In business operations, many corporations wish to use a unified trademark system for their subsidiaries or affiliates. This helps to strengthen brand recognition and maintain image consistency. However, intellectual property law approaches each enterprise as an independent legal entity. Therefore, when two legal entities register identical or similar signs for the same group of goods/services, the risk of being rejected under Article 74.2(e) of the IP Law is very high.
A familiar solution is to submit a Letter of Consent (LoC) – a letter of consent from the previous trademark owner to prove that the coexistence of the trademark does not cause any disadvantage to the parties involved. However, the big question is: Does the Letter of Consent have enough legal weight to eliminate the risk of confusion?
Tran & Tran IP Law Firm analyzes below the core legal issues, practical application and recent trends of the National Office of Intellectual Property related to the acceptance of LoC between affiliated companies.
1. Why is the Letter of Consent still not enough to “resolve” the risk of confusion?
Although the Letter of Consent is recognized by many countries, practice in Vietnam shows that the National Office of Intellectual Property (IPVN) is still applying a very cautious approach. The reason is because the basic function of a trademark is to protect consumers from confusion about commercial origin.
If two different legal entities are allowed to use similar signs based solely on internal agreements, state agencies are concerned:
• Consumers do not know/do not care about the group structure
Even though two companies belong to the same group, this is often not shown on the label. When encountering two products with similar signs but under the names of two different legal entities, consumers can completely misunderstand who produced them and who is legally responsible.
• Risks of brand quality and reputation
If the subsidiary does not maintain the same quality as the parent company, the reputation of the entire brand system can be affected. LoC is not enough to eliminate this risk.
• Internal relationships can change
The subsidiary can be sold, separated, or disaffiliated. In that case, the existence of two identical trademarks belonging to two completely independent legal entities will create a real risk of confusion.
Therefore, even with a Letter of Consent, the IP Office can still conclude that the risk of confusion with the public is significant and reject the application.
A typical example:
The parent company owns the trademark “X” for cosmetics.
The subsidiary files an application for “X Plus” for cosmetics in the same group.
→ Even with a LoC, the NOIP may still reject the application because it is difficult to determine the legal entity ultimately responsible, especially if the group structure changes.
2. Other views: Should there be more flexibility with Letters of Consent between companies in the same group?
Another view is that the refusal is too rigid and is not suitable for the development of modern corporations.
• “Family” trademarks are a common strategy
Many global corporations use many similar trademarks for their subsidiaries – this is a market segmentation strategy, not “confusion”.
• Quality control is often unified from the parent company
In many cases, the parent company still retains control of the brands, quality standards and market positioning of its subsidiaries. This significantly reduces the risk of confusion or damage to consumers.
• Consumer perception may not be as simple as “one legal entity – one brand”
Consumers can completely see similar brands as a “brand ecosystem” belonging to the same corporation, especially in industries such as cosmetics, fashion, food, technology, etc.
According to this approach, mechanically rejecting LoC may not reflect current business practices, where brand models are increasingly diverse and complex.
3. Conclusion & recommendations for IP owners
The lack of clear regulations and inconsistency in accepting Letters of Consent are creating great difficulties for businesses, especially corporations with many legal entities using similar brands.
Tran & Tran IP Law Firm recommends that businesses should:
Assess the similarity of brands right from the brand strategy planning stage.
Structure the dossier tightly, not only based on LoC but also need to be accompanied by explanations about quality management, brand control system, relationship between legal entities.
Consider choosing trademark variations to minimize the risk of being assessed as confusing.
Prepare a counter-argument if the IP Office still assesses that there is a risk of confusion to the public.
