United States: Federal And Fourth Circuits To Rule On Constitutionality Of Lanham Act's Prohibition On Registration Of Disparaging Marks

As several of our newsletters have chronicled, the constitutionality of Section 2(a) of the Lanham Act and, in particular, its prohibition on the registration of marks that "may disparage," has been fertile ground for litigation. Most recently, the Eastern District of Virginia affirmed the provision's constitutionality in Pro-Football, Inc. v. Blackhorse, and that decision is on appeal to the Fourth Circuit. In addition, the en banc Federal Circuit recently heard oral argument on the same issue in In re Tam.

Potentially key to both appeals is the Supreme Court's recent decision in Walker v. Texas Division, Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015). In Walker, the Supreme Court, in a 5–4 decision authored by Justice Breyer, held that in its specialty license plate system, Texas was "entitled to refuse to issue plates featuring [a] proposed design" incorporating the Confederate battle flag. The Court held that the plate design constituted "government speech"—"that the message . . . [is] conveyed on behalf of the government"—and that "Texas was consequently entitled to refuse to issue plates featuring SCV's proposed design." The Court reasoned that the state could constitutionally refuse to authorize specialty license plates for a group because license plates had long communicated messages from the state, the public closely associated state license plate designs with the state, and the state maintained "direct control" over the message conveyed on the plate and had actively exercised its authority in rejecting designs.

Pro- Football, Inc. v. Blackhorse, No. 1:14-cv- 01043-GBL- IDD, 2015 WL 4096277, 2015 U.S. Dist. LEXIS 89932 (E.D. Va. July 8, 2015)

In our Summer 2014 issue we analyzed the implications of the Trademark Trial and Appeal Board's (TTAB) cancellation of Pro- Football, Inc.'s (PFI) "Redskins" trademarks, Blackhorse v. Pro-Football, Inc., 2014 WL 2757516 (T.T.A.B. 2014), noting that PFI had opted not to appeal to the Court of Appeals for the Federal Circuit, but rather to seek to overturn the ruling in the Eastern District of Virginia based on a de novo review. In July, the district court affirmed the TTAB's decision. In granting Blackhorse summary judgment, the court emphasized that although federal trademark registration provides many benefits, the PTO's cancellation was limited to the federal trademark registration and did not affect PFI's ability to use the marks or to enforce the marks under common law. The court then addressed and rejected PFI's constitutional challenges to Section 2(a)'s "may disparage" provision.

First, PFI had argued that Section 2(a) infringed on its First Amendment rights by "restricting protected speech, imposing burdens on trademark holders, and conditioning access to federal benefits on restrictions of trademark owners' speech." In rejecting these arguments, the district court relied on Federal Circuit and Fifth Circuit precedent holding that refusal to register a mark does not "infringe upon the mark owner's First Amendment rights as '[no] conduct is proscribed[] and no tangible form of expression is suppressed.'" The court further held that because "the cancellations do not burden, restrict, or prohibit PFI's ability to use the marks" or "restrict the public debate on public issues," PFI's First Amendment rights were not implicated.

Second, the district court held that the federal trademark registration program is government speech and, thus, exempt from First Amendment scrutiny. The court first looked to the Supreme Court's decision in Walker, and found parallels for each of the factors the court had examined. Specifically, the district court found that the trademark registration program communicated the message that the government had approved the registered trademark, that the public associated registration and the associated use of the "®" insignia with the federal government, and that the PTO regularly exercised editorial control over registration in rejecting marks under Section 2 of the Lanham Act.

Third, the district court also found that the registration program was government speech under the Fourth Circuit's multi-factor "mixed/hybrid speech test": the central purpose of the program was not for the expression of private views or interests, but rather to provide federal protection of marks, in part by providing notice of marks; the PTO exercised a high degree of editorial control; and the literal speaker was the government in that the Official Gazette of the PTO and the Principal Register, in which registered trademarks are recorded, are PTO publications. In contrast, only one factor favored a finding of private speech—the mark owner was responsible for defending the federal registration when challenged and had to apply to avail itself of the benefits of the program.

Finally, the court found that the registration program was constitutional because "the government may determine the contents and limits of its programs" under Rust v. Sullivan, 500 U.S. 173 (1991). In Rust, the Supreme Court upheld regulations prohibiting doctors receiving Title X funding from engaging in various abortion related activities as part of their Title X projects, but did not restrict their activities outside of the Title X projects. In holding Section 2 constitutional under Rust, the district court in Blackhorse distinguished cases where the government-imposed requirements affected protected conduct outside the scope of the federally funded program, reasoning that "mark owners are free to use marks that 'may disparage' outside of the federal trademark registration program," and that "[p]articipation in the program is not compulsory" as the right to trademark protection was a common law right.

Having concluded that Section 2(a) did not run afoul of the First Amendment, the district court found that the section did not violate the Fifth Amendment. In particular, given dictionary definitions and use of the term in prior court opinions, the term "disparage" was not vague, and because PFI had no property interest in the registration of its marks, the Takings and Due Process Clauses were not violated.

The court then granted summary judgment for the challengers on the merits of the dispute under the Lanham Act. The court held that it was indisputable that at the time the marks were registered, "a substantial composite of the referenced group" viewed the term as disparaging and, therefore, cancellation was appropriate. The court noted that a substantial composite was not necessarily a majority and did not need to represent "mainstream" views. The court further held that the petition was not barred by laches because the petitioners did not unreasonably delay in suing—they were all under 18 when a prior litigation had commenced—and had sensibly waited to see how it progressed before bringing their own challenge. In addition, the court held that the public interest favored the removal of disparaging marks from the register.

PFI appealed the ruling to the Fourth Circuit. Briefing will not be completed until late February 2016 and oral argument has yet to be scheduled.

In re Tam

As discussed in the Spring 2015 Newsletter, in In re Tam, the TTAB refused to register the mark "The Slants" for use as the band name for an Asian-American dance rock band, holding that the mark was not registrable under Section 2(a). On appeal, a panel of the Federal Circuit held that it was bound by an earlier ruling of its predecessor court upholding the provision's constitutionality, In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981). Judge Moore, who authored the panel opinion, also penned substantial "additional views" stating that she believed it was time to reconsider the question. A week later, the court sua sponte vacated the panel decision and ordered the case reheard en banc. In the October 2, 2015 en banc oral argument in In re Tam, the Federal Circuit's questions indicated some skepticism as to the constitutionality of Section 2(a). Although the recent decision in Pro-Football was not mentioned in the oral argument, many of the same issues were at play. The parties discussed the government's role in granting trademarks, looking at whether the government provided a subsidy in allowing the registration of marks or whether it provided a forum for speech and merely maintained a database of marks for notice purposes. Notably, several judges seemed more willing to consider Section 2(a) limits on trademark registration as a regulation governing private speech and not, as the district court held in Pro-Football, government speech. In addition, several judges asked questions about the distinction between copyright registration and trademark registration, inquiring whether a prohibition on registering disparaging copyright materials would be permissible if Section 2(a) were held constitutional.

Stay Tuned

Whether the First Amendment permits the PTO to refuse to register trademarks that it considers "disparaging" (or "immoral," "deceptive" or "scandalous") under Section 2(a) of the Lanham Act is a significant issue for trademark owners. In addition, as suggested above, it raises issues that span a range of fields. The question of government restrictions in the context of governmentfunded or government-administered programs arises not only in these two trademark disputes, but also in the context of vanity license plates, Title X medical programs and myriad other areas. Even if the Fourth and Federal Circuits decide the First Amendment issue similarly, the fact that Walker was a 5–4 decision, coupled with the Supreme Court's ongoing assessment of the interplay of private action and government involvement in the context of restrictions on speech, suggests that the circuit court rulings may not be the last word.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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