The Lanham Act (the federal statute that governs trademarks) states:
No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it—
(a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; or a geographical indication which, when used on or in connection with wines or spirits, identifies a place other than the origin of the goods and is first used on or in connection with wines or spirits by the applicant on or after one year after the date on which the WTO Agreement (as defined in section 3501(9) of title 19) enters into force with respect to the United States. 15 U.S. Code § 1052.
This prohibition was challenged by the Portland rock band "The Slants" after their trademark application for their band name was rejected. The Supreme Court ruled in the band’s favor in 2017 in Matal v. Tam, holding that, “The disparagement clause violates the First Amendment’s Free Speech Clause. Contrary to the Government’s contention, trademarks are private, not government speech.”
Justice Alito stated in the decision, “Speech that demeans on the basis of race, ethnicity, gender, religion, age, disability, or any other similar ground is hateful; but the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’”
This was an important decision with wide-reaching impact. For example, the lawsuit concerning the Washington Redskin’s trademark was subsequently dismissed after this ruling. It will be interesting to see what kind of impact this ruling may have on trademarks and businesses in the future.