July 2017
Historic IP Decision: The Future of ‘Immoral,’ ‘Scandalous’ and ‘Disparaging’ Trademarks

The U.S. Supreme Court recently made a decision that will likely have wide ranging impact on the field of trademarks and open up protection for trademarks that may have been traditionally viewed as culturally or socially insensitive or disparaging.

In a highly anticipated decision, the Supreme Court determined on Monday, June 19, in the Matal v. Tam case that a significant portion of section 2(a) of the Lanham Act is unconstitutional on First Amendment grounds. The decision overturns a century of trademark precedent refusing federal trademark protection for marks considered disparaging in nature.

Disparaging Trademark Law Origins

The 1905 Trade-Mark Act was the first federal statute to forbid registration of scandalous and immoral trademarks, a prohibition which was later re-enacted as section 2(a) of the Lanham Act, in 1946, which prohibited the federal registration of marks that were immoral, scandalous, or disparaging, now known as the Disparagement Clause.

Problems with the Disparagement Clause

Many scholars observe that barring registration for marks that are immoral, scandalous, or disparaging has the effect of expanding trademark law well beyond its basic purpose of protecting consumers from confusion as to the source and quality of goods and services, and toward consumer protection from material deemed offensive.

Since the Lanham Act provides no definition of “scandalous,” “immoral,” or “disparaging,” decisions made by the Trademark Trial and Appeal Board (TTAB) have been inconsistent, highly subjective and unpredictable. This has led to inconsistent and subjective application of the clause by trademark examining attorneys prosecuting new applications. As a result, numerous trademarks have registered that many consider openly disparaging, while other “borderline” applications have been denied. This inconsistent application has long frustrated trademark applicants.

Cases at Hand

Two individual provisions making up the Disparagement Clause were challenged in separate court actions as unconstitutional under the Free Speech Clause of the First Amendment – Matal v. Tam and In re Brunetti.

In Matal v. Tam, an all-Asian rock band was denied trademark registration by the USPTO for their band name, “The Slants”. The examining attorney reasoned that “slant” can be used as derogatory term for Asian persons, and therefore the mark was “disparaging” and unregistrable. The TTAB and the Federal Circuit upheld the examining attorneys’ reasoning.

On appeal to the Supreme Court, the band argued that refusing to register their trademark was a violation of free speech. The USPTO retorted that trademarks should be considered government speech and are therefore subject to certain restrictions.

The Supreme Court’s unanimous decision found that denying the registration of a mark that could be considered “disparaging” amounted to discrimination based on unpopular speech because it denied the applicant the substantial benefits of trademark registration.

Justice Alito, writing for the Court, stated that not allowing “disparaging” marks to be federally registered “offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.” The court noted that while many trademarks initially rejected under the Disparagement Clause convey hurtful speech that could harm members of often stigmatized communities, the First Amendment protects even hurtful speech. As explained by Justice Alito, “trademarks are private, not government speech.”

At issue in In re Brunetti, the United States Patent and Trademark Office (USPTO) denied trademark registration to the mark, FUCT for apparel (including children and infant clothing), citing its “scandalous and immoral” nature. The Brunetti case is still pending. Since the Supreme Court’s ruling on the disparagement provision, the Federal Circuit has ordered the parties in Brunetti to submit a supplemental briefing explaining how the Tam decision affects the constitutionality of the “scandalousness provision.”

Where does this leave us?

As of June 26, 2017, the USPTO issued guidance based on Matal v. Tam stating that any pending trademarks rejected under the Disparagement Clause will be removed from suspension and further examined. Any applications previously rejected by the USPTO under the Disparagement Clause, or abandoned as a result of such rejection, may be refiled.

This decision is seen by many as a final victory for the Washington Redskins, whose trademark was invalidated in 2014 under the Disparagement Clause. Undoubtedly, others will view this as official sanctioning of hate-filled speech, opening the door to a slew of new potentially offensive trademarks.

Many mark holders who have previously been denied trademark registration because their mark was considered “disparaging” may now be eligible for registration, and we expect to see an uptick in new applications as a result. However, because the Supreme Court decision only deals with “disparaging” marks, the constitutionality of the “scandalousness provision” remains pending before the Federal Circuit in Brunetti. The USPTO continues to examine applications for compliance with that provision.

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