Is Peloton Spinning Its Wheels? Peloton Petitions to Cancel “SPINNING” Registrations
The U.S. Supreme Court has granted the U.S. government’s petition for a writ of certiorari in a case challenging provision of the federal trademark statute. In In re Brunetti, 877 F.3d 1330 (Fed. Cir. 2017), the U.S. Court of Appeals for the Federal Circuit found the portion of the Lanham Act that proscribes registration of trademarks comprised of “immoral and scandalous matter” unconstitutional. The Supreme Court will hear arguments in April.
The case began when Erik Brunetti filed an application seeking to register the mark FUCT for use in connection with various types of clothing. The examining attorney refused registration on the grounds that the term sought to be registered was immoral or scandalous and thus was barred from registration under Section 2(a) of the Lanham Act. Mr. Brunetti appealed, and the Trademark Trial and Appeal Board (the “TTAB”) affirmed the refusal. Mr. Brunetti appealed to the U.S. Court of Appeals for the Federal Circuit, which found that though the term was immoral or scandalous, the statute’s proscription against registration of such matter is unconstitutional because it violates the First Amendment of the U.S. Constitution. The Federal Circuit Court’s decision in Brunetti issued shortly after the U.S. Supreme Court decided Matal v. Tam. Matal v. Tam involved a challenge to a different clause of Section 2(a) of the Lanham Act, the portion proscribing registration of disparaging marks.
The U.S. Supreme Court decided Matal v. Tam in 2017. The Court unanimously agreed that the challenged portion of Section 2(a) of the Lanham Act, the portion proscribing registration of disparaging marks, violated the First Amendment of the U.S. Constitution. But no majority could agree on why. Justice Alito’s opinion addressed each argument raised by the government in turn. By contrast, Justice Kennedy’s opinion cut to the chase and found that the proscription constituted viewpoint discrimination, which could not survive even a lower level of scrutiny (leaving aside whether a trademark constituted commercial or expressive speech and therefore what level of scrutiny should apply). By agreeing to hear the Brunetti case, the Court may offer clearer guidance on what nature of speech trademarks are, what level of scrutiny applies to restrictions on registration of trademarks, and whether immoral or scandalous terms are perceived as ‘content neutral’ restrictions that do not discriminate on the basis of viewpoint.
However the U.S. Supreme Court decides Brunetti, the case will be focused on registrability of the mark. While this may have some implications for enforceability of trademark rights, it does not necessarily get to the heart of usability of a mark. For this, the experience of other mark owners may be of interest. Fortunately for this blog post, a recent news story highlights issues that may be faced by owners of marks that contain ‘immoral or scandalous matter.’ Conveniently, the mark at issue is a variation of the same term at issue in Mr. Brunetti’s application.
Around the same time the U.S. Supreme Court granted certiorari in Brunetti, a small restaurant owner was struggling with issues related to its own arguably immoral and scandalous name. The restaurant had entered into a lease with the city of Keene, New Hampshire, to operate its restaurant out of City Hall beginning in spring of 2019. The restaurant owner hung a temporary sign in the window of the anticipated location, and apparently had been selling shirts under its mark for several months. Here is a picture of the mark at issue as it appears on a hangtag specimen submitted to the PTO for registration of the mark for use with apparel:
Unfortunately, as reported by the local public radio station, the city had concerns about the mark. The lease required the restaurant to obtain permission from the city before hanging any signs. The restaurant had not done that (and later explained on its website that they believe such requirement does not apply to temporary signs). The city asked the restaurant to take down the sign. That left the restaurant in limbo for a few weeks wondering whether the city was going to approve or object to the name, after the restaurant had already invested time, money, and resources in promoting the restaurant under its selected mark. Fortunately for the restaurant, the city ultimately approved the signage and allowed the restaurant to proceed as desired. The restaurant is scheduled to open in March. Meanwhile, the restaurant’s federal trademark applications remain pending and the decision in Brunetti may affect whether they proceed to registration.
This anecdote is a useful caution for brand owners. Obtaining registration is just one step in the branding process. While a registration is certainly valuable, it is still necessary to use the mark to preserve rights in the mark. If the selected mark is offensive to some, the mark owner may encounter more impediments to use and may require more resources to overcome and survive those obstacles.