[Tina] Renna produces a public access television show in Cranford, NJ, called the “Union County Citizen’s Forum.” The show displays on-air a graphic illustration depicting the Seal of the County of Union with a spotlight shining on it. The illustration symbolizes the self-proclaimed mission of the show to shine a critical light on the workings of the Union County Board of Chosen Freeholders….
The County Attorney sent a cease-and-desist letter to the Township of Cranford warning it to stop displaying the County of Union seal, except in broadcasts of Freeholders’ meetings. According to the County, Renna’s use of the Seal infringes the County’s trademark rights under the Lanham Act. [This led to the Township’s asking Renna not to use the seal on her program, and demanding that she agree to indemnify the Township for any litigation expenses; Renna responded in part by bringing this lawsuit, which seeks a declaratory judgment that her use of the seal would not be infringing. -EV]
Whether the County has tried to bully a constituent is for the public to decide. The issues before me primarily involve the proper scope of trademark law. Renna has sued seeking a declaratory judgment pursuant to 28 U.S.C. § 2201 that: (1) Union County has no trademark rights with respect to its official Seal; (2) Renna’s display of the seal in connection with her television show does not constitute trademark infringement; and (3) Union County deprived Renna of her First Amendment rights when it threatened to enforce trademark laws against her. Because I decide the first two issues in Renna’s favor, it is unnecessary to rule definitively on the third, although I touch on it in the final section of this opinion.

1. The court noted that the U.S. Patent and Trademark Office refused the Country’s trademark registration application, because federal trademark law provides that,

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 — …
(b) Consists of or comprises the flag or coat of arms or other insignia of the United States, or of any State or municipality, or of any foreign nation, or any simulation thereof.

The court agreed that this meant that county seals can’t be registered trademarks (In re City of Houston (Fed. Cir. 2013), recently held the same), and concluded that this expressed a federal trademark policy against treating county seals as unregistered trademarks as well. The County therefore had no trademark rights to assert.

In discussing the trademark rights question, the court also faulted the County for its “misleading” pre-litigation behavior:

The County did not revise its position in response to the USPTO’s authoritative rejection; it doubled down. Recall that the previous cease-and-desist letter had stated that the trademark (as conceded at oral argument, this could only have meant trademark registration) was “pending.” In his April 21, 2011 letter to Renna’s counsel, [First Deputy Counsel Norman W.] Albert peremptorily announced: “For your information, this Seal is in fact now trademarked under federal law.”
That statement carried the misleading implication that some intervening event had solidified the trademark status of the Seal. In fact, the opposite was the case; in the interim, the USPTO had categorically rejected the County’s trademark registration application as a matter of law. (Of course, as discussed below, an unregistered trademark, too, may be protected, but that was not the import of the letter.) At oral argument, counsel for the County (not Albert) had no explanation for this statement, and, to his credit, did not attempt to justify it.
To that misleading implication, Albert added another: “N.J.S.A. 56:3–13–29(c) prohibits a third party, such as your client, from registering a mark that uses such an insignia.” (I take this to be a typo for 56:3–13–2(c).) The State statute does not say that; it says this:
Essentially, the County here attempted to revive, in state-law form, its rejected position as to federal trademark law. But the state statute, like the federal one, provides categorically that an official insignia “shall not be registered.” It contains no exemption for government entities. It is not confined to “third parties, such as your client.”
Albert’s letter then added the following non sequitur. “Indeed, N.J.S.A. 52:2–4 makes unauthorized use of the State seal a crime.” And “indeed” it does, to the tune of $50. But the Great Seal of the State of New Jersey is not at issue here.
It is hard to discern any purpose, other than general intimidation, for the citation of this criminal statute in an official communication to a citizen, even one represented by counsel. Again, counsel at oral argument offered no justification or explanation for Albert’s citation of this statute….

2. The court also notes that, even if the trademark had been valid, Renna’s use wasn’t infringing:

Ms. Renna also argues that, even assuming arguendo that the County had trademark rights with respect to the Seal, her use of the Seal did not infringe the County’s trademark. Her show, carried on a public access channel, is not a business, and her use of the Seal did not occur in a commercial context. Rather, she used the seal in connection with exercising her right to describe and criticize the workings of County government. Such matters, she says, lie outside the concerns of trademark law.
Even as between private parties, trademark law has a particular purpose, and it should be confined to that purpose. The foundational concern of trademark law is “use” of a mark in connection with the furnishing of “goods or services.” It protects purchasers from being deceived as to the source of goods.
Trademark law is not properly employed to stifle discussion. Microsoft Corporation could not use trademark law to enjoin a consumer from saying “I prefer Apple® to Microsoft®,” nor could Apple do the reverse. Such comments simply have nothing to do with protecting a purchaser mistaking the source of goods.
Case law … supports the proposition that infringing use is only illegal if it is done in connection with the defendant’s offer or provision of goods or services. In cases in multiple circuits, courts have held that individuals who use protected marks in the course of merely criticizing the trademark holders’ goods or services do not violate the Lanham Act.
A company may feel put upon by statements about itself that it considers inaccurate. But trademark law is not the solution to that problem; “trademark infringement protects only against mistaken purchasing decisions and not against confusion generally.” “[T]rademark rights do not entitle the owner to quash an unauthorized use of the mark by another who is communicating ideas or expressing points of view.” Were we to ignore the expressive value that some marks assume, trademark rights would grow to encroach upon the zone protected by the First Amendment. Simply put, the trademark owner does not have the right to control public discourse whenever the public imbues his mark with a meaning beyond its source-identifying function.
In short, a private company cannot shut down criticism or quash inaccurate information by prohibiting the use of its trademarked name. It must content itself with, for example, corrective public statements of its own, or an action for libel with respect to false statements.

3. And the court also notes the First Amendment problems with the County’s argument:

In general, the First Amendment imposes more stringent limitations on the government’s ability to restrain expression. Renna cogently contends that the County’s assertion of trademark rights gives rise to a substantial First Amendment issue. That constitutional issue, however, is easily avoided by simply giving the words of Section 2(b) registration bar their plain meaning and scope….
Renna is clearly using the County Seal in an expressive manner. That expression, moreover, is political expression, entitled to the highest degree of constitutional protection. Consider that the First Amendment prohibits a State from criminalizing the desecration of the United States flag as a form of political protest. Should a county, by means of an artful extension of trademark law, be permitted to quash political expression that uses its Seal? I think such an extension would be both unwarranted and Constitutionally risky.
I leave for another day the question of whether a state or municipality may enjoin deceptive misuse of official insignia. The State should not be powerless to address such a case, particularly if it specifically targets deceptive, as opposed to expressive, statements. The County has argued that a viewer could be misled by Renna’s “spotlight” logo, but has not submitted any evidence that anyone was, or was likely to be, deceived. But be that as it may, the County has failed to meet its threshold burden of demonstrating that trademark law is an appropriate vehicle for its complaints about Ms. Renna’s use of its Seal.

The analysis seems quite right to me. (I take “deceptive misuse of official insignia” to refer to the use of official insignia to pretend to be a county official, in a way that defrauds citizens of money, coerces people into following the deceptive user’s orders, and the like.)