On December 22, 2015, the Court of Appeals for the Federal Circuit ruled that the U.S. government cannot refuse registration of disparaging trademarks, citing constitutional free-speech protections. In re Tam, No. 2014-1203.

Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a), prohibits federal registration of “scandalous, immoral or disparaging marks.” Under the disparagement provision, the Patent and Trademark Office (PTO) cannot register marks that refer to identifiable persons, institutions, beliefs or national symbols and that may be disparaging to a substantial composite of the referenced group. Marks the PTO recently found to be disparaging include STOP THE ISLAMISATION OF AMERICA (disparaging to U.S. Muslims), HEEB (disparaging to the Jewish community) and most notably the REDSKINS name used by Washington, D.C.’s NFL team (disparaging to Native Americans). The REDSKINS case is on appeal in the 4th Circuit.

The Tam case involves Portland-based Asian-American band, THE SLANTS. Its front man, Simon Shiao Tam, chose the name to make a statement about racial and cultural issues and to “reclaim” and “take ownership” of Asian stereotypes. The PTO refused registration of THE SLANTS for “entertainment in the nature of live performances by a musical band” based on evidence that “slants” disparages Asian people because it derides and mocks their physical features. Tam appealed, arguing that the PTO erred in its finding and that § 2(a) is unconstitutional.

To be constitutional, content-based regulations on private speech must be narrowly tailored to serve a compelling government interest. (The court held that trademarks are not commercial speech entitled to less protection than private, noncommercial speech because it is the mark’s “expressive character,” not its commercial nature as a source identifier, that determines registrability.) The Tam court held that the § 2(a) disparagement provision is a viewpoint-discriminatory content regulation that denies rights to certain speakers: the government can refuse registration of disparaging marks like THE SLANTS, while it registers marks with positive messages like CELEBRASIANS and ASIAN EFFICIENCY, thereby discriminatorily denying disparaging mark owners the significant valuable benefits of registration (including presumptions of nationwide rights and ownership) and chilling free speech by disincentivizing the selection of and financial investment in such brands.

The court found no legitimate interest to justify the regulation. The government need not dissociate itself from odious trademarks because they are neither government speech nor reasonably attributed to the government by the public; the government isn’t expending substantial resources on such marks because registration is user-funded, not taxpayer-funded, and the government in fact spends more to defend its refusals than grant registrations; and the law does not materially advance a government interest in fostering racial tolerance since, despite § 2(a), it still grants many registrations for racially charged marks and copyright registrations for creative works containing disparaging speech. The court, therefore, held that denying registration of disparaging marks under § 2(a) violates the First Amendment and vacated the PTO’s holding that THE SLANTS is unregistrable (the court said the immoral and scandalous portions of § 2(a) may also be unconstitutional but its holding is limited to the disparagement provision).

The PTO only determines if a mark can be federally registered, not whether it can actually be used in the marketplace and enforced under state or common law. For this reason, some believe that denying registration under § 2(a) has little practical effect on well-known trademarks such as REDSKINS that have significant nationwide use and recognition. Not so, says the Federal Circuit. Uncertainty exists as to whether disparaging marks are entitled to unregistered rights. The court said the federal Lanham Act and 1964 Model State Trademark Act adopted by most states seemingly deny both registered and unregistered protection for disparaging terms. It also found no cases where the owner of an unregistered disparaging mark was able to enforce it. This decision may, therefore, have a significant impact on protection for disparaging marks. The Supreme Court will likely consider the issue because the Federal Circuit held a federal statute unconstitutional, and its decision isn’t binding on the 4th Circuit in the higher-profile REDSKINS case, setting up a possible circuit split.

The Tam decision is available here.