Faegre Drinker Biddle & Reath LLP

Sometimes the quickest way out of something is straight through it. This advice holds true in life, and in trademarks.

Those who deal with trademarks are familiar with obstacles to registration based on similar third-party marks. It’s frustrating, and especially so if you had conducted a clearance search beforehand in an effort to avoid such obstacles and see no reasonable basis for the Trademark Office’s refusal. Other times, the Trademark Office may approve your application for publication, but a third party will oppose registration during the opposition period. Or maybe you haven’t even applied for registration in the Trademark Office, but you receive a letter threatening legal action if you do not cease and desist from the use of your mark.

In all of these cases, the instinctive response is to start developing counterarguments. Maybe there are specific differences in the marks that are sufficient to avoid marketplace confusion. Maybe the goods and services aren’t that related or the purchasers are sophisticated enough to distinguish between the brands. Maybe you’re comfortable taking your chances presenting these arguments to the Trademark Office or to a court, or maybe you think you could convince the adversary to enter into a formal coexistence agreement. But before jumping to any of these options, consider one additional question: is the quickest way out of this pickle actually through it? And by that I mean, might it make more sense to offer to buy the brand from the adversary? When contemplating a brand buyout, consider the following:

  1. Do some homework. Is the adversary’s brand currently in use? What is the adversary’s brand currently being used to identify? Chances are that if the adversary has objected, their mark is in use. But if the refusal was issued by the Trademark Office, it’s possible that the cited mark is no longer being used and could be removed as an obstacle to registration via a cancellation petition. Or maybe it is only in limited use, in which case the owner might be willing to part with it for a reasonable price.
  2. Consider hiring a third party to negotiate. This isn’t necessary if the adversary already knows who you are (for instance, if they opposed your application in the Trademark Office), but otherwise, anonymity could work to your advantage. If the adversary knows you are a big company, represented by a sophisticated law firm, or otherwise well-capitalized, they may artificially inflate their sale price. Hiring a third party such as a trade investigator to negotiate on your behalf may help prevent an adversary’s avarice from blowing up an otherwise achievable deal. If the mark blocking yours isn’t a brand you would use following acquisition, but you are simply purchasing it to remove it as an obstacle in the Trademark Office, you may wish to adjust your offer price accordingly.
  3. Consider concessions. Sometimes obstacles not relating to money can also get in the way of a successful deal. For instance, some adversaries may want to continue using their brand within their trading area after the sale closes. If their trading area is geographically remote from yours, consider whether it makes sense to offer the adversary a limited license back to continue using the mark (perhaps until such time as your business expands into that area). Other roadblocks may require different but equally creative solutions.

Many consider a brand buyout only after all other options have been exhausted. But I argue that in many cases it is best approached as a first option. If successful, it is almost guaranteed to overcome obstacles in the Trademark Office and will save you the time and effort of presenting arguments. And full ownership of the brand rights is preferable to coexistence in virtually every case. That said, it may take some time to make a deal; I recommend budgeting at least 2–3 months for negotiations with the adversary. And approaching the adversary directly can be a bit risky if you are determined to proceed with adopting the brand regardless of their answer — so the approach is best utilized in cases where you are prepared to pivot quickly to a different brand if they say “no.” Because sometimes the best way out … can instead be jumping ship and starting over.

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