07/19/19

SUPREME COURT STRIKES DOWN PROHIBITION AGAINST SCANDALOUS MARKS

Timothy J. Lockhart and Katherine Carroll*

In a decision with major implications for U.S. trademark practice, the Supreme Court has ruled that a trademark application cannot be denied because a mark—in this case, FUCT—is “immoral” or “scandalous.” Iancu v. Brunetti, 588 U.S. ___, 139 S. Ct. 2294 (2019).  The court’s decision that the Trademark Act’s prohibition against such marks is unconstitutional follows its similar decision in Matal v. Tam, 582 U.S. ___, 137 S. Ct. 1744 (2017), that the prohibition against disparaging marks—there, THE SLANTS for an Asian American rock band—violates the Constitution.  (The Tech Law Letter reported on Matal v. Tam here.)

Trademark applicant Erik Brunetti is an artist and entrepreneur who applied in May 2011 to register FUCT as a trademark for his clothing line. Brunetti claims that his mark is pronounced as an initialism:  F-U-C-T, from the phrase “Friends U Can’t Trust.”  Pronouncing his mark as an acronym, however, sounds similar to the past participle of a well-known word of profanity that refers to, among other things, sexual intercourse.

The U.S. Patent and Trademark Office (USPTO) denied Brunetti’s application under Section 2(a) of the Trademark Act, 15 U.S.C. § 1052(a), which contains the prohibition against immoral or scandalous marks. When Brunetti appealed the rejection by the USPTO Examining Attorney assigned to his application, the Trademark Trial and Appeal Board upheld the rejection, finding the mark to be “highly offensive” and “vulgar” with “decidedly negative sexual connotations.”  Brunetti successfully appealed the Board’s decision to the U.S. Court of Appeals for the Federal Circuit, which held that the immoral/scandalous prohibition in Section 2(a) violates the constitutional guarantee of freedom of speech.  (The Tech Law Letter reported on the Federal Circuit’s decision here.)

The government then appealed, and the Supreme Court granted certiorari in January 2019. In a 6-3 decision the Supreme Court upheld the lower court’s ruling that the USPTO could not reject Brunetti’s mark for being immoral or scandalous because such a decision is viewpoint-based.  Conversely, Justice Sotomayor, concurring in part and dissenting in part, contended that Section 2(a) can be saved by narrowly construing the word “scandalous” to refer only to vulgar language, which would permit the USPTO to reject Brunetti’s application.  The majority and dissenting opinions disagreed on three key issues:  (1) whether “immoral” and “scandalous” are separate and distinct terms; (2) whether those terms are viewpoint-discriminatory; and (3) whether the Supreme Court should interpret overly broad statutes so as to make them constitutional.

Writing for the majority, Justice Kagan stated that the terms “immoral” and “scandalous” should be read together as a “unitary provision” because that is how the USPTO treats the two words. Justice Sotomayor, however, argued that “immoral” and “scandalous” should be viewed as separate and distinct terms of art.  Because 2(a) includes the separate words “immoral,” “scandalous,” and “disparage,” she wrote, each one should mean something different or else the statute’s language is “superfluous, void, or insignificant.”

With regard to the second issue, the majority held that both terms, “immoral” and “scandalous,” are facially viewpoint-biased. “Immoral” requires the USPTO to judge the morality of a message whereas “scandalous” requires the USPTO to determine if a message defies society’s sense of decency.  Therefore, in both instances the USPTO must decide whether a message is acceptable for the general public.

To demonstrate her point, Justice Kagan compared past applications where the USPTO approved certain marks but rejected others involving the same subject but conveying different messages. For example, the USPTO approved “D.A.R.E. TO RESIST DRUGS AND VIOLENCE,” an anti-drug message, but rejected “MARIJUANA COLA,” a pro-drug message.

Although she agreed with the majority that “immoral” is a viewpoint-discriminatory term, Justice Sotomayor argued that “scandalous” is viewpoint-neutral. She stated that “scandalous” can and should be read narrowly to prohibit a vulgar mode of communication.  This approach would make the “scandalous” prohibition viewpoint-neutral but content-based, similar to prohibitions against profanity, obscenity, and threats.

Finally, Justice Kagan rejected the argument that “immoral” and “scandalous” can be narrowly tailored to limit only a mark’s mode of expression. The court can interpret ambiguous language to avoid constitutional issues, she said, but it should not rewrite a law to “conform it to constitutional requirements.”  The terms “immoral” and “scandalous” are too well defined to be considered ambiguous and too broad to be narrowed into a constitutional definition.

Justice Sotomayor disagreed. She argued that “scandalous” is ambiguous, pointing toward the two different definitions that she and Justice Kagan used in their respective opinions.  She also said that if properly narrowed, “scandalous” would be constitutional because it does not regulate a viewpoint, merely how that viewpoint is conveyed.

Additionally, Justice Sotomayor argued that rejecting a trademark application does not limit speech. She noted that although registering marks grants certain benefits to certain speakers, not registering marks does not deprive any speakers of any rights.  Because the government is granting the benefits of registration, the government has an interest in not being associated with vulgar trademarks.  Chief Justice Roberts echoed this argument in his opinion, also concurring in part and dissenting in part.

Justice Breyer largely agreed with Sotomayor’s opinion, but he used slightly different reasoning. Justice Breyer proposed a balancing test under which the court would weigh the speech-related harm against the government justification.  He argued that the USPTO’s interest in not associating itself with vulgarity outweighs an applicant’s interest is registering a mark.

Justice Alito, concurring with the majority, warned that government officials can easily exploit viewpoint-discrimination laws such as Section 2(a) if they are allowed to decide what is and is not moral. He also stated that the majority’s decision does not prevent Congress from adopting a more narrowly tailored, content-based statute that rejects marks for containing vulgar terms.  Indeed, by stating that the registration of vulgar marks such as FUCT “serves only to further coarsen our popular culture,” he seemed to be inviting Congress to take such action.

Based on the court’s decision, the USPTO now cannot reject a mark for consisting of or including immoral or scandalous matter. The court left the door open, however, for Congress to write a content-based prohibition restricting marks’ modes of expression.  Brunetti will apparently be able to register his mark, but if a new, carefully tailored prohibition passes, future owners of profane marks may not be as successful.

* Many thanks to summer associate Katherine Carroll for her contributions to this article.

 

COURT RIPS FABRIC COMPANY’S INACCURATE COPYRIGHT CLAIM

Timothy J. Lockhart

Based on an inaccurate statement in the plaintiff’s copyright application, the U.S. Court of Appeals for the Ninth Circuit upheld the district court’s dismissal of a copyright infringement complaint and its award of attorneys’ fees to the defendant. Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC, 925 F.3d 1140 (9th Cir. 2019). Gold Value International Textile, Inc. (Gold Value), a fabric manufacturer, sued Sanctuary Clothing, LLC (Sanctuary) for copying a Gold Value fabric design, using it to manufacture blouses, and then selling the blouses through its retail outlets. Sanctuary filed a counterclaim seeking to invalidate Gold Value’s registration for the fabric design. The district court granted summary judgment to Sanctuary, finding that Gold Value had falsely claimed in its copyright application that its fabric design had not been published.

Gold Value owns the copyright in a two-dimensional textile design titled 1461-43 (1461 Design). Effective October 24, 2013, Gold Value registered the 1461 Design as a work of visual art under Copyright Registration No. VAu 1-151-509 (’509 Registration), which included over 30 other designs in addition to the 1461 Design. In the copyright application Gold Value’s president, Morris Ajnassian, certified that none of the designs had been published as of October 23, 2013. Thus, the fabric designs were registered as an unpublished collection.

At trial, however, Ajnassian testified that prior to the registration date Gold Value had sold about 190 yards of fabric displaying the 1461 Design to “a limited group of existing and potential customers for the limited purpose of securing full production contracts for hundreds or thousands of yards of fabric.” He also testified that he did not consider the sales of those samples to be true publication of the 1461 Design. Because Gold Value stated in a subsequent copyright application, however, that the 1461 Design had been published as of March 12, 2013, when the company began selling samples of that design, the district court did not find Gold Value’s “limited publication” argument persuasive.

Gold Value also argued that because not all of the works covered by the ’509 Registration had been published, the collection as a whole had not been published. The district court did not find that argument persuasive either, noting that the Copyright Office’s rules and practices prohibit the registration of published and unpublished works as a group (citing 37 C.F.R. § 202.3(b)(4)(i)(B) (effective July 6, 2007); U.S. Copyright Office, Compendium of U.S. Copyright Office Practices § 607 (2d ed. 1984)).

Section 411 of the Copyright Act, 17 U.S.C. § 411, states that an entity must have a valid copyright registration before it can sue for infringement of the copyright. Section 411(b) provides that:

[a] certificate of registration satisfies the requirements of this section . . ., regardless of whether the certificate contains any inaccurate information, unless—(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.

Characterizing Gold Value’s position regarding the publication issue as one of “ignorance of the law,” which is “no excuse,” the district court determined that Gold Value had knowingly included inaccurate information on its application to register the copyright in the 1461 Design.

The district court submitted an inquiry to the Register of Copyrights, asking if the Copyright Office would have issued a registration certificate for the collection if it had known that the 1461 Design had been published. The Register responded that “had the [Copyright] Office been aware that the 1461 Design had been previously published, the Office would have refused registration of that work using the unpublished collections option because the work was registered as unpublished when in fact it had been published.”

The district court found that Gold Value’s registration certificate was invalid and that therefore Gold Value did not have standing to sue Sanctuary for infringing the copyright in the 1461 Design. The court granted summary judgment for Sanctuary, awarding it $121,423.01 in attorneys’ fees and other costs under Section 505 of the Copyright Act, 17 U.S.C. § 505, which permits courts to make such an award to the “prevailing party,” including a defendant, even one prevailing, as in this case, on a technical defense. The court of appeals upheld both actions of the district court.

 

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