Trademarks are for Parents, Not Children

Children are all too familiar with parents telling them that everything they own is actually mom and dads. And as frustrating as this is to hear as a child, a recent opinion from the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board informs us that this is not necessarily a bad thing—at least in the world of trademarks.

The opinion stemmed from DP Derm, LLC’s successful allegations that Derma Pen IP Holdings LLC (“DPIPH”) had abandoned its trademark for DERMAPEN, when it did not have any operations beyond owning the trademark. See DP Derm, LLC v. Derma Pen IP Holdings, LLC, Cancellation No. 92073045 (April 3, 2024). DPIPH acknowledged this fact, but sought to impute its parent company, FD Holdings, LLC’s use of the mark as FD Holdings had continued to market and sell products bearing the DERMAPEN mark.

In general, it is permissible for another company’s use of a trademark to inure to the benefit of the trademark owner, provided the trademark owner exercises control over the nature and quality of the goods and services. However, because DPIPH was a subsidiary (child) and not able to show any license or other agreement with its parent, it could not demonstrate that it had control over the quality of the goods and services sold in connection with the DERMAPEN mark. Therefore, FD Holdings use of the mark was not imputed to DPIPH, and DPIPH was found to have abandoned the mark, and the cancellation was granted.

Had the roles been reversed, and the parent company owned the trademark, the result likely would have been different as it is generally presumed that parent companies exercise control over the nature and quality of the goods and services sold by its subsidiary.

To that end, it is important for businesses to think critically about who they are listing as the owner of their trademarks, and who is actually using the trademark. If they are the same entity, great. If they are not, make sure that either the parent company owns the trademark, or there is some mechanism, such as a license, by which the subsidiary is able to (and does) control the nature and quality of the goods and services.