In 2014, the U.S. Patent and Trademark Office canceled the trademark for the NFL’s Washington Redskins, deeming the term offensive and therefore not eligible for trademark. In July 2015, a federal court sided with the USPTO and ordered the agency to cancel the team’s trademark. But a ruling this week by an appeals court in Washington, D.C., adds a new wrinkle to this complicated and controversial issue.

At issue in this second case is Oregon-based rock band The Slants. The band members — all of whom are Asian-American and know that the term can be used pejoratively — chose the name as a multilayered play on race, culture, and music.

The USPTO had rejected the band’s efforts to trademark their name under the Lanham Act’s prohibition on registering “immoral, deceptive, or scandalous” marks. Rejecting or canceling a trademark application doesn’t mean the name can’t be used. It just means there are no protections against someone else using the same name for their products.

The Redskins case is not alone in being canceled or rejected. The USPTO has blocked dozens of trademarks deemed offensive to just about every imaginable ethnic, religious, and racial group.

But yesterday, a majority of the Appeals Court for the Federal Circuit ruled [PDF] in the Slants case that not only was the USPTO wrong in rejecting the band’s trademark, but that the portion of the law preventing the registration of offensive marks is unconstitutional.

“Many of the marks rejected as disparaging convey hurtful speech that harms members of oft-stigmatized communities,” writes the nine-judge majority. “But the First Amendment protects even hurtful speech.”

The court held that the government’s refusal to register disparaging trademarks is a curtailing of free commercial expression.

“The government regulation at issue amounts to viewpoint discrimination,” reads the ruling.

Previous courts had held that, because rejected trademarks could still be used in commerce that a rejection from the USPTO was not a restriction on free speech.

But the majority in this case points to precedent which found that content-restricting laws are “presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests.”

Additionally, the appeals panel notes that viewpoint-based regulations, those “targeting the substance of the viewpoint expressed, are even more suspect.”

Because the Lanham Act specifically prohibits the registration of disparaging marks, the court says there is no reasonable way to argue that the law is not a content-based restriction or that it is content-neutral.

“And the test for disparagement — whether a substantial composite of the referenced group would find the mark disparaging — makes clear that it is the nature of the message conveyed by the speech which is being regulated,” writes the court.

By deeming something offensive or disparaging — and thus unable to be trademarked — the court contends that the government is expressing its disapproval.

“When the government discriminates against speech because it disapproves of the message conveyed by the speech, it discriminates on the basis of viewpoint,” reads the opinion. “The legal significance of viewpoint discrimination is the same whether the government disapproves of the message or claims that some part of the populace will disapprove of the message. This point is recognized in the Supreme Court’s long-standing condemnation of government impositions on speech based on adverse reactions among the public.”

The USPTO had argued that the Lanham Act is content-neutral, pointing out that an offensive trademark application is denied regardless of the applicant’s intentions. The members of The Slants have no intention to offend or disparage Asians, but some people still find the name just as hurtful as if it had been used by some deliberately seeking to malign a large segment of the population.

This issue is particularly relevant to the Redskins dispute. The team’s ownership and other supporters of the name say there is no malicious intent in its use, but opponents counter that it doesn’t matter whether the team intends to offend by using the name; it’s a hurtful word with a long history of being deployed pejoratively.

But the court’s majority concluded that the USPTO was not being viewpoint-neutral in its decisions, saying that the agency “looks at what message the referenced group takes from the applicant’s mark in the context of the applicant’s use, and it denies registration only if the message received is a negative one.”

The court gives the example of “Dykes On Bikes,” a trademark that was ultimately approved after the applicant showed that even though “dyke” can be used in an offensive way, it has been used frequently enough in a positive manner among the population of people who would most likely be offended by its use.

Likewise, the USPTO approved the trademark for “Squaw Valley” for use on some items, but not on others. The court contends that if the agency were truly neutral, it would approved or rejected all uses of the term “squaw” without regard to the registrant’s intention or end-use.

The government had also tried to argue that the Lanham Act only prohibits commercial speech, but the court held that trademarks “often have an expressive aspect over and above their commercial-speech aspect.”

It points to the contention by Slants frontman Simon Tam that he explicitly selected the name to create a dialogue on controversial political and social issues.

“With his band name, Mr. Tam makes a statement about racial and ethnic identity,” writes the court. “He seeks to shift the meaning of, and thereby reclaim, an emotionally charged word. He advocates for social change and challenges perceptions of people of Asian descent. His band name pushes people. It offends. Despite this — indeed, because of it — Mr. Tam’s band name is expressive speech.”

In dissenting from the majority, judge Alan Lourie points to the fact that this provision of the Lanham Act has been repeatedly upheld as constitutional since the law’s inception.

“[O]ne wonders why a statute that dates back nearly seventy years — one that has been continuously applied — is suddenly unconstitutional as violating the First Amendment,” writes Lourie. “Is there no such thing as settled law?”

In fact, notes the dissent, even before the Lanham Act — going back to the Trademark Act of 1905 — the government has had the authority to reject offensive or scandalous marks.

By declaring the law unconstitutional, argues Lourie, “we interfere with the long-standing Congressional policy of delegating authority to the USPTO to filter out certain undesirable marks from the federal trademark registration system. We should not further the degradation of civil discourse by overturning our precedent that holds that the First Amendment is not implicated by [the law]’s prohibition against disparaging trademarks.”

Yesterday’s decision comes as the Redskins are finalizing their own appellate brief, which is due to be filed in a federal appeals court in Richmond, VA, by Jan. 14. That court may come to a different conclusion than the one reached by the Federal Circuit.

As we noted earlier this year, given the high profile and sensitive nature of the Redskins case, it seemed headed to ultimately go before the U.S. Supreme Court. That looks even more likely now that this week’s ruling has created new precedent.

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