More Disparagement Rejections at USPTO

By John DiGiacomo

A recent opinion issued by the United States Court of Appeals for the Federal Circuit could lead to the disqualification of one of the Lanham Act’s most controversial provisions. That provision is 15 U.S.C. § 1052(a), otherwise known as the “disparagement standard,” which allows the United States Patent and Trademark Office (USPTO) to reject trademark applications if an examining attorney believes that the proposed mark would disparage a substantial number of consumers. Applicant Simon Shiao Tam, the creator of a band named The Slants, attempted to trademark THE SLANTS, but was rejected by the examining attorney, whose decision was then affirmed by the Trademark Trial and Appeals Board (the Board).

The Board rejected Applicant’s proposed SLANTS mark because it found that the mark would be disparaging to people of Asian-American descent under 15 U.S.C. § 1052(a). To make its decision, the Board looked to the Applicant’s band’s website that featured an Asian woman, a dragon, and the rising sun symbol next to the band’s name; to Applicant’s statement that he was trying to “own” the stereotype; and to letters received by the USPTO from Asian-Americans who opposed the registration of the mark due to its offensive nature. Applicant then appealed to the United States Court of Appeals for the Federal Circuit challenging both the disparagement analysis and the constitutionality of the disarrangement section of the Lanham Act. The court published its opinion on April 20, 2015.

Disparagement Analysis

To determine whether or not the Board correctly determined that THE SLANTS would be a disparaging mark, the court used the two-part disparagement test from In re Geller,[1] which asks courts to consider: “(1) what is the likely meaning of the matter in question, taking into account not only dictionary definitions, but also the relationship of the matter to the other elements in the mark, the nature of the goods or services, and the manner in which the mark is used in the marketplace in connection with the goods or services; and (2) if that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group.”[2] Because the court was reviewing the formal decision of an agency board, it only had to determine if there was substantial evidence to support its decision, and review de novo the decision reached.

The court first determined that there was substantial evidence to find that THE SLANTS has a meaning tied to Asian-Americans under the first Geller prong. The most damning piece of evidence from the record was a quote from Applicant himself saying, “I was trying to think of things that people associate with Asians. Obviously, one of the first things people say is that we have slanted eyes. . . .”

The court then determined that there was substantial evidence to find that THE SLANTS would be disparaging to a “substantial composite of people of Asian descent.” The court pointed to the dictionary definitions considered by the Board that defined “slants” as an ethnic slur, as well as numerous other websites and blogs that condemned usage of the term.

The Constitutionality of 15 U.S.C. § 1052(a)

The court then turned its attention to the constitutional challenge brought by Applicant who claimed that the disparagement standard of the Lanham Act violated the free speech protections of the First Amendment. Applicant argued that the government was conditioning a benefit (trademark registration) on his relinquishment of certain distasteful speech (a generally illegal censorship of subject matter).

The court did not accept Applicant’s argument, however, and pointed to the In re McGinley[3] case where the Federal Circuit’s “predecessor court” wrote: “With respect to appellant’s First Amendment rights, it is clear that the [US]PTO’s refusal to register appellant’s mark does not affect his right to use it. No conduct is proscribed, and no tangible form of expression is suppressed. Consequently, appellant’s First Amendment rights would not be abridged by the refusal to register his mark.”[4] Essentially, the court followed its own precedent in ruling that denying registration of a mark does not deny the applicant his or her right to free speech because he or she can still use the mark freely in the marketplace.

Applicant also argued that the disparagement standard was unconstitutionally vague, also under First Amendment law. Specifically, Applicant pointed towards the words “scandalous” and “disparage” and argued that the words were inherently subjective and vague, and that a reasonable person would not understand the standard. The court disagreed, again pointing to McGinley, where the court held that the words were sufficiently descriptive to allow the USPTO and the Board to properly apply the law.

Finally, Applicant made due process and equal protection claims. The court rejected both, holding that the large amount of “process” required of trademark applicants is enough to satisfy due process, and that there was no equal protection violation because Applicant’s mark was rejected for its likely offensiveness, not because Applicant himself was an Asian-American.

Judge Moore’s Separate Opinion and Call to Action

In the most interesting part of the opinion, Judge Moore wrote separately to urge a reconsideration of the court’s holding in McGinley, now more than thirty years old. Particularly, Judge Moore was concerned with the fact that commercial speech jurisprudence has evolved since the McGinley ruling, and since then, the balance of the USPTO’s budget has shifted from being mostly funded by applicants, to being mostly funded by public tax dollars.

Judge Moore began by laying out what a First Amendment analysis must entail by asking three questions: (1) Is the speech considered protected speech? (2) Is there government action that abridges that speech? (3) Under the appropriate framework, is that abridgment unconstitutional?

To the first question, Judge Moore identified that under modern commercial-speech jurisprudence, trademarks are protected forms of commercial speech deserving of First Amendment protection. In Applicant’s case, specifically, Judge Moore noted that the band’s songs, which support Asian-American heritage, when juxtaposed with the “offensive” band name, make a political and cultural statement of the type the First Amendment was created to protect.

Under the second question, Judge Moore opined that by withholding federal trademark registration—and all the benefits registration provides—the federal government “acts” to abridge speech pursuant to the famous First Amendment/Due Process case Perry v. Sindermann.[5] Sindermann stands for the “Unconstitutional Condition” doctrine which says the government cannot condition a benefit on the relinquishment of constitutional rights. Judge Moore noted that no other case has analyzed the disparagement standard under the Unconstitutional Condition doctrine, and that it is time one does. Because the USPTO’s funding no longer comes from the treasury, its operations look more and more like a regulatory scheme. According to Judge Moore, the benefits of trademark registration should be judged on the same plane as social security and welfare—affirmative benefits that cannot be conditioned on the recipient giving up their First Amendment rights.

Finally, Judge Moore claimed that McGinley should be re-considered under a traditional First Amendment analysis. She argued that as a content-based, viewpoint restriction, the disparagement standard is presumptively unfair and must meet strict scrutiny—the highest amount of scrutiny a reviewing court can utilize in determining the constitutionality of government action. However, restrictions on commercial speech, which trademarks arguably should be classified as, must only meet “intermediate” judicial scrutiny. This did not seem to deter Judge Moore, who wrote that even under this lesser form of scrutiny, the disparagement standard was most likely unconstitutional.

To reach that conclusion, Judge Moore used the three-part commercial speech test from the Central Hudson[6] case which has a reviewing court ask three questions after determining that the commercial speech is lawful and not misleading: (1) is “the asserted governmental interest is substantial,” (2) is “the regulation directly advances the governmental interest asserted,” and (3) is the regulation “is not more extensive than is necessary to serve that interest.”[7]

After determining that THE SLANTS trademark would be legal and not misleading, Judge Moore dove into the Central Hudson analysis. Under the first prong, Judge Moore argued that there is no substantial government interest in censoring offensive speech, and many cases outside the trademark space have held just that. She did not elaborate on the final two prongs as they are intertwined with the first and in her mind, the first prong was not met.

Moving Forward

Due to Judge Moore’s persuasive opinion, a sua sponte[8] poll was taken and en banc[9] consideration was granted. The parties in the case have been asked to submit new briefs limited to the issue of the disparagement standard’s constitutionality.

[1] 751 F.3d 1355, 1358 (Fed. Cir. 2014).

[2] Id.

[3] 660 F.2d 481, 484 (C.C.P.A. 1981).

[4] Id. (emphasis added).

[5] 408 U.S. 593, 597 (1972).

[6] Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557 (1980).

[7] Id. at 566.

[8] “Of their own accord”

[9] Refers to a ruling made by the entire bench of a particular circuit.

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