Fundamental rights: Trademark office or moral guardian?

Recent court decisions, such as Iancu v Brunetti in June 2019, which deal with the balance between free speech and IP law, highlight the challenge of striking the right balance between IP and fundamental rights.

The US Supreme Court delivered its highly anticipated verdict in a case that forced the judges to grapple with the implications of trying to balance morality, fundamental rights, and IP in one statute.

Iancu v Brunetti, a dispute over whether streetwear brand owner Erik Brunetti’s ‘Fuct’ mark was impermissible as “scandalous”, revived a fierce debate in the country, and in the court itself. At the heart of the case was what role public institutions, in this case the US Patent and Trademark Office (USPTO), should have in regulating and protecting morality.

The case posed difficult questions of what extent fundamental rights, such as that to free speech, should intrude into the realm of IP. Like Matal v Tam before it, the case led to the Supreme Court ruling that the USPTO’s obligation to uphold morality ultimately infringed the right to free speech under the First Amendment of the US Constitution.

The right to free speech is commonly invoked when challenging IP law and IP rights. As Andreas Lubberger, partner at Lubberger Lehment in Berlin, explains, this is often under the umbrella of the parody defence, which under EU trademark law constitutes fair use of another’s registered mark.

“It’s difficult to create a law that focuses on language, especially since how we use language is constantly evolving." - Simon Tam, The Slants

One can claim freedom of expression or freedom of the arts to justify why use of a sign is a “quotation” rather than commercial infringement of a trademark, Lubberger explains.

The intersection of IP rights and freedom of speech can, however, become a particularly thorny issue. Jeanne Fromer, professor of law at New York University (NYU), co-authored an April 2019 paper, “Immoral or Scandalous Marks: An Empirical Analysis” in the NYU Journal of Intellectual Property & Entertainment Law with fellow NYU professor Barton Beebe aimed at providing an empirical analysis of how the US’s ban on scandalous and disparaging marks was implemented.

“Centrally at issue is the paradox between saying that there’s a right to free speech and being able to register certain trademarks,” Fromer argues.

It is little surprise, perhaps, that a significant clash arose between trademark law and the right to free speech. IP rights are fundamentally to do with exclusivity and protecting the rights to determine how IP can and can’t be used. As Fromer points out, this often comes down to “stopping other people speaking”.

“By propertising rights, the law is diminishing the rights of others to speak,” she says. When these same rights to free speech are invoked in support of the right to register certain marks, it presents significant legal challenges for courts, rights owners, and attorneys.

Consistently inconsistent

When the Supreme Court delivered Iancu v Brunetti, overturning the ban on “disparaging marks” and ruling it as unconstitutional, this did not come as a surprise. This is arguably because the court would have found it difficult to break from its precedent in 2017’s Matal v Tam ruling, which threw up many of the same questions regarding free speech.

In that decision, the Supreme Court sided with Asian-American band The Slants, who had been denied registration of their band name as a trademark on the grounds that it was offensive to an ethnic minority.

Fromer and Beebe’s research focused on providing hard, empirical data which could illustrate how the ban had been implemented in practice. This was not just an abstract or academic endeavour: the NYU professors based their paper on an amicus brief they had submitted to the Supreme Court in Iancu v Brunetti.

“We wanted to offer the court some data,” Fromer explains to WIPR. As critics of the ban, even they were surprised by the findings. “We suspected we’d find inconsistencies, but the degree of inconsistency astounded us,” she says.

This point was echoed by Simon Tam, co-founder of The Slants, the band which ultimately succeeded in having the disparaging marks element of the statute overturned in 2017.

Speaking to WIPR, Tam notes that “hundreds of trademarks have been registered for the term ‘slant’.”

“It was never denied for being ‘disparaging’ until I applied,” Tam says.

Inconsistency of this sort, Fromer and Beebe found, was the prevailing feature of how the statute was implemented. Fromer points to the phenomenon they encountered of the USPTO ruling that a mark was immoral, but also confusingly similar to an already registered mark.

If some marks were being permitted and confusingly similar ones were being rejected as immoral, then this raises questions as to how such a standard could possibly be applied effectively. There was, as Fromer says, “inconsistency all the way down”.

The Supreme Court ultimately agreed. The majority opinion, delivered by Associate Justice Elena Kagan, cited Beebe and Fromer’s amicus brief, when commenting on how the text of the statute led to viewpoint-based discrimination against certain ideas.

As Kagan noted, the USPTO had refused to register marks relating to drug use, religion, and terrorism on the grounds that they were “scandalous” or “immoral”. Yet the office had “approved registration of marks expressing more accepted views on the same topics”.

If the text of the statute was viewpoint-dependent in order to determine what exactly was scandalous, offensive, or immoral, then it was perhaps inevitable that it was not implemented with a great degree of consistency.

What is offensive?

Does this invalidate altogether the idea of a moral check on what can and can’t be registered?

Regardless of the wording, there will inevitably be challenges when attempting to codify in law what is and isn’t offensive. “It’s difficult to create a law that focuses on language, especially since how we use language is constantly evolving,” Tam says.

For her part, Fromer believes the data she and Beebe compiled “implied very strongly” that it was difficult to salvage any kind of workable morals clause in trademark law. She points to the problems caused by Erik Brunetti’s ‘Fuct’ mark, and on the other hand the plethora of other variations of the word ‘fuck’ which did pass registration.

“If you can’t be consistent about that word,” she suggests, “it does not inspire confidence for dealing with more potent and complex issues.”

Part of the problem, she explains, was that the guidance from the USPTO on this point was limited to a fairly high-level, abstract sort.

"This is an area of law where morally rooted considerations need to be carefully balanced against the legitimate right of traders to freedom of expression." - Imogen Fowler, Hogan Lovells

Implementation of the ban came down to individual examiners spotting something which could potentially be classed as scandalous or disparaging. It is no surprise then, that the results were wildly inconsistent. After all, Fromer explains, trademark examiners are principally trained to deal with issues such as a likelihood of confusion, and whether there has been genuine commercial use of a particular sign.

The ban on scandalous and disparaging marks did not feature greatly in the day-to-day work of a USPTO examiner.

Fromer points out that from 2003 to 2015, there were not many more than 100 refusals per annum on the grounds of morality or scandal. The intrusion of the concepts of morality and offence are, she says bluntly, something of a “distraction” in trademark law.

The European angle

As rights owners and IP attorneys across the US were digesting the Supreme Court’s Iancu ruling, an advocate general (AG) at the Court of Justice of the EU (CJEU) issued an influential opinion in a case that could be seen as the European mirror image of the debate over scandalous marks.

At the beginning of July, AG Michal Bobek told the CJEU that it should overturn a decision of the EU General Court, which in January 2018 refused registration of a German film production company’s mark ‘Fack Ju Göhte’ (an intentional misspelling of Fuck you, Goethe).

The mark covered the name of a comedy film produced by the applicant, Constantin Film Produktion, but the EU Intellectual Property Office (EUIPO) had found that the mark breached accepted principles of morality.

The General Court agreed with the EUIPO, which had argued that it had a role in protecting public morality.

In his opinion, Bobek said that while the EUIPO did have such a function, it was “certainly not the key or predominant role of the EUIPO and EU trademark law”.

The AG also faulted the EUIPO for failing to explain why its decision in this case departed from a previous one in which it granted registration of the ‘Die Wanderhure’ (wandering prostitute) mark.

Laura Alonso, partner at Hoyng Rokh Monegier in Madrid, says the AG’s opinion was likely to “likely to put some pressure on the EUIPO moving forward to assess the offensive character of a trademark more carefully”.

Imogen Fowler, partner at Hogan Lovells in Alicante, adds that she regarded the AG’s opinion as an important opportunity to reverse what she regards as an “overly moralistic” interpretation of EU trademark law.

According to Fowler, the AG’s opinion was in line with the US Supreme Court’s rulings in Matal and Iancu.

“It constitutes an innovation in the EU context, where the position generally taken has been that the act of refusing a trademark registration cannot be regarded as a breach of freedom of expression, given that such a denial would not prevent the trademark being used,” she says.

As ever, when it comes to competing rights in the legal sphere, the key issue seems to be one of balance.

“In my view this is an area of law where morally rooted considerations need to be carefully balanced against the legitimate right of traders to freedom of expression,” Fowler says, arguing that the AG had successfully achieved this balance in his opinion.

Alonso notes that the AG’s opinion may have further implications for the balancing of rights in future IP decisions.

She points to the AG’s comment that “the protection of freedom of expression is not the primary goal of trademark protection” as one which could have a significant impact in case law, particularly with respect to parody defences.

Culture shock

Regardless of the complex issues involved, in these cases there were tangible, legally defined rights involved upon which a court could rule. Clashes between IP rights and fundamental rights can, at times, be far more nebulous. They may relate not to individual rights such as freedom of speech or expression, but to the sense that brands are devaluing the identities of entire communities.

In June 2019, for example, Kim Kardashian came under fire for her attempt to register her shapewear brand under the ‘Kimono Intimates’ name. This caused a considerable degree of upset and controversy, particularly in Japan and on social media.

While the name was intended to be a pun on Kardashian’s name, it was condemned as being disrespectful of Japanese cultural traditions. In such cases, where accusations of “cultural appropriation” are levelled, the real battleground is not in the courts, but rather in the minds of the public.

According to Rosie Burbidge, partner at Gunnercooke in London, it comes down to concerns over a brand’s image.

“When brand owners behave in culturally insensitive ways, it creates an ill-feeling which can do significant damage to a brand,” she says.

Even when such disputes are lacking a formal trademark or IP dimension, it becomes what Burbidge calls an “IP issue in reverse”. This is, she explains, because the brands and goodwill that companies invest significant resources in building can suffer as a result of poor decisions in this respect.

“While there might not necessarily be an IP dimension to it, there’s clearly a public relations sensitivity which has an impact on the brand,” Burbidge says.

Kardashian’s is not the only fashion brand to run into trouble on this front. In 2016, the Navajo Nation, the largest Native American community in the US, settled a trademark suit it had brought against retailer Urban Outfitters.

The fashion brand was criticised for its use of traditional Navajo patterns in its commercial products, including clothes and jewellery. Quite apart from the offence caused, the Navajo Nation claimed that it had formal ownership over the designs.

At the time, Russell Begaye, former president of the Navajo Nation, said: “We expect that any company considering the use of the Navajo name, or our designs or motifs, will ask us for our permission.”

In this sense, one could look at the clash as a fairly standard dispute over trademark ownership, yet it is clearly tied up with historical and cultural concerns in a way that very few IP disputes are.

This is true even if people don’t think about such disputes through the prism of IP.

“Identity has become such an important part of political discussion,” Burbidge says. “If a brand is seen to be disrespectful or to be claiming ownership over a community or group’s identity, they run the risk of admonishment from a public which is arguably less forgiving than ever before in this respect.”

While brand owners may be confident of their rights with respect to pure IP law, when brands are dragged into the court of public opinion, they are on much shakier ground. IP’s fundamental principles have largely remained constant, and attorneys can point to a rich lore of case law which helps to predict which way a dispute will go in court.

But when brands are forced to answer questions that go beyond IP rights, the results can be much more volatile. Prevailing opinion and cultural norms are fluid and constantly developing, and recent history, such as the example of Kim Kardashian, shows how one grave misstep in this respect can do great harm to a brand.

While Iancu v Brunetti was more straightforward, in the sense that there was a concrete legal question to be answered, the case highlights how previously accepted standards for balancing IP protection with morality can quickly become obsolete.