In Landmark Decision, the Supreme Court Strikes Down Key Provision of the Lanham Act that Prohibits Registration of Disparaging Trademarks
On Monday, June 19, 2017, the U.S. Supreme Court in Matal v. Tam, 582 U.S._ (2017), unanimously struck down the disparagement clause of the Lanham Act, 15 U.S.C.A. § 1052(a), on grounds that it violates the Free Speech Clause of the First Amendment. The disparagement clause – in force for over 70 years – is found in section 2(a) of the Act and prohibits the registration of trademarks that “may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” 15 U.S.C.A. § 1052(a). Justice Alito, writing for the Court, opined that the provision “offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.”
The disparagement clause has been the subject of much debate since 2014 when the Patent and Trademark Office (PTO) cited the clause in revoking six federal trademark registrations belonging to the Washington Redskins, a result which was affirmed by a district court in Virginia. The Supreme Court’s holding in Tam is no doubt music to the ears of Redskins’ owner Dan Snyder, whose appeal of the district court’s ruling is currently pending before the U.S. Court of Appeals for the Fourth Circuit. Given the Supreme Court’s invalidation of Section 2(a), a victory for the Redskins in the Fourth Circuit appears all but guaranteed.
Of course, the ruling is also a victory for the trademark applicant in Tam – the front-man of the Asian-American band THE SLANTS – whose application to trademark the band name was rejected by the PTO pursuant to section 2(a). Although the band sought to “reclaim the stereotype [of Asians having slanted eyes] and take ownership of the term,” the Trademark and Trial Appeal Board affirmed the PTO Examiner’s finding that the name “THE SLANTS” is disparaging to people of Asian descent.
In its petition, the Government argued that trademarks are “government speech” and thus outside the purview of the Free Speech Clause of the First Amendment. The Court disagreed, noting that the Government “does not dream up these marks, and it does not edit marks submitted for registration.” Justice Alito mused that the Government is hardly advancing a particular message or viewpoint in registering marks and, if it is, “the federal government is babbling prodigiously and incoherently.” The PTO has made clear that registration of a mark does not constitute approval of it. And unlike, for example, advertisements promoting beef products, license plates, or landmarks in public parks, trademarks have never been traditionally used to convey a government message.
The Court also rejected the argument that the Government is permitted to regulate speech in connection with offering benefits under government programs. The Government argued that it is not required to subsidize activities it does not wish to promote. But the Court drew a key distinction between cases in which the Government actually pays cash subsidies or their equivalent to promote certain activities (e.g., cash grants to artists or funds to private parties for family planning services) and the federal registration of trademarks, in which applicants and trademark holders actually pay the Government fees.
Finally, the Court declined to adopt a new doctrine providing for a limited public forum for private speech, with content-, or speaker-based restrictions. The Court explained that the disparagement clause does not provide a limited public forum for private speech; rather, it “discriminates on the bases of ‘viewpoint’” by denying federal registration to viewpoints deemed offensive by certain groups.
Accordingly, the Supreme Court held that the disparagement clause of the Lanham Act regulates private speech and fails to meet even the relaxed scrutiny of Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (1980) because the provision is “not 'narrowly drawn' to drive out trademarks that support invidious discrimination.”
The result is that the PTO can no longer deny the registration of any mark that meets the Lanham Act’s other viewpoint-neutral requirements. The ruling, of course, is likely to result in a marked increase in trademark applications for offensive or hateful marks that the PTO now has no choice but to register. Nonetheless, free speech advocates claim that the result is a major win for freedom of expression. The decision certainly confirms that the Court is loath to carve out exceptions to free speech protections. Indeed, as Justice Kennedy wrote in a concurrence, “To permit viewpoint discrimination in this context is to permit government censorship."
U.S. Department of Labor Withdraws Independent Contractor and Joint Employment Guidance
In a positive development for employers, the United States Department of Labor (DOL) announced on Wednesday, June 7, 2017, that it is withdrawing two Interpretations issued during the Obama Administration.
Interpretation No. 2015-1 addressed the classification of independent contractors under the Fair Labor Standards Act (FLSA), and took the expansive view that most workers qualify as employees and are thus entitled to minimum wages and overtime pay. Interpretation No. 2016-01 expanded the definition of "joint employment" under the FLSA and the Migrant and Seasonal Agriculture Protection Act (MSPA), allowing more workers to claim they were due wages by more than one company.
While these Interpretations were viewed by the Obama Administration as an effort to crack down on employee misclassification and tighten standards for determining joint employment, they created more legal risks for companies by calling into question longstanding work arrangements. The Interpretations were not law, but they served as a guide for the DOL's Wage & Hour Division in its enforcement efforts. Withdrawal of the Interpretations signals that the Trump Administration DOL will be less aggressive in its enforcement efforts in these two areas; however, state laws may differ from federal laws with regard to independent contractor and joint employment status.
For example, Nevada and Arizona have adopted laws that allow for greater certainty for businesses.
In 2015, Nevada enacted NRS 608.0155, which creates a presumption that a person is an independent contractor if he or she (1) possesses or has applied for an employer identification number or social security number, or has filed a tax return for a business or earnings from self-employment with the IRS in the previous year, (2) is required by the contract with the principal to hold any necessary state business registration, licenses, insurance or bonding, and (3) satisfies three or more of the following criteria:
In 2016, Arizona enacted A.R.S. § 23-1601, which creates a rebuttable presumption that an independent contractor relationship exists if the contractor signs a declaration acknowledging that (1) the contractor operates its own business, (2) the contractor is not an employee of the employing entity, (3) the employing entity does not restrict the contractor's ability to perform services for other parties and expects that the contractor will provide services for other parties, (4) the contractor will be paid based on the work to be performed, not on a salary or hourly basis, and (5) the contractor is not covered by the employing entity's health or workers compensation insurance.
California law has principally relied on a multi-factor common law test to determine contractor vs. employee status. However, the California Supreme Court is currently considering an expansive definition of the word "employ." In Dynamex Operations West v. Superior Court, 179 Cal. Rptr. 3d 69, the Second Appellate District rejected the traditional common law test based on whether the employer has the right to control the manner and means of accomplishing the result desired, in favor of defining the word "employ" to mean "to engage, suffer, or permit to work." If upheld, Dynamex will result in the reclassification of many independent service providers as employees, entitling them to California's wage and hour protections.
In light of these developments, employers should seek legal counsel when considering whether to engage someone as a contractor or employee, and to evaluate existing contractor arrangements to determine whether they satisfy these legal tests.
14 Payne & Fears LLP Attorneys Recognized in Southern California Super Lawyers and Rising Stars Lists
Irvine, Calif. – Payne & Fears LLP is pleased to announce that nine partners, Jeffrey K. Brown, Daniel F. Fears, Daniel M. Livingston, James R. Moss, Jr., Benjamin A. Nix, James L. Payne, Eric C. Sohlgren, Scott S. Thomas, and Thomas L. Vincent, have been selected for inclusion in the 2017 Southern California Super Lawyers. Among the nine, Daniel F. Fears has been named in the Top 50: 2017 Orange County Super Lawyers.
In addition, Andrew K. Haeffele, Rhianna S. Hughes, Robert T. Matsuishi, Alejandro G. Ruiz, and Scott O. Luskin were named to the Southern California Rising Stars 2017 list.
Super Lawyers and Southern California Rising Stars conduct a thorough multi-phase process that includes nominations, independent research evaluations of candidates, and peer reviews by practice area.
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