Offensive Trademarks Can Be Protected

(Originally appeared in Los Angeles Daily Journal Dec. 30, 2015)

Can the U.S. Patent & Trademark Office refuse to register trademarks that are racist, offensive, and disparaging to minorities, religious groups, and others? For over a hundred years, the well-established answer to that question has been “yes.” Under Section 2(a) of the Lanham Act and its predecessor rules of practice, trademark examiners have rejected disparaging marks, as well as those deemed to be scandalous or immoral. Although unsuccessful applicants would still have their common law trademark rights under state law, they could not obtain federal trademark registration and its associated rights to enforce their offensive brands. The most famous and controversial example of this practice came in 2014, when the USPTO canceled the federal trademark of the Washington REDSKINS after years of litigation that is still ongoing with an appeal pending at the 4th U.S. Circuit Court of Appeals. Other rejected or canceled trademarks have included STOP THE ISLAMISATION OF AMERICA, THE CHRISTIAN PROSTITUTE, MORMON WHISKEY, KHORAN (for wine), HAVE YOU HEARD SATAN IS A REPUBLICAN, and DEMOCRATS SHOULDN’T BREED. Many other rejected marks have used clear racial epithets and slurs that most people would be shocked to see next to a U.S. trademark registration symbol.

But that longstanding practice has now been held unconstitutional. On Dec.22, the U.S. Court of Appeals for the Federal Circuit held in an en banc decision that the USPTO’s refusal to register disparaging marks violates the First Amendment. In re Shiao Tam, 141203, reviewed the USPTO’s refusal to register the mark THE SLANTS for an Asian-American rock band that “reappropriated” the racial slur to take on stereotypes about people of Asian descent. In a forceful opinion penned by Judge Kimberly Moore and joined in all respects by all but three of the panel’s 12 judges, the court held that “[t]he government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks.” Noting that the Free Speech Clause of the First Amendment protects even hurtful speech, the court held that Section 2(a) is unconstitutional because it amounts to viewpoint discrimination and fails the strict scrutiny review accorded such government regulation of speech.

Since the Lanham Act’s enactment in 1946, Section 2(a) has barred registration of any mark that “[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.” While In re Tam did not involve an “immoral” or “scandalous” mark, the majority acknowledged that its decision could well affect the USPTO’s ability to refuse registration of such marks as well.

To determine which marks are “disparaging” under Section 2(a), the USPTO has developed a two-part test which requires trademark examiners to ask: (1) what is the likely meaning of the mark based on dictionary definitions and other objective indicia; and (2) if that meaning refers to an identifiable person, institution, belief, or national symbol, whether it may be disparaging to a substantial composite of the referenced group. Applying this test to the applicant’s mark in In re Tam, the trademark examiner found that the term “slants” has a long history as a reference to mock “a physical feature” of people of Asian descent and that a substantial composite of persons of Asian descent would find the term offensive. The Trademark Trial and Appeal Board affirmed the examiner’s rejection, notwithstanding the band’s non-racist message and political use of the term.

On appeal, the Federal Circuit initially affirmed the rejection, finding itself bound by In re McGinley, 660 F.2d 481 (1981) a decision on the same issue by its predecessor court, the U.S. Court of Customs and Patent Appeals. McGinley found without any analysis that refusing registration of an offensive trademark does not abridge any First Amendment rights because it does not prevent the trademark owner from using his trademark. In an unusual move, however, the Federal Circuit sua sponte granted en banc review in In re Tam to overrule McGinley, noting that McGinley was decided before recent developments in First Amendment law.

Rejecting McGinley‘s simplistic approach, Moore explained in In re Tam that trademark registration confers significant benefits and that denying these benefits to those whose message is deemed offensive imposes an unconstitutional burden on speech. The benefits of registration include the right to exclusive nationwide use against later users of the mark, a presumption of validity and – after five years of continuous use – incontestability. They also include the right to obtain treble damages for willful infringement, prevent cybersquatting of a domain name, and prevent importation of infringing goods with the help of U.S. Customs.

The majority argued that Section 2(a) unquestionably discriminates on the basis of content because it applies to particular speech on the basis of the topic discussed. Worse, the discrimination is also viewpoint-based, targeting speech based on the message that the speaker wants to convey by the mark. To prove the point, the majority cited the USPTO’s own argument that it wanted to “dissociate itself from speech it finds odious.” The majority also cited the USPTO’s different treatment of the same offensive words depending on the message they convey: The USPTO rejected STOP THE ISLAMISATION OF AMERICA but allowed the mark THINK ISLAM.

The USPTO argued, however, that Section 2(a) is permissible because it regulates only commercial speech. But the majority rejected that argument, citing a Supreme Court decision holding that government cannot regulate speech based on content or viewpoint merely because it is commercial. Sorrell v. IMS Health, 131 S. Ct. 2653 (2011). In Sorrell, Vermont had made it illegal for pharmacies to sell patient information to data miners who used the information to promote the sale of brand-name pharmaceuticals. That restriction on the flow of information was unconstitutional regardless of its commercial nature; Vermont was trying to restrain speech because it related to marketing pharmaceuticals. Section 2 (a) similarly targets speech based on the message it conveys, and not to further the Lanham Act’s permissible goal of preventing consumers from being misled and deceived by confusingly similar trademarks.

Rather than try to show that Section 2(a) could survive strict scrutiny, the USPTO argued that trademark registrations do not prohibit any private speech at all but instead constitute government speech. That argument seemed promising in light of the Supreme Court’s decision just last year in Walker v. Texas Division, Sons of Confederate Veterans, Inc., 14-144. In Walker, the court permitted Texas to reject specialty license plates that used the Confederate flag under a law barring such plates when they are “offensive to any member of the public.” The court upheld the Texas law because, in the view of the public, by issuing specialty license plates the state endorses the messages conveyed by the plates. And, just last July, the U.S. District Court for the Eastern District of Virginia relied on Walker to uphold the USPTO’s cancellation of the REDSKINS mark in Pro-Football, Inc. v. Blackhorse, No. 1-14-cv-01043 (July 8, 2015), which is currently on appeal in the 4th Circuit.

As it has done successfully so far in the Pro-Football, the USPTO argued that the registrant’s right to attach the (R) symbol and rely on the accoutrements of trademark registration amounts to government speech, much like the issuance of specialty license plates in Walker. But the majority in In re Tam found this argument “meritless.” Consumers do not believe that a trademark registration conveys government approval of the goods or services. The USPTO regularly registers marks that the government obviously does not endorse, including RADICALLY FOLLOWING CHRIST IN MISSION TOGETHER, THINK ISLAM, GANJA UNIVERSITY, and CAPITALISM SUCKS DONKEY BALLS.

The majority also was troubled by the implications of the USPTO’s “government speech” argument. If the (R) symbol and the benefits of trademark registration allow government to discriminate against messages it disapproves of, why shouldn’t the Copyright Office be able to censor speech by refusing to register offensive material for fear of associating itself with the speech through the use of the (C) symbol?

The In re Tam majority similarly rejected the USPTO’s argument that trademark registration is a form of subsidy that the government may refuse where it disapproves of the message a mark conveys. The USPTO was relying on Rust v. Sullivan, 500 U.S. 173(1991), which held that Congress can condition family planning funding to clinics that do not advocate abortion. But Rust only applies, the majority noted, where the government is trying to get out its own message through a subsidy, in that case to support its own family planning program. In contrast, when refusing to register offensive trademarks, the USPTO is not getting out any message of its own; it is trying to regulate private speech by others. Outside of the limited context of promoting its own programs, the majority argued, Congress is not allowed to burden private speech by restricting benefits to those whose messages it finds offensive. Just as government cannot decline to spend its resources issuing parade permits to racist or homophobic groups, it cannot decline to spend resources registering trademarks of groups whose messages it deems inappropriate.

Judge Timothy B. Dyk, in a dissenting opinion, agreed that THE SLANTS was core protective expression that the USPTO should have registered. But he would not impose on the government an obligation to subsidize purely commercial speech that is offensive. Addressing the majority’s concern that the government subsidy argument would lead to censorship by the Copyright Office, Dyk pointed out that copyrights, unlike trademarks, serve a different function of protecting core protected expression. Judge Jimmie Reyna, in a separate dissent, argued that only intermediate scrutiny should apply to Section 2(a) because the purpose of a trademark is merely to propose a commercial transaction. The government, he argued, has a substantial interest in furthering the orderly flow of commerce through trademarks, and that interest is furthered by not registering offensive marks, including in his hypothetical example, “SPICS NOT WELCOME.”

These dissenting views and the continuing litigation of the identical issues in the pending 4th Circuit appeal on the REDSKINS trademark virtually ensure that the Supreme Court will ultimately resolve the important constitutional issues in In re Tam. Until then, trademark examiners must prepare themselves for the prospects of eventually helping applicants register their offensive, sexist and grossly inappropriate trademarks and design marks.