In a recent decision, the Trademark Trial and Appeal Board (TTAB) clarified two issues that tend to arise in cases where a claim of abandonment is made (eg, where a petition is filed to cancel a registration due to non-use):
- For intent-to-use applications, the period of non-use does not begin to run until after the statement of use is filed.
- The continuing marketing efforts of a parent entity do not inure to the benefit of its wholly owned subsidiary when the two entities are not "related companies" under Section 5 of the Lanham Act.
Noble Home Furnishings, LLC – a seller of both outdoor and indoor furniture – filed a petition to cancel the word mark NOBLE HOUSE for furniture owned by Floorco Enterprises, LLC.(1) Registration for this mark was based on Floorco's intent-to-use application. Floorco filed a statement of use on August 18 2011 and the registration was issued on November 1 2011. Noble had filed an application to register the mark NOBLE HOUSE HOME FURNISHINGS for various services, including online retail store services featuring furniture and home furnishings. That application had been refused on likelihood of confusion grounds due to Floorco's existing registration.
In an effort to clear the way for its application, Noble filed a petition to cancel Floorco's NOBLE HOUSE mark. Noble first alleged abandonment of the mark by Floorco, providing evidence that Floorco had not sold furniture under the NOBLE HOUSE mark for three consecutive years; in fact, the last sale of furniture under the mark was July 14 2009. After that date, products were sporadically marketed under the NOBLE HOUSE mark, but no sale was executed. Floorco countered that the mark was used in advertising and marketing by its parent company, Furnco International Corporation, and that such use – which had provided the basis for the statement of use filed in support of the registration – was sufficient to prevent cancellation on the basis of abandonment.
Noble also alleged that Floorco had committed fraud on the US Patent and Trademark Office when it submitted its specimen of use. In support of its statement of use, Floorco submitted a specimen comprising a photograph of a package bearing the NOBLE HOUSE mark. Noble alleged that this specimen did not accurately depict the use of the mark in commerce.
The TTAB granted the petition to cancel NOBLE HOUSE, finding that Floorco had abandoned the mark through non-use. In finding so, the TTAB stated that the three-year period for non-use begins after the statement of use is filed because an intent-to-use applicant need not use its mark until it files the statement of use.
Floorco's counter-argument that the mark had been used by its parent company, and that such use should "count", was rejected by the TTAB. The TTAB found that a company's use of its subsidiary's trademark does not inure to the subsidiary's benefit when the parent company controls the nature and quality of the products sold under the mark – or advertised and marketed with the mark – and when there are no agreements with the subsidiary concerning the mark.
In this instance, the products offered for sale under the mark were not controlled by the applicant Floorco, but rather by its parent company Furnco, which solely conducted all marketing and advertising of NOBLE HOUSE furniture products after August 28 2011 and manufactured all related materials. There was no evidence in the record of any agreement between Floorco and Furnco regarding the NOBLE HOUSE mark.
The TTAB concluded that, notwithstanding the "on paper" corporate relationship, Floorco and Furnco were not sufficiently "related entities" for trademark purposes because the essence of related-company use – the control exercised over the nature and quality of the goods or services on or in connection with which the mark is used – was missing. As Furnco's marketing and advertising efforts would not inure to the benefit of Floorco, there was no use to sustain Floorco's NOBLE HOUSE registration.
Conversely, the fraud claim by Noble was dismissed. The TTAB found that Floorco did not wilfully make a material misrepresentation; instead, it held the mistaken belief that "whatever the legal significance of the parent's activities, they inured to [Floorco's] benefit". In short, Floorco did not intend to deceive the US Patent and Trademark Office.
For further information on this topic please contact Timothy J Kelly, Rachael Million-Perez or Kathryn E Easterling by telephone (+1 212 218 2100) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.
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