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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.
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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.

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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.

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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.

This morning, the United States Supreme Court heard the long-anticipated oral argument in the Lee v. Tam trademark dispute. The issue in the case, as reported on the SCOTUS blog, is as follows:

“Whether the disparagement provision of the Lanham Act, 15 U.S.C. 1052(a), which provides that no trademark shall be refused registration on account of its nature unless, inter alia, it ‘[c]onsists of . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute’ is facially invalid under the Free Speech Clause of the First Amendment.”

Supreme Court
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Stated more simply, the issue facing the Supreme Court is whether section 2(a) of the Lanham Act, which bars the registration of disparaging trademarks, is constitutional. The Supreme Court is now primed to make that decision, which will not only have an impact on the Lee v. Tam dispute but also the Washington Redskins dispute and many others.

In making that decision, the justices will consider the parties’ oral argument and briefing as well as the numerous amicus briefs filed by numerous third party organizations and individuals interested in the outcome of the Lee v. Tam dispute. Demonstrating the significance of this dispute, numerous of the justices during oral argument today asked pointed questions to the attorneys representing the parties, particularly to the attorney arguing on behalf of the United States Patent and Trademark Office (in favor of the Lanham Act’s current prohibition). Today’s oral argument started and ended with questions related to differences in trademark law and copyright law and included questions on a whole range of topics relevant to section 2(a), its constitutionality, and its implications.

The Supreme Court will issue an order in the case later this year. Additional background regarding this dispute and the related Washington Redskins dispute can be found in prior blog posts as part of this blog’s ongoing coverage of developments in this landmark dispute.

The ongoing battle before the United States Supreme Court regarding the ability to register disparaging trademarks, prior details of which can be found in earlier blog posts here, here, and here, is heating up with a recent flurry of amicus brief filings. Earlier this month, the USPTO filed its opening brief in the case involving the rock band The Slants pending before the Supreme Court, urging the Court to uphold section 2(a) of the Lanham Act, the section that bans the registration of disparaging trademarks, and explaining why it believes the ban is not a restriction on free speech. Following that submission, numerous other groups have filed amicus briefs taking various positions on the issue.

The Native Americans who petitioned to cancel the Washington Redskins’ trademark registrations filed an amicus brief in favor of the USPTO’s position and arguing that there is no right under the First Amendment to use a disparaging trademark to silence others. Other Native American organizations also filed an amicus brief asking the Supreme Court to rule in favor of the USPTO and find section 2(a) of the Lanham Act constitutional in light of the government’s incentive to discourage discriminatory conduct. A collection of bar associations filed an amicus brief seeking the same result. The Washington Redskins, on the other hand, are expected to file an amicus brief arguing the opposite–in favor of allowing registration of allegedly disparaging trademarks.

American Bar Association Stamp
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The American Bar Association (“ABA”) filed a procedurally interesting amicus brief, in which it declined to take a position on whether section 2(a) of the Lanham Act is constitutional and instead focused on a procedural issue. The ABA argued that if the Supreme Court holds that disparaging marks are not registerable (i.e. that section 2(a) is constitutional), it should also hold that such marks are still enforceable under the common law and the federal unfair competition provision of the Lanham Act. The ABA believes that the Federal Circuit’s underlying decision is too vague on this point and that it should be clarified at the Supreme Court level. Were the Supreme Court to follow the ABA’s thinking, the implication may be that trademark users (including The Slants and the Washington Redskins) continue to use disparaging marks but rely upon common law protection or federal unfair competition protection for enforcement purposes.

Other amicus briefs have also been filed with the Supreme Court and can be read on the SCOTUS blog website.  The Slants’ brief is forthcoming, and a decision from the Court is not expected until next year.

Today the Supreme Court announced that it will not hear the Washington Redskins’ trademark dispute, despite the fact that the Supreme Court announced last week that it will hear the related trademark dispute involving the rock band, The Slants.  As referenced in an earlier blog post, the Washington Redskins filed a request last spring asking the Supreme Court to hear its case even though the case is currently pending before the Fourth Circuit.  Although the Supreme Court rejected the Redskins’ request, it is likely that the Supreme Court’s decision regarding The Slants will impact the Redskins’ dispute as well.

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This morning, the United States Supreme Court granted certiorari to hear the trademark dispute involving the rock band, The Slants.  The United States Patent and Trademark Office (“USPTO”) previously denied The Slants’ trademark registration on the basis of section 2(a) of the Lanham Act, which prohibits the registration of disparaging trademarks.  In 2015, the Federal Circuit held that section 2(a) is itself an unconstitutional restriction on the right to free speech guaranteed by the First Amendment.  The USPTO appealed that decision to the Supreme Court earlier this year, and the Supreme Court announced today that it will hear the case, thus signaling that it will determine whether or not the Lanham Act’s prohibition on offensive trademarks is constitutional.

An earlier blog post described the related dispute over whether the Washington Redskins will lose their federally-registered trademarks in the Redskins name.  The Supreme Court has not indicated whether it will also hear the Redskins’ dispute, which is currently pending before the Fourth Circuit.  However, the Supreme Court’s decision regarding The Slants will very likely impact the Redskins’ dispute as well as the USPTO’s registration of other potentially disparaging trademarks.

There has been much debate and discussion over whether the Redskins—Washington D.C.’s professional football team in the National Football League—should voluntarily change their name under the view that it disparages Native Americans.  In May, the Washington Post reported that a poll of Native Americans across the country found that nine in ten Native Americans are not offended by the Redskins name.

American football
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Regardless of what any poll may or may not suggest, there is also a separate debate on this issue—whether the Redskins should lose their federally-registered trademarks in the Redskins name.  The basis for this debate is section 2(a) of the Lanham Act, which bars registration of disparaging words or phrases.  And central to the debate is the First Amendment’s guarantee of the right to free speech.

In 2015, when a federal district court affirmed the United States Patent and Trademark Office (“USPTO”) cancellation of a number of the Redskins trademarks, it seemed almost certain that the Redskins would lose their trademarks.  But then the Federal Circuit ruled in a separate matter—related to the rock band the Slants—that section 2(a) is itself an unconstitutional restriction on the right to free speech.

The decision related to the Slants was appealed to the United States Supreme Court, and now the question of whether section 2(a) can prohibit the Redskins trademarks may be headed to the same place.  Initially, the Redskins filed an appeal of the cancellation of their trademarks to the Fourth Circuit Court of Appeals.  But in April, shortly after the Slants case was appealed to the Supreme Court, the Redskins filed a petition asking the Supreme Court to hear the case before the Fourth Circuit issues a decision in light of the fact that the Supreme Court may hear the issue in the case involving the Slants. Although the Redskins team apparently believes that both cases should be decided by the same court, particularly given the sums of money it has spent building the Redskins brand, the government disagrees that the Supreme Court should hear the case.  According to the New York Times, the Supreme Court only occasionally allows such a “certiorari before judgment.”

The outcomes of this case and the Slants case, whether ultimately decided by the Supreme Court, may have a significant impact on the ability to register disparaging or offensive trademarks in the future.  If section 2(a) is found by the Supreme Court to be unconstitutional, the USPTO would likely begin registering trademarks widely considered offensive or disparaging.