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Supreme Court Corner Q3 2017

Intellectual Property and Technology News

MATAL V. TAM
TRADEMARK Decided: June 19, 2017
HOLDING: The Lanham Act's disparagement clause violates the free speech clause of the First Amendment.

Simon Shiao Tam leads a dance-rock band and sought to trademark the band's name: The Slants. The Trademark Trial and Appeal Board (TTAB) upheld the PTO's decision not to register the mark under § 2(a), holding it disparages a substantial composite of an identifiable group of people − persons of Asian ancestry. A Federal Circuit panel affirmed, finding the PTO's decision did not abridge Tam's First Amendment right to free speech. An en banc Federal Circuit, however, held § 2(a) unconstitutional and vacated the TTAB's decision, finding, under strict scrutiny, the disparagement clause invalid as a viewpoint-based restriction on speech.

The Supreme Court unanimously affirmed, holding the Lanham Act's disparagement clause violates the First Amendment. Trademarks, it said, are private speech, not government speech; and the government cannot "abridge[e] the freedom of speech." The Court split on the basis for the decision. Without deciding which level of scrutiny to apply, Justice Samuel Alito, joined by three others, found the disparagement clause unconstitutionally vague even under relaxed scrutiny. The clause is not "narrowly drawn" to protect only invidious discrimination − it more broadly prohibits marks that disparage any person, group or institution. The First Amendment would be endangered, the opinion reasons, if government could cleanse commercial speech "of any expression likely to cause offense."

HOLDING: The Lanham Act's disparagement clause violates the free speech clause of the First Amendment.

Justice Anthony Kennedy, also joined by three others,* concurred, but reasoned the First Amendment's test for viewpoint discrimination controls. Because an applicant can register a positive trademark but not a derogatory one, the disparagement clause impermissibly "reflects the Government's disapproval of a subset of messages it finds offensive."

By striking down the disparagement clause, the Supreme Court's decision resolves the Slants dispute and may lead to reversal of the TTAB's decision to cancel the Washington Redskins trademarks, a decision upheld by the Eastern District of Virginia in Pro-Football, Inc. v. Amanda Blackhorse.** 

* Justice Neil Gorsuch took no part in the decision.
** For more on Pro-Football, Inc. v. Amanda Blackhorse, see www.dlapiper.com/supreme-court-corner-q3-2015.

OIL STATES ENERGY SERVS., LLC V. GREENE'S ENERGY GROUP, LLC
PATENT Cert. Granted
ISSUE: Whether inter partes review before the Patent Trial and Appeal Board violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury trial.

The America Invents Act created the inter partes review (IPR) process, whereby a third party may request review of any patent by the USPTO's Patent Trial and Appeal Board (PTAB). If the USPTO determines "there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged," review may be instituted, and a three-judge panel may issue a final written decision adjudicating validity of some or all of the claims. The IPR process, which does not permit a jury, is an alternative to challenging patent validity in federal courts.

ISSUE: Whether inter partes review before the Patent Trial and Appeal Board violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury trial.

In 2012, Oil States filed a patent infringement suit against Greene's Energy Group in the Eastern District of Texas; a year later, Greene's Energy Group filed an IPR petition. After the IPR was instituted, Oil States moved to amend the claims. The PTAB denied that motion. Oil States appealed to the Federal Circuit on several grounds, including that the IPR process violates Article III and the Seventh Amendment. A Federal Circuit panel summarily affirmed the PTAB's decision, and Oil States' requests for panel rehearing and rehearing en banc were denied.

The Supreme Court granted certiorari on the question of whether the IPR process is constitutional. Oil States argues the Seventh Amendment guarantees a patent owner the right to a jury trial for invalidity proceedings. Oil States also argues patent owners are entitled to an Article III forum for invalidity proceedings because patent invalidation is a cause of action that stems from the common law. Greene's Energy Group responds that Article III permits Congress to designate "public rights" for adjudication in non-Article III tribunals and because patents are a "quintessential" public right, Article III permits the PTAB to adjudicate validity. Greene's Energy Group further argues the Seventh Amendment does not bar IPRs because it guarantees a right to a jury trial "only where Article III compels Congress to assign adjudication of particular claims to federal courts, or where Congress chooses to do so." A decision is expected in this case by June 2018.