The Federal trademark statute’s more-than-60-year prohibition on registering trademarks that may be viewed as disparaging goes out the window with the United States Supreme Court’s recent unanimous decision. The Court ruled that the disparagement provision of the Lanham Act is unconstitutional under the First Amendment’s Free Speech Clause. The decision will likely have far-reaching implications, not only for the NFL’s Washington Redskins but also for many consumer-facing businesses.

Brief Background

The case grew out of a trademark application filed by Simon Shiao Tam, an Asian-American musician, political activist, and founder of a rock band called “The Slants.” Mr. Tam’s application to register his band’s name was refused under Lanham Act §2(a) because the U.S. Patent and Trademark Office concluded that the name was “disparaging” to persons of Asian descent. Mr. Tam appealed, arguing that although the term may be viewed by some as disparaging, his goal was not disparagement but rather to “wrest ‘ownership’ of the term from those who might use it with the intent to disparage.” On appeal, the Federal Circuit initially agreed with the refusal to register, finding that under court precedent, prohibiting registration of disparaging marks under §2(a) did not violate the First Amendment because even without a registration an applicant is still free to use the mark – a registration is not required for use. Thereafter, however, the court sua sponte ordered rehearing en banc to more closely analyze the First Amendment issue. In reversing and finding the disparagement provision unconstitutional, the court held that the provision discriminates based on disapproval of the message conveyed by the trademark.

The Supreme Court’s Decision

The Supreme Court rather easily concluded, on June 19, 2017, that the challenged provision amounts to an unconstitutional restriction on free speech under the First Amendment. Finding the Government’s arguments unpersuasive, the Court first held that notwithstanding the fact that the government issues trademark registrations, those registrations are private and not government speech. As such, it is inappropriate for the government to essentially censor trademarks based on what the Trademark Office believes to be disparaging content. To conclude that the registration of a trademark transforms the mark to government speech “would constitute a huge and dangerous extension of the government-speech doctrine” because the next logical step would be to conclude that other government registration programs – such as copyright registration – should be treated similarly.

The Court was similarly unpersuaded by the Government’s argument that the disparagement provision is constitutional because trademark registration is akin to other government programs that have subsidized speech expressing a particular viewpoint. Despite the fact that a trademark registration may arguably provide “valuable, non-monetary benefits that are directly traceable to the resources devoted by the federal government . . .”, the Court found the federal trademark registration program to be “nothing like” the programs the Court has traditionally categorized as subsidy programs – where cash subsidies or their equivalent are paid out by the government. Here, no money is paid to parties seeking trademark registrations; rather, trademark applicants must pay the Trademark Office both for the initial application and to maintain the registration thereafter.

What’s Next?

The Court in Tam took the opportunity to refocus the trademark registration question on the consumer. No longer does the registrability of a proposed mark hinge on whether the term may disparage some portion of the population. The Lanham Act prohibits marks from being registered if they are merely descriptive or deceptively misdescriptive or if they are likely to give rise to consumer confusion. The Tam decision evidences a realization that refusing to register marks that “may disparage” gets away from protecting consumers and is more in line with appeasing sensibilities. The decision is likely to open the door not only to numerous trademarks that have traditionally been off-limits but also to further challenges to the governing statute. For example, in addition to preventing the registration of marks deemed to be disparaging – the basis for the recent cancellation of several trademark registrations owned by the Washington Redskins – the statute at issue also prohibits registration of marks that are “scandalous” or “immoral.” How the Trademark Office will handle such marks in the future is unclear at this juncture, but the argument can certainly be made that neither of those terms is any clearer (or more constitutionally sound) than “may disparage.” With the Tam decision, it appears that the key limiting factor with respect to the ability to protect a term as a trademark has to come back to whether the proposed mark will be used in a trademark manner, i.e., to identify source, and not whether the term has a meaning that might be viewed by some as inappropriate.