Commentary://January 7, 2016
//January 7, 2016
The U.S. Court of Appeals for the Federal Circuit issued a landmark decision last month holding that the prohibition on registration of “disparaging” trademarks under § 2(a) of the Lanham Act is unconstitutional because it violates the First Amendment.
The Lanham Act provision that the In re Tam court found to be unconstitutional has been in effect for nearly 70 years. It bars, in part, federal registration of any mark that “consists of or comprises … matter which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” While the Federal Circuit limited its decision to the disparagement portion of § 2(a), it also opened the door for the possibility of a constitutional challenge to the § 2(a) ban on registration of “immoral” and “scandalous” marks, as the court’s reasoning could possibly be extended to these provisions as well.
A disparaging mark is one which “dishonors by comparison with what is inferior, slights, deprecates, degrades, or affects or injures by unjust comparison.” In determining whether a mark is disparaging, the United States Patent and Trademark Office considers: (1) the likely meaning of the mark; and (2) if that meaning is found to refer to an identifiable group, whether it is disparaging to a substantial composite (not necessarily a majority) of the group in the context of contemporary attitudes.
Drawing on this authority, the USPTO denied petitioner Simon Shiao Tam’s application to register the mark “The Slants,” the name of the Asian-American dance-rock band fronted by Tam, finding the mark likely disparaged people of Asian descent by “derid[ing] and mock[ing] a physical feature” commonly associated with Asian people. The rejection was based, in part, on Tam’s own testimony that he selected the name to make a statement about racial and cultural issues, and to re-appropriate, combat, and otherwise respond to various Asian stereotypes.
The Trademark Trial and Appeal Board, and then a panel of the Federal Circuit, affirmed the examiner’s decision, finding that the relevant evidence, including dictionary definitions, news articles, brochures, blog posts, the band’s website and Wikipedia page, known ethnic slurs and Mr. Tam’s own statements, supported the conclusion that “The Slants” likely refers to people of Asian descent and is likely offensive to a substantial composite of people of Asian descent.
Applying strict scrutiny, the en banc court reversed itself. The court rejected the government’s argument that trademarks are commercial speech subject to the lesser intermediate scrutiny standard because “it is always a mark’s expressive character, not its ability to serve as a source identifier, that is the basis for the disparagement exclusion from registration.” Nevertheless, the court noted that even if the disparagement provision were evaluated under the commercial speech doctrine, it would not survive, because the government failed to present a substantial interest justifying the total ban on disparaging marks.
“All of the government’s proffered interests boil down to permitting the government to burden speech it finds offensive,” the court ruled. “This is not a legitimate interest.”
The court further concluded that the disparagement provision is facially invalid, overturning its longstanding precedent of In re McGinley. The court patently disagreed with the McGinley precedent and the government’s argument that the disparagement clause does not affect a trademark holder’s First Amendment rights because it merely prohibits federal registration and does not restrict or affect the right to use a mark. As the court explained, the First Amendment is implicated not only when a government regulation bans speech, but also when it burdens speech. The court noted that federal registration “bestows truly significant and financially valuable benefits upon markholders,” such as the right to exclusive nationwide use of a mark where there is no prior use by others, the presumption of validity of the mark, and the right to stop the importation of infringing or counterfeit goods. The denial of these benefits has a chilling effect on speech because it “creates a serious disincentive to adopt a mark which the government may deem offensive or disparaging.”
Such disincentive does not end with registration, because § 2(a) permits the USPTO to cancel registered trademarks later found to be disparaging. To cite one recent, high-profile example, the “Redskins” trademark registrations were cancelled under § 2(a) as being “disparaging” of Native Americans. Such cancellation, which was upheld by the U.S. District for the Eastern District of Virginia, is presently on appeal to the 4th U.S. Circuit Court of Appeals. While the 4th Circuit is not bound by the Federal Circuit’s holding in In re Tam, it may find such decision to be persuasive authority, and if followed the cancellation of the “Redskins” registrations will be reversed. On the other hand, if the Fourth Circuit upholds the constitutionality of § 2(a)’s disparagement provision, then the Supreme Court may grant certiorari to resolve the split among the Circuit Courts. Additionally, because the Federal Court has struck down part of a federal statute, the government may seek Supreme Court review of the case.
Also of significant note is the court’s comment that a mark found disparaging, and thus ineligible for federal registration, may not be protectable at all. Because the Model State Trademark Act, adopted by “virtually all” of the states, also prohibits registration of “disparaging” marks and can be construed to limit common law trademark rights to any mark that is “entitled to registration” under the Model Act, the court stated it is “at best unclear” whether the user of an unregistrable, disparaging mark has any enforceable common law rights.
As a result, owners of marks denied registration on the basis of the disparagement clause, and others who claim common law rights in arguably disparaging marks, can expect greater obstacles in enforcing their marks, as alleged infringers, relying on In re Tam, will argue that they have no valid or enforceable trademark rights.
Considered together, these disincentives place a strong, chilling effect on speech, the court determined, because trademark applicants and owners risk losing the substantial benefits of registration based on the communicative content of their speech. The court further noted that the uncertainty of determining what marks “may disparage” contributes significantly to the chilling effect on speech, as such determination is a highly subjective one and the USPTO’s record of registrations and denials in this regard “often appears arbitrary and is rife with inconsistency.”
While this decision is probably not the final word on the constitutionality of the § 2(a) disparagement provision, in the near term it will likely increase the filing of applications to federally register marks which could be considered disparaging or which were previously cancelled or refused registration on the basis of disparagement.
The case is In re Tam, No. 2014-1203, 2015 U.S. App. LEXIS 22300, 2015 WL 9287035 (Fed. Cir. 2015).
Donna M.D. Thomas is a principal with Astrachan Gunst Thomas P.C. in Baltimore. She can be reached at [email protected].l