On December 15, 2017, following hot on the heels of the Supreme Court's recent ruling striking down the Lanham Act's disparagement clause (Matal v. Tam, 137 S. Ct. 1744 (2017)), the Federal Circuit ruled that the Lanham Act's prohibition on immoral and scandalous matter similarly violates the First Amendment.
At issue in the recent Federal Circuit appeal was the registrability of the mark FUCT for clothing. Following more a decade of use of the FUCT brand, Applicant Erik Brunetti applied to the USPTO to register the apparel brand. During examination, the PTO refused registration concluding that the mark was vulgar, and therefore scandalous and unregistrable under Section 2(a) of the Lanham Act. Following affirmation of the denial by the TTAB, Mr. Brunetti appealed to the Federal Circuit.
While rejecting Mr. Brunetti's argument that FUCT was not vulgar, the Federal Circuit agreed with his contention that the Lanham Act's prohibition on marks which "consist of or comprise immoral ... or scandalous matter" was an unconstitutional content-based restriction on speech.
In evaluating the constitutionality of this portion of Section 2(a) of the Act, the Court addressed many of the same defenses raised by the government in the Tam case. For example, the Court rejected the government's argument that because trademark registration is a government subsidy program, Congress's prohibition is a reasonable exercise of its spending power. Trademark registration does not implicate Congress's power to spend funds, the Court said, because trademark registration fees collected from applicants, and not taxpayers, fund the government's operating expenses associated with trademark registration. Though important legal rights and benefits are accorded to registrants from registration, the court concluded that such rights and benefits are not analogous to the grant of federal funds. And to the extent federal funds are spent for enforcement and USPTO employee benefits, that is true of almost every government service. If, the Court concluded, trademark registration gave the government the authority to regulate speech, then every government registration program would give the government equivalent censorship authority.
The Court also rejected the government's argument that trademark registration is a limited public forum. Because the purpose of trademarks is to convey messages throughout commerce, "[i]t is difficult to analogize the Nike swoosh or the Nike JUST DO IT mark located on a Nike shirt in a Nike store as somehow a government created limited public forum." Nor does the Principal Register transform trademark registrations into a limited public forum, the Court concluded, because "[t]he government does not open the principal register to any exchange of ideas—it is ancillary to trademark registration."
Finally, the Court rejected the government's argument that, as commercial speech, intermediate scrutiny applies. Though trademarks convey a commercial message, they also often contain expressive content. Whether a mark is immoral or scandalous depends on its expressive, rather than source-identifying, nature. Accordingly, strict scrutiny applies.
Even if the intermediate scrutiny threshold were to apply, the statutory prohibition would nevertheless fail. Under intermediate scrutiny, commercial speech is analyzed using a four-pronged test that 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) the regulation is not more extensive than necessary to serve that interest." The Court found the prohibition could not meet the second, third, or fourth prongs.
The Court found that the government could barely identify any government interest in the restriction, much less a substantial one. "All of the government's proffered interests boil down to permitting the government to burden speech it finds offensive." The Tam case and other Supreme Court precedent, however, make clear that the government's interest in protecting the public from marks it considers "off-putting" is not a substantial interest justifying the broad suppression of speech.
Nor did the Court believe the prohibition advanced any government interest. The government acknowledged that registration refusals do not prevent applicants from using their marks in commerce. Thus, the court concluded, "[i]n this electronic/Internet age, to the extent that the government seeks to protect the general population from scandalous material, with all due respect, it has completely failed."
Finally, the Court concluded that the government could not demonstrate that the Lanham Act's prohibition is narrowly tailored. Pointing to numerous, nearly-identical marks that were approved by one Examining Attorney, and rejected as scandalous or immoral by another, the court found that "[t]he PTO's inconsistent application of the immoral or scandalous provision creates 'uncertainty [that] undermines the likelihood that the [provision] has been carefully tailored.'"
Justice Dyk, concurring in the Court's judgment, would have narrowed the scope of the Lanham Act's provision to prohibiting obscene marks only, which are not protected by the First Amendment. The majority, however, did not find that approach reasonable because not all scandalous or immoral marks are obscene. According to the majority: "While the legislature could rewrite the statute to adopt such a standard, we cannot."
The case is In re: Erik Brunetti, Case No. 2015-1109 (Fed. Cir. Dec. 15, 2017).
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