Supreme Court Holds that Offensive Marks Are Registrable

Author: Lara Garner

As predicted in an earlier post here, the Supreme Court has held that the Lanham Act’s prohibition on registration of “immoral[ ] or scandalous” trademarks violates the First Amendment. Iancu v. Brunetti, No. 18–302, 588 U.S. ___ (2019).

Erik Brunetti, a counter culture artist, sought to trademark “FUCT.” Brunetti’s streetwear clothing line used the brand, which stands for “Friends U Can’t Trust” and is pronounced as the four letters “Eff U Cee Tee.” The Court noted one might read it differently, and if you did “you would hardly be alone.” Because of that common perception, when Brunetti discovered knockoffs using the brand, he attempted to register the trademark. His application was denied under a provision of the Lanham Act that prohibits registration of trademarks that consist of or comprise “immoral[ ] or scandalous matter,” 15 U. S. C. §1052(a). Brunetti challenged the denial under the First Amendment. The Federal Circuit invalidated the “immoral or scandalous” bar.

Two years ago, in Matal v. Tam, 137 S. Ct. 1744, 1763 (2017) the Court had declared unconstitutional the Lanham Act’s ban on registering marks that “disparage” any “person[ ], living or dead.” §1052(a). The ban was found to be the essence of viewpoint discrimination: allowing marks that are “positive” about a person and disallowing marks that are “derogatory.” In Brunetti, Justice Elena Kagan wrote for the majority, “[t]oday we consider a First Amendment challenge to a neighboring provision of the act.” In a 6-3 vote, the Justices held that the ban on “immoral[ ] or scandalous” trademarks also violates the Constitution: “We hold that this provision infringes the First Amendment for the same reason: It too disfavors certain ideas.”

The divided Court in Matal had agreed on two propositions: (1) if a trademark registration bar is viewpoint based, it is unconstitutional; and (2) the disparagement bar was viewpoint based. In Iancu, the Court found the “immoral or scandalous” bar similarly flawed because it discriminates on the basis of viewpoint. Supported by a review of the dictionary definitions of “immoral” and “scandalous,” the statute was found facially biased in favor of messages that are in accord with society’s sense of decency. And in practice, the Court noted, the PTO has refused to register marks that are at odds with society’s views regarding topics such as drug use, religion, and terrorism but has approved registration of marks on those same topics that comport with society’s views.

The Government argued that the statute could be preserved by a limiting construction, narrowing the bar to marks that are lewd, sexually explicit, or profane. But the language is not ambiguous and to do so, the Court found, would be to rewrite, rather than interpret, the statute. Fairly interpreted, the viewpoint bias of the bar ends the inquiry and the bar must be invalidated.

Separate opinions dissenting in part with the majority were written by Chief Justice Roberts and Justices Breyer and Sotomayor. Each agreed with the majority in striking the “immoral” portion of the law. But all three agreed with each other that “scandalous” can be read to prohibit only marks that are “obscene, vulgar, or profane.” The three, along with Alito in his concurrence, expressed concern for a flood of new, crude trademarks and the creation of public spaces that would be repellant to some. As Justice Sotomayor explained, lamenting the expected result of the Court’s decision, the Government will have no choice but to begin registering the “coming rush” of “marks containing the most vulgar, profane, or obscene words and images imaginable.”

Justice Alito noted in his concurrence that the mark at issue could be denied under a narrower statute banning vulgar terms as the mark expresses no idea (and signifies the “severely limited vocabulary” of its user). But, that “[a]t a time when free speech is under attack, it is especially important for this Court to remain firm on the principle that the First Amendment does not tolerate viewpoint discrimination.”

Justice Roberts, concurring in part and dissenting in part, observed that the trademark registration system merely confers additional benefits. Denying registration does not restrict or punish speech. And First Amendment protections do not extend to require “the Government to give aid and comfort to those using obscene, vulgar, and profane modes of expression.”

Justice Breyer concurred in part and dissented in part at length, writing that precedents warn against interpretation of statutes that renders them unconstitutional. Agreeing with Justice Sotomayor’s narrow interpretation of “scandalous,” he proceeded to address the question of whether the benefits of trademark registration can be denied on the basis of the narrowly construed statute without offending the First Amendment. He concluded in the affirmative.

According to Justice Breyer, the category-based approach taken by the majority is inadequate. The speech-related categories for First Amendment analysis (such as “viewpoint discrimination”) should be viewed, not as outcome-determinative rules but rather as “rules of thumb.” They are not absolute rules; they sometime give weight to competing interests. And they are sometimes applied, as here, too rigidly. Justice Breyer urged that the Court look to the values the First Amendment seeks to protect and refrain from striking down ordinary regulations that pose little threat to free speech interests. The Court should ask whether the regulation at issue “works speech-related harm that is out of proportion to its justifications.”

The statute in this case, Justice Breyer wrote, does not fit neatly into the categories. It is an open question whether the trademarks statue merely regulates “commercial speech.” And it cannot be straightforwardly described as regulating “government speech.” The concept of “public forum” does not apply, although “limited public forum” may have some application as may cases involving government subsidies of private speech. The bounds between “viewpoint discrimination” and “content discrimination” may be hazy, and the denial of the benefits of federal trademark registration to highly vulgar or obscene words would not offend the Constitution. While emotion-laden, such words do not, standing alone, convey a viewpoint labeling them content-based should not be, according to Justice Breyer, outcome determinative.

A proportionality analysis of the statute, as interpreted by Justice Sotomayor, results in a conclusion that it does not offend the Constitution. A ban merely on registration does not bar businesses from using the words, and trademarks are highly regulated with the specialized aim of assisting customers with identification of goods. Those regulations necessarily limit speech. The Government has an interest in avoiding involvement in, and protecting children from such speech, which scientific evidence suggests may be different in kind – they have a physiological and emotional impact that most words do not. As such, in Justice Sotomayor’s view, risks to the First Amendment are minor in light of these objectives.

Justice Sotomayor’s concurrence in part and dissent in part was joined by Justice Breyer. An alternative to the majority’s interpretation is, according to Justice Sotomayor, “equally possible” and saves the statute rendering it a reasonable, viewpoint neutral-restriction. The Government does not have to confer trademark benefits at all but also cannot do so in a viewpoint-discriminatory way. However, the term “scandalous” should not be collapsed with “immoral” as the majority does because the term is ambiguous and the text of the statute comports with a narrow reading of its meaning.

In Justice Sotomayor’s view, “scandalous” can be read broadly to cover both idea and manners of expressing them, or narrowly to cover only manners of expression. Congress used the “scandalous,” “immoral,” and “disparage” to describe separate prohibited features. While “immoral” and “disparage” target offensive ideas, “scandalous” can be read, not as a synonym of “immoral,” but with a distinct, non-redundant meaning, as offensive due to the mode in which it is expressed. The most obvious such mode of expression is with the use of obscenity, vulgarity, or profanity. Justice Sotomayor does not propose a list (other than “the apparent homonym of Brunetti’s mark,” and “at least one particularly egregious racial epithet”) but would leave it to the USPTO to identify the “small group” of such words.

A limiting construction, according to Justice Sotomayor, is appropriate here and consistent with precedent. It is reasonable in the context of an ancillary benefit as compared to, for example, criminal statutes that threaten freedom. Brunetti would not even be prohibited from using his mark, merely from registering it. “Properly narrowed, ‘scandalous’ is a viewpoint-neutral form of content discrimination that is permissible in the kind of discretionary governmental program or limited forum typified by the trademark-registration system.”

The impact of this decision remains to be seen. But, notwithstanding the worries of some Justices, it seems unlikely that the USPTO will see a flood of attempts to register vulgarities. The value of a trademarks is in the goodwill associated with it. Building a mark’s positive reputation takes a considerable investment of time and care. The novelty of registering a mark that is unlikely, by its nature, to appeal to a wide class of consumers is outweighed by the expense of doing so. Registrations may still be rejected on the basis of other criteria, such as similarity to exiting marks. And it remains to be seen whether Congress will address the issue as it seems likely that a narrower prohibition would be upheld. As Justice Alito wrote in his concurrence, it is up to Congress, if it wants, to devise a “more carefully focused statute that precludes the registration of marks containing vulgar terms that play no real part in the expression of ideas.”

About the author: Lara Garner is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on Intellectual Property litigation and counseling for patents, copyrights, trademarks, and trade secrets, and in a broad range of matters, including contract, technology, and privacy issues. Ms. Garner’s biography can be found here.

The Tightrope Between First Amendment Violations and Lawful Regulation of Vulgar Trademarks

Author: Sean Flaherty

Trademark attorneys and brand owners alike know that trademark applications are not to be refused registration by the USPTO unless they fall within certain codified prohibitions. 15 U.S.C. § 1052(a) (“Lanham Act Section 2(a)”), for example, bans trademarks which “[c]onsists 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 . . .”

But in 2017, the Supreme Court ruled in Matal v. Tam, 137 S. Ct. 1744, 1763 (2017), that the “disparagement clause” of Section 2(a) was unconstitutional as amounting to viewpoint discrimination. This set the stage for subsequent challenge to the remaining part of 2(a)—the “immoral/scandalous” clause. This issue was recently argued on April 15, 2019 before the Supreme Court in Iancu v. Brunetti, Case No. 18-302.

Trademark Application and TTAB Appeal

In 2011, Erik Brunetti, “an artist and entrepreneur whose graphics are infused with cultural strands from skateboarding, graffiti culture, punk rock music, and remnants of Situationist Ideal ideologies” sought to register the trademark application no. 85310960 for “FUCT.” In re Brunetti, 2014 TTAB LEXIS 328, *3-4 (T.T.A.B. August 1, 2014). The PTO rejected the application under the prohibition against “immoral/scandalous” marks, and Brunetti appealed to the TTAB. There, Brunetti attempted to argue that the mark did not carry any particular meaning, was not being used for its phonetic equivalent, and instead was “an arbitrary made up word” which evoked an edgy aesthetic. Brunetti further argued that to the extent the term had any meaning, it correlated to each of the first letters of the phrase FRIENDS U CAN’T TRUST. However, the TTAB stated that the foregoing arguments “stretche[d] credulity.”

The TTAB affirmed the refusal, noting that “the threshold for objectionable matter is lower for what can be described as ‘scandalous’ than for ‘obscene,’” citing In re McGinley, 660 F.2d 481, 211 USPQ 668, 673 n.9 (CCPA 1981). The also TTAB recognized its own statutory limitations in noting it was not “the appropriate forum for re-evaluating the impacts of any evolving First Amendment jurisprudence within Article III courts upon determinations under Section 2(a) of the Lanham Act.” In re Brunetti, 2014 TTAB LEXIS 328 at *16.

Federal Circuit Appeal

Brunetti appealed the TTAB to the Federal Circuit. The Court of Appeals did not disturb the TTAB’s factual finding that the mark was vulgar and therefore fell within Section 2(a)’s prohibition against the registration of scandalous marks. In re Brunetti, 877 F.3d 1330, 1338 (Fed. Cir. 2017) (“Dictionaries in the record characterize the word as ‘taboo,’ ‘one of the most offensive’ English words, ‘almost universally considered vulgar,’ and an ‘extremely offensive expression.’”) But, while the case was on appeal, Matal v. Tam¹ was decided. Applying that holding to Brunetti’s application, the Federal Circuit found the “immoral/scandalous” prohibition as an unconstitutional content-based restriction on speech. In re Brunetti, 877 F.3d at 1341. The Federal Circuit held that the regulation did not survive even intermediate, much less strict scrutiny, because (i) “the government ha[d] failed to identify a substantial interest justifying its suppression of immoral or scandalous trademarks”; (ii) the government could not show that the “regulation directly advance[d] the government’s asserted interest” (because the ban does not prevent actual use of the vulgarity and thus “does not protect the general population from scandalous material”); and (iii) the government failed to show that the regulation was “carefully tailored” given the significant evidence of inconsistent application and “vague nature of the scandalous inquiry.”

Finally, the Federal Circuit denied the government’s last-stand argument, which was to interpret the ban narrowly so as to uphold its constitutionality, by making the prohibition coextensive with a ban on obscenity. However, the Federal Circuit noted that due to the language used in the statute, no basis was provided to the Court to rewrite the law. Id. at 1357 (“We do not see how the words ‘immoral’ and ‘scandalous’ could reasonably be read to be limited to material of a sexual nature. We cannot stand in the shoes of the legislature and rewrite a statute.”).

Supreme Court Review

The Supreme Court granted certiorari and recently held oral argument.

Brunetti primarily argued that there was no principled distinction between the unconstitutionality of the prohibition against the offensive viewpoints targeted by “disparagement clause” in Tam and the offensive viewpoint targeted by the “immoral/scandalous clause” presently before the Court. Further, the applicant argued that all examination of trademarks necessarily implicated an evaluation of content, and thus the government could not argue that the prohibition amounted only to regulation of the “mode of expression.”

In light of Tam, the government was hard pressed to maintain the facial validity of the regulation. Instead, the government conceded the statute should be narrowed so as to preserve its validity.

At oral argument, Justice Kagan asked: “[J]ust so I could understand, you’re asking us to narrow this statute to exactly what?” Deputy Solicitor General Malcom Stewart replied, “To marks that are offensive, shocking to a substantial segment of the public because of their mode of expression, independent of any views that they may express.” Here, the government essentially argued that the PTO should be permitted to restrict speech akin to fighting words, which are susceptible to regulation because they are not based on viewpoint, but instead voiced merely to anger and incite. The government also distinguished Tam by arguing the prohibition against scandalous words is viewpoint-neutral and applied regardless of the applicant’s intended message.

The oral argument lasted nearly an hour with the Court peppering each party with a great number of questions. At several instances, the Court indicated uneasiness with vagueness of the regulation, as evidenced by the PTO’s track record of inconsistent application. But that is not to suggest an unconstitutionality ruling is assured. The Justices probed whether any speech in the context of trademarks could thereafter be regulated in the event this provision were ruled unconstitutional. Could a trademark registrant owning a vulgar mark for example, not be denied advertising space on the side of a public bus, given that its trademark registration was now approved by the federal government?

Justice Breyer repeatedly raised the point that even today, a limited number of dirty words and racial slurs are well defined and well documented to have a physiological effect on the hearer, and asked why the government should not be permitted to ban those words from the trademark registration program. Similarly, Justice Gorsuch asked with regard to the trademark registration program, “why can’t the people choose to withhold the benefit [of registration] on the basis that there are certain words that are profane and that we, as a matter of civility in our culture, would like to see less of rather than more of, and you can use – you’re free to use them . . .but we are not going to trademark them, and we’ve held just last year that a patent is a public benefit that can be withdrawn without a judge. Why isn’t this also similarly a public benefit rather than a private right?” Additionally, Justice Sotomayor posited, “Why can’t the government say, no, we’re not going to give you space on our public registry for words that we find are not acceptable?”

Although the expected bet is on another decision striking down the prohibition as unconstitutional in light of Tam, don’t be surprised if the Court instead decides to walk a tightrope and find that certain vulgarities do not implicate bona fide viewpoints, are used for no more than to create a shocking response in the hearer, and are thus susceptible to regulation without running afoul of the First Amendment.

About the author: Sean Flaherty is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on litigation matters involving copyright, trademarks, trade secrets, and patents, as well as transactional matters related to intellectual property licensing. Mr. Flaherty is a registered patent attorney with a degree in Civil Engineering. Mr. Flaherty’s biography can be found here.
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¹ Prior to this Supreme Court decision, the Federal Circuit had held Section 2(a)’s disparagement provision as unconstitutional under the First Amendment, failing to survive either intermediate or strict scrutiny. See In re Tam, 808 F.3d 1321, 1358 (Fed. Cir. 2015)

Brewery Near Me: Why You Should Name Your Brewery After a Location and Related Trademark Considerations

Author: Michael Kanach

Home for the Holidays

Whether you are traveling home for the holidays or visiting an old friend, the holiday season is a time to return to old favorites. For craft beer fans visiting home and looking for a place to gather, they will notice the brewery landscape has changed over the last few years. Whether you are visiting a large city or a small town, the number of new breweries may surprise you. In fact, the number of breweries in the United States has more than tripled recently, increasing from less than 2,000 in 2010 to more than 7,000 in 2018.¹ On November 20, 2018, the Brewers Association’s Bart Watson tweeted “Here are the ~1,000 breweries that have opened since last Thanksgiving,”² with a link to a google map showing new breweries that opened between November 25, 2017, and November 17, 2018.³ In addition, numerous breweries have recently shut down, been acquired, or changed names based on trademark disputes.

Searches for “Brewery Near Me” will be trending on Google and other search engines. For example, when you type “Brewery” into Google.com or Bing.com, both search engines will propose the search “Brewery Near Me.” Alternative results include “Brewery Near My Location,” or nearby city names, such as “Brewery San Francisco” and “Brewery Oakland.” With consumers searching on maps, in search engines, and in beer-focused applications such as Untappd and RateBeer, breweries need to stand out when their name shows up on the list.

From a trademark and branding perspective, you want consumers to recognize your name – and recognize it as a source of great beer. You want your name to communicate the quality of your product and differentiate your brewery from the others in your neighborhood. In other words, you want consumers to know what they can expect when they choose to visit your brewery or drink your beer. Are you known for your rotating selection, your hazy IPAs, your flagship lager, your barrel aged stouts, your sours, or your Belgians? Or maybe you’re known for your food, your staff, or other non-beer-related aspects of running a restaurant or brew pub.

Drink Local = Higher Brand Awareness

When the message is “drink local,” and thousands of smaller breweries are opening up to serve their local communities, it can be beneficial to tell your consumers where you are located. For many breweries, their location is not simply an address in a city or a town. It is also their brand.

In a discussion with Robert Cartwright of DataQuencher, which performs surveys of beer drinkers for breweries, his surveys have shown that location names can help certain breweries increase their brand awareness. The data shows that, for breweries up to about the 20,000 barrels mark, the breweries that have a location in their name have significantly higher brand awareness than other breweries. In other words, microbreweries may benefit from their location-based names, but regional brewers may not see much additional impact.

For example, in Virginia, Blue Mountain Brewery, located in the heart of the Blue Ridge Mountains has a higher than anticipated awareness from beer drinkers in the State of Virginia. Given their production numbers (less than 15,000 barrels in 2017) and the size of the Virginia market, it would be normal for Blue Mountain to have a brand awareness in the high 20% to 35% range. Instead, DataQuencher’s recent survey results show that Blue Mountain Brewery has a brand awareness of 49% among VA beer drinkers. This location-based name may also help in each of the states through which the Blue Ridge Mountains extend—namely, Georgia, South Carolina, North Carolina, Tennessee, Virginia, Maryland, and Pennsylvania.

With respect to the San Francisco Bay Area, certain microbreweries rank higher than anticipated in “brand awareness” based on their location-based names, including San Francisco Brewing Co., Alameda Island Brewing Company, Marin Brewing Company, and Oakland Brewing Company. See the recent chart below prepared by DataQuencher. It is not surprising to see some larger breweries with location-based names, such as Sierra Nevada and Russian River, at the top of the list.

Chart reproduced and used with permission.

DataQuencher’s recent survey evidence, which shows higher brand-awareness for breweries with location-based names, is consistent with the breweries who have earned their brand awareness through decades of sales and advertising, as well as distribution through large retail chains and to multiple states. Not surprisingly, many of the largest breweries in the United States have location-based names.⁴ In fact, about a third (17 of 50) of the Brewers Association’s list of the 50 top selling breweries in the United States in 2017 have location-based names.

The chart below includes a list of those breweries with an explanation of their location-based name for those unfamiliar with the local references. The cites to Wikipedia are because the USPTO will often cite to Wikipedia (or Urban Dictionary!) and other websites as a basis for refusing to register geographically descriptive trademarks.

In addition to the chart above, two more breweries in the top 50, DogFish Head (#12) and Allagash (#36), are named after small towns in the State of Maine,²⁸ which – while nowhere close to their brewery locations^{29 30} – both help tell a story about the brewers’ roots and the breweries’ small beginnings.

How Does a Brewery Obtain a Trademark for its City, Town, Mountains, River, Lake, or Street?

First, a little background about trademarks. Your trademark is your name, logo, or anything else that indicates your brewery is the source of a product or service.

A mark can be:

• a name of a beer or the brewery,
• a drawing (e.g., The Alchemist’s Heady Topper, 21^st Amendment’s various can designs),
• a color or color scheme (e.g., Russian River’s Pliny the Elder’s red circle on a forest green label),
• a shape (e.g., Bass’s red triangle, Heineken’s red star),
• a design,
• a slogan, or
• even the unique overall “look and feel” of the brewery, product, or packaging (or other forms of “trade dress”).

You obtain common law trademark rights when you begin to use the mark. If someone else used it first, you are a junior user and they are the senior user. To obtain nationwide rights to your trademark, you can file an application to register your trademark with the United States Patent and Trademark Office (the “USPTO”).

One myth is that you don’t want to name your brewery after a location because it’s hard to get a trademark. While it is true that location-based names have inherent hurdles, including from a trademark perspective, there are also potential benefits from a trademark and branding perspective.

Those hurdles include difficulty in proving that your name is an indication that your brewery is the source of the beer. In trademark language, we call that “acquired distinctiveness,” or “secondary meaning.” It may take years for your brewery to build distinctiveness in the eyes of consumers, while a more unique and arbitrary name may obtain a registered trademark much faster.

Because locations are descriptive, the USPTO often refuses to register marks with a location is in the name. On one hand, the USPTO may refuse to register the mark because you are describing where you are located. In that case, the name is “geographically descriptive” and other breweries located there should be able to use that name to describe their brewery. One the other hand, if your name is a location where you are not located, the USPTO may refuse to register your mark on the basis that it is “geographically deceptively misdescriptive.” This means your name makes people believe you are from a location from which your beer does not originate, and that description is misleading and deceptive.

Relatedly, if you advertise your products as coming from a geographic location – but your beer is not from there – those false statements could give rise to a class action lawsuit for false advertising. Numerous lawsuits have been filed over the past several years. For example, class action lawsuits have been filed against Fosters (not imported from Australia),³¹ Becks (not imported from Germany),³² Kirin (not imported from Japan),³³ and Red Stripe (not imported from Jamaica).³⁴ While the breweries named as defendants in those class action lawsuits were some of the largest alcohol producers in the world – Miller Brewing Co. (Fosters), Anheuser-Busch (Becks, Kirin), and Diageo (Red Stripe) – plaintiffs could file similar lawsuits against craft beverage producers as well. So it is wise to clearly label where your brewery (or winery, meadery, or distillery) is located.

To avoid such misrepresentations in labeling and advertising, you will notice the labels for some breweries list more than one location. For example, Lagunitas clearly advertises that it is brewed in Petaluma, California and Chicago, Illinois.  Likewise, Sierra Nevada’s labels clearly advertise that it is brewed in Chico, California and Mills River, North Carolina.

While there are many considerations when it comes to branding and trademarks, these are several of the considerations with respect to location-based names. As is the case with all intellectual property, it is prudent to talk to an attorney about your strategy for obtaining and enforcing your trademarks.

For more information about trademarks and intellectual property, you can reach Michael Kanach a partner in the Intellectual Property and Food and Beverage groups at Gordon Rees Scully Mansukhani. Mike is also a practice group leader for the Beer, Wine, and Spirits Law group and the Entertainment and Recreation practice group. Mike’s email is mkanach@grsm.com and his phone number is 415-875-3211.
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¹ “Number of Breweries, Historical U.S. Brewery Count,” Brewers Association, https://www.brewersassociation.org/statistics/number-of-breweries/ (as of November 19, 2018).
² Bart Watson (@BrewersStats), https://twitter.com/brewersstats/status/1064927306571964416?s=11 (accessed (November 20, 2018, 9:03 AM)
³ “Breweries Opened in Last Year – New breweries that have opened between 11/25/2017 and 11/17/2018.” https://www.google.com/maps/d/viewer?mid=1Bw583n55Vu4ghUsUyuOcOVFzjymeBU4p&usp=sharing
⁴ “Brewers Association Releases 2017 Top 50 Brewing Companies By Sales Volume,” Brewers Association, March 14, 2018, located at https://www.brewersassociation.org/press-releases/brewers-association-releases-2017-top-50-brewing-companies-by-sales-volume/
⁵ https://en.wikipedia.org/wiki/Boston
⁶ https://en.wikipedia.org/wiki/Sierra_Nevada_(U.S.)
⁷ https://en.wikipedia.org/wiki/Deschutes_River_(Oregon)
⁸ https://en.wikipedia.org/wiki/Deschutes_County,_Oregon
⁹  https://en.wikipedia.org/wiki/Deschutes_National_Forest
¹⁰ https://en.wikipedia.org/wiki/Brooklyn
¹¹ https://en.wikipedia.org/wiki/Sweetwater_Creek_(Chattahoochee_River_tributary)
¹² https://en.wikipedia.org/wiki/Sweetwater_Creek_State_Park
¹³ https://en.wikipedia.org/wiki/New_Glarus,_Wisconsin
¹⁴ https://en.wikipedia.org/wiki/Alaska
¹⁵ https://en.wikipedia.org/wiki/Abita_River
¹⁶ https://en.wikipedia.org/wiki/Abita_Springs,_Louisiana
¹⁷ https://en.wikipedia.org/wiki/Stevens_Point,_Wisconsin
¹⁸ https://en.wikipedia.org/wiki/Long_Trail
¹⁹ https://en.wikipedia.org/wiki/Rogue_River_(Oregon)
²⁰ https://en.wikipedia.org/wiki/Rogue_Valley
²¹ https://en.wikipedia.org/wiki/Uinta_Mountains
²²  https://en.wikipedia.org/wiki/Uinta_National_Forest
²³ https://en.wikipedia.org/wiki/Uintah_and_Ouray_Indian_Reservation
²⁴ https://en.wikipedia.org/wiki/Uinta_National_Forest
²⁵ https://en.wikipedia.org/wiki/Lost_Coast
²⁶ https://en.wikipedia.org/wiki/North_Coast_(California)
²⁷ https://en.wikipedia.org/wiki/Mount_Wachusett
²⁸ “How Your Favorite Brewery Got Its Name” Thrillist, Lee Breslouer, located at www.thrillist.com/amphtml/drink/nation/dogfish-head-name-how-your-favorite-brewery-got-its-name
²⁹ DogFish Head is a name of a small location in Southport, Maine, over 9 hours away and 573 miles away from the DogFish Head Craft Brewery location in Milton, Delaware
³⁰ Allagash is a town and river in northern border of Maine, 5.5 hours away and 341 miles away from the Allagash Brewery location in Portland, ME.
³¹ “Man Sues Over Foster’s Beer Being Brewed in Texas, Not Australia,” Time, Sarah Begley (December 15, 2015), http://time.com/4148740/man-sues-fosters-beer/
³² “Anheuser-Busch Admits Beck’s Isn’t Actually German, Looks to Settle Class Action Lawsuit” Food and Wine, Mike Pomranz (June 22, 2017),  https://www.foodandwine.com/fwx/drink/anheuser-busch-admits-beck-s-isn-t-actually-german-looks-settle-class-action-lawsuit
³³ “If You Bought Kirin Beer In The Last 5 Years, You Could Get $12,” Huffington Post, Harry Bradford (January 7, 2015 5:16 pm ET, January 9, 2015, https://www.huffingtonpost.com/2015/01/07/kirin-beer-money_n_6430732.html
³⁴ “Red Stripe Is the Latest Beer to Get Sued Over Mislabeling Where It Is Brewed,” Food and Wine, Mike Pomranz (June 22, 2017) https://www.foodandwine.com/fwx/drink/red-stripe-latest-beer-get-sued-over-mislabeling-where-it-brewed

U.S. Supreme Court to Resolve Circuit Split Regarding Trademark Licensees’ Rights Upon Licensor Bankruptcy

Author: Benni Amato

According to the International Trademark Association (“INTA”), “whether a debtor-licensor can terminate a trademark license by rejection, thereby ‘taking back’ trademark rights it has licensed and precluding its licensee from using the trademark” is “the most significant unresolved legal issue in trademark licensing.” It likely will not stay unresolved for much longer; on October 26, 2018, the United States Supreme Court granted a petition for certiorari to resolve this specific issue as part of the Mission Product Holdings Inc. v. Tempnology LLC case.

Tempnology is a New Hampshire-based company that developed chemical-free cooling fabrics. It used this fabric to produce clothing that were designed to remain cool during exercise. Tempnology and Mission entered into a distribution agreement in November of 2012 that gave Mission the non-exclusive right to sell certain patented and trademarked Tempnology products throughout the world and the exclusive right to sell some of those products within the United States.

After a complex factual and procedural history, Tempnology filed for Chapter 11 bankruptcy in September 2015. The day after the filing, Tempnology moved to reject the agreement under 11 U.S.C. §365(a). After two appeals, a split First Circuit panel held that Tempnology’s rejection terminated the trademark rights licensed to Mission under the agreement.

As explained by the majority in the First Circuit decision, after a debtor-licensor files for Chapter 11 bankruptcy, it may secure court approval to “reject” any executory contract so that the other party to the contract is “left with a damages claim for breach, but not the ability to compel further performance.” Mission Prod. Holdings, Inc. v. Tempnology, LLC (In re Tempnology, LLC), 879 F.3d 389, 404 (1st Cir. 2018). “When the rejected contract, however, is one ‘under which the debtor is a licensor of a right to intellectual property,’ the licensee may elect to ‘retain its rights . . . to such intellectual property,’ thereby continuing the debtor’s duty to license the intellectual property.” The problem begins, however, with the fact that Congress left trademarks off the definitional list of intellectual properties in 11 U.S.C. §101(35A).

The First Circuit found that it made sense for Congress to have excluded trademarks. After all, “the effective licensing of a trademark requires that the trademark owner—here the debtor, followed by any purchaser of its assets—monitor and exercise control over the quality of the goods sold to the public under cover of the trademark.” Should the licensor fail to exercise reasonable control, that could result in the abandonment of its trademarks.

Thus, the First Circuit reasoned that should Mission be allowed to continue to use Tempnology’s trademarks, that would force Tempnology to choose between performing executory obligations in monitoring and controlling the quality of goods or risk losing its trademarks and diminishing their value to Tempnology. The loss of the contractual licensing value to Mission should instead be compensated via damages.

The First Circuit decision, however, was a direct split from the Seventh Circuit decision six years prior in Sunbeam Prods. v. Chi. Am. Mfg., LLC, 686 F.3d 372, 377 (7th Cir. 2012). The Seventh Circuit, with an opinion from its Chief Judge Easterbrook, stated that “[t]he limited definition in §101(35A) means that §365(n) does not affect trademarks one way or the other. According to the Senate committee report on the bill that included §365(n), the omission was designed to allow more time for study….” “What §365(g) does by classifying rejection as breach is establish that in bankruptcy, as outside of it, the other party’s rights remain in place. After rejecting a contract, a debtor is not subject to an order of specific performance…The debtor’s unfulfilled obligations are converted to damages…But nothing about this process implies that any rights of the other contracting party have been vaporized.”

Mission and its amici have urged the Supreme Court to adopt the Sunbeam approach, which allows licensees to keep their licensed trademark rights even when the debtor-licensor has successfully rejected the contract. Their reasons include:

• Enabling the debtor to take back rights already granted to a licensee encourages them to “cut a better deal for those rights” to the detriment of the licensee through no fault of licensee’s. (Mission’s petition for writ of certiorari.)
• “If the debtor believes its trademarks are worth the cost of monitoring, it will presumably incur that cost to preserve the value of the asset…. That decision is no different than the cost-benefit analysis debtors undertake every day when deciding whether to make an investment in an estate asset to maximize its value. It has no bearing on the question whether rejection terminates a licensee’s trademark rights.” (Mission’s petition for writ of certiorari.)
• “A licensee who is confident that the licensor’s bankruptcy will not upend its continued right to use licensed trademarks or sell the debtor’s products under an exclusive-distribution agreement will be more inclined to enter into an agreement that creates net efficiencies for distribution and production arrangements.” (Mission’s petition for writ of certiorari.)
• “Licensors benefit because licensees will pay more up front or in royalties for licensed rights that survive a potential bankruptcy filing by the licensor.” (INTA’s amicus brief.)
• “Licensees, who have substantial reliance interests in the licensed trademarks (g., having hired employees and/or established manufacturing capacity to take advantage of the rights), will not suddenly find their rights rendered valueless by the licensor’s decision to terminate a trademark license agreement through rejection in bankruptcy.” (INTA’s amicus brief.)
• “Under the First Circuit’s rule, a debtor/licensor can use the power to reject to destroy a licensee’s business or hold the licensee hostage, forcing it to pay twice for a license it had already purchased.” (Law professors’ amicus brief.)

Tempnology, on the other hand, sought to distinguish its case from that of Sunbeam’s. Sunbeam involved a “short term transitional license for sale of a finished product,” whereas the Tempnology-Misson agreement was a complex joint venture/joint marketing and distribution arrangement with a two-year wind-period that would require post-rejection interaction between the parties to ensure maintenance of quality control.

Regardless of how the Supreme Court eventually rules, having this issue settled will at least provide clarity for trademark licensors and licensees in the event of bankruptcy. We will report on the high court’s final decision.

About the author: Benni Amato is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on litigation matters involving trademarks, copyright, trade secrets, patents, internet issues, cybersecurity, and contractual disputes, as well as domain name arbitrations and trademark and copyright prosecution and licensing. Ms. Amato’s biography can be found here.

Craft Beer and Trademarks – 10 Takeaways from the 2017 College Football Season

Author: Michael Kanach

Nothing pairs quite like beer and football. As we approach Super Bowl LII, there is no shortage of articles informing businesses how to avoid a trademark dispute with the National Football League (NFL), particularly regarding the registered trademark “Super Bowl.”^{1 2 3 4 5}

With advertisers paying millions of dollars for a 30 second advertisement spot during the “Big Game,” there are millions of reasons for the NFL to ask companies to cease and desist using its trademarks when used without authorization. AdAge estimates that marketers will have spent about $5.4 billion total in advertising over these 52 years of Super Bowls.⁶ An example of one brewery planning to make a big spend on Super Bowl Sunday is Gambrinus’ Spoetzl Brewery of San Antonio, Texas, one of the largest craft breweries in the nation.⁷ They are prepared to spend $1.2 million for a 30-second advertisement for its Shiner Bock beer brand to air across the State of Texas during the Super Bowl.⁸

According to The Brewers Association, there were more than 6,000 breweries operating in the United States in 2017.⁹ But, of course, not all breweries have the budget to spend on a television advertising spot during the Super Bowl, so craft breweries often have to come up with creative ways to get noticed. One way breweries have worked to obtain a local following is to support their local teams, professional and collegiate, especially during the football season. Sometimes, in this fandom, breweries (inadvertently) cross over the line into using their favorite team’s intellectual property without approval.

The following four stories from the 2017 college football season provide trademark and branding lessons for craft breweries who want to use trending themes, viral stories, names, and images from their local institutions – to sell beer.

As the images and stories below demonstrate, trademarks are not simply names, logos, and slogans. A trademark can be anything that indicates the source of a product or service. As these packages show, a trademark can be a color scheme, distinctive font, single letter, image (e.g., a train or a famous building on campus), trending hashtag, viral event, and even the design of a special necklace. The main lesson you can learn from these stories about craft breweries using others’ trademarks is to obtain prior written approval from the trademark owner.

Purdue University wins injunction over Boilermakers Beer:

In June 2016, an individual in Naples, Florida, obtained a trademark in the State of Indiana for the marks “Purdue Boilermakers Brewing” and “Boilermakers Beer” claiming first use in 2016.¹⁰ According to the defendant’s website, “Sports Beer Brewing Company™ is an intellectual property holding company consisting of a portfolio of sports trademarks, registrations and service marks for sports teams through out (sic) the United States.”¹¹ It’s not clear whether Sports Beer Brewing Company actually brews beer themselves, since their website says they “will contract with a local micro-brewery in your area for a tasting to decide what type of beer you want to brew.”¹²

The Trustees of Purdue University own several federally registered trademarks, including “Purdue,” “Boilermakers,”¹³ and various images of trains or locomotives.¹⁴ One such registered trademark for BOILERMAKERS claims a first use in commerce at least as early as in 1959, decades before Sports Beer Brewing Company filed an application to register the trademark with the state of Indiana in 2016.¹⁵ The Trustees of Purdue University filed a lawsuit in Tippecanoe County, Indiana, to enforce their trademarks.

Purdue licenses its logos and trademarks to Peoples Brewing Company, located in Lafayette, Indiana, for labeling on a beer named “Boiler Gold.” Below left, is an image of the Boiler Gold beer can’s label,¹⁶ which contains authorized references to Purdue, a train, and the distinctive letter “P” and the school’s color scheme of “campus gold” and black.¹⁷ The infringer’s logo is shown below right, with the University’s name on a black background and underneath a gold and white-colored train.

On November 9, 2017, Purdue University obtained an injunction against Sports Beer Brewing Company and its owner Paul Parshall. The court found the defendant’s trademarks were confusingly similar to Purdue’s trademarks. The injunction read, in part, that Paul Parshall was:

… enjoined to immediately discontinue using or offering or licensing the terms “Purdue”, “Boilermakers”, “Boilermakers Beer” and “Purdue Boilermakers Brewing” or any other marks which feature the words “Boilermakers” and/or “Purdue” for any commercial purpose.

Sports Beer Brewing Company’s ownership of a state trademark did not prevent the university from obtaining an order enjoining it from selling products with the school’s names, logo, and color scheme. According to the defendant’s website, http://www.sportsbeerbrewing.com/, defendant still owns numerous other trademarks for beer names under a “claim your brand” link. These names include the following schools: Pitt (Pitt Panthers Brewing Co • Pitt Panthers Beer) and the University of Miami (Miami Hurricanes Brewing • Canes Beer), which are discussed below for other reasons.¹⁸

“Hail to Pitt” (University of Pittsburgh) – #H2P Beer Labels Removed:

In a separate dispute related to the University of Pittsburg (a.k.a. Pitt), a Pennsylvania craft brewery’s use of Pitt’s trademarks is a lesson for brewers to make sure to get written approval from the university before making any substantial investments in labels, bottles, and cans. Voodoo Brewery, located in Meadville, Pennsylvania, began selling a beer under the name “#H2P” with cans designed in Pitts’ colors and script and an image of a cathedral.¹⁹ This name “H2P” is short for “Hail to Pitt” and was a trending hashtag for the university during the college football season.²⁰ Pitt owns a registered trademark for “H2P,” which was registered in 2011 and claimed a first use in commerce in 2010. In addition, Pitt owns at least two registered trademarks for “Pitt” with stylized font, and with a distinctive letter “P,” claiming a first use in commerce at least as early as 1990.^{21 22} Pitt’s colors are royal blue and yellow (or alternatively navy blue and gold).²³ The Cathedral is focused throughout the University’s advertising, as shown in the school’s official “Graphic Standards.”²⁴ The letter “P” in the brewery’s “H2P” logo appears to be the same “P” in the University’s registered “Pitt” logo, which has been used for decades.²⁵

According to an October 2017 article in the Pittsburgh Post-Gazette, Voodoo Brewery’s brewmaster was a former Pitt student and involved in athletics, and the brewery believed it had the University’s approval because the brewery had previously sold these beers on campus.²⁶ However, there was nothing in writing from the University approving the packaging, so the brewery was forced to cease and desist using the schools trademarked hashtag, distinctive name, images, and color scheme.

University of Miami Hurricanes – Turnover Chain IPA Changes Name to “Chains”:

Like a viral hashtag, craft breweries tend to follow trending stories relating to their local teams and try to incorporate them into their beer names, labels, and designs. In 2017, J. Wakefield Brewing, in Miami, Florida, announced that it would brew a beer called “TURNOVER CHAIN” IPA.²⁷ The “Turnover Chain” was a reference to the 2017 Miami Hurricanes’ football team’s over-sized, Cuban-linked, gold chain with a large “U” (for Miami University) in the school’s colors: orange and green. This chain is ceremoniously placed around a defensive player’s neck to wear on the sideline after forcing a turnover.

On November 16, 2017, the University of Miami filed a trademark application for TURNOVER CHAIN for various goods (although not including beer) claiming a date of first use in commerce in September 2017. (U.S. Trademark Serial No. 87688132). In addition, the University of Miami’s “Visual Identity Manual” explains that the University’s colors are orange and green and shows examples of the “U” logo, with orange on the left and green on the right.²⁸

J. Wakefield Brewing in Miami, Florida filed a Certificate of Label Approval (COLA) with the Alcohol and Tobacco Tax and Trade Bureau (TTB), which was approved on November 19, 2017.²⁹

An article on SouthFlorida.com’s website said that a former Miami Hurricane’s football player was on board and promoting the Miami-themed beer.³⁰ In a separate Press Release in Brewbound, the brewery discussed how the founder and brewmaster Johnathan Wakefield was a big Miami Hurricane’s fan and met with a former player. But the brewer’s status as a true fan was not enough. Neither was label approval from the government or concept approval from a former football player. The brewery did not have approval from the University.

Shortly after initial announcements of the “TURNOVER CHAIN” beer, J. Wakefield Brewing began selling a product named “Chains” which no longer included the word “TURNOVER” and no longer included a green/orange color scheme. In an article in Brewbound, a disclaimer was included and the following explanation was provided related to the beer name: “Chains, formerly known as Turnover, is not affiliated with any educational institution and is not being marketed to college students.”³¹

Iowa University – “Iowa City Wave” Milkshake IPA:

Ending on a high note, the 2017 college football season had a true feel-good-story based in Iowa. At the end of the first quarter, at each of the University of Iowa home football games, the entire stadium full of more than 60,000 fans would turn towards the new UI Stead Family Children’s Hospital that overlooked the field.³² The fans inside Kinnick Stadium would wave to the children and their families inside the hospital, who would wave back. If you have not seen it yet, watch a video.³³ It’s powerful.

Taking this trending, season-long, feel-good, local story and imagining a way to support their local team and local children, Backpocket Brewing in Iowa decided to brew a beer and donate the proceeds to the Children’s Hospital.³⁴ After selling the “Iowa City Wave” milkshake IPA for a limited time, the brewery delivered a check of over $600 to the hospital, posting on Twitter the following message on November 20, 2017: “Thank you everyone who came out to the taproom & enjoyed our milkshake IPA to help us raise over $600 for the @UIchildrens #IowaCraftBeer.”³⁵

While it may not be authorized by,³⁶ sponsored by, or affiliated with the university,³⁷ it is nice to see the donation being put to good use. It is not clear whether the brewery and the University or the hospital have been in contact regarding this beer name. This is a unique situation – but not because the brewery is making donations to the Children’s Hospital. For example, the outcome of the trademark disputes related to Purdue, Pitt, and Miami-branded craft beer would not have been different even if proceeds of sales were donated. Rather, it is a unique situation because it is not clear who owns “The Wave.” At this time, the University has not filed an application to register a trademark containing the word “Wave” for any goods and services. However, this new tradition of the “Wave” is likely to continue into next football season and it may become a clear indication of source for the University and/or the Children’s Hospital.

Conclusion:

The following do NOT automatically authorize you to use your favorite college’s trademarks:

1. You are “local.”
2. You are the #1 fan of the #1 team.
3. You registered a trademark with the State.
4. You obtained a COLA label approval for your label.
5. You have been using a name in your advertising for years.
6. You donate money to the school.
7. You got approval from alumni (not even from famous alumni).
8. You have sold that beer at the school before.
9. You filed an application to register a trademark with the USPTO.
10. You are donating all proceeds of all sales.

In conclusion, get approval from the owner of the trademark. Get it in writing. And then make sure you comply with the university’s branding requirements.If you do not have approval, check the branding requirements to familiarize yourself with the school’s brand so you can make sure you do not step over the line.

While each of the examples discussed above relate to universities, these lessons apply to the major leagues as well. For example, Boulevard Brewing was one of the first breweries to work with a Major League Baseball team when it became the official craft beer sponsor of the Kansas City Royals.^{38 39} In the San Francisco Bay Area, San Francisco’s Anchor Brewing partnered with both MLB’s San Francisco Giants (“Los Gigantes” Mexican Style Lager) and the NBA’s Golden State Warriors – using team logos and color schemes in their packaging.^{40 41} In addition, San Jose’s Gordon Biersch partnered with the NHL’s San Jose Sharks by creating a special “Chum” red dry hopped ale in team colors and including the team logo.⁴² These examples of official sponsorships and authorized uses of trademarks include official announcements and press releases.

Michael Kanach is a Partner in the firm’s Intellectual Property and Food & Beverage practice groups, and a frequent speaker and writer on craft beer trademark law. For more information about Gordon Rees Scully Mansukhani LLP’s Intellectual Property Practice Group, including the firm’s specialization in the craft beer industry, please visit www.grsm.com/practices/food-beverage/craft-breweries and https://www.gordonrees.com/practices/intellectual-property.

Mr. Kanach is also a member of the firm’s Entertainment, Fashion, Media & Sports practice group. For more information, please visit https://www.gordonrees.com/practices/entertainment-media-sports.
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¹ “How to Use the Super Bowl to Promote Your Business – Not!” Small Business Trends, Joshua Sophy, January 28, 2018. https://smallbiztrends.com/2018/01/super-bowl-trademark-rules.html
² “Super Bowl or the Game That Shall Not Be Named!” Hop Law, Garner & Ginsburg, P.A., December 20, 2017. http://www.hoppylawyers.com/super-bowl-game-shall-not-named/
³ “The NFL Pretending Trademark Law Says Something It Doesn’t Leads To Hilariously Amateurish Ads For ‘The Big Game’ – from the the-game-that-shan’t-be-named dept” Tech Dirt, Timothy Geigner, January 29, 2018. https://www.techdirt.com/articles/20180126/09444139092/nfl-pretending-trademark-law-says-something-it-doesnt-leads-to-hilariously-amateurish-ads-big-game.shtml
⁴ “Making Fair Use of the Super Bowl Trademark” Duets Blog, Steve Baird, September 25, 2017. https://www.duetsblog.com/2017/09/articles/advertising/making-fair-use-of-the-super-bowl-trademark/
⁵ “Securing necessary copyright and trademark rights for broadcasts and promotions related to the NFL championship games and Super Bowl 52” Lerman Senter PLLC (Lexology), January 11, 2018. https://www.lexology.com/library/detail.aspx?g=92ce3502-82e6-4768-8721-d279df297589 http://www.lermansenter.com/assets/attachments/758.htm
⁶ “Big Game Punting: Super Bowl Scores $5.4 Billion In Ad Spending Over 52 Years” AdAge, Bradley Johnson, January 11, 2018. http://adage.com/article/special-report-super-bowl/super-bowl-ad-spending-history-charts-52-years/311881/
⁷ “Brewers Association Releases 2017 Top 50 Brewing Companies By Sales Volume” Brewers Association, March 14, 2018, https://www.brewersassociation.org/press-releases/brewers-association-releases-2017-top-50-brewing-companies-by-sales-volume/
⁸ “Craft Brewing and Distilling News for January 24, 2018” Shanken News Daily, January 24, 2018 http://www.shankennewsdaily.com/index.php/2018/01/24/20038/craft-brewing-distilling-news-january-24-2018/
⁹ “2017 Craft Beer In Review” Press Release, The Brewers Association, December 13, 2017. https://www.brewersassociation.org/press-releases/2017-craft-beer-review/
¹⁰ Indiana Government website trademark search page: http://www.in.gov/apps/sos/trademarks/
¹¹ http://www.sportsbeerbrewing.com/claim-your-brand-.html
¹² http://www.sportsbeerbrewing.com/about-us.html
¹³ U.S. Trademark Registration No. 4497301.
¹⁴ U.S. Trademark Registration Nos. 2023046 and 2023047.
¹⁵ https://www.whois.com/whois/sportsbeerbrewing.com
¹⁶ TTB ID 17283001000314 https://www.ttbonline.gov/colasonline/viewColaDetails.do?action=publicFormDisplay&ttbid=17283001000314
¹⁷ https://www.purdue.edu/brand/downloads/508_Quick-Brand-Guide-PDF-300.pdf
¹⁸ http://www.sportsbeerbrewing.com/claim-your-brand-.html (last viewed on January 29, 2018).
¹⁹ “Pitt drops trademark hammer on Voodoo Brewery’s Pitt-themed beer” Pittsburgh Post-Gazette, Adam Bittner, October 19, 2017. http://www.post-gazette.com/sports/Pitt/2017/10/19/h2p-beer-pitt-trademark-voodoo-brewery-pittsburgh-panthers-homecoming/stories/201710190025
²⁰ H2P (standard character mark) for magnets and label pins owned by the Registrant University of Pittsburgh-Of the Commonwealth System of Higher Education (“Pitt”) (U.S. Trademark Registration No. 4014150)
²¹ PITT (in script lettering) for football helmets (U.S. Trademark Registration No. 4960354).
²² PITT (in script lettering) for numerous goods, including shot glasses, drinking glasses, and miniature toy helmets (U.S. Trademark Registration No. 4960171).
²³ http://www.post-gazette.com/sports/Pitt/2017/06/27/Pitt-colors-change-royal-blue-and-yellow/stories/201706270143 “Will Pitt change its colors back to royal blue and yellow?” Pittsburgh Post-Gazette Kevin Stankiewicz, June 27, 2017.
²⁴ http://www.communications.pitt.edu/Graphic-Standards.pdf
²⁵ PITT (in script lettering) for football helmets claims to have a first use in commerce at least as early as 1973 (U.S. Trademark Registration No. 4960354).
²⁶ http://www.post-gazette.com/sports/Pitt/2017/10/19/h2p-beer-pitt-trademark-voodoo-brewery-pittsburgh-panthers-homecoming/stories/201710190025
²⁷ “Miami Hurricanes’ Turnover Chain becomes a beer” SouthFlorida.com, Talia J. Medina, November 15, 2017. http://www.southflorida.com/restaurants-and-bars/drinking/sf-j-wakefield-turnover-chain-miami-canes-beer-20171115-story.html
²⁸ The University of Miami’s “Visual Identity Manual” https://ucomm.miami.edu/_assets/pdf/tools-and-resources/UMiami_IDguide_March_2015.pdf (Updated March 2015)
²⁹ Alcohol and Tobacco Tax and Trade Bureau (“TTB”) of the U.S. Department of the Treasury’s Certificate of Label Approval (“COLA”) TTB ID: 17320001000412, approved on November 19, 2017. https://www.ttbonline.gov/colasonline/viewColaDetails.do?action=publicDisplaySearchBasic&ttbid=17320001000412
³⁰ See footnote 27: “The IPA will be brewed in partnership with former Miami Hurricanes linebacker D.J. Williams, who was a member of the 2001-2002 national championship team.”
³¹ “J. Wakefield Brewing to Release Chains New England-Style IPA” Brewbound, Press Release, Dec. 11, 2017. https://www.brewbound.com/news/j-wakefield-brewing-release-chains-ipa
³² “The Iowa Wave through a child’s eyes” USAToday, George Schroeder, November 2, 2017. https://www.usatoday.com/story/sports/ncaaf/2017/11/02/iowa-wave-through-childs-eyes/826378001/
³³ “Iowa Hawkeyes’ new tradition is more than just a wave” ESPN, Published on Sep 30, 2017. https://www.youtube.com/watch?v=w7UqYD_owgY
³⁴ “Iowa City Wave, Backpocket’s newest beer, will benefit the UI Children’s Hospital” Little Village Magazine, Emma McClatchey, November 2, 2017. http://littlevillagemag.com/iowa-city-wave-backpockets-newest-beer-will-benefit-the-ui-childrens-hospital/
³⁵ https://twitter.com/BackpocketBrew/status/932722791710937088
³⁶ See footnote 34. “Overton said he and other Iowa City natives on staff had been meaning to make a beer that pays homage to Hawkeye football. With Iowa City Wave, they not only nabbed a trademark-free title, but a way to both honor and contribute to the growing awareness of children’s hospital patients and their families by Hawk fans.”
³⁷ According to a search of the University’s  searchable website portal, there do not appear to be any breweries listed as licensed: http://portal.uilicensing.com/index.cfm/licensee/search
³⁸ “The Kansas City Royals have named an official craft beer. Will other teams follow?” The Washington Post, Fritz Hahn, March 10, 2017. https://www.washingtonpost.com/news/food/wp/2017/03/10/the-kansas-city-royals-have-named-an-official-craft-beer-will-other-teams-follow/ (“The Kansas City Royals have named Boulevard Brewing their official craft beer partner. According to Major League Baseball, it’s the first time a team has had an official craft beer.”)
³⁹ https://www.boulevard.com/partner/royals/
⁴⁰ “Anchor Brewing’s Golden Warriors beer for the Dub Nation” The Mercury News, Jay R. Brooks, March 27, 2017, updated March 30, 2017. https://www.mercurynews.com/2017/03/27/anchor-brewings-golden-warriors-beer-for-the-dub-nation/
⁴¹ http://www.nba.com/warriors/anchor?mpweb=1009-2132-44620
⁴² “Gordon Biersch’s new San Jose Sharks beer is called ‘Chum’” The Mercury News, Sal Pizarro, September 8, 2016, updated September 9, 2016. https://www.mercurynews.com/2016/09/08/gordon-bierschs-new-san-jose-sharks-beer-is-called-chum/

Protecting “The Thought That We Hate”

Author: Patrick Mulkern

The Supreme Court’s recent decision in Matal v. Tam, 582 U.S. ___ (2017) changes the trademark landscape by striking down the Lanham Act’s “disparagement clause” and rejecting the notion that trademarks are themselves “government speech.”

The Slants and Re-Appropriation of Derogatory Terms

The case stems from a trademark application filed by Simon Tam, the lead singer of the rock band “The Slants.” Although “slants” is often viewed as a derogatory term for persons of Asian descent, and despite suffering years of bullying growing up, Tam and his fellow band members (all of whom are Asian-American) sought to “reclaim” the term and turn the previously-negative stereotype into a point of pride.

Trademark registration is not required for a person or entity to use a word or phrase in commerce, but the protections afforded by the registration are often crucial in helping avoid or prevent consumer confusion regarding source or affiliation. See Matal, 582 U.S. at ___ (quoting Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985)) (“The Lanham Act provides national protection of trademarks in order to secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers.”).

Here, The Slants ran into that exact problem when other bands started to use the same name. So, in 2010, Tam and the band sought to trademark the name but their application was rejected. The U.S. Patent and Trademark Office (“PTO”) denied the application on the basis that the registration would violate the Lanham Act’s “disparagement clause”—specifically, a concern that the trademark may “disparage . . . or bring . . . into contemp[t] or disrepute” any “persons, living or dead.” See 15 U.S.C. § 1052(a).

Tam appealed at the PTO, but was denied.  He then took his case to federal court, where the en banc Court of Appeals for the Federal Circuit held the disparagement clause to be unconstitutional as an impermissible violation of the First Amendment.  See In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc).  The Supreme Court affirmed.

Supreme Court Decision

The Supreme Court began by rejecting Tam’s argument that the disparagement clause did not even actually apply to his application because it allegedly only concerned “persons” (that is, individuals and juristic entities) and not racial or ethnic groups. With the scope of the clause decided, the Court then addressed the Government’s claims that (a) trademarks are government speech, and not private speech; (b) trademarks are a government subsidy; and (c) the disparagement clause should be evaluated under a new “government-program” doctrine.

The distinction between “government” speech and “private” speech was the crux of the Government’s case because Supreme Court precedent clearly established that “[t]he Free Speech Clause . . . does not regulate government speech.” Matal, 582 U.S. at ___ (quoting Pleasant Grove City v. Summum, 555 U.S. 460, 467 (2009)). With that broad exception, the Court noted how the doctrine “is susceptible to danger misuse” and for that reason “must exercise great caution before extending” the scope of government speech.

To that end, the Court reasoned trademarks are not “government speech”—despite being registered by the PTO, an arm of the Federal Government—because the government “does not dream up” the content of the marks, “does not edit” the marks, and (normally) will not reject a registration based on the viewpoint it expresses. Additionally, registration “does not constitute approval” of a mark and “it is unlikely that more than a tiny fraction of the public” knows what trademark registration even means. For these reasons, the Court determined, “it is far-fetched to suggest that the content of a registered mark is government speech.”¹

The remainder of the opinion resulted in limited precedent as the Court was split 4-4 in approving differing rationales for the ultimate outcome.² Justices Alito, Roberts, Thomas, and Breyer rejected the Government’s “subsidy” argument, namely because the PTO is not providing cash or its equivalent to trademark applicants—“quite the contrary[,] an applicant for registration must pay the PTO[.]” These Justices also declined the Government’s invitation to apply a newly suggested “government-program” doctrine to save the disparagement clause, by simply merging the “government speech” line of cases with the “government subsidy” line of cases, because the rights conferred by a trademark registration were not valuable enough to warrant protection.

In any event, Justices Alito, Roberts, Thomas, and Breyer determined viewpoint discrimination has always been forbidden when the government creates a limited public forum for private speech (which trademarks were determined to be, earlier in the opinion). The Justices reminded how “[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.’” Matal, 582 U.S. at ___ (quoting Street v. New York, 394 U.S. 576, 592 (1969)). Justices Kennedy, Ginsburg, Sotomayor, and Kagan expanded on the application of viewpoint discrimination to trademarks and agreed that the First Amendment’s prohibition of such discrimination was fatal to the disparagement clause.

Finally, Justices Alito, Roberts, Thomas, and Breyer declined to determine whether trademarks are “commercial speech”—thus making the disparagement clause subject to the relaxed scrutiny of Central Hudson—because the disparagement clause could not withstand even that lower standard of review. The clause, these Justices determined, serves no “substantial interest” and is not “narrowly drawn.” Most specifically, the argument that the Government has an interest in preventing offensive speech is completely unavailing because “the broadest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’” Matal, 582 U.S. at ___ (quoting United States v. Schwimmer, 279 U.S. 644, 655 (1929) (Holmes, J., dissenting)).³

Impact

This decision will likely have wide-reaching impact as individuals (i) attempt to follow in The Slants’ footsteps of reclaiming once-derogatory terms, or, conversely, (ii) attempt to capitalize on the ability to sequester certain offensive words and phrases for commercial gain through trademark registration. The effects of the disparagement clause’s demise cannot accurately be forecasted to affect any one industry and, instead, will most likely impact all commercial streams.

A notable circumstance the decision is sure to impact is the current fight between the Washington, DC NFL team (the “Washington Redskins”) and the PTO, over the “Redskins” moniker. See Pro-Football, Inc. v. Blackhorse et al., Case No. 15-1874 (4th Cir. 2015). Six of the team’s trademarks had been cancelled by the PTO after several Native Americans petitioned that they disparaged Native Americans and had been registered in violation of the Lanham Act’s disparagement clause. Given the Matal v. Tam decision and its attendant striking down of the disparagement clause, however, it is likely the Court of Appeals for the Fourth Circuit will side with the team and reinstate the trademark registrations.

In coming to that conclusion, one must question the import of how Simon Tam chose “The Slants” in an effort to “reclaim” the term whereas the NFL team can make no such claim to its selection of “Redskins.” Given the protections afforded by the First Amendment—and the prohibition on viewpoint discrimination—such a calculus is also likely obsolete.

A copy of the Court’s slip opinion can be found here.

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¹ The Court made quick work to distinguish the Government’s central case, Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576 U.S. __ (2015). Walker, which held Texas’ specialty license plates were government speech, was different for three reasons: (i) license plates have long been used to convey state messages; (ii) license plates are often closely identified with the State, since they are manufactured and owned by the State, designed by the state, and serve as a form of government ID; and (iii) Texas maintained direct control over the messages conveyed on its specialty plates. None of those factors are present in trademark registration.
² Justice Neil Gorsuch was not on the Court when oral argument was heard and took no part in the consideration or decision of the case.
³ Justices Kennedy, Ginsburg, Sotomayor, and Kagan took the position that, regardless of how the private-commercial speech issue is resolved, the evident viewpoint discrimination of the disparagement clause warrants heightened scrutiny—scrutiny it cannot survive.  These Justices did go on to discuss how trademarks likely are not government speech, however, and provided examples of how trademark registration was different from other “government speech” cases. See Matal, 582 U.S. at ___ (citing Legal Services Corp. v. Valazquez, 531 U.S. 533, 540-42 (2001)) (noting viewpoint discrimination exception “where the government itself is speaking or recruiting others to communicate a message on its behalf).

National Marks: Who Owns the Trademarks to America’s Famous Landmarks

National Park Concessionaires

In September 2015, a seemingly innocuous contract dispute was filed in the United States Court of Federal Claims (“CFC”) that could lead to the United States losing the trademark rights to some of its most popular national attractions.¹ Though the suit is ostensibly based on failed contract negotiations between private national park concessionaire DNC Parks & Resorts at Yosemite, Inc. (“Delaware North”) and the United States Department of Interior (“National Park Service”), the damages claimed by Delaware North directly implicate whether a private entity should—or even can—own trademark protection for national landmarks like The Ahwahnee Hotel and even Yosemite National Park itself.

The National Park Service regularly administers guest services operations within its national parks through private companies, awarding “concession contracts” to these various entities. Delaware North was selected as Yosemite National Park’s official concessionaire in 1993, and came to operate over 1,500 hotel rooms, 25 food and beverage stands, and nearly 20 retail establishments.² During its tenure, Delaware North also registered several trademarks for places traditionally associated with Yosemite National Park, including THE AWAHNEE, CURRY VILLAGE, WAWONA, BADGER PASS, and YOSEMITE NATIONAL PARK.³

As part of the concession contract renewal process, the National Park Service agreed that any successor concessionaire would be required to pay Delaware North “fair value” for its Yosemite-related property. In the dispute, Delaware North argues this should include at least $44 million in compensation for the Yosemite trademarks. The National Park Service, however, contends the trademarks are likely invalid and, thus, “fair value” is more accurately estimated at $3.5 million. In fact, in response to this lawsuit, the National Park Service filed a Consolidated Petition for Cancellation before the United States Patent and Trademark Office’s Trademark Trial and Appeal Board (“TTAB”) in an attempt to cancel Delaware North’s various Yosemite-related trademarks.⁴ That TTAB proceeding was suspended, however, because of the action already pending at the CFC. Accordingly, the court will likely be forced to wrestle with whether Delaware North’s trademarks are valid as the civil action seeks to determine if Delaware North was properly compensated though the parties vehemently dispute the value of the relevant intellectual property.

Of note, another concessionaire giant, Xanterra, filed a series of similar trademark applications in October and November 2014, for landmarks related to Grand Canyon National Park—EL TOVAR, HERMITS REST, LOOKOUT STUDIO, BRIGHT ANGEL LODGE, and PHANTOM RANCH.⁵ These applications came during a similar contract dispute with the National Park Service, though each was expressly abandoned in March 2015 after Xanterra was awarded a temporary, one-year contract.

Arguments for Cancellation

As part of the cancellation analysis, it is important to remember a trademark is entitled to protection only where it is functions as “a source identifier.”⁶ Through this lens, the U.S. Government argues that Delaware North’s trademarks should be cancelled because they falsely suggest a connection to the National Park Service. Delaware North counters that some of these marks have been in use by Yosemite’s concessionaires for nearly 100 years, with The Ahwahnee Hotel, for example, having been established by Delaware North’s predecessor in 1927. The PTO Examiner agreed with the National Park Service, initially, denying Delaware North’s original application for YOSEMITE NATIONAL PARK because of its false suggestion of a connection and descriptiveness.⁷ That office action was traversed, however, when Delaware North submitted a heavily redacted version of its 1993 concessionaire contract, allegedly establishing the necessary connection, and a declaration of acquired distinctiveness.

Legislative Efforts

In response to this high profile case, legislatures have taken to banning the registration of trademarks related to popular outdoor destinations. At the federal level, for example, Congress recently enacted a statute intended to prevent similar disputes.⁸ 54 U.S.C. § 302106 prevents the trademark registration of a name historically associated with “buildings and structures on or eligible for inclusion on the National Register (either individually or as part of a historic district), or designated as an individual landmark or as a contributing building in a historic district by a unit of State or local government.” This language would have precluded almost all of Delaware North’s registrations and may prohibit any future attempt to register Xanterra’s presently-abandoned applications.

At the state level, California (home to the most national parks) recently adopted a similar bill that prohibits state park concessionaires from registering or obtaining any ownership interests in “the name or names associated with a state park venue.”⁹

Overall, these statutory proscriptions appear to embody the notion that parks—national, state, and regional—are held in the public trust, for all people, and thus, their associated property (including trademarks) should be part of that trust, too.¹⁰

Moving Forward

The future of this dispute is unclear. In its Opposition to suspend the TTAB proceeding, the National Park Service argues that Delaware North’s CFC complaint intentionally avoids mentioning issues of trademark validity or infringement, though such issues are arguably implicated by Delaware North’s claim for damages. Thus, the Government contends, these issues may not even be addressed.

The National Park Service has also argued the CFC is an inappropriate venue for the trademark dispute because it does not have jurisdiction to either (a) hear Lanham Act claims, or (b) cancel trademark registrations.¹¹ The National Park Service specifically noted cases in which the CFC, itself, proclaimed “we have no jurisdiction over claims for trademark infringement”¹² and “this court does not have jurisdiction over plaintiff’s claim for [trademark] cancellation.”¹³ Delaware North responded to these claims by asserting the CFC has jurisdiction by virtue of its “authority to decide incidental legal issues that arise in the course of deciding a claim within its Tucker Act jurisdiction, even if those issues would be outside the Court’s jurisdiction if asserted as standalone claims.”¹⁴ Thus, the issues of trademark validity and infringement may or may not be appropriately raised before the CFC.

Alternatively, the parties may simply come to a settlement, similar to that seen in the National Park Service’s dispute with Xanterra, though the Yosemite contract-at-issue has already been awarded to a different concessionaire. We await further developments.
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¹ See DNC Parks & Resorts at Yosemite, Inc. v. United States of America, No. 1:15-cv-01034-PEC (Fed. Cl. 2015).
² Another popular concessionaire, Xanterra Parks & Resorts, controls operations at Crater Lake National Park, Death Valley National Park, Glacier National Park, Grand Canyon National Park, Rocky Mountain National Park, Yellowstone National Park, and Zion National Park.
³ See U.S. Trademark Reg. Nos. 2772512, 2685968, 2739708, 2720778, and 2715307.
⁴ United States Dept. of Interior v. DNC Parks & Resorts at Yosemite, Inc., Cancellation No. 92063225 (T.T.A.B. 2016).
⁵ See U.S. Trademark App. Serial Nos. 86446998, 86444313, 86444295, 86434643, and 86444229.
⁶ Boston Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 12 (1st Cir. 2008) (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992)).
⁷ See DNC Parks & Resorts at Yosemite, Inc., Cancellation No. 92063225, at 1 TTABVUE 12-15.
⁸ See 54 U.S.C. § 302106 (2016).
⁹ AB 2249, 2015-2016 Leg. (Cal. 2015).
¹⁰ See AB 2249 §§ 2(a), (f).
¹¹ See DNC Parks & Resorts at Yosemite, Inc., Cancellation No. 92063225, at 9 TTABVUE 9-11.
¹² Id. at 10 (quoting Lockridge v. United States, 218 Ct. Cl. 687, 690 (1978)).
¹³ Id. at 10-11 (quoting Boyle v. United States, 44 Fed. Cl. 60, 65 (1999)).
¹⁴ DNC Parks & Resorts at Yosemite, Inc., Cancellation No. 92063225, at 15 TTABVUE 10.