The Supreme Court recently granted cert (meaning that they agreed to hear arguments) in Lee v. Tam, a case challenging the United States Patent and Trademark Office’s ban on the registration of ‘disparaging’ trademarks. The Supreme Court will hear arguments on this issue, but denied the request of the owners of the Washington Redskins’ trademarks for their pending appeal to be heard at the same time.

Even though the Court will not be hearing directly from the Redskins, the decision will likely have a direct impact on whether or not potentially ‘disparaging’ trademarks, including the ‘Washington Football Team’s’ REDSKINS marks, may be registered with the Trademark Office.

Lee v. Tam – THE SLANTS Trademark Application Denied For Being ‘Disparaging’

On November 14, 2011, Simon Tam, front man for the band “The Slants” filed an application for a federal trademark registration with the United States Patent and Trademark Office, the government agency that, among other things, grants federal trademark registrations to U.S. trademark owners.  The government attorney assigned to review and examine Tam’s application refused the application on the grounds that the mark was a racial slur that disparaged Asian-Americans. Under Section 2(a) of the Lanham Act (the U.S. trademark law), disparaging trademarks cannot be registered and cannot take advantage of the benefits given to trademark owners who successfully register their trademarks.

Tam appealed this ruling to the USPTO’s administrative board, the Trademark Trial and Appeal Board (“TTAB”), and lost. He then appealed to the Federal Circuit, where the court overturned the TTAB ruling, holding that the disparagement clause of Section 2(a) was unconstitutional. The U.S. government appealed the ruling to the Supreme Court, who agreed to hear the case last week.

The Slants’ Argument and the Issues Before the Supreme Court

First, it is important to point out that Tam is Asian-American and selected the name “The Slants,” in part, to “take back” a racially-charged word that many feel is offensive to Asian-Americans. Tam argued that the USPTO’s disparagement refusals were unevenly applied because the definition of “disparagement” is too vague and unpredictable. He argued that, under the First and Fifth Amendment, the Section 2(a) “disparagement” refusal was unconstitutional.

The Federal Circuit appeared to take Tam’s argument one step further and held that the “disparagement” clause of Section 2(a) of the Lanham Act is unconstitutional because it violates the First Amendment’s protection of free speech. This set the stage for the arguments the Supreme Court will hear this upcoming term.

The Supreme Court has been asked to decide “[w]hether the disparagement provision in [Section 2(a) of the Lanham Act] . . . [which] provides that no trademark shall be refused registration on account of its nature unless, inter alia, it ‘[c]onsists of . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute’ is facially invalid under the Free Speech Clause of the First Amendment.” It will also be asked to decide “[w]hether the disparagement clause bars the registration of [Tam’s] trademark and “[w]hether the disparagement clause is unconstitutionally vague.”

The decision will likely provide a framework for whether future “disparaging” marks will be able to obtain federal registrations.

Why Does a Federal Trademark Registration Matter?

The benefits of a federal trademark registration are at the heart of this case. It seems undeniable that a federal registration gives registrants many important benefits, but the legal question is whether the U.S. government can restrict who can, and cannot, obtain a registration based on the disparaging nature of the trademark.

Tam is essentially fighting for the right to register his band’s trademark and obtain these benefits (see below for an overview of the benefits) and, by denying him, the government is certainly preventing him from obtaining and exercising these benefits.  But what benefits do registrants actually get for owning a federal trademark registration? Benefits include:

Constructive notice to third-parties of the registrant’s claim of ownership of the mark;

This means that no one can generally claim that they did not know about the trademark owners’ claim to the trademark. If a northeastern restaurant chain owns a federal registration, it puts everyone else on notice that the restaurant chain is the owner of that mark for restaurant services and related goods and services. If a restaurant opens with the same (or confusingly similar) name in Texas, or North Dakota, or Hawaii, they cannot claim to have never heard of the registrant’s mark (even if they legitimately haven’t.)

A legal presumption of the validity of the mark, the Registrant’s ownership of the mark and the registrant’s exclusive right to use the mark nationwide;

The owner of a federal trademark registration is entitled to a “presumption” that its mark is valid and that it is the owner against the user of a confusingly similar mark for related goods and services. That presumption can be overcome with evidence (for example, that the alleged infringer used the mark first in commerce) but these presumptions are extremely powerful when negotiating during a dispute.

The use of the U.S registration as a basis to obtain registration in foreign countries and the ability to register the trademark with the U.S. Customs Service;

A United States registration can be used as a basis for registration in countries that are members of similar treaties and international trademark registration systems (Sections 44 and 66 of the Lanham Act.) Benefits can include earlier ‘priority’ dates in foreign countries and the ability to use a system called the Madrid Protocol to more easily register a trademark throughout the world.

Registration also allows registrants to file their trademarks with the U.S. Customs Service, who will affirmatively act to stop counterfeits bearing the mark from entering the country through U.S. customs.

Other unofficial/intangible benefits, such as using a trademark registration as collateral and international enforcement

There are other benefits to owning a trademark registration. In some cases, a trademark owner can use a trademark registration as collateral for loans and other business activities. While an unregistered trademark still has good-will (and is protectable intellectual property,) practically a registered trademark will have a lot more weight.

Further, some international companies, like AliBaba require U.S. trademark owners who want to remove infringing uses of trademarks to submit proof of registration. Amazon’s Brand Registry and Google’s AdWord trademark enforcement policies also highly favor registered marks and typically require significant evidence of unregistered trademark rights to take advantage of these benefits.

For domain name disputes under the Uniform Dispute Resolution Policy (“UDRP”) certain WIPO panels have held that a trademark registration satisfies the first prong of the test (that the complainant owns trademark rights).

Further Analysis on Both Sides

The disparagement clause of Section 2(a) definitely, by its very nature, prevents trademark owners from registering certain types of marks, depriving them of the benefits mentioned above. However, in order for a law to violate the ‘free speech’ clause of the First Amendment, a law (or the government’s enforcement of a law) must actually restrict an individual’s protectable speech or expression.

The United States government (and those in favor of upholding the ‘disparagement’ clause) argue that denying a trademark registration does not, in turn, chill or prevent the protected speech of the trademark owner. U.S. trademark law allows trademark owners to bring lawsuits and enforce unregistered trademarks. In the United States, trademark rights are based on use, not registration. The government argues that, because the trademark can still be used and protected under common-law rights, the owner of a disparaging trademark’s speech is not restricted.

Tam (and those in favor of overturning the ‘disparagement’ clause) argue that a federal trademark registration gives registrant’s significant advantages over unregistered trademark owners in protecting their trademark rights. Thus, the inability to obtain a federal registration will forcepolitically- and socially-aware groups like Tam’s band The Slants, to choose a different name that can be registered with the U.S. government. It will also prevent them from stopping others from using the name in different geographic areas of the United States were the band had not yet established common-law rights (as opposed to having nationwide constructive notice.)

Tam also argues that the law, as written, is too vague and that, as a result, the USPTO decides arbitrarily what is, or is not, disparaging without a clear, enforceable law. The USPTO has registered a number of questionable trademarks—the Redskins’ provided a lewd list of bizarre and offensive trademarks in one of their appeal briefs—including DUMB BLONDE beer, BAKED BY A NEGRO bakery goods, TAKE YO PANTIES OFF clothing, DANGEROUS NEGRO shirts, NAPPY ROOTS records, SLUTSSEEKER dating services, and (many) more.

The government rejects this claim, arguing that its test for disparagement under Section 2(a) is whether a significant portion of the ‘disparaged’ group would find the trademark to be disparaging. The government argues that, using evidence found in journals, on the internet and through historical documents, its attorneys are able to make a competent and evidenced-based decision, just like they do for any other basis for refusal, such as confusion or descriptiveness.

Federal trademark registrations bestow significant benefits on the registrant. However, does nothaving these benefits stifle otherwise protectable speech or expression? Does the government have the ability to accurately and uniformly decide what is, or is not, disparaging? These will be the questions asked and (hopefully) answered by the Supreme Court.

But What Does This Mean for the Washington Redskins? Didn’t their Supreme Court appeal get denied?

In July of 2015, the Eastern District of Virginia affirmed the USPTO’s cancellation of the Redskins’ trademarks brought by a group of Native Americans who asked the USPTO to cancel the registrations on the grounds that they were disparaging. The next step for the Redskins in that case is to appeal to the U.S. Court of Appeals for the Fourth Circuit, who has not yet ruled on the case.

Typically, the Supreme Court will only hear a federal case after it has been decided on appeal to the appropriate appeals court. The Redskins submitted an appeal directly to the Supreme Court, asking for the Court to allow the Redskins to argue their theory of the case at the same time as Tam’s case. Presumably, the Redskins would rather not leave the future of its trademarks in the hands of Tam, who has publicly denounced the Redskins trademark. The Supreme Court denied that request.

Regardless, the outcome of the Tam case will likely have a direct bearing on the future of the Redskins’ trademarks. If the Court broadly holds that Section 2(a) of the Lanham Act is an unconstitutional restriction on free speech, then that will make it easy for the Fourth Circuit to decide in favor of the Redskins. If the Court is narrowly in favor of Tam or holds that Section 2(a) is constitutional, then the options left for the Redskins (and the Slants) will be extremely limited.