Disparagement Clause of Lanham Act held Facially Unconstitutional under Free Speech Clause of the First Amendment

June 19, 2017

Disparagement Clause of Lanham Act held Facially Unconstitutional under Free Speech Clause of the First Amendment

By Brian Darville and Chris Donahue

Today, the United States Supreme Court held that the disparagement clause of the Lanham Act, Section 2(a), is facially unconstitutional under the First Amendment’s Free Speech Clause, affirming the Federal Circuit’s en banc decision in Lee v. Tam, 808 F.3d 1321 (Fed. Cir. 2015). Matal v. Tam, Case No. 15-1293, __ U.S. __ (June 19, 2017). Section 2(a) prohibits the registration of trademarks that may “disparage . . . or bring . . . into contemp[t] or disrepute” any “persons, living or dead.” 15 U.S.C. § 1051(a). The USPTO had relied upon Section 2(a) in refusing registration of the trademark THE SLANTS, for entertainment services in the nature of live performances by a musical band, on the grounds that the term SLANTS is a derogatory term for Asians.

The Supreme Court first rejected Tam’s argument that the disparagement clause does not reach marks that disparage racial or ethnic groups based on the plain language of the statute referencing “persons.”

The Supreme Court next rejected the argument that trademarks are government speech, not private speech. The Court distinguished the Section 2(a) disparagement provision from its prior decision in Walker holding that the messages on Texas specialty license plates are government speech. Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576 U.S. ___ (2015). The Court observed that: (1) license plates have long been used by the government to convey state messages; (2) license plates are often closely identified in the public mind with the government, are manufactured and owned by the state, are generally designed by the state, and serve as a form of government identification; and (3) the State of Texas maintained direct control over the messages conveyed on the specialty plates. The Court observed none of these factors are present in this case involving the Section 2(a) disparagement provision in the Lanham Act.

The Supreme Court then rejected the arguments that trademarks are a form of a government subsidy, and that the constitutionality of the disparagement clause should be tested under a new “government-program” doctrine.

The Supreme Court then ruled that it need not address whether trademarks constitute commercial speech subject to “intermediate scrutiny” under First Amendment Analysis, or non-commercial speech, subject to “strict scrutiny” because the disparagement clause cannot withstand even “intermediate scrutiny” under Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (1980). Under Central Hudson, “a restriction of speech must serve ‘a substantial interest,’ and it must be ‘narrowly drawn.’” Id., at 564-565. “This means, among other things, that ‘[t]he regulatory technique may extend only as far as the interest it serves.’” Id., at 565.

The disparagement clause failed this requirement of extending only as far as the interest it serves. The Supreme Court found that the disparagement clause served two interests: First, “[t]he Government has an interest in preventing speech expressing ideas that offend.” Slip op. at 25.

And, as we have explained, that idea strikes at the heart of the First Amendment. 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.’” Slip op. at 25 (quoting United States v. Schwimmer, 279 U.S. 644, 655 (1929)).

Second, the government has an interest in protecting the orderly flow of commerce. However, the Supreme Court ruled that “the disparagement clause is not “narrowly drawn” to drive out trademarks that support invidious discrimination.” Slip op. at 25. The Court emphasized that the clause “reaches any trademark that disparages any person, group, or institution. It applies to trademarks like the following: “Down with racists,” “Down with sexists,” “Down with homophobes.” It is not an anti-discrimination clause; it is a happy-talk clause. In this way, it goes much further than is necessary to serve the interest asserted.” Id.

The Supreme Court also found the disparagement clause far too broad in other ways in that it protects every person living or dead as well as every institution. The Court questioned how speech disparaging deceased presidents or calling “Slavery an evil institution” could conceivably disrupt commerce.

Finally, the Supreme Court observed “a deeper problem with the argument that commercial speech may be cleansed of any expression likely to cause offense.”

The commercial market is well stocked with merchandise that disparages prominent figures and groups, and the line between commercial and non-commercial speech is not always clear, as this case illustrates. If affixing the commercial label permits the suppression of any speech that may lead to political or social “volatility,” free speech would be endangered.

Slip op. at 26.

For these reasons, the Supreme Court held that the disparagement clause of Section 2(a) violates the Free Speech Clause of the First Amendment.

In concurrence, Justice Kennedy, joined by Justices Ginsburg, Sotomayor and Kagan, reasoned that the disparagement clause of Section 2(a) constitutes viewpoint discrimination, which is “a form of speech suppression so potent that it must be subject to rigorous constitutional scrutiny. The Government’s action and the statute on which it is based cannot survive this scrutiny.” Slip op. at 1 (Kennedy, J., concurring).

Justice Kennedy emphasized that apart from a few categories of speech and narrow exceptions, “it is a fundamental principle of the First Amendment that the government may not punish or suppress speech based on disapproval of the ideas or perspectives the speech conveys.” Id., at 2 (citing Rosenberger v. Rector and Visitors of Univ. of Va., 515 U.S. 819, 828-829 (1995)). “A law found to discriminate based on viewpoint is an ‘egregious form of content discrimination,’ which is ‘presumptively unconstitutional.’” (Id., quoting Rosenberger, 515 U.S. at 829-830). Because the disparagement clause permits an applicant to register a positive or benign mark, but not a derogatory one, that law reflects the government’s disapproval of a subset of messages that the government finds offensive. “This is the essence of viewpoint discrimination.” Id., at 2-3.

Justice Kennedy further emphasized that regardless of whether or not trademarks are commercial speech, the viewpoint based discrimination at issue with respect to the disparagement clause necessarily invokes heightened scrutiny. “’Commercial speech is no exception, . . . to the principle that the First Amendment ‘requires heightened scrutiny whenever the government creates a regulation of speech because of disagreement with the message it conveys.’” Id., at 5 (quoting Sorrell v. IMS Health Inc., 564 U.S. 552, 566 (2011)). In Justice Kennedy’s view, to permit viewpoint discrimination in the modern commercial marketplace “is to permit Government censorship.” Id., at 5.

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.

Id., at 8.

For these reasons, Justice Kennedy concurred in part and concurred in the judgment holding Section 2(a) facially unconstitutional under the Free Speech Clause of the First Amendment.

The Supreme Court’s decision in Tam likely will impact an appeal by the Washington Redskins professional football team to the U.S. Court of Appeals for the Fourth Circuit of the decision by the Trademark Trial and Appeal Board (TTAB) granting a petition for cancellation of various REDSKINS marks pursuant to Section 2(a). The Tam decision almost certainly will lead to a reversal of the TTAB decision cancelling those registrations on the grounds that they disparage Native American Indians.