The Supreme Court this morning came out with two opinions that have the potential to impact the alcohol beverage business.
In the first, Iancu v. Brunnelli, the court ruled that the Lanham Act’s prohibition on registration of “immoral or scandalous” trademarks violates the First Amendment. To be sure, the Lanham Act deals with trademarks, while Alcohol & Tobacco Tax & Trade Bureau deals with labels.
“The PTO has refused to register marks communicating “immoral” or “scandalous” views about (among other things) drug use, religion, and terrorism. But all the while, it has approved registration of marks expressing more accepted views on the same topics,” the court said.
The Government attempted to save the statute by proposing that it would apply only to “lewd, sexually explicitly or profane marks.” But the court rejected that, saying, “The statute says something markedly different . . . To cut the statute off where the Government proposes is not to interpret the statute Congress enacted, but to fashion a new one.”
To be sure, different statutes can lead to different results. But we agree with Richard Blau, who heads the bev/al practice at GrayRobinson, the Miami law firm, who said today’s decision makes it more difficult for TTB to defend a challenge when it rejects a label on the basis the label is “obscene or indent” in contradiction of the Federal Alcohol Administration Act.
“Prior efforts to balance the dictates of the FAA Act against the protections afforded by the First Amendment have not worked out well for alcohol regulators,” Blau notes.
That doesn’t mean – nor does today’s Supreme Court decision mean – that courts will apply the rationale of Brunetti to the FAA Act, Blau notes. Given the regulated nature of alcohol, it’s entirely possible courts will apply a higher level of scrutiny to challenges to TTB’s label regulation.
You can hear my interview with Blau here.
We asked the major trade associations for their view of the decision. A Beer Institute spokesman told us “the key question becomes: Is the “immoral or scandalous” criterion in the Lanham Act viewpoint-neutral or viewpoint-based? The Supreme Court says the “immoral or scandalous” bar does not survive as free speech challenge because it is a viewpoint-based standard. The Supreme Court also struck down the bar on registration of “immoral or scandalous” trademarks as substantially overbroad, because the standard reaches not only marks that offend because of their mode of expression (such as vulgarity and profanity) but also marks that offend because of the ideas they convey. “There are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all.”
The Supreme Court decision is not based on moral relativism but on the recognition that a law banning speech deemed by government officials to be “immoral” or “scandalous” can easily be exploited for illegitimate ends, the BI spokesman said, adding the decision also does not prevent Congress from adopting a more carefully focused statute that precludes the registration of marks containing vulgar terms that play no real part in the expression of ideas.