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August 14, 2017

Legalese: In 'Slants' Ruling, Trademarks Are Protected

This article originally ran in the August 2017 issue of AVN magazine. Click here to see the digital edition. This month’s column is longer than customarily is the case, but for good reason. The topic—the Supreme Court’s decision in Matel v. Tam, the so-called “Slants” case—which seems rather straightforward, is loaded with subtle, bombshell political underpinnings. Matel v. Tam, ___ U.S. ___, 137 S.Ct. 1744, ___ L.Ed.2d ___ (June 19, 2017). The practical result of the case to this industry seems fairly clear: Federal trademark registration cannot be denied because the trademark expresses an unpopular message. That had not been the case prior to the relentless battle mounted by the rock band The Slants with the United States Patent and Trademark Office (the “PTO”). Analyzing this case requires a review of general trademark principles, how federal trademark registration operates; and a little history of the PTO’s consistent rejection of controversial trademarks. The impact of this case clearly will be to “un-cancel” the registration of the Washington Redskins football team, and permit the registration of many other very controversial ones. Trademarks and Registration Trademarks (which, as used here, include service marks) are words or symbols that distinguish the origin of goods and services. Trademarks function to protect both consumers and commercial interests. Those, of course, are each important interests. There are now more than two million active trademarks that enjoy federal registration; and the number of trademarks that are valid although unregistered is staggering, an unimaginable number. To use an example, take two trademarks with which everyone is familiar, “McDonald’s” and the “golden arches” that tower over most every McDonald’s in the world. When the first McDonald’s was opened over a half-century ago, it had no trademarks, registered or otherwise. But when it started selling hamburgers at its McDonald’s business with the golden arches rising above it, McDonald’s garnered two common-law trademarks. That is, McDonald’s could prevent any competing hamburger joint from using either mark. As noted, that serves two important public interests. Interest Number One is for McDonald’s. Other hamburger joints are prevented from trading off of the famous name to gain an unfair competitive advantage. Interest Number Two is for the consumer. Whatever your opinion of the food at McDonald’s may be, if you go into one of those places beneath the “golden arches,” you know what to expect, right down to the amount of salt on the fries. It is for the latter interest that trademark owners are required to “police” their trademarks. If a McDonald’s franchise fails to live up to McDonald’s quality standards, McDonald’s World Headquarters is required to slap them on the wrist to be sure that they toe the mark. Failing to do that would open them up to a claim that their trademark does not fairly represent a particular kind and quality of product. Trademarks come and go automatically. There is no registration requirement for trademarks, unlike, for example, patents. If you use a trademark or trade name, it is yours, so long as it doesn’t infringe on one that someone else owns. Similarly, if you stop using it, it is considered abandoned and you lose it, even if it is registered. Historically, trademarks were many times geographically limited. For example, if you owned a hardware store in Twin Falls, Idaho, the trademark you had for that business would be limited to the Twin Falls area of Idaho. The Internet, however, has changed all of that, given that materially every business has a website. Both the federal government and the states have mechanisms for registration of trademarks. The focus here is the federal one, which as a general proposition is by far the most important. (State trademark registration may or may not confer additional benefits, depending upon the state you are in. Ask your attorney.) Federally registered trademarks (and only federally registered trademarks) are indicated by the ® symbol, with which you probably are familiar. There also are the ™ and â„  symbols, with which you likely are equally familiar. They do nothing more than tell the world that you are claiming that with which it is associated as your trademark or service mark, respectively, which is worthwhile. Federal trademark registration confers substantial benefits to the registrant. First, once you file your registration application with the Trademark Office (The United States Patent and Trademark Office, or the “PTO”), you secure your “place in line.” It is for that reason that the trademark office allows “intent to use” (or “1(b)”) applications. Second, after five years, you can file the appropriate papers and your registration becomes largely incontestable. That’s a biggie! Federal trademark registration is not automatic, although the process is relatively straightforward (though not so much that a non-lawyer should attempt it). First, you complete an online application and pay the filing fee (a little over $300). Unless it’s an intent-to-use application, it must include a “specimen” that establishes how the mark is being used. For example, if the trademark is for the name of a product, you might include a photo of the packaging, showing the use of the mark (in interstate commerce, by the way). The application is then assigned to an examining attorney. The examiner will review the application to determine whether it was done correctly, whether the applied-for mark infringes on any existing mark and whether there is any part of the mark that must be disclaimed. (A “McDONALDS HAMBURGERS” trademark, for example, must disclaim any special right to the use of the word “hamburgers.”) If the examining attorney doesn’t like something about your application, he or she issues an “office action,” to which you will have six months to respond. The most common of office actions consist of a complaint about the description of the goods or services attached to the mark. Usually what happens is that the response to the office action satisfies the examining attorney. In that event, the mark is “published for opposition” for 30 days and, if there is no opposition, the registration is granted and the applicant can (in fact, must) commence using the ® next to the mark. Two things can get in the way of the orderly proceeding of the application process. Thing One happens when the examining attorney and the applicant have irreconcilable differences. Thing Two happens when, during the publication period, someone opposes the mark, such as someone claiming that the applied-for mark is too much like the one owned by the opposer. If either of these things transpires, it is resolved by the Trademark Trial and Appeal Board (the “TTAB”). While the TTAB resolves other categories of disputes, in the two categories above it acts as sort of an appellate court, reviewing the decision of the examining attorney. The loser in the TTAB can appeal to the United States Court of Appeals for the Federal Circuit (formerly the United States Court of Customs and Patent Appeals), a specialty appellate court of dignity equal to the other courts of appeals (i.e., one tier below the Supreme Court) and operating on a nationwide basis. Any appeal involving a patent, for example, goes to that court, as do a variety of other cases, including TTAB appeals. Enter Section 1052(a) Section 1052(a) in relevant part reads materially as it did when first enacted as part of the 1946 Lanham Act: “No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it— “(a) Consists of or comprises immoral, deceptive, or scandalous matter...” However, the ban on scandalous and immoral trademark registrations first surfaced in the Trade-Mark Act of 1905, which required otherwise appropriate marks to be approved “unless such mark— (a) Consists of or comprises immoral or scandalous matter.” America was a considerably different place in Victorian 1905 than it is today! A mark could be rejected if the PTO could establish that it was “shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; ... giving offense to the conscience or moral feelings; ... [or] calling out [for] condemnation.” In Re Riverbank Canning Co., 95 F.2d 327 (C.C.P.A.1938). For an intriguing and rather entertaining history of the PTO’s historical struggle with immoral trademarks, see A.G. LaLonde & S. Johnson, An Overview of the Law of Scandalous Trademarks in the United States, American Bar Association Section of Intellectual Property Law; 30th Annual Intellectual Property Law Conference (A.B.A. 2015). For years, nobody seriously challenged the legitimacy of the PTO’s ability to deny registration of immoral trademarks—until 1980. Bob McGinley Robert L. (“Bob”) McGinley may or may not be a name familiar to you. Bob, a dear friend and former client, for decades was the center-of-the-universe for the “lifestyles” folks. Not so parenthetically, Bob is just now putting the finishing touches on a book about his lifestyle adventures, which is bound to be a page-turner. Bob’s conventions in Las Vegas for decades turned out thousands of devoted “swingers” (some of whom were porn stars) and were very impressive. In any event, how that is relevant is the case of In Re Robert L. McGinley, 660 F.2d 481 (C.C.P.A. 1981). Bob applied for a mark that, according to the court, “comprises a photograph of a nude man and woman kissing and embracing in a manner appearing to expose the male genitalia.” In describing the goods and services associated with the mark, the opinion of the Court of Customs and Patent Appeals explained: “According to the applications for registration, it is used for ‘Newsletter Devoted to Social and Interpersonal Relationship Topics’ and ‘Social Club Services.’ The evidence shows that the newsletter has to do with discussions of sexual topics such as bisexuality, homosexuality, masturbation, and fornication; that the services include sponsoring and arranging parties for ‘swinging,’ which appears to be a form of group sex.” You can see that the majestic federal court was something less than comfortable with the subject matter! In any event, the court went on to invoke section 1052(a) to deny the registration in a 3-2 decision that remained good law for decades, see In Re Mavety Media Grp., 33 F.3d 1367 (Fed. Cir. 1994); In Re Boulevard Entm’t, Inc., 334 F.3d 1336 (Fed. Cir. 2003); In Re Fox, 702 F.3d 633 (Fed.Cir.2012), until The Slants came before that (renamed) court, some 34 years later in In Re Tam, 808 F.3d 1321 (Fed. Cir. 2015). Not dwelling on that opinion (because it is the one that found its way to the Supreme Court and is the subject of this article), suffice it to say that it squarely abrogated the In Re McGinley ruling. The Slants and the Supreme Court Unhappy about the Federal Circuit abrogating the In Re McGinley decision, the trademark office took the case to the Supreme Court, which generally agrees to review most cases holding a federal statute unconstitutional, as was the case here. In a unanimous decision (8-0, Justice Gorsuch not participating), the Court found that the PTO’s denial of The Slants registration violated the First Amendment. The Justice lineup is interesting. Justice Thomas, in a concurring opinion, noted his consistent position that commercial speech has just as much First Amendment protection as any other speech. “I continue to believe,” he reiterated, “that when the government seeks to restrict truthful speech in order to suppress the ideas it conveys, strict scrutiny is appropriate, whether or not the speech in question may be characterized as ‘commercial.’” Aside from that, however, it is significant that Justice Alito, who generally is comparatively hostile to First Amendment interests, wrote the opinion for the unanimous Court—and this is a political angle on the case. Which justice is assigned to write an opinion is decided by Chief Justice John Roberts (whose title, by the way, is Chief Justice of the United States, rather than Chief Justice of the Supreme Court, often unknown to the media). If the chief justice does not vote with the majority, then the most senior associate justice assigns the opinion. Why is that important? Justice Kennedy wrote one of his signature wonderful First Amendment opinions, concurring in the judgment. Justice Alito’s opinion was much less generous to the First Amendment, although it did get the job done. Chief Justice Roberts, as you probably know if you have read the article this far, was a George W. Bush appointee, as was Justice Alito. This circumstance punctuates the importance of the Chief Justice; and this one will be in place for decades to come. Justice Alito’s opinion reviews, albeit from a somewhat different perspective, the trademark principles articulated above and the issue of whether the disparagement clause applies to racial or ethnic groups. Finding that it does, the opinion addressed the government’s claim that trademark registration is government speech trying to benefit from the Court’s horrible decision in Walker v. Texas Div., Sons of Confederate Veterans, Inc., 135 S.Ct. 2239 (2015), remarkably holding that personalized license plates constituted government speech. Containing that bad decision, Justice Alito surprisingly dismissed the claim, finding that “it is far-fetched to suggest that the content of a registered mark is government speech. ... None of our government speech cases even remotely supports the idea that registered trademarks are government speech.” Parenthetically, it seems equally far-fetched to find that personalized license plates consist of government speech, but the Court somehow found a distinction in the Walker case. The real potential danger of the Tam case was the possible extension of Walker, which stood to be a disaster. Justice Alito’s opinion goes on to reject the government’s other two arguments, one that the statute was justified by cases approving “governmentally subsidized” speech, and the other that the Court should create a new “government program” exception to the First Amendment. The “government program” proposal really didn’t stand much of a chance because the current Court has been loath to create new categories of unprotected speech (such as what the government sought in the “crush video” and the “stolen valor” cases). Justice Kennedy’s concurrence loaded the First Amendment into a howitzer and fired it straight at section 1052(a): “This separate writing explains in greater detail why the First Amendment’s protections against viewpoint discrimination apply to the trademark here. It submits further that the viewpoint discrimination rationale renders unnecessary any extended treatment of other questions raised by the parties.” Viewpoint discrimination is a principle that conservatives don’t like very much because it substantially constrains the government’s ability to shut people up. Justice Kennedy’s opinion (with citations omitted) goes on to take the government to task for attempting to categorize The Slants’ trademark application as commercial speech: “The parties dispute whether trademarks are commercial speech and whether trademark registration should be considered a federal subsidy. The former issue may turn on whether certain commercial concerns for the protection of trademarks might, as a general matter, be the basis for regulation. However that issue is resolved, the viewpoint based discrimination at issue here necessarily invokes heightened scrutiny. “‘Commercial speech is no exception,’ the Court has explained, 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.’ Unlike content based discrimination, discrimination based on viewpoint, including a regulation that targets speech for its offensiveness, remains of serious concern in the commercial context. “To the extent trademarks qualify as commercial speech, they are an example of why that term or category does not serve as a blanket exemption from the First Amendment’s requirement of viewpoint neutrality. Justice Holmes’ reference to the ‘free trade in ideas’ and the ‘power of ... thought to get itself accepted in the competition of the market,’ was a metaphor. In the realm of trademarks, the metaphorical marketplace of ideas becomes a tangible, powerful reality. Here that real marketplace exists as a matter of state law and our common-law tradition, quite without regard to the Federal Government. These marks make up part of the expression of everyday life, as with the names of entertainment groups, broadcast networks, designer clothing, newspapers, automobiles, candy bars, toys, and so on. Nonprofit organizations—ranging from medical-research charities and other humanitarian causes to political advocacy groups—also have trademarks, which they use to compete in a real economic sense for funding and other resources as they seek to persuade others to join their cause. To permit viewpoint discrimination in this context is to permit Government censorship.” Reading Justice Kennedy’s evaluation of the First Amendment in this case makes one cringe to think of the specter of his retirement, and being replaced by the likes of Justice Gorsuch, who seems to be joining ranks with Justices Thomas and Alito. This case points to the disturbing trend in the United States of “political correctness” in favor of free speech. However, Donald Trump’s tweets could be reversing that trend.

 
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