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Jun 20, 2017

Supreme Court Finds Lanham Act’s Disparagement Clause Unconstitutional

On June 19, 2017, the United States Supreme Court issued its long-awaited opinion in Matal v. Tam, in which it unanimously declared the Lanham Act’s “disparagement clause” unconstitutional. 

At issue in that case was a trademark application for the mark “The Slants” as used by an Asian-American rock band seeking to “reclaim” the derogatory term.  Registration of the mark was refused by the United States Patent and Trademark Office (“USPTO”) for violating the Lanham Act’s disparagement clause, contained in 15 U.S.C. § 1052(a), which, since 1946, has prohibited the registration of any mark that may “disparage  … or bring … into contemp[t] or disrepute” any person, institution, belief, or national symbol. 

While the clause is inherently vague and highly subjective, and has produced somewhat inconsistent rulings over the years, the Supreme Court decided that the clause violates the Free Speech Clause of the First Amendment since it operates to censor ideas that the government finds offensive.

Laws that discriminate against viewpoints and content are generally subject to judicial “strict scrutiny,” meaning that the law must be “necessary” to further a “compelling actual purpose.”  The burden is on the government to prove the law passes this rigorous test, and few laws survive this level of review.  An important exception to this doctrine exists for “government speech,” which does not need to be viewpoint-neutral (and, in fact, would be disastrous to the efficacy of our government if it were).

Rather than attempt to pass strict scrutiny, the USPTO argued that the Lanham Act’s disparagement clause is not subject to strict scrutiny because trademarks constitute government speech.  In finding that “[t]rademarks are private, not government, speech,” despite their registration with the government, the Supreme Court explained that unlike government speech, the government has no control over a trademark owner’s creation, modification or uses of its trademark, other than the ability to refuse registration. 

The Supreme Court was also concerned about the implications of the USPTO’s government speech argument, since if adopted, it would render other government registration systems, including copyright, subject to the same proposed principle: that federal registration equals government approval and viewpoint-adoption.  In further dismantling the USPTO’s position, the Supreme Court noted that the USPTO itself has long held that “registration does not constitute approval” and that that if it did, that would mean the “Federal Government is babbling prodigiously and incoherently” since it registers many inarticulate and viewpoint-inconsistent marks.

The Supreme Court also considered whether trademarks constitute “commercial speech,” which the government may undoubtedly regulate to protect the public from false and deceptive advertisements and from those proposing illegal activities.  Unlike government speech, laws regulating commercial speech are subject to a lower level of judicial review known as “intermediate scrutiny,” which requires the law to be “substantially related” to an “important actual purpose.”  Without even answering the question of whether trademarks constitute commercial speech, the Supreme Court found that the disparagement clause could not withstand even this lower threshold since the clause’s overbreadth impermissibly prohibits more conduct than just those instances it’s supposedly designed to combat: (1) hateful speech and (2) disruptions of commerce.  In Justice Alito’s words, because the disparagement clause operates like a “happy-talk clause,” it goes too far and endangers freedom of expression entirely.

Notably, the Court’s decision only held that the disparagement clause, and not Section 2(a) of the Lanham Act in its entirety, is unconstitutional.  This means that the other provisions of Section 2(a), prohibiting registration to “immoral, deceptive, or scandalous matter[s]” are still presumably valid.  While the “immoral” and “scandalous” provisions may overlap somewhat with disparagement, it remains to be seen how the USPTO and courts will treat other seemingly offensive marks in light of the Court’s ruling. 

While the Court’s opinion seems narrowly drafted to address only the disparagement clause, the reasoning behind the ruling does suggest that viewpoint discrimination of any kind by the USPTO is unconstitutional.  As such, this leaves unanswered the question of whether marks that might be considered “offensive” (as opposed to merely disparaging) will be refused registration.  Prior to and during the pendency of this case, many trademark applications were filed for marks that include “foul language,” and were suspended by the USPTO pending resolution of this case.  The USPTO will now have to resolve this question itself in light of this ruling.

Additionally, there are numerous trademark applications that were recently filed to register marks for use in connection with marijuana-related goods and services, which the USPTO had also suspended during the pendency of this case.  Perhaps to the dismay of those legal practitioners and business owners closely watching this case, it does not seem as though the Court’s ruling will necessarily allow such marks to now be registered.  While refusing registration to marks for use in connection with such goods and services may constitute viewpoint discrimination, refusal may still be permissible under the “immoral” or “scandalous” provisions of Section 2(a), in addition to other legal bases, since marijuana remains illegal under federal law.

While the Court’s ruling is good news for those seeking to register arguably disparaging marks, it is certainly unclear the effect it will have on other controversial marks, including arguably offensive ones and those relating to illegal activities, as many had hoped it would address.  In light of the Court’s ruling, we can expect many more trademark applications will be filed for controversial marks, and it will still be up to the USPTO to decide if each particular mark should be refused registration for reasons other than disparagement.

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