Federal Circuit Vindicates First Amendment by Holding Section of Lanham Act Unconstitutional

trademark-gavelBy Vijay Kumar

The Court of Appeals for the Federal Circuit (CAFC) recently decided en banc that Section 2(a) of the Lanham Act, which prohibits registration of “disparaging” trademarks, is unconstitutional under the First Amendment. The effects of this significant decision (In re Tam) will undoubtedly ripple across multiple industries and affect many controversial trademarks, including most notably the Washington Redskins, who are currently appealing a district court decision to the 4th Circuit Court of Appeals.

Background for the In re Tam case dates back to November 2011 when Simon Tam filed a trademark application to register the band’s name “The Slants” for “entertainment in the nature of live performance by a musical band.” The U.S. Patent and Trademark Office (PTO) Examiner refused to register the mark because it was considered disparaging to “people of Asian decent.” In reaching this decision, the Examiner, and eventually the Trademark Trial and Appeal Board (TTAB), relied on the band’s usage of the term and, more importantly, the band’s statement that the mark was a way “to reclaim a racial slur and to assert Asian pride.” Tam appealed the TTAB’s decision, which was upheld by the Federal Circuit in an April 2015 decision. That same month, the CAFC ordered, sua sponte, to rehear the issue en banc to decide whether Section 2(a)’s preclusion on registering disparaging marks violated the First Amendment. In a 9-3 decision, the Court decided that it did, declaring Section 2(a) of the Lanham Act unconstitutional.

Section 2(a) of the Lanham Act precludes registration of any marks that “[c]onsist or comprise immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with person, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.” To actually determine whether a mark qualifies as “disparaging,” a two-part test is used. First, Examiners will consider a mark’s “likely meaning,” using dictionary definitions and the manner in which it is used in the marketplace. Second, they will then determine whether that meaning “may be disparaging to a substantial composite of the referenced group.” As Judge Moore noted in the en banc decision, this test has led to varying results that are “rife with inconsistency.”

The backbone of the Court’s decision rested on the underlying principle of the First Amendment that “the government may not penalize private speech merely because it disapproves of the message it conveys.” The CAFC found that Section 2(a)’s prohibition of disparaging marks discriminated on the basis of content, which is presumptively unconstitutional, and that the government provided no compelling state interest for justifying such a regulation.

The government’s primary argument was that because Section 2(a) regulates only commercial speech, the rule should be subject to a lower level of scrutiny. The Court, though, rejected this argument and pointed out that “every time the PTO refuses to register a mark under Section 2(a), it does so because it believes the mark conveys an expressive message . . . that is disparaging to certain groups.” Regardless of whether the speech is commercial or not, the government is still passing judgment by regulating speech that is expressive in nature.

The Court also rejected the government’s argument that Section 2(a) should not implicate the First Amendment because refusal to register a mark does not affect an applicant’s ability or right to actually use the mark. In response, the Court stated emphatically that the First Amendment cannot be subject to such limits. Given the valuable benefits that registering a mark provides, the ability to pass judgment on that registration allows the government to create a disincentive to use certain expressions, and thereby create a chilling effect on certain speech that it deems “disparaging.”

This case has already received significant attention and will likely receive more as the 4th Circuit’s upcoming ruling regarding the Washington Redskins is decided. Following that decision, the issue of Section 2(a)’s constitutionality may be a likely candidate for review by the U.S. Supreme Court.

Image source: ipwatchdog.com.

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