On June 19, 2017, the Supreme Court issued its opinion in Matal v. Tam, No. 15-1293, holding that trademarks are “private speech,” and thus qualify for protection from government regulation under the First Amendment. The Court further held that the ban on registering “disparaging” trademarks violates the Free Speech Clause of the First Amendment.

The Supreme Court’s decision addressed the constitutionality of § 2(a) of the Lanham Act, 15 U.S.C. § 1052(a) (the “disparagement clause”), which provides that the United States Patent and Trademark Office (“USPTO”) may refuse registration of any trademark that is, among other things, “disparag[ing].” Historically, the USPTO considered a trademark disparaging if the likely meaning of the mark “refer[s] to identifiable persons, institutions, beliefs or national symbols” and “may be disparaging to a substantial composite of the referenced group.” Trademark Manual of Examining Procedure § 1203.03(b)(i) (Jan. 2015 ed.).

In 2011, Simon Shiao Tam filed an application for federal registration of the name of his rock band – “THE SLANTS.” Tam said that the band’s name was selected in an effort to “reclaim” and “take ownership” of Asian stereotypes. The USPTO rejected Tam’s application, finding that “even though Tam may have chosen the mark to ‘reappropriate the disparaging term,’ a substantial composite of persons of Asian descent would find the term offensive.” The Trademark Trial and Appeal Board (“TTAB”) affirmed the finding, and Tam appealed to the Federal Circuit. A three-judge panel of the Federal Circuit affirmed the TTAB’s ruling. A week later, the Federal Circuit, sua sponte, vacated the decision and set the case for reconsideration en banc. On December 22, 2015, in a 9-2 decision, the en banc panel of the Federal Circuit determined that § 2(a) of the Lanham Act is facially unconstitutional. In re Simon Shiao Tam, 808 F.3d 1321 (Fed. Cir. 2015).

The Supreme Court affirmed the Federal Circuit’s en banc decision in a unanimous opinion authored by Justice Alito, with separate concurrences from Justices Kennedy and Thomas. The Court specifically rejected the arguments the Government advanced in defense of the statute, as explained below.

First, the Court rejected the government’s position that trademark registrations are exempt from First Amendment scrutiny because they are government speech rather than private speech. The Court noted that there are more than 2 million trademarks, and characterizing those marks as government speech would mean that the “Federal Government is babbling prodigiously and incoherently.” Furthermore, the Court explained that a key characteristic of government speech is conveying a government message. Trademarks, however, convey no such message.

Next, the Court rejected the government’s position that trademark registration is a form of government subsidy and, as a result, the USPTO can refuse to register trademarks that it does not wish to promote. 

In making this argument, the government relied on a line of Supreme Court cases holding that (i) government subsidies can be used to encourage speech expressing a particular viewpoint; and (ii) the government can refuse to subsidize activities that it does not wish to promote. The Court distinguished these cases, holding that trademark registrations are not a form of government subsidy. The Court explained that subsidies involve providing cash payments or equivalents, such as tax benefits. By contrast, trademark registration requires applicants to make payments to the government.

Finally, the Court rejected the argument that the disparagement clause should survive because trademarks are commercial speech, and therefore restrictions on registration are subject to the relaxed scrutiny under Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980). The Court noted that even under Central Hudson, a restriction on commercial speech must serve “a substantial interest” and must be “narrowly drawn.” The Court noted that the disparagement clause fails on both counts. Moreover, the Court noted that the line between commercial speech and non-commercial speech is not always clear, and allowing suppression of commercial speech threatens free speech.

The Court’s decision will open the door to registration of trademarks that have been rejected as offensive. For example, the decision is welcome news for the Washington Redskins football team, which has been battling for several years to overturn the TTAB’s cancellation of its “Redskins” trademark, which was challenged as disparaging to Native Americans. The impact of the Court decision, however, is less clear with respect to other grounds for denying trademark registration under § 2(a) of the Lanham Act. For example, it is currently unclear whether the USPTO may also deny registration of marks that are “scandalous” or “immoral.” We would therefore expect further lower court decisions probing the scope of the Tam decision