As brands grow, so too does the risk of overlap with those in other markets. For many businesses in the UK, especially those branching out into new sectors, it’s not so much a question of if, but when.
A practical and commercial way to manage the risk of intellectual property (IP) infringement is through co-existence agreements, allowing two parties to use similar branding without stepping on each other’s toes – but only if it is carefully managed and regularly reviewed.
The recent High Court judgment on the dispute between Clarks Shoes and cycling company Trek has demonstrated both the useful nature of the agreements and the responsibilities they can enforce upon the parties involved.
Megan Jefferies, Partner in Thrings’ Intellectual Property team, takes a look at the case and how effective such agreements can be.
What are co-existence agreements?
A co-existence agreement is a contract between two (or more) IP owners, setting out how similar rights can be used side-by-side, commonly where:
- two brands use the same or similar names in different sectors;
- there is a risk of trade mark opposition or infringement claims; or
- businesses want certainty before expanding into new markets.
Typically, these agreements cover:
- who can use what, and where (product categories, territories);
- branding aspects such as logos and colours;
- future expansion rules – e.g. what happens if one party diversifies;
- dispute resolution mechanisms required if one side were accused of a breach.
At their best, co-existence agreements allow businesses to avoid costly disputes while preserving brand value. But as the Clarks v Trek case shows, they don’t solve every issue.
Clarks v Trek
The High Court case centred on a long-running dispute over the use of the word “TREK” -with both having used the word to market their products for around 50 years.
To avoid conflict, the two companies entered into a co-existence agreement in 2001, which broadly meant:
- Clarks could use “TREK” for footwear (but not for sports or cycling-specific use);
- Trek could use “TREK” for cycling goods/apparel (but not for footwear).
We understand that for years, the arrangement worked but problems arose when Trek began selling “TREK”-branded cycling shoes and related products. Clarks argued this breached the agreement and infringed its trade marks.
Trek, in turn, argued that cycling shoes were not “footwear” in the sense intended by the agreement, and that it had informal consent from Clarks to expand into that space.
The High Court rejected those arguments. It found that:
- “footwear” did include cycling shoes;
- any alleged consent was too informal to override the written agreement; and
- Trek’s use of “TREK” on cycling shoes infringed Clarks’ trade marks.
However, the decision did not go entirely in Clarks’ favour as some of its own products were found to have breached the same agreement, having strayed into “sports or fitness” territory.
In short, it seems both parties were thought to have fallen foul of the two-decade-long agreement.
Making the most of a co-existence agreement
For businesses thinking about entering into (or relying on) a co-existence agreement, there are some clear takeaways to help avoid bigger issues further down the line.
· Is a co-existence agreement right for you? – Having an agreement in place might seem like a sensible option, but it doesn’t solve every problem that you might encounter down the line.
· Be precise – Vague wording can be costly in a dispute so avoid any ambiguity that could lead to more than one interpretation.
· Do not rely on informal discussions – Make sure every exchange that could impact the agreement is properly recorded as informal conversations would be unlikely to override a formal written agreement.
· Plan for future growth – Businesses grow and their products and services evolve, so what seems like a clear dividing line between the activities of two parties might not hold in the years to come so make sure any agreements anticipate this with mechanisms for variation.
· Conduct regular reviews – Regular reviews can help ensure that the contract still reflects commercial reality and reduces the risk of accidental breach. This should also look to address responsibility for licensees, affiliates and collaborators.
· Align legal and marketing teams – Internal conversations are just as important as external ones, particularly where restrictions of co-existence agreements apply. Branding and marketing can shift in line with a business’ evolution but it is important that these outward facing departments are in regular contact with their legal counterparts.
Megan Jefferies said: “Co-existence agreements remain a valuable tool for businesses navigating crowded markets. But they work best when treated as living documents – carefully drafted, regularly reviewed, and supported by clear internal processes.
“If your business is considering expanding into a new space, or you are concerned about potential overlap with another brand, taking legal advice early can help avoid costly, brand-damaging disputes.”
Thrings’ Intellectual Property lawyers are experienced in safeguarding brands and trade marks from infringement and have successfully advised national and multinational organisations on a range of matters. To find out how they can help protect your IP rights, get in touch
