Federal Circuit Holds Section 2(a)'s Prohibition against Registration of Immoral or Scandalous Marks Unconstitutional

Federal Circuit Holds Section 2(a)’s Prohibition against Registration of Immoral or Scandalous Marks Unconstitutional

By Brian Darville

In a long-anticipated decision, the U.S. Court of Appeals for the Federal Circuit recently held that Section 2(a)’s prohibition against the registration of “immoral or scandalous matter” is unconstitutional based on the U.S. Supreme Court’s decision in Matal v. Tam, 137 S. Ct. 1744 (2017) which held the “disparagement” clause of Section 2(a) unconstitutional on First Amendment grounds. In Re Brunetti, 2015-1109 (Fed. Cir. Dec. 15, 2017). The Federal Circuit reversed the Trademark Trial and Appeal Board’s decision refusing registration of the mark “FUCT” on the grounds that it was scandalous under § 2(a). Id.

The Federal Circuit held that substantial evidence supported the Board’s findings that the mark FUCT for a clothing brand comprises immoral or scandalous matter under 15 U.S.C. § 1052(a) (“§ 2(a)”), and it did not err in concluding the mark comprises immoral or scandalous matter. However, the Federal Circuit held that § 2(a)’s bar on registering immoral or scandalous marks is an unconstitutional restriction on free speech in violation of the First Amendment.

Brunetti’s application to register “FUCT” for apparel was rejected as immoral or scandalous under § 2(a). The examining attorney reasoned that FUCT is a slang term for the past tense of the verb “fuck,” a vulgar word, and is therefore scandalous under In re Fox, 702 F.3d 633, 635 (Fed. Cir. 2012), which held that the PTO may prove “scandalousness” by establishing that a mark is “vulgar.” Id.

The Federal Circuit found that the mark FUCT is vulgar and therefore scandalous. Dictionary definitions, evidence of the applicant’s use and other internet usage supported this finding. “Substantial evidence supports the Board’s finding the mark FUCT is vulgar and therefore the Board did not err in concluding the mark is not registrable under § 2(a).” Slip op. at 9.

Turning to the constitutionality issue, the Federal Circuit held that § 2(a)’s bar on immoral or scandalous marks is unconstitutional under the First Amendment. The Federal Circuit first reviewed the U.S. Supreme Court’s decision in Matal v. Tam, 137 S. Ct. 1744 (2017), which held §2(a)’s disparagement provision unconstitutional on First Amendment grounds:

• In Tam, the Court held that trademarks are private not government speech. Id. at 1757-61.
• The Court concluded that § 2(a)’s bar on the registration of disparaging marks discriminated based on viewpoint. Id. at 1763 (Alito, J.); id. at 1765 (Kennedy, J.)
• The Court explained the disparagement provision “offends a bedrock First Amendment principle: “Speech may not be banned on the ground that it expresses ideas that offend.” Id. at 1751 (Alito, J.).
• Justice Alito’s plurality opinion further concluded that the constitutionality of the disparagement provision could not be sustained by analyzing a trademark registration as either a federal subsidy or a federal program. Id. at 1760-63 (Alito, J.).
• Both opinions held the disparagement provision unconstitutionally restricted free speech. Id. at 1764.
• The question of whether Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980) provides the appropriate test for deciding free speech challenges to provisions of the Lanham Act was left open.
• Justice Alito’s opinion concluded the disparagement provision failed even the intermediate test under Central Hudson because the prohibition was not narrowly drawn to a substantial government interest. Id. at 1764-65 (Alito, J.).
• Justice Kennedy’s opinion concluded that, because the disparagement provision discriminates based on viewpoint, it was subject to heightened scrutiny, which it did not withstand. Id. at 1767-68 (Kennedy, J.).

Turning to Brunetti’s appeal, the Federal Circuit ruled that Section 2(a)’s prohibition against registering immoral or scandalous marks is an unconstitutional content-based restriction on speech which is presumptively invalid. To survive, content-based statutes must withstand strict scrutiny review, which requires the government to “prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. Slip op. at 13 (quoting Reed v. Town of Gilbert, 135 S. Ct. 2218, 2227 (2015)).

The Federal Circuit rejected the government’s argument that the immoral or scandalous provision does not implicate the First Amendment because trademark registration is either a government subsidy program or limited public forum. The Court rejected the argument that trademark registration is a government subsidy program observing that the Justice Alito’s plurality opinion in Tam held the government subsidy framework does not apply to trademark registration. 137 S. Ct. at 1761 (Alito, J.). The Court reasoned that trademark registration does not implicate Congress’ power to spend funds and the grant of a trademark is not the equivalent of a subsidy, such that the “subsidy line of case law cannot justify the government’s content-based bar on registering immoral or scandalous marks.” Slip op. at 20.

The Court then rejected the government’s argument that trademark registration is a limited public forum, which would subject § 2(a)’s content-based restriction on marks comprising immoral or scandalous matter to a less demanding degree of scrutiny. “The constitutionality of speech restrictions on government property are analyzed under the Supreme Court’s “forum analysis,” which “determine[s] when a governmental entity, in regulating property in its charge, may place limitations on speech.”” Slip op. at 20 (quoting Christian Legal Soc’y of the Univ. of Cal. Hastings Coll. of Law v. Martinez, 561 U.S. 661, 669 (2010)). The Court reasoned that the “Supreme Court has found the existence of a limited public forum only when the government restricts speech on its own property.” Slip op. at 22. The Court found that because trademarks are used in commerce, trademark registration bears no resemblance to a limited public forum. “The registration and use of registered trademarks simply does not fit within the rubric of public or limited public forum cases.” Slip op. at 24. The Court concluded that “government registration of trademarks does not create a limited public forum in which the government can more freely restrict speech.” Id. at 25-26.

The Federal Circuit held that § 2(a)’s prohibition against registration of immoral or scandalous marks targets the expressive content of speech and therefore strict scrutiny should be applied. The Court reasoned that “rejections under § 2(a)’s bar of immoral or scandalous marks are necessarily based in the government’s belief that the rejected mark conveys an expressive message – namely, a message that is scandalous or offensive to a substantial composite of the general population.” Id. at 28. Because § 2(a) regulates the expressive components of speech, not the commercial components of speech, it should be subject to strict scrutiny, and there is no dispute that § 2(a)’s bar on immoral or scandalous marks is unconstitutional if strict scrutiny applies. Id.

The Federal Circuit then held that § 2(a)’s prohibition against registration of immoral or scandalous marks does not survive the Central Hudson intermediate scrutiny test covering commercial speech. “Intermediate scrutiny requires that ‘the State must show at least that the statute directly advances a substantial governmental interest and that the measure is drawn to achieve that interest.” Id. (quoting Sorrell v. IMS Health, Inc., 564 U.S. 552, 572 (2011)).

Commercial speech is subject to a four-part test which asks whether (1) the speech concerns lawful activity and is not misleading; (2) the asserted government interest is substantial; (3) the regulation directly advances that government interest; and (4) whether the regulation is “not more extensive than necessary to serve that interest.”

Id. (quoting Central Hudson, 447 U.S. at 566). The Court found the first prong of the Central Hudson test was met because the speech concerns lawful activity and is not misleading. However, the government failed to establish that its asserted interest – “protecting public order and morality” or promoting the use of non-scandalous marks in commerce – was a substantial interest justifying its suppression of immoral or scandalous trademarks. Similarly, restricting immoral or scandalous marks utterly failed to advance any governmental interest because even if the marks are refused registration, applicants can continue to use the marks in commerce. Finally, the regulation of immoral or scandalous marks was more extensive than necessary because the PTO’s inconsistent application of the immoral or scandalous provision undermines the likelihood that the provision has been narrowly tailored to achieve its objectives. Id. at 28-38.

Finally, the Federal Circuit held that it could not reasonably construe § 2(a)’s bar against immoral and scandalous marks to bar only obscene material. “We do not see how the words ‘immoral’ or ‘scandalous’ could reasonably be read to be limited to material of a sexual nature. We cannot stand in the shoes of the legislature and rewrite a statute.” Id. at 41.

The Court held that § 2(a)’s bar against immoral or scandalous marks is unconstitutional because it violates the First Amendment. Id. at 42. It reversed the Board’s holding that Mr. Brunetti’s FUCT mark is unregistrable under § 2(a).

Judge Dyk concurred in the judgment arguing that a saving construction of the statute limiting the immoral or scandalous provision to prohibiting obscene matter should be adopted to preserve the constitutionality of that portion of § 2(a). In Judge Dyk’s view, such a limiting construction to avoid the facial constitutional challenge to the provision is required and is consistent with precedent holding that the First Amendment does not protect obscene speech.