In Matal V. Tam, Scotus Rules Prohibition On Disparaging Trademarks Unconstitutional

The Asian American members of the band the Slants adopted that name to “reclaim” and “take ownership” of the derogatory term. The United States Patent and Trademark Office (“USPTO”) refused to register a trademark application for THE SLANTS filed by Simon Shiao Tam, the band’s lead singer, because the mark violated the Lanham Act’s disparagement clause. Tam appealed and finally prevailed before the Supreme Court of the United States in Matal v. Tam, 582 U.S. ___ (2017), which was announced on June 19, 2017. In pushing to secure a trademark registration for “The Slants,” however, Tam opened the flood gates for hate speech in trademark registrations issued by the USPTO.

Trademarks are indicators of source—including words, names, symbols, logos, smells, or sounds—that are capable of distinguishing a person’s goods or services from those of others. The main federal trademark statute is the Lanham Act, which was enacted in 1946 and amended several times since then. The Lanham Act, in addition to prohibiting trademark infringement, trademark dilution, and false advertisement, also governs registration of trademarks with the USPTO. Under the Lanham Act, trademarks that have been used in U.S. commerce are eligible for registration on the USPTO’s federal register. Trademarks that consist of descriptive terms may be placed on the USPTO’s supplemental register.

Common law trademark rights are created through use of a mark in U.S. commerce, and federal registration is not necessary to enforce common law trademark rights in federal court or use the ™ symbol. Nevertheless, owning a federal trademark registration on the USPTO’s principal register does provide significant benefits, including that the registration: serves as constructive notice of the registrant’s claim of ownership in a mark; “is ‘prima facie evidence of the validity of the registered mark and of the registration of the mark, of the owner’s ownership of the mark, and of the owner’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate’” (citing B & B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. ___, at __ (2015) (slip op., at 3) (quoting §1057(b)); may become “incontestable” upon the fifth anniversary of the registration of the trademark; and enables the registrant to stop the importation into the United States of goods bearing an infringing mark. Also, the registered trademark symbol ® cannot be used without a federal registration (although owners of unregistered marks can use the ™ symbol).

The Lanham Act prohibits the registration of certain categories of trademarks. Notably, for seventy years, the “disparagement clause” of the Lanham Act has barred the registration of a trademark “which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.” 15 U.S.C. §1052(a). The policy of the USPTO had been to refuse registration of trademark applications that contained matter that was “found to refer to identifiable persons, institutions, beliefs or national symbols” that had a “meaning that may be disparaging to a substantial composite of the referenced group” taking into context “contemporary attitudes.” Trademark Manual of Examining Procedure §1203.03(b)(i) (Apr. 2017). After the USPTO examining attorney assigned to an application had found that a prima facie case of disparagement existed, trademark applicants were given an opportunity to present argument as to why the applied for mark was not disparaging. Nevertheless, the trademark manual was clear that “[t] he fact that an applicant may be a member of that group [being disparaged] or has good intentions underlying it use of the term does not obviate the fact that a substantial composite of the referenced group would find the term objectionable.” Id.

Approximately seven years ago, Tam filed a trademark application for THE SLANTS for “Entertainment, namely, live performances by a musical band.” That application was refused registration by the USPTO examining attorney assigned to the trademark application because the derogatory term in the mark violated the disparagement clause contained in Section 2(a) of the Lanham Act. See 15 U.S.C. §1052(a). Tam appealed to the USPTO’s Trademark Trial and Appeal Board, which affirmed the examining attorney’s decision. Tam appealed, and an en banc panel of the Court of Appeals for the Federal Circuit ultimately ruled that the disparagement clause violated the First Amendment. The Supreme Court of the United States unanimously affirmed the Federal Circuit’s decision. Justice Alito announced the judgment of the Court, and delivered the opinion with respect to Parts I, II, and III-A, in which all justices joined (except Justice Thomas did not join in Part II, and Justice Gorsuch took no part in the decision).

The Supreme Court ruled that the content of trademarks registered by the USPTO does not constitute government speech. The Court reasoned that the Federal Government has no role in developing or editing the content of trademarks in trademark applications, and the examining attorneys assigned to review trademark applications do not inquire whether a trademark is consistent with any government policy. The Court explained that if registered trademarks constitute government speech, then “the Federal Government is babbling prodigiously and incoherently.” The Court distinguished case law finding specialty license plates to be government speech by noting that the States have used license plates to convey messages, license plates operate as a form of government identification, license plates are “closely identified in the public mind” with the government, and the States often maintain direct control over the content of license plates.

The Court also rejected the Government’s reliance on cases upholding the constitutionality of government programs that subsidized speech expressing a particular viewpoint. The Court held that these cases were distinguishable because they involved government payments or benefits, and concluded that trademark registration does not provide analogous benefits. Rather, registering trademarks is akin to the benefits that everyone receives, like police and fire protection.

The Court declined to rule on whether trademarks are commercial speech subject to relaxed scrutiny under Central Hudson Gas. & Elect. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (1980), which held that any restriction of speech must serve a “substantial interest” that is “narrowly drawn.” Rather, the Court ruled that the Lanham Act’s disparagement clause fails the Central Hudson standard because it is not “‘narrowly drawn’ to drive out trademarks that support invidious discrimination.” The Court found that the disparagement clause “is a happy-talk clause,” since it would on its face apply to trademarks such as “’Down with racists,’ ‘Down with sexists,’ ‘Down with homophobes.’” Accordingly, the Court held that the Lanham Act’s disparagement clause violates the First Amendment’s Free Speech Clause.

Under Tam, trademark applications that contain terms that disparage racial or ethnic groups will no longer be refused registration under the Lanham Act’s disparagement clause, regardless of the intent of the applicant. In other words, trademarks containing hate speech, including racial epithets, are now eligible to receive federal trademark registrations issued by the USPTO. The greatest beneficiary of the Court’s decision in Tam may not be the Slants but rather the owners of sports teams that have derogatory team names like the Washington Redskins. That football team, which has been in a decades-long legal battle regarding whether its team name is disparaging to Native Americans, is almost certain to prevail in those proceedings given the Supreme Court’s announcement that the Lanham Act’s disparagement clause is unconstitutional.

Raffi Zerounian is a Partner at Hanson Bridgett LLP in San Francisco. Raffi specializes in intellectual property and commercial litigation, with an emphasis on trademark and copyright litigation. For more on Raffi and his practice click here.

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