Trademark Delimitation Agreements: An Overview under Indonesian Law

Definition and Purpose of Trademark Delimitation Agreement

Trademark delimitation, also known as coexistence agreements, are created to prevent or resolve disputes between owners of conflicting trademarks by defining the areas in which trademarks may be used. Within the agreement, parties agree to use their marks only for certain goods and services in a certain manner. The owner of the earlier trademark gives permission to the owner of the applied-for trademark to use the trademark, provided that it does not cause confusion among consumers and that it is used for different types of goods than the earlier trademark. A delimitation agreement is not a license agreement, and it does not grant any usage rights. Instead, it is intended to create legal certainty in relation to the use of trademarks, especially in cases where there is a certain similarity between two trademarks, but the outcome of trademark proceedings is uncertain. A frequently encountered situation pertains to the registration of two identical trademarks for diverse goods and/or services, yet the possibility of a potential collision in the future remains imminent.

Application and Regulation of Trademark Delimitation Agreement in Foreign Jurisdiction

  1. EU

The trademark coexistence agreements is mandated under the “Directive 2008/95/EC of the European Parliament and of the Council.” Article 5 of the directive allows member states to approve the registration of a later trademark if the owner of an earlier trademark or prior right consents to it. Although the European Union Intellectual Property Office (EUIPO) does not engage in a thorough examination of relative grounds for trademark registration, there is no official process for submitting coexistence agreements to EUIPO. Nevertheless, parties involved in a trademark dispute are encouraged to pursue a peaceful resolution through negotiation, with coexistence agreements providing a feasible avenue for resolving trademark opposition proceedings.

  1. Singapore

The Registrar may accept an application under the provisions of Section 8(9) of the Trade Marks Act in Singapore and judge whether public confusion is likely to be caused. According to item (b)(i) of 7 in chapter 7 of the Trade Marks Work Manual, the Registrar may give significant weight to a letter of consent from the cited owner. It’s crucial to assess each case individually. If the trademarks are very similar, the goods or services are the same, and the trademarks are meant for the same markets, a letter of consent alone won’t be enough to withdraw a citation. In case the letter of consent is accepted, it should be stated in the Gazette that the trademark was granted based on the cited owner’s agreement.

  1. China

In July 2018, Beijing High People’s Court’s civil court No. 3 issued an article on “coexistence agreement” in IP trials. They clarified whether “coexistence agreement” and “consent letter” could be used as direct evidence to exclude the possibility of confusion. Beijing Higher People’s Court Guidelines for the Trial of Trademark Right Granting and Verification Cases, released in April 2019, prescribe the attributes, formal prerequisites, and legal effects of coexistence agreements. It concluded that coexistence agreements can be used as preliminary evidence to eliminate confusion. However, the legal effect of a coexistence agreement is restricted. If the applied mark is identical or substantially similar to the cited mark and both marks are used on identical or similar goods, a coexistence agreement alone cannot approve the application. If the applied mark is similar to the cited mark and both marks are used on identical or similar goods, and the cited mark owner issues a coexistence agreement, and there is no other evidence to prove that the coexistence of two trademarks will confuse the public regarding the sources of goods, then the trademarks may be determined to be dissimilar.

Letter of consent

In practical terms, registering a trademark is often simplified through the use of a trademark letter of consent (LoC). A trademark LoC is a legal document that allows the owner of a trademark to grant permission for another party to use the trademark for specific purposes. This written agreement may permit a third party to use a registered trademark for a particular product or service without infringing on the trademark owner’s rights. The letter of consent is advisable when someone (one who wish to file a new mark) to use a trademark already owned by someone else, with the aim of preventing confusion in the marketplace and ensuring that all parties are aware of the agreement’s terms and conditions. 

Does Indonesian Law has regulated or acknowledge the Trademark Delimitation agreement?

In Indonesia, the concept of a delimitation agreement or LoC is currently absent from the legal framework and has not been addressed by any relevant precedents. Indonesian trademark law only governs license agreements and trademark assignment agreements, which differ substantially from delimitation agreements/LoC. A license agreement permits the trademark owner to grant permission for the use of their trademark, either in part or in full, for a range of goods and/or services, with such agreements required to be registered with the relevant ministry.

Although the submission of a letter of consent to the Indonesian Trademark Office is feasible, it does not necessarily ensure the successful registration of a trademark. If a trademark application is having provisional refusal, the affected party may provide a letter of consent, but the decision ultimately rests with the trademark examiner’s assessment. The rejection of a trademark application in Indonesia is currently limited to Article 21 of the trademark law, which does not consider delimitation agreements or letters of consent as relevant factors for the acceptance of a trademark that shares similarities with a registered trademark.

Conclusion 

Multiple marks often have similarities or resemblances to one another, creating potential obstacles for trademark applicants seeking registration. Trademark examiners at the TMO evaluate applications and assess any potential disputes that may arise. However, Delimitation Agreement or LoC agreements can help preempt and resolve future disputes, even though they are not yet regulated in Indonesia.

IP consultants (and/or behalf of the trademark applicants) in Indonesia typically draft an LoC, which, however, is not currently recognized or regulated by Indonesian legislation. While the LOC can be used as supplementary evidence to support an applicant’s argument that their trademark has obtained prior approval from an existing mark to coexist in the Indonesian database and in the trading world, it does not guarantee registration. Trademark examiners in Indonesia evaluate applications subjectively, without fixed regulations, rendering this practice acceptable yet non-binding.

1 Sophia Xiao, Current Situation of Trademark Coexistence System and the Application of Coexistence Agreement in the Chinese Trademark Practice” , Beijing Wei Chixue Law Firm, https://www.lindapatent.com/en/info/insights_trademark/2022/0216/1469.html accessed on 20 March 2023. 
2  See Article 41 para. 1 letter a and Article 42 of Indonesian Trademark and Geographical  Indication Law Number 20 of 2016

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Fitri Astari Asril
Fitri Astari Asril
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