The United States Court of Appeals for the Federal Circuit, sitting en banc, today held that the prohibition against registration of “disparaging” marks under Section 2(a) of the Lanham Act violates the First Amendment. The case, In re Tam, Case No. 2014-1203, slip op. (Fed. Cir. Dec. 22, 2015) (en banc), involves an application to register THE SLANTS in connection with “entertainment in the nature of live performances by a musical band.” The applicant adopted THE SLANTS as a service mark “to ‘reclaim’ and ‘take ownership’ of Asian stereotypes.” The U.S. Patent and Trademark Office (“PTO”) found the applied-for THE SLANTS service mark likely disparaging to “persons of Asian descent” and refused registration under Section 2(a). The Trademark Trial and Appeal Board affirmed that refusal in 2013.

Earlier this year, a Federal Circuit panel deferred to the precedential holding of In re McGinley, 660 F.2d 481 (C.C.P.A. 1981), rejected the applicant’s argument that the PTO’s refusal to register was unconstitutional under the First Amendment, and affirmed that refusal. Thereafter, and as suggested by Judge Moore’s “additional views” accompanying the panel decision, the Federal Circuit sua sponte vacated that panel decision and ordered rehearing en banc to consider one question: “Does the bar on registration of disparaging marks in 15 U.S.C. § 1052(a) [the Lanham Act’s Section 2(a)] violate the First Amendment?” Answering that question in the affirmative, today’s en banc majority opinion expressly overruled In re McGinley, vacated the refusal to register, and remanded the case to the Trademark Trial and Appeal Board for further proceedings.

In re McGinley held that a refusal to register does not implicate the First Amendment because it does not prohibit any conduct (i.e., use of a disparaging mark), but only prevents its registration. The Federal Circuit, based on the significant procedural and substantive benefits afforded to the registrant of a mark, today found that the prohibition against registration of “disparaging” marks deters the adoption of such marks and chills speech based on the content or views expressed in such marks. This is particularly true, the Court noted, where the prohibition may 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 its First Amendment analysis, the Federal Circuit further determined that the restrictions of Section 2(a) of the Lanham Act are subject to strict scrutiny because trademarks and service marks constitute “expressive speech.” The Court noted that the PTO’s test for “disparagement” “makes clear that it is the nature of the message conveyed by the speech which is being regulated” and is therefore “presumptively invalid.” Limiting its findings to the “disparagement” prong of Section 2(a) of the Lanham Act, the Federal Circuit held that the restriction facially violates the First Amendment.

The Federal Circuit also rejected the government’s contention that registration of a mark constitutes “government speech” that is not subject to the First Amendment. The Court found that argument “meritless,” as “[t]rademark registration is a regulatory activity” and “manifestations of government registration do not convert the underlying speech to government speech.”

The government further maintained that registration of a trademark or service mark is a form of government subsidy, which the government may refuse where it disapproves of the message a mark conveys. The Federal Circuit found this argument “contrary to the long-established unconstitutional conditions doctrine” in part because “[t]rademark registration does not implicate Congress’s power to spend or to control use of government property.” In addition, “denial of an otherwise-available benefit is unconstitutional at least where, as here, it has a significant chilling effect on private speech.”

The Federal Circuit also found that, even if the “intermediate scrutiny” test for commercial speech were to apply, the content- and viewpoint-based restrictions of the Lanham Act’s Section 2(a) fail that test. “The entire interest of the government in § 2(a) depends on disapproval of the message. That is an insufficient interest to pass the test of intermediate scrutiny.”

The Federal Circuit’s majority opinion was authored by Judge Moore, and joined by Chief Judge Prost and Judges Newman, O’Malley, Wallach, Taranto, Chen, Hughes, and Stoll. That opinion was accompanied by several concurring and dissenting opinions:

  • Judge O’Malley’s concurring opinion, joined by Judge Wallach, maintains that the Lanham Act’s Section 2(a) is also unconstitutionally vague under the Fifth Amendment.
  • Judge Dyk’s concurrance in part and dissent in part, joined by Judges Lourie and Reyna as to the dissent, posits that Section 2(a) of the Lanham Act is constitutional as applied to purely commercial trademarks, but not as to core political speech (using THE SLANTS as an example of such speech).
  • Judge Lourie and Judge Reyna separately filed dissenting opinions.

Today’s ruling from the en banc Federal Circuit may have a substantial impact on the public’s adoption and selection of trademarks and service marks, on the U.S. Patent and Trademark Office’s operations and procedures, and on other co-pending cases in various courts concerning the “disparagement” prong of Section 2(a) of the Lanham Act. Of course, the ruling may also be subject to a petition for a writ of certiorari to the U.S. Supreme Court.