Today the Supreme Court agreed to decide an ongoing conflict, pitting a trademark registrant’s First Amendment rights against longstanding law precluding trademark registration of “disparaging” marks.

In This Corner: Trademark Law & the USPTO

Section 2(a) of the Lanham Act, precludes trademark registration of marks that are: immoral, deceptive or scandalous matter; or matter which may disparage …or bring them into contempt or disrepute….” Since World War II, the United States Patent and Trademark Office (USPTO) has relied on Section 2(a) to deny registration to such marks, but in December 2015, for the first time, the legality of Section 2(a) was called into question.

In This Corner: The First Amendment & The Slants

An Asian-American rock band, The Slants, sought to register its name, but the USPTO rejected the name as disparaging. The Slants appealed to a federal district court, which affirmed the USPTO’s decision, but when The Slants appealed to the Federal Circuit, the majority found that Section 2(a) was unconstitutional restraint of free speech under the First Amendment.

The Slants asked the Federal Circuit to order the USPTO to register its trademark, but the court declined. The USPTO issued guidelines, advising trademark applicants that any applications with potentially disparaging marks would be held in limbo until the issue was resolved.  Then the USPTO asked the Supreme Court to decide the issue.

In This Other Corner: The Washington Redskins

Meanwhile in June 2014 the USPTO deregistered the Washington Redskins’ trademark under Section 2(a). The Washington football team appealed, lost in federal district court and appealed to the Fourth Circuit. While that appeal is currently pending, the Washington team has asked the Supreme Court to intercede.

The Judges’ Score Card: Key Issues

The Slants, the Washington team and the Federal Circuit majority basically argue that trademarks equal free speech. They contend that Section 2(a) amounts to viewpoint discrimination and is subject to strict scrutiny  review, Section 2(a) fails to withstand “strict scrutiny” and is therefore unconstitutional. “Strict scrutiny” requires the USPTO to prove that Section 2(a) serves a compelling government interest, that it is narrowly tailored to achieve that interest, and that it is the least restrictive means for achieving that interest.

The USPTO, the two federal district courts, and the Federal Circuit’s dissenting opinion argue that trademarks do not equal free speech, and Section 2(a) is not subject to “strict scrutiny.” They contend that Section 2(a) does not prohibit any speech but instead denies the benefits of registration to private disparaging speech. In short, The Slants and the Washington team are entirely free to call themselves whatever they want, to publicize their names and use their names in commerce, but they are not entitled to the extra benefits conferred by federal trademark registration.

TKO or 12 Rounds?

While today’s grant of certiorari is only the beginning of the first round, recent Court decisions upholding hateful speech in other situations would tend to indicate that USPTO may be punching above its weight class and Section 2(a) might hit the canvas.

INITIAL CALL ON THE FIELD

In June 2014, the U.S. Patent and Trademark Office (USPTO) stripped the Washington Redskins (Washington) of their federal trademarks, finding the term “Redskins” was disparaging under Section 2(a) of the Lanham Act.

REPLAY OFFICIAL CONFIRMS THE CALL

Washington sought an instant replay before the District Court for the Eastern District of Virginia, but that Court affirmed the USPTO’s initial call.  Washington then sought a replay in the Fourth Circuit Court of Appeals, but this week, while that decision was under review, Washington threw a Hail Mary pass, asking the Supreme Court to intercede even before the Fourth Circuit decides Washington’s appeal.

WASHINGTON’S END AROUND

Washington’s unorthodox move is the result of another scrimmage — this one between the USPTO and the Portland dance-rock band, The Slants. As discussed in our prior post,  The Slants, a band comprised of Asian Americans, tried to register their name with the USPTO, but the USPTO refused, citing Section 2(a).  The Slants appealed the USPTO decision, lost at trial, but then won when the Federal Circuit reversed , finding that Section 2(a) was unconstitutional restraint of free speech under the First Amendment.

JOINING A GAME ALREADY IN PROGRESS

Last week the USPTO petitioned the Supreme Court to settle whether Section 2(a) violates the First Amendment. The thrust of the USPTO’s argument is that The Slants (and by extrapolation Washington) have free speech to call themselves whatever they want; the government is not stopping them.  They just aren’t entitled to “federal trademark registration,” i.e., a stamp of approval for their use of “disparaging” names.

So Washington’s latest play is essentially joining The Slants to pile on the USPTO and knock Section 2(a) out of the trademark registration game.

Nobody knows, and that’s why the United States Patent and Trademark Office (USPTO) just filed a petition asking Supreme Court to settle its turf battle with the Federal Circuit Court.

Ancient History: No Disparaging Trademarks

From WWII until March of this year, the USPTO routinely refused to issue trademarks that it considered to be disparaging under Section 2(a) of the Lanham Act.  So it wasn’t big news in 2011 when the USPTO summarily rejected Simon Shiao-Tam’s trademark registration for his rock band, “The Slants.” Mr. Tam appealed the USPTO’s decision to the Federal Circuit, which initially upheld the USPTO’s decision, but later agreed to rehear the appeal en banc.

Quantum Leap: First Amendment Trumps Lanham Act’s Prohibition of Disparaging Trademarks 

But, as we previously reported, it was huge news last December when the Federal Circuit reversed its earlier opinion and the USPTO’s decision and held that Section 2(a) violated the First Amendment, effectively stripping the USPTO of its power to deny trademarks that it deemed disparaging.   Presumably the court’s decision also strikes down Section 2(a)’s prohibition of marks that are immoral or scandalous.

Early last month, the USPTO reacted to the court’s decision, issuing guidelines that trademark applications with Section 2(a) issues would be held in limbo “while the constitutionality of these provisions remains in question…”  Shortly thereafter, Mr. Tam filed a writ of mandamus asking the Federal Circuit to force the USPTO to register The Slants trademark.

Breaking News: The Suspense was Killing the USPTO

The Federal Circuit denied the writ, but today the USPTO petitioned the Supreme Court to resolve:

Whether the disparagement provision in 15 U.S.C. 1052(a) is facially invalid under the Free Speech Clause of the First Amendment.

Usually issues percolate up slowly over the course of years before they reach the Supreme Court, but with the Federal Circuit insisting that Section 2(a) is unconstitutional and the USPTO refusing to cede its authority to reject disparaging trademarks there’s really no place else to take the issue.  And until the issue is ultimately resolved, trademarks that the USPTO considers disparaging will continue to sit in limbo.  Four of the justices will need to vote to hear the USPTO’s petition and, absent the extremely rare issuance of an extraordinary writ (allowing accelerated briefing and oral argument), even if the Supreme Court grants certiorari the matter won’t be decided for some time.

We recently wrote about In re Tam, the Federal Circuit Court’s decision invalidating Section 2(a) of the Lanham Act.  The Court held that Section 2(a), which precludes trademark registration of immoral, deceptive, scandalous or disparaging trademarks, violates the First Amendment.  The Court ruled for The Slants, a Portland-based band comprised of Asian Americans who had sought to trademark their name, but whose trademark application had been rejected by the U.S. Patent and Trademark Office (USPTO)  as “disparaging.”

The Court’s decision could have wider implications, especially with regards to the Washington Redskins’ appeal to regain their trademark, which is pending before the Fourth Circuit, a “sister” court to the Federal District Court. In December, Simon “Young” Tam (the Tam in In re Tam) wrote this blog post sharing his views about media coverage of the case, including the desire of the media (and attorneys) to compare the case to the Redskins’ case and issues surrounding identity politics. It’s definitely worth a read!

The USPTO Strikes Back, Sort of

In response to the In re Tam decision, last week the USPTO decided that it would put trademark applications with Section 2(a) issues in limbo.  The USPTO issued  Examination Guidance 01-16, which advised that “while the constitutionality of these provisions remains in question and subject to potential Supreme Court review” the USPTO will handle trademark applications with section 2(a) problems by issuing an “advisory refusal and suspend action on the application.”

The Slants’ Full Court Press

But The Slants aren’t willing to wait. Yesterday The Slants filed a writ of mandamus petition asking the Federal Circuit Court to order the USPTO to immediately process The Slants’ trademark registration.

The $64,000 question is whether the Federal Circuit Court will grant The Slants’ petition, rather than wait for the issue to percolate up to the Supreme Court. One Court observer  has noted that in recent years the Federal Circuit Court has become more aggressive about issuing such extraordinary relief.

Blog note: Photo updated 3/16/2016

On December 22, 2015, in a potentially far-reaching decision, the Federal Circuit Court of Appeals held that Section 2(a) of the Lanham Act, which prohibits registration of disparaging trademarks, is unconstitutional under the First Amendment’s guarantee of free speech. While perhaps the most publicized “disparaging trademark” controversy this year centered around the Washington Redskins, whose trademark registrations were cancelled earlier this year in a decision upheld by a federal district court (the case is currently on appeal to the Fourth Circuit), this case before the Federal Circuit involved Simon Shiao-Tam, who applied to register the name of his band, “The Slants,”  for trademark protection.

Though the Portland-based band is comprised of Asian American musicians who had previously stated that the name’s intent was to reclaim the word, the U.S. Patent and Trademark Office (USPTO) refused to register the mark based on Section 2(a)’s prohibition against registration of trademarks that consist of “immoral, deceptive, or scandalous matter; or matter which may disparage…persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” This decision was affirmed by the USPTO’s Trademark Trial and Appeals Board.

Ironically, in the initial appeal of the matter to the Federal Court, neither Tam nor the government focused on the First Amendment argument. At oral argument in the initial appeal in January 2015, Judge Kimberly Ann Moore (who is also a Washington Redskins fan) invited the government’s attorney to discuss the First Amendment issue, which the attorney declined to do.  Writing for the majority, Judge Moore affirmed the USPTO’s refusal to register the mark, finding that there was substantial evidence supporting the USPTO’s finding that the term “The Slants” was disparaging and also rejecting Tam’s backup argument that Section 2(a) was a violation of the First Amendment. The Federal Circuit stated that it was bound by precedent, namely a prior 1981 case (In re McGinley) that had held the government’s refusal to register a disparaging mark does not prevent a party from using it (and therefore, there was no First Amendment violation). See the April 2015 opinion In re Tam.

However, in that same decision, in a lengthy section entitled “additional views,” Judge Moore urged the Court to revisit In re McGinley and to reexamine the First Amendment issue. Thereafter, the Court of Appeals decided on its own, and without the request of the government or Mr. Tam, to review the decision en banc before a full panel of judges and ordered briefing on the First Amendment question, leading to this latest decision.  Although not binding on the Fourth Circuit Court of Appeals, which will be hearing the Washington Redskins’ appeal next year, the Fourth Circuit could be persuaded to reverse the USPTO’s cancellation of the Redskins’ trademark registrations.

A full copy of the Federal Circuit’s en banc opinion can be accessed here.

Just coming off the heels of the lawsuit it filed against Marc by Marc Jacobs on April 8, 2015, adidas America, Inc., adidas AG, and adidas International Marketing B.V. (collectively, “adidas”) filed suit against Skechers USA, Inc. (“Skechers”) on September 14, 2015 in the United States District Court of Oregon for trademark and trade dress infringement, unfair competition, trademark and trade dress dilution, deceptive trade practices, and breach of contract. The company alleges that the Skechers “Onix” tennis-style sneaker infringes on one of its most iconic shoes, “the ‘Stan Smith’ sneaker, which adidas introduced in the early 1970s featuring a classic tennis-shoe profile with a sleek white leather upper, three rows of perforations in the pattern of the well-known Three-Stripe trademark, a defined stitching across the sides of each shoe enclosing perforations, a raised mustache-shaped colored heel patch, which often is green, and a flat tonal white rubber outsole.”

In its complaint, adidas outlined all the similarities between the adidas Stan Smith and the Skechers Onix.

In support of its infringement claims, adidas cites its various federal registrations for its famous “Three Stripe Mark” on athletic shoes.

Although the perforations on the Skechers Onix do not exactly mimic the three rows of perforations in the pattern of the well-known Three-Stripe Mark, it is hard to deny the striking similarities between the two sneakers. adidas is seeking various damages, including all profits derived from the infringing good, costs and reasonable attorneys’ fees, as well as an injunction to stop all sales and marketing of the infringing good.

After two years of battle in court, Tory Burch LLC (“Tory Burch”) wins $41.2 million ($38.9 million in damages and $2.3 million in attorneys’ fees) in its trademark infringement lawsuit against Lin & J International, Inc. (“Lin & J”), which was filed on May 31, 2013, in the U.S. District Court of the Southern District of New York. Tory Burch alleged in its 2013 complaint that Lin & J’s unauthorized use of Tory Burch’s federally registered trademarks and copyrighted works violated trademark counterfeiting, trademark infringement, trademark dilution, copyright infringement, and unfair competition laws.  In particular, Tory Burch claimed that Lin & J wrongfully reproduced earrings, necklaces, pendants, cuffs, bangles, and bracelets bearing unauthorized reproductions of Tory Burch’s famous TT Designs (see below).

Despite the apparent similarities, Lin & J had countersued Tory Burch for unfair trade practices, tortious interference with its business relationships, defamation, and trademark infringement. Lin & J claimed that its Isis Design is inspired by the Isis cross or a Coptic cross, which is a symmetrical cross with short, flanged bars, typically set in a circle. Nonetheless, in addition to finding that Lin & J had fabricated and destroyed evidence, the court ruled against Lin & J. This $41.2 million win for Tory Burch will be another notch added to her designer belt and not to mention her $3 billion (yes, with a “B” billion) empire.

Taking big hits is quite familiar to professional football teams.  The hit laid down by a federal District Court on July 8, 2015, however, is one that Washington’s professional football franchise will remember for a long time.  District Court Judge Gerald Bruce Lee upheld the cancellation of federal registration for the team’s “Redskins” trademarks, holding that “the (1) dictionary evidence; (2) literary, scholarly, and media references; and (3) statements of individuals and groups in the referenced group show that the Redskins Marks consisted of matter that ‘may disparage’ a substantial composite of Native Americans during the relevant time period.”

June 18, 2014, the USPTO’s Trademark Trial and Appeal Board (“TTAB”) had issued a decision cancelling the team’s six federal registrations for trademarks that include the term “Redskins.”  The team brought suit in federal district court to challenge the TTAB’s decision.  Judge Lee’s ruling denied the team’s motion for summary judgment and granted cross-motions for summary judgment by the TTAB and the group of Native Americans that brought the proceedings before the TTAB.

The Redskins’ Trademark Registrations Have Not Actually Been Cancelled . . . Yet

Like the TTAB’s decision, the District Court decision does not go into effect immediately. Its decision is subject to appeal, and the team has already indicated that such an appeal will be forthcoming. As such, even if the decision ultimately stands, the case will not likely be final for some time. The registrations will remain on the federal register of marks and not be listed in the USPTO’s records as “cancelled” until after the case has made its way through the courts.

The Redskins Will Not Have to Change Their Name

Even if the Court’s decision stands, the Redskins will not be compelled to change the name of the franchise. The decision speaks only to the team’s right to register the “Redskins” marks, not to its right to use the name.

The Team Can Still Sue Those Who Infringe on the “Redskins” Mark

Should the Redskins ultimately lose their federal trademark registrations, they will not likely lose their ability to protect their exclusive use of the marks. Trademark rights in the United States come from use of a mark on or in conjunction with goods or services, not merely from the additional step of federal trademark registration. Indeed, this last step is optional.

Based on their longstanding use of the marks in question, the Redskins likely enjoy common law trademark rights independent of federal trademark registration. Should the team be stripped of federal registration, it could still pursue infringers through lawsuits based on these common law rights.

Lack of Registration Does Have Practical Consequences

While the Redskins may still bring suit to enforce common law trademark rights, losing federal registrations will eliminate the presumptions of ownership and of a nationwide scope of rights that come with federally-registered trademarks. Common law trademark rights exist on a state-by-state basis. This means that the Redskins would have to establish the legitimacy of their common law rights to use the marks in every infringement suit they file. As discussed above, however, it is likely that the Redskins will have little difficulty in establishing the existence of such rights.

Where losing the registration of their trademarks has the greatest potential to harm the team in the short term, however, is in the corresponding loss of the ability to record the registrations with the U.S. Customs and Border Patrol Service, which blocks importation of infringing or counterfeit goods. Without support of the Customs department, the market may be flooded with inexpensive Redskins gear.

The P.R. Battle Within the Case

In the long term, we wonder whether the team’s decision to persist in fighting this battle in the Courts will ultimately result in insurmountable pressure to change the team’s name.  Public awareness of the concerns around the name increases with every appeal (and every court loss).  Celebrities and politicians are increasingly hostile to the team’s use of their name.  As the matter seems destined for the Supreme Court, it is worth asking: Win or lose, is it only a matter of time before the “Redskins” become a relic of the past?

In our previous post, LEGO Tries New Angle To Guard Its IP Against Upstart MEGA BLOKS, we wrote about LEGO’s efforts to protect its IP against alleged knock-off brick makers.  LEGO has now scored a victory in its ongoing efforts in its war against knock-offs.  In a ruling handed down on June 16th by the General Court of the European Union, the court rejected a bid by Best-Lock, a competitor of LEGO, to invalidate LEGO’s registration of a European Union trademark based upon the shape of its LEGO minifigs.

Back in 2000, LEGO obtained a trademark registration for the shape of its classic miniature person figurines, affectionately known among LEGO fans as “minifigs.”  That European Union trademark registration, termed a Community Trade Mark (CTM), was granted by the European Union’s Office for Harmonization in the Internal Market (Trade Marks and Designs) or “OHIM.”  In 2011, Best-Lock filed an application with OHIM seeking a declaration of invalidity of LEGO’s minifig trademark.  LEGO intervened in the case to defend its trademark registration.  After the application was rejected and that rejection was upheld by an OHIM appeal board, Best-Lock appealed the case to the General Court of the European Union.

The European Court considered whether LEGO’s trademark was invalid under regulations governing CTM registrations that bar registration where the trademark consists exclusively of a shape determined by the nature of the goods themselves or consists exclusively of the shape of goods necessary to obtain a technical result.

Best-Lock argued that LEGO’s minifigs have connectors on their heads and holes on their feet and other characteristics that allow them to interconnect with building blocks, hence rendering their shape functionally necessary to obtain a technical result.  An earlier LEGO CTM registration for its LEGO brick had been rejected for that very same reason.

This time, the Court sided with LEGO.

The Court observed that the first question was what were the “essential characteristics” of the contested mark.  Those essential characteristics were described by the Court as the shape of the head, body, arms and legs necessary to have the appearance of a human figure.  Those shapes are not dictated by any technical function.

Even if the parts of the minifig that allow for connections to LEGO’s brick system (like the stud on the top of the head) could be described as having a technical function, the Court reasoned that those characteristics were secondary to the essential characteristics of the mark and the overall impression conveyed by the mark, its human figure shape.  The toy’s overall shape that constitutes the trademark is not directly related to any technical function that the toy is designed to achieve.

As the Court explained, “[Best-Lock] neglected to mention what technical result a toy figure might be supposed to achieve” and that “…the fact that the figure in question ‘represents a manikin’ and may be used by a child in a play context was not a technical result.”  See Best-Lock (Europe) Ltd. v. Office for Harmonization in the Internal Market (Trade Marks and Designs (OHIM) (2016) Judgment of the General Court, June 16, 2015, Case No. T-396/14.

On April 8, 2015, Adidas filed suit against Marc by Marc Jacobs (“Marc”) in the United States District Court of Oregon for trademark infringement, unfair competition, trademark dilution, and deceptive trade practices based on Marc’s use of a four stripe pattern on sweaters in its autumn/winter 2014 collection, which allegedly infringes on Adidas’ “Three-Stripe Mark.” See comparison below. In its complaint, Adidas claims that Marc’s “use of confusingly similar imitations of adidas’s Three-Stripe Mark is likely to deceive, confuse, and mislead purchasers and prospective purchasers into believing that the apparel sold by Marc Jacobs is manufactured by, authorized by, or in some manner associated with adidas, which it is not.”

Adidas claims that it has used the “Three-Stripe Mark” on apparel sold in the U.S. and worldwide since as early as 1967. Adidas further support its claims based on its numerous incontestable federal trademark registrations, which includes Reg. No. 2,058,619, issued on May May 6, 1997, for the “Three-Stripe Mark,” for “sports and leisure wear, namely shirts.”

An “incontestable” registration is conclusive evidence of the validity of the registered mark, of the registration of the mark, of the owner’s ownership of the mark and of the owner’s exclusive right to use the mark with the goods/services. If the owner of the mark can establish that the mark is incontestable, the mark will be presumed valid unless another party can establish one or more of the following:

• The registration or the incontestable right to use the mark was obtained by fraud.
• The registrant has abandoned the mark.
• The mark is used to misrepresent the source of its goods or services.
• The infringing mark is an individual’s name used in his or her own business, or is otherwise prohibited or reserved under the Lanham Act.
• The infringing mark was used in commerce first—before the incontestable mark’s registration.
• The infringing mark was registered first.
• The mark is being used to violate the antitrust laws of the United States.

Although nothing is guaranteed in court, it appears that Marc will have an uphill battle defending itself against Adidas since, at first glance, it appears that even Sue Sylvester would wear either of the above track jacket or sweater.