Author: Eric Waltmire

Yesterday, I wrote about Contraband Sports LLC’s lawsuit for declaratory judgement that its four finger weight lifting glove does not infringe Fit Four LLC’s design patent D652,607. If this case goes to trial, could there be any difficulty arising out of Contraband’s name?

On one hand, a party’s name should have no bearing, merits-wise, on whether or not it infringes a patent. On the other hand, does Contraband’s name have a negative connotation that could impact the jury?

The Oxford English dictionary provides one definition of “contraband” as “goods that have been imported or exported illegally.” Merriam-Webster’s dictionary provides an other definition of the term as “illegal or prohibited traffic in goods.” Dictionary.com provides a definition of the term as “anything prohibited by law from being imported or exported.”

Say the defendant chooses to refer to the plaintiff in front of the jury as “Contraband” e.g. “Contraband asserts that…” “Contraband’s product has…” “Contraband’s president says…” “Contraband…” “Contraband….” “Contraband….” and so-on and so-on. Does that repeated use of “contraband” have an impact when Contraband is trying to show that its product is non-infringing; trying to show that its law abiding in the patent sense? It seems like a possibility. Sure, maybe it won’t have a decisive impact in most cases, but what about a close case?

It is probable that Contraband is using its mark in an arbitrary manner and does not illegally import its goods, if it imports at all. But, the focus here is on what perception a mark might engender to a jury.

Maybe this case will never make it to trial and it will never be an issue. And maybe the name is well received with customers in the same way less edgy words like “rebel” are received so that any potential downside in (rare) legal proceedings are offset by market benefits of the name. Nevertheless, its worth considering whether using a word as business name having a definition involving illegal activity could be a detriment when trying to show that you are, in fact, within the law.

Peter Thiel believes that company names are predictive of future success. And he criticizes the names of companies like Napster. I bet he wouldn’t like the name Contraband either.

Mainstream Property Group, LLC applied to register the mark NEXT HOMES  for providing assisted living facilities as well as for providing long-term care facilities and short term rehab facilities for seniors. NextHome, Inc. opposed the application based on its NEXTHOME mark, which was registered for real estate brokerage services.

The Board found that the only differences between the marks were (1) the space between “Next” and “Homes” and (2) the HOMES in the applicant’s mark is plural while the opposer’s mark has HOME singular. The Board concluded that “these minute changes do not distinguish the marks.”

The Board went on to find that there was a likelihood of confusion between the marks because the opposer provided its real estate brokerage services to seniors.

Minor differences, such as word spacing or plurals v. singular word forms, are unlikely to distinguish otherwise similar marks.

Citation: NextHome, Inc. v. Mainstream Property Group, LLC, No. 91231109 (TTAB 2017)

Simon Tam a member of the rock group “The Slants.” Tam applied to register the mark The Slants. But the USPTO refused registration under section 2(a) of the Lanham Act asserting that the mark was disparaging. In June of 2017, the Supreme Court found the section 2(a) prohibition on disparaging marks violated the First Amendment in Matal v. Tam, No. 15-1293 (2017). It is an important ruling in the Federal Circuit’s decision striking down the bar on registration of immoral and scandalous marks, so I’m going back to review it now.

Tam’s Aim to Reclaim Ethnic Slur

Tam chose the name “The Slants” to reclaim and take ownership of stereotypes about people of Asian ethnicity. The band draws inspiration for its lyrics from childhood slurs and mocking nursery rhymes. It has album names such as “the Yellow Album” and “Slated Eyes, Slanted Hearts.”

Disparagement Bar

A portion of section 2(a) the Lanham Act prohibits the registration of a trademark “which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” The USPTO used a two part test to decide whether a trademark is disparaging. First it considers the likely meaning of the mark or the portion of the mark at issue. If that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, in the second step the USPTO asks whether that meaning may be disparaging to a substantial composite of the referenced group.

The justices were divided over the proper analysis of the constitutional issue but agreed on the result. Justice Alito provided an opinion for four justices and Justice Kennedy provided an opinion for four other Justices. Both Justices Alito and Kennedy agreed that the bar on disparaging marks constituted viewpoint based discrimination. If the message is a disparaging one, it is prohibited under section 2(a). That is the government is discriminating on the basis of the message, e.g. the view point.

Trademarks Are Not Government Speech

The justices agreed that registration of a mark does not transform the mark into government speech. On this point the court said that “If the federal registration of a trademark makes the mark government speech, the Federal Government is babbling prodigiously and incoherently.” It went on to cite examples of registration of marks that provide contradictory views. Simply registering marks and placing them in a database does not constitute government speech.

Kennedy: View-Point Discrimination Subject to Heightened Scrutiny

Justice Kennedy would have ended the inquiry there. His view is that once you have view-point discrimination and you conclude that the speech at issue is not government speech, you run into heightened scrutiny that the section 2(a) disparagement bar can’t survive. He said “It is telling that the Court’s precedents have recognized just one narrow situation in which viewpoint discrimination is permissible: where the government itself is speaking or recruiting others to communicate a message on its behalf.”

Alito: Disparagement Bar Cannot Survive Intermediate Scrutiny 

Justice Alito asserts that the court need not decide whether trademark registration comprises commercial speech, subject to relaxed intermediate scrutiny, or expressive speech subject to strict scrutiny because the disparagement bar cannot survive even intermediate scrutiny.

Under intermediate scrutiny “the regulatory technique may extend only as far as the interest it serves.” Alito found it fails this requirement. The government asserted the following interest that are purported to be served by the disparagement bar: (1) preventing underrepresented groups from being bombarded with demeaning messages in commercial advertising, and (2) protecting the orderly flow of commerce.

Alito dismissed the first interest because the First Amendment protects the freedom to express “the thought[s] that we hate.” And on the second interest, Alito finds that the disparagement bar is not narrowly drawn to drive out trademarks that support invidious discrimination. It reaches the disparagement of any person, group, or institution and applies to trademarks like “Down with racists.” He says its not an “anti-discrimination clause; it is a happy-talk clause.” Therefore it goes further than necessary to serve the interest asserted.

Impact of Decision

As I cited yesterday regarding the invalidation of the bar on immoral and scandalous marks, “The marketplace would ideally deal with the most offensive marks, as consumers would presumably refuse to purchase goods sold under marks that offend them.” Trademarks Laid Bare: Marks That May Be Scandalous or Immoral, 101 Trademark Rep. 1476 (2011). The same is likely true with disparaging marks, apart from instances like THE SLANT were the owner is trying to reclaim and change the meaning of a mark.

Probably the most high profile impact is that the Washington Redskins mark will remain registered. That mark was previously invalidated by the USPTO on the basis of the disparagement bar and that decision is the subject of a pending appeal to the Fourth Circuit. In June, the parties in the Redskins appeal filed letters to the Fourth Circuit stating that the Tam decision controls and that the USPTO decision canceling the Redskins mark should be reversed.

So it will take longer before the Redskins change their name, which is likely to happen eventually on account of public pressure, rather then legal rulings. Still it is doubtful that any serious sporting team would adopt the Redskins name today, if today was day-one of the franchise.

The law no longer bars registration of disparaging trademarks. But, we are unlikely to see a flood of businesses adopting disparaging marks in the marketplace.

Erik Brunetti acquired ownership of a trademark application to register the mark FUCT for apparel. The USPTO refused to register the mark under section 2(a) of the Lanham Act asserting that it was immoral or scandalous. But the Federal Circuit found that the provision banning registration of marks comprising immoral or scandalous matter violated the First Amendment. In re Brunetti, no. 2015-1109 (Fed. Cir. 2017). This clears the way for FUCT to register, unless the government appeals this ruling.

The Brunetti case follows the Matal v. Tam, No. 15-1293 (2017) case where the Supreme Court struct down as violating the First Amendment another provision of section 2(a), which barred the registration of marks consisting of material that is disparaging. The outcome in Brunetti is not surprising in light of Tam.

In Brunetti, the court found that evidence supported that FUCT was vulgar as being a phonic twin of “fucked.” Therefore FUCT was scandalous under section 2(a).

But, the court found that the immoral or scandalous bar of section 2(a) was an unconstitutional content-based restriction on speech.

Trademarks Have Expressive Content

The court noted that marks considered immoral or scandalous can have expressive content. The court cited the following examples of marks espousing a powerful cause: FUCK HEROIN; FUCK CANCER; and FUCK RACISM. And the court noted these marks conveying a political view: DEMOCRAT.BS and REPUBLICAN.BS. The court said that “powerful messages can sometimes be conveyed in just a few words.”

The court found that there is no question that the immoral or scandalous prohibition targets the expressive components of speech. And this content-based restriction is disconnected from the purpose of trademark registration, which is to facilitate the source identification of goods and services and avoid consumer confusion in the marketplace.

There was no dispute that the immoral and scandalous provision could not survive First Amendment strict scrutiny. The court further found that it could not survive intermediate scrutiny.

Trademark registration is not a government subsidy or a limited public forum

The government argued that the First Amendment was not implicated because the trademark registration program is either a government subsidy or a limited public forum. The Court rejected both of these arguments.

On the subsidy issue, the court found that trademark registration does not implicate Congress’ power to spend funds and that the grant of a trademark registration is not a subsidy equivalent.

On the limited public forum issue, the court found that the speech that “flows from trademark registration is not tethered to a public school, a federal workplace, or any other government property.” Further, it said, “If the government can constitutionally restrain the expression of private speech in commerce because such speech is identified in a government database [e.g. the trademark registration database], so too could the government restrain speech occurring on private land or in connection with privately-owned vehicles, simply because those private properties are listed in a database.”

On Judicial Review

The court cited to the article by Anne Gilson LaLonde & Jerome Gilson titled Trademarks Laid Bare: Marks That May Be Scandalous or Immoral, 101 Trademark Rep. 1476 (2011). This article considers the problems of the immoral or scandalous provision and reviews numerous examples of marks rejected and not rejected under that provision. One of the solutions proposed by the article is for Congress to repeal the scandalous and immoral prohibitions from the statute. But the article states:

No lawmaker would be willing to suggest even tinkering with a ban of any sort on immoral or scandalous material. Asking to be tagged as pro-immorality or pro-vulgarity is not a savvy political move. And advocating repeal of a century-old statutory phrase designed to protect public sensibilities would doubtless trigger impassioned opposition.

Therefore, the courts are likely the only place where the scandalous and immoral provision could be addressed.

Public Sensibilities Protected?

But did the immoral or scandalous bar provision really “protect the public sensibilities?” In Brunetti, the government argued that it had a substantial interest in protecting the public from scandalous or immoral marks. But as the court noted, whether a trademark is registered or not, does not stop someone from using such a mark in the marketplace. You can use a mark without registration it. And, the court said:

“In this electronic/Internet age, to the extent that the government seeks to protect the general population from scandalous material, with all due respect, it has completely failed.”

Impact of the Decision

Before this decision, as noted by the court, the marketplace included scandalous material and scandalous marks. In fact, Mr. Brunetti claimed that he operated his clothing brand under the FUCT mark for over 20 years. The lack of registration didn’t stop him from operating all that time and exposing the public to his mark.

After this decision, looking to the trademark registration database, you might see more scandalous, vulgar, or shocking marks. But will that have a great impact?

As the Laid Bare article stated, “The marketplace would ideally deal with the most offensive marks, as consumers would presumably refuse to purchase goods sold under marks that offend them. The American public would continue, as it is now, to be faced with products, services, entertainment and printed matter that are in poor taste and even embarrassing to behold.”

The Court said that “Many of the marks rejected under § 2(a)’s bar on immoral or scandalous marks … are lewd, crass, or even disturbing.” The Court continued that it “was not eager to see a proliferation of such marks in the marketplace.” But, “There are countless songs with vulgar lyrics, blasphemous images, scandalous books and paintings, all of which are protected under federal [copyright] law.” And, “The First Amendment… protects private expression, even private expression which is offensive to a substantial composite of the general public.”

Obscene Material

The court left open the possibility that a provision barring marks comprising obscene material could be constitutionally permissible.

The government might appeal this ruling to the Supreme Court and argue that the immoral and scandalous provision should be interpreted narrowly to cover only marks comprising obscene material. It seems unlikely that the court will take that appeal following Tam.

Your trademark is registered in the United States. But you sell goods/services under that trademark both in the US and in foreign countries. Should you use the registered trademark symbol, R enclosed in a circle, i.e. ®, next to the mark on or in connection with the goods/services sold in foreign countries?

Maybe not, unless you registered the mark in the foreign countries where it is used and those foreign countries allow for the use of R in a circle.

When a trademark is registered in the US and the mark is used in the US on or in connection with goods/services described in the registration, US law provides that the owner of the registration can and should indicate that the mark is registered. See 15 U.S.C. 1111. That indication is often provided by placing the letter R enclosed in a circle next to the mark, i.e. ®. An alternative to using the circle R, the owner can provide a text statement that the mark is a Registered in U.S. Patent and Trademark Office,” which can be abbreviated “Reg. U.S. Pat. & Tm. Off.”

But, trademark rights are generally confined to the countries or jurisdictions where the marks are used or registered. Therefore, a registration in the US generally does not provide the registration owner with trademark rights outside of the US.

If you use the R in a circle next to your mark on goods/services sold in a foreign country, could consumers there think that your mark is registered in that foreign country or jurisdiction? Possibly, yes. A 2000 report from the International Trademark Association details that many foreign countries prohibit the indication that a mark is registered when it is, in fact, not registered in that country. The report provides that such use can result in sanctions, civil liability, and even criminal penalties.

Therefore, you should be careful when using R in a circle in a foreign country to be sure your use comports with the local law in that country.