In light of these findings, it was asked whether Floorco could rely on parent company Furnco`s use of a “related company.” While, according to the general principles of the company, businesses related to the mother and subsidiary are considered related businesses, Section 45 of the Trademark Act defines the term “linked company,” particularly with respect to trademark law, as “any person whose use of a trademark is controlled by the trademark holder with respect to the nature and quality of the goods or services on which the mark is used. In the context of an adversarial procedure at the USPTO, a parent company cannot count on a registration held by a wholly owned subsidiary while it can count on the use of that subsidiary. The subsidiary should be involved in the proceedings to invoke the rights arising from a registration in its possession. Similarly, a subsidiary cannot rely on the registration of a parent company in an adversarial proceeding with the USPTO if the parent company does not participate in the proceedings. See Hunt Control Systems Inc. v. Koninklijke Philips Electronics N.V., 98 USPQ2d 1558 (TTAB 2011). Noble House, 118 USPQ2d to 1421. The benefits of using the parent company cannot be invoked for the benefit of the subsidiary. Since the subsidiary did not use the mark and had not used the mark for more than three years, the registration was cancelled for abandonment. In order for a trademark holder to prevent the removal of a trademark registration or assert its rights, an oral or written licensing agreement must be entered into between the trademark holder and the trademark user.
Common ownership of the company is not enough. However, while there is evidence of a licensing agreement that states that a subsidiary has the right to use a trademark in Canada, federal courts such as the Trademark Opposition Board in Sobeys Capital Inc/ Edrnred, a limited company, 2012 TMOB 86, have always found that “organizational structure per se,… does not support the inference that the trademark holder controls the character or quality of the goods and services used in relation to such a licence. In a situation where you have sister companies or other common ownership between two companies, it should be noted that these companies are not considered to have the same financial interest in another business whose only relationship is joint ownership. In other words, a company cannot be empowered to object to the use of a trademark by third parties, owned by another company whose only relationship is joint ownership. Compuclean Marketing and Design v. Berkshire Products Inc., 1 USPQ2d 1323 (TTAB 1986). Basically, the fundamental purpose of a brand is to identify the source.
If the alleged owner does not use the mark itself, does not control the nature and quality of the goods and services offered by his related companies under the mark, the mark does not in fact identify the “owner” as a source of goods and services. As a result, the operation by the related companies does not support the alleged ownership of the alleged owner. Practitioners should anticipate these problems and urgently consider that the parent at the top of the client`s organizational structure owns all the brands. If, for some reason, this is not feasible or undesirable, trademark licenses – from owner to user – should be put in place for each user, not a subsidiary of the owner.