Chapter 12 Mass Media Law

• Scholar's definition of commercial speech

"paid, mass-mediated attempts to persuade." That persuasion increasingly comes in digital form, and it is growing: Spending in digital advertising was forecast to grow more than 25 percent in 2021 to more than $190 billion. Speech dealing with economics and trying to get you to spend money

Central Hudson Test

1. Is the commercial speech false or related to an illegal activity? If yes, the speech may be banned or strictly regulated. If no, proceed with the test. 2. Is the regulation of commercial speech based on its content? If yes, the court must apply heightened, or strict, scrutiny and presume that the regulation is unconstitutional. If no, proceed with the test. 3. Is the regulation of commercial speech content neutral? If yes, the court must apply the Central Hudson test and strike down the regulation unless the answer to all of the following is yes. - Does the rule relate to a significant government interest? - Does the rule directly advance that government interest? - - Is the regulation unrelated to the suppression of speech - Does the regulation "fit" the government interest without unduly infringing on speech? This new standard makes it very difficult for regulations of truthful commercial speech to survive First Amendment review unless the speech promotes an illegal activity.

Regulating Ads on Government Property.

A number of cases address the rights of individuals, especially proponents of controversial positions, to advertise in space offered by the government, especially on public transit. Case outcomes vary with those favoring advertisers often determined by the nature of speech involved and those favoring government focused on the nature of the forum. For example, a divided Ninth Circuit Court of Appeals upheld the authority of Seattle Metro Transit to prohibit ads on its buses that criticized Israeli policies toward Palestinians. In rejecting ads that read "ISRAELI WAR CRIMES . . . YOUR TAX DOLLARS AT WORK," the court said the county applied viewpoint-neutral, content-based review of speech in a limited public forum. The SMT ruling responded to "real and substantial" fears that the ads' display "presented a reasonably foreseeable threat of disruption" to transit passengers. The First Circuit Court of Appeals also affirmed a Massachusetts ban on ads that "demean or disparage" individuals or groups from its transit vehicles. One banned ad read "IN ANY WAR BETWEEN THE CIVILIZED MAN AND THE SAVAGE, SUPPORT THE CIVILIZED MAN. SUPPORT ISRAEL. DEFEAT JIHAD." The court said the ad space was a nonpublic forum and the ban a constitutional application of "reasonable, viewpoint-neutral limits." In contrast, a federal district court ruled that the Philadelphia public transit authority's refusal to display ads that read "Islamic Jew-Hatred: It's in the Quran. Two Thirds of All US Aid Goes to Islamic Countries" violated the First Amendment. The court reasoned that the ad was "exactly the sort of political expression that lies at the heart of the First Amendment . . . regardless of its alleged falsity." The court then enjoined the city's ban on the ads.

• Advertisers addressing social issues.

Advertisers are increasingly addressing social issues like "toxic masculinity," teen suicide and gun control. Some publicists argue that the resulting public controversy strategically fuels both the viewing and the impact of ads, even if it requires public relations teams to step in to smooth ruffled feathers. This mingling of commerce with public issues and political speech also moves the speech away from being "purely commercial," which the U.S. Supreme Court has said may be regulated.

Early Case Law

As commercial advertising took hold of the U.S. economy in the 20th century, the U.S. Supreme Court also reluctantly began crafting a speech category to help define the boundaries between the constitutionally approved regulation of commerce under the Commerce Clause and the constitutionally protected freedom of speech under the First Amendment.

• Influencer marketing

But the extraordinary growth of influencer marketing, generally less famous fans of brands who develop expertise and a significant social media following, is changing the advertising landscape. Some forecasts predicted that influencer marketing would reach $4.14 billion in 2022. Influencer marketing is on the rise in the United States. Some forecasts predicted that influencer marketing would reach $4.14 billion in 2022. Contracted brand fans and experts with a significant online following who help to create sales and positive discussions about brands.

.• Celebrity marketing.

Celebrity marketing of brands has long been a hallmark of advertising and remains popular. Contracted celebrities who endorse brands and create interest in the brand through advertising.

• Central Hudson Gas & Electric Corp. v. PSC (1980)

Central Hudson Gas & Electric Corp. v. Public Service Commission, the decision widely touted as the cornerstone of modern commercial speech law, the Court said commercial speech was "expression related solely to the economic interests of the speaker and its audience" and/or "speech proposing a commercial transaction." The Supreme Court generally described commercial speech as an advertisement for the sale of goods and services. That ambiguous definition remains to this day.

• Content marketing

Content marketing, sponsored content, branded content or brand promotion are similar terms for the same idea—brands are themselves becoming publishers, creating their own platforms and posting content directly to consumers. This kind of advertising often takes the form of video shorts, brand documentaries or brand podcasts. Advertising content shared directly from a brand's platform.

Regulating Vice Products

Controversial commercial speech—such as advertising for vice products or advertising to susceptible audiences—is a prime arena for testing the limits of constitutional protection for commercial speech. The U.S. Supreme Court must often determine the limits of permissible regulation of advertising for alcohol, tobacco, drugs, gambling, guns and, more recently, marijuana. Vice Products: Products related to activities generally considered unhealthy or immoral or whose use is restricted by age or other condition. The category includes alcohol, tobacco, firearms, sexually explicit materials and drugs. Ex: Promoting alcohol on campus

• Bigelow v. Virginia (1975)

In Bigelow v. Virginia, as in Sullivan, the Court looked beyond commercial motivation to the political nature and public interest in advertising about legal abortions in New York state to determine that neither payment for nor the format of such commercial speech deprived it of First Amendment protection. The Bigelow decision used the commercial purpose of the ad as a factor to be balanced against the public interest in the speech and "clearly establish[ed] that speech is not stripped of First Amendment protection merely because it appears in [the] form" of paid commercial advertisements.

• Breard v. Alexandria (1951)

In Breard v. Alexandria, the Supreme Court upheld a law banning unsolicited door-to-door sales of magazines. The Court acknowledged the First Amendment value of magazines but reasoned that the "primary purpose" of the activity was commercial and, therefore, regulable.

• Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico.

In Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, the U.S. Supreme Court walked through the steps it set out in Central Hudson. It first reaffirmed that "commercial speech receives a limited form of First Amendment protection so long as it concerns a lawful activity and is not misleading or fraudulent." The advertising at issue in Posadas was for casino gambling, a lawful activity for the targeted residents of Puerto Rico, and the ad was neither misleading nor fraudulent. Such commercial speech "may be restricted only if the government's interest in doing so is substantial, the restrictions directly advance the government's asserted interest, and the restrictions are no more extensive than necessary to serve that interest," the Court said. The government interest in regulating casino advertising was to reduce demand from Puerto Rico residents for casino gambling, and the Supreme Court said this "interest in the health, safety and welfare of its citizens constitutes a 'substantial' governmental interest" as required under Central Hudson. The remainder of the test examines the "fit" between the legislature's ends and the means chosen to accomplish those ends. Step three asks . . . whether the challenged restrictions on commercial speech "directly advance" the government's asserted interest. . . . [T]he restrictions on advertising of casino gambling "directly advance" the legislature's interest in reducing demand for games of chance. . . . [T]he legislature felt that for Puerto Ricans the risks associated with casino gambling were significantly greater than those associated with the more traditional kinds of gambling in Puerto Rico. In our view, the legislature's separate classification of casino gambling, for purposes of the advertising ban, satisfies t

• Valentine v. Chrestensen (1942)

In Valentine v. Chrestensen, the U.S. Supreme Court's first ruling to suggest the category of commercial speech 80 years ago, the Court only mentioned the term "speech" once. The case involved distribution of a handbill encouraging people on the streets of New York to pay to tour a decommissioned U.S. Navy submarine docked at a city pier. City law prohibited commercial handbill distribution except when "solely devoted to information or a public protest," so the promoter printed a protest to that law on the flip side of the ad. Lower courts ruled that the inclusion of this "political speech" immunized him from prosecution, but the U.S. Supreme Court reversed. In its six-paragraph opinion, the Supreme Court described the handbill as "commercial advertising" and "soliciting," as prohibited by the law, and emphasized the public's right to be free of interference on public thoroughfares. By "attempting to use the streets of New York by distributing commercial advertising, the prohibition of the code provision was lawfully invoked against [the respondent's] conduct," the Court said. Moreover, because "affixing of the protest against official conduct to the advertising circular was with the intent, and for the purpose, of evading" the law, the Court said the city could legally prevent its distribution. Many interpreted Chrestensen to mean that a message whose primary purpose was to promote commerce did not receive First Amendment protection. The Supreme Court said the holding in Chrestensen was limited and established only that government could regulate "the manner in which commercial advertising could be distributed." The Court said Chrestensen had never been intended to permit any and all government regulation of commercial advertising.

• Consumer Activism and Corporate Speech

In recent decades, corporate and professional self-promotion and branding have grown in economic and social importance, and businesses have stepped increasingly into public debates on social issues like climate change, teen suicide and gun safety. If such advertising goes awry, it may or may not land companies in court, but some publicists argue that the public attention and even legal controversy effectively increase both the viewing and the impact of their commercial messages. Consumer activists argue that some corporate messaging goes too far and should be more regularly challenged. Marc Kasky is a longtime consumer activist and lawyer who has advocated for increased corporate accountability and responsibility. In the early 2000s, he and others argued that Nike made multiple misrepresentations regarding its overseas labor practices. In the midst of the large public controversy about Nike's offshore factories, Nike issued press releases and letters to newspapers and university athletic directors in an attempt to place itself in a positive light. In Nike, Inc. v. Kasky, the U.S. Supreme Court was asked to determine whether Nike's published communications responding to accusations of illegal, unsafe and abusive conditions in its overseas plants could be punished as false advertising. The trial court dismissed the case, but the California Supreme Court ruled that the speech contained statements of fact that might be punishable under the state's false advertising and unfair competition laws. The court said Nike's published statements to potential customers were commercial speech intended to maintain or increase sales. Nike appealed to the U.S. Supreme Court and argued that, even if false, its speech was political and protected by the First Amendment. The Supreme Court dismissed the case without addressing

• Unfairness authority

In the 1970s, the FTC faced criticism as it used its unfairness powers to legislate against perceived violations of "public policy." The most prominent example of overreach occurred when the FTC tried to ban all advertising directed to children on the grounds that it was "immoral, unscrupulous, and unethical" and based on generalized public policies to protect children. Gradually, the Commission moved away from an emphasis on public policy and toward a focus on consumer injury and consumer sovereignty. Today, a three-part definition guides what constitutes the FTC's unfairness authority: An act or practice that (1) causes or is likely to cause substantial injury to consumers; (2) which is not reasonably avoidable by consumers themselves; and (3) not outweighed by countervailing benefits to consumers or competition.237 Examples of unfairness actions vary, but can include coercion or fraud (in which companies exercise undue influence in some way); withholding of information from consumers; targeting of vulnerable consumers (such as children or the elderly); and/or a lack of "privity," in which obligations or conditions are imposed on consumers in excess of a contract or agreement.238 In recent years, the FTC has used its unfairness authority to especially protect online consumer fraud. In FTC v. Wyndham Worldwide Corp. the FTC filed suit against the hotel chain for a series of data breaches in which online hackers accessed more than 619,000 consumer accounts, resulting in approximately $10.6 million in fraud.239 The FTC made both deception and unfairness claims against Wyndham. The hotel chain made two arguments in its defense: that the FTC lacked authority to regulate data security under its unfairness authority and that the commission had not given the chain fair notice about its cybersecurity rules. In 2

Testing Commercial Speech Protection

In the 1970s, the U.S. Supreme Court established that when truthful commercial speech is of core public interest, the First Amendment protection for the speech outweighs the government's interest in regulating advertising. But the Court did not make clear exactly what level of First Amendment protection such nondeceptive advertising enjoys.

• Central Hudson Gas & Electric v. Public Service Commission of New York.

In the 1980 Supreme Court case Central Hudson Gas & Electric v. Public Service Commission of New York, the Court designed a new test. The case involved an order from the Public Service Commission of New York to ban advertising that promoted the use of electricity because of concerns related to the supply of power and fuel shortages during winter of 1973 and 1974. Central Hudson Gas & Electric challenged the regulation on First Amendment grounds. The Court's decision in Central Hudson established that regulation of (1) nondeceptive advertising for legal products and services is constitutional only if (2) government demonstrates a "substantial" state interest in the regulation, (3) the regulation "directly advance[s]" that interest and (4) the regulation is "no more extensive than necessary to serve that interest." Applying the new test, which bears a striking resemblance to the O'Brien test for content-neutral regulations of speech the Court found a New York state ban on energy-use advertising unconstitutional. The court said that although the state had a substantial interest in energy conservation, the commission's order was more extensive than necessary, among other findings. The Central Hudson Commercial Speech Test: The government may regulate advertising that is false, misleading or deceptive. The government may regulate advertising for unlawful goods and services. Even accurate advertising for legal goods and services may be regulated if the government demonstrates the following: There is a substantial state interest behind the regulation. The regulation directly advances the state's interest. The regulation is not more extensive than is necessary to serve that interest. - Central Hudson lays out a test. If someone wanted to advertise something but the city wont allow them. They th

• Struggle to define commercial speech.

Lower courts struggle to define what is, and is not, commercial speech. In one case, the Fifth Circuit Court of Appeals ruled that one company's claim that the chief employee of another firm was a "deadbeat dad" was commercial speech because the individual "made [the posted comment] with the economic interest of harming" the other's business.44 The court held that the First Amendment permitted legal action against the commenter.45 In another case, former Chicago Bulls star Michael Jordan sued a grocery store for printing his photograph and a message congratulating him for being inducted into the Basketball Hall of Fame in a magazine ad bearing the store's logo and marketing slogan.46 Without determining the store's liability, the Seventh Circuit Court of Appeals found that the paid content was commercial speech even though it did not "propose a commercial transaction."47 On remand, the trial court found for the store.48 When Army Sgt. Jeffrey Sarver sued the producers of the Oscar-winning film "The Hurt Locker" for appropriating his image as a lead character, he categorized the film as commercial speech that deserved reduced First Amendment protection. The Ninth Circuit Court of Appeals disagreed. It said the film was not commercial speech because it did not propose a commercial transaction.49 When the Enigma Software Group sued Bleeping Computer for false advertising through its online forum discussing software firms and products, Bleeping moved for dismissal, claiming that user comments were not commercial speech.50 The federal district court, however, said a "hybrid" combination of commercial and noncommercial speech could be regulated under commercial speech standards if the (1) advertisement (2) referenced a specific product or service (3) to advance the speaker's economic interests

• Guns

Mass shootings in the United States have focused attention on the manufacturers of guns and ammunition and on gun safety laws. Federal law shields the gun industry from nearly all civil liability for the dangers their products pose. But some lawmakers and activists have attempted to address the problem by regulating gun advertising. To date, those efforts have been largely unsuccessful. In 2018, a California law established that "[n]o handgun or imitation handgun, or placard advertising the sale or other transfer thereof, shall be displayed in any part of [commercial] premises where it can readily be seen from the outside." When two gun stores were forced to remove in-store signs, the owners sued. Applying Central Hudson, a federal trial court in California said the advertising at issue was lawful and nonmisleading and the state's interest in reducing handgun suicide was substantial. However, the court found "paternalistic" and "highly speculative" the government's theory that an impulsive person will see a handgun sign outside a store, will impulsively buy the gun (although the Government does not identify a specific purpose for the purchase), and then, at some unspecified future time likely years later, the person's impulsive temperament will lead him to impulsively misuse the handgun that he bought in response to seeing the sign. The law was unconstitutional, the court concluded, because it did not substantially advance the state's legitimate interest and was intended to suppress truthful speech that the government found too persuasive. In an earlier ruling, the court said the First Amendment challenge to the law would likely succeed because the state's goals of dampening demand and reducing violence were tenuous and only indirectly advanced by limiting the merchants' speech. But gu

• The Lanham Act.

More than half a century before the U.S. Supreme Court established that the First Amendment protected truthful, nonmisleading commercial speech about legal products and services in Virginia State Board of Pharmacy, Congress began enacting laws to protect consumers from unscrupulous business practices.176 Because commercial speech often crosses state lines and falls under the U.S. Constitution's Commerce Clause, the federal government generally preempts state regulation of advertising and other commercial speech.177 Congress has enacted scores of laws to ensure that companies provide consumers with essential and accurate information. Competing firms initiate lawsuits when they believe they have been harmed or treated unfairly contrary to the provisions of these laws. In 1946, Congress passed the Lanham Act to prohibit any false or misleading description or promotion of goods, services or commercial activities.178 The law was amended in 1988. At the outset, the law was seldom used to curtail advertising practices, but it became the foundation for lawsuits, especially over ads using price or product comparisons. Today, the Act applies to competitors, not consumers. Courts have formulated five elements for a successful claim under the Act: (1) The defendant must have made a false or misleading statement of fact in advertising; (2) The statement must have actually deceived or had the capacity to deceive a substantial segment of the audience; (3) The deception must have been material, in that it was likely to influence the purchasing decision; (4) The defendant must have caused its goods to enter interstate commerce; and (5) The plaintiff must have been or is likely to be injured as a result.179 Points of Law Understanding The Lanham Act The Lanham Act is federal law. The false advertising section of the Lanham Act provide

• False or Misleading Speech.

Neither the definition of the category nor the precise test applied to government constraints on commercial speech is clear and stable, but the U.S. Supreme Court has steadfastly held that the Constitution does not protect false or deceptive advertising. In addition to giving commercial speech First Amendment protection for the first time in Virginia State Board of Pharmacy, the Supreme Court also established that government could regulate commercial lies and deceptions because the advertiser's access to the truth about his product and its price substantially eliminates any danger that governmental regulation of false or misleading price or product advertising will chill accurate and nondeceptive commercial expression. There is, therefore, little need to sanction some falsehood in order to protect speech that matters. International Law Misleading Advertising in Europe According to the European Commission, anyone advertising, marketing, promoting or selling goods and services is required to provide consumers with enough accurate information to make an informed purchase. The European Union identifies "bait advertising, phony 'free' offers, manipulation of children, false claims of cures, hidden [native] advertisements in media, . . . [and] false offers of prizes" as among the most prominent misleading or aggressive practices that are prohibited. Recent EU regulations bar "unfair commercial practices" in advertising and marketing that are likely to materially distort the purchase decisions of a reasonable consumer.168 The EC found that earlier policies failed to prevent deceptive online practices such as misleading internet offers, false product and price comparisons, fake internet domain name sales, use of competitors' trademarks and other internet-based fraud. The Court developed this thought f

"Integrated brand promotion."

Some advertising scholars call the combination of these old and new techniques "integrated brand promotion."

Commercial Speech

Striking the balance between protecting the rights of advertisers and corporations in the digital era and protecting consumers from deceptive and unfair advertising practices lies at the heart of studying the law of advertising—or what courts refer to as the law of "commercial speech."

• Federal Trade Commission

The Federal Trade Commission (FTC) a federal agency, was established in 1914. Its purpose is to promote free and fair competition in interstate commerce; this includes preventing false and misleading advertising. Its powers were expanded under the Lanham Act. Today, the primary function of the FTC is to prohibit "unfair or deceptive acts or practices in or affecting commerce." The FTC protects consumers by ensuring that advertisers have evidence to support their claims, but it also helps to ensure a fair and competitive marketplace for businesses.

• Tobacco

The Lorillard brothers began advertising their tobacco products in a New York daily newspaper in 1789. Nearly two centuries later, a district court in Washington, D.C., ruled that the federal Public Health Cigarette Smoking Act's ban on broadcast TV and radio ads for cigarettes did not violate the free speech rights of tobacco companies because other outlets existed for their advertising The court said the government had the power to regulate tobacco advertising to protect minors and others from the lure of tobacco. Tobacco producers responded by increasing advertising via print media, billboards and other means. In 2013, a quarter century after federal law prohibited cigarette ads on TV, R. J. Reynolds Tobacco Co. launched a campaign for its e-cigarette, Vuse. Justin Sullivan/Getty Images In 2001, Lorillard Tobacco Co. challenged a Massachusetts law that limited point-of-sale tobacco ads and banned outdoor tobacco ads within 1,000 feet of schools or playgrounds. The U.S. Supreme Court reviewed the law under Central Hudson and held that the limits on ads at the point of purchase advanced a legitimate state interest in preventing minors from accessing tobacco products that were illegal for them to consume. In Lorillard Tobacco Co. v. Reilly, the Court said the restrictions addressed a state interest "unrelated to the communication of ideas." However, the ban on outdoor advertising was unconstitutional because it did not reasonably fit the state's interest. In 2017, one federal district court upheld the authority of the Food and Drug Administration (discussed later in this chapter) to regulate all tobacco products, including cigars, e-cigarettes and vaping materials. That same year, a district court in West Virginia ruled that an e-cigarette consumer could pursue his First Amendment claim against the FDA an

CONSUMER PROTECTION AND THE FEDERAL TRADE COMMISSION (FTC)

The Progressive Era of the early 20th century saw the birth of concerns for consumer protection, but increased interest in safeguarding consumers has been a century-long, if sometimes challenging project that continues today. As the Industrial Revolution gave rise to consumer culture, the progressives of that era fought for social and political reforms to counter problems caused by industrialization. The formation of the Federal Trade Commission in 1914 by Congress was part of several federal laws to address everything from the safety of food and drugs to changes in the banking system. It was part of a push to hold manufacturers accountable and to protect citizens from the harms caused by a changing and booming U.S. economy. Initially, the FTC was formed to address the growth of the business trusts that created monopolistic environments (see above). Today, the FTC handles a variety of antitrust and consumer protection laws. The Federal Trade Commission has two key commercial speech powers, both derived from Section 5(a) of the FTC Act. The agency is empowered to investigate and prevent (1) unfair or deceptive acts or practices affecting commerce and (2) unfair methods of competition. (IMPORTANT) It oversees nearly all parts of commerce and targets its enforcement efforts at practices that cause the greatest harm to consumers. (IMPORTANT) The first power is used in cases against advertisers; the second power is one that the FTC increasingly relies on to monitor competitive harms caused by businesses generally, especially those businesses more recently engaged in the digital economy. For example, the FTC has used its "unfairness authority" to regulate digital platforms like Facebook, which has repeatedly deceived users about its ability to control the privacy of user personal information. (IMPORTANT)

• Virginia State Board of Pharmacy v. Virginia CCC (1976)

The Supreme Court overturned Chrestensen and provided commercial speech explicit First Amendment protection in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council. Reviewing a Virginia state ban on pharmacists' advertising of prescription drug prices, the Court said the ban violated the public's right to receive information about the prices and the need for a free flow of commercial information to aid intelligent consumer decisions. The Court clarified that commercial speech does not fall "wholly outside the protection" of the First Amendment. Commercial speech has value within the economic marketplace and as a venue for debate. The Court wrote, As to the particular consumer's interest in the free flow of commercial information, that interest may be as keen, if not keener by far, than his interest in the day's most urgent political debate. . . . Advertising, however tasteless and excessive it sometimes may seem, is nonetheless dissemination of information as to who is producing and selling what product, for what reason, and at what price. So long as we preserve a predominantly free enterprise economy, the allocation of our resources in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be intelligent and well informed. To this end, the free flow of commercial information is indispensable. In a test that looked something like intermediate scrutiny, the U.S. Supreme Court found the government's asserted interest in fostering high professional standards among pharmacists insufficient to support a ban on price advertising and found the law overbroad in achieving its stated goal. The Court added that its ruling allowed the government to continue to regulate false, deceptive or misleading sp

• Citizens United v. Federal Election Commission (2010).

The Supreme Court's 2010 decision in Citizens United v. Federal Election Commission (see Chapter 2) also increased First Amendment protection for corporate and nonprofit funding of political speech. That landmark case involved "Hillary: The Movie," a film produced by Citizens United, a conservative nonprofit group, that was highly critical of Democratic presidential candidate Hillary Clinton's experience and ability to hold the office. A federal law called the Bipartisan Campaign Reform Act of 2001, an attempt to regulate "big money" campaign contributions, placed restrictions on corporations and labor unions from funding such communication—what is often referred to as "independent expenditures." Citizens United challenged provisions in that law on First Amendment grounds. Overturning more than 100 years of precedent, the U.S. Supreme Court held that such independent political spending did not present a threat of corruption, as long as it was not coordinated with a candidate's campaign. As a result, corporations can now spend unlimited funds on campaign advertising as long as they are independent and not formally associated with a candidate for office or a political party. The Court held that political speech does not lose First Amendment protection "simply because its source is a corporation." The 5-4 decision in Citizens United remains highly controversial. Free speech advocates heralded the opinion as a win for corporations and an open, unfettered marketplace of ideas. Critics have lamented that the opinion has hurt the country, ushering in "massive increases in political spending from outside groups" and "dramatically expanding the already outsized political influence of wealthy donors, corporation and special interest groups." The case has fueled the growth of so-called S

• Prescription Drugs

The U.S. Supreme Court applied strict scrutiny in its review of a Vermont law that prohibited only certain marketers from buying doctors' prescription records from pharmacies. The state law limited access to specific brand-name drug sales data to protect doctors' privacy and prevent drug marketing designed to quash demand for cheaper generic drugs. In Sorrell v. IMS Health, Inc. (discussed earlier and excerpted at the end of this chapter), the Supreme Court found that "the state has burdened a form of protected expression that it found too persuasive. At the same time, the state has left unburdened those speakers whose messages are in accord with its own views. This the state cannot do."

CORPORATE POLITICAL SPEECH

The U.S. Supreme Court has distinguished the First Amendment right of a business to communicate political messages from its commercial speech. In 1977, when the First National Bank of Boston wanted to spend money to oppose a ballot initiative that would allow Massachusetts to institute a graduated income tax, the Supreme Court affirmed the bank's constitutional right to speak out. The bank challenged state restrictions on political contributions by corporations to influence the outcome of the vote. Relying on the public's right to free-flowing information and the nearly impossible differentiation of media companies from others, the Court provided businesses' noncommercial speech with greater protection than afforded under the commercial speech doctrine. The Court concluded that the bank's speech was "at the heart of the First Amendment's protection."

• Board of Trustees of the State University of New York v. Fox

The U.S. Supreme Court has tinkered with, clarified or altered the "fit," or "no more extensive than necessary," requirement of the Central Hudson test almost since its adoption. In Board of Trustees of the State University of New York v. Fox, the Court attempted to clarify that element of the test. In Fox, the Court said advertising regulation did not need to employ the "least restrictive means" available. Instead, regulation must demonstrate a "reasonable fit" to the state interest. Citing Posadas, the Court explained, "What our decisions require is a 'fit' between the legislature's ends and the means chosen to accomplish those ends—a fit that is not necessarily perfect, but reasonable." This revision displayed deference to legislative judgments and made it easier for advertising regulations to be found constitutional. In subsequent commercial speech rulings, the U.S. Supreme Court tried to help lower courts grapple with the determination. It said a law does not "fit" its objective when alternatives are available "which could advance the government's asserted interest in a manner less intrusive to . . . First Amendment rights." Alternately, "the scope of the restriction on speech must be reasonably, though it need not be perfectly, targeted to address the harm intended to be regulated."66 Or the required match between the law and its goals must be one of "narrow tailoring" where courts "carefully calculate the costs and benefits associated with the burden on speech."67 It's a matter of "proportionality," some justices said.68 And in the case of Sorrell v. IMS Health, Inc. (discussed again later and excerpted at the end of the chapter), the Court sidestepped the definition of fit to explain its objective: The proper "fit" ensures "not only that the S

• Gambling

The case of Posadas discussed earlier involved casino advertising in Puerto Rico, where gambling is legal. But a few years later, the U.S. Supreme Court reviewed the constitutionality of a federal law that banned a radio station in North Carolina, where gambling was illegal, from advertising lotteries even when most of the station's listeners lived in Virginia, where lotteries were legal. The station was only three miles from Virginia. The U.S. Supreme Court upheld the ban, finding that the state power to ban gambling provided a legitimate government interest in discouraging gambling promotion. The Court said that Congress surely knew that stations in one state could often be heard in another but expressly prevented each and every North Carolina station, including Edge, from carrying lottery ads . . . [because] each North Carolina station would have an audience in that state, even if its signal reached elsewhere. In addition to finding that the state's greater power to ban gambling encompassed the lesser power to ban its promotion, the Court said that the radio station's audience-based argument "has no logical stopping point once state boundaries are ignored." The Court declined "to start down that road."

First Amendment and Commerce Clause.

The law of commercial speech is rooted both in the First Amendment and in the Commerce Clause—Article 1, Section 8 of the U.S. Constitution—which enumerates Congress' power "to regulate commerce with foreign nations, and among the several states Commerce generally is defined as the provision of goods or services in exchange for compensation, usually payment.

• 2021-2022: updated rules

The statute also gives the FTC authority to seek relief for consumers, and in some instances to seek civil penalties from wrongdoers. In 2021, a unanimous U.S. Supreme Court ruled that the FTC can no longer grant monetary relief from companies engaged in deceptive practices under Section 13(b) of the FTC Act. As of 2022, the FTC was voting to update its rules and seek more authority to collect penalties under other provisions of the FTC Act. In addition, the FTC has lobbied Congress to revise the law to make clearer its ability to collect civil penalties. President Biden's Build Back Better bill also provides for expanded FTC powers. In addition to fines, the FTC can implement rules for advertisers that define acts or practices that are unfair or deceptive. It publishes reports, monitors compliance, and makes legislative recommendations to Congress about issues affecting the economy. The FTC is led by five commissioners, who are nominated by the President and confirmed by the U.S. Senate. No more than three commissioners can be of the same political party, and the president chooses one to be chair. The FTC has several bureaus that carry out its work: the Bureau of Consumer Protection, the Bureau of Competition and the Bureau of Economics.

Native advertising.

The terms to describe this explosive growth are somewhat confusing and often contested. But the terms are likely to be hugely important as courts begin to wrestle with what and how to protect these new forms of advertising and marketing. Native advertising, which represented the greatest share of the roughly $53 billion digital advertising market in 2020,37 disguises commercial advertising content by mirroring the tone, style and design of the nonadvertising copy in which it is embedded. It is usually hosted by established publishers. The Wall Street Journal, BuzzFeed, HuffPost and others have employees or third parties dedicated to generating this paid content. It can also include promoted tweets, suggested Facebook posts, and editorial-based content recommendations. Ads designed to resemble the editorial content of the medium where they appear.

Commercial Speech Scrutiny

U.S. Supreme Court has held that government efforts to compel speech and government efforts to silence speech are equally suspect. The freedom of speech "necessarily compris[es] the decision of both what to say and what not to say," the Supreme Court said. Government-mandated disclosures—such as loyalty oaths, safety recall notifications or cigarette warning labels—threaten First Amendment freedoms in two ways. First, they alter the speaker's coherent message. "For instance, by compelling newspaper editors or parade organizers to include certain material," they "unduly intrude" on the editors' or organizers' ability to communicate their chosen message. Second, they force a speaker to declare something as fact that the speaker disputes. Mandated speech also prevents silence by those who prefer not to speak at all. The U.S. Supreme Court has said that speech mandates are content-based regulations subject to strict scrutiny review.

• Alcohol.

When Coors Brewing Co. wanted to advertise and label its beer with the percentage of alcohol content, a federal law stood in the way. Coors challenged the law on First Amendment grounds, and the federal government said the law was a reasonable means to prevent "strength wars" that might increase beer potency and harm society. In Rubin v. Coors Brewing Co., the U.S. Supreme Court held for Coors. The Court said that while combating "strength wars" might be a substantial interest, a ban on alcohol content advertising or labeling did not "fit" that goal as well as would alternatives "less intrusive to the First Amendment's protections for commercial speech." In the case of 44 Liquormart, Inc. v. Rhode Island mentioned earlier, Rhode Island fined a liquor store owner who tried to evade a state ban on ads that made "reference to the price" of liquor by placing the exclamation "Wow" instead of prices next to bargain products in newspaper ads. The owner raised a First Amendment challenge to the law, and the state argued that the ban advanced the government's substantial interest in promoting temperance by preventing bargain-priced alcohol promotions designed to increase consumption. Real World Law Does Advertising Increase Product Demand? A key justification for government regulation of advertising is that it alters consumer choices and increases product demand. Policy and empirical studies find mixed results. One study suggested that advertising increases demand for cigarettes. Another found that alcohol advertising instead shifts consumption among brands.135 The Food and Drug Administration found a correlation between advertising and increased product demand, but other federal agencies were "not convinced." Nonetheless, U.S. Supreme Court's rulings have reasoned that companies "b

• Commerce and the Industrial Revolution.

While advertising certainly existed long before the 19th and 20th centuries, it was the Industrial Revolution, the rise of consumer culture, and the advent of broadcast media that ignited the consumer landscape and grew the U.S. advertising market from one that created anxieties about advertising speech to one that would be the envy of the world. With that growth, however, came an increase in unfair and monopolistic business practices. Business "trusts" at that time combined several large companies to control production and distribution of goods for mutual advantage. But such trusts also created abusive market powers—monopolies—that often prohibited others from entering the same business. In the most well-known example, Standard Oil, John D. Rockefeller's company that existed from 1870 to 1911, controlled almost all oil production, processing, marketing and transportation in the U.S. with the help of trust agreements and mergers.

• Sherman Antitrust Act (1890)

With that growth, however, came an increase in unfair and monopolistic business practices. Business "trusts" at that time combined several large companies to control production and distribution of goods for mutual advantage. But such trusts also created abusive market powers—monopolies—that often prohibited others from entering the same business. In the most well-known example, Standard Oil, John D. Rockefeller's company that existed from 1870 to 1911, controlled almost all oil production, processing, marketing and transportation in the U.S. with the help of trust agreements and mergers. Congress responded to such market power by passing the Sherman Antitrust Act in 1890, and the company was ultimately ordered to divest its major holdings. But Congress also decided federal laws were not enough. When judicial interpretation of such laws continued to favor large business interests and the costs of litigating such disputes increased, Congress began discussing a new commission to regularly check such powerful interests.