Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a), prohibits the registration of a trademark if it “[c]onsists of or comprises immoral, deceptive, or scandalous matter; or 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 . . . .”   On December 22, 2015, the United States Court of Appeals for the Federal Circuit ruled that the portion of Section 2(a)  – barring registration of “disparaging” trademarks is unconstitutional and amounts to a violation of a brand owner’s First Amendment right to free speech.  See In re Tam, No. 2014-1203 (Fed. Cir. Dec. 22, 2015)

In its majority opinion, the en banc panel held that “[t]he government cannot refuse to register disparaging marks because it disapproves of the expressive message conveyed by the marks.”  In doing so, the Federal Circuit abandoned nearly seventy years of U.S. Patent & Trademark Office (“USPTO”) practice whereby a mark could be refused registration on the basis that it disparages others.   

Members of the Asian-American rock band, The Slants, challenged the USPTO’s refusal to register the mark THE SLANTS for entertainment services on the grounds that it was offensive to Asian-Americans, despite the band’s stated intention to reappropriate the term to serve as a source of cultural pride.  Initially, the USPTO’s Trademark Trial and Appeal Board (“TTAB”) and Federal Circuit agreed with the Examining Attorney’s decision that the mark was disparaging to Asian-Americans and affirmed the refusal to register on Section 2(a) grounds.  However, last April, the Federal Circuit ordered a rehearing en banc to reconsider its decision, as well as its prior precedent governing the constitutionality of Section 2(a).

In striking down portions of Section 2(a), the majority explained that the sole purpose of the disparagement provision is to enable the government to disassociate itself from “odious” or otherwise offensive speech, namely, the most vile racial epithets and slurs.  However, bedrock constitutional principles dictate that “the government may not penalize private speech merely because it disapproves of the message it conveys.” In this regard, Section 2(a) amounts to nothing more than “viewpoint discrimination.”  Thus, in order for Section 2(a) to pass constitutional muster and survive “strict scrutiny,” the standard applicable to private speech, the government is required to show that the regulation is narrowly tailored to address a compelling government interest.  Ultimately, the government’s desire to prevent the registration of trademarks it subjectively deems to be disparaging does not qualify as a compelling state interest. 

The Federal Circuit also rejected the government’s attempt to apply the less onerous “intermediate scrutiny” standard, ordinarily applicable to commercial speech.  As the Court explained, Section 2(a) is not necessarily designed to regulate a trademark’s commercial aspects; rather, it merely chills speech on the basis of its expressive content.   Equally unavailing was the government’s argument that Section 2(a) does not trigger the First Amendment at all because nothing in the statute prevents owners from using their marks or seeking protection at common law.  However, as the Court observed, a federal trademark registration confers significant substantive and procedural benefits:  owners of registrations enjoy nationwide priority, a presumption of validity, the ability to claim incontestability after five years of continuous use, enhanced statutory damages, and may record their registrations with U.S. Customs.  To deny those benefits simply because the government disapproves of the message conveyed amounts to a violation of a brand owner’s First Amendment protections.

In re Tam is certain to have a tremendous impact for brand owners, prospective applicants, and in the ensuing battle to cancel the Washington Redskins’ trademark.  This past July, a U.S. district court affirmed the TTAB’s cancellation of the registrations for various REDSKINS marks, also on Section 2(a) disparagement grounds.  The case is currently up on appeal in the Fourth Circuit.  Although the Federal Circuit’s holding is not binding on the Fourth Circuit, it may likely serve as persuasive authority.  If the Federal Circuit’s analysis is adopted by the Fourth Circuit, the recent decision to cancel the REDSKINS registrations would ultimately be overturned.  However, a contrary outcome could make the Washington Redkins’ case ripe for U.S. Supreme Court review.

While the Federal Circuit took great care to opine only on the constitutionality of Section 2(a)’s disparagement provision, the Federal Circuit left open the possibility that other provisions in Section 2(a) – such as the prohibition on marks that are immoral or scandalous – may one day face constitutional scrutiny.  For the time being, brand owners can at least take comfort in the fact that a mark cannot be cancelled or refused registration on the basis that it has a tendency to disparage.