IP News

Federal Circuit to Decide On First Amendment Constitutionality of Barring Disparaging Trademark Registration

On April 27, 2015, the Federal Circuit voted, sua sponte, to vacate its opinion of April 20, 2015 in In re Simon Shiao Tam, Case No. 2014-1203, and to reconsider en banc whether the Lanham Act baron registration of disparaging marks violates the First Amendment.

The Federal Circuit had issued a unanimous opinion by a panel of Judges Lourie, Moore, and O'Malley, which affirmed the Trademark Trial and Appeal Board's (TTAB's) decision to refuse to register Tam's mark “THE SLANTS”. In its opinion, the panel first applied disparagement analysis to the word “slant,” based on: 1) its likely meaning; and 2) whether it “may be disparaging to a substantial composite of the referenced group.” Slip op. at 7. The panel found that the “definitions in evidence universally characterize the word 'slant' as disparaging, offensive, or an ethnic slur when used to refer to a person of Asian descent.” Id. Further, based on several publications and articles the panel found “substantial evidence” for “the Board's finding that the mark is disparaging to a substantial composite of people of Asian descent.” Id. at 8.

The panel resolved the First Amendment constitutional challenge according to precedent set by In re McGinley, 660 F.2d 481 (C.C.P.A. 1981), which found “the PTO'S refusal to register appellant's mark does not affect his right to use it. No conduct is proscribed, and no tangible form of expression is suppressed. Consequently, appellant's First Amendment rights would not be abridged by the refusal to register his mark.” Slip Op. at 8 (citing McGinley at 484).

However, in a separate opinion expressing additional views, Judge Moore suggested the Federal Circuit revisit McGinley's First Amendment holding:

“Neither the court in McGinley nor any other court has analyzed '2(a) under the 'unconstitutional conditions' doctrine. This is error. Federal trademark registration confers valuable benefits, and under '2(a), the government conditions those benefits on the applicants' choice of a mark. Because the government denies benefits to applicants on the basis of their constitutionally protected speech, the 'unconstitutional conditions' doctrine applies.”

Id. at 14.

Further, because “[s]ection 2(a) discriminates against disparaging or offensive viewpoints,” Moore states that strict scrutiny analysis should apply to its constitutionality, or at least the same level of scrutiny that applies to restrictions on commercial speech. Id. at 17-18. In his view, Moore finds no “substantial government interests that would justify the PTO's refusal to register disparaging marks.” Id. at 24.

The Federal Circuit will now consider the First Amendment constitutionality of '2(a) en banc. Briefing on this issue has been requested, and a date for oral argument has yet to be set.

Federal Circuit: The PTO's Refusal to Terminate IPR Proceedings Is Not a 'Final Agency Action'

On April 10, 2015, a unanimous Federal Circuit panel of Chief Judge Prost, Circuit Judge Taranto, and District Judge Fogel (sitting by designation from the Northern District of California) issued an opinion authored by Judge Taranto in Automated Merchandising Systems, Inc. (AMS) v. Michelle K. Lee (Director, PTO), Case No. 2014-1728. The panel affirmed the district court's finding that the court was not required to terminate inter partes reexaminations (IPRs) under the Administrative Procedures Act (APA), because there had not been a 'final agency action' in the PTO's refusal to terminate reexaminations involving AMS.

The case began when petitioners and appellants AMS sued third party Crane for infringement of four patents in the Northern District of West Virginia. Crane filed for IPRs of each patent, raising 'substantial new questions of patentability' for each. Slip op. at 3. The suit settled by consent judgment, stipulating to the patents' validity.

AMS then sought to terminate the IPRs under 35 U.S.C. '317(b), which states in part:

Once a final decision has been entered against a party in a civil action ' that the party has not sustained its burden of proving the invalidity of any patent claim in suit …, then . ' an inter partes reexamination requested by that party or its privies on the basis of such issues [raised in the action] may not thereafter be maintained by the Office '.

Id. at 4 (citing '317(b)).

The PTO declined to terminate the IPRs, finding no 'decision' on invalidity in the West Virginia suit. Id. AMS brought suit against the PTO in the Eastern District of Virginia under the APA and other statutory jurisdiction. The district court granted summary judgment for the PTO, reasoning that '317(b) only applies to 'an actual adjudication on the merits.' Id. (citations omitted). The Federal Circuit decided the case on different grounds.

The Federal Circuit stated that agency action would be proper under APA judicial review if a 'final agency action for which there is no other adequate remedy in a court.' Id. at 7 (citing 5 U.S.C. '704). The panel, deciding whether the PTO's refusal constituted a 'final action,' considered two requirements for a final action: whether it was 'the 'consummation' of the agency's decision making process' and 'one by which 'rights or obligations have been determined,' or from which 'legal consequences will flow.” Id. (citing Bennett v. Spear, 520 U.S. 154, 177-78 (1997)). First, in arguing against 'consummation,' the panel analogized the PTO's refusal to terminate to a 'run of the mill district-court denial of a motion to dismiss' ' i.e., 'interlocutory.' Id. at 8. Second, the panel found that 'AMS has lost no patent rights from the refusal to terminate the proceedings' and therefore the only legal consequence 'is that AMS must continue to participate in the reexaminations to preserve its interests.' Id. at 9. On these grounds, the panel found no 'final agency action,' and affirmed the district court's grant of summary judgment in favor of the PTO.

Brent T. Hagen is a Law Clerk in the New York office of Kenyon & Kenyon.

Federal Circuit to Decide On First Amendment Constitutionality of Barring Disparaging Trademark Registration

On April 27, 2015, the Federal Circuit voted, sua sponte, to vacate its opinion of April 20, 2015 in In re Simon Shiao Tam, Case No. 2014-1203, and to reconsider en banc whether the Lanham Act baron registration of disparaging marks violates the First Amendment.

The Federal Circuit had issued a unanimous opinion by a panel of Judges Lourie, Moore, and O'Malley, which affirmed the Trademark Trial and Appeal Board's (TTAB's) decision to refuse to register Tam's mark “THE SLANTS”. In its opinion, the panel first applied disparagement analysis to the word “slant,” based on: 1) its likely meaning; and 2) whether it “may be disparaging to a substantial composite of the referenced group.” Slip op. at 7. The panel found that the “definitions in evidence universally characterize the word 'slant' as disparaging, offensive, or an ethnic slur when used to refer to a person of Asian descent.” Id. Further, based on several publications and articles the panel found “substantial evidence” for “the Board's finding that the mark is disparaging to a substantial composite of people of Asian descent.” Id. at 8.

The panel resolved the First Amendment constitutional challenge according to precedent set by In re McGinley, 660 F.2d 481 (C.C.P.A. 1981), which found “the PTO'S refusal to register appellant's mark does not affect his right to use it. No conduct is proscribed, and no tangible form of expression is suppressed. Consequently, appellant's First Amendment rights would not be abridged by the refusal to register his mark.” Slip Op. at 8 (citing McGinley at 484).

However, in a separate opinion expressing additional views, Judge Moore suggested the Federal Circuit revisit McGinley's First Amendment holding:

“Neither the court in McGinley nor any other court has analyzed '2(a) under the 'unconstitutional conditions' doctrine. This is error. Federal trademark registration confers valuable benefits, and under '2(a), the government conditions those benefits on the applicants' choice of a mark. Because the government denies benefits to applicants on the basis of their constitutionally protected speech, the 'unconstitutional conditions' doctrine applies.”

Id. at 14.

Further, because “[s]ection 2(a) discriminates against disparaging or offensive viewpoints,” Moore states that strict scrutiny analysis should apply to its constitutionality, or at least the same level of scrutiny that applies to restrictions on commercial speech. Id. at 17-18. In his view, Moore finds no “substantial government interests that would justify the PTO's refusal to register disparaging marks.” Id. at 24.

The Federal Circuit will now consider the First Amendment constitutionality of '2(a) en banc. Briefing on this issue has been requested, and a date for oral argument has yet to be set.

Federal Circuit: The PTO's Refusal to Terminate IPR Proceedings Is Not a 'Final Agency Action'

On April 10, 2015, a unanimous Federal Circuit panel of Chief Judge Prost, Circuit Judge Taranto, and District Judge Fogel (sitting by designation from the Northern District of California) issued an opinion authored by Judge Taranto in Automated Merchandising Systems, Inc. (AMS) v. Michelle K. Lee (Director, PTO), Case No. 2014-1728. The panel affirmed the district court's finding that the court was not required to terminate inter partes reexaminations (IPRs) under the Administrative Procedures Act (APA), because there had not been a 'final agency action' in the PTO's refusal to terminate reexaminations involving AMS.

The case began when petitioners and appellants AMS sued third party Crane for infringement of four patents in the Northern District of West Virginia. Crane filed for IPRs of each patent, raising 'substantial new questions of patentability' for each. Slip op. at 3. The suit settled by consent judgment, stipulating to the patents' validity.

AMS then sought to terminate the IPRs under 35 U.S.C. '317(b), which states in part:

Once a final decision has been entered against a party in a civil action ' that the party has not sustained its burden of proving the invalidity of any patent claim in suit …, then . ' an inter partes reexamination requested by that party or its privies on the basis of such issues [raised in the action] may not thereafter be maintained by the Office '.

Id. at 4 (citing '317(b)).

The PTO declined to terminate the IPRs, finding no 'decision' on invalidity in the West Virginia suit. Id. AMS brought suit against the PTO in the Eastern District of Virginia under the APA and other statutory jurisdiction. The district court granted summary judgment for the PTO, reasoning that '317(b) only applies to 'an actual adjudication on the merits.' Id. (citations omitted). The Federal Circuit decided the case on different grounds.

The Federal Circuit stated that agency action would be proper under APA judicial review if a 'final agency action for which there is no other adequate remedy in a court.' Id. at 7 (citing 5 U.S.C. '704). The panel, deciding whether the PTO's refusal constituted a 'final action,' considered two requirements for a final action: whether it was 'the 'consummation' of the agency's decision making process' and 'one by which 'rights or obligations have been determined,' or from which 'legal consequences will flow.” Id . (citing Bennett v. Spear , 520 U.S. 154, 177-78 (1997)). First, in arguing against 'consummation,' the panel analogized the PTO's refusal to terminate to a 'run of the mill district-court denial of a motion to dismiss' ' i.e., 'interlocutory.' Id. at 8. Second, the panel found that 'AMS has lost no patent rights from the refusal to terminate the proceedings' and therefore the only legal consequence 'is that AMS must continue to participate in the reexaminations to preserve its interests.' Id. at 9. On these grounds, the panel found no 'final agency action,' and affirmed the district court's grant of summary judgment in favor of the PTO.

Brent T. Hagen is a Law Clerk in the New York office of Kenyon & Kenyon.