Trademark Abandoned Despite Use by Parent Company: TTAB | Practical Law

Trademark Abandoned Despite Use by Parent Company: TTAB | Practical Law

The Trademark Trial and Appeal Board (TTAB) ruled that a company's use of its subsidiary's trademark does not inure to the subsidiary's benefit when, among other things, the parent company controls the nature and quality of the products sold under the mark.

Trademark Abandoned Despite Use by Parent Company: TTAB

Practical Law Legal Update w-001-8729 (Approx. 3 pages)

Trademark Abandoned Despite Use by Parent Company: TTAB

by Practical Law Intellectual Property & Technology
Published on 08 Apr 2016 • USA (National/Federal)
The Trademark Trial and Appeal Board (TTAB) ruled that a company's use of its subsidiary's trademark does not inure to the subsidiary's benefit when, among other things, the parent company controls the nature and quality of the products sold under the mark.
On April 4, 2016, in Noble House Home Furnishings, LLC v. Floorco Enterprises, LLC, the Trademark Trial and Appeal Board (TTAB) ruled in a precedential opinion that a company's use of its subsidiary's trademark does not inure to the subsidiary's benefit when, among other things, the parent company controls the nature and quality of the products sold under the mark (Cancellation No. 92057394 (T.T.A.B. April 4, 2016)).
Petitioner Noble House Home Furnishings, LLC, sought to cancel Floorco Enterprises, LLC's trademark registration for the mark NOBLE HOUSE on furniture, asserting that Floorco abandoned the mark through nonuse.
Under the Lanham Act, a mark is deemed abandoned if the trademark owner both:
  • Discontinues use of the mark.
  • Intends not to resume use.
(15 U.S.C. § 1127).
Petitioner established a prima facie case of abandonment by showing that Floorco had not sold any furniture under the NOBLE HOUSE mark for three consecutive years. Floorco countered that use of the mark in advertising and marketing by its parent company, Furnco International Corporation, was sufficient to prevent abandonment.
The TTAB noted that nonuse due to lack of demand may not constitute abandonment if the trademark owner continues its marketing efforts. However, in this case, parent Furnco's advertising and marketing did not inure to Floorco's benefit as the two entities were not "related companies" as required under Section 5 of the Lanham Act (15 U.S.C. § 1055).
Critically:
  • Furnco, not Floorco, actually used the mark.
  • Furnco controlled Floorco and not vice-versa.
  • Furnco had no agreements with Floorco concerning the use of the mark.
  • Furnco controlled the nature and quality of furniture sold and intended to be sold under the NOBLE HOUSE mark.
The TTAB therefore ruled that Floorco abandoned the NOBLE HOUSE mark through nonuse. The TTAB also denied petitioner's motion to amend its pleadings and dismissed its fraud claim.