In re: Tam Take Two: Federal Circuit Strikes Down Disparagement Provision of Lanham Act § 2(a)

In May we reported that a panel of the U.S. Court of Appeals for the Federal Circuit had affirmed the USPTO’s denial of a registration for the trademark “THE SLANTS” to refer to an all-Asian-American rock band, but had, in a prescient “additional views” opinion, prompted en banc reconsideration.  A majority of the full Federal Circuit held last week that the provision of Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a) (“Section 2(a)”) which prohibits the registration of “disparaging” trademarks violates of the First Amendment, and vacated the USPTO’s holding that Simon Shiao Tam’s mark was unregisterable.

The majority held that the government cannot refuse to register disparaging trademarks “because it disapproves of the expressive messages conveyed by the marks” or because “it concludes that such marks will be disparaging to others.”  Such regulation, the court explained, “amounts to viewpoint discrimination” that fails both strict scrutiny review and the intermediate scrutiny typically applicable to commercial speech.  In a comprehensive 62-page opinion authored by Judge Kimberly Moore – who wrote the original panel opinion and “additional views” opinion – the majority found that while the record supported the conclusion that Mr. Tam’s mark was, in fact, disparaging to those of Asian descent, Section 2(a)’s prohibition on registering such marks was nonetheless unconstitutional.  (Two concurring opinions and two dissents accompanied the majority opinion).

Under strict scrutiny review the court held that the government’s desire to prohibit registration of “the most vile racial epithets and images” in order to disassociate itself from such “odious” speech (as compared to speech conveying positive messages) was, on its face, content- and viewpoint-based regulation.  This type of message-based regulation, the court held, is presumptively unconstitutional, and “no argument [was] made that the measure survives” strict scrutiny.  The court rejected the government’s attempt to bypass strict scrutiny by claiming that Section 2(a) regulates commercial speech rather than expressive aspects of the mark, but explained that even if the government had been regulating commercial speech, Section 2(a) would not survive the intermediate scrutiny because “[t]he entire interest of the government in § 2(a) depends on disapproval of the message.”

The court also rejected several of the government’s alternative arguments.  First, contrary to its predecessor court’s decision in In re McGinley, 660 F.2d 481 (C.C.P.A. 1981), the majority agreed that while a putative applicant could still use a disparaging mark without registration, a substantial burden would be placed on the applicant sufficient to chill speech based on its content.  Message-based denial of the significant benefits associated with registration would discourage registration of potentially controversial marks and therefore violates the First Amendment.

Second, the majority rejected the argument that trademark registration constitutes “government speech” exempt from the First Amendment.  Use of a mark in commerce, the court said, is private speech meant to associate the mark with the origin of the goods, not the government, and placing a mark on the Principal Register is a regulatory activity akin to registering copyrights, granting parade permits, and issuing hunting licenses, none of which constitute government speech.  To hold otherwise would mean the government would be free to deny any such applications whenever it deemed a message unsavory.

Finally, the court explained that Section 2(a) is not a government “subsidy program” exempt from strict scrutiny.  Rather, the government’s conduct violated the “unconstitutional conditions” doctrine which prohibits denial of “an otherwise-available benefit” on a basis that infringes a constitutionally protected interest such as private free speech.  The trademark registration system, the court explained, is a regulatory regime paid for by registration fees, not a government subsidy program paid by taxpayer dollars.

The Federal Circuit is the first court of appeals to opine on the constitutionality of Section 2(a) in the face of the First Amendment, but it likely will not be the last.  The Washington Redskins’ appeal of the cancellation of six of their trademarks in Blackhorse v. Pro Football, Inc. is currently on appeal before the U.S. Court of Appeals for the Fourth Circuit, which may follow In re Tam’s lead when deciding the same First Amendment issues before it.  But a divergent ruling could result in a circuit split on this sensitive issue, perhaps prompting the Supreme Court to weigh in.  In the meantime, In re Tam may embolden businesses and individuals finding themselves on the fence about adopting potentially controversial trademarks – especially those without the means to square off against the government – which could result in even more cases percolating up through the courts in other circuits.  It appears the debate on Section 2(a) is just getting started; we will continue to report on further developments.