How to Use a Trademark Consent Agreement to Overcome a 2(d) Refusal
Alex Sandler | October 05, 2020
Likelihood of confusion with a prior pending application or registered trademark is one of the most common substantive reasons that an examiner can refuse an applied-for mark. As trademark attorneys know, an applicant facing a §2(d) refusal may respond to an office action and submit arguments in support of registration. But a meaningful agreement between parties to allow both marks to coexist, referred to as a consent agreement, can help an applicant overcome a §2(d) refusal. An applicant that anticipates a §2(d) refusal may even proactively seek a consent agreement before initiating the application process.
In a consent agreement, the owner of a registered trademark provides permission to an applicant to register a similar or identical mark because the parties believe that confusion is unlikely. An examining attorney considers thirteen factors (the “DuPont” factors), including whether an applicant has obtained consent from the owner of a registered trademark to use a similar mark, in determining whether there is a likelihood of confusion between marks. Therefore, a consent agreement can be a useful tool in overcoming a likelihood-of-confusion refusal. In In re E.I. du Pont de Nemours & Co., the United States Court of Customs and Patent Appeals held, “when those most familiar with the use in the marketplace and most interested in precluding confusion enter agreements designed to avoid it, the scales of evidence are clearly tilted. It is at least difficult to maintain a subjective view that confusion will occur when those directly concerned say it won’t” 476 F.2d 1357, 1363 (CCPA 1973). How much value a consent agreement has will depend on how detailed the agreement is and whether the DuPont factors overall indicate that consumers are not likely to be confused.
Aside from being an effective option to overcome a §2(d) refusal, a consent agreement also reduces chances of future disputes between the parties, provided that neither party breaches the agreement. We’ll discuss what should be avoided and what should be included in a consent agreement in order to overcome a §2(d) refusal.
Caution Against Naked Consent Agreements
The USPTO advises against “naked consent” agreements, in which the owner of a registered trademark provides consent to the registration of a similar mark without information explaining why confusion is unlikely or what the parties will do to minimize consumer confusion. These types of consent agreements do not usually carry much weight in a likelihood of confusion analysis.
For example, in In re KTM-Sportmotorcycle AG, the TTAB affirmed the examiner’s refusal to register the mark “E SPEED” on the grounds that it is confusingly similar to the mark “EPSEED.” While the owner of the registered trademark and the applicant entered into a consent agreement, the Board found that the terms of the agreement constituted a naked consent. The agreement, in fact, consisted of only three paragraphs:
[Applicant] agrees to limit its goods to the goods identified above.
[Registrant] consents to [Applicant’s] use and registration of its [mark] for the goods identified above, and states that such use does not create a likelihood of confusion with [Registrant’s] registration.
If either party should become aware of any instances of actual confusion between the parties with respect to their respective use of their respective marks for their respective goods, that party will promptly notify the other party of the circumstances of such confusion, and both parties shall cooperate in taking any reasonable action for avoiding any further confusion.
The only part of the agreement that has any substance is the last paragraph. However, without explaining why confusion is unlikely or how the parties will cooperate with each other in the future to avoid confusion, the agreement was insufficient to overcome the §2(d) refusal, and the applicant’s mark failed to register.
Requirements for Consent Agreement
At the very least, a consent agreement should detail the reasons why the confusion between two marks isn’t likely, considering the differences in the marks and the goods or services, the number of similar marks in use, the conditions under which purchases are made, and any other relevant distinctions. In In re American Cruise Lines Inc., the TTAB ruled that a consent agreement in which “competitors have clearly thought out their interests” should be given great weight, and the USPTO should not submit its judgment concerning likelihood of confusion over the objection of the parties involved. See 128 U.S.P.Q.2D (BNA) 1157, 1163 (TTAB 2018). In that case, the parties were both cruise lines bearing similar marks. They submitted a consent agreement which included five credible reasons regarding why confusion between their marks was unlikely, specifically:
Applicant always refers to its ship as AMERICAN CONSTELLATION and agrees not to refer to it as CONSTELLATION;
Cruise ship services customers exercise a heightened degree of care when selecting a cruise ship service;
Cruise ship services customers know that Applicant uses “American” as a house mark;
For over ten years, Applicant’s AMERICAN INDEPENDENCE cruise liner and Royal Caribbean’s INDEPENDENCE OF THE SEAS cruise liner have coexisted without any reported instances of confusion; and
Applicant and Registrant agree that confusion is unlikely because “different cruise lines operate numerous ships under names that share terms in common. Examples include Carnival’s LEGEND and Royal Carribean’s LEGEND OF THE SEAS; Radisson’s SEVEN SEAS NAVIGATOR and Royal Carribean’s MARINER OF THE SEAS; and [Applicant’s] INDEPENDENCE and Royal Caribbean’s INDEPENDENCE OF THE SEAS.
Consequently, the Board found that the consent agreement was sufficient to overcome the §2(d) refusal. A detailed consent agreement can help tip the scales in favor of finding no likelihood of confusion, showing that the parties are making active efforts to avoid confusion.
Although not required, it can be helpful for the parties to outline the steps they will take to minimize future confusion. This is especially true for marks that are identical and are used with the same goods or services because these must meet a higher bar to convince an examining attorney that confusion is unlikely. For example, you can avoid confusion by setting restrictions on which goods or services will be allowed. Also helpful may be a provision that details how the parties will promote the products to avoid confusion, e.g., both parties agree to use a specific trade dress with the mark. Furthermore, it’s always a good idea to include in the consent agreement a statement that the parties agree to take any necessary steps in the future to avoid activity that would lead to confusion.
It’s important to note that a consent agreement should not contain terms that are not reflected in the application (e.g., geographical limitations, trade channel restrictions, and any other terms that are designed to distinguish the parties and are not a part of the application). For example, in In re Bay State Company, Inc.,, the TTAB found that a consent agreement was insufficient to overcome a §2(d) refusal because the geographical restrictions in the agreement were not part of the application. See 117 U.S.P.Q.2D (BNA) 1958, 1965. In that case, the parties agreed that the applicant could use the mark “TIME TRAVELER BLONDE” in New York and New England, while the owner of the registered mark “TIME TRAVELER” was free to use the mark throughout the US. See id. at 1963. Both marks were used in connection with beer. See id. The consent agreement presented a couple issues: First, both marks could still be used in overlapping geographical areas (New England and New York), which would not alleviate confusion because the marks are so similar and the goods are identical. See id. at 1964. In addition, because the applicant was seeking nationwide registration, the public may not notice or be aware of the geographical restrictions set forth in the agreement. See id. at 1965. The result likely would have been different if the applicant applied for a concurrent use registration. A concurrent use registration restricts an owner’s use of a mark to a certain geographical area and lets the public know that a registration is restricted.
Finally, a well-drafted consent agreement will have signatures from both parties. To learn more about consent agreements, please take a look at the Trademark Manual Examining Procedure Guide (TMEP) under §1207.01(d)(viii).
A detailed consent agreement can help you overcome a §2(d) refusal. The agreement should be supported by evidence including differences in the marks, the goods or services, or trade channels; mere consent without substance will not overcome a §2(d) refusal. It can also be beneficial to include provisions detailing the steps your client will take to minimize confusion. If you anticipate that the examiner is going to refuse your client’s application due to a likelihood of confusion with a registered mark, you can always consider seeking a consent agreement with the trademark owner before you apply. This may help save time in the trademark application process and help your client get a better sense of the application’s chances of success. In any case, a consent agreement can be a great tool to help your client overcome a §2(d) refusal and receive federal trademark protection.