MATAL v. TAM, Greater Freedom for Trademarks and Beer Labels

 

            On June 19, 2017, the Supreme Court of the United States issued a landmark trademark ruling in the case of Matal v. Tam.  The case dealt with whether or not the US Patent & Trademark Office (PTO), could deny a trademark registration on the basis that the mark in question was deemed derogatory or insulting. While the case has implications for First Amendment jurisprudence generally, it is of specific importance to the craft beer community.

Image credit: blog.eckraus.com

Image credit: blog.eckraus.com

             Matal v. Tam, involved an all-Asian rock brand that wanted to register a trademark for their band name, “The Slants.” They were denied the registration by the PTO, on the basis that the mark “the Slants,” violated the disparagement clause of the Lanham (Trademark) Act, 15 U. S. C. §1052(a), as the word slants is a commonly used racial epithet for people of East Asian ancestry. The clause states, in relevant part, that:

                  No trademark...shall be refused...on account of its nature unless it, consists of or comprises immoral, deceptive, or scandalous matter; or matter 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.

Following the initial denial, Simon Tam appealed the ruling of the PTO agent, and the case eventually found its way up to the Supreme Court. Upon review, the Court reached two relevant conclusions.

             First, the Court ruled that a trademark registration is not government speech, and therefore First Amendment free speech protections still extend to companies or people who apply for registration.  Specifically, the majority explained that, “[i]f private speech could be passed off as government speech by simply affixing a government seal of approval, government could silence or muffle the expression of disfavored viewpoints. For this reason, we must exercise great caution before extending our government-speech precedents.”

             Second, the Court explained that even if a trademark is considered commercial speech, which generally has a lower level of protection than political or artistic expression, the government still could not deny a trademark for The Slants on the basis that the name is considered derogatory because that would constitute viewpoint discrimination. The Court noted that, “the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers.”  For these and other reasons, the Court struck down the disparagement clause as unconstitutional.

             This decision has immediate implications for those who seek to register a trademark that would have, in the past, been denied because they were deemed derogatory under Section 2(a). For example, in March 2014, the PTO rejected under section 2(a) an application for the mark “Functioning Retard,” which the applicant had sought to register in class 025 for clothing. The applicant refiled for the mark in view of the Tam case.  Now that the Supreme Court has struck down the disparagement clause, the “Functioning Retard” mark will likely proceed to registration. 

             One unanswered question from the Tam case is the scope of the 2(a) language that has been struck down. Following Matal v. Tam, marks that are disparaging can now be registered. However, article 2(a) also prohibits the registration of marks that are ‘immoral” or “scandalous.” There is a pending case before the Federal Circuit,In re Brunetti,that will determine the constitutionality of the “scandalous” clause.  Given the broad scope of how the Supreme Court discussed free speech issues in Tam, particularly its comment that “the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate’,” it is likely that the Federal Circuit will either strike down or severely limit registration denials on the basis that the mark is scandalous.

Image credit: Aleheads.com

Image credit: Aleheads.com

In the past, registrations for beer names and logos that were vulgar or offensive were refused under this provision.  For example, Swedish import/export company Berax was denied a registration for the beer mark “The Real Shit.”  Engine 15 Brewing Company was denied registration for its beer mark, “Nut Sack Double Brown Ale (though they later won their appeal and the mark registered).  Wauldron Corporation was denied registration of their “Bad Frog Beer” logo depicting a frog with its middle finger extended.  If the Federal Circuit extends the Tam decision and rules that the scandalous and immoral provisions are also unconstitutional, then these and other vulgar or offensive marks would likely be approved for trademark registration.

             Beyond its impact on trademark registration, the Tam decision (and potentially the In re Brunetti decision) could have an impact on regulations governing label approval by the Alcohol and Tobacco Tax and Trade Bureau (TTB). The decision states that,

Holding that the registration of a trademark converts the mark into government speech would constitute a huge and dangerous extension of the government-speech doctrine.  For if the registration of trademarks constituted government speech, other systems of government registration could easily be characterized in the same way.

The Court is implying here that free speech protections would also extend to content that has to be registered under other systems of government regulation. Under TTB regulations, any malt beverages sold in interstate commerce[KR6] [KR7]  must bear a label that has been registered with, and received prior approval from, the agency (27 C.F.R. § 7.20). In addition to the many other requirements and restrictions for beer labels, applicants are prohibited from using “any statement, design, device, or representation which is obscene or indecent” (27 C.F.R. § 7.29).  While the language does not track exactly with the Lanham Act prohibitions on marks that disparage, or are immoral or scandalous, there is a likelihood any free speech protections that extend to commercial speech which is “immoral...scandalous” would also encompass that speech which is “obscene or indecent.”  Through the incorporation process of the 14th amendment, the free speech protections outlined in Tam (and any subsequent federal decisions that result from the case), would most likely also extend to the state level.  So, for example, Flying Dog’s famous decade long legal battle against the Michigan Alcohol Control Board regarding their “Raging Bitch” beer would nowadays be impacted by the expanded free speech standard outlined in Tam.

             All this, of course, doesn't mean that just because a brewery may now have greater freedom to use disparaging or insulting/scandalous language in its branding, it should necessarily use that freedom. There is a growing sentiment in the craft beer community that breweries who use disparaging language should be called out and admonished for doing so. Recall that under new Brewers Association standards, any breweries who use what the BA considers to be derogatory or vulgar language for a beer name, will no longer be allowed to reference any BA-related awards on the advertising or labeling for that beer.  With this added freedom for breweries, exercising good judgment will be more important than ever.

             Because the scope of the Tam decision is somewhat unclear and the In re Brunetti case is still ongoing, it would be advisable for any brewery using a beer name that might be considered derogatory, scandalous, immoral, obscene, or indecent to contact their trademark attorney for advice particular to their case. 

About the authors:  Gregory Parnas is a contributing writer for DCBeer.com and a local brewery attorney. Brian Kaider is the principle of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  Brian can be reached at (240) 308-8032 or bkaider@kaiderlaw.com.