Federal Circuit No. 2014-1203 (en banc)

En Banc Federal Circuit Rules Disparagement Proscription of Lanham Act is Unconstitutional

The Federal Circuit sitting en banc has held that the Trademark Trial and Appeal Board cannot deny an application a trademark of "The Slants" on the grounds that the mark would be disparaging. More broadly, Section 2(a) of the Lanham Act, which prohibits disparaging marks, violates the First Amendment freedom of speech on its face.

Appellant Simon Tam was a member of an Asian-American rock band that called themselves "The Slants." Mr. Tam chose this name in order to "reclaim” and “take ownership” of Asian stereotypes. Mr. Tam used the band and its title to weigh in on issues of race, culture, and stereotypes.

The trademark examiner refused to register the mark on the grounds that it would be disparaging to persons of Asian descent under Section 2(a), and the Trademark Trial and Appeal Board affirmed.

The Federal Circuit reversed the TTAB, using a variety of rationales. The most prominent ground of reversal was the holding that Section 2(a)'s prohibition on disparaging marks was invalid because it discriminated on the basis of content, as well as viewpoint.  Content based discrimination is presumptively invalid and faces strict scrutiny, and viewpoint discrimination is even more suspect. The government discriminated on the basis of content and viewpoint because it denied marks that it found to be culturally offensive, while allowing some marks that contained more positive cultural stereotypes.

The Court found that the strict scrutiny test was not met, as the government could not show that it had a compelling interest and that the law was narrowly tailored to that interest. The government claimed to have a compelling interest in fostering racial tolerance, but the Court rejected this.

The Court also pointed out that the disparagement prohibition effectively chills speech. Trademarks can be commercially valuable, and if an application for a mark is denied or cancelled, it can have a significant economic impact on the party. Thus potential trademarks registrants are likely to avoid choosing controversial marks that may disparage some groups out of fear that the mark will be denied. The inherent vagueness of the disparagement prohibition exacerbates this effect.

The Court also found, as an alternative theory, that Section 2(a) did not pass the four part Central Hudson test for determining whether restrictions on commercial speech are constitutionally valid.  Commercial speech is less protected than speech of private citizens. The Central Hudson test uses a form of intermediate scrutiny, so it is less demanding than the strict scrutiny test for content or viewpoint discrimination. Yet the Court still found that the government failed to meet the second step of the test, the requirement of a substantial government interest. The "entire interest of the government in § 2(a) depends on disapproval of the message. That is an insufficient interest to pass the test of intermediate scrutiny."

Finally, the Court noted that although it held the disparagement provision unconstitutional, it did not in any way endorse the mark at issue.

Judges O'Malley and Wallach concurred, agreeing with the majority and also writing that Section 2(a) was unconstitutionally vague under the Fifth Amendment. Judges Dyk, Lourie, and Reyna concurred in part and dissented in part, writing that the statute was not facially unconstitutional, but was unconstitutional as applied because Mr. Tam's speech was political. However, other marks may not be so expressive and deserving of First Amendment protection.

Judge Lourie dissented on two grounds. First, stare decisis should apply here because the statue has been continuously applied for 70 years. Secondly, Mr. Tam's free speech has not been violated because he could still use the phrase "The Slants" in practice, but was simply not entitled to a trademark. Judge Reyna dissented on the grounds that trademarks are commercial speech, and that intermediate scrutiny thus applies. Section 2(a) passes intermediate scrutiny because "it is only an incidental restriction on First Amendment freedom [that] is no greater than is essential to the furtherance of the governmental interest in the orderly flow of commerce."