Offensive Trademarks are Protected Speech, According to the Supreme Court

Ding-dong the disparagement clause is dead. In a trademark law ruling that will substantially expand the amount of acceptable trademarks, the Supreme Court came down against a rule in trademark law which bars disparaging marks.

The disparagement clause specifically barred marks which disparage, bring into contempt or disrepute any person, living or dead, institutions, beliefs, or national symbols. Some examples of marks that have previously been refused protection based on this clause include such gems as “Democrats Shouldn’t Breed”, “Republicans Shouldn’t Breed”, “Have you Heard that Satan is a Republican?”, and a bizarre trademark with the goal of mocking the Boston Red Sox—Sex Rod. Most famously in the last few years, the disparagement clause was used to cancel six trademarks associated with the Washington Redskins. This was due to “Redskins” being a pejorative term for Native Americans.

Another mark which fell prey to the disparagement clause was the mark that led to the case the Supreme Court just ruled on–The Slants. The Slants are an all Asian-American band out of San Francisco. Their name is obviously a pejorative term for Asian people. However, they specifically chose the name with the goal of making their name an ironic reclamation of the offensive term. Despite this, because the term itself disparages those of Asian descent, they were denied the protection of a trademark on their band name.

The Slants chose to challenge this in court, saying that a rule forbidding disparaging marks violates the First Amendment. As we covered previously, the U.S. Court of Appeals agreed with the band members. Now the Supreme Court has done the same, ending the disparagement clause once and for all.

offensive trademarksWhy is the Disparagement Clause Unconstitutional?

The government is generally not allowed to restrict speech based on viewpoint. If this were not the case, the government might be free to silence those who disagree with it with impunity.  However, the government can pass laws that restrict speech where they are content-neutral—not aimed at censoring the content of speech, but instead aimed at restricting the time, place, or manner which speech can be conveyed. Where a law makes a viewpoint based restriction, it will be unconstitutional most of the time.

In deciding whether a law makes a viewpoint based speech restriction the courts look to see if, within any topic, the government has target a certain type of speech for disfavor based on the what that speech is saying. For example, if the government forbade pro-lion taming speech but allowed anti-lion taming speech, that restriction would almost certainly be unconstitutional.

The Supreme Court found that the disparagement clause targeted a subject matter of the people, institutions, beliefs, and national symbols which the clause covers. Inside the subject matter, the clause allowed people to register marks referring to people or groups in a positive or neutral way, but not derogatory ones. Thus, the clause targeted a specific viewpoint and violated the First Amendment. This was exacerbated by the fact that the disparagement clause essentially allowed the government to determine what types of marks were offensive. The entire point of preventing viewpoint based speech restrictions is to prevent the government from choosing which speech to censor and which to allow.

The government defended the disparagement clause by describing trademarks as either government speech, government subsidy, or commercial speech–all types of speech which receive a lower level of protection than your own private speech. The Supreme Court rejected all of these classifications–officially declaring trademarks private speech.

Government speech, speech conveying a message from the government, does not need to be viewpoint neutral. This is because the government is allowed to voice its own position on an issue as opposed to sponsoring both sides of any matter. However, government speech has to actually come from the government. Trademarks don’t meet this requirement. The message from a trademark is communicating a private party’s brand, not the government’s approval or involvement in that brand. As the Supreme Court said, if trademarks represent the government speaking then the “Federal Government is babbling prodigiously and incoherently.”

Similarly to government speech, the government may subsidize one viewpoint over another. However, subsidies come in the form of money or tax breaks, not trademarks. Once again, the Supreme Court wasn’t having it.

Finally, commercial speech receives less protection than private speech. In general, speech is commercial when it is made by a company or individual with the goal of making a profit. However, the amount of protection is not so much less for commercial speech that it would make the disparagement clause constitutional. Restrictions on commercial speech still need to be as narrow as possible to achieve the government’s objective and the Supreme Court ruled that the disparagement clause just wasn’t narrow enough.

What Does The End of the Disparagement Clause Mean?

First and foremost, this ruling means that an enormous number of trademarks have become available. In the coming weeks, there will likely be an enormous boom in applications for the disparaging marks that were once out of reach.

Marks that were previously cancelled under the clause, such as the marks of the Washington Redskins, will likely be revived. In fact, the owner of the team–having filed briefs in support of a ruling like this with the Supreme Court–has been publically celebrating the ruling on social media.

This celebration is the perfect example of why many have found the ruling no cause to party–it allows racially insensitive or outright offensive marks such as the “Redskins” to receive protection. The band members of The Slants have recognized this, and have publically made it known that they are none too happy to be lumped in on the same side as the Redskins. However, the band members said that they pursued the case regardless because they felt that the broader free speech implications were more important.

So this is the central dilemma. Does this ruling mean that racial slurs can receive trademark protection? Yes. However, the flip side to this is that the alternative allows the government to choose what is offensive. As the Supreme Court noted in its ruling, the whole point of forbidding viewpoint based discrimination is to prevent the government from censoring speech. Where the majority gets to choose what speech is acceptable, the minority tends to get the short end of the stick. All the rest of our areas of intellectual property law don’t involve much in the way of morality restrictions, trademark is just catching up.

The Future of Civil Asset Forfeiture

Civil asset forfeiture has long been a bipartisan issue that both sides of the country can unite behind. Democrats are in favor of undoing practices that indirectly target minorities and abuse criminal defendants. Republicans can rally against big government seizing property. Civil Asset Forfeiture has always been problematic as the practice allows law enforcement to seize property regardless of whether the defendant is even charged of a crime. The first cases testing the limits of Civil Asset Forfeiture are now in the Supreme Court and it’s no surprise that the Court frowns about asset forfeiture as much as voters and lawmakers do.

civil asset forfeitureWhat Happened?

In 2005, Shannon Nelson was convicted by a Colorado jury of two felonies and three misdemeanors relating to the alleged sexual abuse of her four children. The trial court sentenced her to 20 years in prison and ordered her to pay over $8,000 in court costs, fees, and restitution. Nelson appealed the conviction and the case was overturned. Nelson was later acquitted of all charges. Nelson asked the state to refund the amount she had already paid, but Colorado refused, citing the state Exoneration Act, which allowed Colorado to retain funds from convictions unless the defendant can prove in civil court that she is innocent by clear and convincing evidence. Nelson lost in the state Supreme Court, but the Federal Supreme Court overturned Colorado’s ruling.

In the 7-1 decision, Justice Ginsburg writing for the majority argued that since Nelson’s conviction had been overturned, her presumption of innocence had also been restored. Since the law presumes that criminal defendants are innocent until proven guilty, states cannot write laws requiring innocent people to prove they are not guilty. Since the law usually requires that parties return any payments they receive if a judgment is reversed, Nelson’s payment of the fines should have been returned when her conviction was overturned.

Justice Thomas’s lone dissent is based on the argument that Nelson has no right to the money she had already given to the state. The dissent’s argument is peculiar as it reasons that since Nelson had not attempted to collect her refund through a law that her attorneys challenged as unconstitutional, no rights have been violated and therefore Colorado doesn’t have to return the money.

What Does This Case Mean Going Forward?

The Nelson case is significant, as it signals that the Court is now ready to rule on civil forfeiture cases.  The Court had the perfect excuse not to hear the case, as Colorado changed the Exoneration Act prior to oral arguments, thereby making the case moot, but the Court chose to make a ruling anyway, paving the way for tighter restrictions on civil forfeiture by creating this precedent.

And the Court should create this precedent. Although civil forfeiture started with good intentions, it has morphed into a process by which police and prosecutors can take property from citizens without having to meet standards such as “guilty beyond a reasonable doubt.” It would be destructive to our rights – and has already caused significant loss of property – if the police could simply change the criminal standards by moving issues into a different court. Despite Justice Thomas’s arguments, seizing a person’s property by changing the requirements for due process is still a violation of the Due Process Clause.

Justice Gorsuch’s First Opinion, Creditors are Not Debt Collectors

The Fair Debt Collections Practices Act, or FBCPA, forbids debt collectors from harassing debtors, including using abusive language, make threats, call the debtor late at night or at work, or make misleading statements. The FBCPA applies to collection agencies and other third parties creditors may hire to chase debt. The FBCPA usually does not apply to creditors themselves, with a few exceptions. It is important that creditors and debtors alike know whether the FBCPA applies to their case, as the FBCPA allows the debtor to countersue if the debt collector violates the FBCPA.

Justice Gorsuch’s first opinion deals with whether creditors who purchase debt from other creditors and pursue their newly purchased debts are debt collectors under the FBCPA. In Henson v. Santander, Citi Financial Auto financed a chain of car loans, which were purchased by Santander, a Spanish bank. Santander attempted to collect the loans and the plaintiffs sued, alleging that Santander had violated FBCPA by harassing and intimidating them. The Supreme Court ruled 9-0 in favor of Santander, declaring that creditors who purchase debt and then attempt to collect the debt themselves without a debt collector are not themselves debt collectors under FBCPA.

Neil GorsuchWhat Was His Focus?

Justice Gorsuch focused primarily on the text of the Fair Debt Collections Act, which defines a debt collector as a person or business whose principal purpose is collecting “debts owed by another.” In other words, under FBCPA, a debt collector can only be a debt collector if the person is collecting debt on behalf of another person. If a person attempts to collect the debt on behalf of him or herself, that person is not a debt collector. Since that person is legally not a debt collector, FBCPA would not apply. Therefore, this person could use collection tactics that the FBCPA would normally prohibit, such as calling late at night or threatening the debtor.

Gorsuch’s opinion and the ruling of the Court are perfectly in line with the role of the judiciary in the Constitution’s checks and balances. Congress has chosen to write a law designed to protect debtors with a built in exemption for certain creditors. It is not the Court’s role to rewrite the law; if people have a problem with the FBCPA, they can ask Congress to change the law or vote in candidates who will change the FBCPA. With that said, the logic behind the law and the outcome of this case is disturbing. The FBCPA essentially states that debt collectors cannot harass debtors, but the owners of those debts can. If a bank like Santander wishes to use unsavory tactics to pressure people into paying their bills, those banks can save money and have greater options in pressuring debtors by cutting out the middle man.

So What Does this Mean for Us?

Arguably, this makes those banks more accountable if they forgo the debt collection agencies, but with the enormous market buying and selling debts, it actually makes it more difficult for debtors to figure out who owns and owes what. If I take out a mortgage with Bank of America, and Bank of America sells my mortgage to Wells Fargo, which sells my mortgage to Santander, I would have no way of knowing these purchases are happening. The resulting confusion on a mass scale could trigger a financial collapse, as it did in 2008 when the housing market tanked. The Court’s ruling and Gorsuch’s written opinion will encourage those same types of debt sales, as buying debt becomes not only more profitable, but easier to enforce legally as well. Congress must change the FBCPA to discourage these types of sales if we are to prevent another housing and financial crisis.

Supreme Court Limits Patent Rights

One of the hallmarks of a successful business is protections on an invention which provide a barrier to competition beyond just money–a patent. Whether you’re an inventor or an entrepreneur, intellectual property protection is close to the heart of your livelihood. Keeping track of what these protections offer is crucial, and these last couple weeks has been enormous for patent law rulings out of the US Supreme Court. First, they limited jurisdictions for patent infringement cases substantially-making patent law much more defendant friendly. Even more recently, and more importantly for patent rights, they limited patent’s exclusive rights by applying the first sale doctrine to patent law at home and abroad with more force than ever before.

What is the First Sale Doctrine?

The first sale doctrine is a concept, also known as exhaustion, that is found as part of the statutory law behind copyright law. The rule is fairly simple but requires a bit of an understanding of the rights intellectual property grants you. Owning a copyright in a work gives you the exclusive right to sell (or really distribute in any way), display, make copies of, or make directive works from that work. Out of all of these, the first sale doctrine exclusively impacts the distribution rights. Once you’ve sold something, or even intentionally given it away, you have “exhausted your distribution rights in that particular work. This means that whoever owns the object or work now is free to sell it, put it on display, blow it up with dynamite-basically distribute or dispose of it as they wish. They can’t make copies, you keep that right, but the distribution right is gone after first sale-thus the first sale doctrine. In Impression Products v. Lexmark, the Supreme Court took this concept from copyright law and decided how it should apply in patent.

Laser Printer Losers-The Case Itself

Lexmark makes laser printers and, more importantly for this case, toner cartridges for those printers. These cartridges, once used up, can be much more cheaply refilled than replaced. This left Lexmark with a bit of a problem-an entire market dedicated to underselling their products by refilling and reselling cartridges. These businesses buy up used cartridges from US purchasers and purchasers abroad to resell them after a refill. With these competitors in mind Lexmark offered their product in two ways, at full price with no stipulations or at a lower price along with a promise to return the cartridges to Lexmark. In order to enforce this, Lexmark included microchips in their cartridges to prevent reuse-a measure the refillers promptly learned how to circumvent.

After failing to curb the businesses of these competitors, Lexmark decided to sue all the companies refilling and selling their used cartridges. They had a big problem though, the contract to not resell the cartridges wasn’t with the refillers it was with the clients who sold to the refillers. Thus, with no contract to assert, Lexmark said that these refillers were infringing on their patent rights.

A patent gives its owners the right to exclude others from making, using, selling, or importing the invention. Lexmark said that because they prohibited reuse and resale in their contracts, the refillers were violating their distribution rights. By the time the case reached the Supreme  Court, there were two serious questions to be addressed. First, whether the contract term could be enforced against the refillers through a patent infringement lawsuit. Second, whethand for patent rights abroad, the answers were no and yes respectively.

What the Decision Does

Case law has long established that exhaustion can apply in patent similar to how it does in copyright law. With this and some recent Supreme Court rulings in mind, the outlook was never particularly good for Lexmark.

As enforceable as their no sale agreements were under contract law, the Supreme Court wasn’t buying it under patent law. The argument, and Lexmark’s hope, was that by selling something with a restriction against further sale they had preserved their first sale rights. This isn’t the case according to the Supreme Court, you can’t contract around the first sale doctrine. Once you sell something

Exhaustion abroad is something the Supreme Court has already addressed for copyright law-and they didn’t go the way Lexmark would want in that case. So it’s no surprise that they followed their own previous ruling in applying exhaustion to patent. From now on selling something outside the US officially counts as a sale under the first sale doctrine and exhausts your distribution right.

These rulings mean that patent rights have been limited, more strictly applying the first sale doctrine to your patents than ever before. However, for those following intellectual property law, this ruling has been more a matter of when than if. The Supreme Court was simply consistent with how it’s handled copyright law in the past.

It’s worth noting that a license is not a sale and that exhaustion applies only to the item actually sold.  This will limit this ruling for many common items such as software or iTunes songs as you more often license these products than actually purchase them.

What’s more, the ruling skirts around the edges of a few other areas of law. Anti-circumvention makes it illegal to, as the name implies, circumvent effective security measures such as the microchips Lexmark installed in their cartridges. Repair and reconstruction is a distinction within patent law. You are allowed to repair an object with a patent on it, but full reconstruction can cross into the territory of patent infringement. While both of these might have applied in this case, neither were considered by the Supreme Court whatsoever.

This ruling will mean that you and your business need to be more careful about how you handle sales if you want to protect your distribution rights in something. There are ways to maintain your rights, depending on how you distribute your product. After this ruling, it’s more important than ever to consider how you’re going to handle your rights and your product.

Teen Sexting May Land Parents in Hot Water

Quick show of hands, how many people have sent or received from a boyfriend or girlfriend sexually explicit text when they were teenagers? In the age of iPhones, the answer is probably “most young people.” Sexting is so prevalent, it probably cost Hillary Clinton the presidency. The House has recently passed the “Protecting Against Child Exploitation Act of 2017,” (PACEA) a bill which mandates a 15 year prison sentence for anyone who shares sexually explicit material of minors, including the minors themselves. Additionally, PACEA mandates the same 15 year sentence for the parents or legal guardians of the minors who “knowingly permits” the minor to send such text messages.

The proposed bill is noble in its intentions, but the methods are extreme. First, the bill would potentially send minors to prison for more than a decade. A 15 year old girl could find herself in prison until she is 30 years old for the crime of sending a nude photo of herself to her boyfriend. Similarly, her parents could also be spending 15 years in prison if they knew she was sending those photos, but didn’t stop her. Since the prison time is a mandatory minimum, there is nothing the judge or jury can do to change the sentence if any of them are found guilty.

sextingThis bill should draw ire from both the left and the right sides of the political spectrum. For liberals, this bill represents yet another example of why criminal justice reform is necessary. These types of bills are likely to target and affect people who make less income than their wealthier counterparts. Although the bill says nothing about income, the wealthy can probably pay a private criminal defense attorney to fight off bogus charges like these. Poorer citizens can only rely on public defenders, who may become overwhelmed with cases like these. For conservatives, this bill should represent a nanny state attempting to dictate to parents how they raise their children. If the parents can’t discipline the children the way the state wants them to, then the whole family will be thrown in prison.

As stated earlier though, the PACEA does have noble intentions. Child pornography among human traffickers and pedophiles is a serious problem. Catching traffickers would certainly be easier if law enforcement could download the traffickers’ outbox and show the jury everything being sent. Since the PACEA does have a legitimate purpose, a few changes could probably fix a lot of the problems described.

How Can Congress Approve this Bill?

First, letting a judge or jury determine the sentence would help our courts separate childish teens from actual predators. If a 17 year old minor is sending nude videos to her 20 year old boyfriend, the parties should be receiving a fine or community service, at most. On the other hand, if a fifty year old man is expecting a 12 year old girl to send pictures of her chest, 15 years in prison might be too light. Mandatory minimums are usually built into law because citizens don’t trust their legal system to give correct verdicts. Although there might be some cases where the defendant gets off too easily, like Brock Turner, those types of injustices tend to be rarer than cases where the mandatory minimum gives too harsh a punishment.

Second, there is no need to charge the parents or legal guardians with sexting. The biggest reason to make parental neglect a crime in this instance would be to prevent guardians from exploiting their children.  Protecting children from their own parents is a potentially worthwhile goal, but the most serious crime would not be the minor sexting. If a guardian is exploiting a child, the government should be checking the parents’ text messages for incriminating evidence, not the kids.

I’ve been very critical of the PACEA so far, but there is one thing it gets right. Although 20 states have passed anti-sexting laws, there is currently no federal law against sexting despite the fact the technology allows sexting to cross state lines. Federal law covers child pornography, but sexting itself is not a federal offense, even if it can be used as evidence of a more serious crime. The PACEA would potentially fill this void, if it can avoid the more draconian methods currently in the bill.