• Parent Company’s Unlicensed Use of Mark Not Credited to Subsidiary
  • September 11, 2016 | Author: Timothy J. Lockhart
  • Law Firm: Willcox & Savage, P.C. - Norfolk Office
  • The U.S. Trademark Trial and Appeal Board (TTAB) has ruled that in the absence of a formal licensing arrangement, a parent company’s use of a mark owned by its subsidiary does not entitle the subsidiary to claim that use for the purpose of trademark registration. Noble House Home Furnishings, LLC v. Floorco Enterprises, LLC, 118 USPQ2d 1413 (TTAB 2016) [precedential].

    In 2008 Floorco Enterprises, LLC (Floorco) filed an intent-to-use application to register NOBLE HOUSE as a trademark for furniture. A few months later, the U.S. Patent and Trademark Office (USPTO) issued a Notice of Allowance for the application, and after obtaining several extensions of time, Floorco filed a Statement of Use in 2011, which resulted in registration of the mark that year.

    In 2012 Noble House Home Furnishings LLC (NHHF) filed an application to register the mark NOBLE HOUSE HOME FURNISHINGS LLC and Design for use with furniture and outdoor furniture. The USPTO refused to register NHHF’s mark, citing Floorco’s registration for NOBLE HOUSE. In 2013 NHHF filed a petition to cancel Floorco’s registration on the grounds that Floorco had abandoned its mark.

    The evidence in the case showed that the last sale under the NOBLE HOUSE mark was made in 2009 and that furniture was “sporadically marketed” under the mark thereafter but without any further sales. But because the NOBLE HOUSE application was filed on the basis of an intent to use the mark, the three-year period for determining whether the mark had been abandoned did not begin to run until Floorco filed its Statement of Use in 2011.

    If a trademark owner continues its marketing efforts, such action can avoid a finding that the mark has been abandoned even if the owner has made no sales under the mark. See, e.g., American Lava Corp. v. Multronics, Inc., 461 F.2d 836, 174 USPQ 107, 110-11 (CCPA 1972). Floorco asserted that despite its lack of sales, it had continued to advertise and market NOBLE HOUSE furniture.

    The TTAB found, however, that Floorco’s parent company, Floorco International Corporation (FIC), not Floorco itself, had been using the mark in advertising and marketing materials. Because there was no formal licensing arrangement between the two companies whereby Floorco could control such use of the NOBLE HOUSE mark, including “the nature and quality of the goods rendered under the . . . mark,” the TTAB held that FIC’s use of the mark did not inure to the benefit of Floorco. Thus, such use did not enable Floorco to avoid a finding of abandonment.

    The TTAB implied that its ruling might have been different if Floorco had a licensing arrangement with FIC whereby Floorco could exercise the rights and duties (including quality control) of a trademark owner. And because a parent company is presumed, even in the absence of a formal licensing arrangement, to be able to control the activities of its subsidiary, the ruling would likely have been different if FIC had been Floorco’s subsidiary and not the reverse. Thus, the NOBLE HOUSE decision underscores the importance of proper trademark ownership and licensing arrangements between parent and subsidiary companies.