USPTO’s Ban on Immoral and Scandalous Marks Unconstitutional, SCOTUS Says

Court splits over whether ‘scandalous’ provision can be narrowed

An 8th Circuit Court of Appeals ruling held up a lower court’s award of $106 million in a decades-long case involving bad actors and a bank's involvement in a Ponzi-like scheme.

Barely two months after hearing oral arguments, the U.S. Supreme Court said in a 6-3 decision that a provision of trademark law barring “immoral” and “scandalous” marks is unconstitutional. The ruling came two years after the court struck down a different provision that prohibited “disparaging” marks. 

The fact patterns in the two cases are quite different. Last week’s ruling involved a streetwear brand called FUCT. For decades the brand’s founder, Erik Brunetti, has been unable to get a trademark for the name. He has claimed he has lost money over copycats and ripoffs. 

A Familiar Opinion

In the case over disparaging marks, Matal v. Tam, an Asian American band called The Slants wanted to use its name as a way of reclaiming the ethnic slur. The Supreme Court’s strike down of the prohibition on disparaging marks was expected to have a ripple effect, including on the Washington Redskins’ litigation over the USPTO’s refusal to register the NFL team’s trademark.

In Iancu v. Brunetti, justices agreed the law as it was until now hadn’t been applied consistently — something the USPTO also conceded during oral arguments. 

“The PTO has refused to register marks communicating “immoral” or “scandalous” views about (among other things) drug use, religion, and terrorism,” wrote Justice Elena Kagan for the majority. “But all the while, it has approved registration of marks expressing more accepted views on the same topics.”

The opinion appeared to use the FUCT term as little as possible, and Kagan turned to other trademark attempts to show the law’s tendency toward viewpoint bias. The PTO has refused marks with approving messages about drug use, she wrote, such as “You can’t spell ‘healthcare’ without ‘THC’” and “Ko Kane.”

 But on the other hand, according to the opinion, the office has approved marks such as “D.A.R.E. to resist drugs and violence.”

The government suggested the law could be construed to deny offensive or shocking marks based on their “mode of expression” without running afoul of viewpoint discrimination. But Kagan wrote that actually asks the court to legislate. 

“To cut the statute off where the Government urges is not to interpret the statute Congress enacted, but to fashion a new one,” she said.

Areas of Contention

But some justices addressed the possibility in split opinions with partial dissents. Divide came in whether to split up the analysis for “immoral” and “scandalous” and possibly strike the first and preserve the second. Chief Justice John Roberts, Justice Stephen Breyer and Justice Sonya Sotomayor each wrote divided opinions. 

“The dissent came from: Can we interpret ‘scandalous’ to mean something that is just limited to sexually explicit, profane or lewd marks, or is it so broad that it will encompass more than that?” said Christopher Stanton, an attorney at Merchant & Gould.

Stanton added he sees interesting subtext in the Supreme Court’s analysis of Brunetti’s case versus The Slants. The Supreme Court seemed to understand the cultural weight of reclaiming a racist slur but seemed more uncomfortable with a brand such as FUCT that is subversive just for its own sake and doesn’t have the same nuance.

“[FUCT] is uncomfortable for the court, and you can see them wrestling with that,” he said.

Sotomayor based her dissent’s analysis on the concern that striking down a ban on scandalous marks would result in the government’s powerlessness to refuse a rush to register such trademarks.

Narrowing the law’s scope to prohibiting vulgar, profane or obscene marks “would save that duly enacted legislative text by rendering it a reasonable, viewpoint-neutral restriction on speech that is permissible in the context of a beneficial governmental initiative like the trademark-registration system,” Sotomayor wrote. “I would apply that narrowing construction to the term ‘scandalous’ and accordingly reject petitioner Erik Brunetti’s facial challenge.”

“It’s a very legalistic way of looking at it, but I think the impact [of the decision] will be that you’ll see more lewd and sexually explicit marks attempting to be registered,” Stanton said. “And I believe it’s now in the hands of Congress.”

Future Possibilities

Given the roadmap laid out in Sotomayor’s and the others’ dissents, Stanton said he believes Congress could change the law to bar lewd, profane or sexually explicit marks if lawmakers choose to without running headlong into another constitutional challenge. A blanket prohibition wouldn’t implicate particular viewpoints or the people expressing them. 

But the previous ruling in Matal v. Tam seems to make more difficult work for government attempts to refuse marks using racist terms or expressing racist ideas. 

The government couldn’t on one hand register a mark that has the intent of reclaiming a racist term by the group it’s used to disparage, while with the other refuse a mark intended to be offensive against that group because the government doesn’t like that viewpoint. 

“It’s really two American ideals: freedom of speech versus tolerance. And you have those competing interests there,” Stanton said. But he added practically, the audience for marks expressing hateful views is limited.

“I think that there’s much to be said about the effects of the marketplace. I don’t really see Walmart or Target carrying brands that are related to hate groups.” 

— Julia Cardi

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