Holding the Government Accountable

Trump’s Trademarks Pose Ethics Challenge for the Executive Branch

(Photo: Adam Fagen / Flickr)

Last week, President Trump’s campaign committee filed a legal complaint against a textile manufacturer in South Carolina for applying to trademark the use of “Make America Great Again” on bath towels, bed blankets, and pillow cases. The complaint was brought before a panel called the Trademark Trial and Appeal Board (Trademark Board), a panel within the Commerce Department’s Patent and Trademark Office in the executive branch. Unlike judges in judicial branch courts, Trademark Board judges ultimately work for Trump. Can they neutrally preside over a case involving him?

Against the recommendation of the government’s top ethics official, President Trump has rebuffedcalls to divest himself of his business interests and place the assets in ablind trust, which means the federal government will continually be placed in situations where its decisions will impact Trump’s continued ownership interests and his bottom line. While he is not required by law to divest, as the late Antonin Scalia wrote in 1974 for the Office of Legal Counsel, the President’s “failure to observe” conflict of interest standards applicable to every other federal employee “will furnish a simple basis for damaging criticism, whether or not they technically apply” to the President.

Because Trump retains a financial interest directly in his companies and at the same time runs the federal government, which affects his companies’ revenues and costs, the conflicts of interest posed are potentially vast. The relatively unexplored conflicts facing the Trademark Board offer a window into the broader conundrum faced by the federal government because of Trump’s decision not to divest.

Government integrity is at stake, namely whether the executive can maintain the appearance of impartiality in matters involving Trump and his family members’ business interests.

The case filed last week is Donald J. Trump for President, Inc. v. Springs Global US, Inc., first reported by the trade publication World Intellectual Property Review. Donald J. Trump for President, Inc. is a corporation registered in the state of Virginia that is the principal campaign committee for Trump. Trump had previously trademarked the use of “Make America Great Again” for a number of political campaign uses, clothing, athletic bags, dog apparel, and other items.

“Claiming ownership to such a slogan as ‘Make America Great’ is an example of our runaway copyright and trademark claims,” said George Washington University Law Professor Jonathan Turley in a blog post in January. Trump was not the first to use the phrase as a campaign slogan. Ronald Reagan used “Let’s Make America Great Again” during the 1980 presidential campaign.

In addition to the current case, Trump has been involved in 57 other legal disputes before the Board since 1988. Of the 58 disputes, Trump filed 31 complaints against a range of defendants, has been a defendant in 17 cases, and his daughter Ivanka has had 10 trademark disputes before the Board.

In contrast, neither President Obama nor his campaign was ever a party to a trademark dispute before this Board (there were cases where a person appealed the Patent and Trademark Office’s rejection of their attempt to trademark words that included the word “Obama” and “Barack”—but Obama was not a party in those cases). There were three trademark cases involving the Clinton Foundation before the Trademark Board, but they were all well after Bill Clinton left the White House. Similarly, 10 cases involved the Ronald Reagan Presidential Foundation—again, well after Reagan was president. No cases involving George H.W. Bush, the 41st president, or his son, George W. Bush, the 43rd president, turned up during a search of their names in the Trademark Board’s case filing system.

While US trademark law gives every living person protection against the unauthorized use of their name, this protection becomes fuzzier when the words are in common usage—such as popular first names or verbs. “When a mark often consists of a common term, like ‘trump,’ which also has multiple dictionary meanings,” Jess Collins, a trademark expert writing for Forbes, wrote last fall, “conflicts are pretty certain to arise.”

Trump’s trademarks raise unique conflict-of-interest concerns given the executive branch’s key role in approving trademarks and handling disputes over them.

Trump has trademarked many terms beyond his name and “Make America Great Again.” For instance, last year, he trademarked the words, “American Idea.”

Collins added, “We will have a President who is hyper-sensitive to the value of brand names. Efforts by the courts, legislature or government agencies to lessen those protections will not find a receptive audience in the White House. The incoming President may even argue that his success is built entirely on the fame of his marks. Will that matter?”

Also last week, in another development that could involve the Commerce Department, China approved numerous trademark applications Trump has had pending before its government. The Commerce Department plays a critical role in determining and enforcing U.S. trade policy with China—a hot-button topic on both the campaign trail and during the early days of Trump’s presidency. Some critics suspect that China may have approved the trademarks to curry favor with Trump.

Back on the domestic front, Trump’s trademarks raise unique conflict-of-interest concerns given the executive branch’s key role in approving trademarks and handling disputes over them.

While the judicial branch, which handles many types of legal disputes, operates independently of the executive branch, administrative panels such as the Trademark Board are down the chain of command from President Trump within the executive (a party dissatisfied with the Trademark Board’s decision can, however, appeal to the US Court of Appeals for the Federal Circuit).

The Trademark Board is made up of the Director and Deputy Director of the US Patent and Trademark Office, the Commissioner for Patents, the Commissioner for Trademarks, and administrative trademark judges who are appointed by the Commerce Secretary. Trump’s nominee for Commerce Secretary, Wilbur Ross, was recently confirmed by the Senate.

While most of the Trademark Board and all of its staff are career members of the civil service with legal protections, a few lack adequate independence and its staffing is not completely insulated from the decisions of political appointees. Notably, the Director of the Patent and Trademark Office is a political appointee,serving at the pleasure of the president (the current director is an Obama holdover). In practice, however, it is rare for the Director or Deputy Director to sit on a panel deciding a pending case. By statute, the Commerce Secretary, who is also a presidential nominee who can be fired at any time for any reason, picks the judges on the Board. The Commerce Department did not respond to a request for comment on the Secretary’s freedom to remove and replace these judges.

Ultimately, it is impossible for a judge with the Trademark Board to be unaware that President Trump is the owner of trademarks that may be in dispute before them. The judges’ decisions could be influenced by fear of (or delight in) angering Trump. Whether that knowledge truly affected a judge’s decision-making or not, it could be hard for them to maintain the appearance of neutrally deciding a case based on the merits of each sides’ arguments alone.

“You’ve got a situation where you’re hearing a case involving the president of the United States,” trademark attorney Ken Kurkle said to The Washington Post. “From that standpoint, I imagine it could involve some discomfort.”

In response to a query by the Project On Government Oversight, a spokesman for the Patent and Trademark Office referred to the Trademark Trial and Appeal Board’s Manual of Procedure and its section on impartiality (see page 191). The section states that a party before the Board shall not “seek to influence a judge, hearing officer, administrative law judge, administrative patent judge, administrative trademark judge, juror, prospective juror, employee or officer of the Office, or other official by means prohibited by law;” or have a one-sided conversation with a judge during a case unless authorized by law.

However, the Trademark Board could be influenced during a case involving Trump’s trademarks in a way that does not run afoul of the Board’s Manual. The simple fact that Trump is the President would be known by any judge presiding over the case and could influence the Board’s decision-making. At a minimum, it casts the Board’s neutrality into doubt.

Similar concerns have been raised involving the decision-making at other executive branch agencies that interact with Trump’s business network. For instance, the General Services Administration (GSA), which manages federal buildings, leases out DC’s Old Post Office building to Trump’s International Hotel chain. GSA’s lease agreement states, “No…elected official of the Government of the United States…shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.” Trump’srevocable trust to avoid breaching the lease doesn’t resolve the conflict because it merely states that the trust will “hold assets for the exclusive benefit“ of Trump and that he “has the power to revoke“ it, which means nothing has really changed. In response to questioning from Members of Congress, the GSA has evaded questions on whether it should cancel the lease based on the terms of its own agreement.

The Office of Government Ethics (OGE) has stated that these awkward situations may only be avoided if Trump sells off his companies. “OGE’s primary recommendation is that he divest his conflicting financial interests,” stated Walter M. Shaub, Jr., director of OGE, in January. “Nothing short of divestiture will resolve these conflicts.”

Trump’s trademarks and the revenue they generate are not a marginal aspect of his business, they are increasingly central. While pinning down the exact value of the Trump brand has been difficult, in June 2014, after the kickoff of his presidential campaign, Trump released a one-page summary of his net worth. The largest portion of his self-assessed worth of $8.8 billion was related to “real estate licensing deals, brand and branded developments” valued at $3.3 billion.

While it is difficult to assess how Trump’s election to the White House has affected the value of his trademarks, President Trump’s son Eric Trump told The New York Times in a story published on Friday, “I think our brand is the hottest it has ever been.”

As widely reported during the presidential campaign, his business has shifted to letting others take on the risk of construction and management while he licenses out the right for them to brand their goods or services with Trump trademarks in return for handsome royalties. For Trump, the shift to a branding-centric revenue model entails much lower risk to him and higher profit margins. Central to this strategy is the aggressive policing of his trademarks to avoid the dilution of his brand—and one of the primary venues for protecting his brand is the Trademark Board.

Scott Amey and Daniel Van Schooten contributed reporting.