Intellectual Property

Just over two months ago, Sacramento’s beloved Firestone Public House was sued by multinational conglomerate Bridgestone Brands, LLC for trademark infringement, trademark dilution, and unfair competition based upon Firestone’s use of the FIRESTONE mark. I initially found this dispute to be quite interesting in light of what I appeared to be vastly different groups of consumers being served by the respective entities: tire consumers vis-à-vis food and beverage consumers. However, I subsequently learned that Bridgestone’s use of the FIRESTONE mark goes beyond tires and into the restaurant and bar industry, as reflected by its federally registered trademark.

The complaint includes allegations relating to the fact that the 16th and L Street location occupied by the Firestone Public House was previously occupied by a Firestone Tire location for 75 years, and is in fact known as the Firestone Building around Sacramento, giving rise to a greater likelihood of consumer confusion. Perhaps more importantly, as mentioned above, Bridgestone owns a federally registered trademark for restaurant and bar services, which according to the U.S. Patent and Trademark Office’s file, dates back to December 1954. In its answer and counterclaim, Firestone Public House seeks to cancel Bridgestone’s mark and contends that the mark was not registered until after Firestone Public House opened. That fact, however, may be of little consequence if Bridgestone has been using the mark in commerce since 1954. In fact, Firestone’s counterclaim is likely only a strategic action taken in an attempt to gain settlement leverage. Specifically, it seems Firestone is trying to force Bridgestone to have some skin in the game so that a more favorable settlement can be reached.

It is unlikely that we will ever see this case adjudicated on the merits. Firestone, although seemingly quite a successful venture, is not nearly as well funded as Bridgestone, so it seems unlikely that it will be as willing to throw money at litigation if it can reach some form of acceptable resolution. And while Bridgestone is flush with cash, it didn’t get that way from throwing money down the drain, and it will probably reach a deal with Firestone that it can live with. After all, it doesn’t seem likely that Firestone’s use of the mark will greatly impact Bridgestone’s reputation in the restaurant and bar industry, especially since most people are unaware of Bridgestone’s Firestone branded restaurants.

But with that said, it also remains possible that Bridgestone will refuse to play ball and negotiate with Firestone in good faith. It wouldn’t be the first time that a national conglomerate stepped in and tried to bully a successful, but significantly smaller company. In fact, perhaps we should expect that sort of behavior from a party who stepped in and sued a distantly located, single-location restaurant over its use of the trademark. It remains to be seen how this will shake out but we will be keeping an eye on this case, and if there are any significant developments, we will be sure to write about them.

For more Intellectual Property articles, visit our IP Law Blog here: http://www.theiplawblog.com.

In Eolas Technologies Incorporated v. Amazon.com, Inc., 3-17-cv-03022 (CAND August 24, 2017, Order) (Tigar, USDJ) the United States District Court for the Northern District of California recently denied plaintiff Eolas Technologies Incorporated’s (“Eolas”) motion to disqualify its former counsel, Latham and Watkins (“Latham”), as counsel for defendant Amazon.com (“Amazon”) because Eolas delayed filing its disqualification motion for over a year after it learned of the potentially conflicting representation.  The Court further found Eolas waived its disqualification argument because the delay substantially prejudiced Amazon in its defense of Eolas’ patent infringement action against Amazon.

On November 24, 2015, Eolas filed a patent infringement action in the Eastern District of Texas against Amazon, asserting infringement by Amazon of U.S. Patent No. 9,195,507 (the “’507 patent”).  The ‘507 Patent relates generally to manipulating data in a computer network, and specifically to retrieving, presenting and manipulating embedded program objects in distributed hypermedia systems.  After the case was filed, Amazon moved to transfer the case to the Northern District of California, and, on April 28, 2017, that case was transferred.

At some point between 1998 and 2006, Latham attorneys represented Eolas in some capacity, and although the exact scope and duration of that representation is contested, Eolas claimed that “Latham was privy to all of Eolas’ proprietary and confidential information relating to its technology, patents, patent applications, business, litigation and licensing strategies, particularly those relating to the ‘906” patent, which is the parent to the ‘507 patent-in-suit.  As a result, Eolas argued Latham must be disqualified from representing Amazon because “Amazon’s defense is predicated on attacking [the ‘906 patent,] the very patent that Latham once competed to assert and later defended, and about which Latham has acquired substantial confidential and strategic information.”

As a preliminary matter, the Court first had to decide whether Texas or California law governed.  As noted, the case was originally filed in the Eastern District of Texas, as was the motion to disqualify, but the case was transferred to the Northern District of California before a decision on the motion issued.  Amazon argued that Texas law still governed.  Eolas argued that California law now applies.  The Court held that it should apply Texas law when analyzing the motion to disqualify because when Latham agreed to represent Amazon, the case was pending in the Eastern District of Texas and Latham would have been correct to expect that Texas ethical codes would apply to any motion to disqualify.  The Court then reasoned that the same law should apply now because “[a] change of venue under § 1404(a) generally should be, with respect to state law, but a change of courtrooms.”  Thus, the Court applied Texas law to the motion to disqualify.

Moving on to the substance of the motion, the Court first noted that under Texas law, “[w]aiver of a motion for disqualification of counsel is proper where the delay in moving for a disqualification is for an extended period of time, or where it is done on the eve of trial.”  However, there was a factual disagreement about when Eolas discovered Latham’s alleged conflict.  Eolas claimed that, until January 6, 2017, “nobody at Eolas knew that Latham was representing Amazon.”  Amazon, on the other hand, asserted that Eolas had known that Latham represented Amazon a year earlier, by January 2016.

The Court sided with Amazon.  Specifically, the Court noted that Latham had appeared in the case for Amazon in January 2016, and that this appearance was recognized by Eolas’ counsel.  Under Texas law, an attorney’s knowledge is imputed to a client, in this case Eolas.  The Court also noted that Eolas knew that it had previously retained Latham, including for work related to the ‘906 patent.  Therefore, the Court found Eolas knew about the Latham conflict for a year before it decided to file its motion to disqualify, and that one year qualifies as an extended delay.

The Court also found that Amazon would face substantial prejudice from Latham’s disqualification.  The Court noted that in 2016 – the year during which Eolas knew of the alleged conflict but took no action – Latham billed over 3,400 hours to defend that action and prepare the matter for trial.  The Court found this large expenditure of time and resources weighed in favor of waiver.  Thus, the Court concluded that Eolas waived its right to seek disqualification by waiting one year after discovering Latham’s conflict to file its motion, and denied the motion to disqualify Amazon’s counsel.

This case is a good reminder to timely raise all issues and potential challenges.  Otherwise, if clients and their counsel delay to long after having been found to be aware of the issue or potential challenge, a court may find it to have been waived and/or unfairly prejudicial to the other party given the delay.

My last column was the first of two columns discussing some of the most common misconceptions or myths about patents.  Here is the second part, starting with number five on my list.

5. A Patent Does Not Give the Patent Owner the Right to Practice the Invention.

Inventors and patent owners often assume that a patent gives them rights to practice the patented invention, i.e., freedom from infringement.  Not true.

A patent is a grant to its owner of the right to exclude others from making, using, offering to sell, and selling the patented invention in the United States, or importing the invention into the United States.  These rights are called exclusionary rights.  A patent does not provide its owner with the rights to do these things.  An invention may be patentable but still infringe another person’s patent.  In such a case, the patent owner may have a patent on the invention but cannot make or use the invention unless they obtain a license from the owner of the patent that is infringed.

6. Patents Do Not Infringe Other Patents.

A patent cannot infringe another patent.  Only a machine, article of manufacture, composition of matter, or process can infringe a patent.

As stated above, a patent gives its owner the right to exclude others from making, using, offering to sell, selling, or importing the patented invention.  The patent is infringed if any of these acts are committed in the United States without the patent owner’s permission.  Thus, there is no infringement unless someone makes, uses, offers to sell, or sells the invention in the United States, or imports the invention into the United States.  An invention described in a patent may infringe another patent, but only if it is made, used, offered for sale, sold, or imported in the United States.  The patent itself is not an act of infringement.

7. Patentability and Patent Infringement are Not the Same Thing.

Inventors often think that if their invention is patentable, then it cannot infringe other patents.  Not so.  Patentability and patent infringement are two different things.  An invention may be both patentable and infringe an existing patent.  In both cases, the starting point of the analysis is the claims.

To determine if an invention is patentable, the invention, as it is claimed, is compared to what is known in the field (the prior art).  In general, prior art includes written documents (such as other patents, published articles, catalogs, and websites), as well as actions by the inventor and third parties, that exist before the patent application is filed.

The first requirement of patentability is that the claims must be novel (new or different) over the prior art.  The test for novelty is performed by looking at each element of the invention as claimed.  If all of the elements of the claimed invention are present in a single prior art reference, then the invention is not novel and is said to be anticipated by the prior art.  The invention is not patentable.

The second requirement of patentability is that the claims must be nonobvious over the prior art.  The invention is obvious if the differences between the invention and the prior art are such that the invention, as a whole, would have been obvious at the time it was made to a person with ordinary skill in the art.  Unlike the test for novelty, the test for obviousness is not limited to a single prior art reference – any number of references can be combined to render an invention obvious.  For obviousness to be found, every element of the claimed invention must be present or suggested in the prior art, although not necessarily in the same reference.

To determine if an invention infringes an existing, in force (not expired) patent, the claims of the patent in question are compared to the invention (in a patent infringement action, the district court first interprets or construes the claims to determine their meaning and scope).  If each element of a claim is present in the invention (literally, or in some cases, by an equivalent), that claim is infringed.  Only one claim need be infringed for the patent to be infringed.

Thus, although it sounds counter-intuitive, an invention can be patentable over a prior art patent and, at the same time, infringe the same patent.

California was the first state to legalize marijuana for medical use.  In 1996, California approved Proposition 215, the California Compassionate Use Act.  Two decades later, California voters approved  Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA).  Despite the fact that cannabis has been legal in California since 1996, you still can’t get a trademark in California for marijuana, medical or otherwise.  Why is that.

The problem results from a disconnect between California’s trademark statutes and the California laws governing legal cannabis use.  California Business and Professions Code Section 14272 provides as follows:

The intent of this chapter is to provide a system of state trademark registration and protection substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. Sec. 1051 et seq.), as amended. To that end, the construction given the federal act should be examined as nonbinding authority for interpreting and construing this chapter.

The USPTO regularly rejects applications to register trademarks related to cannabis on the grounds that such use would not constitute “lawful use in commerce”.  The legal reasoning underlying such rejection goes as follows:  Under federal trademark law, the registration of a trademark requires use of that mark in connection with the goods or services in commerce.  Federal trademark law defines “commerce” as all commerce which may lawfully be regulated by Congress.  If the goods or services covered by a mark are unlawful, actual lawful use in commerce is not possible.  And in those situations, a mark covering such unlawful goods or services cannot be federally registered.

Cannabis and products that are primarily intended or designed for use in connection with cannabis are federally illegal under the Controlled Substances Act.  The federal trademark office has taken the position that if a mark covers a good or services that would be illegal under the CSA, lawful use in commerce is not possible, and as such, the mark cannot be federally registered.

The trademark examiners in Sacramento have gone further than taking USPTO reasoning as nonbinding authority; they have taken the USPTO reasoning as gospel in  rejecting state applications for cannabis.  However, California’s lawmakers are proposing an amendment to California’s trademark laws that will address this inconsistency.

AB 64 proposes to, notwithstanding those provisions, authorize the use of specified classifications for marks related to medical cannabis and nonmedical cannabis, including medicinal cannabis, goods and services that are lawfully in commerce under state law in the State of California

AB 64 intends to provide a statutory mechanism for allowing the registration of a California trademark for cannabis products.  The bill proposes two new classifications of goods and services may be used for trademark marks related to cannabis, including medicinal cannabis that are lawfully in commerce under state law in the State of California.  The proposed classes are:

(1) 500 for goods that are cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.

(2) 501 for services related to cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.

While AB 64 would appear to solve conflict at the California Secretary of State’s trademark department, the down side is that California state trademark registrations for cannabis products will not be available until January 1, 2018.

A plaintiff seeking to prevail on a trademark infringement claim needs to establish that there is some likelihood of confusion between its mark and that of the defendant.  Generally, a plaintiff establishes that there is “forward” confusion by showing that customers believed they were doing business with plaintiff but because of a confusion in their respective marks, were actually doing business with the defendant.  Sometimes, however, a plaintiff will seek to establish “reverse confusion” in that a customer believing they were doing business with a defendant actually ends up doing business with the plaintiff.  The Ninth Circuit, in the case Marketquest Group v. BIC Corp. (decided July 7, 2017), was faced with the issue as to whether a plaintiff seeking to prevail under a theory of “reverse confusion” is required to plead that theory with specificity.

For nearly 20 years, Marketquest produced and sold promotional products utilizing its registered trademarks “All-in-One” and “The Write Choice.”  In 2009, BIC Corporation acquired a competitor in the promotional products field and began publishing promotional product catalogs featuring the phase “All-in-One” and in other advertising, using the phrase “The WRITE Pen Choice for 30 Years.”  Marketquest sued BIC for trademark infringement.  After the District Court granted summary judgment to BIC, Marketquest appealed to the Ninth Circuit.  (This article does not address the other issues decided by the Ninth Circuity other than the pleading requirement.)

In seeking to have the Ninth Circuit reject the appeal, BIC argued that Marketquest could not proceed under a “reverse confusion” theory because it had not specifically pled such a theory in its complaint. The Ninth Circuit began by recognizing that the Lanham Act allows a trademark owner to pursue a cause of action against someone who uses the trademark in commerce “when such use is likely to cause confusion.”  Given that neither party questioned the validity of Marketquest’s trademarks, the Ninth Circuit recognized that the main issue before the lower court was “whether there is a likelihood of confusion: that is, whether Defendants’ `actual practice[s were] likely to produce confusion in the minds of consumers about the origin of the goods … in question.’”  Since at least 2005, the Ninth Circuit has recognized two theories of consumer confusion: “forward confusion” and “reverse confusion”.  See Surfvivor Media, Inc. v. Survivor Prods., 406 F.32 625 (9^th Cir. 2005).  Because Marketquest was attempting to establish trademark infringement under a theory of “reverse confusion,” BIC argued that it was required to plead such a theory with specificity in its complaint and that having failed to do so, the lower court properly granted judgment against it.

The Ninth Circuit recognized that it had not addressed this issue before, but that the First Circuit, in Dorpan, S.L. v. Hotel Melia, Inc. 728 F.3d 55 (1^st Cir. 2013), had.  In that case the First Circuit ruled that “`reverse confusion’ is not a separate legal claim requiring separate pleading.  Rather, it is a descriptive term referring to certain circumstances that can give rise to a likelihood of confusion.”  The Ninth Circuit adopted this approach and ruled in Marketquest’s favor “when reverse confusion is compatible with the theory of infringement alleged in the complaint, a  Plaintiff need not specifically plead it.”

BIC argued that at least two prior Ninth Circuit cases required a different result.  BIC first cited the Ninth Circuit’s decision in Surfvivor to support its argument that strict pleading is required. However, the Ninth Circuit rejected this argument and held that the only the thing that the Surfvivor case held was that when reverse confusion is the only plausible theory in a trademark infringement complaint, a plaintiff cannot establish a viable trademark infringement claim based on “forward confusion.”

BIC also cited Murray v. Cable National Broadcasting Co., 86 F.3d 858 (9^th Cir. 1996) in support of its proposition that in order to plead a “reverse confusion” theory, “a plaintiff must allege that the defendant `saturated the market with advertising’ or alleged actual reverse confusion from customers.”  The Ninth Circuit likewise rejected this argument recognizing that its Murray decision was decided before it had even recognized a theory of infringement based on “reverse confusion.”  More importantly, the Ninth Circuit concluded that the plaintiff in Murray had not alleged any cognizable trademark infringement claim regardless of whether it was based on “forward confusion” or “reverse confusion.”

The Ninth Circuit concluded that although Marketquest did not use the words “reverse confusion” in its complaint, nor did it allege that the defendants had saturated the market, it had alleged generally that customers “were confused `as to whether some affiliation, connection or association existed’ among defendants and Marketplace and specifically alleged that there were actual instances of forward confusion (i.e., that consumers that that defendant’s goods came from Marketquest).”  Although Marketquest did not raise issues of ”reverse confusion” until its motion for preliminary injunction and later on summary judgment, the lower court’s order did recognize that Marketquest was asserting infringement based on “reverse confusion.”  Although it had not pled such a theory with specificity in its complaint, the Ninth Circuit concluded that the lower court properly allowed Marketquest to proceed under a “reverse confusion” theory and held that Marketquest was not required to plead such a theory with specificity in its complaint.

The Ninth Circuit’s opinion in Marketquest will give plaintiffs some leeway in pleading their theory of trademark infringement. However, plaintiffs will still be required to allege some likelihood of confusion between its mark and that of the defendant in order to avoid a dismissal of their infringement claim.

Because it’s summertime, I thought we should take a break from “serious” intellectual property articles.  So, instead, here are some patented inventions that you might see this summer.

A baseball with a speedometer seems like a great idea.  Although I don’t know anyone who has one, I’ve seen them in toy catalogs.  What could be more American?  We love baseball (at least many of us do) and we love competition, and this allows you to prove how fast you can throw the ball!  The patent is entitled “Baseball Having Inherent Speed-Measuring Capabilities.”  The patent covers the baseball itself, which contains a computer chip, as well as a method of determining the speed the ball is thrown.

A spray misting system for cooling people is a very useful thing.  These systems are very popular; in the last few weeks, I have seen them at a restaurant and at the State Fair.  They’re really effective.  One patent is entitled “Water Mist Cooling System.”  Apparently, there are several similar systems on the market, but most have a lot of problems, such as low water pressure due to reliance on tap water, and clogging due to small nozzle openings and high levels of dissolved solids in the water.  The invention is basically a hose with a series of nozzles, but it also has a pump and a regulator.  The pump solves the low water pressure problem and the regulator flushes the system to reduce clogging.

Corn on the cob holders – a cute idea, but no one actually seems to use them.  They come in all sorts of designs, from those with plain handles to those with decorative handles (little corn cobs, soccer balls, etc.).  Most of the patents I found were design patents and all were entitled “Corn Cob Holder.”  The designs varied in their handles (flat, cylindrical, or curved inward) and in the number of prongs (one, two, or four).  Even though these seem useful, most people seem to prefer to eat corn with their fingers.

The frisbee is a classic summertime invention.  The oldest patent I found was issued in 1967 and was called “Flying Saucer.”  Since then, there have been many patents covering improvements to what is now called a “flying disc.”  There are two types: regular saucer-shaped discs and ring-shaped ones.  The aerodynamics of the two types are completely different. I found one patent that described a “yo-yo returning disc” that uses a string and axle to create “yo-yo motion,” causing the disc to return to the user, like a boomerang.  The advantage of this invention is that a person can play frisbee all alone.  I’m not sure why anyone would want to do this, but if you did, this invention would make it much easier.

The barbecue fork with thermometer is a common subject for design patents.  These devices allow you to stab your food item as it’s being grilled to determine whether it’s done.  As a vegetarian, I don’t need this device, but I’m told it is very useful.  The patented designs vary in the location of the thermometer (an in-line thermometer in the handle of the fork or a round device sitting on top of the handle), and in the length of the fork portion.  The forks with the longer fork portion would seem to be better – so that you don’t burn your arm.

There are lots of patents for soccer shin guards.  The old shin guards were pretty simplistic, consisting of a single piece of stiff material.  The new ones have a separate foot portion that attaches with velcro at the ankle to the shin portion.  The patented shin guards all try to solve the same problem: they must be flexible enough to fit a variety of shins and yet also be stiff enough to provide protection.  Protection is critical, because the shin bone (the tibia) is a very vulnerable bone – it is long, thin, triangular, and not covered by muscle or fat.  One patent described a moisture-curable resin shin guard that can be molded to the user’s shin without heat, using only water, to form a rigid, tight-fitting guard.  This sounds like an effective way of getting a good fit.

The swim noodle is my favorite summer invention.  I have a bunch of them, and I wish I’d patented it.  The noodle is a long, open-celled, foam tube that is used as a pool floatation toy.  They come in many colors and shapes.  You can do just about anything with the noodle, depending on how many you have and how you arrange them.  You can use them to float sitting up, lying down, or something in between.  You can use them to do water exercises and to reach other pool toys floating in the pool.  Kids (and adults!) use them to whack each other or blow water out.  I couldn’t find a patent for the basic noodle, but I did find one for a noodle chair.  However, I think the noodle is best used in its purest form, by itself.

Now, enjoy the rest of our summer!

In TASER International, Inc. v. PhaZZer Electronics, Inc. et al, 6-16-cv-00366 (FLMD July 21, 2017, Order), a Florida District Court took the drastic step of entering a default judgment in favor of Plaintiff Taser, along with an award of compensatory and treble damages, an award of reasonable attorneys’ fees and costs, and injunctive relief because of Defendant Phazzer’s discovery failures and abusive litigation tactics.  According to the Court, since the outset of the litigation, Phazzer had engaged in a pattern of bad faith conduct designed and intended to delay, stall, and increase the cost of the litigation.  The Court determined no relief other than terminating sanctions would be adequate to address Phazzer’s repeated violations.  In the case, Plaintiff Taser filed a complaint against Defendant Phazzer for patent and trademark infringement, false advertising, and unfair competition.

In the order granting the terminating sanctions, the Court began by summarizing the “abusive litigation and discovery practices” it found the Defendant undertook during the litigation.  Specifically, the Court noted that after three motions to compel, and after the case had been ongoing for nearly a year, plaintiff “TASER still has not received the most basic information regarding the details and relationships between Phazzer and its manufacturer/suppliers/distributors of the accused . . .[infringing] product.”  In addition, the Court noted that while Taser had been attempting to schedule depositions for five months, Phazzer continued to assert that “[e]very one of the handful of critical witnesses associated with Phazzer, a small, closely-held company, are represented to be on vacation, out of the country, in surgery, or convalescing.”

Furthermore, after multiple failures by corporate representative for Phazzer to appear when required, the Court order that a representative of Phazzer must attend a hearing on their counsel’s request to withdraw, cautioning that “[f]ailure to comply with this Order may result in imposition of sanctions, including entry of a default or default judgment against the offending party or counsel.”  However, the Court noted that no representative from Phazzer Electronics attended the hearing in clear violation of the Court’s Order.  Moreover, in addition to the “flagrant discovery abuse and contemptuous behavior exhibited by Phazzer,” the Court also cited to numerous attempts by Phazzer to derail the litigation by repeatedly attempting to stay the proceedings, and by filing a last minute emergency motion for a protective order.

As for legal authority for its terminating and others sanctions ordered against Phazzer, the Court stated Rule 37 of the Federal Rules of Civil Procedure “allows district court judges broad discretion to fashion appropriate sanctions for the violation of discovery orders.”  The Court then noted Rule 37 “authorizes a variety of sanctions, such as, striking pleadings, rendering a default judgment, and holding the disobeying party in contempt of court.”  Furthermore, Rule 37 provides that “the court must order the disobedient party, attorney advising that party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.”

Although the sanction of default is seen as a “last resort,” the Court reasoned a party’s “willfull or bad faith disregard” for discovery orders may call for this type of sanction when the party failed to comply with a court order compelling discovery and warning that the failure to comply might result in a default judgment.  The Court also noted bad faith may be found through “delaying or disrupting the litigation or hampering enforcement of a court order.”  The Court then found that Defendant Phazzer engaged in the above-described misconduct with the subjective intent to abuse the judicial process.  Thus, the Court found the imposition of terminating sanctions, along with compensatory and treble damages, attorneys’ fees and costs, and a permanent injunction to be “necessary to adequately punish Phazzer for its wanton and repetitive disregard of this Court’s orders and as a consequence of its willful abuse of the discovery process. The imposition of lesser sanctions would underrepresent the seriousness of the offensive conduct.”

Although an extreme example, this case is a good reminder to parties and attorneys alike that all litigation must be taken seriously and that the discovery process must be respected.  Failure to do so can lead to sanctions, up to and including terminating sanctions in particularly egregious cases.

In 2014, the Washington Redskins lost a battle before the Trademark Trial and Appeal Board (“TTAB”) where the petitioner, a group of Native American activists, sought cancellation of the “Washington Redskins” trademark, which had been used for over 80 years. Immediately after the decision, the Redskins sought recourse through the United States District Court, which is one of two appropriate venues for an appeal from the TTAB. However, the Redskins didn’t have any better luck there as Judge Gerald Bruce Lee affirmed the TTAB’s ruling in 2015, finding that the mark, and its related marks, are offensive to Native Americans and therefore ineligible for federal trademark protection under the Lanham Act, which prohibits registration of trademarks that “may disparage” or bring people into contempt. The Redskins, displeased with Judge Bruce Lee’s ruling, eventually petitioned the Supreme Court for certiorari, but the Court refused to hear the matter, finding that a similar case, In re Tam, stemming from the Federal Circuit, was preferable for review.

In In re Tam, the front man for an Asian-American rock band known as the Slants, sought registration of the band’s name through the United States Patent and Trademark Office (“USPTO”), but was denied registration on the ground that the mark is disparaging. Accordingly, Tam sought appellate review before the Federal Circuit, which is the other appropriate venue for a USPTO or TTAB appeal, claiming that the disparagement clause of the Lanham Act violates the First Amendment’s Free Speech Clause. The Federal Circuit sided with Tam and ordered the TTAB to register the mark. The TTAB, dissatisfied with the Federal Circuit’s ruling, sought Supreme Court review, which as stated above, was granted.

The matter of Matal v. Tam was argued before the Supreme Court on January 18, 2017 and the Court issued its opinion on June 19, 2017. In an 8-0 decision, with Justice Neil Gorsuch taking no part in the consideration or decision of the case, the Court affirmed the Federal Circuit’s decision. Justice Alito, delivering the opinion of the Court, stated that “The disparagement clause violates the First Amendment’s Free Speech Clause,” and “Contrary to the Government’s contention, trademarks are private, not government speech.” He further stated that:

The Commercial market is well-stocked with merchandise that disparages prominent figures and groups, and the line between commercial and non-commercial speech is not always clear, as this case illustrates. If affixing the commercial label permits the suppression of any speech that may lead to political or social “volatility,” free speech would be endangered.

Despite this favorable ruling for free speech, Justice Alito cautioned that the government still “has an interest in preventing speech expressing ideas that offend.” But he and the Court believe the disparagement clause in its current form is too broad. He stated that:

The clause reaches any trademark that disparages any person, group, or institution. It applies to trademarks like the following: “Down with racists,” “Down with sexists,” “Down with homophobes.” It is not an anti-discrimination clause; it is a happy-talk clause. In this way, it goes much further than is necessary to serve the interest asserted.

So interestingly, while the opinion is clearly a victory for Tam, the Slants, and the Redskins, Justice Alito left open the door for some form of governmental regulation of ideas that offend.

On the other hand, Justice Alito was clear that trademark registration does not constitute governmental speech, which has inferior free speech protection. So it’s reasonable to conclude that irrespective of Justice Alito’s cautionary proclamation, the Court will not allow the TTAB or USPTO to continue cancelling and rejecting trademarks it finds disparaging, irrespective of any amendment or narrowing to the disparagement clause. However, the most appropriate interpretation of the Court’s opinion is likely that the disparagement clause, in its current form, is unconstitutional and overbroad in its scope, but while the trademark registration does not constitute governmental speech, commercial speech is not without governmental regulation. As such, it is likely that Congress will amend the Lanham Act and narrow the scope of the disparagement clause, then the TTAB will cancel, or the USPTO will reject, a trademark under the revised disparagement clause. Only then will we learn exactly how far the Court is willing to go to protect free speech, but based upon Justice Alito’s remarks regarding the danger of treating commercial speech any differently, it seems likely that the Court would rule in favor of free speech again.