domain name may be noncommercial speech; TM rules don't apply

The Supreme Court has endorsed copyright exceptionalism—ordinary First Amendment doctrines just don’t apply, because copyright has to be constitutional (regardless how far it’s strayed from what the Framers understood to be “copyright”).  Courts are inclined to do this with trademark too, even though, as the recent Stolen Valor Act case made clear, the “deception” rationale for trademark protection fits neatly into broader First Amendment narratives.  This case represents a particularly blatant example of trademark exceptionalism.  I’m not saying it’s wrongly decided; I just really don’t like special pleading in the First Amendment context. 

Gibson v. Texas Dept. of Ins.-Div. of Workers' Compensation, --- F.3d ----, 2012 WL 5330890 (5^th Cir.)

The TDI sent a C&D to Gibson, a plaintiff’s attorney who does workers’ comp claims and uses the domain name texasworkerscomplaw.com, stating that his domain name’s use of the words “Texas” and “Workers’ Comp” violated the Texas Labor Code.  He sued alleging that the relevant statutory provision violated the First, Fifth, and Fourteenth Amendments, and the district court dismissed for failure to state a claim.  The court of appeals affirmed in part and reversed in part.

The relevant provision states that

a) Except as authorized by law, a person, in connection with any impersonation, advertisement, solicitation, business name, business activity, document, product, or service made or offered by the person regarding workers' compensation coverage or benefits, may not knowingly use or cause to be used:

(1) the words “Texas Department of Insurance,” “Department of Insurance,” “Texas Workers' Compensation,” or “division of workers' compensation”;

(2) any term using both “Texas” and “Workers' Compensation” or any term using both “Texas” and “Workers' Comp”;

(3) the initials “T.D.I.”; or

(4) any combination or variation of the words or initials, or any term deceptively similar to the words or initials, described by Subdivisions (1)-(3).

The statute also bars use of these terms along with the state seal, images of the state, or official logos.

Restrictions on commercial speech have to pass Central Hudson scrutiny.  Gibson argued that this was a content-based regulation deserving higher scrutiny, but the court disagreed: the law was viewpoint-neutral, and it didn’t restrict all speech relating to workers’ compensation.  He argued that his domain name was inextricably intertwined with his website’s content, which includes his views on the need for legal reform.  (Is a domain name ever inextricably intertwined with the content of the site?  No law of humanity or nature seems to require that.)  But that was speech outside the reach of the regulation, and it didn’t make this regulation one that discriminated against content.  Gibson also argued that the law was a prior restraint, but the Supreme Court has held that laws aimed at prohibiting deceptive commercial speech are unlikely to implicate the prohibition on prior restraints. Friedman v. Rogers, 440 U.S. 1 (1979) (not incidentally, a case about a Texas regulation of the use of certain terms by businesses).  Anyway, this wasn’t a prior restraint; it provided a penalty for past speech.

So did the statute regulate commercial speech?  The court of appeals agreed that the domain name and associated blog might do more than propose a commercial transaction.  But the domain name could still be commercial speech if it’s an ad, referring to a specific product, with an economic motivation.  “A domain name, which in itself could qualify as ordinary communicative speech, might qualify as commercial speech if the website itself is used almost exclusively for commercial purposes.”  The court of appeals designed to resolve the issue, because even if the domain name was commercial speech, Gibson stated a claim; on remand, Gibson could submit evidence that his domain name was noncommercial speech. 

Now, the key Central Hudson moment: commercial speech that is false, deceptive, or misleading may simply be banned.  But is that determination to be made wholesale or retail?  Well, inherently misleading speech can be banned outright, while speech that is only potentially misleading is different.  To be completely unprotected, the commercial speech must either be inherently misleading or the record must show that a particular “form or method” of advertising has in fact been deceptive.  Pub. Citizen, Inc. v. La. Attorney Disciplinary Bd., 632 F.3d 212, 218 (5th Cir. 2011) (citing In re R.M.J., 455 U.S. 191 (1982)) (Again leaving the wholesale/retail line unclear.)

Texas argued that the domain name was inherently misleading, citing trademark cases refusing to apply First Amendment protection for domain names that used marks “to misidentify the source of a product.”  But these cases were “unique to the field of trademark infringement, and [did] not necessarily extend to a case such as this one, where Texas is prohibiting Gibson from using words that are otherwise in the public domain.”  The court continued:

Cases involving trademark infringement involve inherently deceptive speech because they contain a significant risk that an infringing party will freeload on the goodwill that has been created by the original trademark. No such risk is present here. Texas has made no showing that its own talents and energy contributed to the creation of any goodwill in the name “texasworkerscomplaw.com.” Instead the regulation at issue is forward-thinking; intended to prohibit confusion for individuals seeking information from the government agency. It is not retrospective in the same way as most trademark litigation, which is generally intended to preserve the reputation that has been built upon a trade name.

Okay, set aside the equation of free riding with harm.  The only reason there’s “inherently” a risk of free riding from infringement is because of the risk of deception about source, which is the exact same risk at issue here.  The question is not whether Texas has “goodwill” in the conventional sense in the particular domain name chosen by Gibson, but rather whether Gibson’s domain name creates a significant risk that people will believe it is official.  Even if I assume, contrary to what most Texans are likely to tell me, that Texas lacks a preexisting brand identity/reputation, the aim of preventing confusion is trademark’s aim.  We even protect inherently distinctive marks without secondary meaning (reputation); the trademark question is, in exactly these words, whether people will be confused into thinking that the domain name indicates official/authorized source, whatever that source is.  Here, that source is (allegedly) the state of Texas. 

(NB: Let me emphasize that I think trademark has lost its anchor in harm, and that materiality and harm should also be required; under Central Hudson, perhaps they should be required as a matter of constitutional law.  Thus, I’m not saying that Gibson should lose.  But pretending that trademark has some completely different theory is intellectually dishonest and helps insulate trademark from proper scrutiny.  And this case further cements my conviction that “goodwill” is a magic word that prevents thought about what is actually going on.)

The court also said that most of the trademark cases cited (e.g., Planned Parenthood v. Bucci), domain names were (ed. note: wrongly) held not to be protected speech because they weren’t expressive, not because they were misleading.  But Gibson’s domain name was expressive because it did more than simply mimic the state agency’s website or identify a source of workers’ comp law.  Instead, it was intended to direct visitors to a forum for discussing such laws and potential reforms, and to convey “the message of Gibson's website as a whole.”

Anyway, in non-trademark cases, “inherently deceptive speech has been found in essentially one other area: attorney solicitation of prospective clients.”  (Though Gibson’s blog might be a solicitation, the rule here wasn’t directly related to his legal practice.  The alleged harm was confusion with a government agency, not harm to a solicited client.)  The risk of harm found in attorney solicitation cases was not present here.  There was no history from which a court could conclude that the speech covered by the statute, and domain names like this one, were inherently deceptive.  And there were no factual findings to support a claim of actual deceptiveness.  Thus, some First Amendment protection attached.

Even speech that isn’t inherently misleading can be regulated if the regulation directly advances a substantial state interest, and is no more extensive than necessary to serve that interest.  The state’s interest was to prevent misuse of state names and symbols, but Texas conceded that it didn’t yet have the record to satisfy its burden under this branch of Central Hudson.  Though history, consensus, and common sense can be enough, the district court here still erred by relying on the legislative record without further briefing.  The case would be remanded on the as-applied challenge. Gibson also alleged facial unconstitutionality, which could be addressed on remand as well.

However, Gibson’s Fifth and Fourteenth Amendment challenges were unmeritorious.  As for the equal protection claim, there was no claim of discrimination against members of any protected class or of uneven application as to similarly situated individuals.  Instead, he argued merely that the law subjected him to controls not placed on similarly situated individuals or businesses.  “The mere fact that a law impacts different individuals in different ways does not subject it to constitutional challenge unless Gibson can show that Texas's law is so extreme as to lack a rational basis.”  And “[g]iven the complex nature of workers' compensation law and the risks that may result from the dissemination of misleading information in this area, Texas's law bears a rational relationship to a legitimate state interest.”

Gibson’s due process claim was that he didn’t get a hearing or a possible appeal, but the regulation allowed him to provide a written response to the C&D, which he didn’t do.  Procedural due process is flexible; he was entitled to notice and an opportunity for a hearing before being assessed any penalties, and this was enough to guarantee him due process.

Gibson’s takings challenge was unripe.

Judge Reavley concurred only in the judgment to reverse.  He didn’t read the statute as prohibiting deceptive commercial speech (though I’m not clear what his alternative reading was), nor did he see the domain name here as misleading.