In re Tam, 808 F.3d 1321 (Fed. Cir. 2015)
The Federal Circuit recently held that Section 2(a) of the Lanham Act, that, among other restrictions, prohibits the registration of trademarks that “may disparage . . . persons, living or dead,” violates the First Amendment because it constitutes viewpoint discrimination on the part of the government. This ruling conflicts with a recent decision by a Virginia district court upholding the cancellation of the Redskins’ trademark on the grounds that it disparages Native Americans. Pro-Football, Inc. v. Blackhorse et al., 112 F.Supp.3d 439 (E.D. Va. 2015). That ruling is currently on appeal to the Fourth Circuit, potentially resulting in a circuit split that would be ripe for Supreme Court review.
In re Tam concerns the Asian American band The Slants’ appeal from the United States Patent and Trademark Office’s (“USPTO”) refusal to register its mark THE SLANTS on the basis that the mark disparages Asians. To determine whether a mark is disparaging under Section 2(a), a trademark examiner considers: (i) the likely meaning of the matter in question, and (ii) if the meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group. In this case, the trademark examiner found that THE SLANTS clearly referred to people of Asian descent and would be understood by a substantial composite of that group as an ethnic slur referring to the eye shape of many people of Asian descent. The trademark examiner therefore denied registration, and the Trademark Trial and Appeal Board affirmed, pointing to, among other things, dictionary definitions, the band’s website, which used the name alongside a stereotypical image of an Asian woman, and record evidence of individuals and groups in the Asian community objecting to Mr. Tam’s use of the word.
In his appeal to the Federal Circuit, the band’s founder and bassist, Simon Shiao Tam, argued that he chose the name “The Slants” in order to reclaim a word that was historically used as an ethnic stereotype or slur; thus, he argued, the use of the term “The Slants” by an Asian American band as a way to undermine and take ownership of a historically derogatory term constituted political speech. By refusing to register the mark, the government was discriminating against him based on his expressive speech in violation of the First Amendment. The Federal Circuit initially affirmed the USPTO’s refusal to register the mark, but then sua sponte ordered a rehearing en banc, after which it reversed its prior decision.
In finding Section 2(a) of the Lanham Act unconstitutional, the Federal Circuit reasoned that the provision is subject to, and fails, strict scrutiny. Strict scrutiny is used to review any governmental regulation that burdens private speech based on the content or viewpoint expressed. In this case, the Federal Circuit found it undeniable that Section 2(a) discriminates on the basis of the viewpoint expressed by the mark: “The PTO looks at what message the referenced group takes from the applicant’s mark in the context of the applicant’s use, and it denies registration only if the message received is a negative one.” 808 F.3d at 1337.
The Federal Circuit rejected the argument that strict scrutiny does not apply to review of Section 2(a) because it regulates commercial rather than expressive speech. It found that marks often have an expressive component over and above their commercial-speech aspect, and that it is the expressive component of the mark that Section 2(a) targets.
The Federal Circuit also rejected the government’s arguments that (i) the First Amendment is not implicated because Section 2(a) does not prevent use of the mark, but only registration, an argument upheld by an earlier Federal Circuit decision, In re McGinley, 660 F.2d 481 (C.C.P.A. 1981); (ii) trademark registrations are government speech; and (iii) trademark registration constitutes a government subsidy and so may be guided by the government’s point of view.
Regarding the argument that the First Amendment does not apply because an applicant may use a mark irrespective of registration, the court found that trademark registration confers real benefits on mark holders, and thus denial of a registration on the basis of the message expressed has a chilling effect on speech. In so holding, it abrogated In re McGinley.
The Federal Circuit then rejected the argument that trademark registration is government speech, finding instead that trademark registration merely regulates private speech—it is not the government speaking for itself. Otherwise, the court argued, copyright registration also would constitute government speech, and the government could refuse to issue registrations to artistic works or books whose subject matter it found distasteful. The court also distinguished the recent Supreme Court decision in Walker v. Texas Division, Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015), in which the Court found that specialty license plates constituted government speech, such that Texas could constitutionally refuse to issue a specialty license plate featuring a confederate flag. According to the Federal Circuit, unlike license plates which have the name of the state emblazoned across the top, and whose use is governed by numerous state laws, private trademarks are in no way associated with the government.
Finally, the Federal Circuit determined that Section 2(a) is not a government subsidy exempt from strict scrutiny. It found that although the government may use the Spending Clause to disseminate or support a particular message through funding recipients, trademark registration does not constitute such a program. In support of that finding, the court pointed out that Congress’s power to regulate trademarks arises under the Commerce Clause, not the Spending Clause. Were the court to accept the government’s argument, it reasoned, the subsidy exception would apply to virtually all government regulation and thus thwart important First Amendment protections. Moreover, the court pointed out, Section 2(a) actually undermines the purpose of the Lanham Act, which is to prevent consumer confusion and protect the goodwill of trademark owners; because Section 2(a) permits cancellation of a mark decades after its registration, it has the potential to undermine rather than protect a trademark owner’s investment in its mark.
The en banc opinions in In re Tam included several concurrences and a dissent. Two judges argued in a concurrence that Section 2(a) is unconstitutionally vague given the subjective nature of the term “disparaging.” Several others concurred in part and dissented in part, arguing that Section 2(a)’s ban on registration of disparaging marks is unconstitutional as applied to Mr. Tam because his mark was expressive, but that the majority erred by finding the provision to be facially unconstitutional as applied to purely commercial speech. One of these judges also argued in support of the holding in In re McGinley, reasoning that the expressive aspect of the applicant’s speech is not burdened because the applicant can continue to use the mark as it wishes in commerce. The sole dissenting judge argued that trademarks are commercial speech and thus intermediate scrutiny, not strict scrutiny, should apply to laws regulating their use. The dissent concluded that Section 2(a) should survive such review because it advances the government’s interest in the orderly flow of commerce: “Commerce does not benefit from political volatility, nor from insults, discrimination, or bigotry.” 808 F.3d 1380. To support this argument, the dissent pointed to several other laws that also ban derogatory speech in commercial settings, such as those that ban discriminatory job advertisements and harassing speech in the workplace. Thus, the dissent concluded that avoiding commercial disruption is a legitimate government interest that justifies any modest burden that refusal to register a mark may place on speech.
Following the Federal Circuit’s decision, the USPTO issued a statement that under the Circuit court’s ruling, other provisions of Section 2(a) that prohibit the registration of “immoral, deceptive, or scandalous matter” would likewise be unconstitutional. It is unclear how the USPTO will deal with applications involving refusals to register on the basis of immoral, deceptive, scandalous, or disparaging matter while the appeals in In re Tam and Blackhorse play out.