Government Subsidies and Intellectual Property Rights: Confining the Applicability of the Subsidies Doctrine to Cash Benefits

Abstract

TABLE OF CONTENTS I. INTRODUCTION II. THE TRADITIONAL NOTION OF GOVERNMENT SUBSIDIES: CASH BENEFITS A. The Government Subsidies Doctrine B. Complexities in Principle and Practice C. Cash Benefits 1. Direct Funding 2. Tax Exemptions and Deductions III. A NEW FRONTIER: MONETIZABLE BENEFITS A. In Re Tam B. Valuing Trademark Registration 1. The Lanham Act 2. Monetizing Trademark Rights IV. THE CASE AGAINST TREATING MONETIZABLE BENEFITS AS SUBSIDIES A. Difficulties in Defining a Subsidy B. The Inappositeness of Cash Benefit Justifications to Monetizable Benefits C. Further Differences Between Cash and Monetizable Benefits 1. Government Monopolies 2. Disaggregation of Activities D. The Broad Implications of Expanding the Government Subsidies Doctrine 1. Expansion into Other Forms of Government Regulation 2. The Danger of Permitting the Government to Practice Viewpoint Discrimination V. CONCLUSION I. INTRODUCTION The government subsidies doctrine permits the government, in determining what to fund, to constitutionally discriminate against speech activities on the basis of content, and perhaps also viewpoint. Traditionally, this doctrine has been applied only to purely monetary or benefits allotted to selected recipients. In contrast, courts generally have not treated monetizable benefits, like intellectual property rights, as government subsidies implicating the doctrine. To expand the government subsidies doctrine to monetizable benefits would invoke significant First Amendment considerations. Monetizable benefits, including trademark registration, should not be categorized as government subsidies--to do so would unjustifiably entrust the government with broad control over expressive activities. In December 2015, the Federal Circuit sitting en banc held that the Lanham Act's prohibition on the registration of disparaging marks violated the First Amendment. In reviewing that case, In re Tam, the court rejected the government's argument that trademark registration is a government subsidy and therefore subject to the government subsidies doctrine. (1) This holding takes the disparagement provision outside the reach of heavy First Amendment scrutiny. The benefit of trademark registration, then, does not constitute a subsidy. This Note examines the government subsidies doctrine, both as conventionally applied to cash benefits and also as envisaged with respect to monetizable benefits. Employing the analysis of the question of trademark registration from In re Tam as an illustration, it argues that the subsidies doctrine should not be extended to monetizable benefits like intellectual property rights. Part II explores the tensions presented by the government subsidies doctrine as it exists today, but acknowledges that the doctrine is well established and can be justified in the cash benefits domain. Part III considers monetizable benefits, specifically those provided to trademark registrants under the Lanham Act, like that at issue in In re Tam. Part IV argues that, despite the possibility of discerning the value of monetizable benefits, courts should not expand the government subsidies doctrine to cover such benefits for three primary reasons. First, many of the justifications for the government subsidies doctrine as applied to cash benefits, particularly the problem of limited federal funding, are inapplicable in the context of monetizable benefits. Second, monetizable benefits diverge from cash benefits in ways that exacerbate the inherent problems with the government subsidies doctrine. For example, the government is more likely to maintain a monopoly over a benefit if that benefit is monetizable rather than cash. Recipients of cash benefits may alternatively be able to disaggregate their activities, receiving funding for some actions while also separately engaging in the unsubsidizable speech. …