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Coexistence Agreement

An agreement between two users of a trademark to the effect that both have limited rights to use the mark, subject to certain rules. Coexistence agreements are most common in the international context, a well-known example being a 1939 agreement between Budjovicky Budvar, národní podnik (i.e., the original Czech Budweiser company) and Anheuser Busch Inc. (US Budweiser) to divide the world so that the Czech company had Europe as a territory and the U.S. North America—an agreement which ended in well known and ongoing worldwide litigation after Anheuser Busch decided to enter certain European markets; each company has won some cases, lost others, with the United Kingdom being essentially a draw (both could sell under their own labels.)

Coexistence agreements can be a short-to-medium term solution to a trademark problem, though, as the Budweiser case demonstrates, where the balance of commercial strength of the parties changes over time they can become increasingly problematic. Coexistence agreements in a national or single territory context present much more substantial legal difficulties, since it can be very difficult to arrange for concurrent ownership of a single trademark registration.

Because many trademark systems require a trademark holder to defend its rights if infringed, or face the risk of losing them by, for example genericide, a coexistence agreement may also be used in certain circumstances and jurisidictions to avoid litigation where both users of a similar mark do not genuinely believe there is a risk of confusion.

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