United States: EDVA Upholds Decision To Cancel Redskins Trademark Registrations — First And Fifth Amendment Challenges To Section 2(a) Still Up For Debate

Eastern District Court Judge Lee upheld the USPTO Trademark Trial and Appeal Board's (TTAB) decision to cancel several REDSKINS trademark registrations.  Pro-Football, Inc. v. Amanda Blackhorse et al., No. 1:14-cv-01043-GBL-IDD (E.D. Va. July 8, 2015).  Deciding several cross motions for summary judgment, the Court ruled against Pro-Football, Inc., owner of the Redskins football franchise, and in favor of a group of Native Americans who had previously petitioned the USPTO to cancel the registrations.  The TTAB held that at the time of registration the marks consisted of matter that may disparage a substantial composite of Native Americans and, therefore, under Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a), the marks should not be registered.  Judge Lee agreed.

Reiterating the difference between a trademark and a trademark registration, interests often conflated, Judge Lee reminded that federal registration does not create trademark rights.  Instead, trademark rights are earned at common law by using a mark in commerce.  Federal registration does confer additional rights on the trademark owner, including incontestability and proof of ownership, the right to request Customs block importation of infringing goods, treble damages in infringement actions, and other remedies.  Judge Lee made very clear: "What is at issue here is the registration of the Redskins Marks and the benefits associated with registration, not use of the marks."  Op. at 13.

Pro-Football challenged the constitutionality of Section 2(a) under the First and Fifth Amendments.  First, the Court stated that, "[s]imply put, . . . cancelling the registrations of the Redskins Marks . . . does not implicate the First Amendment as the cancellations do not burden, restrict, or prohibit [Pro-Football's] ability to use the marks."  Op. at 15.  Citing the Supreme Court's recent ruling in Walker v. Tex. Div., Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015) (finding Texas' specialty license plate program is government speech), the Court further found that the federal trademark registration system constitutes government speech, not subject to First Amendment scrutiny.

Interestingly, Judge Moore of the Federal Circuit recently stated the exact opposite in a similar case, In re Simon Shiao Tam, No. 14-1203 (Fed. Cir. Apr. 20, 2015).  The PTO refused to register the trademark THE SLANTS, the name of the applicant's Asian-American rock band, under Section 2(a) and the TTAB affirmed the refusal.  On appeal, despite stating the First Amendment interests were implicated Judge Moore upheld the ruling, but suggested only because the Court was bound by precedent.  She asked the Federal Circuit to review its holding in In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981) ("[I]t is clear that 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.").  A week later, the Federal Circuit voided the decision and agreed to rehear the matter en banc.  The parties are currently briefing that matter.  Reports state the Pro-Football has indicated it would appeal the Eastern District's ruling.  The Fourth Circuit may defer to the Federal Circuit given that it is the main court for review of TTAB decisions; however, this presents opportunity for a potential circuit split regarding constitutionality of Section 2(a), making it ripe for Supreme Court consideration.

Although the First Amendment question is getting much press, what has been given little coverage by the media and by Judge Lee is Pro-Football's Fifth Amendment Takings Clause claim.  Citing In re Int'l Flowers & Fragrances, Inc., 183 F.3d 1361, 1366 (Fed. Cir. 1999), Judge Lee summarily dismissed the claim in three sentences, finding no property interest in the registrations subject to a taking.  In Int'l Flowers, the Federal Circuit upheld a refusal to register a mark that included a "phantom" element because the application violated the one-mark-per-application rule.  (A "phantom" element is essentially a blank to be filled in later with any material, a component subject to change.)   The Court ruled that the refusal of registration was not a deprivation of property without due process and equal protection.  The applicant had not established a constitutionally protected property interest in registration of its phantom marks.

Int'l Flowers is readily distinguishable.  There, the applicant had no trademark interests that could be expended upon by registration.  Trademark rights are earned by adoption and use in commerce, so there can be no trademark rights in a phantom or blank element.  Federal registration does not create trademark rights—it can only expand on rights that already exist.  In this case, Pro-Football has used the REDSKINS marks in commerce for decades.  Registration expanded upon Pro-Football's preexisting trademark interests.  This case involves cancellation of additional benefits afforded by registration, not the refusal to expand on rights that never existed.

What is more, although both the Federal Circuit and the Eastern District made a point to distinguish between trademark interests and registration interests, neither court addressed why the latter are not also property interests.  The rights are distinct, but does that warrant the conclusion that only one is a property right?  Nothing about the Court's ruling deprives Pro-Football of its property interests in the REDSKINS marks themselves.  But it does deprive Pro-Football of the expansion of those interests afforded by registration.  The Lanham Act codified trademark common law, but also expanded on it by creating additional rights as noted above.  Like a trademark itself, a registration and all the associated benefits can be assigned.  Registrations are exclusive.  A registration can exist perpetually like other private property rights.  Additionally, although precedent concludes that patents are not protected property rights in this context because patent rights arise under the Constitution's Intellectual Property Clause and not a source independent of the Constitution, the same is not true of the trademark registration regime.  A registration—in addition to and apart from the trademark itself—appears to be a property interest that could be taken.  Regardless, the Eastern District never addressed due process or equal protection.

In the end, however, Judge Lee reminds that Pro-Football is still well within its rights to use the REDSKINS marks and that fans can still collect, wear and display the marks.  He leaves Pro-Football and other businesses with a warning though: "only business like [Pro-Football] control their own destiny with respect to how the public discerns the source and origin of [its] goods and services."  Op. at 69.

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