Tuesday, July 26, 2016

TTAB Reverses 2(d) Refusal of Salvation Army Mark, Finding Unity of Control

The Board reversed a Section 2(d) refusal to register the mark shown below, for charitable fundraising services, on the ground that the applicant and the owners of the registrations cited by the Examining Attorney "are governed by a central authority, which exercises unity of control over the entities' trademarks." As a result, the Board concluded, there will be no likelihood of confusion as to the source of the entities' services. In re The Salvation Army, Serial No. 86150336 (July 8, 2016) [not precedential].

The Examining Attorney based his refusal to register on thirteen existing registrations owned by three different entities incorporated in different states. Each of the registrations, for various charitable services, includes the words THE SALVATION ARMY. The Examining Attorney withdrew two additional citations because applicant, it turned out, is the owner thereof.

The Board observed that because the issue here is likelihood of confusion as to source, it would consider whether there exists "such unity of control over the marks ... that the public will view the identified services as emanating from a single source."

Applicant explained that it is one of The Salvation Army regional offices (in Illinois). The Salvation Army, "while decentralized into separate regional organizations, ... is under the unitary control of the Salvation Army USA through the National Commander USA and the Commissioners Conference USA." Relying on In re Wella A.G., 5 USPQ2d 1349 (TTAB 1987), applicant maintained that the regional entities follow directives from a single source. And it pointed out that the USPTO, has already allowed the aforementioned 13 registrations to co-exist.

The Examining Attorney contended that this arrangement fails to satisfy the requirements of Wella because the entities here are "sister entities" that are "not even owned by a single parent." Moreover, there is no evidence regarding how one entity controls the activities of another. And there is no consent agreement as found in the file history of the two withdrawn registrations.

In Wella, parent company Wella A.G. was refused registration of a particular mark in view of several registrations owned by its U.S. subsidiary. The CAFC vacated the TTAB's decision and remanded the case to the Board to consider whether the public would likely believe that the source of the Wella A.G. product is the U.S. subsidiary, or whether consumers perceive only a single source for all the Wella products, namely, Wella A.G.

The Board then reversed the refusal, observing that the CAFC views the concept of "source" as encompassing more than "legal entity." A declaration from a Wella U.S. executive stated that Well A.G. owned substantially all the stock of Wella U.S. and "thus controls that activities and operations of Wella U.S., including the selection, adoption and use of the trademarks." Although no details were given regarding this control, the Board found the declaration sufficient to establish that "control over the use of all the 'WELLA' trademarks in the United States resides in a single source."

The Board observed that the issue of "unity of control" must be considered on the facts of each case, and does not hinge on any particular organizational structure. "[M]erely because an arrangement does not fall within a set type of organization does not preclude a finding that there is unity of control."

Here the evidence showed that The Salvation Army is a worldwide organization headquartered in London; the United States affiliate is divided into four regions under the control of the National Command in a quasi-military structure. Moreover, applicant already owns three registrations for marks with the wording "The Salvation Army," which registrations have coexisted with the other registrations.

Under the unique facts of this case, the Board found that there would not be a likelihood of confusion as to source.

As the Federal Circuit stated, the question is "whether under the circumstances there was in fact any likelihood of confusion" and “to explain what that confusion would be.” In re Wella, 229 USPQ at 277. Based on this record and the unique organizational structure of the Salvation Army, it is not possible to explain what that confusion would be.

Read comments and post your comment here.

TTABlog comment: Seems a bit "loosey-goosey" to me. Oh, Wella!

Text Copyright John L. Welch 2016.


At 9:48 AM, Anonymous Anonymous said...

I agree with your comment. Considering the unique facts of this case and possible expansion of the principles forwarded by Wella, you would think the Board would have designated this decision as precedential. Rather, I don't think it wants this case to ever be referenced again.

At 1:05 PM, Anonymous Anonymous said...

Accepting the Board's reasoning in this case -- that "the Registrants in the three cited registrations and Applicant are entities governed by a central authority [presumably The Salvation Army USA or perhaps the international headquarters in London], which exercises unity of control over the entities' trademarks" -- doesn't this suggest the applicant here, one of the separate regional organizations in the U.S., is not in fact the entity using the mark in this use-based application as per the Board's April decision in Noble House? It sounds like the central authority is the one controlling the nature and quality of the services offered under the marks. Might the Board have remanded this case back to the examining attorney (as it may per Trademark Rule 2.142(f)) to at least explore whether a refusal should issue on that ground?

At 1:58 PM, Blogger John L. Welch said...

I believe the NOBLE HOUSE case was the opposite situation. Use by the parent did not enure to the benefit of the subsidiary.

At 3:20 PM, Anonymous Anonymous said...

John, I think I should've been more precise. The Noble House case did indeed hold that use by the parent did not inure to the benefit of the subsidiary.

This applicant argued there's no likelihood of confusion between it and the other registrants, all being regional organizations, because the parent in reality controls them in a hierarchical, military-style structure. But if that's true, then it appears the parent is the entity that controls the nature and quality of the services offered under the applicant's mark (as well as the registrants', for that matter), and thus is the true owner of the mark. If the parent is the true owner of the mark -- and its use does not inure to the benefit of the applicant-subsidiary, as per Noble House -- then the applicant-subsidiary is not the proper applicant in this use-based application. In short, it seems to me this applicant's unity-of-control argument is necessarily at odds with it being the owner of the mark in its application.

Perhaps the facts aren't at present sufficiently flushed out to make that refusal since the applicant and EA were arguing 2(d) rather than ownership, which is why I think the Board might have remanded this case to more fully explore that issue.

At 8:40 PM, Blogger John L. Welch said...

But the applicant is using the mark, so it is a proper applicant. Maybe the "parent" would be the more appropriate applicant and owner of all the registered marks.

At 9:42 PM, Anonymous Anonymous said...

The applicant may be using the mark, but if that use inures to the benefit of the parent because it's the parent that controls the nature and quality of the services offered under the mark, then I believe that means the applicant is not the owner and the application is void as a result.

At 6:28 AM, Blogger John L. Welch said...

Then how do you square that with the Wella decision?

At 10:09 AM, Anonymous Anonymous said...

Well, Wella was sort of a train wreck. There were actually five decisions:

before the Board initially (affirming 2(d) refusal)
on appeal to the CAFC (vacating 2(d) refusal and remanding, with Judge Nies' additional views)
before the Board again (remanding to the examining attorney to consider new refusal based on ownership)
[examining attorney refuses registration based on ownership issue]
before the Board again (reversing 2(d) refusal but affirming ownership refusal)
on appeal to the CAFC again (reversing ownership refusal as beyond the scope of the initial remand)

In the first appeal to the CAFC, Judge Nies included her "additional views," including: "Regardless of their being related companies, only one is the owner. Whether the relationship is that of licensor/licensee or parent/subsidiary, the one entity which controls the nature and quality of the goods sold under the mark is the owner." She therefore stated her view that the 2(d) refusal should be reversed but that a new refusal should issue based on the ground the applicant is not the owner of the mark. After that new refusal was issued by the examining attonrey and it was again on appeal to the Board, the Board perceptively and pithily characterized Judge Nies' views as being that "to analyze the facts of this case by reference to Section 2(d) is to miss the real issue of the case. Judge Nies characterized the issue as one of ownership of the mark sought to be registered."

On appeal again to the CAFC, the majority reversed the ownership refusal because it deemed it outside the scope of its previous remand to the Board.

In short, I agree with Judge Nies and would add that the CAFC never actually held that her "additional views" on the ownership issue, or the Board's decision below on that point, was incorrect on the merits. Rather, the CAFC reversed the ownership refusal solely on the ground that it went beyond "the only issue" the Board was instructed to consider on remand.

At 1:36 PM, Blogger John L. Welch said...

Thanks for your comments. Why don't you write a commentary for The Trademark Reporter on this issue? Contact Willard Knox at the TMR.


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