The Supreme Court’s Tam Decision: Federally Registered Offensive Trademarks

On June 19, 2017, the Supreme Court ruled that the longstanding federal prohibition against registering offensive trademarks is unconstitutional. The decision represents a stark departure from long prevailing U.S. judicial wisdom, as well as the rest of the world, where most countries have some form of prohibition against the registration of "immoral" marks. In the U.S., the prohibition has been a fixture of trademark law for well over a century and goes back to the 1905 Trademark Act, which prohibited the registration of "scandalous and immoral" trademarks. The prohibition against "disparaging" marks was added in 1946.

Until the Supreme Court’s decision, the "disparagement clause" of the Lanham Act prohibited registration of trademarks "which may disparage . . . or bring . . . into contempt or disrepute" any "persons, living or dead, institutions, beliefs, or national symbols." Simon Tam sought federal trademark registration for THE SLANTS—the name of his Portland-based Asian-American band. The name, according to Tam, was an attempt to "reclaim" and "take ownership" of stereotypes about people of Asian ethnicity. Citing the disparagement clause, the Examining Attorney refused registration on the basis that "there is . . . a substantial composite of persons who find the term in the applied-for mark offensive." Tam appealed, and the Federal Circuit reversed, finding the disparagement clause unconstitutional under the First Amendment. The government appealed, and the Supreme Court affirmed.

Writing for all eight participating justices, Justice Alito ruled that the disparagement clause "offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend."  While the Supreme Court did not directly address the connection between the denial of a federal registration and the impact on speech, it let stand the Federal Circuit’s ruling that a sufficient connection exists. Specifically, the Federal Circuit held that the denial of the significant and financially valuable benefits of federal trademark registration creates a serious disincentive to adopt a mark which the government may deem offensive or disparaging, thereby creating a chilling effect on speech.

While no dissenting opinions were filed, a plurality of concurring opinions were handed down. All concurrences fundamentally agreed that the disparagement clause constitutes viewpoint discrimination. Justice Alito, joined by three other justices, wrote: "Speech that demeans on the basis of race, ethnicity, gender, religion, age, disability, or any other similar ground is hateful; but the proudest boast of our free speech jurisprudence is that we protect the freedom to express 'the thought that we hate.'" Justice Kennedy concurred, stating that the public—rather than potentially arbitrary decisions by government officials—must be trusted to regulate offensive speech: "A law that can be directed against speech found offensive to some portion of the public can be turned against minority and dissenting views to the detriment of all. The First Amendment does not entrust that power to the government’s benevolence.  Instead, our reliance must be on the substantial safeguards of free and open discussion in a democratic society."

In view of the Supreme Court’s decision, the new arbiter of all things "disparaging" is no longer the courts or the U.S. Patent and Trademark Office, but the commercial marketplace. Merchants seeking to exploit the source-identifying function of disparaging words will need to balance such use against the inherent risk of commercial alienation, blowback, and public outrage.

The Court’s decision is of course welcome news for the Washington Redskins. The team’s six "Redskins" marks were cancelled in 2014 after a decades-long legal battle brought by Native Americans, who argued that the team’s name is a racial epithet. In 2015, a district court affirmed the cancellation, and the team’s appeal at the Fourth Circuit was on hold pending resolution of the underlying constitutional dispute in the Tam case.

The Court’s opinion is already reverberating further. In a footnote, the Supreme Court pointed out the Trademark Trial and Appeal Board’s acknowledgment that the guidelines for determining whether a mark is "scandalous" are likewise vague and highly subjective. As such, it is little surprise that in a case currently before the Federal Circuit involving federal registration of the term FUCT for clothing (In re Brunetti), the USPTO conceded in a letter brief that the Federal Circuit’s reasoning in Tam also requires invalidation of the Lanham Act’s prohibition on the registration of scandalous and immoral marks. After the Supreme Court’s decision, the Federal Circuit ordered additional briefing on how Tam impacts the scandalous/immoral clause of the Lanham Act. During oral argument in the Brunetti case, the petitioner repeatedly drew an analogy to Tam, arguing that the Lanham Act’s prohibition against scandalous and immoral marks likewise impermissibly regulates speech and should be held unconstitutional. These signs foretell the impending doom of the Lanham Act’s scandalous/immoral clause.

The prohibition against registration of offensive trademarks has always been somewhat of an anomaly in trademark law, when considering that the fundamental purpose of trademarks is to protect consumers from confusion. It is difficult to see how the prohibition against the registration of offensive trademarks directly fosters that objective. As Justice Kennedy observed, "The central purpose of trademark registration is to facilitate source identification…. Whether a mark is disparaging bears no plausible relation to that goal." Thus, in a broad sense, the Supreme Court’s decision marks a return of trademark law to its exclusive source-identification purpose. The full impact of that return, however, will likely not be known for quite some time.