1201.07 Related Companies and Likelihood of Confusion
1201.07(a) "Single Source" – "Unity of Control"
Section 2(d) of the Trademark Act, 15 U.S.C. §1052(d), requires that the examining attorney refuse registration when an applicant’s mark, as applied to the specified goods or services, so resembles a registered mark as to be likely to cause confusion. In general, registration of confusingly similar marks to separate legal entities is barred by §2(d). See TMEP §§1207–1207.01(d)(xi). However, the Court of Appeals for the Federal Circuit has held that, where the applicant is related in ownership to a company that owns a registered mark that would otherwise give rise to a likelihood of confusion, the examining attorney must consider whether, in view of all the circumstances, use of the mark by the applicant is likely to confuse the public about the source of the applicant’s goods because of the resemblance of the applicant’s mark to the mark of the other company. The Court stated that:
The question is whether, despite the similarity of the marks and the goods on which they are used, the public is likely to be confused about the source of the hair straightening products carrying the trademark "WELLASTRATE." In other words, is the public likely to believe that the source of the product is Wella U.S. rather than the German company or the Wella organization.
In re Wella A.G., 787 F.2d 1549, 1552, 229 USPQ 274, 276 (Fed. Cir. 1986); cf. In re Wacker Neuson SE, 97 USPQ2d 1408 (TTAB 2010) (finding that the record made clear that the parties were related and that the goods and services were provided by the applicant).
The Wella Court remanded the case to the Board for consideration of the likelihood of confusion issue. In ruling on that issue, the Board concluded that there was no likelihood of confusion, stating as follows:
[A] determination must be made as to whether there exists a likelihood of confusion as to source, that is, whether purchasers would believe that particular goods or services emanate from a single source, when in fact those goods or services emanate from more than a single source. Clearly, the Court views the concept of "source" as encompassing more than "legal entity." Thus, in this case, we are required to determine whether Wella A.G. and Wella U.S. are the same source or different sources....
The existence of a related company relationship between Wella U.S. and Wella A.G. is not, in itself, a basis for finding that any "WELLA" product emanating from either of the two companies emanates from the same source. Besides the existence of a legal relationship, there must also be a unity of control over the use of the trademarks. "Control" and "source" are inextricably linked. If, notwithstanding the legal relationship between entities, each entity exclusively controls the nature and quality of the goods to which it applies one or more of the various "WELLA" trademarks, the two entities are in fact separate sources. Wella A.G. has made of record a declaration of the executive vice president of Wella U.S., which declaration states that Wella A.G. owns substantially all the outstanding stock of Wella U.S. and "thus controls the activities and operations of Wella U.S., including the selection, adoption and use of the trademarks." While the declaration contains no details of how this control is exercised, the declaration is sufficient, absent contradictory evidence in the record, to establish that control over the use of all the "WELLA" trademarks in the United States resides in a single source.
In re Wella A.G., 5 USPQ2d 1359, 1361 (TTAB 1987) (emphasis in original), rev’d on other grounds, 858 F.2d 725, 8 USPQ2d 1365 (Fed. Cir. 1988).
Therefore, in some limited circumstances, the close relationship between related companies will obviate any likelihood of confusion in the public mind because the related companies constitute a single source. See TMEP §§1201.07(b)-1201.07(b)(iv) for further information.
1201.07(b) Appropriate Action with Respect to Assertion of Unity of Control
First, it is important to note that analysis under Wella is not triggered until an applicant affirmatively asserts that a §2(d) refusal is inappropriate because the applicant and the registrant, though separate legal entities, constitute a single source, or the applicant raises an equivalent argument. Examining attorneys should issue §2(d) refusals in any case where an analysis of the marks and the goods or services of the respective parties indicates a bar to registration under §2(d). The examining attorney should not attempt to analyze the relationship between an applicant and registrant until an applicant, in some form, relies on the nature of the relationship to obviate a refusal under §2(d).
Once an applicant has made this assertion, the question is whether the specific relationship is such that the two entities constitute a "single source," so that there is no likelihood of confusion. The following guidelines may assist the examining attorney in resolving questions of likelihood of confusion when the marks are owned by related companies and the applicant asserts unity of control. (In many of these situations, the applicant may choose to attempt to overcome the §2(d) refusal by submitting a consent agreement or other conventional evidence to establish no likelihood of confusion. See TMEP §1207.01(d). Another way to overcome a §2(d) refusal is to assign all relevant registrations to the same party.)
1201.07(b)(i) When Either Applicant or Registrant Owns All of the Other Entity
If the applicant or the applicant’s attorney represents that either the applicant or the registrant owns all of the other entity, and there is no contradictory evidence, then the examining attorney should conclude that there is unity of control, a single source, and no likelihood of confusion. This would apply to an individual who owns all the stock of a corporation, and to a corporation and a wholly owned subsidiary or a subsidiary of a wholly owned subsidiary. In this circumstance, additional representations or declarations should generally not be required, absent contradictory evidence.
1201.07(b)(ii) Joint Ownership or Ownership of Substantially All of the Other Entity
Either Applicant or Registrant Owns Substantially All of the Other Entity. In Wella, the applicant provided a declaration stating that the applicant owned substantially all of the stock of the registrant and that the applicant thus controlled the activities of the registrant, including the selection, adoption, and use of trademarks. In re Wella A.G., 5 USPQ2d 1359, 1361 (TTAB 1987), rev’d on other grounds, 858 F.2d 725, 8 USPQ2d 1365 (Fed. Cir. 1988). The Board concluded that this declaration alone, absent contradictory evidence, established unity of control, a single source, and no likelihood of confusion. Id. Therefore, if either the applicant or the registrant owns substantially all of the other entity and asserts control over the activities of the other entity, including its trademarks, and there is no contradictory evidence, the examining attorney should conclude that unity of control is present, that the entities constitute a single source, and that there is no likelihood of confusion under §2(d). In such a case, the applicant should generally provide these assertions in the form of an affidavit or declaration under 37 C.F.R. §2.20.
Joint Ownership. The examining attorney may also accept an applicant’s assertion of unity of control when the applicant is shown in USPTO records as a joint owner of the cited registration, or the owner of the registration is listed as a joint owner of the application, and the applicant submits a written statement asserting control over the use of the mark by virtue of joint ownership, if there is no contradictory evidence.
1201.07(b)(iii) When the Record Does Not Support a Presumption of Unity of Control
If neither the applicant nor the registrant owns all or substantially all of the other entity, and USPTO records do not show their joint ownership of the application or cited registration (see TMEP §1201.07(b)(ii)), the applicant bears a more substantial burden to establish that unity of control is present. For instance, if both the applicant and the registrant are wholly owned by a third common parent, the applicant would have to provide detailed evidence to establish how one sister corporation controlled the trademark activities of the other to establish unity of control to support the contention that the sister corporations constitute a single source. See In re Pharmacia Inc., 2 USPQ2d 1883 (TTAB 1987); Greyhound Corp. v. Armour Life Ins. Co., 214 USPQ 473 (TTAB 1982). Likewise, where an applicant and registrant have certain stockholders, directors, or officers in common, the applicant must demonstrate with detailed evidence or explanation how those relationships establish unity of control. See Pneutek, Inc. v. Scherr, 211 USPQ 824 (TTAB 1981). The applicant’s evidence or explanation should generally be supported by an affidavit or a declaration under 37 C.F.R. §2.20.
1201.07(b)(iv) When the Record Contradicts an Assertion of Unity of Control
In contrast to those circumstances where the relationship between the parties may support a presumption of unity of control or at least afford an applicant the opportunity to demonstrate unity of control, some relationships, by their very nature, contradict any claim that unity of control is present. For instance, if the relationship between the parties is that of licensor and licensee, unity of control will ordinarily not be present. The licensing relationship suggests ownership in one party and control by that one party over only the use of a specific mark or marks, but not over the operations or activities of the licensee generally. Thus, there is no unity of control and no basis for concluding that the two parties form a single source. Precisely because unity of control is absent, a licensing agreement is necessary. The licensing agreement enables the licensor/owner to control specific activities to protect its interests as the sole source or sponsor of the goods or services provided under the mark. Therefore, in these situations, it is most unlikely that an applicant could establish unity of control to overcome a §2(d) refusal.