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Intellectual Property Litigation Trademarks United States Supreme Court

Matal v. Tam and Viewpoint-Discriminatory Prohibitions Against Federal Registration

In Matal v. Tam, the SCOTUS held that a portion of Section 2(a) of the Lanham Act, 15 U.S.C. §1052(a), prohibiting the federal registration of potentially disparaging trademarks and service marks, violated the Free Speech Clause of the First Amendment.

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In Matal v. Tam, 137 S. Ct. 1744 (2017), the Supreme Court held that a portion of Section 2(a) of the Lanham Act, 15 U.S.C. §1052(a), prohibiting the federal registration of potentially disparaging trademarks and service marks, violated the Free Speech Clause of the First Amendment. The eight justices participating in the case agreed that the prohibition constituted a viewpoint-based government restriction, but they divided evenly on the constitutional significance of that consideration. Whatever the resolution of that division ultimately may be, though, the outcome of the litigation is unlikely to affect the validity of most — but not necessarily all — of the Lanham Act’s other prohibitions on registration.

Section 2(a) of the Lanham Act

Section 2(a) bars the registration of several categories of marks, including those “consisting or comprising immoral … or scandalous matter, or … which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” This language has two distinct prongs, namely, whether a mark is “immoral or scandalous,” and whether a mark “may disparage”; only the latter prohibition was at stake in Tam. The two bans are closely related, and it is possible for a mark to be rejected under both. See, e.g., Boston Red Sox Baseball Club LP v. Sherman, 88 U.S.P.Q.2d 1581 (T.T.A.B. 2008) (refusing registration to SEX ROD mark for clothing). In addition, if a challenge is brought to an existing registration under these prongs of Section 2(a), the challenger must demonstrate the registration “was obtained” in violation of the statute, meaning that the challenger’s showing must focus on whether the mark in question was scandalous, immoral, or potentially disparaging on the date it was registered (see, 15 U.S.C. §1064(3)), rather than when the merits of the challenge are decided.

Nevertheless, there are significant differences in how the USPTO and courts traditionally have interpreted these two prongs of Section 2(a). One is that, although the challenger to the registrability of a mark under the first prong must demonstrate actual immorality or scandal to prevail, a mere showing of potential disparagement will suffice under the second prong. Another is how an offense under the two prongs is measured: 1) where scandal and immorality are concerned, whether the mark consists of or comprises scandalous matter must be determined from the standpoint of a substantial composite of the general public (although not necessarily a majority); but 2) if the mark’s meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group. A mark therefore may be unregistrable under the “may disparage” prong of Section 2(a), even if the general public (as opposed to the referenced group) does not find it offensive.

Procedural History of Tam

Tam arose from the USPTO’s rejection of an application to register the mark THE SLANTS for entertainment services because the mark potentially disparaged Asian-Americans despite the membership of the applicant, Simon Tam, in that group. In an appeal from that action, the full Federal Circuit invalidated Section 2(a)’s “may disparage” prohibition as fatally inconsistent with the First Amendment. See, In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc), as corrected (Feb. 11, 2016), cert. granted sub nom. Lee v. Tam, 137 S. Ct. 30 (2016), affirmed sub nom. Matal v. Tam, 137 S. Ct. 1744 (2017). Despite the absence of a circuit split, the Supreme Court agreed to answer the following question: “Whether the disparagement provision in 15 U.S.C. [§]1052(a) is facially invalid under the Free Speech Clause of the First Amendment.” Brief for the Petitioner at i, Matal v. Tam, 137 S. Ct. 1744 (2017).

The Supreme Court Holds Section 2(a)’s Prohibition on the Registration of Potentially Disparaging Marks Unconstitutional

The Supreme Court affirmed. As an initial matter, the Court unanimously rejected Tam’s argument that Section 2(a)’s reference to “persons” did not apply to racial and ethnic groups, noting such a reading would be inconsistent with the rest of the clause, which also applies to “institutions” and “beliefs,” and would lead to absurd results. Tam, 137 S. Ct. at 1756 n.4. The Court’s opinion also confirmed several basic propositions of trademark law, including that: 1) a determination of mark’s unregistrability does not restrict the mark owner’s right to use the mark in commerce; 2) this determination does not necessarily render that mark invalid and unprotectable; and 3) owners of marks registered on the Principal Register enjoy certain substantive and procedural advantages in litigation to protect their marks that are unavailable to the owners of unregistered marks. Id. at 1752-53.

The Court then addressed whether the decision to register a particular mark constitutes government speech immune from First Amendment scrutiny. The Court unanimously held it does not, calling the argument “far-fetched.” Id. at 1758. In doing so, the Court distinguished its earlier opinion in Walker v. Texas Division, Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015), in which it had classified messages on specialty license plates as government speech. The Court determined none of the elements present in Walker — the states’ long-standing practice of using license plates to convey messages, the public’s identification of license plates with states, and the states’ direct control over the messages conveyed on specialty plates — was present in Tam. Tam, 137 S. Ct. at 1760.

Just as all Justices agreed on these points and that the statutory language at issue therefore was subject to First Amendment scrutiny, they were also unanimous that the portion of Section 2(a) at issue was not viewpoint-neutral, even if it evenhandedly prohibited the potential disparagement of all groups. To Justices Kennedy, Ginsberg, Sotomayor and Kagan, the lack of viewpoint neutrality meant the prohibition on registration necessarily invoked “heightened scrutiny.” Tam, 137 S. Ct. at 1767 (Kennedy, J., concurring in part and concurring in the judgment). They would have held the prohibition invalid without additional analysis, despite the commercial nature of trademarks: “Unlike content based discrimination, discrimination based on viewpoint, including a regulation that targets speech for its offensiveness, remains of serious concern in the commercial context.” Id. at 1766.

In contrast, Justice Alito, joined by Chief Justice Roberts and Justices Thomas and Breyer, addressed “the Government’s argument that this case is governed by cases in which this Court has upheld the constitutionality of government programs that subsidized speech expressing a particular viewpoint.” Matal v. Tam, 137 S. Ct. 1744, 1760 (2017) (opinion of Alito, J.). Alito’s opinion rejected the assertion that government programs subsidizing speech expressing a particular viewpoint are necessarily constitutional. Alito distinguished prior case law from the Court suggesting otherwise, noting that “the decisions on which the Government relies all involved cash subsidies or their equivalent,” id., while the subsidy the government claimed in this case was the non-monetary benefit of trademark registration. Alito also rejected the government’s attempt to create a “government program” doctrine under which to analyze the disparagement clause, concluding, similar to Kennedy, the issue to be a simple matter: Viewpoint-based discrimination is impermissible. Id. at 1763.

Finally, Alito considered whether trademarks are commercial speech, and thus if restrictions on their registrability should receive a lower level of scrutiny under Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York, 447 U.S. 557 (1980). Nevertheless, Alito’s opinion did not decide whether trademarks qualified for that treatment, determining only that, if so, the potential disparagement clause could not withstand even Central Hudson review, which requires that a restriction on commercial speech serve “a substantial interest” and be “narrowly drawn.” Id. at 1764. Alito concluded the disparagement clause was neither, writing that any intention to prevent offense “strikes at the heart of the First Amendment” and that, in any event, the statutory language could not be “narrowly drawn” to exclude from registration marks that support “invidious discrimination.” Id. at 1764-65. Significantly, however, Alito and the three Justices joining his opinion expressly left open “the question whether Central Hudson provides the appropriate test for deciding free speech challenges to provisions of the Lanham Act.” Id. at 1764 n.17. Consequently, not a single Justice fully committed himself or herself to Central Hudson‘s viability in this context.

Potential Impact

The most immediate effect of the Supreme Court’s holding will be on a different trademark dispute currently pending before the Fourth Circuit. In Pro-Football, Inc. v. Blackhorse, 112 F. Supp. 3d 439 (E.D. Va. 2015), cert. denied, 137 S. Ct. 44 (2016), the Eastern District of Virginia concluded that six service marks owned by the parent company of the Washington Redskins football franchise potentially disparaged Native Americans and that the registrations covering the marks therefore were void under Section 2(a). Because that opinion rested on many of the same arguments advanced by the government in Tam, its ability to survive appellate scrutiny is doubtful.

The decision’s significance to the other prohibitions on registration set forth in the Lanham Act is likely to turn on whether those prohibitions are viewpoint-discriminatory or merely content-discriminatory. Content-based discrimination occurs when the government attempts to censor all speech about a certain topic, no matter what that speech is saying about the topic. Viewpoint-based discrimination is a subset of content-based discrimination and occurs when the government attempts to censor certain opinions about a topic. “Viewpoint discrimination is thus an egregious form of content discrimination. The government must abstain from regulating speech when the specific motivating ideology or the opinion or perspective of the speaker is the rationale for the restriction.” Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 829 (1995).

Justice Alito’s and Justice Kennedy’s rationales for treating Section 2(a)’s prohibition on the registration of potentially disparaging marks as a viewpoint-based regulation were not entirely clear. Nevertheless, both appear to have been swayed by the distinction between the registrability of a positive reference to a particular group, on the one hand, and the unregistrability of a negative reference to the same group. Thus, for example, Justice Alito noted that “[t]he clause reaches any trademark that disparages any person, group, or institution. It applies to trademarks like the following: ‘Down with racists,’ ‘Down with sexists,’ ‘Down with homophobes.’ … [I]t is a happy-talk clause.” Tam, 137 S. Ct. at 1765 (Alito, J.). Likewise, Justice Kennedy noted that “an applicant may register a positive or benign mark but not a derogatory one. The law thus reflects the Government’s disapproval of a subset of messages it finds offensive. This is the essence of viewpoint discrimination.” Id. at 1766 (Kennedy, J.).

For the most part, this distinction does not underlie other prohibitions on registration in the Lanham Act. Specifically, although Sections 2, 13 and 14 of the Act identify myriad grounds on which a mark can be found unregistrable, most are viewpoint neutral, even if they might be considered content neutral: Thus, for example, Section 2(e)(5) bars the registration of functional material, without regard to context or to the intent of an applicant seeking to register it. Consequently, Tam is unlikely to threaten the viability of it and other subsections of Section 2 like it.

Nevertheless, and despite widespread commentary to the contrary, the distinction underlying Justice Kennedy’s and Justice Alito’s opinions may not affect the constitutionality of Section 2(a)’s parallel prohibition on the registration of immoral and scandalous marks. Like the one targeting potentially disparaging marks, that prohibition is content-discriminatory. But numerous interpretations of it have reached findings of unregistrability without regard to whether the marks in question are intended to have positive connotations or benign ones. One example of this phenomenon is In re Tinseltown, Inc., 212 U.S.P.Q. 863 (T.T.A.B. 1981), in which the Trademark Trial and Appeal Board affirmed a refusal to register the BULLSHIT mark for, inter alia, handbags, notwithstanding the applicant’s intent to satirize the fashion industry. Consequently, although the government has conceded in another pending case that the two prongs of Section 2(a) should receive equal treatment (see, In re Brunetti), it is not apparent the bar on the registration of immoral and scandalous marks is necessarily viewpoint discriminatory in the same was as its potential disparagement counterpart.

Perhaps a more promising candidate for those seeking to use Tam in challenges to other sections of the Lanham Act therefore is the tort of likely dilution by tarnishment found in Section 43(c), 15 U.S.C. §1125(c). That tort allows the owner of a famous mark to challenge the use and registration of a mark in a context in which the use reflects poorly on the plaintiff’s mark. Thus, for example, in V Secret Catalogue, Inc. v. Moseley, 605 F.3d 382 (6th Cir. 2010), the Sixth Circuit affirmed a finding of likely dilution after Victoria’s Secret successfully demonstrated the defendants had used the VICTOR’S LITTLE SECRET in connection with an adult novelty store. Because this application of Section 43(c) appears to rest on the same benign/derogatory distinction as that underlying the outcome, distinguishing Tam ultimately may prove a difficult task.

*****
Ted Davis
is a partner in the Atlanta office of Kilpatrick Townsend & Stockton LLP. He can be reached at tdavis@kilpatricktownsend.com. Sam Kilb is an associate in the New York office of Kilpatrick. He can be reached at skilb@kilpatricktownsend.com.

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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