Trademark law.

• Author: Albert, Gary
• Position: Excluding disparaging trademarks violates First Amendment

Trademark Law--Federal Circuit Holds En Banc That Excluding Disparaging Trademarks Violates First Amendment--In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc)

Congress enacted the Lanham Act for two primary reasons: ensuring public confidence that a product is genuine, and preventing misappropriation of that product's identifiers by "pirates and cheats." (1) Section 2(a) of the Lanham Act prevents federal registration of scandalous, immoral, or disparaging trademarks. (2) In In re Tam, (3) the Federal Circuit reviewed en banc whether the First Amendment allows the denial of a trademark application that the Trademark Examiner and Trademark Trial and Appeals Board (TTAB) found disparaging. (4) Vacating the TTAB's holding, the Federal Circuit held that the "disparaging" provision of section 2(a) of the Lanham Act violates the First Amendment right to free speech because the government has no legitimate interest in denying registration under the provision. (5)

Simon Shiao Tam, the founder of The Slants, an Asian-American band, attempted to register the band's name as a trademark. (6) The trademark examiner from the PTO refused to register Tam's mark because persons of Asian descent could find the mark disparaging, therefore causing the mark to be barred under section 2(a) of the Lanham Act. (7) Tam appealed the PTO's decision to the TTAB, arguing that the PTO improperly based its decision on Tam's ethnic background. (8) The TTAB rejected Tam's arguments and affirmed the PTO's refusal to register his mark. (9)

Further appealing to the Federal Circuit, Tam argued that the TTAB erred in finding the mark disparaging and that section 2(a) was unconstitutional. (10) The Federal Circuit affirmed the TTAB's decision, holding that substantial evidence bolstered its assessment that people of Asian descent would likely find the mark offensive. (11) Filing an additional opinion, Judge Moore requested that the Federal Circuit review the constitutionality of section 2(a). (12) The Federal Circuit held a sua sponte hearing en banc, vacated the panel opinion, and re-examined the constitutionality of section 2(a). (13) After the en banc review, the Federal Circuit held that the disparagement provision of section 2(a) was unconstitutional and remanded the case, overturning the precedent of In re McGinley, (14) which stated that refusal to register a mark under section 2(a) of the Lanham Act did not suppress freedom of expression. (15) Four Federal Circuit judges filed additional opinions providing concurring and dissenting views. (16)

McGinley previously acted as the Federal Circuit's primary authority in determining the constitutionality of section 2(a) of the Lanham Act. (17) Strict scrutiny applies when the government denies the legal right to private speech based on government disapproval of that speech. (18) The same is true when the government denies a party a benefit because of that party's protected speech or association, and in turn, chills private speech discriminatorily. (19) This unconstitutional conditions doctrine prevents government benefits from being conditioned on the waiver of a constitutional right. (20) Registered trademarks have clear benefits over unregistered marks, placing owners of unregistered marks at a disadvantage. (21)

If trademarks are protected speech, then the unconstitutional conditions doctrine may apply when the government denies one. (22) Government speech, however, is not subject to the same requirements as First Amendment protected speech. (23) Because the federal government manages trademark registration, it is unclear how the speech that trademarks embody should be categorized. (24) Furthermore, trademarks have elements of both expressive and commercial speech. (25)

The Supreme Court usually treats commercial speech differently than other types of private, expressive speech, by holding regulation over commercial speech to a lower constitutional standard. (26) Under the intermediate scrutiny standards to which commercial speech is subject, courts utilize a four-part test devised in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York (27) (Central Hudson test) to determine whether regulation is appropriate. (28) The government can implement regulations on commercial speech provided that the commercial speech is lawful and not misleading; the government has a substantial interest in regulating the speech; the regulation advances that same government interest; and the regulation is not unnecessarily extensive. (29)

In Tam, the Federal Circuit applied strict scrutiny to invalidate section 2(a). (30) The court held that the disparagement provision was neither content nor viewpoint neutral, and thus, failed the strict scrutiny analysis. (31) Although trademarks have aspects of commercial speech, the court reasoned that section 2(a), in reality, suppressed the expressive components of a mark. (32) The Federal Circuit, applying the unconstitutional conditions doctrine, also rejected the government's argument that the provision does not ban speech--stating while the government's argument may be true, it discriminatorily chills private speech. (33)

The Federal Circuit also rejected the argument that trademark registration is a form of government speech exempt from strict scrutiny. (34) Further applying the unconstitutional conditions doctrine, the court rejected the government's argument that trademark registration was a subsidy falling outside a strict scrutiny analysis. (35) To bolster its rationale, the Federal Circuit then applied the Central Hudson test, finding section 2(a) unconstitutional even when applied to purely commercial speech under the intermediate scrutiny standard. (36) In its analysis, the court recognized that jurisprudence on commercial speech protection "has evolved significantly since the McGinley decision." (37) The Federal Circuit ultimately held that the disparaging provision of section 2(a) fails under both strict and intermediate scrutiny, and overturned McGinley as it relates to disparaging marks. (38)

The Tam decision leaves many questions regarding the scope of section 2(a)'s validity unanswered, despite the Federal Circuit's intent to clarify the issue. (39) Likewise, the court made little assertion as to the proper test--and level of scrutiny--to use in determining the validity of a Lanham Act provision. (40) The court declared that strict scrutiny should apply to section 2(a), yet analyzed the statute under intermediate scrutiny as well. (41) Judge Reyna's dissenting opinion in Tam presents a strong argument that under intermediate scrutiny, the government may have a legitimate interest supporting the provision. (42) Alternatively, Judge Dyk's opinion notes that, because the provision limits no speech beyond the federal trademark program, it may not "run afoul of the unconstitutional conditions doctrine." (43)

These uncertainties solidify the beliefs of those who question the holding's validity and consider the court's analysis misguided and incomplete...