The decision by Kimberly-Clark to sell its interest in Toronto-based Scott Paper of Canada has thrown the future of the latter company into question.

Dallas, Tex.-based Kimberly-Clark has yet to say whether it intends to permit spc to continue using such brands as Scott, Cottonelle and Baby Fresh, which Kimberly-Clark owns and spc markets under license.

The license is up for renewal, and if spc can’t strike a deal, it would be forced to stop marketing the brands in about a year.

Dave Erskine, spc’s chief financial officer, says he believes it’s in the interest of both companies for the relationship to continue.

Erskine says the overall value of the brands includes not only the equity of the trademarked names, but also the value of the ‘distribution system’ and ‘retail shelf-space’ contracts that spc brings to the bargain.

A spokesperson for Kimberly-Clark said the company would not discuss the issues until after it had met with spc.

Kimberly-Clark acquired ownership of Scott, Scotties, Cottonelle, Baby Fresh, Viva and WypAll in December, when it purchased Florida-based Scott Paper Co.

As part of the acquisition, Kimberly-Clark picked up the 50.1% of spc that was previously owned by Scott Paper Co.

spc, which recently moved its head office from Vancouver to Toronto, has held the Canadian licence to the brands since 1954.

While spc hopes it will be able to negotiate a deal, it is fearful Kimberly-Clark might decide to consolidate the brands within its own product stable, as it is doing in the u.s.

That done, it could produce and distribute the brands through its Canadian Kimberly-Clark subsidiary, or ship product up from its u.s. facilities.

The federal government’s Competition Bureau ruled Kimberly-Clark would have to sell several brands and a tissue mill in order to gain approval for its purchase of spc.

So it’s not clear how the Bureau would react to Kimberly-Clark’s consolidating, within its existing product line, the same brands it was being asked to divest as part of the company takeover.

But should Kimberly-Clark ultimately take the brands in-house, Erskine says Scott has a contingency plan in place.

spc markets two other brands that are sold only in Canada: White Swan, which it purchased from EB Eddy in 1989, and Purex, which it developed in the mid-1960s.

Erskine says if Cottonelle, Scott, Baby Fresh and the rest of the licensed brands are pulled from its product roster, it could shift its ‘distribution’ emphasis to White Swan and Purex.

Before it does that, however, spc will have to settle a dispute with Kimberly-Clark as to which company owns the rights to the two brands.

Prior to Kimberly-Clark’s purchase of Scott Paper in the u.s., spc licensed White Swan and Purex to u.s.-based Scott Paper to allow for the worldwide monitoring of trademarks.

Earlier this month in the u.s., Kimberly-Clark announced the consolidation of Scott Paper’s toilet tissue brands within its own brand ranks.

Kleenex, a Kimberly-Clark brand, is to be used on all premium tissue products, while the Scott label will be put on value products.

The Kleenex name has also been added to other Scott products such as Viva paper towels.

spc’s advertising account is split between J. Walter Thompson and Bozell Palmer Bonner.

Advertising for Kimberly-Clark comes from u.s. agencies Campbell Mithun Esty, Minneapolis; fcb, Chicago; and Ogilvy & Mather, New York.

With files from Patrick Allossery.