal necessity, because it did not want to argue about the similarity of the marks and goods and services with company A.
If you are in this situation, it is important in all negotiations and correspondence to make it as clear as possible that you are seeking the consent in order to avoid unnecessary disputes and legal fees, not because you think that the marks are too similar. Also, it would help to establish in the agreement that the consent is irrevocable and stipulate the consequences if the consent is withdrawn in breach of contract.
While companies and even most trademark attorneys consider use and registration consents as “irrevocable”, the EU court has clearly taken a contrary view. This means that if you rely on another party’s consent, you need to be aware that this consent can be taken away at any time and you may have to change your brand