Tread Carefully After High Court Offensive-Trademark Ruling

By: Daniel Alvarez Sox

As published in Law360 Expert Analysis, July 3, 2017

For the past 71 years, the Lanham Act’s “disparagement clause” prohibited the U.S. Patent and Trademark Office from registering disparaging and offensive trademarks, like those incorporating racial slurs. On its basis, the USPTO denied an application by Simon Shiao Tam to trademark the name of his band, “The Slants,” a racially derisive term for Asians. Tam, an Asian-American, sought to combat the slur’s denigrating force by reclaiming it. He appealed the USPTO’s denial to the U.S. Supreme Court and won. The court agreed unanimously that the disparagement clause violated the First Amendment’s Free Speech Clause.

The fall of the disparagement clause — or the “happy-talk clause,” as Justice Samuel Alito called it — makes it possible to trademark a racial slur, but doesn’t eliminate its consequences. The court of public opinion will assume the jurisdiction that the USPTO lost. For example, the Tam decision is a win for the Washington Redskins in its pending dispute with Native American tribes over whether the USPTO properly applied the disparagement clause when it revoked six of the team’s trademarks as offensive to Native Americans. But as younger generations embrace social inclusion as a moral obligation, the team’s legal victory may hurt its long-term bottom line.

Passed in 1946, the Lanham Act gave the federal government authority to register trademarks like “Tide” and “iPhone.” The disparagement clause appears in Section 1052(a), which prohibits registration of trademarks that may “disparage … or bring … into contempt or disrepute” any “person, living or dead.” Applying the disparagement clause, USPTO examiners would determine whether the proposed trademark referred to certain people and then determine whether it would offend “a substantial composite” (not necessarily a majority) of those people. After reviewing Tam’s application, the examiner concluded that The Slants refers to Asians because Tam is Asian-American, and a substantial composite of Asians would be offended by the band’s name.

Tam’s case is unusual because his motive for trademarking “The Slants” is laudable, even if misguided. Laudable speech, or “happy talk,” rarely needs protection from the government. The court recognized, however, that its decision would pave the way for the registration of trademarks that offend on the basis of race, ethnicity, gender or religion. Noting that such speech is hateful, the court stressed that “the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’”

The court concluded that “[g]iving offense is a viewpoint,” and the USPTO impermissibly was discriminating against offensive viewpoints by suppressing them through its application of the disparagement clause. In response, the government tried to cast the USPTO’s use of the disparagement clause in a different light. The government can subsidize and promote certain activities and not subsidize others. Thus, the government argued that the USPTO was not suppressing offensive speech, it was choosing merely to not subsidize it.

The line between suppressing speech and not subsidizing it is notoriously blurry. For the court, however, the USPTO’s application of the disparagement clause was not a close call because the USPTO does not provide cash grants or tax breaks for the promotion of any activities. Acknowledging that registering a trademark provides a traceable economic benefit to its owner, the court likened trademark registration to other government services like providing police and fire protection, public parks, and highways, which also provide traceable economic benefits to the public but do not confer authority to infringe on the public’s First Amendment rights.

Finding no success advocating within the First Amendment’s scope, the government tried to work around it by arguing that trademarks are government speech, not public speech. The court’s opinion, written by Justice Alito, rejected that argument. Just shy of calling it absurd, the court stated that if trademarks are government speech, then the government “is babbling prodigiously and incoherently.” The court added, “[W]hat does the Government have in mind when it advises Americans to ‘make.believe’ (Sony), ‘Think different’ (Apple), ‘Just do it’ (Nike), or ‘Have it your way’ (Burger King)? Was the Government warning about a coming disaster when it registered the mark ‘EndTime Ministries?’”

Regardless of how the government characterized the disparagement clause, the court returned to an inescapable bottom line: The USPTO, through the disparagement clause, was suppressing speech solely because it was offensive. Quoting a Supreme Court case from 1969, the court stated, “We have said time and again that ‘the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers.’”

The possible ramifications of Tam are varied. Notwithstanding any legal considerations, Tam may be right about the possibility of limiting a slur’s capacity to offend, opening the door to its commercialization. Consider the term “redneck,” which originated in the 1800s to refer to poor white farmers whose necks turned red after working for hours in the hot sun. It was used pejoratively and still is, but many take pride in being associated with the redneck stereotype because at least they’re not their stereotypical nemesis, the city-livin’, suit-wearin’, fancy-car-drivin’ elitist.

Self-described rednecks successfully reclaimed the term, allowing for its broad commercialization. For example, Jeff Foxworthy, a self-described redneck, made a fortune on his trademarked comedy routine, “You Might Be a Redneck If.” Today, almost anyone can have a good laugh over Foxworthy’s jokes without closing the windows and turning down the volume.

Though “redneck” was successfully commercialized, tread carefully before rushing out to trademark disparaging terms. Most disparaging terms will not be accepted the same way. First, redneck was reclaimed by self-described rednecks, something that’s much harder to do in a corporate form. Second, self-described rednecks started reclaiming the term well before it was commercialized. Third, though redneck was a disparaging term, its use in modern times does not refer to an ethnic minority like African-Americans and, unlike common slurs for African-Americans, the term was a reference to people’s economic status as opposed to a horrifying history of oppression. Finally, what image came to mind when you read the term “redneck”? Did you think of a well-educated person? Though, as Tam suggests, reclaiming a slur may reduce the sting of its intended offense, it doesn’t eliminate the harm caused by the continued promotion of the underlying stereotype. Younger generations are more sensitive to that reality and will remain so as there buying power increases.

The same day the court decided Tam, at least one company applied to register a version of the N-word ending in “a,” and another company applied to trademark a two-word saying including the N-word followed by “please.” Two days later, a company tried to trademark a disparaging term for people of Chinese decent. It’s not clear whether the applicants are trying to implement Tam’s strategy, communicate a hateful message, or make money. The applicants don’t appear to be large corporations and it’s unlikely that large corporations will trademark racial slurs. For example, it’s probably safe to say that Apple Inc. isn’t running out to trademark a “[racial slur] iPhone.”

Tam may not have a significant societal or economic impact. Some people or organizations with ill motives may see a slight economic benefit from the Tam decision, but just because the government can’t stop them from trademarking racial slurs doesn’t mean that they’re going to profit from them significantly. Even before Tam, anyone could, for example, sell shirts brandishing a racial slur. Now, someone may be able to benefit exclusively from the use of the same racial slur on a T-shirt, but that doesn’t make the racial slur any more appealing to the public. Trademarking does not purify a racial slur; its repulsiveness survives the registration process.

Tam is a win for companies that are fighting battles over existing trademarks. For example, the Tam decision means that the Washington Redskins’ trademarks will be reinstated, an admittedly severe blow to Native Americans that have been fighting the team’s use of the term and related logos since at least 1992. The court of public opinion generally agrees with that outcome, but the court of public opinion is not bound by precedent.

Millennials see social inclusion as a moral obligation and they may not view the team’s mascot and name in a favorable light. As millennials gain increased buying power, the team’s bottom line may suffer. Not merely because millennials may hesitate to wear a shirt prominently displaying what some feel is a racial slur, but because it is likely that they will prefer to purchase and display symbols, terms, and products that promote unifying messages and social responsibility. Modern morality is not about who you marry or whether you go to church. It’s about buying local, protecting the environment, supporting minority-owned business, buying products that use diverse actors in their ads, and using Lyft instead of Uber because of Uber’s alleged mistreatment of female employees. In the future, if someone wants to profit by selling a shirt displaying a Native American, the caption will probably need to be closer to “I stand with Native Americans” than “Redskins.” There is comfort, however, in knowing that there is a freedom to produce, purchase and wear either one. And the benefit of free speech is that for every business or organization that will use their freedom to harm and offend, people are also free to encourage people to “coexist,” trademarked in 2010.