Caseflicks

Court of Appeals for the Federal Circuit • 2015

In RE:TAM en Banc

808 F.3d 1321 | 2015 U.S. App. LEXIS 22593

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Takeaway

In short, this en banc decision held that the Lanham Act could not deny federal trademark registration because a mark’s message might offend or disparage a group; such message-based discrimination violated the First Amendment.

Background

Simon Shiao Tam is the frontman of an Asian-American dance-rock band called THE SLANTS. Tam chose the name to reclaim a stereotype about Asian people and to provoke discussion of racial and cultural identity. He sought federal registration of THE SLANTS for live musical-band performances, asserting use of the mark since 2006.

A PTO examining attorney refused registration under § 2(a) of the Lanham Act, which barred registration of marks that “may disparage” persons, institutions, beliefs, or national symbols. The examiner concluded that “slants” referred to people of Asian descent and that a substantial composite of that group would find the term disparaging. The Trademark Trial and Appeal Board affirmed.

A Federal Circuit panel affirmed the Board’s finding of disparagement but concluded that circuit precedent, especially In re McGinley, foreclosed Tam’s First Amendment challenge because he remained free to use the name without registration. The full court granted rehearing en banc to decide whether § 2(a)’s disparagement bar violated the First Amendment.

Issues

Issue #1

Whether THE SLANTS was properly found disparaging under the PTO’s existing § 2(a) standard.

Holding

Yes. The en banc court reinstated the panel’s conclusion that substantial evidence supported the Board’s finding that the mark was disparaging to a substantial composite of persons of Asian descent.

Reasoning

The record supported the conclusion that THE SLANTS referred to people of Asian descent. Tam had explained that the name invoked the stereotype of “slanted eyes,” and the band’s materials linked the name to Asian imagery and to the goal of reclaiming an ethnic slur.

The record also supported the Board’s conclusion that the term was disparaging under the PTO’s then-existing test. Dictionary definitions characterized “slant,” when used to describe a person of Asian descent, as offensive or derogatory, and the record included objections from members and organizations within the Asian-American community.

The court’s constitutional ruling did not rest on a contrary factual finding about Tam’s intended message. Even if Tam selected the name to reappropriate a slur and express pride in Asian identity, the PTO could find that a substantial composite of the referenced group would view the term as disparaging under § 2(a).

Issue #2

Whether § 2(a)’s bar on registration of disparaging marks is an unconstitutional content- and viewpoint-based restriction on private speech.

Holding

Yes. The disparagement provision was facially unconstitutional because it discriminated against speech based on the message conveyed and could not survive strict scrutiny.

Reasoning

Section 2(a) targeted marks because of their expressive content. A mark was refused registration precisely when the PTO concluded that the message it conveyed disparaged an identified group; listener reaction to speech is not a content-neutral basis for regulation.

The provision was viewpoint discriminatory as well as content based. The PTO permitted favorable or neutral references to a group while denying registration to negative references to that same group. Thus, marks such as THINK ISLAM could receive registration while STOP THE ISLAMISATION OF AMERICA could not.

Trademarks often communicate more than source identification. Tam’s band name was intended to make a social and political statement about race, stereotypes, and identity. More generally, the PTO applied the disparagement bar because it objected to marks’ expressive messages, not because the marks failed to identify source or were misleading.

Because the statute burdened speech due to disagreement with its message, strict scrutiny applied. The government did not contend that the provision could satisfy strict scrutiny, and its asserted interest in disassociating itself from offensive messages was not a permissible basis for suppressing private expression.

The provision was facially invalid because every denial under its disparagement clause withheld otherwise available legal rights on the ground that the government found the mark’s expressive message disparaging. Leaving the rule in place would also perpetuate uncertainty and chill speakers from adopting marks that might later be deemed offensive.

Issue #3

Whether the First Amendment was not implicated because refusal of registration did not prohibit Tam from using THE SLANTS in commerce.

Holding

No. The denial of federal registration imposed a significant, message-based burden on speech even though Tam could continue using the mark.

Reasoning

The court overruled In re McGinley and its premise that the absence of an outright prohibition ends the First Amendment inquiry. Under unconstitutional-conditions principles, government may not deny a valuable benefit because of protected speech when doing so penalizes and inhibits that speech.

Federal registration provides substantial legal and economic benefits unavailable to unregistered markholders. These include nationwide constructive-use priority, presumptions of validity and exclusive ownership, possible incontestability, access to certain federal remedies, Customs assistance, anti-cybersquatting protections, and international-registration advantages.

The uncertainty of the phrase “may disparage,” together with inconsistent PTO decisions, intensified the chilling effect. Applicants could avoid a controversial mark rather than risk denial, litigation costs, or cancellation after investing heavily in a brand.

Issue #4

Whether trademark registration may be denied on the theory that registered marks are government speech or that registration is a government subsidy.

Holding

No. Trademark registration neither transforms a private mark into government speech nor constitutes a subsidy program exempt from First Amendment limits.

Reasoning

Trademark registration is a regulatory act, not the government’s adoption of the mark’s message. Consumers understand trademarks to identify the private source of goods and services, not to express governmental approval of their content. The PTO itself routinely registered messages that plainly could not be understood as government endorsements.

The ordinary features of registration—the ® symbol, a registration certificate, publication, and placement in a PTO database—do not turn the underlying expression into government speech. Treating such administrative acts as government speech would dangerously permit content-based discrimination in analogous registration systems, including copyright.

Trademark registration also was not a government subsidy. The Lanham Act regulates commerce and grants legal rights among private parties; it does not distribute public funds to advance a government message. The registration system was funded by user fees, and the disparagement condition was unrelated to the trademark system’s core goals of preventing consumer confusion and protecting goodwill.

The court rejected the suggestion that the government could characterize any valuable legal entitlement as a subsidy and allocate it on a viewpoint-discriminatory basis. Such a theory would allow government to evade the First Amendment simply by withholding legal protections from speakers whose ideas it disfavored.

Issue #5

Whether the disparagement provision would survive intermediate scrutiny if treated as a regulation of commercial speech.

Holding

No. Even under the Central Hudson test, § 2(a)’s disparagement bar was unconstitutional.

Reasoning

The speech at issue concerned lawful activity and was not misleading. Unlike Lanham Act provisions that deny registration to deceptive or confusing marks, the disparagement bar did not address consumer deception or the mark’s capacity to identify source.

The government failed to identify a substantial interest independent of hostility toward the message. Its principal asserted interest—dissociating the government from odious speech—depended on disapproval of the mark’s viewpoint and could not justify content-based discrimination against private speech.

The government’s additional interests in conserving resources, fostering racial tolerance, and allowing state-law restrictions were insufficient. Registration was largely user-funded; an asserted interest in racial tolerance could not support selective limitations on speech; and states could not justify federal discrimination by seeking to impose similar unconstitutional restraints.

The provision also did not directly and materially advance any broad goal of reducing racial intolerance. Disparaging expression remained widespread in books, music, and online speech, while the PTO itself had registered various charged marks.

Concurrences

Judge O'Malley

Reasoning

Judge O'Malley joined the Court's result, but judge O’Malley agreed that the disparagement provision was facially invalid under the First Amendment and that the court properly discarded McGinley’s cursory contrary analysis. She wrote separately because she would also hold the provision void for vagueness under the Fifth Amendment.

In her view, the statutory phrase “may disparage,” applied to a broad and undefined range of persons, institutions, beliefs, and symbols, gave applicants and PTO officials inadequate guidance. The PTO’s added test—whether a mark may disparage a “substantial composite” of an “identifiable” group—compounded rather than resolved the uncertainty.

The PTO’s inconsistent treatment of materially similar marks showed that the provision invited subjective and arbitrary enforcement. Because the statute regulated speech based on content, heightened vagueness scrutiny was appropriate: speakers need clear notice, and administrators need objective standards that prevent discriminatory application.

The majority correctly recognized that uncertainty chilled speech, but Judge O’Malley would have treated that uncertainty as an independent due-process defect. In her view, § 2(a) failed even a relatively forgiving vagueness test and plainly could not meet the stricter test applicable when First Amendment interests are at stake.

Dissents

Judge Dyk

Reasoning

Judge Dyk agreed that § 2(a) was unconstitutional as applied to Tam because THE SLANTS carried core political expression about race and cultural identity. But he rejected the majority’s facial ruling, which invalidated the statute as applied to marks that are purely commercial source identifiers.

In his view, § 2(a) did not reflect government hostility to a speaker’s viewpoint. Rather, the PTO used an objective inquiry into whether a substantial composite of the referenced group would find the mark disparaging. Like the rule considered in Boos v. Barry, the statute was content based but viewpoint neutral because it looked to the perspective of the affected group rather than to the government’s preferred ideology.

Purely commercial trademarks receive less First Amendment protection than core political speech. The government could reasonably decline to furnish its trademark-registration and enforcement machinery to commercial marks that target groups for ridicule, because commercial disparagement has little or no informational value and intrudes on the privacy interests of the disparaged group.

Judge Dyk viewed federal registration as a government benefit or subsidy. The government need not supply enhanced enforcement mechanisms for every commercial mark, and denial of that benefit did not forbid the owner from continuing to use the mark. In his view, the condition regulated speech only within the federal trademark program and therefore did not create an unconstitutional condition on speech outside that program.

The government had a sufficient interest in protecting groups from targeted, demeaning commercial advertising and in avoiding intrusive, unpleasant commercial formats. That interest, coupled with the limited constitutional value of commercial disparagement, justified withholding registration from purely commercial marks.

Judge Lourie

Reasoning

Judge Lourie joined the principal portions of Judge Dyk’s opinion and added that Congress and the PTO had long excluded offensive marks from federal registration. In his view, the court should not upset that longstanding legislative policy, continuously applied since the early federal trademark statutes, absent a compelling constitutional reason.

He maintained that refusal to register a mark did not deny Tam freedom of speech. Tam could use THE SLANTS to identify his band and to convey his intended message; he simply lacked access to additional federal registration-based enforcement mechanisms. Judge Lourie also believed unregistered marks could receive protection under § 43(a) of the Lanham Act and under common-law principles.

Judge Lourie further viewed registration as carrying a permissible government imprimatur. Through publication in the Official Gazette, issuance of registration certificates, and use of the ® symbol, the government conveyed that a mark qualified for its federal registration program. The PTO could therefore decide not to associate that program with marks shown to be disparaging to affected persons.

Judge Reyna

Reasoning

Judge Reyna concluded that trademarks are commercial speech, even when they contain political or expressive elements. Their essential function is to identify the source of goods or services and facilitate commercial transactions, so the appropriate standard was intermediate rather than strict scrutiny.

He understood § 2(a) as a content-neutral effort to address the secondary commercial effects of discriminatory and disparaging speech, not as an effort to suppress ideas. The Lanham Act’s overarching purpose is to promote the orderly flow of commerce, and commercial marks that demean people based on race, religion, gender, ethnicity, or similar characteristics can disrupt commerce and undermine market stability.

The government’s interest in preventing those harms was substantial. Judge Reyna analogized to civil-rights laws that address discriminatory speech in commercial settings, including discriminatory advertising and workplace harassment, because speech alone can create discriminatory effects in commerce.

The statute imposed only a modest burden: it neither prohibited Tam from using the name nor restricted his private advocacy, but merely withheld an exclusive federal registration benefit for a narrow class of low-value commercial speech. Balancing that limited burden against the government’s commercial interest, Judge Reyna would have upheld § 2(a) under intermediate scrutiny.