The USPTO Is Dropping the Hammer on Consent Agreements Since In re Bay State Brewing

Photo of ants on opposite sides of a bamboo stick

A consent agreement is exactly what it sounds like. It’s an agreement in which a party consents to the use and registration of the other party’s trademark. Usually, the agreement is bilateral with both parties consenting to the other’s use and registration.

Consent agreements are usually submitted to the U.S. Patent and Trademark Office (“USPTO”) to overcome an office action refusing registration because of a § 2(d) likelihood of confusion with a prior registration or prior pending application. Most of the time, a consent agreement is sufficient to overcome a § 2(d) likelihood of confusion refusal, but the USPTO is not obligated to withdraw the refusal.

The TMEP and Consent Agreements

The USPTO’s handling of consent agreements is set forth in § 1207.01(d)(viii) of the Trademark Manual of Examining Procedure (“TMEP”). The long and the short of it is that (i) consent agreements are only one factor to be taken into account in the likelihood of confusion analysis (specifically, the market interface between the applicant and registrant), which is the 10th factor in the Federal Circuit’s du Pont likelihood of confusion test; (ii) “naked” consent agreements (i.e., agreements that don’t set forth the reasons why the parties believe there is no likelihood of confusion and arrangements by the parties to avoid confusion) are less persuasive and more likely to be rejected by the USPTO; and (iii) in accordance with Federal Circuit Court precedents, proper consent agreements are to be given great weight and an examining attorney should not substitute his own opinion that confusion is likely.

The TTAB’s Recent Decisions on Consent Agreements

Despite the Federal Circuit’s decisions reaffirming the substantial weight to be given consent agreements by the USPTO, the USPTO seems to be scrutinizing consent agreements much more than it has in the past. In fact, when I started practicing trademark law, if I submitted a consent agreement in response to a § 2(d) likelihood of confusion refusal, the USPTO withdrew the refusal every single time. Even when I was submitting naked consent agreements. Times have changed.

In fact, since the TTAB’s 2016 Bay State Brewing decision, the TTAB has issued two more decisions rejecting consent agreements submitted to overcome § 2(d) likelihood of confusion refusals. Let’s take a look at the TTAB’s three recent decisions involving consent agreements.

Bay State Brewing: TIME TRAVELER BLONDE v. TIME TRAVELER

On February 25, 2016, the TTAB issued its precedential decision in In re Bay State Brewing Co.  117 USPQ2d 1958, 2016 TTAB LEXIS 46 (TTAB 2016). In Bay State Brewing, the TTAB affirmed the examining attorney’s refusal to register Bay State Brewing’s TIME TRAVELER BLONDE mark for “beer” based on a § 2(d) likelihood of confusion with A&S Brewing Collaborative’s prior registration for TIME TRAVELER for “beer, ale and lager” despite a consent agreement between the applicant and registrant.

The TTAB began its decision by evaluating the first four factors of the Federal Circuit’s du Pont likelihood of confusion test, all of which the TTAB held weighed in favor of a likelihood of confusion between the marks. It then turned to the consent agreement, which it analyzed under the 10th du Pont factor, the market interface between the applicant and registrant.

What is interesting about this decision is that the parties’ consent agreement was not a naked consent agreement. In fact, while the TTAB briefly discusses naked consent agreements in the decision, it never says that the consent agreement in this case is a naked consent agreement. So even non-naked consent agreements can be rejected by an examining attorney and the TTAB.

In analyzing the consent agreement, the TTAB agreed with the examining attorney’s conclusion that the geographical restriction in the consent agreement was legally insignificant. It did so on two grounds: (1) while the applicant was restricted from using its mark outside of New England and New York, there was no geographical restriction on registrant from using its mark in New England or New York, and (2) if applicant’s application matured into a registration, the registration would not reflect the geographical restriction.  Of course, anyone paying attention knows that the TTAB’s second point has nothing to do with a likelihood of confusion between the marks at issue. It’s a transparent attempt to support a conclusion already made.

The TTAB then also dispensed with the parties’ agreement to use house marks in connection with their respective marks and to refrain from using similar trade dress. If we are being honest about the TTAB’s analysis in this section of the decision, the TTAB substitutes its own judgment for that of the parties—something the Federal Circuit has instructed examining attorneys and the TTAB not to do. The TTAB decided that house marks would not obviate a likelihood of confusion in this case, and then also decided that the agreement between the parties to refrain from using similar trade dress was insignificant because of the import of standard character marks and the lack of a requirement to use particular trade dress. But the reality is that the parties’ consent agreement did set forth specific examples of trade dress that each party should avoid imitating. Confusingly, the TTAB ignored the parties’ private contract setting forth agreed-upon restrictions and focused on what the parties could or could not do in a hypothetical situation where no such consent agreement existed.

Finally, the TTAB noted that the parties’ consent agreement did not set forth any language about the marks having coexisted without actual confusion. This was because applicant’s application was an intent-to-use application. The TTAB’s language in this section gives the impression that it will be more difficult to get a consent agreement blessed by an examining attorney or the TTAB if the marks are not in use or the parties do not include language about coexisting without confusion.

It is too bad that the applicant did not appeal this decision to the Federal Circuit. This could have been another opportunity for the Federal Circuit to really flesh out how non-naked consent agreements should be handled and address the dynamic between restrictions in a consent agreement vs. lack of restrictions in a registration subject to a consent agreement.

If you’d like a copy of the Bay State Brewing decision, just click here: TTAB Consent Agreement Cases  

KTM-Sportmotorcycle AG: E SPEED v. ESPEED

About seven months later on September 12, 2016, the TTAB issued its non-precedential opinion in In re KTM-Sportmotorcycle AG. 2016 TTAB LEXIS 456 (TTAB 2016). In KTM-Sportmotorcycle, the TTAB affirmed the examining attorney’s refusal to register KTM-Sportmotorcyle AG’s E SPEED mark in stylized form in connection with a variety of automotive parts based on Neumayor Tekfor Holding GmbH’s prior trademark registration for ESPEED in connection with a variety of automotive parts.

Again, the TTAB went through the du Pont factors, finding that the similarity of the marks, goods, and trade channels weighed in favor of a likelihood of confusion before turning to the consent agreement.

Unlike Bay State Brewing, however, the consent agreement at issue in KTM-Sportmotorcycle was birthday suit nakedness personified. In fact, other than the recitals, it consisted of only three paragraphs:

  1. [Applicant] agrees to limit its goods to the goods identified above.
  2. [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.
  3. If either party should become aware of any instances of actual confusion between the parties with respect to their respective uses 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 TTAB correctly pointed out that the consent agreement failed to set forth the reasons why the parties determined that there is no likelihood of confusion, how the parties would cooperate to avoid a likelihood of confusion, or any period of coexistence without confusion.  Accordingly, in this case, it is not surprising that the consent agreement did not pass muster.

If you’d like a copy of the KTM-Sportmotorcycle decision, just click here: TTAB Consent Agreement Cases .

A-Plant 2000: NORDIC v. NORDIC

On August 25, 2017, the TTAB issued its non-precedential opinion in In re A-Plant 2000 ApS. 2017 TTAB LEXIS 306 (TTAB 2017). In A-Plant 2000, the TTAB affirmed the examining attorney’s refusal to register A-Plant 2000 ApS’ NORDIC mark for plants based on LCN Holdings, Inc.’s prior trademark registration for NORDIC for live plants, namely, holly cultivars.

As in Bay State Brewing and KTM-Sportmotorcycle, the TTAB first went through the other du Pont factors, finding the parties’ marks, goods, and trade channels similar before turning to the consent agreement under the market interface du Pont factor. In evaluating the consent agreement in this case, the TTAB weighed five factors:

  1. whether the consent shows an agreement between both parties;
  2. whether the agreement includes a clear indication that the goods and/or services travel in separate trade channels;
  3. whether the parties agree to restrict their fields of use;
  4. whether the parties will make efforts to prevent confusion, and cooperate and take steps to avoid any confusion that may arise in the future; and
  5. whether the marks have been used for a period of time without evidence of actual confusion.

These are the factors that the Federal Circuit has set out in various opinions relating to consent agreements.

In assessing these factors, the TTAB found the consent agreement deficient for several reasons. First, while the parties had agreed to use restrictions for their marks, the TTAB again noted that the registration(s) would not reflect such use restrictions. As discussed above, however, this does not go to the issue of likelihood of confusion and seems to be an incorrect basis for minimizing a consent agreement. That point aside, the TTAB also disagreed with the parties’ conclusion that the commercial impression of the marks was different. With regard to the parties’ marks, the TTAB noted that, while the consent agreement required applicant to use stylized characters, it did not restrict the registrant’s depiction of its mark.

But more importantly, the TTAB noted that the consent agreement did not restrict the parties’ use to different markets, trade channels, or consumers; did not set forth specific measures to prevent consumer confusion; and did not contain any provision that the parties had coexisted for a period of time without confusion.

If you’d like a copy of the A-Plant 2000 decision, just click here: TTAB Consent Agreement Cases .

The Last Word

There’s one thing that immediately jumps out at me when reviewing these three cases. In all three cases, the marks and goods are identical (or virtually identical). It leads to the conclusion that, if you are submitting a consent agreement that involves virtually identical marks and goods, you should be prepared for the consent agreement to be reviewed more closely by the examining attorney and for the consent agreement to be rejected.

And with the USPTO’s closer review of consent agreements, to the extent possible, make sure the consent agreement addresses each one of the five factors set forth in the A-Plant 2000 decision. Furthermore, you’ll want to consider the whether the application(s) and registration(s) at issue reflect the restrictions agreed-upon in the consent agreement. This is something the examining attorneys and TTAB have been focusing on to unfairly reject otherwise proper, non-naked consent agreements.

In the next few posts (I don’t know how many I’ll write on this subject), I am going to continue writing about different aspects of consent agreements.

About the Author

Bruno Tarabichi