United States: The Federal Circuit Rules § 2(a) Of The Lanham Trademark Act Is Unconstitutional

Last Updated: January 4 2016
Article by Marsha G. Gentner

Coming as no surprise to anyone who attended or read the transcript of the en banc oral argument hearing in the case of In re Tam, No. 14-1203 (Fed. Cir. Dec. 22, 2015), the Federal Circuit Court of Appeals has ruled § 2(a) of the Lanham Trademark Act of 1946 violates the First Amendment on its face. The nine-judge majority limited its holding to § 2(a)'s prohibition on the registration of marks which "may disparage... persons, living or dead, institutions, beliefs or national symbols." In doing so, the Court expressly overruled its longstanding precedent to the contrary, In re McGinley, 660 F.2d 481 (C.C.P.A. 1981). Two judges would uphold the constitutionality of § 2(a) in its entirety, and another would hold that § 2(a) is facially constitutional, but as applied to Mr. Tam in this particular case, violated his First Amendment rights.

To determine whether a mark is unregistrable under § 2(a)'s disparagement provision, the U.S. Patent and Trademark Office (PTO) applies a two part test: (1) what is the likely meaning of the trademark in the context of its use; and (2) if found to refer to identifiable persons, institutions, etc., whether that meaning may be disparaging to a substantial composite of the referenced group. The majority opinion, written by Judge Moore, found this to be classic viewpoint discrimination by the government. The government argued that § 2(a) is content neutral because it is directed at words or symbols, and not the viewpoint or message of the mark's holder in using that designation. But the Court rejected this, pointing to numerous examples of identical terms accepted for registration, and rejected under § 2(a), depending on whether the message the referenced group takes from it is positive (registrable) or negative (not registrable). "Importantly, every time the PTO refuses to register a mark under § 2(a), it does so because it believes the mark conveys an expressive message—a message that is disparaging to certain groups." In re Tam, *24.

The holding that § 2(a) is viewpoint discrimination dictates the statute be subject to strict scrutiny under a long line of Supreme Court cases, the Federal Circuit held. Judge Moore noted that that the government did not even attempt to salvage the disparagement provision under strict scrutiny analysis.

The Court likewise rejected each of the government's other arguments. First, in response to the government's claim that § 2(a) does not prohibit any speech, leaving the trademark owner free to use the mark in commerce, the Court pointed to the "significant and financially valuable benefits" that federal trademark registration convers. These include nationwide constructive notice and priority, the ability to obtain incontestable status of a registered trademark, the presumption of validity of a registered trademark, the ability to block infringing imports and to bar the registration, trafficking or use of certain domain names, and the use of a registration defensively as a complete bar to a state or common law action for dilution. Denial of these benefits on the basis of the message conveyed has a chilling effect on, and impermissibly burdens, speech in violation of the First Amendment, the Court held.

Second, the Court rejected the contention that the accoutrements of trademark registration (the right to use the ® symbol, listing of the mark on the PTO Principal Register, issuance of a registration certificate) amounts to government speech, as opposed to regulation of private speech. As respects this argument, the PTO may have been its own worst enemy, as (the Court noted) it has publicly maintained for decades that issuance of a trademark registration does not amount to a government endorsement, imprimatur, or pronouncement with regard to the mark. The Court pointed out that the copyright registration scheme involves similar accoutrements—use of the © symbol, a registration certificate with a government seal—and yet, as the government conceded, this does not convert copyrighted content into government speech.

Finally, the Court rejected the contention that trademark registration is a form of government subsidy which it may refuse when it disapproves of the message the mark conveys. Finding that trademark registration does not implicate Congress's power to spend or to control the use of government property, the Court held § 2(a) to be a regulatory regime, not a government subsidy program. Once again, the Court analogized to the copyright registration scheme, and the government's concession that such is subject to First Amendment protection.

As an alternative ground, the Court analyzed § 2(a) as commercial speech regulation, under an intermediate scrutiny standard, requiring only that the regulatory scheme serve a substantial government interest, narrowly tailored to serve those interests. The Court held that all of the government's proffered interests "boil down to permitting the government to burden speech it finds offensive" (id. *61), which is not a legitimate interest.

Judge Dyk, concurring and dissenting in part, essentially took issue with the blanket strict scrutiny approach. Thus, he would find § 2(a) constitutional as to purely commercial trademarks, but not as to core political expression (a category in which he places the mark at issue in this case). In Judge Dyk's view, the purpose of the statute is "to protect underrepresented groups in our society from being bombarded with demeaning messages in commercial advertising" (Dyk, concurring, *3); disparagement in commercial advertising, in Judge Dyk's opinion, furthers no First Amendment value. Judge Dyk points to the Civil Rights Act's Title VII prohibition of sexually or racially disparaging speech in the work place as but one example of the established principle that speech in the commercial context may be more freely regulated than other forms of protected speech. Judge Dyk disagrees with the majority that all disparaging marks have an expressive component but believes that some, like the one at issue in this case, do implicate core expression; hence, his "as applied", rather than facial, rejection of § 2(a) on First Amendment grounds. According to Judge Dyk, this also distinguishes the copyright registration scheme, which always involves core expression.

Judge Reyna's dissenting opinion, too, rejects strict scrutiny analysis of § 2(a)'s disparagement provision. In his view, trademarks are commercial speech, and the decision to grant or deny registration need only be reviewed under an intermediate standard of scrutiny. Judge Reyna finds that commercial speech which insults groups of people based on race, gender, religion or other demographic trait, tends to disrupt commercial activity and undermines the stability of the marketplace. Judge Reyna sees § 2(a) not as an effort to suppress free expression but rather "to mitigate the disruptive secondary effects that a particular type of low-value speech may have when used in a commercial context." Reyna, dissenting, *7. As such, according to Judge Reyna, § 2(a) is both content neutral and advances a substantial government interest. Judge Reyna also points to the Civil Rights Act—Title VIII's ban on advertising indicating a discriminatory preference, and Title VII's restrictions on job advertisements and ban on harassing speech in the workplace—as confirming such pure speech regulations in service of this government interest may withstand First Amendment intermediate scrutiny.

Finally, Judge Reyna (as do Judges Dyk and Lourie) believes that § 2(a) does not unduly burden a trademark owner in the exercise of his First Amendment rights, but only denies a government created benefit. The trademark owner is "free to communicate his chosen message within or without commerce, so long as he is willing to permit others to do the same." Id. *11.

Judge Lourie, also writing separately in dissent, would leave In re McGinley intact, on stare decisis grounds. Further, in addition to rejecting the premise that denial of a trademark registration impairs any free speech rights, Judge Lourie would find, in any case, that trademark registration has a government, as well as private, speech context. 

In re Tam, although an en banc decision, may not be the last word, however. Because the federal statute has been declared unconstitutional, the government may appeal to the Supreme Court, though there is no indication yet whether it will do so. Further, the same issue is pending on appeal before the Court of Appeals for the Fourth Circuit. Pro-Football, Inc. v. Blackhorse, No. 15-1874. Particularly if the Fourth Circuit reaches a different result, it looks like the constitutionality of § 2(a) may be headed to the Supreme Court. 

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