WEBVTT - Can 'Trump Too Small' Be Trademarked? 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:10.119 --> 0:00:13.000 He's always calling me little Marco an Alam the guy. 0:00:13.039 --> 0:00:14.960 He's taller than me. He's like six to two, which 0:00:14.960 --> 0:00:17.200 is why I don't understand why his hands are the 0:00:17.239 --> 0:00:18.680 size of someone who's five to two. 0:00:18.920 --> 0:00:19.920 Have you seen his hands? 0:00:20.600 --> 0:00:22.480 They're like this, hit my hands. 0:00:22.480 --> 0:00:23.400 I've never heard of this one. 0:00:23.680 --> 0:00:24.640 Look at those hands? 0:00:24.680 --> 0:00:25.799 Are they small hands? 0:00:26.320 --> 0:00:29.560 You may remember seven years ago when Donald Trump and 0:00:29.600 --> 0:00:33.840 Senator Marco Rubio were engaged in locker room talk over 0:00:33.880 --> 0:00:36.960 the size of Trump's hands. Now it's part of the 0:00:37.000 --> 0:00:40.800 case before the Supreme Court. Attorney Steve Elster says he 0:00:40.840 --> 0:00:44.080 has a free speech right to trademark the phrase trump 0:00:44.159 --> 0:00:48.120 too small to use on T shirts. The US Patent 0:00:48.159 --> 0:00:52.000 and Trademark Office disagreed, and it appears that the Supreme 0:00:52.040 --> 0:00:56.520 Court also disagrees. At oral arguments on Wednesday, Justice Is 0:00:56.560 --> 0:01:01.480 across the ideological divide suggested that nying Elster a trademark 0:01:01.520 --> 0:01:04.559 for the phrase does not violate his free speech rights 0:01:04.800 --> 0:01:08.960 for a host of reasons. Justice Katanji Brown Jackson discussed 0:01:09.000 --> 0:01:10.760 the point of trademark law. 0:01:10.920 --> 0:01:14.920 And trademark is not about expression trademark is not about 0:01:14.959 --> 0:01:19.240 the First Amendment and people's ability to speak. Trademark is 0:01:19.280 --> 0:01:23.520 about source identifying and preventing consumer confusion. 0:01:24.080 --> 0:01:27.679 Justice Sonya Sotomayor said that not getting a trademark does 0:01:27.760 --> 0:01:29.520 not infringe on his speech. 0:01:29.600 --> 0:01:33.600 Because you're not talking about stopping the speech. You're talking 0:01:33.760 --> 0:01:38.920 about not receiving government protection for activity that you would 0:01:39.000 --> 0:01:42.720 like to heighten protection for. Doesn't stop you from selling. 0:01:42.720 --> 0:01:45.399 It doesn't stop you from selling anywhere as much as 0:01:45.440 --> 0:01:45.880 you want. 0:01:46.840 --> 0:01:49.440 Justice Neil Gorzitch pointed to history. 0:01:49.520 --> 0:01:53.000 But at the end of the day, it's pretty hard 0:01:53.040 --> 0:01:56.800 to argue that a tradition that's been around a long 0:01:56.920 --> 0:02:01.840 long time since the founding common law type stuff is 0:02:02.360 --> 0:02:04.040 inconsistent with the First Amendment. 0:02:04.400 --> 0:02:07.360 And the Chief Justice said that giving him a trademark 0:02:07.520 --> 0:02:10.560 would have the effect of restricting the speech of other. 0:02:10.400 --> 0:02:13.040 People, because the whole point of the trademark, of course, 0:02:13.120 --> 0:02:16.000 is to prevent other people from doing the same thing. 0:02:16.080 --> 0:02:18.560 So if you win, you know, the slogan trump too 0:02:18.560 --> 0:02:21.320 small or whatever, other people can't use it right. 0:02:22.000 --> 0:02:25.639 Joining me is intellectual property litigator Terence Ross, a partner 0:02:25.680 --> 0:02:29.800 at Katon Euchen Rosenman, Terry tell Us about the procedural 0:02:29.960 --> 0:02:31.720 background of this case. 0:02:32.600 --> 0:02:38.320 Mister Elser thought trademark registration from the United States Trademark Office, 0:02:38.680 --> 0:02:44.040 and the Trademark examiner handling the application denied it as 0:02:44.080 --> 0:02:48.560 a violation of sections ten fifty two A and C 0:02:49.240 --> 0:02:51.960 of the Landham Act, which is the trademark laws here 0:02:51.960 --> 0:02:55.280 in the United States. Mister Elster then appealed within the 0:02:55.360 --> 0:03:00.320 Trademark Office, which confirmed the finding of a denial by 0:03:00.320 --> 0:03:03.120 the Trademark Examiner, and mister Elster took it to the 0:03:03.200 --> 0:03:05.359 United States Court of Appeals for the Federal Circuit here 0:03:05.360 --> 0:03:10.760 in DC. The Federal Circuit unanimously reversed the decision of 0:03:10.800 --> 0:03:14.560 the Trademark Office on constitutional grounds. It found that at 0:03:14.639 --> 0:03:18.959 least as applied in this case, section ten fifty two 0:03:19.320 --> 0:03:23.280 C was unconstitutional in light of the First Amendment, and 0:03:23.720 --> 0:03:28.480 the Trademark Office thereafter decided that this was important enough 0:03:28.520 --> 0:03:32.000 to appeal to the Supreme Court the United States, which 0:03:32.120 --> 0:03:35.240 granted SERTs theri on the case, recognizing it was a 0:03:35.320 --> 0:03:36.440 very significant issue. 0:03:36.560 --> 0:03:39.480 So as just as Sonya Sotomayor pointed out, you don't 0:03:39.520 --> 0:03:42.640 need a trademark to sell T shirts with this phrase 0:03:42.720 --> 0:03:44.760 on it. In fact, they are selling t shirts with 0:03:44.840 --> 0:03:48.839 this phrase on it online, So what would registration of 0:03:49.080 --> 0:03:50.840 the trademark give Elster? 0:03:51.560 --> 0:03:56.200 So this is an important issue that goes back to 0:03:56.760 --> 0:04:00.000 the passage of the Landam Act in nineteen fifty four 0:04:00.680 --> 0:04:03.040 and its predecessors. 0:04:02.240 --> 0:04:06.720 Going back to the late nineteenth century. The argument is 0:04:06.840 --> 0:04:12.720 that there is a benefit to having a registered trademark 0:04:13.160 --> 0:04:17.839 in that your good or service and its identifier in 0:04:17.880 --> 0:04:23.520 the public mind is protected against copying by anyone else 0:04:23.800 --> 0:04:27.120 with respect to that same category of goods and services. 0:04:27.360 --> 0:04:32.440 So it's essentially a government benefit being conveyed upon the registrant. 0:04:33.000 --> 0:04:37.919 That position is not without detractors within the trademark field, 0:04:38.320 --> 0:04:41.400 but that is the way we to this day teach 0:04:41.560 --> 0:04:45.200 law students about trademark law that if you jump through 0:04:45.240 --> 0:04:47.680 all the hoops to get a trademark, you receive this 0:04:47.839 --> 0:04:52.520 government blessing, this advantage in commerce, which is protection in 0:04:52.560 --> 0:04:55.200 a limited way for the trademark that you're using on 0:04:55.240 --> 0:04:56.280 your goods or services. 0:04:56.440 --> 0:04:59.719 Elster's lawyer told the court that the government's sole interest 0:04:59.720 --> 0:05:03.880 in nine the trademark is protecting the feelings of famous people, 0:05:04.240 --> 0:05:08.040 but that's not a legitimate reason to burden protected speech. 0:05:08.400 --> 0:05:10.839 How did his argument strike you. It sort of struck 0:05:10.880 --> 0:05:12.560 me as being weak in many ways. 0:05:13.200 --> 0:05:16.200 I thought it was extraordinarily weak. I mean, I was 0:05:16.240 --> 0:05:19.159 not there in person, and so there is a difference 0:05:19.320 --> 0:05:23.200 in listening to the recording of a Supreme Court argument 0:05:23.200 --> 0:05:27.600 to being there in person. But my reaction was that 0:05:28.279 --> 0:05:31.159 mister Alistair's counsel did not do a very good job. 0:05:31.440 --> 0:05:33.680 It was pointed out in the press that this was 0:05:33.720 --> 0:05:36.800 his very first argument to the Supreme Court, but quite 0:05:36.800 --> 0:05:39.240 frankly came across as a first a pallid argument at 0:05:39.240 --> 0:05:43.040 a sword. And indeed his response to this question was 0:05:43.200 --> 0:05:47.719 really a hail Mary, because he was unable to answer 0:05:48.040 --> 0:05:52.800 a previous question from Justice Kagan. Justice Kagan had asked 0:05:52.880 --> 0:05:56.120 him for any case that he could think of in 0:05:56.640 --> 0:06:00.719 which the conveying of a government benefit in a position 0:06:00.880 --> 0:06:05.680 neutral viewpoint state had been held to be unconstitutional. You know, 0:06:05.680 --> 0:06:08.520 it was crickets in the room. He had nothing, and. 0:06:08.880 --> 0:06:11.080 Nothing except maybe a sinking feeling. 0:06:11.400 --> 0:06:14.080 Yeah, when just so my word asked this, he went 0:06:14.240 --> 0:06:18.640 for his press conference SoundBite, which was, Oh, we can't 0:06:18.640 --> 0:06:21.320 be protecting the feelings of famous people. Oh you know, 0:06:21.480 --> 0:06:25.159 that's actually not what this statute is about. There is 0:06:25.279 --> 0:06:29.200 actually a different provision on that, and it helps sometimes 0:06:29.480 --> 0:06:34.599 to read the actual wording of a statute here fifteen USC. 0:06:34.680 --> 0:06:38.839 Ten fifty two see essentially barge registration of a trademark. 0:06:38.920 --> 0:06:43.480 That quote consists of, or comprises a name, portrait, or 0:06:43.600 --> 0:06:48.640 signature identifying a particular living individual except by his written consent. 0:06:48.920 --> 0:06:50.880 This applies to everybody, applies to you, applies to me, 0:06:51.160 --> 0:06:55.120 applies to the listeners. A living person's name and latest 0:06:55.200 --> 0:06:58.839 can't be used to promote another product, and this is 0:06:59.040 --> 0:07:03.360 fundamental to trademark. Look going back into the common law, 0:07:03.520 --> 0:07:05.880 it was known as passing off. You know, it's claiming 0:07:05.880 --> 0:07:08.760 that some famous person had blessed this product or was 0:07:08.800 --> 0:07:13.720 associated with it. There's a separate provision regarding the name, signature, 0:07:13.800 --> 0:07:17.680 portrait of presidents of the United States, which was not 0:07:17.800 --> 0:07:21.480 an issue here. And so it was very much sort 0:07:21.520 --> 0:07:26.880 of an absurd response to Justice Sodoma Org and really 0:07:26.960 --> 0:07:32.480 reflected a core problem with their argument, which Justice Thomas 0:07:32.600 --> 0:07:37.000 identified quickly at or argument and he asked just straight out, 0:07:37.040 --> 0:07:40.840 what's the burden on free speech here? What is the 0:07:40.880 --> 0:07:45.240 burden on free speech? And really didn't get an answer 0:07:45.520 --> 0:07:49.920 because simple fact that as you said, people are already 0:07:49.960 --> 0:07:52.880 using this slogan everywhere. The fact that you don't get 0:07:52.920 --> 0:07:57.080 registration does not mean you can't use the slogan, and 0:07:57.160 --> 0:08:00.400 mister Elster himself has already been using it. Means is 0:08:00.360 --> 0:08:03.920 that he's been denied the benefit of registration, which is 0:08:03.960 --> 0:08:07.920 the ability to exclude, in certain circumstances, third parties from 0:08:08.000 --> 0:08:08.800 using his slogan. 0:08:09.120 --> 0:08:12.920 And the Chief Justice John Roberts pointed out that giving 0:08:13.000 --> 0:08:17.239 him a trademark would have the effect of restricting speech 0:08:17.640 --> 0:08:20.200 by other people who want to use that slogan. 0:08:21.000 --> 0:08:23.720 And I think it's a fair point to make that 0:08:23.840 --> 0:08:29.280 in effect by granting the trademark registration here because of 0:08:29.320 --> 0:08:34.079 the unique category in which it thought, it really does 0:08:34.480 --> 0:08:39.800 limit other people's free speech, because this slogan Trump too 0:08:39.800 --> 0:08:44.640 Small is apparently commonly used by folks who are opposing 0:08:44.679 --> 0:08:47.240 former President Trump's candidates, So Terry. 0:08:47.240 --> 0:08:49.960 We always say you can't tell from their oral arguments 0:08:50.000 --> 0:08:52.760 how the Court is going to rule. But it seemed 0:08:52.800 --> 0:08:58.480 to me that justices across the ideological spectrum we're against 0:08:58.600 --> 0:09:00.960 giving this phrase trademark protection. 0:09:01.360 --> 0:09:04.760 I agree with that. My count was that there was 0:09:04.800 --> 0:09:10.360 a clear majority skeptical of granting registration, and I agree 0:09:10.360 --> 0:09:13.800 with your comment. It's hard to always read or arguments, 0:09:14.000 --> 0:09:19.920 but in this case, particularly, the tonalities of the justice's 0:09:20.040 --> 0:09:27.560 questions really reflect it pretty hardened positions antagonistic to any 0:09:27.600 --> 0:09:31.800 type of register. This my count had Justice Thomas, Justice 0:09:31.840 --> 0:09:38.840 Sodomi or Justice Kagan, and Chief Justice Roberts As all skeptical, 0:09:39.040 --> 0:09:42.160 if not outright saying they were opposed to registration here. 0:09:42.360 --> 0:09:46.920 In addition, I had Justice Gorsi and Alito disagreeing with 0:09:47.160 --> 0:09:51.920 mister Elster's council on different grounds. They historically are opposed 0:09:51.960 --> 0:09:56.040 to this notion that trademark confers a government benefit, but 0:09:56.400 --> 0:09:59.680 they would say that they were opposed to this for 0:09:59.760 --> 0:10:03.560 other reasons. So by my count, that's six justices who 0:10:03.600 --> 0:10:08.280 seem pretty firmly opposed to registration of this trademark. And 0:10:08.440 --> 0:10:11.400 I really couldn't count maybe the other justices as being 0:10:11.400 --> 0:10:14.319 in favor. They just seem to not express an opinion 0:10:14.360 --> 0:10:17.160 one way or the other. So sick zippy is a 0:10:17.280 --> 0:10:19.199 pretty good starting point for the government here. 0:10:19.520 --> 0:10:22.520 So that leads me to the question, how did a 0:10:22.720 --> 0:10:27.319 unanimous panel of the Federal Circuit allow this trademark? 0:10:28.400 --> 0:10:28.720 June. 0:10:28.760 --> 0:10:32.400 We could spend a lot of time on decisions by 0:10:32.440 --> 0:10:34.760 the Federal Circuit, where I practice a lot, by the way, 0:10:34.960 --> 0:10:38.640 and the level of disrespect accorded to those decisions by 0:10:38.640 --> 0:10:40.400 the Supring Court in the United States, true, I mean, 0:10:40.559 --> 0:10:43.320 the mere fact that this decision came out of the 0:10:43.360 --> 0:10:47.440 Federal Circuit probably starts off with your points in the 0:10:47.440 --> 0:10:52.440 government's favor here, because the Supreme Court just doesn't respect decisions, 0:10:52.760 --> 0:10:55.520 most significant decisions coming out of the Federal Circuit. The 0:10:55.720 --> 0:10:59.360 history of reversal is just phenomenal. And so I mean 0:10:59.400 --> 0:11:02.360 those of us who as a federal circuit regular basis say, okay, 0:11:02.400 --> 0:11:05.640 you get granted search the or out of the Federal Circuit, 0:11:05.840 --> 0:11:07.800 you got a good chance of winning. And this is 0:11:07.800 --> 0:11:11.800 another great example that the Federal Circuit was three zero 0:11:12.000 --> 0:11:17.040 in favor of mister Elster, and their views were in 0:11:17.200 --> 0:11:22.400 large part based on an attempt to accord their decision 0:11:22.520 --> 0:11:25.720 with what they perceived the Supreme Court wanted based on 0:11:25.800 --> 0:11:30.040 prior cases involving the First Amendment trademark. And it looks 0:11:30.080 --> 0:11:31.720 like once again they just plain got it wrong. 0:11:32.200 --> 0:11:35.400 Coming up a look at recent trademarked decisions by the Court. 0:11:35.640 --> 0:11:39.240 This is Bloomberg. I've been talking to intellectual property litigator 0:11:39.360 --> 0:11:43.480 Terrence Ross of Catain Euchen Rosenman about Supreme Court oral 0:11:43.600 --> 0:11:48.760 arguments this week over trademarking. The phrase trump too small, 0:11:48.840 --> 0:11:52.120 So that brings us to This case is the latest 0:11:52.160 --> 0:11:56.079 to come before the Court involving challenges to trademark denials. 0:11:56.559 --> 0:12:00.959 In the previous cases the most recent so people seeking 0:12:01.040 --> 0:12:04.800 registration have won and the Court has struck down parts 0:12:05.320 --> 0:12:08.960 of the trademark law in favor of more free speech 0:12:09.040 --> 0:12:10.400 protections June. 0:12:10.400 --> 0:12:14.200 It's impossible to understand the Selster case without recognizing that 0:12:14.240 --> 0:12:17.680 it's the third in a trilogy of Supreme Court cases 0:12:18.200 --> 0:12:21.680 of which challenged provisions of the Landom Act on First 0:12:21.679 --> 0:12:25.680 Amendment grounds. And this provision of the Landham Act actually 0:12:25.720 --> 0:12:31.760 contains three distinct prohibitions on registration. The first one is 0:12:32.160 --> 0:12:37.240 trademarks that consist of are comprised immoral or deceptive or 0:12:37.280 --> 0:12:42.079 scandalous matter. The second provision prohibits trademark registration for marks 0:12:42.080 --> 0:12:45.840 that may disparage persons living or dead. And then the 0:12:45.880 --> 0:12:47.840 third one is the one actually in front of the 0:12:47.840 --> 0:12:51.120 court here. You know the use of name, portrait, or 0:12:51.120 --> 0:12:55.120 signature identifying particular living individual. So a few years back 0:12:55.240 --> 0:12:59.560 in a case called Mattel versus ten there was an 0:12:59.640 --> 0:13:05.760 Asian American rock band that had sought trademark registration on 0:13:05.840 --> 0:13:10.800 the term slants slnts, which the Trademark Office I think 0:13:10.880 --> 0:13:16.000 rightly recognized as a slur on Asian Americans, very offensive 0:13:16.080 --> 0:13:19.520 for an Asian Americans, and denied registration on the grounds 0:13:19.520 --> 0:13:23.120 that it was disparaging persons of Asian ethnicity. That case 0:13:23.160 --> 0:13:24.439 went all the way up to the Supreme Court, and 0:13:24.440 --> 0:13:28.320 the Supreme Court reversed the Trademark Office and held this 0:13:28.400 --> 0:13:32.360 particular provision of ten fifty two a unconstitutional in light 0:13:32.400 --> 0:13:34.920 of the First Amendment. The problem with that decision was 0:13:34.960 --> 0:13:38.120 that the Court was Justice cour Sais did not participate 0:13:38.160 --> 0:13:40.400 for some reason in that decision. So you only had 0:13:40.440 --> 0:13:43.280 eight judges and they split evenly four to four. I mean, 0:13:43.280 --> 0:13:45.800 there were a number of concurring opinions, but the core 0:13:45.920 --> 0:13:50.360 decisions were split four to four, and that split was 0:13:50.679 --> 0:13:56.080 centered on whether or not this sort of government benefited 0:13:56.280 --> 0:14:02.040 speech should be subject to heightened scrutiny for First Amendment purposes. 0:14:02.520 --> 0:14:05.600 And whenever you have a type of speech that the 0:14:05.600 --> 0:14:08.680 government is trying to regulate and you apply heightened scrutiny. 0:14:08.840 --> 0:14:11.400 It's almost a certainty that's going to be held to 0:14:11.400 --> 0:14:15.720 be unconstitutional. And Justice Kennedy, Ginsburg, Soda, Mayori, and Kagan 0:14:16.200 --> 0:14:19.120 all felt that you applied heightened scrutiny here, and therefore 0:14:19.520 --> 0:14:24.480 the provision was unconstitutional. Chief Justice Roberts, Justice Alito, Justice Pomis, 0:14:24.480 --> 0:14:28.080 and Justice Bryer fought that you did not apply heightened scrutiny, 0:14:28.480 --> 0:14:32.880 but it was still unconstitutional because there was no demonstrable 0:14:33.280 --> 0:14:36.880 benefit to the government to impose this sort of burden 0:14:36.880 --> 0:14:40.480 on free speech. So it was struck down eight to zero, 0:14:40.520 --> 0:14:43.840 but with two really different basis for a decision. A 0:14:43.840 --> 0:14:47.320 couple of years later comes along in case Ionku versus Brunetti, 0:14:47.880 --> 0:14:51.280 looking at the second prohibition here in ten fifty two, 0:14:51.480 --> 0:14:55.960 which is immoral or scandalous trademarks. And in that case 0:14:56.040 --> 0:14:59.960 we had a registrant trying to get a trademark register 0:15:00.280 --> 0:15:06.200 in the term suc T and the trademark office refused 0:15:06.200 --> 0:15:09.440 to accept that as immoral or scandalous, and there is 0:15:09.480 --> 0:15:13.440 a long history of variations of that particular mark being rejected. 0:15:13.560 --> 0:15:16.760 This one also went up to the Supreme Court, and 0:15:16.800 --> 0:15:19.840 again it was struck down, and the particular provision was 0:15:19.840 --> 0:15:22.000 held in constitutional in the first minute. But you had 0:15:22.040 --> 0:15:27.160 a combination of Justice Kagan, Justice Thomas, Justice Thelido importantly 0:15:27.280 --> 0:15:31.160 Justice Course Such and Justice Kinsburg. Just Kavanaugh also not 0:15:31.200 --> 0:15:33.840 participate because it wasn't on the court yet, and they 0:15:34.480 --> 0:15:38.960 made the argument that this was viewpoint based discrimination by 0:15:39.000 --> 0:15:42.960 the government. The government was making a decision that the 0:15:43.160 --> 0:15:48.080 particular use of foul language or in moral words is 0:15:48.200 --> 0:15:51.120 the Statute says, was the government trying to dictate how 0:15:51.120 --> 0:15:54.720 people can speak, and therefore that was unconstitutional. So if 0:15:54.720 --> 0:15:56.840 you look at those two cases, even though there was 0:15:56.880 --> 0:16:00.160 sort of a scattered decision making, you would have come away, 0:16:00.200 --> 0:16:03.160 as the Federal Circuit did, thinking that the Supreme Court 0:16:03.320 --> 0:16:08.480 dislikes limits on trademarks relating to some form of speech, 0:16:08.760 --> 0:16:12.000 even if that speech is really distasteful. And in both 0:16:12.000 --> 0:16:15.440 those cases it was very distasteful. And yet the Federal 0:16:15.560 --> 0:16:21.120 Circuit clearly misread what had happened before, in part because 0:16:21.120 --> 0:16:24.400 you have this floating cast of justices with different points 0:16:24.440 --> 0:16:26.680 of view, and they just plane got it wrong here. 0:16:27.200 --> 0:16:29.520 How do you think the Court's going to rule? 0:16:29.960 --> 0:16:34.360 I'm pretty confident June that the Federal Circuit decision is 0:16:34.400 --> 0:16:37.080 going to be reversed, and the Court will then send 0:16:37.160 --> 0:16:40.760 it back for a decision on the te tabs ruling 0:16:41.000 --> 0:16:43.480 of non registration, and at the end of the day 0:16:43.600 --> 0:16:47.040 may take a couple procedural hurdles, but this mark is 0:16:47.080 --> 0:16:51.480 not going to get registered. The real question is what's 0:16:51.520 --> 0:16:55.440 the decision tree going to be like here? I think 0:16:55.480 --> 0:16:59.520 you will, once again, as in the Caam case and 0:16:59.560 --> 0:17:04.840 the Brunet Any case, have a fractured Supreme Court unless 0:17:05.800 --> 0:17:10.040 one of these justices, Justice Barrack, who really didn't give 0:17:10.080 --> 0:17:13.200 away where she was coming from, Let's say they join 0:17:13.320 --> 0:17:17.320 with several other justices to create a five judge majority. 0:17:17.640 --> 0:17:21.520 I think one of the core issues here is the 0:17:21.560 --> 0:17:26.400 position that Justice Course suching Justice Alito have. They clearly 0:17:26.560 --> 0:17:31.919 expressed to the government lawyer that they don't believe in 0:17:31.960 --> 0:17:35.720 the government benefits argument. What they essentially said is they 0:17:35.840 --> 0:17:39.600 wanted the decision to be grounded in the history of 0:17:39.680 --> 0:17:43.800 trademark law in this country and pointed specifically to the 0:17:43.960 --> 0:17:49.560 historical protection that has been allowed for certain types of trademarks, 0:17:49.600 --> 0:17:54.960 such as geographic marks. The trademark law atlantamac accords special 0:17:55.080 --> 0:17:59.240 protection to various things. For example, the Olympics the US 0:17:59.280 --> 0:18:03.480 Olympic Committe gets special protection, and unless you're running a 0:18:03.480 --> 0:18:07.200 business within a certain distance of Olympia, Washington, you don't 0:18:07.240 --> 0:18:10.199 get to use the word Olympic in any sense. But 0:18:10.280 --> 0:18:16.119 those sorts of historically allowed prohibitions on trademarks. So I 0:18:16.200 --> 0:18:20.119 think that they're going to insist that the decision be 0:18:20.240 --> 0:18:25.080 grounded on the historical record of trademark law in this country, 0:18:25.280 --> 0:18:27.800 which by the way, is consistent with their views that 0:18:27.840 --> 0:18:30.280 you have to look at the historical development of the 0:18:30.359 --> 0:18:33.800 law and find something back in the historical records that 0:18:33.960 --> 0:18:37.160 allows you to regulate. And here they would say that 0:18:37.200 --> 0:18:40.560 there's a historical recognition that the government has been allowed 0:18:40.840 --> 0:18:44.960 to regulate speech in the context of certain types of trademarks, 0:18:44.960 --> 0:18:46.919 and that's how they're going to ground their decision. And 0:18:46.960 --> 0:18:49.640 quite frankly, that might also pick up at least one 0:18:49.640 --> 0:18:52.280 other justice. So right there you have three justices with 0:18:52.400 --> 0:18:56.719 this splintered decision. I think Chief Justice Roberts might also 0:18:56.840 --> 0:18:59.520 be inclined to something like that, whereas you're going to 0:18:59.520 --> 0:19:02.320 have this group justice sot of Major Justice Kagan. I 0:19:02.359 --> 0:19:06.919 think Justice Thomas at a minimum all arguing that this 0:19:07.080 --> 0:19:10.560 is not viewpoint discrimination and that the First Bendment only 0:19:10.560 --> 0:19:13.480 applies when it's in the context of viewpoint discrimination. I 0:19:13.520 --> 0:19:16.440 would like to see a clearer decision, and I may 0:19:16.440 --> 0:19:18.359 be proven wrong, but I think we're going to get 0:19:18.400 --> 0:19:21.920 one of these four three two or three three three 0:19:21.920 --> 0:19:24.639 type decisions like we've had so often of late. The 0:19:24.720 --> 0:19:27.000 interesting part of it is you and I've discussed the past, June, 0:19:27.080 --> 0:19:29.159 so in the intellectual property field, you don't see the 0:19:29.200 --> 0:19:32.000 ideological split that you do. I mean, if you look 0:19:32.040 --> 0:19:34.280 at all three of these cases, the so called liberals 0:19:34.320 --> 0:19:37.760 and the so called conservatives are all together in different blocks. 0:19:37.920 --> 0:19:39.840 So it's sort of interesting that respect. 0:19:40.359 --> 0:19:44.240 Thanks so much, Terry. That's Terrence Ross of Captain Eugen Rosenman. 0:19:44.760 --> 0:19:47.520 Coming up next on the Bloomberg Lawn Show. The government 0:19:47.600 --> 0:19:50.040 is trying to stop the merger of Jet Blue and 0:19:50.119 --> 0:19:53.639 Spirit Airlines. I'm June Grosso and you're listening to Bloomberg. 0:19:54.480 --> 0:19:58.879 The US crackdown on airline consolidation faces a new test 0:19:58.920 --> 0:20:02.280 this week, as the government tries to stop Jet blues 0:20:02.400 --> 0:20:06.600 three point eight billion dollar takeover of Spirit Airlines, arguing 0:20:06.600 --> 0:20:10.600 that the merger would reduce competition and boost fares for passengers. 0:20:11.000 --> 0:20:14.679 Trials started Tuesday before a federal judge in Boston, and 0:20:14.760 --> 0:20:17.560 it comes at a critical time for the industry where 0:20:17.600 --> 0:20:22.000 domestic low cost carriers have cut service as fare slide 0:20:22.080 --> 0:20:26.240 and travel slows. Joining me from Boston is Bloomberg Intelligence 0:20:26.320 --> 0:20:31.320 senior litigation analyst Jenniferree, who's covering the trial. Jen, this 0:20:31.400 --> 0:20:35.720 isn't Jet blues first run in with antitrust regulators. Why 0:20:35.800 --> 0:20:37.840 is the government trying to stop this merger? 0:20:38.760 --> 0:20:42.040 Well, you know, the government really sees this as reducing 0:20:42.200 --> 0:20:45.080 output and increasing prices, or at least a deal that 0:20:45.119 --> 0:20:47.400 would have the potential to do that in the industry. 0:20:47.800 --> 0:20:51.760 Because Spirit is what's considered an ultra low cost airline 0:20:52.040 --> 0:20:54.560 that offers a la carte options, and so if a 0:20:54.600 --> 0:20:57.280 consumer wants to fly and really get the very lowest 0:20:57.280 --> 0:20:59.760 price they can, they have the option of doing that 0:20:59.840 --> 0:21:02.399 on Spirit and not buying the extras the food or 0:21:02.440 --> 0:21:06.239 the water or the inflight entertainment. Whereas Jet Blue has 0:21:06.280 --> 0:21:09.399 a different kind of a model, and so Jet Blue, 0:21:09.480 --> 0:21:13.400 if it takes over Spirit intends to change everything over 0:21:13.440 --> 0:21:16.600 to its own model. All the airplanes would be retrofitted, 0:21:16.640 --> 0:21:19.760 so there'd be fewer seats, so that means reduced output. 0:21:19.800 --> 0:21:22.959 And it would likely mean increase fares because Jet Blue's 0:21:23.000 --> 0:21:26.720 average fares tend to be over spirits. So overall, putting 0:21:26.760 --> 0:21:29.680 aside sort of the city routes in which these two 0:21:29.720 --> 0:21:33.879 airlines compete, overall, the Department of Justice is concerned about 0:21:33.920 --> 0:21:37.040 the removal of this option of this a la carte 0:21:37.119 --> 0:21:39.760 ultra low cost option that's in the marketplace. 0:21:40.480 --> 0:21:44.439 So Jet Blues lawyers said that it's the first time 0:21:44.560 --> 0:21:46.960 that the government has ever challenged a merger of two 0:21:47.080 --> 0:21:50.879 small airlines on antitrust grounds. The companies account for just 0:21:51.000 --> 0:21:55.120 eight percent of industry revenue, so even after the merger, 0:21:55.240 --> 0:21:58.400 Jet Blue's market share would rise to just seven percent 0:21:58.800 --> 0:22:02.040 from five percent. I mean, is the government going after 0:22:02.080 --> 0:22:05.240 them because they haven't gone after the airlines before. I mean, 0:22:05.240 --> 0:22:08.879 this seems like they're trying to compete with the big airlines. 0:22:09.200 --> 0:22:11.040 Well, I have a couple things to say about that. 0:22:11.119 --> 0:22:12.720 I Mean, I first, I think, look that that's a 0:22:12.720 --> 0:22:15.200 good argument by Jet Blue, But I think it's sort 0:22:15.200 --> 0:22:17.800 of a red herring because at the end of the day, 0:22:17.840 --> 0:22:23.000 that national competition, that combined national share isn't really relevant 0:22:23.080 --> 0:22:26.360 to the anti trust inquiry. Because the anti trust inquiry 0:22:26.400 --> 0:22:30.160 looks at options for consumers, and consumers that are trying 0:22:30.160 --> 0:22:33.880 to fly from let's say Boston to Santa Fe, they 0:22:33.920 --> 0:22:36.960 don't care about the fact that, combine they're small nationally. 0:22:37.440 --> 0:22:40.399 If they have a reduced option when they're shopping for 0:22:40.440 --> 0:22:43.600 their flights, and they have fewer options when they're shopping 0:22:43.600 --> 0:22:45.720 for that flight, and now the prices have gone up, 0:22:46.000 --> 0:22:50.080 those consumers care about that. So really, with airline deals, 0:22:50.480 --> 0:22:52.560 they have to be looked at from city to city 0:22:52.640 --> 0:22:55.600 and which airlines are competing on each of those routes. 0:22:55.760 --> 0:22:57.920 So it's kind of like a lot of mini mergers. 0:22:58.000 --> 0:23:00.760 And it's also not necessarily true that the Department of 0:23:00.880 --> 0:23:03.640 Justice hasn't challenged small deals. You know, there have been 0:23:03.680 --> 0:23:05.919 deals where an airline was trying to just buy a 0:23:05.960 --> 0:23:09.520 few slots, let's say, at an airline, and the Department 0:23:09.560 --> 0:23:13.240 of Justice voiced some opposition and the airline abandoned that deal. 0:23:13.640 --> 0:23:16.719 Well, what do you think Jet Blue's best argument was 0:23:17.160 --> 0:23:18.000 in the openings? 0:23:18.560 --> 0:23:20.680 Well, I think that their best argument is and they've 0:23:20.720 --> 0:23:23.119 done a good job with it. That Look, at the 0:23:23.200 --> 0:23:26.000 end of the day, we are going to increase competition 0:23:26.400 --> 0:23:29.480 because we have a really tough time fighting against the 0:23:29.480 --> 0:23:33.560 big legacy carriers Delta, American and United, and you can 0:23:33.600 --> 0:23:36.800 throw Southwest in there too, that actually, combined account for 0:23:36.840 --> 0:23:39.160 about eighty percent of air travel and cost a lot 0:23:39.200 --> 0:23:41.719 of money. We have lower farars than they do. And 0:23:41.760 --> 0:23:44.399 by increasing Jet Blue, by making Jet Blue a bigger, 0:23:44.480 --> 0:23:47.800 more viable competitor, we can exert more competitive pressure on 0:23:47.840 --> 0:23:51.120 those legacy airlines and it pulls down their prices. It's 0:23:51.119 --> 0:23:53.760 something that the Department of Justice has acknowledged called the 0:23:53.800 --> 0:23:56.760 Jet Blue effect, and I think that the lawyers have 0:23:56.880 --> 0:24:00.399 so far, we're just at the beginning, effectively laid that 0:24:00.480 --> 0:24:02.159 out and made that argument. And I think it's a 0:24:02.160 --> 0:24:04.919 good argument because what it does is force us the 0:24:05.000 --> 0:24:07.520 judge to kind of say, which is the better side, 0:24:07.720 --> 0:24:09.879 you know, which is the bigger harm or the lesser harm? 0:24:10.160 --> 0:24:13.200 Is it better to remove this ultra low cost option 0:24:13.400 --> 0:24:17.520 for some real bargain conscious consumers, but end up, you know, 0:24:17.640 --> 0:24:20.880