Federal Circuit: Barring Registration of Disparaging Trademarks is Unconstitutional

By: Shawn Marcum

The United States Court of Appeals for the Federal Circuit decided on December 22, 2016, whether the government acts unconstitutional when barring registration of disparaging trademarks under § 2(a) of the Lanham Act. The Court found that when the government denied registration of disparaging trademarks, it was refusing registration because it disapproved of the expressive messages conveyed in the marks.[2] Consequently, the Court ruled that the disparagement portion of § 2(a) of the Lanham Act violated the First Amendment.[3]

In 2010, an Asian-American band filed a trademark registration application to the United States Patent and Trademark Office (“USPTO”) for its name THE SLANTS.[4] The application was for “entertainment in the nature of live performances by a musical band.”[5] However, the Examining Attorney refused registration after reviewing dictionary definitions of the mark, the band’s usage of the mark, and the band’s reasoning for adopting the mark—own the stereotype that the mark represents and show Asian pride.[6]

On appeal, the Trademark Trial and Appeals Board and a panel of judges at the Federal Circuit upheld the refusal based on USPTO and judicial precedent—barring registration did not prevent the applicant from using the mark in commerce, which in turn did not prohibit any speech, and so constitutional.[7] Afterwards, the Federal Circuit in 2015, on its own accord, ordered a rehearing en banc to determine the constitutionality of the Lanham Act’s § 2(a) bar on registering disparaging marks under the First Amendment.[8]

Section 2(a) of the Lanham Act bars registration of marks that disparage a group of persons.[9] To determine disparagement, the USPTO applies a two-part test.[10] First, the USPTO determines the likely meaning of the mark by reviewing dictionary definitions and the meaning that the mark took on in the marketplace.[11] Second, the USPTO determines whether a substantial composite of the referenced group may be disparaged by the determined meaning.[12]

The Court held the disparagement portion of § 2(a) to be government viewpoint-based discrimination.[13] Viewpoint-based discrimination requires that § 2(a) be reviewed under strict scrutiny—the government has to prove that § 2(a) is narrowly tailored to serve a compelling state interest—to determine its constitutionality.[14] Here, the Court found that § 2(a) is discriminatory on its face because (1) it was based on marketplace viewpoints determined by the USPTO and (2) the government did not provide sufficient evidence of a compelling state interest.[15]

In addition, the government made other arguments, all of which the Court rejected. First, the government argued that § 2(a) only regulated commercial speech.[16] As such, the trademark owner was free to continue the use of the mark in commerce, which did not prohibit speech.[17] Nevertheless, the Court noted the various benefits that federal registration of a trademark provides and determined that barring registration based on the marketplace viewpoint determined by the government actually hampers First Amendment free speech because applicants will choose to avoid using disparaging marks (at the expense of free speech) to gain the rights associated with registration.[18] Furthermore, “[t]he distinction between laws burdening and laws banning speech is but a matter of degree. The Government’s content-based burdens must satisfy the same rigorous scrutiny as its content-based bans.”[19] Second, the government argued that trademark registration equated to government speech instead of private speech regulation.[20] The government stated that trademark registration conveyed only one message, that the government registered the mark.[21] However, the Court noted that the USPTO has stated many times in the past that trademark registration does not amount to government endorsement.[22] Additionally, by looking to a recent decision where the government owns the underlying property, the Court found that the government does not own the trademark or the goods/services it represents.[23]

The Court’s holding, that § 2(a)’s disparagement bar to registration is unconstitutional, could have great impact on trademark law. First, the decision calls into question the other registration bars found in § 2(a) when the Court noted that the other provisions of § 2(a)—scandalous and immoral—might also be viewpoint-based discrimination. For example, when the USPTO bars registration of an immoral mark, it takes into consideration marketplace viewpoints that it thinks the mark most likely means, which is very similar, if not the same, as what the USPTO does when it determines whether a mark is disparaging (i.e., unregisterable).

Second, the Court’s decision could affect the REDSKINS trademarks. The USPTO cancelled the registration of these trademarks as disparaging of Native Americans. The USPTO’s decision to cancel was upheld in district court. However, the Fourth Circuit may follow the Federal Circuit upon appeal and reverse the USPTO’s cancellation.

Lastly, by removing the disparagement bar, and possibly the other viewpoint-based bars like immoral and scandalous, the Court provides a safer commercial playing field for businesses when choosing marks to be used in interstate commerce. Before this decision, for businesses to play it safe, they would choose marks that are not disparaging, scandalous, or immoral at the expense of product or service matchup with the mark or even at the expense of making a point—e.g., THE SLANTS meant embracing the stereotype and being a proud Asian. After this decision, however, businesses may still play it safe even if they choose a disparaging, scandalous, or immoral mark.

[1] In re Tam, No. 14-1203 (Fed. Cir. 2015).

[2] Id. at 19.

[3] Id.

[4] Id. at 11.

[5] Id.

[6] Id. at 12-13.

[7] Id. at 14.

[8] Id. at 16-17.

[9] Id. at 7, 9.

[10] Id. at 9-10.

[11] Id. at 10.

[12] Id.