In a landmark decision that will significantly impact those seeking to block or cancel trademarks they consider offensive, the U.S. Supreme Court has struck down the "disparagement clause" of the federal trademark registration act (also known as the Lanham Act) as an unconstitutional impairment of free speech. Matal v. Tam ("Tam"), 582 U.S. ___ , No. 15-1293, Slip Op. (June 19, 2017). The disparagement clause prohibits federal registration of a trademark if it comprises "matter 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). This prohibition on federal trademark registration is no longer operative.

The Tam case is unusual, in that it was filed not by a group seeking to cancel a racially disparaging trademark, but by the person who created and owns the mark. Simon Tam is the lead singer of an Asian-American dance-rock band, which he named "The Slants." Mr. Tam believed that by adopting this derogatory term for Asians, he could "reclaim" or "take ownership" of the term, thereby draining it and other such terms of their "denigrating force." See Tam, Slip Op. at 1, 7. The US Patent and Trademark Office (USPTO), however, rejected his application to register his trademark pursuant to the disparagement clause of the Lanham Act. Mr. Tam appealed to the US Court of Appeals for the Federal Circuit, which found the disparagement clause to be an unconstitutional restriction of free speech and vacated and remanded the USPTO's final decision. In re Simon Shiao Tam, 808 F.3d 1321 (Fed. Cir. 2016) (en banc).

The Supreme Court granted certiorari and affirmed the Federal Circuit's decision. Federal law, the Court explained, does not create trademarks, but only helps ensure that they are fully protected and afforded "a degree of national uniformity" by enabling owners to register their trademarks on federal registers. Tam, Slip Op. at 2-3. A valid trademark is protectable under state or common law, and may be used to identify a person's goods and services in commerce, even without federal registration. Id. at 4. Trademarks are private rights, and are thus entitled to protection as free speech under the First Amendment.

Just as significant is the Court's holding that trademarks do not fall under any of the categories of speech that are not protected or are subject to highly permissive rational-basis review. The categories examined by the Court are: (i) "government speech"; (ii) government-subsidized speech; (iii) a newly proposed "government-program" doctrine; and (iv) "commercial speech." Tam, Slip Op. at 12, 23-24.

On the first category, the Court held that "it is far-fetched" to find that trademarks are "government speech." The Federal Government does not "dream up," "edit" or even use others' registered trademarks to convey its own message. Id. at 14-15. Nor does it "inquire whether any viewpoint conveyed by a mark is consistent with Government policy," or "reject a mark based on the viewpoint that it appears to express." Federal registration does not even "constitute approval of a mark." Id. at 14-15. To hold otherwise, the Court explained, would suggest that "the Federal Government is "babbling prodigiously and incoherently" by saying many "unseemly" and "contradictory" things, "unashamedly endorsing a vast array of commercial products and services," and "providing Delphic advice to the consuming public." Id. at 15.

Of even greater concern to the Court was the "huge and dangerous extension of the government-speech doctrine" that would result from converting trademarks into government speech. Slip Op. at 17-18. Copyrights, patents, and "other systems of government registration could easily be characterized the same way," and thus could lose "all First Amendment protection" if trademarks were considered government speech. Id. In so holding, the Court rejected the argument that trademarks are too brief to convey protectable expressive content. "[P]owerful messages can sometimes be conveyed in just a few words," the Court cautioned. Id.

Regarding the second category above, the Supreme Court rejected the Government's argument that trademarks are the result of "government programs that subsidize[] speech expressing a particular viewpoint." Slip Op. at 18. This is "a notoriously tricky question of the constitutional law," the Court wrote. Although the Government is not required to subsidize activities that it does not wish to promote, neither may it deny a benefit to a person on a basis that infringes that person's freedom of speech. Id. at 18-19. The Court also had no difficulty distinguishing trademarks from cash subsidies and other government subsidies. The USPTO does not pay persons to register trademarks; to the contrary, the agency exacts fees from applicants to register and maintain their trademarks. The fact that a trademark may convey some non-monetary benefits is irrelevant, the Court found, noting that there are many other government programs that expend funds for the benefit of individual citizens, but this does not mean they can impair a citizen's rights to free speech.

Third, the Court rejected the Government's attempt to create a new "government program" exception to the First Amendment. This argument, the Court found, was simply an attempt to merge the Court's government-speech cases with its government-subsidy cases and a few public-sector union cases. Slip Op. at 20-21. Yet even in those cases, "viewpoint discrimination" by the Government is still forbidden. Id. at 22. "Giving offense is a viewpoint," and thus protected speech, even if the Lanham Act applies equally to disparaging marks of any kind. Id.

Finally, the Court found that the disparagement clause could not withstand the "relaxed scrutiny" of "commercial speech." Slip Op. at 23-24. Regardless of public interest in preventing offensive speech, the Court held there is a far greater interest at stake: "The proudest boast of our free speech jurisprudence is that we protect the freedom to express 'the thought that we hate.'" Id. at 25, quoting United States v. Schwimmer, 279 U.S. 644, 655 (1929). In addition, the Court found the disparagement clause is overly broad for its intended purpose of driving out discriminatory trademarks. Because of these failings, the Court held that it did not need to reach the issue of whether trademarks actually are "commercial speech," or whether, in this case, they say something more about broader social issues. That dispute was left to be resolved another day.

The Tam decision was anxiously anticipated given its likely impact on the long-pending suit brought by Native American plaintiffs seeking to cancel the Washington NFL team's trademark in its controversial name. Both the USPTO and a federal court agreed with plaintiffs in finding the team's name disparaging to Native Americans under the same clause it had used to reject Mr. Tam's trademark. Pro-Football, Inc. v. Blackhorse, (E.D. Va., No. 1:14-cv-01043), appeal pending. That case has been stayed in the U.S. Court of Appeals for the Fourth Circuit pending the Supreme Court's decision in the Tam case, and will now presumably move toward a decision consistent with the Court's ruling.

The Tam decision may also significantly impact other aspects of trademark law. Unknown at the present time, but likely to be addressed by the USPTO, is how the USPTO's examination rules will be altered to implement the Tam decision. The disparagement clause, moreover, is just one part of Section 2(a) of the Lanham Act (15 U.S.C. §1052(a)), which also prohibits registering trademarks that consist of "immoral, deceptive, or scandalous matter." That provision, and any other provisions in federal or state intellectual property law that seek to limit freedom of speech to avoid immoral or offensive expressions, may also be susceptible to constitutional attack on First Amendment grounds.