Dec 23, 2015

Eye Opening Decision: Federal Circuit finds THE SLANTS Mark Disparaging but Registrable

On December 22, 2015, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a landmark decision holding the federal prohibition on registration of “disparaging” trademarks unconstitutional and in conflict with the First Amendment.  In re Tam, No. 2014-1203 (Fed. Cir.).  While the number of marks that are refused on this “disparagement” basis is limited, In re Tam could have significant implications for the long-running dispute regarding the REDSKINS mark, and also provides a useful discussion on the regulation of trademarks as expressive, rather than commercial, speech. 

 Since enacting the Lanham Act in 1946, the U.S. Patent and Trademark Office (USPTO) has been required to deny federal registration to marks that consist of or comprise “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.”  Lanham Act §2(a), 15 U.S.C. § 1052(a).  The CAFC notes that this “disparagement” clause stands out from the other prohibitions contained in Section 2(a), such as prohibiting the registration of marks that falsely suggest a connection with an individual, because it does not advance one of the two related goals of the Lanham Act: (1) protecting the public from source confusion and (2) ensuring that a trademark owner can protect its investment from misappropriation. 

 In In re Tam, Applicant Mr. Simon Shiao Tam was denied registration of the mark THE SLANTS in connection with musical entertainment services on the ground that the mark is disparaging to people of Asian descent, despite the fact that Mr. Tam’s adoption and use of the mark is intended to make a statement about racial and cultural issues.  While acknowledging that the “disparagement” test was correctly applied, the CAFC overturned the nearly 35-year old case In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981) holding that Lanham § 2(a) does not implicate the First Amendment.

 Judge Moore’s majority opinion champions the right to free speech guaranteed by the First Amendment, noting that “[i]t is a bedrock principle underlying the First Amendment that the government may not penalize private speech merely because it disapproves of the message it conveys.”  The CAFC found it “beyond dispute” that application of the “disparagement” clause is discrimination on the basis of content.  Because trademarks are private, expressive speech, the clause could be justified only if the government was able to prove that it was narrowly tailored to serve compelling state interests. 

 Judge Moore considered and patently disagreed with the government’s argument that because it was merely prohibiting federal registration, and not proscribing use, the “disparagement” clause is not affecting a trademark holder’s First Amendment rights.  Rather, the bar on registration of “disparaging” marks chills speech by creating a disincentive to choose certain marks, and denies the benefits of federal registration. 

 Moreover, the government’s argument that it was “entitled to disassociate itself from speech it finds odious” was rebuffed on the ground that trademarks are not governmental speech, nor do consumers perceive the registration of a trademark as an approval of its content or expression by the government.  To illustrate the fallacy of the “trademarks as governmental speech” argument, the CAFC compared the registration of trademarks with the registration of copyrights, observing that the attachment of the © symbol to a copyrighted work does not convert that work into governmental speech, and so the granting of the right to use the ® symbol does not morph the trademark owner’s expression into government expression.  Finally, Judge Moore sharply disagreed with the government’s suggestion suggestion that trademark registration is a form of government subsidy, and noted that registration fees cover all of the operating expenses associated with registering marks.

Finally, the CAFC rejected the government’s argument that trademarks are commercial speech subject to an intermediate scrutiny analysis, noting that while marks serve a commercial function, trademarks have an expressive quality as well, and whenever the USPTO refuses to register a mark on the ground of disparagement, it is because it believes the marks convey an expressive message.  Judge Moore noted the “disparagement” clause would not pass muster even under the more permissive intermediate scrutiny analysis. 

 In re Tam is unlikely to have an immediate effect on the majority of trademark holders, although the CAFC acknowledged that the decision may result in an uptick in trademark applications for marks that offend vulnerable communities.  While the REDSKINS mark and Pro Football, Inc. v. Blackhorse case, No. 1:14-cv-01043-GBL-IDD (E.D. Va.) is never mentioned by name, it is clear that Judge Moore wrote her opinion with this dispute in mind, not so subtly noting how the “disparagement” clause “can even be employed in cancellation proceedings challenging a mark many years after its issuance and after the markholder has invested millions of dollars protecting its brand identity and consumers have come to rely on the mark as a brand identifier.”    

In addition, while the CAFC explicitly limited its analysis to the constitutionality of “disparaging” marks, the reasoning in In re Tam could be extended to Lanham § 2(a)’s prohibition on registration of “immoral” and “scandalous” marks, and it is likely that the constitutionality of these provisions will be contested as well.  

If you have any questions regarding these issues, please contact your Intellectual Property counsel at Smith, Gambrell & Russell, LLP.

This client alert is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice.

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