On June 19 2017 the Supreme Court held that the Lanham Act's disparagement clause is unconstitutional under the First Amendment's free speech clause. Unanimously affirming the Court of Appeals for the Federal Circuit, the Supreme Court explained that the disparagement clause "offends a bedrock First Amendment disparagement principle: Speech may not be banned on the ground that it expresses ideas that offend".
In 2011 Simon Tam – founder of the Asian-American dance-rock band The Slants – filed a US trademark application to register the band name THE SLANTS, citing adoption of the mark as a way "to 'reclaim' the term and drain its denigrating force". The examining attorney refused to register the mark, citing 15 USC Section 1052(a) of the Lanham Act (Section 2(a)), commonly known as the 'disparagement clause'. This clause prohibits registration of trademarks that may "disparage… or bring… into contempt or disrepute" any "persons, living or dead". Tam appealed first to the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (USPTO), and then to a Federal Circuit panel, both of which upheld the examining attorney's rejection. In April 2015 the Federal Circuit sua sponte ordered an en banc rehearing on whether Section 2(a) violates the Constitution's First Amendment.
The Federal Circuit found Section 2(a) to be unconstitutional under the strict scrutiny test. Among other arguments, the Federal Circuit noted that Section 2(a) is neither content nor viewpoint neutral. By allowing the USPTO to choose what marks it deems disparaging, Section 2(a) discriminates both based on topic and on message conveyed. The Federal Circuit also held that trademarks possess an expressive aspect beyond the purely commercial, and allowing refusal of a trademark registration based on personal judgement of that expressive content makes Section 2(a) invalid on its face as discriminatory. The Federal Circuit also rejected the government's arguments that Section 2(a) does not implicate the First Amendment or is a government subsidy exempt from strict scrutiny.
In September 2016 the Supreme Court granted certiorari to In re Tam. The court heard oral arguments in this case on January 18 2017.
Delivering the opinion of the court, Justice Alito began by setting forth the purpose of trademarks to "help distinguish a particular artisan's goods from those of others". The court noted the lengthy history of trademark protection under US law, including the enactment of the Lanham Act in 1946. The act allows for federal registration of a trademark, which "ensure[s] that trademarks are fully protected and supports the free flow of commerce". While federal registration is not required for a trademark to be enforced under laws such as the Lanham Act and against alleged infringers, it does "confer important legal rights and benefits", such as "constructive notice of the registrant's claim of ownership" of a mark.
As it stands, the act contains certain provisions that bar delineated types of trademarks from being registered on the principal register. One such clause is the disparagement clause. This clause requires a two-part test to determine whether a trademark is disparaging. First, the USPTO determines whether the likely meaning of the mark refers "to identifiable persons, institutions, beliefs, or national symbols". If so, the USPTO then determines whether "a substantial composite… of the referenced group would find the proposed mark… to be disparaging in the context of contemporary attitudes".
Turning to the parties' arguments, the court first addressed Tam's argument that the disparagement clause does not extend to marks that disparage racial or ethnic groups. For the first time in his brief to the court, Tam argued that 'persons' as set forth in the disparagement clause include only "natural and juristic persons", not "non-juristic entities". The court disagreed with Tam's argument, finding that it was "refuted by the plain terms of the disparagement clause", as a racial or ethnic group was inherently made up of persons. (Justice Thomas did not join in this part of the decision, seeing "no reason to address this legal issue in the first instance".)
The court then moved on to the issue of whether the disparagement clause violates the free speech clause of the First Amendment. First, the entire court rejected the proposition that trademarks are government speech and thus not regulated by the free speech clause, holding that they are private speech. The court noted that the government does not come up with or edit the marks to be registered, and a registered mark is not reviewed or removed by the government until it is challenged by a third party, none of which suggests that the content of a trademark is government speech. Moreover, none of the cases previously decided by the court "even remotely" give support to the idea that registered trademarks qualify as government speech. Holding that registration of a trademark changes private speech into government speech "would constitute a huge and dangerous extension of the Government-speech doctrine", especially when considering the potential extension to the copyright system. Notably, the court distinguished Walker v Texas Div, Sons of Confederate Veterans Inc, 576 US (2015) (slip op), a case specifically relied on by the Eastern District of Virginia to deny a trademark for the Washington Redskins football team.
Justices Alito, Roberts, Thomas and Breyer also rejected the government's argument that this case was governed by cases upholding the constitutionality of "government programs that subsidized speech expressing a particular viewpoint" or a broader "government-program" doctrine where "some content and speaker-based restrictions are permitted". These justices found that federally registering trademarks was nothing like the cases involving cash subsidies or equivalents cited by the government. For example, the court noted that the USPTO does not subsidise the trademark applicant seeking registration, and conversely it is the applicant who must pay a filing fee to the USPTO to apply for registration or to maintain the registration. These justices also addressed the government's position that "trademarks are commercial speech, and are thus subject to the relaxed scrutiny outlined in Central Hudson Gas & Elec Corp v Public Serv Comm'n of NY, 447 US 557 (1980)", concluding that it did not need to be resolved as "the disparagement clause cannot withstand even Central Hudson review", because it extends beyond the purported interest it services.
In an opinion concurring in part and concurring in the judgment, Justices Kennedy, Ginsberg, Sotomayor and Kagan agreed that Section 2(a) constitutes viewpoint discrimination, but went into greater detail about why it did so, and postulated that this rationale rendered unnecessary the other issues discussed in the preceding paragraph.
Trademarks cannot be denied federal registration or be cancelled from the Federal Register merely because they offend. Rather, assuming that they otherwise qualify, offensive trademarks are entitled to the substantial benefits of federal trademark registration.
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