What Will Impact Be of Supreme Court's <i>Tam</i> Decision?

Tam arose from the USPTO's rejection of the application to register the mark THE SLANTS for entertainment services because the mark potentially disparaged Asian-Americans despite the membership of the applicant, Asian-American Simon Tam, in that group. In an appeal from that action, the full U.S. Court of Appeals for the Federal Circuit invalidated §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.”

As an initial matter, the Supreme Court unanimously rejected Tam's argument that §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. The court's opinion also confirmed several basic propositions of trademark law, including that: 1) a determination of mark unregistrability does not restrict the mark owner's right to use the mark in commerce; 2) such a determination does not necessarily render that mark invalid and unprotectable; and 3) owners of marks registered on the federal Principal Register enjoy certain substantive and procedural advantages in litigation to protect their marks that are unavailable to the owners of unregistered marks.

The Supreme 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.” 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.

Just like all the 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 §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.” (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.”

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. Justice Alito's opinion rejected the assertion that government programs subsidizing speech expressing a particular viewpoint are necessarily constitutional. Justice 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,” while the subsidy the government claimed in this case was the non-monetary benefit of trademark registration. Justice 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.

Finally, Justice 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 Commission of New York, 447 U.S. 557 (1980). (Central Hudson was a successful First Amendment challenge to a state ban on utility-company promotional advertising.) 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.” Justice Alito concluded that 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 Lanham Act language could not be “narrowly drawn” to exclude from registration marks that support “invidious discrimination.” Significantly, however, Justice 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.” Consequently, not a single justice fully committed himself or herself to Central Hudson's viability in this context.

The most immediate effect of the Supreme Court's holding is on the 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 §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 Tam 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. The Supreme Court noted in Rosenberger v. Rector & Visitors of University of Virginia, 515 U.S. 819, 829 (1995) that viewpoint discrimination is “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.”

Justice Alito's and Justice Kennedy's rationales for treating §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.” 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.”

For the most part, this distinction does not underlie other prohibitions on registration in the Lanham Act. Specifically, although §§ 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, §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 §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 §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 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 §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 §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. But because such an application of §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 [email protected]. Sam Kilb is an associate in the New York office of Kilpatrick. He can be reached at [email protected].