By Michael Small
Section 2(a) of the Lanham Trademark Act, 15 U.S.C. §1052(a) allows the United States Patent and Trademark Office (USPTO) to refuse registration of marks that contain immoral or scandalous matter. Known as the disparagement clause, the USPTO enforces the rule in the Trademark Manual of Examining Procedure (TMEP) Section 1203.01, specifying the types of rejected marks that fall under immoral or scandalous nature, such as obscene graphics or disparaging terms. Examples of rejected trademark applications include the following: Stop the Islamisation of America; Democrats Shouldn’t Breed; Naturally Intelligent God Gifted Africans; and most recently, the cancellation of the Washington Redskins NFL football team’s trademark name in 2014. Rejected trademarks are void from government benefits, such as preventing registration from other confusingly similar marks during the application process, receiving sole ownership of the mark for advertising purposes, and prevent foreign companies with similar marks to import their trademarked goods. In the pending U.S. Supreme Court case Lee v. Tam, the justices will make a decision that determines whether Section 2(a) of the Trademark Act violates the First Amendment. If the justices confirm that Section 2(a) violates the First Amendment, it would mark one of the most significant changes to the Lanham Act since the amendment of the Trademark Counterfeiting Act of 1984.
Before the case began, Tam created an all-Asian American band in 2006, named “The Slants.” According to Tam, the name addressed issues with racism that Asian Americans face and share the band members’ experiences with the term, ultimately reclaiming the word for Asians. Tam attempted to register the band name with the USPTO in 2011; however, an USPTO examiner rejected the application, arguing that the name is derogatory of Asians and those of Asian descent, despite the band’s intent. Tam appealed to the USPTO’s Trademark Trial and Appeal Board, but the Board affirmed the examiner’s position. Tam filed an appeal to the United States Court of Appeals for the Federal Circuit, arguing that the USPTO’s rejection of his mark is unconstitutional in accordance to the First Amendment. Although the Federal Court initially affirmed the USPTO’s decision, Tam filed a petition for a rehearing en banc. The en banc panel found that the government erred in treating the case with strict scrutiny because the government did not take into consideration Tam’s accusation of First Amendment violation. The en banc panel reversed the USPTO’s rejection of the trademark, arguing that the USPTO examiner’s rejection under Section 2(a) despite the band’s ideology is viewpoint discrimination and therefore violates the First Amendment. The panel further clarifies that the First Amendment protects even hurtful speech. The director of the USPTO, Lee, filed a writ of certiorari to the Supreme Court. The Supreme Court accepted the writ and heard oral arguments of the case in January 2017. A final decision from the Supreme Court is pending.
The Supreme Court’s decision on this case will have a huge impact on U.S. Trademark Law should the Court rule in favor of Tam. If the Court agrees that Section 2(a) of the Trademark Act is unconstitutional, it would mean the readjustment of the Lanham Act to accommodate trademark registration that contained restrictions on immoral or scandalous materials. Trademark registrants would have to depend on other regulations to take down purposeful slanders of their marks, such as dilution or likelihood of confusion. Consumers would also be at risk of exposure to trademarks that may offend them, which could discourage their investment into U.S. markets. For instance, consumers and entrepreneurs of black descent in the U.S. would not be open to purchasing goods whose mark consists of material that may offend them, such as marks that refer to hate groups or openly mocks their descendent. The approval of Tam’s mark, despite the owner’s intent, may bring about a challenge as to how the consumers will react to future disparaging marks.
There is a previous Supreme Court case that dealt with a similar situation as Lee v. Tam. In 2015, the Court reviewed Walker v. Texas Division, Sons of Confederate Veterans, Inc., in which the state of Texas rejected the Sons of Confederate Veteran’s confederate flag design for license plates. The Board’s reasoning for this rejection centered around the public’s view, who may find the confederate flag offensive due to its association with organizations that express hatred directed towards specific people and/or groups. In this case, the Supreme Court ruled that license plates are government speech because of their maintenance and distribution by the state of Texas. Therefore, license plates are exempt from the First Amendment defense, even from the expression of private individuals. As the USPTO also mandates the marks that will receive protection, it is likely that the Supreme Court could also decree trademarks government speech and rule in favor of Lee. However, the ruling in Walker had a 5-4 decision amongst the justices, making the ruling a narrow victory for government speech. It is evident that there is a divide between justices in determining the eligibility of protection under government speech or the First Amendment.
Based on evidence from previous Supreme Court decisions and the treatment of government speech and the First Amendment, one can conclude that the court’s ruling on this case will have an impact on how the legal system views trademark law. If Tam acquires the court’s favor and receives registration of his mark, it would open the opportunity for other groups to register marks for similar purposes as Tam. However, the intent to use said marks will vary for each group, bringing about a concern of whether future registered marks will be used in good or bad faith. If the court rules in favor of Lee, then trademarks could be identified as government speech. Therefore, it may be recommended for future owners of rejected trademarks not to rely exclusively on the First Amendment to defend their trademark. Debate might also arise as to whether other aspects of government-protected intellectual property rights are government speech, such as trade dress or patents. This would bring about confusion in IP law as to whether the acquisition of government protection is enough to warrant government speech. One can hope that regardless of the Supreme Court’s decision, the outcome will further clarify what terms are eligible for protection under the First Amendment or government speech for trademark registration.
 See 15 U.S.C. §1052(a)
 E.g. Greyhound Corp. v. Both Worlds Inc., 6 U.S.P.Q.2d 1635, 1639 (T.T.A.B. 1988) (holding that a mark of a defecating dog as a logo for polo shirts and t-shirts was scandalous, and thus barring the mark from registration under Section 2(a)).
 Lee v. Tam, No. 15-1293, 2016 U.S. LEXIS 4462 (U.S. Sept. 29, 2016) (granting certiorari).
 The Trademark Counterfeiting Act of 1984 enforces a penalty for the unauthorized or intentional usage of counterfeit trademark, with the maximum sentence of five years imprisonment or a $250,000 – $1 million fine. See 18 U.S. Code § 2320.
 See Katy Steinmetz, “The Slants” Suit: Asian-American Band Goes to Court Over Name,” Time, Oct. 23, 2013, http://entertainment.time.com/2013/10/23/the-slants-suit-asian-american-band-goes-to-court-over-name/ (“Prior to the term Asian becoming in vogue, the term that the Asian-American community used [to describe themselves] was “yellow.” It’s empowering when people use it and embrace it as part of their identity.”).
 See Walker v. Tex. Div., Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015).