NSFW beer trademarks are coming — will the TTB stand aside?

Jack Mormon. The Real Shit. Nut Sack Double Brown Ale. Each were applications for beer-related trademarks the USPTO rejected as disparaging or scandalous. But no more. Last week the Federal Circuit held the rule barring registration of marks deemed disparaging violates the First Amendment right to free speech. Will this pave the way for protectable rights in NSFW beer marks and labeling?

The Tam Case and the coming wave of NSFW trademark applications

Simon Shiao Tam leads the Asian-American rock band The Slants. He and his bandmates chose the name to take back an offensive term as their own. But when Tam applied to trademark the name, he ran into a USPTO roadblock that’s well known in any industry —like brewing — that prizes edgy names. Section 2(a) of the Lanham Act bars registration of any mark which is an “immoral, deceptive or scandalous matter” or “which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute….” 15 U.S.C. § 1052(a). The trademark examiner rejected Tam’s “The Slants” application as disparaging to people of Asian descent. Tam’s own ethnicity and motivation in choosing the name didn’t matter.

After losing before the Trademark Trial and Appeal Board and a panel of the Federal Circuit, Tam had his case re-heard by the full Federal Circuit, which reversed the rejection and struck down section 2(a)’s disparagement ban as unconstitutional. The court rejected the government’s arguments that it had a legitimate interest in disassociating itself from speech it found offensive and that one could still use a mark even if it’s not federally registered. Instead, the court found it is widely recognized that federal registration bestows “truly significant and financially valuable benefits upon markholders.” And the government denied those benefits to anyone whose trademark expressed a message deemed by the government to disparage any group.

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That, in turn, chilled free speech — denial of trademark benefits “creates a serious disincentive to adopt a mark which the government may deem offensive or disparaging.” The result, the court explained, is that “the government’s ability to impose content-based burdens on speech raises the specter that the government may effectively drive certain ideas or viewpoints from the marketplace.”

The Federal Circuit thus ruled section 2(a)’s non-disparagement clause violated the First Amendment, for “discrimination against a mark by virtue of its offensive, disparaging nature discriminates against the mark’s political or social message.” While the Tam opinion expressly did not touch section 2(a)’s prohibitions on immoral or scandalous marks, it implied those rules are similarly doomed.

Section 2(a)’s effect on free speech is beyond hypothetical in the brewing industry. While a few breweries exist with the will and money to court controversy (like Engine 15 Brewing Co., whose Nut Sack Double Brown was eventually allowed after an appeal to the TTB), there is a surprising dearth of NSFW beer marks. Breweries are adept at the double entendre — think SweetWater’s Happy Ending Imperial Stout and Funky Buddha’s Morning Wood Porter. But plainly in-your-face NSFW names and designs are few and far between. One cause must be the inability to obtain federal trademark registration and its crucial nationwide protections.

After Tam, trademark examiners will need to be thick-skinned. The USPTO is likely to face a tsunami of applications for sexual, anatomical, scatological and otherwise crude, hilarious or offensive marks. Breweries are certain to be rushing to join the party. But the USPTO isn’t the only obstacle breweries face — a mark is useless if it can’t be put on the product, and that’s up to the Tax and Trade Bureau.

Under Tam, TTB’s label content regulations may be unconstitutional

Kent Battle Martin, the TTB’s labeling specialist for over a decade, ruthlessly rejected labels like Dogfish Head Golden Shower and Lagunitas The Kronic for noncompliance with TTB rules. Battle retired in May 2015, but his legacy of carefully scrutinizing applications for Certificates of Label Approval (COLAs) is sure to live on.

Similar to the Lanham Act, the TTB’s COLA regulations, 27 C.F.R. § 7.29, prohibit labels containing “any statement that is disparaging of a competitor’s products” or “any statement, design, device, or representation which is obscene or indecent.” Labels are also banned if they contain any name, statement or design relating to the American flag or the U.S. armed forces. The TTB regularly puts the kibosh on labels under these regulations for everything from depicting a cartoon deemed an attractant to kids to a picture of a pot leaf to using a “nonaccepted term” to describe a beer. Labels are reviewed by a TTB officer with complete discretion over how the rules are applied. Like a trademark examiner, the TTB officer has the ability to prevent a brewery’s chosen mark from ever seeing the market.

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Tam doesn’t directly apply to the TTB, but the Federal Circuit’s ruling — that a government ban on expressive content with a particular message is unconstitutional if the ban deprives an applicant of a substantial benefit — could be the death knell for certain TTB prohibitions. As with a federal trademark registration, a COLA gives the recipient substantial and important rights to distribute a product bearing the approved label. And as with trademarks, the possibility of a COLA application being denied has a chilling effect on speech in that it disincentivizes adoption of names and designs the government may deem indecent or disparaging. Under Tam, the government can’t burden speech it disagrees with out of a desire to avoid giving such speech a governmental stamp of approval. If Tam were applied to TTB regulations prohibiting disparaging, obscene or indecent material, those regulations may also be found unconstitutional.

While the Tam case may end up before the U.S. Supreme Court, for now Tam is law and the USPTO must follow it. That means trademark examiners can no longer reject applications deemed disparaging. The question of whether Tam applies to section 2(a)’s bars on obscene or scandalous marks is sure to arise in the TTB soon. If a brewery has been sitting on a fantastic yet NSFW mark that will grab consumers by the [eyes] and sell tons of beer, now is the time to strike. Though it may be a battle with the TTB (at least it won’t be Kent Battle), the Tam opinion gives breweries a strong argument the TTB can no longer refuse to grant a COLA based on the expressive nature of a label’s content.

This fantastic article comes to us from Tom Dietrich, an intellectual property and business attorney in Flagstaff, Ariz. He works with breweries and other businesses in Northern Arizona and California on trademark filing and management, litigation, trade secrets protection, rights licensing and patent reviews. Tom’s favorite beer at the moment is Tower Station IPA from Mother Road Brewing Co.