Are 'bad' Marks Good for Business? Implications of the Supreme Court's Approval of Scandalous & Immoral Trademarks

• Publication year: 2019
• Author: Vera Golosker

Are 'Bad' Marks Good for Business? Implications of the Supreme Court's Approval of Scandalous & Immoral Trademarks

Vera Golosker

Vera Golosker is Counsel, Business & Legal Affairs at Metro-Goldwyn-Mayer Studios, where she works on development in the unscripted television division. Vera is Vice Chair of the Association of Media and Entertainment Counsel's Emerging Leaders Board and Chair Emeritus of the IP Section of the Beverly Hills Bar Association.

Introduction

As companies strive to stand out to catch consumers' attention, a risqué brand name may just do the trick. Whether attracted or offended, potential customers are likely to notice a salacious mark, and, after a landmark U.S. Supreme Court decision, companies can now register a scandalous brand name without running afoul of federal trademark law.

In the case of Iancu v. Brunetti, the U.S. Supreme Court ruled on June 24, 2019, that barring federal registration of "immoral or scandalous" trademarks under section 2(a) of the Lanham Act¹ constitutes a violation of the First Amendment's free speech protections.² In light of the Brunetti decision, businesses may now apply to register such marks, and in some cases may appeal prior denials that were issued on the basis of the Lanham Act provision. But should businesses do so? Will the Court's decision lead to a flurry of registrations of scandalous marks? Or will companies conversely deem such marks bad for business, or simply banal, post Brunetti?

Landscape of Lanham Act Section 2(a)

Under section 2(a) of the Lanham Act, a trademark may be refused registration if it "[c]onsists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."³

Though Brunetti focused on "immoral" or "scandalous" marks, a prior case confronted the Lanham Act's bar on marks that "disparage." In 2017, the U.S. Supreme Court ruled that the Lanham Act's prohibition of disparaging marks was unconstitutional in Matal v. Tam.⁴ In Tam, the U.S. Supreme Court decided that the denial of registration of the Asian-American band name "The Slants" on the basis of the Lanham Act violated the First Amendment, affirming the decision of the Court of Appeals for the Federal Circuit.⁵ With the name "The Slants," the band members endeavored to reclaim a term that had been historically derogatory towards Asian Americans, and instead create a source of cultural and ethnic pride.⁶ But the U.S. Patent and Trademark Office ("USPTO") nevertheless rejected registration of the mark on the basis that it was disparaging.⁷ As had the Court of Appeals for the Federal Circuit, the U.S. Supreme Court ruled that trademarks are private speech, not government speech, and that the bar on disparagement was an unconstitutional viewpoint-based restriction.⁸ The Court explained that the government may not discriminate against speech based on whether it disapproves of the ideas conveyed or finds the message offensive.⁹ Justice Kennedy explained that the bar on disparagement allowed the government to approve marks that it considers positive and reject marks that it considers derogatory, violating "a bedrock First Amendment principle" that the government may not discriminate against ideas.¹⁰

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Tam resulted in the end of the contentious Washington Redskins trademark fight led by Native Americans who argued that the registered mark of the football team's name should be cancelled because it is an offensive and disparaging slur.¹¹ Petitioners withdrew from the litigation because Tam rendered the legal issue moot once the Supreme Court found that the section 2(a) disparagement clause, the basis of Petitioners' argument, violated the First Amendment.¹²

Matal v. Tam paved the way for the Brunetti decision, and the Brunetti ruling also stemmed from the notion that the USPTO's reliance on section 2(a) to deny federal registration of scandalous marks is unconstitutional viewpoint discrimination.¹³

Brunetti Background & Decision

Erik Brunetti is a designer and artist who co-founded the modern streetwear clothing and lifestyle brand "FUCT" in Los Angeles in 1990.¹⁴ In 2011, Brunetti applied for federal registration of the mark "FUCT" (which stands for "Friends U Can't Trust") in connection with his brand to help counteract knock-offs.¹⁵ His application was denied by the USPTO based on Lanham Act section 2(a)'s prohibition on registration of "scandalous" trademarks, because the "FUCT" mark was vulgar and therefore unregistrable.¹⁶ Brunetti challenged the rejection at the Trademark Trial and Appeal Board, which affirmed the decision of the USPTO examiner, stating that the mark was "highly offensive" and had "decidedly negative sexual connotations."¹⁷ In 2017, the U.S. Court of Appeals for the Federal Circuit reversed, and in 2019 the U.S. Supreme Court affirmed, ruling that the USPTO cannot reject registration of a mark on the basis that the mark is "immoral or scandalous."¹⁸

The Supreme Court unanimously ruled that it is unconstitutional to deny federal registration to immoral trademarks,¹⁹ affirming the U.S. Federal Court of Appeals' 2017 decision.²⁰ Six of the nine justices ruled that, in addition to immoral trademarks, scandalous marks cannot be denied federal registration.²¹

Per the Brunetti decision, the prohibition of scandalous and immoral marks under section 2(a) of the Lanham Act²² violates the free speech protections of the First Amendment.²³

Justice Elena Kagan led the Supreme Court's majority, ruling that the Lanham Act prohibition, and the USPTO's denial of the "FUCT" trademark, constituted unlawful viewpoint discrimination.²⁴ The majority was joined by Justices Alito, Ginsburg, Gorsuch, Kavanaugh, and Thomas, with Justices Roberts, Breyer, and Sotomayor dissenting in regard to scandalous marks.²⁵According to Justice Sotomayor's opinion, restrictions on "scandalous" marks should be assessed separately from "immoral marks," to allow the USPTO to reject marks containing "obscenity, vulgarity, or profanity" in a viewpoint-neutral way.²⁶ In assessing whether the mark is scandalous, the government would focus on the offensive mode of expression, not the underlying idea.²⁷ But the majority of Justices grouped "scandalous" and "immoral" marks together and found them both constitutionally problematic.²⁸

Justice Kagan explained that the bar on marks that are immoral or scandalous is substantially overbroad, stating "[t]here are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all. It therefore violates the First Amendment."²⁹

Brunetti Makes Way for Scandalous Registrations

The Brunetti decision will have an effect on applications for marks that had been previously been denied registration on the basis of section 2(a)'s restriction on scandalous and immoral marks, and on cases that have been stayed to await the determination of the U.S. Supreme Court in Brunetti. For example, in 2015, the all-female rock band Thunderpussy applied for registration to trademark its name and was denied registration by the USPTO on the basis that the mark has a vulgar meaning and is therefore scandalous.³⁰ In June 2016, the case was suspended to await the Court's ruling in Brunetti, and the application currently remains suspended.³¹ There has been a media push for the trademark office to register the Thunderpussy mark in light of the Brunetti ruling.³²

In Brunetti, the Supreme Court used several examples to communicate its point that the prohibition on immoral or scandalous trademarks was discriminatory based on viewpoint, including the USPTO's refusal to register marks communicating controversial views on drug use (such as MARIJUANA COLA, BONG HITS FOR JESUS, and YOU CAN'T SPELL HEALTHCARE WITHOUT THC), but its...