HRFM Today

SCOTUS Invalidates Lanham Act's Prohibition on Immoral or Scandalous Trademarks

By Alexsandar Nikolic

On June 24, the Supreme Court of the United States (SCOTUS) provided its long-awaited decision in Iancu v. Brunetti, 588 U.S. ___ (2019) by invalidating the Lanham Act's prohibition on immoral or scandalous trademarks. In short, the Court held that the provision is unconstitutional because it conflicts with the First Amendment.

Before continuing with the case summary, a short distinction should be made between obtaining a trademark and registering a trademark with the United States Patent and Trademark Office (USPTO). A trademark identifies the source of a good or service and is obtained by virtue of the mark's use in commerce. Registration is a step which grants certain benefits to trademark holders, including a presumption of trademark validity, national public notice, limits on infringer defenses, and access to federal statutory damages.

The Lanham Act creates a trademark registration system with the USPTO as administrators. Under 15 U.S.C. 1052(a), a trademark may be denied registration if it "consists of … immoral or … scandalous matter." Designer and entrepreneur Erik Brunetti has a clothing line that uses the trademark FUCT, which he attempted to register with the USPTO. Mr. Brunetti indicates that the mark is pronounced as the four letters. However, the mark may also be interpreted as "'the equivalent of [the] past participle form of a well-known word of profanity.'" This latter interpretation prevented Mr. Brunetti from being able to register his trademark with the USPTO.

When Mr. Brunetti attempted to register his trademark with the USPTO, however, his application was denied. Both the USPTO examining attorney and the Trademark Trial and Appeal Board determined that the mark was immoral and scandalous, denying Mr. Brunetti registration for his trademark. Mr. Brunetti then appealed to the Court of Appeals for the Federal Circuit (CAFC), where the CAFC determined that the prohibition on immoral or scandalous trademarks was unconstitutional. The Supreme Court granted certiorari after the USPTO appealed.

The Lanham Act indicates that the USPTO may deny registration under certain conditions. Nonetheless, the Supreme Court determined that a denial for immoral or scandalous matter was unconstitutional because it touches on the First Amendment. In particular, the Court determined that speech based on ideas or opinions may not be curbed by the government. Thus, government discrimination based on viewpoint is unconstitutional.

In the decision in Matal v. Tam, 137 S.Ct. 1744 (2017) the Court decided that the prohibition on disparaging marks was unconstitutional because the prohibition was viewpoint based. With the Brunetti decision, the Court extended the scope of unconstitutional prohibitions to include immoral and scandalous marks.

The Supreme Court decision was written by Justice Kagan, and joined by Justices Thomas, Ginsburg, Gorsuch, Kavanaugh, and Alito, with Justice Alito providing a concurring opinion. Justices Roberts, Breyer, and Sotomayor each wrote an opinion that concurred in part and dissented in part.

All the justices agreed that the term "immoral" was overly broad and subjective. The justices also agreed that a more narrowly tailored statute may be created by Congress to prevent vulgarity without impinging on the expression of ideas.

The three Justices that dissented in part suggested that 15 U.S.C. 1052(a) should have been interpreted so that a narrower interpretation of the term "scandalous" could be applied to marks. Justice Roberts suggested that marks that offend because of the "mode of expression" could be denied while marks that offend because of the idea conveyed should be allowed. Justice Breyer suggested that the statute should be narrowly interpreted with a balance of harms versus justifications test applied when examining scandalous marks. Justice Sotomayor stated that the government should have some leeway to judge scandalous content in light of the dispute being over registration of the mark, not over the existence of a protected mark. Since registration conferred a benefit protected by the government, the government should have the power to regulate.

It appears as if it is up to Congress to make changes to 15 U.S.C. 1052(a) if it intends to prevent registration of marks that may be vulgar or lewd without offering or expressing ideas. As of now, it appears as if FUCT is on its way to becoming a registered mark.

Alexsandar Nikolic is an associate with Heslin Rothenberg Farley & Mesiti P.C. in its Rochester office. He can be reached at (585) 288-4832 or [email protected].

Toward Rebalancing Outcomes of Alice Patentable Subject Matter Inquiries — Part Two

By Wayne F. Reinke for The Daily Record

It has been about nine months since my last patentable subject matter (aka "Alice") update, tracking cases and other important information in the wake of the Alice Supreme Court decision. Things continue to improve at the Court of Appeals for the Federal Circuit and with examination at the U.S. Patent and Trademark Office.

The two-part Alice test for patentable subject matter starts by determining whether the claims are directed to a judicially recognized exception — namely, laws of nature, natural phenomena and abstract ideas. If an exception is present, it is then determined whether the elements of each claim, both individually and as an ordered combination, are sufficient to transform the nature of the claim into something patentable.

Finjan, Inc. v. Blue Coat Systems, Inc. (Fed. Cir. Jan. 10, 2018) involved a method and system for computer security involving attaching a security profile to an executable (downloadable application program). It is a behavior-based virus scanning technique. The Court found the claims not to be abstract, as they are employing a new type of file-enabling capability; in this case, scanning for previously unknown security threats.

Data Engine Technologies LLC v. Google LLC (Fed. Cir. Oct. 9, 2018). Data Engine Technologies involved four patents directed to spreadsheets; three of them concerning tabs for navigating through multiple spreadsheets conceptually "stacked" in a three-dimensional fashion. The tabbed spreadsheet patents saved the user from navigating through complicated spreadsheets and searching for applicable complicated (and proprietary) commands. The Court held patentable subject matter — not an abstract idea.

Ancora Techs. v. HTC Am. (Fed. Cir. Nov. 16, 2018) involved a method of restricting a computer's use of a program in accordance with a license using a verification structure stored in erasable non-volatile memory of the BIOS. As with the cases above, the claim was held not to be abstract, so there was no need to address step two of the Alice §101 inquiry.

IBG v. Trading Technologies (Fed. Cir. Feb. 13, 2019) (non-precedential) is not technically an Alice case, but in practice serves a similar purpose. IBG involved four patents directed to a Graphical User Interface (GUI) for a trading system including a dynamic display of market depth, which addresses price changes during the time between the trader reading the price and actually entering a trade order. The basis for determining eligibility is, in part, whether it solves a technical problem using a technical solution, similar to an Alice review. Relying on a prior Fed. Cir. Decision, the court concluded the invention was a specific improvement to computer operation, the GUI providing a specific solution to a specific problem with trading system software.

Endo Pharmaceuticals, Inc. v. Mallinckrodt LLC (Fed. Cir. March 28, 2019) involved a patent related to treating kidney-impaired patients for pain using oxymorphone. The district court had found the claims to fail the Alice test, finding them to be directed to a law of nature. The CAFC reversed, explaining the invention is a new way to treat such patients. Specifically, a lower dose could be used to achieve a similar level of oxymorphone in the blood, due to such patients more slowly metabolizing the drug because of their kidney impairment.

Ironworks v. Apple (D. Del. 2018) involved patents directed to the use of various tactile sensation patterns to convey information to a user. Think haptic feedback. The defendant characterized the invention as abstract without more, using a kind of vocabulary to convey information, analogizing to the Braille system. The court found the claimed device and mobile station not to preempt all vibration-based inventions and included tangible systems with specific components configured to perform specific functions in response to specific events. The district court admitted that the claims include the abstract idea of using a vocabulary to convey information, but that the claims in their entirety were directed to patentable subject matter.

In Ricipi Communications LLC v. JPS Interoperability Solutions, Inc. (D. Del., March 18, 2019), the district court held as patentable a system using two-way radios to communicate over a computer network or the internet. The court found the invention to be an improvement over prior art systems using telephone lines and the claims to be non-abstract. Further, the court opined that even if the claims were held to be abstract, the remaining parts impart enough to make them patentable.

The best news for patent applicants affected by Alice in the recent past is the January 2019 U.S. Patent and Trademark Office §101 Guidance for Patent Examiners. Under the Guidance, a claim of a patent application is not to be considered abstract, except in rare circumstances, unless it falls within one of three groupings of abstract ideas: mathematical concepts; mental processes; and certain methods of organizing human activity.

The category of mathematical concepts includes mathematical relationships, mathematical formulas or equations and mathematical calculations. Mental processes include concepts performed in the human mind (including an observation, evaluation, judgment, opinion). Although the mental processes group seems harmless enough at first glance, note that the USPTO will review a computer-implemented invention claim as if the computer were not present. In this exercise, if, for example, the steps of a method claim are found to include an abstract idea, the inquiry will include whether the steps (absent the programmed computer) could be performed in the human mind. If so, the claim will fail the Alice inquiry.

Finally, certain methods of organizing human activity include fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); and managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions).

While the new examination guidelines should make prosecuting previously §101-challenged applications easier with more certain outcomes, the guidelines are not law (statutory or judicial). Any patent issued under the guidelines that is challenged or enforced, will also need to survive application of §101 inquiry in practice at that time. In that regard, the Senate Judiciary Committee has hearings in June regarding a statutory fix to §101.

Wayne F. Reinke is a partner with the law firm of Heslin Rothenberg Farley & Mesiti P.C. in its Rochester office. His practice focuses on issues related to Internet-based inventions, software, business methods, semiconductor technologies, design patents, and nanotechnology. He can be reached at (585) 288-4832 or [email protected].