Supreme Court Rules Trademark Disparagement Provision Unconstitutional

On June 19, 2017, the United States Supreme Court issued its long-awaited decision in Matal v. Tam1 regarding the trademark disparagement provision in Section 1052(a) of the Lanham Act which states that a mark could be refused registration when it “consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute

The Supreme Court unanimously affirmed the Federal Circuit Court’s decision and held that §1052(a) violates the First Amendment by unconstitutionally restricting free speech.

Background

Simon Shio Tam filed an application for the mark “THE SLANTS” for “entertainment in the nature of live performances by a musical band.” The examining attorney at the United States Patent and Trademark Office (“USPTO”) refused to register the mark, citing that under § 1052(a) of the Lanham Act, the mark was “likely disparaging to persons of Asian descent” due in part to the historical use of the term “slants” as a pejorative slang term for the perceived shape of Asian eyes.. Following an appeal, the Trademark Trial and Appeals Board (TTAB) affirmed the examining attorney’s refusal under §1052(a) by applying a two-part disparagement test and producing evidence that illustrated how members of the Asian community objected to the term “slants.”

Mr. Tam’s subsequent appeal from the TTAB’s decision to the Federal Circuit yielded conflicting results. In its initial decision on April 20, 2015, the Federal Circuit affirmed the TTAB’s refusal of Mr. Tam’s mark, and further held that §1052(a)  “does not implicate the First Amendment rights of trademark applicants.” On April 27, 2015, just one week after the three-judge panel decision in In re Tam, the judges on the Federal Circuit voted in favor of sua sponte en banc consideration of the case, with the parties filing briefs to exclusively address the issue of whether the bar on registration of “disparaging marks” violates the First Amendment. In re Tam, 600 F. App’x 775 (Fed. Cir. 2015).

The Federal Circuit’s Corrected Decision: In re Tam, 808 F.3d 1321 (Fed. Cir. 2015)

Following the hearing en banc, the Federal Circuit substantially altered the initial decision in In re Tam on the constitutionality of the disparagement provision in §1052(a) under the First Amendment. Notably, the court held that the prohibition on registration of disparaging marks is subject to, and does not survive, strict scrutiny because it “burdens private speech based on disapproval of the message conveyed” in a trademark application. The court addressed issues of commercial and government speech.

In terms of commercial speech, the court acknowledged that while trademarks “play a role” in the development of products and services in commerce, the disparagement provision in §1052(a) primary regulated their “expressive” character.  The “slants” mark provided a prime example for the court of how trademarks may be used to achieve an expressive function over a commercial function.

As to whether trademark registration constitutes government speech, the court sharply criticized the government’s contention that the many stages of trademark registration, which include placement of the principal register and issuance of a registration certificate, together amount to the finding that registration constitutes free speech. The court rejected the government’s argument, finding trademark registration akin to “when the government issues permits for street parades, copyright registration certificates… [or] birth certificates,” all of which are not considered government speech. Ultimately, the court acknowledged that while the disparagement provision of §1052(a) may have helped insulate the public from offensive material; the harm created from its restriction on the First Amendment is too damaging to uphold.

The Supreme Court’s Decision

The Supreme Court affirmed the Federal Circuit’s decision and ruled §1052(a) unconstitutional on various grounds. The Court agreed with the Federal Circuit that federal trademark registration does not constitute government speech and thus does not fall into any government program or subsidized-speech exceptions to First Amendment scrutiny. The Court also dismissed the argument that federal trademark registration constitutes commercial speech and is at most subject to relaxed scrutiny, stating that “to permit viewpoint discrimination in this [commercial] context is to permit Government censorship.”

“Immoral, Deceptive, or Scandalous Matter”

In the majority opinion of In re Tam, the Federal Circuit made sure to narrow its holding to the “disparagement” provision of §1052(a) and differentiate it from the preceding “immoral and scandalous” provision.2 The court cites the Trademark Manual of Examining Procedure (“TMEP”) to distinguish the review methods of marks for disparagement with the review for immoral or scandalous matter, which in fact does require an examining attorney’s consultation with a supervisor:

           * See TMEP § 1203.01 Immoral or Scandalous Matter: “To ensure consistency in examination with respect to immoral or scandalous matter, when an examining attorney believes, for whatever reason, that a mark may be considered to comprise such matter, the examining attorney must consult with his or her supervisor.”

           * See TMEP § 1203.03 Matter Which May Disparage, Falsely Suggest a Connection, or Bring Into Contempt or Disrepute: Does not contain any mention of a procedure to consult with a supervisor upon discovery of a potentially disparaging mark.

In contrast, the Supreme Court’s written opinions suggest that the Court’s holding expands upon the Federal Circuit’s holding and invalidates all of the at-issue clauses in §1052(a). For instance, the Court’s majority opinion cites a Trademark Trial and Appeal Board decision that references the “vague” guidelines for determining whether a mark is “scandalous or disparaging” (emphasis added). Matal v. Tam, No. 15-1293, slip op. at 11 n.5 (U.S. June 19, 2017). Moreover, Justice Kennedy’s concurrence, which was joined by Justice Ginsburg, Justice Sotomayor, and Justice Kagan, explicitly states, “as the Court is correct to hold, §1052(a) constitutes viewpoint discrimination – a form of speech suppression so potent that it must be subject to rigorous constitutional scrutiny.” Matal v. Tam, No. 15-1293, slip op. (concurrence, Kennedy, J.).

The Redskins

Another high-profile case that invoked the “disparagement” provision is Pro-Football, Inc. v. Blackhorse, which involves the cancelled trademark registrations of the term “Redskins” for a national football team on the ground that it was disparaging to Native Americans under §1052(a). Pro-Football appealed the Trademark Trial and Appeals Board’s cancellation of its mark to a Virginia district court, which affirmed the TTAB’s cancellations of the marks and further ruled that federal trademark registration constituted “government speech that is exempt from First Amendment scrutiny.”  Pro-Football has since appealed to the 4th Circuit for review, which was to be decided pending the Supreme Court’s decision in Matal v. Tam. Given the Court’s take, Pro-Football will likely survive any challenges to registration of their REDSKINS mark.

What Happens Next?

Going forward, courts must review the procedures in the Lanham Act that may be influenced by Matal v. Tam.  The Trademark Office has already issued a new Examination guideline, Examination Guide 1-17, June 26, 2017, which disallows rejections based on disparagement. The Court of Appeals for the Federal Circuit is hearing a challenge to “the immoral and scandalous” clause, In re Brunetti, which is expected to result in an overturning of that clause on similar grounds. In re Brunetti No. 15-1109.

Although the Court’s holding prevents the government from making determinations of “disparagement,” it does not address an individual’s ability to petition for cancellation of a registered mark under §1052(a). For example, §1064(3) allows for a person who believes he is or will be damaged by the federal registration of a mark to petition to cancel if the mark was obtained contrary to the provisions of §1052 as a whole (emphasis added). The Court’s opinion stated that “a speech burden based on audience reactions is simply government hostility and intervention in a different guise.” This seems to indicate that no refusals of federal trademark registration will be allowed at all, even if a “substantial composite” of a group is offended by certain marks.

Anne Hiaring Hocking is presenting a full paper on the topic of trademark disparagement in collaboration with Practising Law Institute on October 23, 2017 in San Francisco. The presentation can be attended in person  or on-line. Summer Law Clerk Natalie M. Cuadros, American University Washington College of Law class of 2018, assisted in preparing this.


1 Formerly Lee v. Tam prior to United States Patent and Trademark Office director Michelle K. Lee’s departure
2 “We limit our holding in this case to the constitutionality of the § 2(a) disparagement provision. Recognizing, however, that other portions of § 2 may likewise constitute government regulation of expression based on message, such as the exclusions of immoral or scandalous marks, we leave to future panels the consideration of the § 2 provisions other than the disparagement provision at issue here. To be clear, we overrule In re McGinley, 660 F.2d 481 (C.C.P.A.1981), and other precedent insofar as they could be argued to prevent a future panel from considering the constitutionality of other portions of § 2 in light of the present decision.” In re Tam, 808 F. 3d at 8 n.1.