Once again, our Supreme Court has weighed in on trademark law and resoundingly commented on what is probably the most misunderstood part of trademark law among all business people, and certainly among startups and entrepreneurs. Registration of a trademark is optional. The government does not create a trademark by granting a registration. The absence or lack of a registration does not mean that you do not own trademark rights.
As many people have read already, this Supreme Court decision was actually about a much more juicy issue than whether trademark registration protects marks. It was about whether the Trademark Office had the right to refuse trademark registration to the mark FUCT (pronounced, yes, exactly as you would expect). From the court, came a resounding “no.” The Supreme Court says that the Trademark Act cannot constitutionally prohibit “scandalous” and “immoral” trademarks from being registered. That would impinge upon First Amendment free-speech rights. The government should not and cannot be in the business of deciding whether words fall under those categories. That violates free speech. The court does not want our Trademark Office deciding whether the public would find the mark “shocking to the sense of truth, decency or propriety,” “disgraceful,” “vulgar” or other such things.
But this short and straightforward decision was accompanied by four separate opinions which took some different points of view. John Roberts, the Chief Justice, did not agree completely with the majority’s point of view, but he did make the point that “the owners of (immoral/scandalous) marks are merely denied certain additional benefits associated with federal registration." Justice Breyer added a little more color to the discussion. He stated outright that a business owner might still use a “vulgar word” as a trademark, provided that he or she is willing to forgo the benefits of registration. Again, federal registration is optional. (But Justice Breyer thought that there should be limits on certain vulgar speech.)
Justice Sonia Sotomayor, herself a former trademark lawyer, wrote by far the most lengthy opinion. She describes trademark registration as almost an afterthought in trademark rights, even as “an ancillary system set up by the government that confers a small number of non-cash benefits on trademark holders who register their marks.” Justice Sotomayor referred to prior decisions of the Court which state the noncontroversial idea that regardless of whether a trademark is registered, it can be used, owned and enforced against would-be infringers. She goes on to claim that the government is under “no obligation to establish” a trademark registration system, and that the system is really just “collateral to the existence and use of trademarks themselves.”
Rarely if ever has the Supreme Court painted the trademark registration system as so “optional.” A lot of trademark lawyers are not going to agree with the minimization of the many important benefits that trademark registration gives. But just as the importance of registration has probably been never so minimized, there has probably never been a clearer discussion of the fact that trademark registration is, in fact, optional. Once you own a trademark, you use it. And once you use it, you gain rights -- rights which can be superior even to prior registrants.
Why was there so much discussion of this by the Supreme Court? Because it was important for the court to establish that in order to draw lines about what could and could not be registered, it was important not to lose focus on the fact that the government was not granting or denying the rights to use a name or word, just regulating certain additional benefits.
All nine members of the Supreme Court agreed that it would be unconstitutional to bar immoral terms. The controversy was whether the government should still be able to bar terms that are considered scandalous words.
There is an interesting discussion of the government’s ability to prevent use of “fighting words” because they were known to create dangerous situations, comparing that to the government’s ability to regulate, according to some members of the court (on the losing side of this argument), registration of certain words.
So as the decision stands, any words can be registered as a trademark regardless of political statement or morality or obscenity. Justice Sotomayor goes so far as to say there will be a “coming rush to register such trademarks” and the government is imminently “powerless” say no.
How much pent-up demand there really is to register obscenities as trademarks, as a percentage of all the names and words used, is open to question. There is really no reflection of that in the Supreme Court opinion.
There is one final interesting point that entrepreneurs can take from this opinion. Justice Sonia Sotomayor, talking about the words used in the Trademark Act that this court has now struck down: words do not live in isolation from each other.
“Words are not pebbles in alien juxtaposition; they have only a communal existence; and not only does the meaning of each interpenetrate the other, but all in their aggregate take their purport from the setting in which they are used.”
Though this quote goes back to a case from the 1940s having nothing to do with trademarks, and though she was discussing how the words appearing in the trademark law currently are, the judge (perhaps inadvertently, perhaps not) creates an exceptionally strong statement for why and how the protection of trademarks -- words and symbols, used alone or in combination -- is important.