US Supreme Court Affirms Federal Circuit Decision Striking the Ban on Offensive and Derogatory Trademarks at USPTO

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US Supreme Court Affirms Federal Circuit Decision Striking the Ban on Offensive and Derogatory Trademarks at USPTO

On June 19, the U.S. Supreme Court rendered a long-anticipated opinion striking the ban on “disparaging” trademarks as unconstitutional. The U.S. Trademark Act prohibits the registration of a trademark “which may disparage persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute” (“disparagement clause”). §1052(a) of the U.S. Trademark Act. The Court, in an 8–0 decision, has found this provision violating the First Amendment’s Free Speech Clause. Matal v. Tam, 582 U.S. ___ (2017) (previously known as Lee v. Tam). As a result, Mr. Simon Tam, the lead singer of an otherwise obscure band “The Slants,” scored a victory. However, the real victors apparently are the owners of an American football team The Redskins, whose registered mark previously was cancelled on that provision. This Blog wrote about the Redskins case.

As many cases before the Supreme Court, this case has had a long history. This case concerned a dance-rock band’s application for federal trademark registration of the band’s name, “The Slants.” “Slants” is a derogatory term for persons of Asian descent, and members of the band are Asian-Americans. (Slants or epicanthic fold or epicanthal fold or epicanthus is a skin fold of the upper eyelid, covering the inner corner of the eye.) But the band members believe that by taking that slur as the name of their group, they will help to “reclaim” the term and drain its denigrating force.

Mr. Tam applied to register the name of the band as a trademark at the Patent and Trademark Office (PTO), but the PTO denied registration. Mr. Tam contested the denial of registration before the PTO’s Trademark Trial and Appeal Board (TTAB) but to no avail. Eventually, he took the case to federal court, where the Federal Circuit ultimately found the disparagement clause facially unconstitutional under the First Amendment’s Free Speech Clause.

Because the disparagement clause applies to marks that disparage the members of a racial or ethnic group, the Supreme Court concluded that it had to decide whether the clause violated the Free Speech Clause of the First Amendment of the U.S. Constitution. The Court has found the Statute’s restriction on registration of disparaging marks violates the free speech provision of the First Amendment.

Justice Alito, who wrote the opinion, noted that trademarks constitute private speech. “Companies spend huge amounts to create and publicize trademarks that convey a message. It is true that the necessary brevity of trademarks limits what they can say. But powerful messages can sometimes be conveyed in just a few words.”

The Court essentially validated the Federal Circuit’s majority decision that the clause engages in viewpoint-based discrimination, that the clause regulates the expressive component of trademarks and consequently cannot be treated as commercial speech, and that the clause is subject to and cannot satisfy strict scrutiny. (Strict scrutiny is the most stringent standard of judicial review used by United States courts. To pass strict scrutiny, the legislature must have passed the law to further a "compelling governmental interest," and must have narrowly tailored the law to achieve that interest.) The Supreme Court, just as the Federal Circuit, also rejected the Government’s argument that registered trademarks constitute government speech.

Despite all the publicity of this case, the significance of the case for trademark practitioners is arguably overrated. Most trademark owners do not select offensive or derogatory names for their products or services. Nike, Coca-Cola and MacDonald may be “offensive” to anti-globalist protesters, but they are not derogatory.

True, there will be some changes. The PTO will begin allowing registration of disparaging marks, and will not cancel registered marks because they are disparaging. This decision will impact the Redskins case, discussed by this blog. Other observers also suggest that disparaging marks will likely be somewhat more difficult to enforce based upon the greater expressive content of the speech.

Curiously, the opinion in Matal v. Tam does not mention how the ruling may affect registrations of marks that are considered immoral or scandalous (which are also prohibited by the same provision of the Trademark Act), but do not disparage a particular group; that issue was not before the Court. Nevertheless, most commentators agree that the provision on immoral and scandalous marks (for example, FUCT clothing) currently under review in the Federal Circuit, probably will not survive either.

Many business owners do not select immoral and scandalous marks either, except for some industries such as craft beer or apparel. In such industries, owners feel like they need to pick a brand that will help them stand out from the crowd. Consider the following beer label as an example.

In conclusion, while Matal v. Tam certainly is a delight to constitutional law professors in American law schools, most trademark law practitioners are unlikely to utilize that case in their day-to-day practice.

Text © 2017 Maxim A. Voltchenko
* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.