Matal v. Tam, No. 15-1293 (U.S. June 19, 2017)
The U.S. Supreme Court has held that a portion of Section 2(a) of the Lanham Act, 15 U.S.C. §1052(a), is unconstitutional as a violation of the First Amendment’s protection of free speech. The decision was unanimous, although the justices differed on their rationales for the outcome. As a result of the decision, the U.S. Patent and Trademark Office may no longer refuse to register trademarks on the grounds that they “disparage . . . or bring . . . into contemp[t] or disrepute” any “persons, living or dead, institutions, beliefs, or national symbols.” Id. The decision may trigger an increased number of registration applications for controversial trademarks, particularly those aggressively advancing political or social viewpoints. The decision also may signal that Section 2(a)’s restrictions on scandalous and immoral marks are potentially unconstitutional as well.
Simon Shiao Tam filed an application to register the mark THE SLANTS for his band, which is made up of Asian-American musicians. Tam selected the mark, despite its reference to a disparaging term for persons of Asian descent, as an example of the well-established phenomenon of “reappropriation,” in which members of minority groups “take ownership” of messages that once were slurs, and use them as badges of pride. The USPTO trademark examining attorney refused to register the mark on the grounds that a substantial number of persons would find the mark offensive and demeaning, and the Trademark Trial and Appeal Board affirmed the rejection. Tam appealed the rejection to the U.S. Court of Appeals for the Federal Circuit, which reversed the TTAB and held that the provision was unconstitutional viewpoint discrimination. In re Tam, 808 F.3d 1321 (Fed. Cir. 2015)(en banc). The USPTO appealed the Federal Circuit decision to the Supreme Court.
Supreme Court Decision
The Court unanimously affirmed the Federal Circuit and held that Section 2(a)’s prohibition on the registration of disparaging marks violated the First Amendment, although the decision was composed of two different opinions that arrived at the result using different paths.
Trademarks generally are created through commercial use under state law, but the Lanham Act provides a system of federal registration of marks. Registration potentially provides the trademark owner with significant benefits, including providing public notice of the mark and its use, conferring a presumption of validity and ownership, and offering the ability to attain “incontestable” status after five years.
The Court addressed two major issues. First, it considered whether the federal trademark registration process is subject to the First Amendment. And second, if the First Amendment is applicable, it considered whether the prohibition on disparaging marks is subject to strict scrutiny as viewpoint discrimination, or a lesser scrutiny as commercial speech.
Trademark Registration Subject to First Amendment
On appeal, the USPTO proposed three theories supporting the position that the First Amendment did not apply to the trademark registration process. First, the government argued that the registration of trademark is government speech, not private speech, and thus not subject to the First Amendment. Second, it argued that trademark registration is a form of protected government subsidy based on viewpoint. Third, the USPTO proposed a new standard for review based on a so-called “government-program” doctrine.
In his opinion for the Court, joined by three other justices (Chief Justice Roberts, Breyer and Thomas), Justice Samuel Alito ruled that USPTO’s registration of trademarks is not government speech, and the other four justices participating in the appeal joined this portion of his opinion. Alito noted that unlike cases in which the government originated a message to achieve a policy objective, marks subject to registration are not created or edited by the government, and the grounds and procedures for rejection are narrowly defined by the Lanham Act. In addition, Alito noted a lack of evidence that the public regards trademark registration as a government message. He concluded, “In light of all this, it is far-fetched to suggest that the content of a registered mark is government speech.” Slip op. at 14. Alito distinguished the Court’s recent decision in Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576 U. S. ___ (2015), which ruled that a state’s approval of specialty vehicle license plates is government speech. Alito noted that Walker was based on the facts that states long have used license plates to convey messages, maintain strict direct control over the messages, and are closely identified with the plates (which states manufacture and design). In contract, registrants design and select trademarks, the government exercises limited control over trademark use, and the public generally does not consider a trademark registration to be a government message. Thus, Alito concluded that none of the factors supporting Walker apply to trademark registration.
Alito also rejected the other two theories proposed for shielding the trademark registrations. He noted that trademark registration is not a government subsidy. In fact, instead of the government making cash payments to registrants, trademark owners pay the government significant application fees. Alito also rejected the government’s proposed “government-program” doctrine, noting that it was based on cases involving collection on union dues, an issue far removed from the trademark registration process. Four justices (Kennedy, Ginsburg, Sotomayor, and Kagan) did not join the Court’s opinion as to these two alternative theories.
Section 2(a) Prohibition on Disparaging Marks Is Unconstitutional
Next, Alito held that Section 2(a)’s prohibition on disparaging marks was unlawful regardless whether it was commercial speech or not. Applying the less restrictive commercial speech standard, Alito noted that restrictions must serve “a substantial interest,” and must be “narrowly drawn.” Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., 447 U. S. 557 (1980). Alito ruled that Section 2(a) did not satisfy this requirement. Neither of the two interests advanced as the basis for Section 2(a) -- preventing underrepresented groups from being bombarded with demeaning advertising and protecting an orderly flow of commerce – justified the restriction:
A simple answer . . . is that the disparagement clause is not “narrowly drawn” to drive out trademarks that support invidious discrimination. The clause reaches any trademark that disparages any person, group, or institution. It applies to trademarks like the following: “Down with racists,” “Down with sexists,” “Down with homophobes.” It is not an anti-discrimination clause; it is a happy-talk clause. In this way, it goes much further than is necessary to serve the interest asserted.
Slip op. at 25. Alito also argued that Section 2(a) was overly broad because it protects “every person living or dead” and every institution from disparaging words, even though a disparaging comment about a deceased person is unlikely to upset the flow of commerce. Slip op. at 26. Thus, Alito concluded that Section 2(a)’s restriction on the registration of disparaging marks was unconstitutional.
Justice Kennedy, joined by Justices Ginsburg, Sotomayor, and Kagan, also concluded that Section 2(a) was unlawful, but used a different analysis. Kennedy argued that the prohibition of disparaging marks was viewpoint discrimination subject to more rigorous scrutiny:
In the instant case, the disparagement clause the Government now seeks to implement and enforce identifies the relevant subject as “persons, living or dead, institutions, beliefs, or national symbols.” 15 U. S. C. §1052(a). Within that category, an applicant may register a positive or benign mark but not a derogatory one. The law thus reflects the Government’s disapproval of a subset of messages it finds offensive. This is the essence of viewpoint discrimination.
Kennedy, concurring op. at 2-3. As viewpoint discrimination, Section 2(a) is presumptively unconstitutional. Further, Kennedy concluded that the restriction could not be justified:
The central purpose of trademark registration is to facilitate source identification. To serve that broad purpose, the Government has provided the benefits of federal registration to millions of marks identifying every type of product and cause. Registered trademarks do so by means of a wide diversity of words, symbols, and messages. Whether a mark is disparaging bears no plausible relation to that goal. While defining the purpose and scope of a federal program for these purposes can be complex, our cases are clear that viewpoint discrimination is not permitted where, as here, the Government expends funds to encourage a diversity of views from private speakers[.]
Id. at 7 (quotation and citation omitted).
Thus, the justices were unanimous in their agreement that Section 2(a)’s prohibition on the registration of disparaging marks was unlawful under the First Amendment. Four justices came to that result using the strict scrutiny applied to viewpoint discrimination, and four reached the same result using less-onerous limits applicable to restrictions on commercial speech.
The Court’s decision in Tam is unlikely to affect the trademark strategies of most commercial competitors, since few companies promote their products in the broad marketplace by adopting trademarks that customers view as offensive. The decision will have a direct impact on at least one high-profile mark, however, that associated with the NFL’s Washington Redskins football team. The USPTO cancelled that REDSKINS mark as disparaging in a case currently on appeal to the U.S. Court of Appeals for the Fourth Circuit, but that rejection almost certainly will be reversed in the wake of Tam. See Pro-Football, Inc. v. Blackhorse, No. 15-1874 (4th Cir Oct. 30, 2015). The Tam decision also is likely to increase trademark registrations filed for marks associated with political and social causes, or those directed to alternative markets. It is important to note that the decision only affects the federal registration of marks. Trademarks used and created under state law are generally enforceable under Section 43(a) of the Lanham Act, regardless of whether they are offensive. The Court’s reasoning in Tam also may signal that the Lanham Act’s prohibitions on the registration of scandalous and immoral marks violate the First Amendment, although the Court did not address those issues directly.