August 11, 2015 Top Story

Free Speech or License to Offend?

Battle over constitutional right to trademark "disparaging" terms heats up

Lauren M. Gregory

The U.S. Court of Appeals for the Federal Circuit has sua sponte vacated its own recent decision, ordering additional briefing and a rehearing en banc to reexamine whether a provision of federal trademark law is an unconstitutional ban on free speech. In In re Tam, the Federal Circuit initially affirmed the U.S. Patent and Trademark Office’s (USPTO) refusal to register THE SLANTS in connection with an Asian-American band on grounds it was offensive to those of Asian descent. A reversal could pave the way for registration of marks that have been deemed offensive or racist.

Background of In re Tam

In 2010, Simon Shiao Tam (Tam) tried to register his band’s name as a trademark. The trademark examiner deemed THE SLANTS disparaging and refused to register it pursuant to 15 U.S.C. § 1052(a) (§ 2(a)), a section of the Lanham Act that gives the USPTO discretion to deny registration of disparaging marks. Tam filed a second application, omitting materials containing Asian motifs, which the examining attorney also denied. The Trademark Trial and Appeal Board (TTAB) affirmed the refusal.

In April, a three-judge panel of the Federal Circuit also affirmed, holding that: (1) the TTAB was correct in deeming THE SLANTS disparaging; and (2) the restrictions contained in § 2(a) are constitutional. Ultimately, the court held that dictionary definitions, material from the band’s website, and various media reports supported a finding that THE SLANTS was derogatory toward individuals of Asian descent. The court rejected Tam’s First Amendment, vagueness, due process, and equal protection challenges to § 2(a) with little analysis.

Like the weight of authority before it, the majority opinion turns on In re McGinley, a 1981 case that has been repeatedly and reflexively cited for the proposition that § 2(a) is constitutional, says Jonathan W. Peters, Lawrence, KS, chair of the First Amendment Subcommittee of the ABA Section of Litigation’s Civil Rights Litigation Committee. The problem, however, is that McGinley “does not engage in any critical First Amendment analysis at all,” Peters explains. “For First Amendment purposes, it is really a useless decision. It is highly cited, but it does not really engage the issues,” he says.

Protecting Trademarks as Commercial Speech

Peters praises the supplemental opinion entitled “additional views” by circuit judge Kimberly A. Moore for offering “really high-level, thoughtful analysis” missing from the court’s majority opinion. He notes that, as Moore points out in her opinion, the court’s reliance on McGinley is undermined by the fact that McGinley was decided only shortly after the commercial speech doctrine first emerged in the 1970s. McGinley does not cite the landmark 1980 Supreme Court decision in Central Hudson Gas & Electric Corp. v. Public Service Commission, which articulated what has become the standard for evaluating commercial speech protection. Trademarks are considered “commercial speech” because they identify the source of a product or service, allowing consumers to discern who is producing what and at what price, explains Joan K. Archer, Kansas City, MO, cochair of the Trademark Litigation Subcommittee of the Section of Litigation’s Intellectual Property Litigation Committee. It is important to monitor regulation of this type of speech given the importance of the concomitant rights at stake, she says.

An applicant may use a term as a mark without obtaining a trademark registration, Archer explains, but “it’s the bundle of rights you get with that registration that have substantial value.” Would-be registrants lose out on exclusive nationwide use of a mark, a presumption of validity of the mark, the ability to sue in federal court and obtain treble damages for infringement, protections related to domestic imports and domain names on the Internet, and the ability to bring a federal unfair competition claim.

Peters believes that denial of these important benefits amounts to punishment for exercise of a First Amendment right under the “unconstitutional conditions” doctrine. While some have argued that regulation of trademarks is well within Congress’ authority to impose limits on the use of federal funds, Peters points out that the USPTO has been funded entirely by registration fees paid by private applicants since 1991.

Ultimately, Peters classifies denial of “disparaging” marks as viewpoint discrimination. “What § 2(a) does essentially is to say, it is fine to have marks that refer favorably to people, but not to have marks that refer unfavorably to people,” he says. “When you go back and analyze under Central Hudson and look for a substantial government interest to support this regulation of marks, I don’t see one.”

This is especially troubling in Tam’s case, he says, given that Tam “is not only trying to identify himself [in the marketplace], he is using the mark as a form of expression. One reason he wants to use the mark THE SLANTS is to reclaim that mark and engage in social dialogue surrounding Asian stereotypes.”

Future Implications Unclear

Both Peters and Archer say it is difficult to predict how the Federal Circuit ultimately will rule on the issue, but both agree that there is little middle ground. The court will likely uphold § 2(a) in its entirety or strike it down completely; it would be too difficult to craft a modified version of the regulation that could be applied consistently enough to avoid due process and equal protection concerns, says Archer. “One person’s social commentary is another person’s offensive trademark,” she says.

Because a relatively small percentage of registration refusals are based on § 2(a), the decision may not have huge practical implications on day-to-day business at the USPTO, according to Archer. However, from a constitutional standpoint, “it will be profoundly impactful, one way or the other,” Peters says.

Lauren M. Gregory is a contributing editor for Litigation News.

Keywords: disparaging trademarks, Lanham Act, Section 2(a), First Amendment, commercial speech, unconstitutional conditions

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