The U.S. Court of Appeals for the Federal Circuit, after an en banchearing, has deemed the disparagement provision of Lanham Act Section 2(a) unconstitutional because it violates the Freedom of Speech Clause of the First Amendment. Writing for the majority, Circuit Judge Kimberly A. Moore stated: "The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional." The CAFC therefore vacated the TTAB's decision that had affirmed a refusal to register the mark THE SLANTS for "entertainment in the nature of live performances by a musical band."In re Tam, Appeal No. 2014-1203 (Fed. Cir. December 22, 2015) [precedential].

The court observed that federal registration confers significant benefits on a trademark owner, benefits that are not available when the mark is not registered. A federal registrant has a right to exclusive nationwide use of the where there was no prior use by others. A registered mark is presumed valid and use of the mark may become incontestable after five years. The registrant may enforce the mark in federal court and may recover treble damages for willful infringement. He may obtain the assistance of U.S. Customs and Border Protection in restricting importation of infringing or counterfeit goods, may prevent "cybersquatters" from misappropriating his domain name, and may qualify for a simplified process for obtaining recognition and protection of his mark in countries that have signed the Paris Convention. And registration provides a complete defense to state or common law claims of trademark dilution.

Many of the Lanham Act's provisions that bar registration concern "deceptive" speech and do not run afoul of the First Amendment. Section 2(a) is a "hodge-podge" that includes restrictions "based on the expressive nature of the content, such as the ban on marks that may disparage persons or are scandalous or immoral."

The court found that Section 2(a) is "a viewpoint-discriminatory regulation of speech, created and applied in order to stifle the use of certain disfavored messages. Strict scrutiny therefore governs its First Amendment assessment."

The Government did not argue that the disparagement provision survives "strict scrutiny" but rather contended that Section 2(a) does not implicate the First Amendment at all. It contended that Section 2(a) is immune from First Amendment scrutiny because it prohibits no speech; that trademark registration is government speech, and thus the government can grant and reject trademark registrations with out implicating the First Amendment; and that the provision merely withholds a government subsidy for Mr. Tam’s speech and is valid as a permissible definition of a government subsidy program. The court rejected all three arguments. 

The court held that "the disparagement provision of §2(a) is unconstitutional because it violates the First Amendment."