Local governments don’t particularly care that trademarks aren’t government speech. But they do care about the breadth of the government speech doctrine because government speech is not protected by the First Amendment (meaning governments can say what they want and exclude messages they disagree with).
In Matal v. Tam Justice Alito, writing for the majority, noted that Walker v. Texas (2005) “likely marks the outer bounds of the government-speech doctrine.” In Walker the Court held that messages on specialty license plates are government speech.
Section 2(a) of the Lanham Act bars the Patent and Trademark Office (PTO) from registering marks that disparage persons and institutions. Simon Tam named his band The Slants to “reclaim” and “take ownership” of Asian stereotypes. The PTO refused to register the band name concluding a “substantial composite of people” would find it offensive. Tam sued the PTO arguing that Section 2(a) violates the First Amendment Free Speech Clause.
Among other arguments, the Supreme Court rejected the federal government’s claim that trademarks are government speech or a form of government subsidy.
In rejecting the argument that trademarks are government speech, the Court noted that none of the factors present in Walker are present in this case. Specifically, license plates have long been used to convey state messages; are closely identified with the state as they are manufactured, owned, and generally designed by the state; and Texas directly controlled the messages conveyed on specialty plates.