The U.S. Court of Appeals for the Federal Circuit, en banc, has ruled that Section 2(a) of the Lanham Act precluding “disparaging” trademark registrations is unconstitutional, rejecting the argument that trademark registration is government speech not subject to First Amendment scrutiny. In re Simon Shiao Tam, No. 2014-1203. Filed by Federal Circuit Judge Kimberly Moore, eight more judges joined the majority opinion. By striking down Section 2(a) of the Lanham Act, the court confirmed the primacy of the First Amendment protection of freedom of speech, including the protection of private “hurtful speech.” (Slip Op. at 4).
BACKGROUND – CATEGORIES OF PRECLUSION
The United States Patent and Trademark Office (“Trademark Office”) provides a federal system for registering trademarks, as authorized by the Lanham Act. The Trademark Office rules list specific categories of marks that are precluded from registration under the Lanham Act. Many of the precluded registration categories under Section 2(d) of the Lanham Act relate to marks that are likely to cause confusion, deception or are misleading. Those categories precluded by Section 2(d) are ineligible because they undermine the purpose of the Lanham Act, which is to protect the public from consumer confusion and to provide the trademark owner with exclusive rights of use. By contrast, Section 2(a) of the Lanham Act bars registration of a mark that “consists 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.” This distinction between preclusion based on the Section 2(d) category of confusion and the Section 2(a) category of disparaging marks has long been cited in First Amendment challenges to Section 2(a) rejections of trademark registrations.
Simon Shiao Tam (“Appellant”) is the most recent applicant to use the First Amendment to challenge a Trademark Office Section 2(d) rejection. In November 2011, Mr. Tam filed an application to register his band’s name, The Slants, with the Trademark Office. The Slants are an Asian-American dance-rock band that “feel[s] strongly that Asians should be proud of their cultural heritage, and not be offended by stereotypical descriptions.” (Slip Op. at 11). According to the court’s opinion, Mr. Tam chose the band name to make a statement about racial and ethnic identity, seeking to shift the meaning of an emotionally charged word. The band advocates for social change and challenges perceptions of people of Asian descent. Through its lyrics, performances and band name, The Slants weigh in on cultural and political discussions about race and society.
The Trademark Office Examining Attorney found the mark disparaging to people of Asian descent and refused registration of the mark. Likewise, the Trademark Trial and Appeal Board upheld the Trademark Office’s decision and also refused registration; Mr. Tam appealed to the Federal Circuit, arguing that Section 2(a) of the Lanham Act is unconstitutional in violation of the First Amendment.
During oral arguments in October 2015, the court noted the apparent inconsistency if Section 2(a) were deemed not discriminatory in violation of the First Amendment, when the preclusion would be discriminatory for copyrights. In its decision, the court made clear that it disagreed with the government’s arguments that trademark registration was a form of government speech, exempt from First Amendment scrutiny. In a further effort to show that Section 2(a) was constitutional, the government argued that Section 2(a) did not prevent the use of a disparaging mark, only the registration of a disparaging mark with the federal government. However, the court confirmed that trademarks are private speech and, thus, subject to strict First Amendment scrutiny.
Applying First Amendment scrutiny, the court noted the differences between the Section 2(d) and the Section 2(a) categories of registration preclusion. The court observed that the Section 2(d) categories are appropriately precluded because deceptive or misleading marks undermine interests served by trademark protection and the Lanham Act’s purpose: to protect the consuming public and legitimate markholder. However, Section 2(a) of the Lanham Act bars registration of a mark that “consists 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.” The court held Section 2(a) unconstitutional for discriminating on the basis of the message conveyed, writing that the “First Amendment protects even hurtful speech.” (Slip Op. at 4).
Accordingly, the Federal Circuit sided with Mr. Tam, holding The Slant’s speech is “within the heartland of speech protected by the First Amendment.” (Slip Op. at 11). The court held that Section 2(a) cannot be justified by any government interest; Section 2(a) does not further the Lanham Act’s purpose to prevent consumer confusion or misappropriation, nor does the preclusion in Section 2(a) serve to protect a markholder’s investment in the mark. Instead, the court held that Section 2(a) denies “the protections of registration for reasons quite separate from any ability of the mark to serve the consumer and investment interests underlying trademark protection.” (Slip Op. at 7). The Federal Circuit held Section 2(a) of the Lanham Act “presumptively invalid” for discriminating on the basis of the content of the message conveyed in the speech. Applying strict scrutiny, the court found no reason for Section 2(a) to survive the heightened standard of review.
IMPACT OF DECISION
For more than seventy years, the Trademark Office has relied on Section 2(a) as the basis for refusing applications for trademarks that it deems as immoral, deceptive or scandalous. By striking down Section 2(a) of the Lanham Act as unconstitutional, the court confirms “the government may not penalize private speech merely because it disapproves of the message it conveys.” (Slip Op. at 4). The court’s reaffirmation of the importance of the First Amendment right to freedom of speech will certainly open the Trademark Office door for markholders seeking registration of colorful marks, which previously would have been precluded.
However, a word of caution: just because a markholder may now have the option to register an “immoral, deceptive or scandalous mark,” it certainly does not mean that it is a wise business or marketing decision to do so. First Amendment strict scrutiny is now to be applied to trademark registrations, but public scrutiny will occur as well. All registration applications are matters of public record; depending on the unique aspects of each market, the use and registration of disparaging marks may alienate and offend consumers.
The court’s ruling also provides support and optimism for current markholders embroiled in litigation involving Section 2(a) rejections. Most notably, under Section 2(a) of the Lanham Act, the Trademark Office cancelled the controversial REDSKINS trademark as “disparaging” to Native Americans. A district court upheld the cancellation, and the case is currently on appeal to the U.S. Court of Appeals for the Fourth Circuit. Although the Fourth Circuit is not required to follow the Federal Circuit’s ruling that Section 2(a) is unconstitutional, a circuit split on the constitutionality of Section 2(a) could force the U.S. Supreme Court to ultimately resolve this issue.