2015 was a momentous year for the Lanham Act. The Supreme Court weighed in on two controversies in trademark jurisprudence. In Hana Financial, Inc. v. Hana Bank, the Court held that tacking is a question of fact to be decided by a jury,2 and in B&B Hardware v. Hargis Industries, Inc., it held that determinations by the Trademark Trial and Appeal Board (“TTAB”) can have preclusive effect in subsequent federal lawsuits.3 2015 also saw heated debate over whether § 2(a) of the Lanham Act, which prohibits registration of marks that may be considered disparaging, violates the Constitution. In July, the District Court for the Eastern District of Virginia addressed this issue in the context of the ongoing REDSKINS football team trademark controversy and concluded that § 2(a) does not violate the First Amendment free speech protections because it does not impact a party’s ability to use its marks.4 That decision was preceded by the Court of Appeals for the Federal Circuit’s announcement that it was vacating its prior decision in In re Tam to address the constitutionality of § 2(a) en banc.5 Oral argument was held on October 2, and the much-awaited decision came down on December 22, 2015,6 capping off an eventful year and setting the stage for further debate in 2016.
The Federal Circuit overruled its predecessor’s decision in In re McGinley,7 and held that the disparagement provision of § 2(a) of the Lanham Act violates the First Amendment.8 In re Tam concerns Simon Shiao Tam’s application to register the mark THE SLANTS in connection with “[e]ntertainment in the nature of live performances by a musical band.”9 The Patent and Trademark Office denied registration on the basis that the mark is likely disparaging to people of Asian descent.10 The TTAB upheld this refusal to register on appeal, and Mr. Tam then appealed to the Federal Circuit, arguing both that the mark is not disparaging and that § 2(a) is unconstitutional.11 A panel of the Court heard the case and upheld the TTAB’s determination that the mark is disparaging.12 The Court further held that its binding precedent set in In re McGinley in 1981 foreclosed the issue of constitutionality.13 In an “additional views” opinion circulated with the decision, Judge Moore urged the Federal Circuit to revisit the issue en banc.14 The Federal Circuit subsequently ordered rehearing en banc to address the specific issue of whether the Lanham Act’s bar on the registration of disparaging marks violates the First Amendment.15
On review, the Court found that, unlike other restrictions in the Lanham Act that are aimed at mitigating consumer confusion and furthering the goals of trademark law, the restrictions in § 2(a) are based solely on the “expressive nature” of the marks.16 Because § 2(a) discriminates based on the message conveyed by a mark, the Court reasoned that it is a content-based regulation.17 Moreover, the restriction targets not only the topic addressed, but also the particular viewpoint expressed, making it “even more suspect.”18 This type of regulation can only be justified if it is narrowly tailored to address a compelling state interest.19 Such strict scrutiny applies notwithstanding that trademarks also have a commercial function; the disparagement exclusion always addresses a mark’s expressive message, rather than its ability to signify source, and this is what dictates the appropriate standard.20
According to the opinion, the government did not argue that § 2(a) could withstand strict scrutiny. Instead, it focused on the fact that § 2(a) does not prohibit speech.21Nothing in the Lanham Act prevents Mr. Tam from calling his band THE SLANTS; rather, the provision only addresses registerability.22 The government also argued that trademark registration is beyond the reach of the First Amendment because it is government speech, and that § 2(a) is exempt because it merely withholds a government subsidy.23
The Court rejected each of these arguments in turn. First, the Court pointed out that § 2(a) implicates the First Amendment not because it suppresses speech, but because it burdens certain speakers by denying them the “truly significant and financially valuable benefits [bestowed] upon markholders.”24 This has a chilling effect on speech that may be considered disparaging, especially given the lack of clear guidance in the statute.25 In rejecting the government’s argument that registration is government speech, the Court noted that the copyright registration process has the same “accoutrements” as trademark registration: a registration symbol, a certificate of registration and inclusion in a database.26 If those were sufficient to render registration government speech, then the government could deny copyright registration to immoral, scandalous or disparaging works.27 Moreover, the Court found “no meaningful basis for finding that consumers associate registered private trademarks with the government.”28 Finally, the Court found that trademark registration is not a subsidy program, and that it “does not implicate Congress’s power to spend or to control use of government property.”29
The Court further concluded that even if it treated § 2(a) as barring commercial rather than expressive speech such that intermediate scrutiny were the appropriate test, § 2(a)’s bar on disparaging marks would still be unconstitutional.30 The Court found that the government did not present a substantial government interest that would justify denying registration to disparaging marks.31 Rather, the interest expressed by the government simply “boils down to permitting the government to burden speech it finds offensive.”32
In accordance with its determination, the Court vacated the TTAB’s ruling upholding the refusal to register THE SLANTS, and remanded the case to the Board for further proceedings.33 The controversy is far from over, however. The USPTO may appeal this decision. Furthermore, both the opinion and dissents34 will likely provide fodder for both sides in the REDSKINS case, which is now on appeal before the Fourth Circuit. 2016 may well yield another circuit split to place trademark law before the Supreme Court once again.