In December 2015, the Federal Circuit struck down the “disparagement” clause of §2(a) of the Lanham Act on First Amendment grounds. However, according to a recent ruling from the court, the USPTO is not required to register disparaging trademarks just yet. In re Tam, No. 16-121 (Fed. Cir. Mar. 30, 2016) (denying petition for writ of mandamus).

The USPTO had suspended the trademark application in issue while the agency decides whether to appeal the Federal Circuit’s First Amendment ruling to the Supreme Court. Last week, the Federal Circuit held that the suspension was not an abuse of discretion and did not warrant “extraordinary” relief.

The ruling is just the latest development in a long-running trademark case involving an Asian-American rock group, the Slants, and their application to register the name of the band as a federal trademark. The case has been gaining interest recently for its potential impact on the Washington Redskins’ trademark case and the possibility of an appearance before the U.S. Supreme Court next term.

Procedural History of the Case

Since 1946, when the Lanham Act was first passed, Section 2(a) has prohibited the registration of trademarks “which may disparage . . . persons, living or dead.” When Simon Shiao Tam applied to register “THE SLANTS” on behalf of his band, the trademark examiner refused registration on the basis that the name was disparaging and thus unregistrable. Both the TTAB and a panel of the Federal Circuit upheld the decision.

Although the band argued that the name was an attempt to reclaim and redefine negative stereotypes in a positive way, the Federal Circuit’s three-judge panel held the actual meaning was immaterial, primarily because the traditional disparagement inquiry looks at whether a “substantial composite” of the targeted group, and not the applicant, may find the name disparaging. In re Simon Shiao Tam, 785 F.3d 567, 571 (Fed. Cir. 2015), rev’d en banc, 808 F.3d 1321 (Fed. Cir. 2015).

Nevertheless, it was the panel’s suggestion in dicta that the Lanham Act’s disparagement clause might be unconstitutional that prompted the court to move sua sponte to review the case again en banc last year.

The Federal Circuit’s December Ruling

Before the Federal Circuit took the case en banc, prior case law had established that the disparagement clause did not implicate the First Amendment because it does not prohibit speech entirely—just its registration as a trademark. The Federal Circuit reversed this precedent last December, holding that the restriction on registration burdens and creates a chilling effect on speech. In re Simon Shiao Tam, 808 F.3d 1321, 1358 (Fed. Cir. 2015).

In its opinion, the court reviewed the statute under both strict scrutiny and the lower review standard reserved for commercial speech and reached the same conclusion: the disparagement clause impermissibly targets the content and viewpoint of private speech.

Parallel Issues with the Washington Redskins

As we reported last July, a federal court in Virginia affirmed the U.S. Trademark Office’s cancellation of the team’s six “Redskins” trademark registrations. Although the football team has been arguing that the disparagement clause is unconstitutional since the early 1990s, the argument became a moot point during the first round of litigation when the plaintiffs’ standing became the controlling issue on appeal.

When the Redskins’ free speech claims finally made it to the Virginia court this last summer, the judge rejected them on dual grounds: (1) the disparagement clause does not prohibit the expression of speech and (2) trademark registrations are government speech. The Federal Circuit squarely rejected both of these points in its December decision.

The Redskins case is still pending on appeal in the Fourth Circuit, which is not bound by the decisions of the Federal Circuit. Nevertheless, the Redskins filed an amicus brief when the Federal Circuit took up the issue last year, and the team’s brief is cited multiple times in the decision. It remains to be seen whether the Fourth Circuit will defer to the recent holding of the Federal Circuit, a court which has special subject matter jurisdiction over intellectual property matters. But if the Fourth Circuit is unpersuaded, the constitutional question may become especially ripe for Supreme Court review.

Meanwhile, the USPTO has until April 20, 2016 – an extension of the original deadline – to file a petition for a writ of certiorari on In re Tam.

Brand owners: stay tuned.