U.S. Supreme Court Rules Lanham Act’s Disparagement Clause Violates Constitutional Right of Free Speech

Summary

The U.S. Supreme Court on Monday, June 19, 2017, issued its opinion in Matal, Interim Director, U.S. Patent and Trademark Office v. Tam (previously Lee v. Tam).  The Court affirmed the en banc Federal Circuit, holding that the Section 2(a) ban on disparaging trademarks violates the Free Speech Clause of the First Amendment.  As a threshold matter, the Court determined that trademarks are private speech and not government speech.  Because trademarks are private speech, laws regulating their content are subject to heightened scrutiny.  Under heightened scrutiny, the disparagement clause cannot survive.  The Court did not resolve whether trademarks are expressive speech subject to strict scrutiny or commercial speech subject to “relaxed” scrutiny because the Court found that the disparagement clause cannot survive under either standard.

Background of the Case

Simon Tam filed a trademark application for the mark THE SLANTS for his dance-rock band.  “Slants” is a derogatory term for persons of Asian descent, and members of the band are Asian-Americans.  Tam chose the name in order to “reclaim” an ethnic slur and drain its denigrating force.  The Examining Attorney issued a refusal based on Section 2(a) of the Lanham Act.  Section 2(a)’s disparagement clause prohibits the registration of trademarks that “[c]onsists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage…or bring into contemp[t] or disrepute” any “persons, living or dead.”  15 U.S.C. § 1052(a).  The Examining Attorney determined that the mark is disparaging to a “substantial composite” of Asian-Americans.  The TTAB affirmed the Examining Attorney’s refusal.

Tam appealed to the Federal Circuit, which initially affirmed the TTAB.  However, the Federal Circuit reheard the case en banc and found the disparagement clause facially unconstitutional under the First Amendment’s Free Speech Clause.  The majority found that the disparagement clause attempts to regulate the expressive content of trademarks, which consequently cannot be treated as commercial speech.  Because the disparagement clause attempts to regulate expressive content, it is subject to—and fails—strict scrutiny.  The majority also found that, even if the disparagement clause was analyzed as regulating commercial speech, the clause would fail the intermediate scrutiny prescribed.  With the case producing four concurrences and dissents in addition to the majority opinion, the Government filed a petition for certiorari, which the Supreme Court granted.

Decision

Justice Alito wrote the opinion, which was joined by a unanimous court.  Justice Alito’s opinion in Parts III-B, III-C, and IV was joined by Chief Justice Roberts and Justices Thomas and Breyer.  Justice Kennedy wrote a concurrence with respect to those parts, and was joined by Justices Ginsburg, Sotomayor, and Kagan.  Justice Thomas also wrote a concurrence with respect to Part II.

Before addressing the constitutionality of the disparagement clause, the Court addressed Tam’s argument that the disparagement clause does not reach marks that disparage racial or ethnic groups.  Tam had not raised this argument before the PTO or the Federal Circuit.  Nevertheless, the Court addressed the argument because, if Tam had been correct, it would obviate the need to adjudicate the constitutionality of the disparagement clause.  The Court found that, by the plain language of the clause’s text, the clause applies to marks that disparage members of racial or ethnic groups.

The Court then addressed how to analyze Tam’s trademark—as government speech, commercial speech, or expressive speech.  The Government contended that trademarks are government speech or a form of government subsidy, and that regulations on their content are not subject to heightened scrutiny.

The Court dismissed as “far-fetched” the Government’s argument that trademarks are government speech.  Despite the fact that trademarks are registered by the PTO, the marks are not created by the government or endorsed by the government.  If that was the case, the government would be “babbling prodigiously and incoherently” by expressing many contradictory views and endorsing many commercial products and services.  Additionally, the PTO made it clear that registration does not constitute approval of a mark.  Finally, the Court found Walker inapposite to trademarks.[1]  In Walker, the Court held that messages on specialty license plates in Texas were government speech.  But license plates convey state messages, are manufactured and owned by the State, serve as a form of government ID, and the State maintains control over the plates.  None of those factors are present with trademarks.  The Court also dismissed the contention that trademarks are a form of government subsidy.  In contrast with subsidies, trademark owners pay fees to the PTO for registration and maintenance.  The Court expressed concern that finding trademarks to be government speech would necessarily mean that copyrights are also government speech, which would have a drastic effect on freedom of expression.  Dismissing all of the Government’s arguments, the Court ruled that trademarks are private speech.

Having decided that trademarks are private speech, Alito and three other justices found that the disparagement clause did not survive any type of heightened scrutiny.  Alito noted that restrictions on expressive speech are analyzed under strict scrutiny, while restrictions on commercial speech are analyzed under the “relaxed” scrutiny of Central Hudson.[2]  Under Central Hudson, a restriction of speech must serve “a substantial interest” and must be “narrowly drawn.”  Alito summarized the disparagement clause’s two asserted interests as “preventing speech expressing ideas that offend” and “protecting the orderly flow of commerce.”  Alito did not find these to be “substantial” in that the former is directly opposed to the First Amendment.  Additionally, Alito did not find the restriction “narrowly drawn.”  The restriction would ban registration of such phrases as “down with racists” as equally disparaging as it would a racist mark.  He elaborated that this is not an “anti-discrimination clause; it is a happy talk clause,” which is much broader than necessary to serve the asserted interests.  Thus, according to Alito’s majority opinion, the disparagement clause violates the Free Speech Clause of the First Amendment.

Justice Kennedy, joined by three other justices, concurred in part and concurred in the judgment.  Kennedy’s concurrence focused more on the content of speech, concluding that the disparagement clause constituted viewpoint discrimination.  Kennedy concluded that the basic thrust of the First Amendment is that government may not punish or suppress speech based on disapproval of the perspectives the speech conveys.  The test for viewpoint discrimination is whether, within the relevant subject category, the government has singled out a subset of messages for disfavor based on the views expressed.  For the Section 2(a) disparagement clause, the relevant subject category consists of “persons, living or dead, institutions, beliefs, or national symbols.”  Within that category, an applicant would be permitted to register a positive or benign mark but not a derogatory one.  Thus, the disparagement clause shows that the government has singled out a subset of messages for disfavor based on viewpoint.  Kennedy agreed with Alito that, regardless of whether trademarks are commercial speech or free speech, the viewpoint-based discrimination invokes heightened scrutiny, under which the regulation cannot survive.  According to Kennedy’s concurring opinion, the disparagement clause amounts to nothing more than government censorship.

Justice Thomas concurred in part and concurred in the judgment.  Because Tam’s alternative argument that the disparagement clause did not apply to racial or ethnic groups was not made to the PTO or to the Federal Circuit, Justice Thomas did not believe it necessary to address that argument.  Justice Thomas also wrote separately to express his belief that commercial speech should be subject to strict scrutiny, as is the case with expressive speech.  But Justice Thomas agreed with the majority that the disparagement clause also fails the relaxed scrutiny of Central Hudson.

Justice Gorsuch did not participate in the case.

Observations

This decision will make it easier to counsel clients attempting to register their trademarks.  In the past, the Examining Attorneys in the PTO were inconsistent in their determination of whether a mark might offend others.  Companies seeking to register “iffy” marks had to wait for many months or, in some cases, years before knowing if they would succeed.  Now, disparaging or offensive marks should be registrable, if they meet the other requirements of registrability.  The Court noted, however, that the First Amendment does not extend to words typically exempted from the definition of “speech,” such as obscenity, libel/defamation, and incitement.  In view of this, Lanham Act prohibitions against registration of such words should continue to be valid.

This case will have an immediate impact on a high profile trademark case involving the Washington Redskins football team.  The trademark registration for REDSKINS had been cancelled by the TTAB under Section 2(a) as disparaging a “substantial composite” of Native Americans.  The team took its case to the Eastern District of Virginia, which also found that the mark disparaged Native Americans.  The team then appealed to the 4th Circuit, which suspended the case pending the outcome of the Tam case.  Because the Supreme Court found the disparagement clause unconstitutional, the team should be entitled to its registrations.

The case will also impact other minority rights organizations seeking to “reclaim” slurs.  Many of these groups, such as Dykes on Bikes, filed briefs as amici in support of Tam.  These groups should now be able to register their marks.

A common theme in the opinions was that if the Court was to accept the government’s position that a trademark registration is government speech, the government could apply the same ban to copyright registrations.  The justices found that this would be a dangerous extension of the government speech doctrine.