US Trade marks: Cautions on related party uses of marks

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

US Trade marks: Cautions on related party uses of marks

In April 2016, the Trademark Trial and Appeal Board (TTAB) issued a precedential decision in Noble House Home Furnishings, LLC v Floorco Enterprises, LLC. This decision is a good reminder about the advisability of memorialising a grant of rights in situations where a company registers a mark in the name of one entity and then exploits the mark through a related entity.

In Noble House, Noble House Home Furnishings, LLC had filed a petition to cancel Floorco Enterprises LLC's trade mark registration for the mark Noble House on the grounds of abandonment (among other things). Under US trade mark law, non-use of a mark for three consecutive years constitutes a prima facie showing of abandonment and Noble House Home alleged that Floorco had abandoned the mark because Floorco's parent entity, Furnco International Corporation was the party actually using the Noble House mark (rather than Floorco).

In its defence, Floorco pointed to Section 5 of the Trademark Act which provides "that a mark may be used legitimately by related companies, and, if such companies are controlled as to the nature and quality of the goods on which the mark is used by the related companies, such use inures to the benefit of the applicant-owner". The term "related company" is defined as any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with the mark is used. Accordingly, Floorco argued that because Furnco exercised control over the nature and quality of the goods and services sold by its wholly-owned subsidiary, Floorco, the use by Furnco inured to the benefit of Floorco such that the mark could not be deemed to be abandoned.

The TTAB, however, held that because Furnco controls Floorco, rather than the other way around, Furnco does not meet the definition of a "related party" (absent other criteria) and the use of the Noble House mark by Furnco does not inure to the benefit of Floorco. This finding resulted in a decision that the mark had not been used by Floorco for three consecutive years and was, therefore, abandoned.

The TTAB confirmed that "in most situations, the inherent nature of the parent's overall control over the affairs of a subsidiary will be sufficient to presume that the parent is adequately exercising control over the nature and quality of goods and services sold by the subsidiary under a mark owned by the parent". However, in the case at hand, the opposite relationship was present since the controlling parent was not the registered owner of the trade mark.

The TTAB's decision indicates that a different outcome would have been likely had Floorco and Furnco had in place a licence agreement memorialising Floorco's grant of rights to Furnco to use the Noble House trade mark. Indeed, the TTAB stated that if there is any doubt on the issue of quality control, it "can be made clear by a proper trademark license agreement between parent and subsidiaries". Accordingly, the decision serves to underscore the importance of documenting licensing arrangements, even between parties under common control.

ash.jpg
Danow_Bret

Karen Artz Ash

Bret J Danow


Katten Muchin Rosenman LLP 575 Madison AvenueNew York, NY 10022-2585United StatesTel: +1 212 940 8554Fax: +1 212 940 8671karen.ash@kattenlaw.comwww.kattenlaw.com

more from across site and SHARED ros bottom lb

More from across our site

Vaping dispute, in which Stobbs and Brandsmiths are the representatives, tested how the UK's Human Rights Act can apply to injunctions restraining unjustified threats
An AI platform being sold for £40m, and lateral hires involving law firms Womble Bond Dickinson and Cadwell Thomas were among the top talking points
With the London Annual Meeting behind us, we look back at some of the lessons learned this week and ahead to what 2027 will bring
In-house counsel aren’t impressed with law firms’ international networks, but practitioners say they are crucial for business
Publication of the UPC’s annual report and adoption of the procedural rules of the Patent Mediation and Arbitration Centre were also among major developments
With the INTA Annual Meeting drawing to a close, we asked attendees for their top tips on how to close business after a meeting
Senior UK judges discussing the impact of AI on the judiciary, and the role of in-house IP lawyers during corporate transactions and carve-outs were among the top talking points
Tarun Khurana, founding partner of Khurana & Khurana, discusses juggling tasks, why every hour has a value, and the importance of ‘trusting the process’
Annual Meeting hears that IP firms are targeting hires with technical literacy in a fragmented landscape, and that those that build an online presence will distinguish themselves from the digital chaos
How law firms can secure themselves in a technology-driven IP landscape and how IP teams can develop future leadership were among the top talking points
Gift this article