Wednesday, December 23, 2015

Federal Circuit Ruling Opens the Door to "Offensive" Design Patents

This week, the en banc Federal Circuit issued an opinion in In re Tam, No. 14-1203 (Fed. Cir. Dec. 22, 2015), holding that the relevant portion of Section 2(a) of the Trademark Act barring the patent office from registering scandalous, immoral or disparaging marks was an unconstitutional infringement of the First Amendment.  The Federal Circuit's decision has significant implications for another trademark case pending in the Court of Appeals for the Fourth Circuit, wherein the Washington Redskins seek to overturn the Patent and Trademark Office's cancellation of the "Redskins" trademark on the same grounds.   Pro-Football, Inc. v. Blackhorse,  No. 15-1874 (4th Cir. filed Aug. 6, 2015).  But what does this decision mean for design patent law, which retains the authority to refuse to issue patents covering ornamental designs deemed "offensive to any race, religion, sex, ethnic group or nationality?"  Find out after the jump. 

Simon Shiao Tam is the front man for a band calling themselves "The Slants." It is effectively undisputed that Mr. Tam adopted that name for his band in a deliberate attempt to "reclaim" an expression understood to be a derogatory term for persons of Asian decent.  While the PTO does not appear to have doubted Mr. Tam's intentions, it refused registration of the band's name as a trademark on the basis that "a substantial composite of persons of Asian descent would find the term offensive." Tam appealed, arguing that the portion of the statute banning the registration of derogatory marks violated the First Amendment.

The relevant portion of Section 2 provides:
No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register 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
Long standing precedent has held that this prohibition does not run afoul of the First Amendment.  Rather, the refusal to register any particular trademark was not believed to invoke the First Amendment at all.  As the Federal Circuit's predecessor court explained:
With respect to appellant’s First Amendment rights, it is clear that the PTO’s refusal to register appellant’s mark does not affect his right to use it.  No conduct is proscribed, and no tangible form of expression is suppressed. Consequently, appellant’s First Amendment rights would not be abridged by the refusal to register his mark.
In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981).  In other words, a person is still permitted to use a trademark without obtaining a federal registration, and is therefor not prevented from speaking.  Courts have also long held that the government is not required to subsidize an expression that it disapproves of.  This is a major reason the government is allowed to refuse to issue offensive personalized license plates, or deny funding to organizations that promote abortion.

The government's position has attracted many critics over the years.  The belief that the refusal to register a mark does not prevent a person from speaking may be naively formalistic.  A federal trademark registration can be incredibly valuable, and it is often considered untenable for a company to maintain any significant branding that is incapable of being registered.  Indeed, the Washington Redskins case is closely watched in large part because it is understood the team will likely have no choice but to rebrand if their trademark registration is permanently canceled.  In addition, many have questioned the value and effectiveness of allowing low level government employees to make individualized calls on what is and is not offensive.  The Tam court notes that the Copyright Office has no such content-based restriction on registration, and no apparent ill effects have resulted from the presumed government endorsement of offensive copyrighted works.  The Tam opinion is also an entertaining read for the multitude of string citations intended to highlight the inconsistent application of this statute with respect to individual registration.  The court notes for example that the mark HAVE YOU HEARD SATAN IS A REPUBLICAN was rejected as disparaging the Republican Party, while THE DEVIL IS A DEMOCRAT was accepted for registration.  

A majority of the Federal Circuit found the critics' position persuasive.  The court first held that the disparagement clause targets a trademark's expressive content, and is therefore not entitled to review under the lower degree of scrutiny reserved for restrictions of commercial speech.  The court next held that the restrictions deny legal rights to individuals based on the content of the speaker's message, and the government's justifications are not sufficient to overcome strict scrutiny.  The registration of a trademark is not fairly understood to be a government endorsement of that mark. And furthermore, trademarks do not fall within the exceptions of the government subsidies doctrine because the government is not permitted to leverage funding or government benefits to regulate speech outside of relatively narrow contours.  

On this basis, the Federal Circuit found Section 2(a) of the Trademark Act to be unconstitutional.

From this extended discussion of federal trademark law, we come back to the focus of this blog: design patents.

The U.S. Patent and Trademark Office guidelines for the prosecution of design patents contains the following provision, reflecting the section of the Trademark Act discussed at length above:
Design applications which disclose subject matter which could be deemed offensive to any race, religion, sex, ethnic group, or nationality, such as those which include caricatures or depictions, should be rejected as nonstatutory subject matter under 35 U.S.C. 171. 
M.P.E.P. § 1504.01(e).  It should be noted that the Patent Office's statutory basis for this ban is less than compelling.  35 U.S.C. § 171 broadly describes the scope of patentable subject matter for designs, and contains no specific prohibition for offensive designs.  The Patent Office also relies on non-statutory federal regulations, namely 37 C.F.R. § 1.3, to support its rejections.  Section 1.3 states, in its entirety:
Applicants and their attorneys or agents are required to conduct their business with the United States Patent and Trademark Office with decorum and courtesy. Papers presented in violation of this requirement will be submitted to the Director and will not be entered. A notice of the non-entry of the paper will be provided. Complaints against examiners and other employees must be made in correspondence separate from other papers.
This regulation also applies to applications for utility patents.  However, the Patent Office does not contain a similar guideline banning offensive utility applications.

Considering the lack of any firm basis in the law, the Patent Office's guidelines are hard to defend in the face of the Federal Circuit's decision in Tam.  The restriction is clearly targeting the expressive aspect of a challenged design, and whatever justification the government may have for rejecting designs it deems to be offensive is belied by the fact that an individual may seek a utility patent covering the functional aspects of the same subject matter without the equivalent restriction for content.

A case challenging the constitutionality of a rejection under Section 1504.01(e) of the MPEP may not come before a court any time soon.  Rejections based on offensiveness of a design appear to be rare, and there does not appear to be case law on point in either direction.  Regardless, it may behoove the Patent Office to consider whether content-based restrictions on the patentability of designs are now a dead letter.  Additionally, considering the majority of appellate courts have not spoken on the trademark issue decided in Tam, individuals seeking protection for designs that stretch the bounds of decorum may want to weigh the viability of a design patent, as patent law is the exclusive jurisdiction of the Federal Circuit.

As a final note, one should bear in mind that the constitutionality of Section 2(a) (and possibly Section 1504.01(e) by extension) is not finally determined.  The Fourth Circuit has yet to rule on this issue in Pro-Football.  Regardless of how that case comes out, this issue is almost certain to be appealed to the Supreme Court.  It's very likely we will see another opinion on this matter in the next year.

In the spirit of the holidays, we leave you with a figure from an U.S. Design Patent No. 372,207, which, while not offensive in the eyes of the Patent Office, may still leave you with a Christmas Smile, or at least a Christmas Cringe.  We give you, "Santa Claus Figure in a Tub" by Seymour Cohen:

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