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Yesterday the United States Supreme Court announced that it was granting the petition for writ of certiorari in the copyright infringement case previously discussed on this blog here and here.  The case is Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC and involves the question of when a copyright holder can properly file a copyright infringement lawsuit.

34126235 - copyrightCurrently there is a circuit-split as to whether the term “registration” as used in the Copyright Act includes the mere filing of a registration application or whether it requires that the Copyright Office have actually approved or denied the registration application.  The plaintiff in the case, Fourth Estate Public Benefit Corp., filed suit before the Copyright Office had approved or denied its application, and the Eleventh Circuit affirmed the lower court’s dismissal of its complaint on that basis.  The United States Solicitor General, who the Supreme Court invited to weigh in earlier this year, urged the Court to take the case and uphold the Eleventh Circuit’s position.

The Supreme Court is now poised to resolve the dispute and to give copyright holders clarity as to whether they may file suit merely after filing an application for a copyright registration.

Justice Anthony Kennedy of the United States Supreme Court announced his retirement yesterday, after having served three decades on the bench.  Justice Kennedy is known for casting the swing vote in a number of major cases and has drafted opinions on a myriad of hotly-contested issues, including LGBT rights and the First Amendment.  His retirement places President Trump in a position to select a conservative justice that will shift the ideological balance of the Court for years to come.

How this will impact future rulings in advertising, trademark, and other intellectual property cases remains to be seen, but we can certainly expect a more conservative slant from the bench going forward.

In what may be the final installment of a series of blog posts related to the Lanham Act’s disparaging trademark ban and its effect on the Washington Redskins’ trademarks, the Fourth Circuit finally issued a decision in the Redskins’ case.  When the United States Supreme Court ruled last June in a case involving the Slants rock band that section 2(a) of the Lanham Act was unconstitutional, the fate of the Washington Redskins’ trademarks became clear.  But it took until yesterday for the Fourth Circuit to officially weigh in.

68951198 – washington redskins nfl team on white

In yesterday’s simple one-page decision, the Fourth Circuit vacated the lower court’s ruling (which affirmed the U.S. Patent and Trademark Office’s earlier order) that six of the team’s trademarks violated section 2(a) of the Lanham Act.  In other words, as expected, the Fourth Circuit issued an order in line with the Supreme Court’s decision that the disparaging trademark ban is unconstitutional and cannot bar the registration of an allegedly disparaging trademark.  As part of its ruling, the Fourth Circuit dispensed with oral argument and remanded the case to the lower court for further proceedings consistent with the Supreme Court’s decision.  Given that the remand is merely a formality at this point, the Washington Redskins may now finally feel closure on the issue (though in true procedural fashion, the Fourth Circuit’s Notice of Judgment does confirm that there is 90 days to file a petition for certiorari to the Supreme Court).

To trace this blog’s history of this interesting trademark issue, check out blog posts here, here, here, here, here, here, here, here.

This post follows up on my prior blog post regarding the case pending at the United States Supreme Court involving the question of when a copyright holder can properly file a copyright infringement lawsuit.  The petitioner, Fourth Estate Public Benefit Corp., has framed the issue in its petition for certiorari as follows:  “Whether ‘registration of [a] copyright claim has been made’ within the meaning of § 411(a) when the copyright holder delivers the required application, deposit, and fee to the Copyright Office, as the Fifth and Ninth Circuits have held, or only once the Copyright Office acts on that application, as the Tenth Circuit and, in the decision below, the Eleventh Circuit have held.”

34126235 - copyrightFollowing the parties’ respective briefing as to whether the Supreme Court should grant certiorari and thus review the case, the Supreme Court has now invited the United States Solicitor General to submit a brief as well.  In other words, the Supreme Court is interested in the Solicitor General’s view on the issue.  A recent American Bar Association article explains that the Supreme Court has increasingly requested the views of the Solicitor General in order to assess how the United States’ interests are being affected by a lower court’s decision and to determine whether the case is important enough or a circuit split is developed enough to warrant the Supreme Court’s review.  This may mean that the Supreme Court is considering granting certiorari in this case, but it will likely be some time before we learn of that.

Continuing my ongoing coverage of the Lanham Act’s disparaging trademark ban, the Federal Circuit ruled today that the U.S. Supreme Court’s June 2017 ruling striking down the ban on disparaging trademarks also applies to the ban on “immoral” and “scandalous” trademarks set forth in section 2(a) of the Lanham Act.  Applying First Amendment free speech rights, the Federal Circuit overturned the U.S. Patent and Trademark Office’s refusal to allow a trademark applicant to register the term “Fuct” for his apparel brand.  Despite the Supreme Court’s ruling regarding disparaging trademarks, the USPTO had apparently continued to take the position that it would not register immoral or scandalous trademarks.  The Federal Circuit has now rejected that position, finding that the ban on immoral and scandalous trademarks is unconstitutional just like the ban on disparaging trademarks.

Last month, a journalism collective called the Fourth Estate Public Benefit Corp. (“Fourth Estate”) petitioned the United States Supreme Court to review a decision issued by the Eleventh Circuit involving the question of when a copyright holder can properly file a copyright infringement lawsuit.  At issue is 17 U.S.C. § 411(a), which states that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”  Although copyright holders obtain copyright protection immediately upon the creation of a copyrightable work, copyright holders cannot initiate a lawsuit without satisfying the “registration” requirement set forth in 17 U.S.C. § 411(a).  According to a Copyright Office circular, this means that “registration (or refusal) is necessary to enforce the exclusive right of copyright through litigation.”

34126235 - copyrightHowever, the Circuit Courts are split as to whether “registration” as used in 17 U.S.C. § 411(a) includes the mere filing of a registration application or whether it requires that the Copyright Office have actually approved or denied the registration application.  Earlier this year, the Eleventh Circuit held in Fourth Estate Public Benefit Corp. v. Wall-Street.com that “registration” requires the latter.  Because Fourth Estate had applied for copyrights that had not yet been decided upon by the Copyright Office, the Eleventh Circuit held that Fourth Estate could not properly bring its copyright infringement lawsuit against Wall-Street.com, a news website that Fourth Estate claims kept its news stories live after Fourth Estate’s membership was cancelled.  Therefore, the Eleventh Circuit affirmed the lower court’s dismissal of Fourth Estate’s complaint.

Now, Fourth Estate asks the Supreme Court to weigh in, reverse the Eleventh Circuit’s decision, and resolve the dispute amongst the Circuit Courts.  In the event the Supreme Court hears the case, copyright holders will finally obtain clarity as to whether they may file suit merely after filing an application for a copyright registration.  On the other hand, if the Supreme Court declines to hear the case, copyright holders will be forced to continue to evaluate which courts are, or may be, favorable on the issue.  If copyright holders are stuck with filing in an unfavorable court, they must evaluate the risks of waiting to file a lawsuit (and potentially paying for an expedited registration) or of jeopardizing dismissal of their complaint.

On November 1, 2017, the Supreme Court distributed the case for conference on November 21, 2017.  After that conference, we should know whether the Supreme Court has granted certiorari, and will thus hear the case, or whether the Circuit Court split will remain for the foreseeable future.

In direct response to the U.S. Supreme Court’s decision striking down the constitutionality of section 2(a) of the Lanham Act, which as enacted barred the registration of disparaging trademarks, there is reason to believe that offensive trademark registration applications are on the rise.

According to Reuters, there were at least nine new applications filed with the U.S. Patent and Trademark Office (“PTO”) between the June 19, 2017 Supreme Court ruling and the end of July 2017.  Such marks include versions of the N-word, a swastika symbol, and other offensive terms/phrases.  For example, Snowflake Enterprises LLC has filed multiple trademark applications for offensive marks, examples of which can be found on the PTO’s website (a version of the N-word can be seen here and a swastika symbol can be seen here). Prior to the Supreme Court’s ruling, it’s likely that the PTO would have outright rejected such filings as they had with similar filings in the past.  But the PTO is now under new guidance—that trademark applicants are protected by the free speech rights guaranteed under the First Amendment to the United States Constitution.  According to Reuters, the PTO told its staff a few days after the June 19 Supreme Court ruling that they could no longer use section 2(a) of the Lanham Act to reject a trademark application for a disparaging trademark.

The full effect of the June 19, 2017 Supreme Court ruling remains to be seen, but the evidence to date suggests that applications for offensive trademarks will increase and that the PTO will be forced to approve them if the marks otherwise qualify for trademark registration.  However, if the applicant does not establish actual use of the offensive mark or does not use the offensive mark as a source identifier, the PTO can still reject the application.  Thus, with the exception of the once-applied disparaging trademark ban, the PTO will continue to apply the same standards to trademark applications as it has in the past.

Prior Above the Fold blog posts explaining the Supreme Court’s June 19, 2017 ruling in more detail can be found here and here.

Amid the hullabaloo over the U.S. Supreme Court’s decision this week in Matal v. Tam, a much broader and potentially more significant development might be overlooked. It shouldn’t be.

The case involved Simon Tam’s band “The Slants,” and as our Elizabeth Patton wrote earlier this week, it invalidated the Lanham Act’s prohibition on the registration of disparaging marks. The crucial development that might be missed, however, is separate from the fascination over whether this decision spells the end of efforts to invalidate the trademark registrations held by the NFL for its football team in Washington, D.C. – it does. Rather, the Slants’ case should be seen for what is lurking in the opinions of the concurring justices. That is, the Tam decision marks a potent evisceration of the First Amendment’s commercial speech doctrine, ensuring heightened constitutional protection for commercial speakers.

U.S. Supreme Court Building, Washington, D.C.
Copyright: Blakeley / 123RF Stock Photo

The commercial speech doctrine has long been invoked to allow broader, more intrusive regulation by government of speech that can be characterized as “commercial.” This is the doctrine that justifies not only the Trademark Office’s regulation of trademarks, but also the Federal Trade Commission’s regulation of social media, and a local municipality’s regulation of highway billboards. The commercial speech doctrine holds that because commercial speech is more robust – that is, because it is financially better equipped to defend itself – the government may have a freer hand in regulating such speech. Under this doctrine, a government regulation of commercial speech has heretofore been subject to a lesser degree of constitutional review – the so-called “intermediate” scrutiny of the Supreme Court’s Central Hudson test.

The Tam case dramatically undermines those prior principles.

Indeed, the various opinions in the Tam case buttress a development in the law that has been building in recent years, where the Supreme Court has been much more skeptical of government attempts to regulate the speech of businesses and other commercial actors. This latest case now solidifies a five-justice majority, and potentially a larger one, that will require rigorous, full-bore, core-speech “strict scrutiny” for government regulations of commercial speech when the regulations attempt to restrict or punish non-misleading commercial speech on the basis of the “viewpoint” expressed in the speech.

In other words, there are at least five justices, and likely more, who no longer focus on whether the speech being regulated is “commercial.” Instead, these justices are willing to apply strict scrutiny – and even a presumption of unconstitutionality – to a regulation that can be characterized as “viewpoint” based.

The nose-counting for this principle looks like this:

In his separate concurrence in Tam, Justice Thomas reiterated his long-held view, one that he persistently expressed along with the late Justice Scalia, that all government regulation of commercial speech should be subjected to strict scrutiny if the speech to be regulated is not misleading. Thus, as First Amendment scholars have long recognized, Justice Thomas already stands in the camp that rejects the rationale of the commercial speech doctrine, that commercial speech is entitled to less protection under the First Amendment.

In addition to Justice Thomas, a four-justice wing led by Justice Kennedy concurred with the outcome in Tam. Kennedy, along with Justices Ginsburg, Sotomayor, and Kagan (that is, the so-called “liberal” wing of the Court) sounded a clarion call for the highest level of constitutional scrutiny on regulations that attack a person’s speech based on the speaker’s viewpoint, regardless of whether the speaker is engaged in commercial speech. Justice Kennedy wrote that “it is a fundamental principle of the First Amendment that the government may not punish or suppress speech based on disapproval of the ideas or perspectives the speech conveys.” He then said that regardless of whether the speech in question is commercial – that is, regardless of the nuances of the commercial speech doctrine – “[a] law found to discriminate based on viewpoint is an egregious form of content discrimination which is presumptively unconstitutional.” (emphasis added)

Thus, there is a five-justice majority, between Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan, that will apply full First Amendment protection against a government regulation that discriminates on the basis of a speaker’s viewpoint, regardless of whether the speaker is commercial or not.

And finally, there is reason to anticipate sympathy for this view even among the rest of the justices. The portion of Justice Alito’s principal opinion that reflected only a four-justice plurality of himself, and Chief Justice Roberts and Justices Thomas and Breyer, observed that the Supreme Court has said “time and again” that the public expression of ideas “may not be prohibited merely because the ideas are themselves offensive to some of their hearers.”

These pronouncements line up to be an eight-justice majority, and potentially a unanimous Court once Justice Gorsuch’s views become known (he did not participate in the Tam case). The Court has thus made clear that the government is barred from regulating truthful, non-misleading commercial speech where the only justification for the regulation is that the commercial speech offends the sensibilities of the listeners.

This expansion of the strict-scrutiny regime into territory once thought to be an area of more fulsome government regulation puts into play all kinds of statutory regimes. Clearly, in addition to the anti-disparagement provision of the Lanham Act, that statute’s additional prohibitions against the registration of trademarks that are “scandalous” or “immoral” soon will be invalidated. (Indeed, the Trademark Office has already signaled its recognition of the likely invalidity of these provisions in briefing it submitted to the Federal Circuit last year.) As a reuslt, trademark applicants who previously were unable to obtain registrations of marks with profanity in them or marks with sexual innuendoes now likely will be able to obtain such registrations.

Similarly, the FTC’s regulatory guidance that has required media companies to disclose whether content on their websites are “sponsored” is potentially subject to strict scrutiny because these restrictions are a regulation of commercial speech based on the viewpoint of the speaker.

Other statutory regimes are equally at risk under this now more robust protection of commercial speech. Hence, states that have enacted “veggie libel” laws that prohibit advertising that criticizes a state’s agricultural products are now likely to face a presumption of unconstitutionality and a need to justify the laws under a strict scrutiny regime.

In addition, states that have enforced restrictions on companies’ truthful, non-misleading advertising will face more legal challenges. One prime example will be the states where marijuana has been legalized but the states have also restricted how those cannabis businesses may advertise their products. Those regulations discriminate against the cannabis business’ advertising based on their viewpoint. The Tam decision means that those regulations are presumptively unconstitutional.

Similarly, municipalities that have prohibited or restricted the advertising of ride-sharing or room-sharing businesses also will find it much more difficult to defend such commercial speech regulations because they enjoin speech on the basis of the speakers’ viewpoints.

The fundamental sea change that can be seen in the Tam decision is that non-misleading, truthful commercial speech is no longer the benighted stepchild of the First Amendment. Rather, such speech now is entitled to the strongest form of constitutional protection when the government seeks to regulate such speech because of the speaker’s viewpoint – that is, when the speech is targeted “based on the government’s disapproval of the speaker’s choice of message.”

The practical effect of the Tam case, when read together with the earlier line of decisions applying the highest form of First Amendment protection against viewpoint discrimination, is that businesses now have an even stronger First Amendment basis to resist government efforts to control the way they speak to the public and their customers when their speech is not misleading.

This morning, the United States Supreme Court issued its long-anticipated ruling in the Lee v. Tam (now designated Matal v. Tam) trademark dispute involving the rock band, The Slants.  As detailed in an earlier blog post, the legal issue faced by the Supreme Court was whether section 2(a) of the Lanham Act, which bars the registration of disparaging trademarks, is constitutional.

roadsign
Copyright: 72soul / 123RF Stock Photo

Justice Alito wrote the opinion for the Supreme Court, which affirmed 8-0 the Federal Circuit’s prior determination that the disparaging trademark ban is facially unconstitutional under the First Amendment’s free speech clause.  In reaching that conclusion, Justice Alito explained that trademarks constitute private speech, not government speech as the government had argued.  As Justice Alito pointedly and simply stated, “Speech may not be banned on the ground that it expresses ideas that offend.”  Justice Alito’s analysis, other aspects of his opinion joined by a smaller number of justices, and two concurring opinions can be read here.

As noted in an earlier blog post, although the Supreme Court decided to hear the Tam case last year, it decided not to hear the Washington Redskins’ related trademark dispute described in another earlier blog post.  It now seems that the Supreme Court’s decision with respect to The Slants will allow the Washington Redskins to keep their federally-registered trademarks in the Redskins name, despite the United States Patent and Trademark Office’s prior cancellation of a number of those trademarks.  More broadly, the outcome of the Tam case may entitle any trademark registrant to invoke the First Amendment’s free speech clause to register disparaging or offensive trademarks.

A New York case decided this week by the U.S. Supreme Court involving a state prohibition on credit card surcharge fees would not, at first blush, seem to involve “speech,” let alone “speech” that needs to be protected by the First Amendment.  Indeed, a credit card surcharge fee – such as, for example, a nondescript warning stating “3% added for credit cards” – hardly seems to be in the same league as The Pentagon Papers, or Fanny Hill, or even the fundraising advertisement “Heed Their Rising Voices” by the Committee to Defend Martin Luther King, all of which were subjects of profound First Amendment cases.

ice cream sundae
Copyright: tul / 123RF Stock Photo

Nevertheless, the Supreme Court’s decision announced on Wednesday (Mar. 29, 2017) in Expressions Hair Design v. Schneiderman, 551 U.S. —, 2017 WL 1155913, involving something as innocuous as a thirty cents surcharge for using a credit card to pay for a ten dollar sundae at Brooklyn Farmacy & Soda Fountain marks a significant evolution in free speech law, one that has the prospect of affecting many areas of economic regulation.  The Court’s holding means that trade regulations that previously were perceived as solely government restrictions on economic activity having nothing to do with free speech rights are now potentially subject to First Amendment challenges if the government’s restrictions impose unwarranted burdens on a merchant’s ability to communicate information concerning the merchant’s products or services.  As a result, this “sleeper” decision from the Roberts Court marks yet another step in the continuing expansion of the Court’s use of the First Amendment to limit the ability of government to regulate economic activity.

The case itself is arcane in its details.  The matter involves a New York statute that was a duplicate of a federal measure that Congress enacted in 1981 but which Congress let expire in 1984.  The New York statute has the same effect as a contractual prohibition that previously had been incorporated into credit card companies’ contracts with merchants, but which the credit card companies dropped under pressure from antitrust lawsuits brought by merchants upset with the credit card companies’ efforts to prevent merchants from steering customers toward using cash instead of credit cards.

The New York statute establishes that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.”

On its face, this statutory language has nothing to do with speech.  The statute simply prohibits a merchant from imposing a “surcharge” on a customer who elects to use a credit card instead of cash.

However, both the five-justice majority for the Court led by Chief Justice Roberts as well as a concurring opinion by Justice Breyer held that this statutory provision regulates more than mere conduct – what price a merchant may impose – but it also regulates speech.  The Court held that the operation of the New York statute regulates “how sellers may communicate their prices”:

“A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases. He is not free to say ‘$10, with a 3% credit card surcharge‘ or ‘$10, plus $0.30 for credit‘ because both of those displays identify a single sticker price–$10–that is less than the amount credit card users will be charged. Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price.”

The Court then concluded that “[i]n regulating the communication of prices rather than prices themselves, §518 regulates speech.”

This short assertion – that the statute regulates speech, rather than conduct – opens up the entire panoply of the First Amendment’s commercial speech doctrine.  As a result, and as the Supreme Court directed, the State of New York must now attempt to defend the statute, either on the grounds that it is a valid, non-discriminatory “disclosure” requirement, or on the grounds that it is “narrowly tailored” to serve a “substantial government interest.”  The trial court which heard the case initially concluded that the New York statute could not survive these First Amendment tests.  On remand from the Supreme Court, it will now be up to the Second Circuit to determine whether the trial court judge was correct.

In any event, the ruling now given by the Supreme Court to the first question – does the statute regulate speech – has the potential to open up constitutional challenges against various and sundry economic regulations that could be said to regulate the “communication” of a price as opposed to the “price” itself.  Hence, statutes or regulations that prohibit “Ladies Night” discounts at bars or clubs might now be said to regulate the “communication” of such discounted prices, rather than prohibiting the prices themselves, and as a result, the prohibitions against such prices might now be challenged on First Amendment grounds.  Similarly, local ordinances requiring the imposition of a 5 cents surcharge on customers who want their groceries in a plastic bag might well be challenged on First Amendment grounds, on the strength that such ordinances regulate how merchants “communicate” their prices, as opposed to the conduct of the price itself.  Additionally, regulations that prohibit merchants from imposing differential pricing based where a customer comes from – such as prohibitions against “residents” discounts – also now may be challenged on First Amendment grounds.

As Justice Breyer remarked in his concurrence in the Expressions Hair Design case, “virtually all government regulation affects speech.”  (Justice Breyer’s point was actually that it is less important whether a government provision regulates speech than it is to consider how much speech, and what kind, is affected by the regulation.)

In light of that observation – that government regulations fundamentally affect speech of all kinds – this latest case from the Supreme Court opens up a new tool for businesses to consider when challenging a regulation that affects their abilities to communicate with their customers.  This new decision means that businesses might now require the government to prove that an economic regulation that previously was subject only to highly deferential “rational basis” review is instead justifiable under more rigorous “substantial interest” scrutiny.

In this regard, the Court’s decision in Expressions Hair Design will come to be seen as a watershed moment for those wishing to challenge government regulation of economic activity.