Wella A.G., In re

• Decision Date: 01 April 1986
• Docket Number: No. 85-2397,85-2397
• Citation: 229 USPQ 274,787 F.2d 1549
• Parties: , 229 U.S.P.Q. 274 In re WELLA A.G. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1549

787 F.2d 1549

54 USLW 2560, 229 U.S.P.Q. 274

In re WELLA A.G.

Appeal No. 85-2397.

United States Court of Appeals, Federal Circuit.

April 1, 1986.

Bruce E. Lilling, Lilling & Greenspan, White Plains, N.Y., argued, for appellant.

Helen R. Wendel, Trademark Examining Atty., U.S. Patent and Trademark Office, Arlington, Va., argued, for appellee. With her on brief were Joseph F. Nakamura, Sol. and Fred E. McKelvey, Deputy Sol.

Before FRIEDMAN, DAVIS and NIES, Circuit Judges.

FRIEDMAN, Circuit Judge.

This is an appeal from the decision of the United States Patent and Trademark Office's Trademark Trial and Appeal Board (Board) refusing registration of a trademark of a foreign corporation, on the ground that the mark so resembles marks registered by an American subsidiary of the foreign corporation that confusion between the American subsidiary's marks and the mark sought to be registered is likely. The Board held that in these circumstances section 2(d) of the Trademark Act, 15 U.S.C. Sec. 1052(d) (1982), discussed below, bars registration. We hold that the Board misinterpreted section 2(d). We therefore vacate and remand for further proceedings.

I

The appellant Wella A.G., a German corporation, sought registration of the mark WELLASTRATE for use on hair straightening products. The examiner refused registration in light of four marks registered by the Wella Corporation (Wella U.S.), an American subsidiary of the German corporation, which also covered various hair care products: WELLATONE, WELLA STREAK, WELLASOL, and WELLA plus a design.

During the proceedings before the examiner, Wella A.G. submitted a declaration by the executive vice president of Wella U.S., who was also a member of the Board of Directors of Wella A.G., which stated that Wella A.G. owns "substantially all of 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 trademarks ...; [Wella U.S.] perpetually consents to the use and registration by Wella A.G. of the mark WELLASTRATE...." Wella A.G. further stated that it, and not Wella U.S., actually had used the mark WELLASTRATE, so that Wella U.S. could not seek registration of that mark.

The examiner denied registration. She relied upon section 2(d), which bars registration of a mark that

so resembles a mark registered in the Patent and Trademark Office or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when applied to the goods of the applicant, to cause confusion, or to cause mistake, or to deceive....

The examiner relied upon a line of Board decisions holding that under section 2(d) the term "another" means "different separate legal entit[ies] regardless of any relationship between the parties." The examiner further stated that there was "no evidence submitted that the appellant and the registrant can and will remain clear of each other's marketing and trade channels, so that there is no real likelihood of confusion."

The Board affirmed the denial of registration. The Board rejected Wella A.G.'s argument that because it and Wella U.S. are "related companies" under the definition of that term in 15 U.S.C. Sec. 1127 (1982), section 5 of the Trademark Act, 15 U.S.C. Sec. 1055 (1982), made section 2(d) inapplicable to this case. Section 5 provides that where "a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use shall inure to the benefit of the ... applicant for registration...." The argument apparently was that since Wella U.S.'s use of its four registered marks inured to the benefit of its related company Wella A.G., the use of those marks by Wella U.S. was not use "by another." The Board held that

[s]ection 5 provides the basis upon which one can claim the benefit of another's use and therefore obtain a registration based on the use by the other related entity. In this regard, we are of the view that nothing precluded Wella A.G. from applying for registration of the cited "WELLA" trademarks based on use by its related company, [Wella U.S.]. Similarly, there is nothing to preclude Wella A.G. from obtaining ownership of the cited registrations by assignment from the subsidiary company. However, nothing in the Act requires us to ignore the requirements of Section 2(d) and there is no evidence that, by permitting claims based on related company use, the framers of the Trademark Act intended to alter the well established principles concerning likelihood of confusion.

The Board followed its prior cases, which, it said, held that registration may not "be issued for the same or similar marks for the same or closely related goods to two separate legal entities, notwithstanding that they may be related companies within the meaning of Section 5 of the Act." The Board concluded:

Section 2(d) of the Act unequivocally bars registration of a mark which so resembles a mark registered or used "by another" as to be likely to cause confusion. It is clear that the owner of the cited registration is a corporation organized under the laws of the State of New York and is an entity separate and distinct from applicant corporation. As we have always considered a subsidiary corporation to be "another" separate legal entity in relation to its parent and as we are not persuaded by applicant that we should now hold to the contrary, we must affirm the refusal of registration for the reasons set forth in the Citibank case, supra.

II

As noted, the Board several times has held that if a separate legal entity seeks registration of a mark that is confusingly similar to a mark used or registered by a related but separate corporation, the latter use or registration is "by another," and that section 2(d) bars registration of the mark. The Board apparently applies this rule automatically without regard to the relationship between the related companies, the extent to which the controlling company supervises and manages the controlled company and its use of trademarks, and the public perception of the source of the goods to which the marks are applied.

In its appeal brief to the Board in this case, Wella A.G. stated:

As pointed out in the response to final rejection filed May 2, 1984, as far as the public is concerned, there is only one "Wella company." In other words, the image given to customers throughout the world is that there is a single Wella entity. Thus, even though there may be technically separate companies for purposes of manufacturing and distributing products in a particular country, the image given to the public is that there is a single Wella company and it is probably true that most customers are not even aware of the fact that there are separate companies.... Therefore, by definition, there will be no likelihood of confusion, because consumers will be associating WELLASTRATE with Wella. It is of no consequence whether the mark is associated with [Wella U.S.], the subsidiary, or Wella A.G., the parent.

In its opinion the Board referred to this contention, but apparently deemed it irrelevant because of the Board's settled view that a separate legal entity always is "another" under section 2(d) which, under the Board's view of that section, bars registration.

We conclude that the Board has taken an unduly, unnecessarily, and improperly narrow view of section 2(d).

That section bars registration of a mark that so resembles the mark registered or used by another "as to be likely, when applied to the goods of the applicant, to cause confusion, or to cause mistake, or to deceive ...." Where the applicant is a related company, the statute requires a thorough inquiry into whether, considering 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. It is not enough to state, as the Board did, that Wella A.G. has not "disput[ed] the similarity of the respective marks and the close relationship of the respective goods in connection with which the marks are used...."

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 that product is Wella U.S. rather than the German company or the Wella organization.

The Board never addressed that question. We think the statute required it to do so. In its brief before us, Wella A.G. states that

there will be no confusion in the marketplace, because, as far as the consuming public is concerned, there is only one Wella. The average consumer does not know and does not care that there may be separate Wella corporate entities throughout the world; the consumer is only concerned with the Wella entity which is selling hair care products worldwide. The fact that one of the Wella companies, as opposed to another Wella company, is selling the product does not make any difference. The consumer believes that he or she is purchasing a Wella product and that is what the consumer is getting, whether it be a product of Wella A.G. or a product of Wella U.S. or a product of one of the other Wella companies.... Thus, even though there may be technically separate companies for purposes of manufacturing and distributing products in a particular country, the image given to the public is that there is a single Wella company and it is probably true that most consumers are not even aware of the fact that there are separate Wella companies.

From a factual point of view, it is not possible for there to be a likelihood of confusion between the marks of Wella A.G. and Wella U.S., because they are, in essence, a single entity and the intention of the marketing campaign is to give the...