Trademarks that Disparage, Part II

A previous blog post discussed the United States Supreme Court's consideration of Lee v. Tam, a case involving whether an Asian-American rock band was permitted to register a potentially offensive trademark.  In a 7-0 decision this week, the Court sided with the band.

More from NPR News:

Members of the rock band The Slants have the right to call themselves by a disparaging name, the Supreme Court says, in a ruling that could have broad impact on how the First Amendment is applied in other trademark cases.

The Slants' leader Simon Tam filed a lawsuit after the Patent and Trademark Office kept the band from registering its name and rejected its appeal, citing the Lanham Act, which prohibits any trademark that could "disparage ... or bring ... into contemp[t] or disrepute" any "persons, living or dead," as the court states.

After a federal court agreed with Tam and his bands, the Patent and Trademark Office sued the band to avoid being compelled to register its name as a trademark. On Monday, the Supreme Court sided with The Slants.

"The disparagement clause violates the First Amendment's Free Speech Clause," Justice Samuel Alito wrote in his opinion for the court. Contrary to the Government's contention, trademarks are private, not government speech."

The decision is likely to have an impact on other pending disputes, including challenges to the marks held by the Washington Redskins.

Trademarks that Disparage

The United States Supreme Court recently heard oral arguments in Lee v. Tam, a case involving the denial of a trademark registration for an Asian American band called The Slants. The U.S. Patent & Trademark Office ("USPTO") determined that the mark would violate the Lanham Act, which prohibits registration of trademarks "which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."

From the Washington Post:

The [USPTO] said the name was likely to disparage a significant number of Asian Americans. But founder Simon Tam said the point of the band’s name is just the opposite: an attempt to reclaim a slur and use it “as a badge of pride.” 

Tam lost in the first legal rounds. But then a majority of the U.S. Court of Appeals for the Federal Circuit said the law violates the First Amendment’s guarantee of free speech. The government may not “penalize private speech merely because it disapproves of the message it conveys,” a majority of the court found. 

The outcome of the Supreme Court case is likely to affect the legal case of the Washington Redskins, whose trademark registration was revoked in 2014 under the same disparagement clause. 

Justices questioned how the Lanham Act's restrictions on negative marks should be balanced with constitutional guarantees of free speech, and what limits should be placed on the USPTO when presented with potentially offensive marks.

A decision is expected later this year.

Supreme Court Strengthens Property Rights

Although today's start of the Supreme Court's new term brings prediction after prediction about the important cases on the docket, it can be difficult to forecast the impact of the Court's decisions.  For property owners, for example, the June 25 decision in Koontz vs. St. Johns River Water Management District could have just as far-reaching an effect as the more high-profile cases involving the Voting Rights Act or Defense of Marriage Act.

This case began in 1994, when Coy Koontz, a Florida landowner, applied for a permit to develop a portion of his property. Because his land was designated as wetlands under Florida law, Koontz was required to enhance wetlands elsewhere as part of his application. He proposed to develop 3.7 acres and give his remaining 11 acres to the district for conservation.   

The permitting agency, the St. Johns River Water Management District, refused to approve Koontz’s construction unless he met one of two conditions: 1) reduce the size of his development to 1 acre and reserve the remaining 14 acres for conservation; or 2) continue with his existing proposal and pay for conservation improvements on district-owned wetlands elsewhere. 

When Koontz sued, the courts were forced to interpret the case based on previous Supreme Court decisions which allowed government to condition land permits only if there was a “nexus” and “rough proportionality” between its demand and the effect of the land use. In Koontz, the Supreme Court ruled that these requirements still applied, even though Koontz’s permit was denied (not approved with conditions) and even though his land was not taken (and only financial demands were made). “We hold that the government’s demand for property from a land-use permit applicant must satisfy the requirements of Nollan and Dolan even when the government denies the permit and even when its demand is for money.” (Koontz at 22). 

This broad reading of the Constitution’s Fifth Amendment Takings Clause, which seemingly requires government to show a connection between its land requirements and its financial demands, promises to strengthen the rights of property owners and developers while placing additional burdens on local governments. Potentially, every governmental financial demand may be constitutionally challenged by property developers, and much litigation is likely to result as future courts grapple with the ramifications of the Koontz decision.