Under Section 1(a)(1) of the Trademark Act, 15 U.S.C. §1051(a)(1), an application based on use in commerce must be filed by the owner of the mark. A §1(a) application must include a verified statement that the applicant believes it is the owner of the mark sought to be registered. 15 U.S.C. §1051(a)(3)(A); 37 C.F.R. §2.33(b)(1). An application that is not filed by the owner is void. See TMEP §1201.02(b).

An application under §1(b) or §44 of the Act, 15 U.S.C. §1051(b) or §1126, must be filed by a party who is entitled to use the mark in commerce, and must include a verified statement that the applicant is entitled to use the mark in commerce and that the applicant has a bona fide intention to use the mark in commerce as of the application filing date. 15 U.S.C. §§1051(b)(3), 1126(d)(2) and 1126(e); 37 C.F.R. §2.33(b)(2). When the person designated as the applicant was not the person with a bona fide intention to use the mark in commerce, the application is void. See TMEP §1201.02(b).

In a §1(b) application, before the mark can be registered, the applicant must file an amendment to allege use under 15 U.S.C. §1051(c) (see TMEP §§1104 et seq.) or a statement of use under 15 U.S.C. §1051(d) (see TMEP §§1109 et seq.) that states that the applicant is the owner of the mark. 15 U.S.C. §§1051(b)(3)(A) and (B); 37 C.F.R. §§2.76(b)(1), and2.88(b)(1).

In a §44 application, the applicant must be the owner of the foreign application or registration on which the United States application is based as of the filing date of the United States application. See TMEP§1005.

An application under §66(a) of the Trademark Act (i.e., a request for extension of protection of an international registration to the United States under the Madrid Protocol), must be filed by the holder of the international registration. 15 U.S.C. §1141e(a). The application must include a verified statement that the applicant has a bona fide intention to use the mark in commerce. 15 U.S.C. §1141(5). The verified statement in a §66(a) application is part of the international registration on file at the International Bureau of the World Intellectual Property Organization ("IB"). The IB will have established that the international registration includes this verified statement before it sends the request for extension of protection to the United States Patent and Trademark Office ("USPTO"). See TMEP §804.06. The request for extension of protection remains part of the international registration, and ownership is determined by the IB. See TMEP §501.07 regarding assignment of §66(a) applications.

1201.01 Claim of Ownership May Be Based on Use By Related Companies

In an application under §1 of the Trademark Act, an applicant may base its claim of ownership of a trademark or a service mark on:

(1) its own exclusive use of the mark;

(2) use of the mark solely by a related company whose use inures to the applicant's benefit (see TMEP §§1201.03 et seq.); or

(3) use of the mark both by the applicant and by a related company whose use inures to the applicant's benefit (see TMEP §1201.05).

Where the mark is used by a related company, the owner is the party who controls the nature and quality of the goods sold or services rendered under the mark. The owner is the only proper party to apply for registration. 15 U.S.C. §1051. See TMEP §§1201.03 et seq. for additional information about use by related companies.

The examining attorney should accept the applicant's statement regarding ownership of the mark unless it is clearly contradicted by information in the record. In re Los Angeles Police Revolver and Athletic Club, Inc., 69 USPQ2d 1630 (TTAB 2004).

The Office does not inquire about the relationship between the applicant and other parties named on the specimens or elsewhere in the record, except when the reference to another party clearly contradicts the applicant's verified statement that it is the owner of the mark or entitled to use the mark. Moreover, where the application states that use of the mark is by a related company or companies, the examining attorney should not require any explanation of how the applicant controls such use.

The above provisions also apply to service marks, collective marks and certification marks, except that, by definition, collective marks andcertification marks are not used by the owner of the mark, but are used by others under the control of the owner. 15 U.S.C. §§1053 and 1054. See TMEP §§1303.01 , 1304.03 and 1306.01(a).

See TMEP §1201.04 for information about when an examining attorney should issue an inquiry or refusal with respect to ownership.

1201.02 Identifying the Applicant in the Application

1201.02(a) Identifying the Applicant Properly

The applicant may be any person or entity capable of suing andbeing sued in a court of law. See TMEP §§803 et seq. for the appropriate format for identifying the applicant and setting forth the relevant legal entity. See TMEP §1201.03(a) regarding the form for indicating that the mark is used solely by a related company.

1201.02(b) Application Void if Wrong Party Identified as the Applicant

An application must be filed by the party who is the owner of (or is entitled to use) the mark as of the application filing date. See TMEP §1201.

An application based on use in commerce under 15 U.S.C. §1051(a) must be filed by the party who owns the mark on the application filing date. If the applicant does not own the mark on the application filing date, the application is void. 37 C.F.R. §2.71(d). Huang v. Tzu Wei Chen Food Co. Ltd., 849 F.2d 1458, 7 USPQ2d 1335 (Fed. Cir. 1988).

If the record indicates that the applicant is not the owner of the mark, the examining attorney should refuse registration on that ground. The statutory basis for this refusal is §1 of the Trademark Act, 15 U.S.C. §1051, and, where related company issues are relevant, §§5 and 45, 15 U.S.C. §§1055 and 1127. The examining attorney should not have the filing date cancelled or refund the application filing fee.

In an application under §1(b) or §44 of the Trademark Act, 15 U.S.C. §1051(b) or §1126, the applicant must be entitled to use the mark in commerce on the application filing date, and the application must include a verified statement that the applicant has a bona fide intention to use the mark in commerce. 15 U.S.C. §§1051(b)(3)(A), 1051(b)(3)(B), 1126(d)(2) and 1126(e). When the person designated as the applicant was not the person with a bona fide intention to use the mark in commerce at the time the application was filed, the application is void. American Forests v. Sanders, 54 USPQ2d 1860 (TTAB 1999), aff'd, 232 F.3d 907 (Fed. Cir. 2000) (intent-to-use application filed by an individual held void, where the entity that had a bona fide intention to use the mark in commerce on the application filing date was a partnership composed of the individual applicant and her husband). However, the examining attorney will not inquire into the bona fides, or good faith, of an applicant's asserted intention to use a mark in commerce during ex parte examination, unless there is evidence in the record clearly indicating that the applicant does not have a bona fide intention to use the mark in commerce. See TMEP §1101.

When an application is filed in the name of the wrong party, this defect cannot be cured by amendment or assignment. 37 C.F.R. §2.71(d); TMEP§803.06. However, if the application was filed by the owner, but there was a mistake in the manner in which the applicant's name is set forth in the application, this may be corrected. See TMEP §1201.02(c) for examples of correctable and non-correctable errors.

See TMEP §1201 regarding ownership of a §66(a) application.

1201.02(c) Correcting Errors in How the Applicant Is Identified

If the party applying to register the mark is in fact the owner of the mark, but there is a mistake in the manner in which the name of the applicant is set out in the application, the mistake may be corrected by amendment. U.S. Pioneer Electronics Corp. v. Evans Marketing, Inc., 183 USPQ 613 (Comm'r Pats. 1974). However, the application may not be amended to designate another entity as the applicant. 37 C.F.R. §2.71(d); TMEP§803.06. An application filed in the name of the wrong party is void andcannot be corrected by amendment. In re Tong Yang Cement Corp., 19 USPQ2d 1689 (TTAB 1991).

The following are examples of correctable errors in identifying the applicant:

(1) If the applicant identifies itself by a name under which it does business, which is not its name as a legal entity, then amendment to state the applicant's correct legal name is permitted.

(2) If the applicant mistakenly names an operating division that is not a legal entity as the owner, then the applicant's name may be amended. See TMEP §1201.02(d).

(3) Clerical errors such as the mistaken addition or omission of "The" or "Inc." in the applicant's name may be corrected by amendment.

(4) If the record is ambiguous as to who owns the mark, e.g., an individual and a corporation are each identified as the owner in different places in the application, the application may be amended to indicate the proper applicant.

(5) If the owner of a mark legally changed its name before filing an application, but mistakenly lists its former name on the application, the error may be corrected because the correct party filed, but merely identified itself incorrectly. In re Techsonic Industries, Inc., 216 USPQ 619 (TTAB 1982).

(6) If an applicant has been identified as "A and B, doing business as The AB Company, a partnership," and the true owner is a partnership organized under the name The AB Company and composed of A and B, the applicant's name should be amended to "The AB Company, a partnership composed of A and B."

(7) If an applicant has been identified as "ABC Corporation, formerly known as XYZ, Inc.," and the correct entity is "XYZ, Inc.," the applicant's name may be amended to "XYZ, Inc.," as long as "ABC Corporation, formerly known as XYZ, Inc." was not a different existing legal entity. Cf. Custom Computer Services Inc. v. Paychex Properties Inc., 337 F.3d 1334, 67 USPQ2d 1638, 1640 (Fed. Cir. 2003).

To correct an obvious mistake of this nature, a verification or declaration is not normally necessary.

The following are examples of non-correctable errors in identifying the applicant:

(1) If the president of a corporation is identified as the owner of the mark when in fact the corporation owns the mark, the application is void as filed because the applicant is not the owner of the mark.

(2) If an application is filed in the name of entity A, when the mark was assigned to entity B before the application filing date, the application is void as filed because the applicant was not the owner of the mark at the time of filing. Huang v. Tzu Wei Chen Food Co. Ltd., 849 F.2d 1458, 7 USPQ2d 1335 (Fed. Cir. 1988) (application filed by an individual two days after ownership of the mark was transferred to a newly formed corporation held void).

(3) If the application is filed in the name of a joint venturer when the mark is owned by the joint venture, the applicant's name cannot be amended. In re Tong Yang Cement Corp., supra.

(4) If an application is filed in the name of corporation A and a sister corporation (corporation B) owns the mark, the application is void as filed because the applicant is not the owner of the mark.

1201.02(d) Operating Divisions

An operating division that is not a legal entity that can sue andbe sued does not have standing to own a mark or to file an application to register a mark. The application must be filed in the name of the company of which the division is a part. In re Cambridge Digital Systems, 1 USPQ2d 1659, 1660 n.1 (TTAB 1986). An operating division's use is considered to be use by the applicant and not use by a related company; therefore, reference to related-company use is permissible but not necessary.

1201.02(e) Changes in Ownership After Application Is Filed

See TMEP Chapter 500 regarding changes of ownership andchanges of name subsequent to filing an application for registration, and TMEP§§502.02 et seq. regarding the procedure for requesting that a certificate of registration be issued in the name of an assignee or in an applicant's new name.

1201.03 Use by Related Companies

Section 5 of the Trademark Act, 15 U.S.C. §1055, states, in part, as follows:

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 registrant or applicant for registration, and such use shall not affect the validity of such mark or of its registration, provided such mark is not used in such manner as to deceive the public.

Section 45 of the Act, 15 U.S.C. §1127, defines "related company" as follows:

The term "related company" means 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 which the mark is used.

Thus, §5 of the Act permits applicants for registration to rely on use of the mark by related companies. Either a natural person or a juristic person may be a related company. 15 U.S.C. §1127.

The essence of related-company use is the control exercised over the nature and quality of the goods or services on or in connection with which the mark is used. When a mark is used by a related company, use of the mark inures to the benefit of the party who controls the nature and quality of the goods or services. This party is the owner of the mark and, therefore, is the only party that may apply to register the mark. Smith International, Inc. v. Olin Corp., 209 USPQ 1033, 1044 (TTAB 1981).

Reliance on related-company use requires, inter alia, that the related company use the mark in connection with the same goods or services recited in the application. In re Admark, Inc., 214 USPQ 302 (TTAB 1982) (related company use not at issue where the applicant sought registration of a mark for advertising agency services and the purported related company used the mark for retail store services).

A related company is different from a successor in interest who is in privity with the predecessor in interest for purposes of determining the right to register. Wells Cargo, Inc. v. Wells Cargo, Inc., 197 USPQ 569 (TTAB 1977), aff'd, 606 F.2d 961, 203 USPQ 564 (C.C.P.A. 1979).

See TMEP §1201.03(c) regarding wholly owned related companies, §1201.03(d) regarding corporations with common stockholders, directors or officers, §1201.03(e) regarding sister corporations, and§1201.03(f) regarding license and franchise situations.

1201.03(a) Use Solely by Related Company Must be Disclosed

If the mark is not being used by the applicant but is being used by one or more related companies whose use inures to the benefit of the applicant under §5 of the Act, then these facts must be disclosed in the application. 37 C.F.R. §2.38(b). See Pease Woodwork Co., Inc. v. Ready Hung Door Co., Inc., 103 USPQ 240 (Comm'r Pats. 1954); Industrial Abrasives, Inc. v. Strong, 101 USPQ 420 (Comm'r Pats. 1954). Use that inures to the applicant's benefit is a proper and sufficient support for an application and satisfies the requirement of 37 C.F.R. §2.33(b)(1) that a §1(a) application specify that the applicant has adopted and is using the mark.

The party who controls the nature and quality of the goods or services on or in connection with which the mark is used should be set forth as the applicant. In an application under §1(a) of the Trademark Act, the applicant should state in the body of the application that the applicant has adopted and is using the mark through its related company (or equivalent explanatory wording). In a §1(b) application, the statement that the applicant is using the mark through a related company should be included in the amendment to allege use under 15 U.S.C. §1051(c) (see TMEP §§1104 etseq.) or statement of use under 15 U.S.C. §1051(d) (see TMEP §§1109 etseq.).

The applicant is not required to give the name of the related-company user unless it is necessary to explain information in the record that clearly contradicts the applicant's verified claim of ownership of the mark.

The applicant may claim the benefit of use by a related company in an amendment to the application. Greyhound Corp. v. Armour Life Insurance Co., 214 USPQ 473, 475 (TTAB 1982).

If the applicant and a related company both use the mark, and it is the applicant's own use of the mark that is relied on in the application, then the applicant does not have to include a reference to use by a related company in the application. See TMEP §1201.05.

1201.03(b) No Explanation of Applicant's Control Over Use of Mark by Related Companies Required

Where the application states that use of the mark is by a related company or companies, the Office does not require an explanation of how the applicant controls the use of the mark.

Similarly, the Office does not inquire about the relationship between the applicant and other parties named on the specimens or elsewhere in the record, except when the reference to another party clearly contradicts the applicant's verified statement that it is the owner of the mark or entitled to use the mark. See TMEP §1201.04.

1201.03(c) Wholly Owned Related Companies

Related-company use includes situations where a wholly owned related company of the applicant uses the mark or the applicant is wholly owned by a related company that uses the mark.

Frequently, related companies comprise parent and wholly owned subsidiary corporations. Either a parent corporation or a subsidiary corporation may be the proper applicant, depending on the facts concerning ownership of the mark. The Office will consider the filing of the application in the name of either the parent or the subsidiary to be the expression of the intention of the parties as to ownership in accord with the arrangements between them.

Either an individual or a juristic entity may own a mark that is used by a wholly owned related company. See In re Hand, 231 USPQ 487 (TTAB 1986).

1201.03(d) Common Stockholders, Directors or Officers

Corporations are not "related companies" within the meaning of §5 of the Trademark Act, 15 U.S.C. §1055, merely because they have the same stockholders, directors or officers, or because they occupy the same premises. In re Raven Marine, Inc., 217 USPQ 68, 69 (TTAB 1983) (statement that both the applicant corporation and the corporate user of the mark have the same principal stockholder and officer held insufficient to show that the user is a related company).

If an individual applicant is not the sole owner of the corporation that is using the mark, the question of whether the corporation is a "related company" depends on whether the applicant maintains control over the nature and quality of the goods or services such that use of the mark inures to the applicant's benefit. A formal written licensing agreement between the parties is not necessary, nor is its existence sufficient to establish ownership rights. The critical question is whether the applicant sufficiently controls the nature and quality of the goods or services with which the mark is used. See Pneutek, Inc. v. Scherr, 211 USPQ 824 (TTAB 1981) (detailed written agreement and substantial evidence in the record indicating that the applicant, an individual, exercised control over the nature and quality of the goods sold under the mark by the user corporation held sufficient to show that the corporation was a related company).

Similarly, where an individual applicant is not the sole owner of the corporation that is using the mark, the fact that the individual applicant is a stockholder, director of officer in the corporation is insufficient in itself to establish that the corporation is a related company. The question depends on whether the applicant maintains control over the nature and quality of the goods or services.

See TMEP §1201.03(c) regarding use by wholly owned related companies.

1201.03(e) Sister Corporations

The fact that two sister corporations are controlled by a single parent corporation does not mean that they are related companies. Where two corporations are wholly owned subsidiaries of a common parent, use by one sister corporation is not considered to inure to the benefit of the other unless the applicant sister corporation exercises appropriate control over the nature and quality of the goods or services on or in connection with which the mark is used. In re Pharmacia Inc., 2 USPQ2d 1883 (TTAB 1987); Greyhound Corp. v. Armour Life Insurance Co., 214 USPQ 473 (TTAB 1982).

See TMEP §1201.03(c) regarding use by wholly owned related companies.

1201.03(f) License and Franchise Situations

The Office accepts applications by parties who claim to be owners of marks through use by controlled licensees, pursuant to a contract or agreement. Pneutek, Inc. v. Scherr, 211 USPQ 824, 833 (TTAB 1981).

A controlled licensing agreement may be recognized whether oral or in writing. In re Raven Marine, Inc., 217 USPQ 68, 69 (TTAB 1983).

If the application indicates that use of the mark is pursuant to a license or franchise agreement, and the record contains nothing that contradicts the assertion of ownership by the applicant (i.e., the licensor or franchisor), the examining attorney will not inquire about the relationship between the applicant and the related company (i.e., the licensee or franchisee).

Ownership rights in a trademark or service mark may be acquired and maintained through the use of the mark by a controlled licensee even when the only use of the mark has been made, and is being made, by the licensee. Turner v. HMH Publishing Co., Inc., 380 F.2d 224, 154 USPQ 330, 334 (5^th Cir. 1967), cert. denied, 389 U.S. 1006, 156 USPQ 720 (1967); Central Fidelity Banks, Inc. v. First Bankers Corp. of Florida, 225 USPQ 438, 440 (TTAB 1984) (use of the mark by petitioner's affiliated banks considered to inure to the benefit of petitioner bank holding company, even though the bank holding company could not legally render banking services and thus could not use the mark).

Joint applicants enjoy rights of ownership to the same extent as any other "person" who has a proprietary interest in a mark. Therefore, joint applicants may license others to use a mark and, by exercising sufficient control and supervision of the nature and quality of the goods or services to which the mark is applied, the joint applicants/licensors may claim the benefits of the use by the related company/licensee. In re Diamond Walnut Growers, Inc. and Sunsweet Growers Inc., 204 USPQ 507 (TTAB 1979).

Stores that are operating under franchise agreements from another party are considered "related companies" of that party, and use of the mark by the franchisee/store inures to the benefit of the franchisor. Mr. Rooter Corp. v. Morris, 188 USPQ 392, 394 (E.D. La. 1975); Southland Corp. v. Schubert, 297 F. Supp. 477, 160 USPQ 375, 381 (C.D. Cal. 1968).

In all franchise and license situations, the key to ownership is the nature and extent of the control by the applicant of the goods or services to which the mark is applied. A trademark owner who fails to exercise sufficient control over licensees or franchisees may be found to have abandoned its rights in the mark. See Hurricane Fence Co. v. A-1 Hurricane Fence Co. Inc., 468 F. Supp. 975, 208 USPQ 314, 325-27 (S.D. Ala. 1979).

In general, where the application states that a mark is used by a licensee or franchisee, the Office does not require an explanation of how the applicant controls the use. See TMEP §1201.03(b).

1201.04 Inquiry Regarding Parties Named on Specimens or Elsewhere in Record

The examining attorney should inquire about another party if the record specifically states that another party is the owner of the mark, or if the record specifically identifies the applicant in a manner that contradicts the claim of ownership, for example, as a licensee. In these circumstances, registration should be refused under §1 of the Trademark Act, on the ground that the applicant is not the owner of the mark. Similarly, when the record indicates that the applicant is a United States distributor, importer or other distributing agent for a foreign manufacturer, the examining attorney should require the applicant to establish its ownership rights in the United States in accordance with TMEP §1201.06(a).

Where the specimen of use indicates that the goods are manufactured in a country other than the applicant's home country, the examining attorney normally should not inquire whether the mark is used by a foreign manufacturer. See TMEP §1201.06(b). Also, where the application states that use of the mark is by related companies, an explanation of how the applicant controls use of the mark by the related companies is not required. See TMEP §1201.03(b).

1201.05 Acceptable Claim of Ownership Based on Applicant's Own Use

An applicant's claim of ownership of a mark may be based on the applicant's own use of the mark, even though there is also use by a related company. The applicant is the owner by virtue of the applicant's own use, andthe application does not have to refer to use by a related company.

An applicant may claim ownership of a mark when the mark is applied on the applicant's instruction. For example, if the applicant contracts with another party to have goods produced for the applicant andinstructs the party to place the mark on the goods, that is the equivalent of the applicant itself placing the mark on its own goods and reference to related-company use is not necessary.

1201.06 Special Situations Pertaining to Ownership

1201.06(a) Applicant Is Merely Distributor or Importer

A distributor, importer or other distributing agent of the goods of a manufacturer or producer does not acquire a right of ownership in the manufacturer's or producer's mark merely because it moves the goods in trade. In re Bee Pollen from England Ltd., 219 USPQ 163 (TTAB 1983); Audioson Vertriebs - GmbH v. Kirksaeter Audiosonics, Inc., 196 USPQ 453 (TTAB 1977); Jean D'Albret v. Henkel-Khasana G.m.b.H., 185 USPQ 317 (TTAB 1975); In re Lettmann, 183 USPQ 369 (TTAB 1974); Bakker v. Steel Nurse of America Inc., 176 USPQ 447 (TTAB 1972). A party that merely distributes goods bearing the mark of a manufacturer or producer is neither the owner nor a related-company user of the mark.

If the applicant merely distributes or imports goods for the owner of the mark, registration must be refused under §1 of the Trademark Act, except in the following situations:

(1) If a parent and wholly owned subsidiary relationship exists between the distributor and the manufacturer, then the applicant's statement that such a relationship exists disposes of an ownership issue. See TMEP §1201.03(c).

(2) If an applicant is the United States importer or distribution agent for a foreign manufacturer, then the applicant can register the foreign manufacturer's mark in the United States, if the applicant submits one of the following:

(a) written consent from the owner of the mark to registration in the applicant's name, or

(b) written agreement or acknowledgment between the parties that the importer or distributor is the owner of the mark in the United States, or

(c) an assignment (or true copy) to the applicant of the owner's rights in the mark as to the United States together with the business and good will appurtenant thereto.

See In re Pharmacia Inc., 2 USPQ2d 1883 (TTAB 1987); In re Geo. J. Ball, Inc., 153 USPQ 426 (TTAB 1967).

1201.06(b) Goods Manufactured in a Country Other than Where Applicant Is Located

Where a specimen of use indicates that the goods are manufactured in a country other than the applicant's home country, the examining attorney normally should not inquire whether the mark is used by a foreign manufacturer. If, however, information in the record clearly contradicts the applicant's verified claim of ownership (e.g., a statement in the record that the mark is owned by the foreign manufacturer and that the applicant is only an importer or distributor), then registration must be refused under §1, 15 U.S.C. §1051, unless registration in the United States by the applicant is supported by the applicant's submission of one of the documents listed in TMEP§1201.06(a).

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, e.g., In re Citibank, N.A., 225 USPQ 612 (TTAB 1985); In re Champion International Corp., 220 USPQ 478 (TTAB 1982); In re Air Products, Inc., 124 USPQ 81 (TTAB 1960). 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). The 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) et seq. 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. (Of course, 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 In re Sumitomo Electric Industries, Ltd., 184 USPQ 365 (TTAB 1974). 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. In this circumstance, additional representations or declarations should generally not be required, absent contradictory evidence.

1201.07(b)(ii) When 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. The Board concluded that this declaration alone, absent contradictory evidence, established unity of control, a single source and no likelihood of confusion. 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.

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, 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 andlicensee, 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 andno 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.

1202 Use of Subject Matter as Trademark

In an application under §1 of the Act, the examining attorney must determine whether the subject matter for which registration is sought is used as a trademark by reviewing all evidence (e.g., the specimens of use and any promotional material) of record in the application. See In re Safariland Hunting Corp., 24 USPQ2d 1380 (TTAB 1992) (examining attorney should look primarily to specimens to determine whether a designation would be perceived as a source indicator, but may also consider other evidence, if there is other evidence of record).

Not everything that a party adopts and uses with the intent that it function as a trademark necessarily achieves this goal or is legally capable of doing so, and not everything that is recognized or associated with a party is necessarily a registrable trademark. As the Court of Customs and Patent Appeals observed in In re Standard Oil Co., 275 F.2d 945, 947, 125 USPQ 227, 229 (C.C.P.A. 1960):

The Trademark Act is not an act to register words but to register trademarks. Before there can be registrability, there must be a trademark (or a service mark) and, unless words have been so used, they cannot qualify for registration. Words are not registrable merely because they do not happen to be descriptive of the goods or services with which they are associated.

Sections 1 and 2 of the Trademark Act, 15 U.S.C. §§1051 and 1052, require that the subject matter presented for registration be a "trademark." Section 45 of the Act, 15 U.S.C. §1127, defines that term as follows:

The term "trademark" includes any word, name, symbol, or device, or any combination thereof--

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this Act,

to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

Thus, §§1, 2 and 45 of the Trademark Act, 15 U.S.C. §§1051, 1052, and 1127, provide the statutory basis for refusal to register on the Principal Register subject matter that, due to its inherent nature or the manner in which it is used, does not function as a mark to identify and distinguish the applicant's goods. The statutory basis for refusal of registration on the Supplemental Register of matter that does not function as a trademark because it does not fit within the statutory definition of a trademark is §§23 and 45, 15 U.S.C. §§1091 and 1127.

When the examining attorney refuses registration on the ground that the subject matter is not used as a trademark, the examining attorney should explain the specific reason for the conclusion that the subject matter is not used as a trademark. See TMEP §§1202.01 et seq. for a discussion of situations in which it may be appropriate, depending on the circumstances, for the examining attorney to refuse registration on the ground that the asserted trademark does not function as a trademark, e.g., TMEP§§1202.01 (trade names), 1202.02(a) et seq. (functionality), 1202.03 (ornamentation), 1202.04 (informational matter), 1202.05 (color marks), 1202.06 (goods in trade), 1202.07 (columns or sections of publications), 1202.08 (title of single creative work), 1202.09 (names of artists and authors), 1202.10 (model or grade designations), 1202.11 (background designs and shapes), 1202.12 (varietal and cultivar names).

The presence of the letters "SM" or "TM" cannot transform an otherwise unregistrable designation into a mark. In re Remington Products Inc., 3 USPQ2d 1714 (TTAB 1987); In re Anchor Hocking Corp., 223 USPQ 85 (TTAB 1984); In re Minnetonka, Inc., 212 USPQ 772 (TTAB 1981).

See TMEP §§1301.02 et seq. regarding use of subject matter as a service mark; TMEP §§1302 through 1304 regarding use of subject matter as a collective mark; and TMEP §1306 regarding use of subject matter as a certification mark.

1202.01 Refusal of Matter Used Solely as a Trade Name

The name of a business or company is a trade name. The Trademark Act distinguishes trade names from trademarks by definition. While a trademark is used to identify and distinguish the trademark owner's goods from those manufactured or sold by others and to indicate the source of the goods, "trade name" and "commercial name" are defined in §45 of the Act, 15 U.S.C. §1127, as follows:

The terms "trade name" and "commercial name" mean any name used by a person to identify his or her business or vocation.

The Trademark Act does not provide for registration of trade names. See In re Letica Corp., 226 USPQ 276, 277 (TTAB 1985) ("[T]here was a clear intention by the Congress to draw a line between indicia which perform only trade name functions and indicia which perform or also perform the function of trademarks or service marks.").

If the examining attorney determines that matter for which registration is requested is merely a trade name, registration must be refused both on the Principal Register and on the Supplemental Register. The statutory basis for refusal of trademark registration on the ground that the matter is used merely as a trade name is §§1, 2 and 45 of the Trademark Act, 15 U.S.C. §§1051, 1052 and 1127, and, in the case of matter sought to be registered for services, §§1, 3, and 45, 15 U.S.C. §§1051, 1053 and 1127.

A designation may function as both a trade name and a trademark or service mark. See In re Walker Process Equipment Inc., 233 F.2d 329, 332, 110 USPQ 41, 43 (C.C.P.A. 1956), aff'g 102 USPQ 443 (Comm'r Pats. 1954).

If subject matter presented for registration in an application is a trade name or part of a trade name, the examining attorney must determine whether it is also used as a trademark or service mark by examining the specimens and other evidence of record in the application file. See In re Diamond Hill Farms, 32 USPQ2d 1383 (TTAB 1994) (DIAMOND HILL FARMS, as used on containers for goods, found to be a tradename that identifies applicant as a business entity rather than a mark that identifies applicant's goods anddistinguishes them from those of others).

Whether matter that is a trade name (or a portion thereof) also performs the function of a trademark depends on the manner of its use and the probable impact of the use on customers. See In re Unclaimed Salvage & Freight Co., Inc., 192 USPQ 165, 168 (TTAB 1976) ("It is our opinion that the foregoing material reflects use by applicant of the notation 'UNCLAIMED SALVAGE & FREIGHT CO.' merely as a commercial, business, or trade name serving to identify applicant as a viable business entity; and that this is or would be the general and likely impact of such use upon the average person encountering this material under normal circumstances and conditions surrounding the distribution thereof."); In re Lytle Engineering & Mfg. Co., 125 USPQ 308 (TTAB 1960) ("'LYTLE' is applied to the container for applicant's goods in a style of lettering distinctly different from the other portion of the trade name and is of such nature and prominence that it creates a separate and independent impression.")

The presence of an entity designator in a name sought to be registered and the proximity of an address are both factors to be considered in determining whether a proposed mark is merely a trade name. In re Univar Corp., 20 USPQ2d 1865, 1869 (TTAB 1991) ("[T]he mark "UNIVAR" independently projects a separate commercial impression, due to its presentation in a distinctively bolder, larger and different type of lettering and, in some instances, its additional use in a contrasting color, and thus does more than merely convey information about a corporate relationship.") See also Book Craft, Inc. v. BookCrafters USA, Inc., 222 USPQ 724, 727 (TTAB 1984) ("That the invoices ... plainly show ... service mark use is apparent from the fact that, not only do the words 'BookCrafters, Inc.' appear in larger letters and a different style of print than the address, but they are accompanied by a design feature (the circularly enclosed ends of two books).").

A determination of whether matter serves solely as a trade name rather than as a mark requires consideration of the way the mark is used, as evidenced by the specimens. Therefore, no refusal on that ground will be issued in an intent-to-use application until the applicant has submitted specimens of use in conjunction with either an amendment to allege use under 15 U.S.C. §1051(c) or a statement of use under 15 U.S.C. §1051(d).

1202.02 Registration of Trade Dress

When an applicant applies to register a product's design, product packaging, color, or other trade dress for goods or services, the examining attorney must consider two issues: (1) functionality; and (2) distinctiveness. See TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1004-1005 (2001); Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775, 23 USPQ2d 1081, 1086 (1992) (only nonfunctional distinctive trade dress is protected). See TMEP§§1202.02(a) et seq. regarding functionality, TMEP §§1202.02(b) and 1212 et seq. regarding distinctiveness, and TMEP §1202.02(c) regarding separate treatment of the two issues procedurally. With respect to the functionality and distinctiveness issues in the specific context of color as a mark, see TMEP §§1202.05 and 1202.05(f).

1202.02(a) Functionality

1202.02(a)(i) Statutory Basis for Functionality Refusal

Before October 30, 1998, there was no specific statutory reference to functionality as a ground for refusal, and functionality refusals were thus issued as failure-to-function refusals under Sections 1, 2 and 45 of the Trademark Act, 15 U.S.C. §§1051, 1052 and 1127.

Effective October 30, 1998, the Technical Corrections to Trademark Act of 1946, Pub. L. No. 105-330, §201, 112 Stat. 3064, 3069, amended the Trademark Act to expressly prohibit registration on either the Principal or Supplemental Register of matter that is functional:

• Section 2(e)(5) of the Trademark Act, 15 U.S.C. §1052(e)(5), prohibits registration on the Principal Register of "matter that, as a whole, is functional."

• Section 2(f) of the Act, 15 U.S.C. §1052(f), provides that matter that, as a whole, is functional may not be registered even on a showing that it has become distinctive.

• Section 23(c) of the Act, 15 U.S.C. §1091(c), provides that a mark that, as a whole, is functional may not be registered on the Supplemental Register.

• Section 14(3) of the Act, 15 U.S.C. §1064(3), lists functionality as a ground that can be raised in a cancellation proceeding more than five years after the date of registration.

• Section 33(b)(8) of the Act, 15 U.S.C. §1115(b)(8), lists functionality as a statutory defense to infringement in a suit involving an incontestable registration.

These amendments codified case law and the longstanding Office practice of refusing registration of matter that is functional.

1202.02(a)(ii) Purpose of Functionality Doctrine

The functionality doctrine, which prohibits registration of functional product features, is intended to encourage legitimate competition by maintaining the proper balance between trademark law and patent law. As the Supreme Court explained, in Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 164, 34 USPQ2d 1161, 1163 (1995):

The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm's reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, 35 U.S.C. §§154, 173, after which competitors are free to use the innovation. If a product's functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity).

In other words, the functionality doctrine ensures that protection for utilitarian product features be properly sought through a limited-duration utility patent, and not through the potentially unlimited protection of a trademark registration. Upon expiration of a utility patent, the invention covered by the patent enters the public domain, and the functional features disclosed in the patent may then be copied by others - thus encouraging advances in product design and manufacture. In TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 34-35, 58 USPQ2d 1001, 1007 (2001), the Supreme Court reiterated this rationale, also noting that the functionality doctrine is not affected by evidence of acquired distinctiveness:

The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply because an investment has been made to encourage the public to associate a particular functional feature with a single manufacturer or seller.

Thus, even where the evidence establishes that consumers have come to associate a functional product feature with a single source, trademark protection will not be granted in light of the public policy reasons just stated. Id.

1202.02(a)(iii) Definitions

1202.02(a)(iii)(A) Functionality

Functional matter cannot be protected as trade dress or a trademark. 15 U.S.C. §§1052(e)(5) and (f), 1091(c), 1064(3), and 1115(b). A feature is functional as a matter of law if it is "essential to the use or purpose of the product or if it affects the cost or quality of the product." TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1006 (2001); Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 165, 34 USPQ2d 1161, 1163-64 (1995); Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, 214 USPQ 1, 4 n.10 (1982).

While some courts had developed a definition of functionality that focused solely on "competitive need" - thus finding a particular product feature functional only if competitors needed to copy that design in order to compete effectively - the Supreme Court held that this "was incorrect as a comprehensive definition" of functionality. TrafFix, 532 U.S. at 33, 58 USPQ2d at 1006. The Court emphasized that where a product feature meets the traditional functionality definition - that is, it is essential to the use or purpose of the product or affects the cost or quality of the product - then the feature is functional. Id. However, an inquiry into competitive need for the product design or feature at issue may be appropriate in cases where the mark sought to be registered is a color or other matter that does not easily fit within the "utilitarian" definition of functionality. Id. at 1006-07 (stating that inquiring into the issue of "significant non-reputation-related disadvantage" (i.e., competitive need) would be appropriate in cases of "aesthetic functionality," such as Qualitex). See TMEP §§1202.02(a)(iii)(C) and 1202.05 regarding the issues of "aesthetic functionality" and color as a mark.

The determination that a proposed mark is functional constitutes, for public policy reasons, an absolute bar to registration on either the Principal Register or the Supplemental Register - regardless of evidence showing that the proposed mark has acquired distinctiveness. TrafFix, 532 U.S. at 29, 58 USPQ2d at 1006. See also Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 61 USPQ2d 1422 (Fed. Cir. 2002); In re Controls Corp. of America, 46 USPQ2d 1308, 1311 (TTAB 1998).

See TMEP §§1202.02(a)(v) et seq. regarding evidentiary considerations pertaining to functionality refusals.

1202.02(a)(iii)(B) "De Jure" and "De Facto" Functionality

Prior to 2002, the Office used the terms "de facto" and "de jure" in assessing whether "subject matter" (usually a product feature or the configuration of the goods) presented for registration was functional. This distinction originated with the Court of Customs and Patent Appeals' Morton-Norwich decision, which was discussed by the Federal Circuit in Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 61 USPQ2d 1422, 1425 (Fed. Cir. 2002):

Our decisions distinguish de facto functional features, which may be entitled to trademark protection, from de jure functional features, which are not. 'In essence, de facto functional means that the design of a product has a function, i.e., a bottle of any design holds fluid.' In re R.M. Smith, Inc., 734 F.2d 1482, 1484, 222 USPQ 1, 3 (Fed. Cir. 1984). De facto functionality does not necessarily defeat registrability. Morton-Norwich, 671 F.2d [1332,] at 1337, 213 USPQ [9] at 13 [(C.C.P.A. 1982)] (A design that is de facto functional, i.e., 'functional' in the lay sense ... may be legally recognized as an indication of source.'). De jure functionality means that the product has a particular shape 'because it works better in this shape.' Smith, 734 F.2d at 1484, 222 USPQ at 3.

However, in three Supreme Court decisions involving functionality - Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 34 USPQ2d 1161 (1995), Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 54 USPQ2d 1065 (2000), and TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001 (2001) - the Court did not use the "de facto/de jure" distinction. Nor were these terms used when the Trademark Act was amended to expressly prohibit registration of matter that is "functional." Technical Corrections to Trademark Act of 1946, Pub. L. No. 105-330, §201, 112 Stat. 3064, 3069 (1998). Accordingly, in general, examining attorneys no longer make this distinction in Office actions which refuse registration based on functionality.

De facto functionality is not a ground for refusal. In re Ennco Display Systems Inc., 56 USPQ2d 1279, 1282 (TTAB 2000); In re Parkway Machine Corp., 52 USPQ2d 1628, 1631 n.4 (TTAB 1999).

1202.02(a)(iii)(C) Aesthetic Functionality

The concept of "aesthetic functionality" (as opposed to "utilitarian functionality") has for many years been the subject of much confusion as to its precise meaning, as well as whether it is even a viable legal principle. While the Court of Customs and Patent Appeals (the predecessor to the Court of Appeals for the Federal Circuit) appeared to reject the doctrine of aesthetic functionality in In re DC Comics, Inc., 689 F.2d 1042, 215 USPQ 394 (C.C.P.A. 1982), the Supreme Court later referred to aesthetic functionality as a valid legal concept in TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001 (2001). In discussing the proper definition of "functionality," the Court distinguished its previous decision in Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 34 USPQ2d 1161 (1995), specifically contrasting the fact that, unlike the issue currently before the Court, in Qualitex "aesthetic functionality was the central question, there having been no indication that the green-gold color of the laundry press pad had any bearing on the use or purpose of the product or its cost or quality." TrafFix, 532 U.S. at 33, 58 USPQ2d at 1006-07. Although the references to aesthetic functionality in the TrafFix decision are dicta, the Court's use of this terminology appears to indicate that the concept of aesthetic functionality - at least when used properly - is a viable legal principle.

The confusion regarding this concept stems from widespread misuse of the term "aesthetic functionality" in cases involving ornamentation issues, with some courts having mistakenly expanded the category of "functional" marks to include matter that is solely ornamental, essentially on the theory that such matter serves an "aesthetic function" or "ornamentation function." It is this incorrect use of the term "aesthetic functionality" in connection with ornamentation cases that was rejected by the Court of Customs and Patent Appeals. See In re DC Comics, Inc., 689 F.2d 1042, 215 USPQ 394, 397, 399-401 (majority opinion and Rich, J., concurring) (C.C.P.A. 1982) (holding, in a case involving features of toy dolls, that the Board had improperly "intermingled the concepts of utilitarian functionality and what has been termed 'aesthetic functionality'"; and rejecting the concept of aesthetic functionality where it is used as a substitute for "the more traditional source identification principles of trademark law," such as the ornamentation andfunctionality doctrines).

Where the issue presented is whether the proposed mark is ornamental in nature, it is improper to refer to "aesthetic functionality," because the doctrine of "functionality" is inapplicable to such cases. The proper refusal is on the basis that the matter is ornamental and thus does not function as a mark under §§1, 2 and 45 of the Trademark Act, 15 U.S.C. §§1051, 1052 and 1127. See TMEP §§1202.03 et seq. regarding ornamentation.

The Supreme Court's use of the term "aesthetic functionality" in the TrafFix case appears limited to cases where the issue is one of actual functionality, but where the nature of the proposed mark makes it difficult to evaluate the functionality issue from a purely utilitarian standpoint. This is the case with color marks and product features that enhance the attractiveness of the product. The color or feature does not normally give the product a truly utilitarian advantage (in terms of making the product actually perform better), but may still be found to be functional because it provides other real and significant competitive advantages and thus should remain in the public domain.

For example, in Qualitex, supra, referred to as an "aesthetic functionality" case in TrafFix, supra, the Supreme Court considered whether a green-gold color used on the pads for dry cleaning presses was barred from trademark protection under the functionality doctrine. While the Court ultimately concluded that the color at issue was not functional, the Court evaluated the proposed mark not only in light of the traditional "utilitarian" definition of functionality (i.e., whether the proposed mark is essential to the use or purpose of the product or affects the cost or quality of the product), but also in terms of whether there was a competitive need for the color in that industry, stating that the color would be considered functional if its exclusive use "would put competitors at a significant non-reputation-related disadvantage." Qualitex, 514 U.S. 165, 34 USPQ2d at 1163-65. See also Brunswick Corp. v. British Seagull Ltd., 35 F.3d 1527, 32 USPQ2d 1120 (Fed. Cir. 1994) (affirming the Board's determination that the color black for outboard motors was functional because while it had no utilitarian effect on the mechanical working of the engines, it nevertheless provided other identifiable competitive advantages - i.e., ease of coordination with a variety of boat colors and reduction in the apparent size of the engines).

In M-5 Steel Mfg., Inc. v. O'Hagin's Inc., 61 USPQ2d 1086 (TTAB 2001), the Board considered the proper use of the aesthetic functionality doctrine in connection with product designs for metal ventilating ducts andvents for tile or concrete roofs:

This case seems to involve elements of both utilitarian andaesthetic functionality. Here, for example, there is evidence of utility in applicant's patent application, as well as statements touting the superiority of applicant's design in applicant's promotional literature, and statements that applicant's design results in reduced costs of installation. On the other hand, there is no question that applicant's roof designs which match the appearance of surrounding roof tiles are more pleasing in appearance because the venting tiles in each case are unobtrusive.

M-5 Steel, 61 USPQ2d at 1096. Citing extensively from the TrafFix, Qualitex and Brunswick cases, the Board concluded that the product designs were functional for a combination of utilitarian andaesthetic reasons:

[W]e agree with opposer that applicant's product designs are functional in the sense that these configurations blend in or match the roof tiles with which they are used better than alternative products. As in Brunswick, these configurations do not make the roof vents work better because they are in these shapes. Rather, like the advantages of color compatibility and reduction in apparent engine size afforded by the color black, applicant's designs are compatible with the roof tiles with which they are used and supply applicant with a competitive advantage in each case. Because applicant's vents match the contours of the roof vents with which they are used, alternatives will not have this advantage. Applicant's patent application and other evidence of record, including applicant's promotional literature and applicant's own testimony, tout the designs' unobtrusive appearance, state that they are "functional in design," camouflage the existence of the vents and are aesthetically pleasing. Applicant also represents in its promotional material that its vents are cheaper to install. We conclude that applicant's product designs are, as a whole, functional, and that registration by applicant would hinder competition by placing competitors at a substantial competitive disadvantage.

M-5 Steel, 61 USPQ2d at 1097.

Note that this type of functionality determination - while employed in connection with a normally "aesthetic" feature such as color - is a proper use of the functionality doctrine, necessitating a §2(e)(5) refusal where the evidence establishes that a color or other matter at issue provides identifiable competitive advantages and thus should remain in the public domain. This is the opposite of an ornamentation refusal, where the matter at issue serves no identifiable purpose other than that of pure decoration.

Generally speaking, examining attorneys should exercise caution in the use of the term "aesthetic functionality," in light of the confusion that historically has surrounded this issue. In most situations, reference to aesthetic functionality will be unnecessary, since a determination that the matter sought to be registered is purely ornamental in nature will result in an ornamentation refusal under §§1, 2 and 45, and a determination that the matter sought to be registered is functional will result in a functionality refusal under §2(e)(5). Use of the term "aesthetic functionality" may be appropriate in limited circumstances where the proposed mark presents issues similar to those involved in the M-5 Steel and Brunswick cases, supra - i.e., where the issue is one of true functionality under §2(e)(5), but where the nature of the mark makes the functionality determination turn on evidence of particular competitive advantages that are not necessarily categorized as "utilitarian" in nature. Any such use of the term "aesthetic functionality" should be closely tied to a discussion of specific competitive advantages resulting from use of the proposed mark at issue, so that it is clear that the refusal is properly based on the functionality doctrine and not on an incorrect use of "aesthetic functionality" to mean ornamentation.

See TMEP §§1202.05 and 1202.05(f) for additional discussion and case references regarding the functionality issue in connection with color marks.

1202.02(a)(iv) Burden of Proof in Functionality Determinations

The examining attorney must establish a prima facie case that the trade dress sought to be registered is functional. The burden then shifts to the applicant to present sufficient evidence to rebut the examining attorney's prima facie case of functionality. In re R.M. Smith, Inc., 734 F.2d 1482, 222 USPQ 1, 3 (Fed. Cir. 1984); In re Bio-Medicus Inc., 31 USPQ2d 1254, 1257 n.5 (TTAB 1993).

The functionality determination is a question of fact, and depends on the totality of the evidence presented in each particular case. Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 61 USPQ2d 1422 (Fed. Cir. 2002); In re Caterpillar Inc., 43 USPQ2d 1335, 1339 (TTAB 1997). While there is no set amount of evidence that an examining attorney must present to establish a prima facie case of functionality, it is clear that there must be evidentiary support for the refusal in the record. See, e.g., In re Morton-Norwich Products, Inc., 671 F.2d 1332, 213 USPQ 9, 16-17 (C.C.P.A. 1982) (admonishing both the examining attorney and the Board for failing to support the functionality determination with even "one iota of evidence").

If the trade dress sought to be registered as a mark is the subject of a utility patent that discloses the feature's utilitarian advantages, then the applicant bears an especially "heavy burden of overcoming the strong evidentiary inference of functionality." TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1005 (2001). See TMEP §1202.02(a)(v).

1202.02(a)(v) Evidence and Considerations Regarding Functionality Determinations

Trade dress is functional if it is essential to the use or purpose of a product or if it affects the cost or quality of the product. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, 214 USPQ 1, 4 n. 10 (1982).

In TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1005 (2001), the Supreme Court resolved a circuit split regarding the proper weight to be afforded a utility patent in the functionality determination, stating:

A utility patent is strong evidence that the features claimed therein are functional. If trade dress protection is sought for those features the strong evidence of functionality based on the previous patent adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection. Where the expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

See also In re Bose Corp., 772 F.2d 866, 227 USPQ 1 (Fed. Cir. 1985); In re Visual Communications Co., Inc., 51 USPQ2d 1141 (TTAB 1999); In re Edward Ski Products, Inc., 49 USPQ2d 2001 (TTAB 1999); In re Caterpillar Inc., 43 USPQ2d 1335 (TTAB 1997).

The Court in TrafFix went on to hold that where the evidence includes a utility patent that claims the product features at issue, it is unnecessary to consider evidence relating to the availability of alternative designs:

There is no need, furthermore, to engage, as did the Court of Appeals, in speculation about other design possibilities, such as using three or four springs which might serve the same purpose. Here, the functionality of the spring design means that competitors need not explore whether other spring juxtapositions might be used. The dual-spring design is not an arbitrary flourish in the configuration of MDI's product; it is the reason the device works. Other designs need not be attempted.

TrafFix, 532 U.S. at 23, 58 USPQ2d at 1007 (citation omitted).

Therefore, in those instances where the examining attorney is presented with facts similar to those in TrafFix - i.e., where there is a utility patent establishing the utilitarian nature of the product design at issue - the examining attorney may properly issue a final functionality refusal based primarily on the utility patent.

In relevant cases, the examining attorney should ask the applicant to provide copies of any patent(s) or any pending or abandoned patent application(s). See Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 61 USPQ2d 1422, 1429 (Fed. Cir. 2002) ("We agree with the Board that an abandoned patent application should be considered under the first Morton-Norwich factor, because an applied-for utility patent that never issued has evidentiary significance for the statements and claims made in the patent application concerning the utilitarian advantages, just as an issued patent has evidentiary significance.").

It is important to read the patent to determine whether the patent actually claims the features presented in the proposed mark. If it does not, or if the features are referenced in the patent, but only as arbitrary or incidental features, then the probative value of the patent as evidence of functionality is substantially diminished or negated entirely. TrafFix, 532 U.S. at 34, 58 USPQ2d at 1007 (where a manufacturer seeks to protect arbitrary, incidental or ornamental aspects or features of a product found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs, functionality will not be established if the manufacturer can prove that those aspects do not serve a purpose within the terms of utility patent); see also Black & Decker Inc. v. Hoover Service Ctr., 886 F.2d 1285, 12 USPQ2d 1250 (Fed. Cir. 1989); In re Zippo Mfg. Co., 50 USPQ2d 1852 (TTAB 1999); In re Weber-Stephen Products Co., 3 USPQ2d 1659 (TTAB 1987).

It is not necessary that the utility patent be owned by the applicant; a third-party utility patent is also relevant to the functionality determination if the patent claims the features in the product design sought to be registered. See In re Virshup, 42 USPQ2d 1403 (TTAB 1997); In re American National Can Co., 41 USPQ2d 1841 (TTAB 1997); In re Cabot Corp., 15 USPQ2d 1224 (TTAB 1990). Therefore, the examining attorney may also search the Office's patent records to see if there are utility patents owned by third parties that disclose the functional advantages of the product design that the applicant seeks to register.

Statements regarding utilitarian advantages of the design made in the course of the prosecution of the patent application can be very strong evidence of functionality. TrafFix, 532 U.S. at 32, 58 USPQ2d at 1006 ("These statements [regarding specific functional advantages of the product design] made in the patent applications and in the course of procuring the patents demonstrate the functionality of the design. MDI does not assert that any of these representations are mistaken or inaccurate, and this is further strong evidence of the functionality of the dual-spring design.").

Where a utility patent claims more than what is sought to be registered, this fact does not establish the nonfunctionality of the product design if the patent shows that the part claimed as a trademark is an essential or integral part of the invention and has utilitarian advantages. Cf. TrafFix, 532 U.S. at 31, 58 USPQ2d at 1006.

The fact that the proposed mark is not the subject of a utility patent does not establish that the product feature is nonfunctional. TrafFix, 532 U.S. at 31, 58 USPQ2d at 1006; In re Gibson Guitar Corp., 61 USPQ2d 1948, 1950 n. 3, (TTAB 2001). If the patent does not disclose utilitarian advantages of the design features at issue, or if no utility patent/application is of record, the evidence normally involves consideration of one or more of the other factors commonly known as the "Morton-Norwich factors:"

(1) the existence of a utility patent that discloses the utilitarian advantages of the design sought to be registered;

(2) advertising by the applicant that touts the utilitarian advantages of the design;

(3) facts pertaining to the availability of alternative designs; and

(4) facts pertaining to whether the design results from a comparatively simple or inexpensive method of manufacture.

In re Morton-Norwich Products, Inc., 671 F.2d 1332, 213 USPQ 9, 15-16 (C.C.P.A. 1982).

Moreover, even in the absence of a utility patent or utility patent application, it is not necessary to consider all these factors in every case. The Supreme Court held that "[w]here the design is functional under the Inwood formulation there is no need to proceed further to consider if there is a competitive necessity for the feature." TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1006 (2001). See also Gibson Guitar Corp., supra (where there was no utility patent, and no evidence that applicant's guitar configuration resulted from a simpler or cheaper method of manufacture, these factors did not weigh in Board's decision).

Relevant technical information is usually more readily available to an applicant. In re Witco Corp., 14 USPQ2d 1557, 1560 (TTAB 1990). Therefore, the applicant will often be the source of most of the evidence relied upon by the examining attorney in establishing a prima facie case of functionality in an ex parte case. In re Teledyne Industries Inc., 696 F.2d 968, 971, 217 USPQ 9, 11 (Fed. Cir. 1982). When there is reason to believe the proposed mark may be functional, in the first Office action the examining attorney should require the applicant to provide information necessary to permit an informed determination concerning the registrability of the proposed mark. See 37 C.F.R. §2.61(b); In re Babies Beat Inc., 13 USPQ2d 1729, 1731 (TTAB 1990) (registration properly refused where applicant failed to comply with examining attorney's request for copies of patent applications andother patent information). In addition to asking whether the proposed mark is or has been the subject of a utility patent or a pending or abandoned patent application, the examining attorney should require an applicant to provide advertising or promotional materials. The examining attorney should also inquire whether the feature makes the product easier or cheaper to manufacture andwhether alternative designs are available.

It is important that the inquiry focus on the utility of the feature or combination of features that is claimed as protectible trade dress, and not on the usefulness of the article overall. Morton-Norwich, 671 F.2d at 1338, 213 USPQ at 13. Generally, dissecting the design into its individual features and analyzing the utility of each separate feature does not establish that the overall design is functional. 15 U.S.C. §1052(e)(5); Teledyne Industries Inc., 696 F.2d at 971, 217 USPQ at 11. However, it is sometimes helpful to analyze the design from the standpoint of its various features. In re R.M. Smith, Inc., 734 F.2d 1482, 1484, 222 USPQ 1, 2 (Fed. Cir. 1984) (affirming the functionality determination, where the Board had initially considered the six individual features of the design, and then had concluded that the design as a whole was functional); In re Controls Corp. of America, 46 USPQ2d 1308, 1312 (TTAB 1998) (finding the entire configuration at issue functional because it consisted of several individual features, each of which was functional in nature). See also Elmer v. ICC Fabricating Inc., 67 F.3d 1571, 1579-80, 36 USPQ2d 1417, 1422-23 (Fed. Cir. 1995) (rejecting the argument that the combination of individually functional features in the configuration resulted in an overall nonfunctional product design).

Where the evidence shows that the overall design is functional, the inclusion of a few arbitrary or otherwise nonfunctional features in the design will not change the result. See Textron, Inc. v. U.S. International Trade Commission, 753 F.2d 1019, 224 USPQ 625, 628-29 (Fed. Cir. 1985); In re Vico Products Mfg. Co., Inc., 229 USPQ 364, 368 (TTAB 1985).

A design patent is a factor that weighs against a finding of functionality because design patents by definition protect only ornamental andnonfunctional features. However, ownership of a design patent does not in itself establish that a product feature is nonfunctional, and can be outweighed by other evidence supporting the functionality determination. R.M. Smith, Inc., 734 F.2d at 1485, 222 USPQ at 3; American National Can Co., 41 USPQ2d at 1843; Caterpillar Inc., 43 USPQ2d at 1339; Witco Corp., 14 USPQ2d at 1559.

1202.02(a)(v)(A) Advertising, Promotional or Explanatory Material in Functionality Determinations

The examining attorney should examine the specimens of record, and should also ask an applicant to provide any available advertising, promotional or explanatory material concerning the goods/services, particularly any material specifically related to the features embodied in the proposed mark. The examining attorney should also check to see if the applicant has a website on which the product is advertised or described.

The applicant's own advertising touting the utilitarian aspects of its design is often strong evidence supporting a functionality refusal. See, e.g., In re Gibson Guitar Corp., 61 USPQ2d 1948 (TTAB 2001); M-5 Steel Mfg., Inc. v. O'Hagin's Inc., 61 USPQ2d 1086 (TTAB 2001); In re Visual Communications Co., Inc., 51 USPQ2d 1141 (TTAB 1999); In re Edward Ski Products, Inc., 49 USPQ2d 2001 (TTAB 1999); In re Caterpillar Inc., 43 USPQ2d 1335 (TTAB 1997); In re Bio-Medicus Inc., 31 USPQ2d 1254 (TTAB 1993); In re Witco Corp., 14 USPQ2d 1557 (TTAB 1989).

An applicant will often assert that statements in its promotional materials touting the utilitarian advantages of the product feature are mere "puffery" and thus entitled to little weight in the functionality analysis. However, where the advertising statements clearly emphasize specific utilitarian features of the design claimed as a mark, the Board will reject such assertions of "puffing." See, e.g., In re Gibson Guitar Corp., supra; Goodyear Tire and Rubber Co. v. Interco Tire Corp., 49 USPQ2d 1705, 1716-17 (TTAB 1998); In re Bio-Medicus Inc., 31 USPQ2d 1254, 1260 (TTAB 1993); In re Witco Corp., 14 USPQ2d 1557, 1559-61 (TTAB 1989).

In Gibson Guitar, the Board found the design of a guitar body to be functional, noting that applicant's literature clearly indicated that the shape of applicant's guitar produced a better musical sound. Applicant's advertisements stated that "This unique body shape creates a sound which is much more balanced and less 'muddy' than other ordinary dreadnought acoustics." 61 USPQ2d at 1951.

The examining attorney may also check trade public