Update to Lanham Act Gets Facelift

Smoot 2By Rachel A. Smoot, attorney, Fay Sharpe LLP

On the morning of January 18, 2017, the Supreme Court heard oral arguments for Lee v. Tam. As a quick recap, this case stems from In re Tam, which began with Simon Shiao Tam’s federal trademark application for THE SLANTS. Mr. Tam is currently the front man for an Asian-American rock band founded in 2006 performing as THE SLANTS. The band draws inspiration for its lyrics from childhood slurs and mockery.

The United States Patent and Trademark Office (USPTO) denied Mr. Tam the registration, citing Section 2(a) of the Lanham Act, which prohibits the registration of any mark consisting or comprising of “immoral, deceptive, or scandalous matter; or matter which may disparage . . . persons.” Specifically, the USPTO found THE SLANTS is disparaging of Asian persons and persons of Asian descent. After having little success at the USPTO’s Trademark Trial and Appeal Board and a three-judge panel of the United States Court of Appeals for the Federal Circuit (CAFC), Mr. Tam prevailed in front of a full panel of the CAFC, who found Section 2(a), particularly the disparagement provision, unconstitutional in view of the First Amendment.

Arguing on behalf of the USPTO was Mr. Malcolm L. Stewart, Deputy Solicitor General. Mr. Stewart led off with the assertion that the PTO’s ruling did not limit Mr. Tam’s ability to use his mark in commerce or “otherwise engage in expression or debate,” and Section 2(a) provides a “reasonable limit to a government program rather than a restriction on speech.” Unfortunately for Mr. Stewart, the Supreme Court did not seem to share this sentiment. The justices were quick to distinguish trademarks from copyrights. Justice Breyer in particular pressed Mr. Stewart for what purpose or objective of trademark protection does the disparagement provision further.

Asserting that “words that have other meanings in common discourse . . . will distract the consumer from the intended purpose of the trademark,” Mr. Stewart seemed unable to convince the justices why the disparagement provision advances trademark protection. The justices also pressed Mr. Stewart as to why the USPTO could make distinctions based on viewpoint; essentially why are neutral/positive trademarks seemingly registrable while negative ones are not, to which Mr. Stewart maintained the provision “precludes disparagement of all.” However, Mr. Stewart may have eviscerated his own argument, acknowledging that trademarks are used for expressive purposes and that when the intent of an applicant is to be edgy, provocative, and reclaim the slur, “[t]his is entirely legitimate.” The problem, he asserted, lies with when people self-consciously use words in a way other than they have been traditionally used, they may be misunderstood.

Mr. John C. Connell argued on behalf of Mr. Tam. Mr. Connell was quick to point out that trademarks constitute both commercial and noncommercial speech, including expressive speech, which places them squarely under the protection of the First Amendment. He insisted that the government has used the disparagement clause to selectively deny legal benefits to a mark holder expressing negative views that the government favors as opposed to mark holders who received those benefits because they express neutral or positive views that the government does favor.
The justices mainly pressed Mr. Connell on what benefits are denied to Mr. Tam, as he is still entitled to use his mark in commerce and enforce it under common law as well as what are the commercial aspects compared to the expressive aspects of a mark. Justice Sotomayor also posed a legal hypothesis. She questioned if a trademark is proven in court to be libelous or slanderous would still exist and be capable of use, to which Mr. Connell answered yes.

Mr. Connell was also quick to clarify that trademarks are not government speech: trademark registrations are no different than copyright registrations, car registrations, marriage licenses, or any other typical government registrations that are simply “ministerial.” He also explained that the expressive and commercial aspects of a mark are inextricably intertwined. For example, no one has argued that consumers would be confused as to the source of services of THE SLANTS; however, the USPTO has taken issue with the other aspect of the mark: the expressive aspect. As viewpoint discrimination is prohibited in commercial speech, the inextricably intertwined nature of the various aspects of a mark protect said mark from viewpoint discrimination. The issue here is a source identifying statute not a politeness statute. Mr. Connell concluded his argument that the same conclusion would be “inevitable” about scandalous marks.

While Lee v. Tam was specifically appealed to address the disparagement provision, Justice Ginsburg did draw attention to the immoral, deception, and scandalous provisions of Section 2(a), which both she and Mr. Stewart found to be “the same thing” as disparagement. Interestingly enough, the USPTO has suspended all trademark applications currently facing Section 2(a) rejections until the Supreme Court has reach a decision. In a memo published in March 2016, the USPTO implied that the Supreme Court’s decision will have much farther reaching effects than solely the disparagement provision and may apply to trademark applications rejected on the basis of being immoral, deceptive or scandalous in addition to just disparaging. Further, the United States Court of Appeals for the Fourth Circuit has suspended the contentious Washington Redskins trademark case also in light of the Supreme Court’s ruling.

We will be watching closely to see whether or not the Supreme Court decides to extend this ruling to the other Section 2(a) provisions. Regardless, the Supreme Court’s ruling is anticipated to change decades of established trademark law. This discussion will continue after publication of the Supreme Court’s decision.

Rachel A. Smoot is an attorney with Fay Sharpe LLP. You can reach her at rachel.smoot@faysharpe.com or (216) 363-9222.