It still remains unclear whether commercial speech enjoys the same level of protection as other forms of speech (i.e. political speech). The Supreme Court has long denied advertising, or commercial speech, constitutional protection as such forms of speech serve to advance profit, not free speech values. Courts utilize the term "commercial speech" to mean paid messages that do "no more than propose a commercial transaction".
Defining Key Terms
Standing: The position of a plaintiff who has been injured or has been threatened with injury. No person is entitled to challenge the constitutionality of an ordinance or statute unless he or she has the required standing - that is, unless he or she has ben affected by the ordinance or statute.
Federal Trade Commission (FTC): A federal agency created in 1914 with the purpose to promote free and fair competition in interstate commerce; this includes preventing false and misleading advertising.
Puffery: Advertising that exaggerates the merits of products or services in such a way that no reasonable person would take the ad seriously. Usually, puffery is not illegal given that a reasonable person understands the claim is not to be taken seriously.
Opinion Letter: An informal FTC communication providing general advice about advertising techniques.
Advisory Opinion: A FTC measure that offers formal guidance on whether a specific advertisement may be false or misleading and how to correct it.
Industry Guides: In advertising, a FTC measure that outlines its policies concerning a particular category of product or service.
Trade Regulation Rule: A broadly worded statement by the FTC that outlines advertising requirements for a particular trade.
Voluntary Compliance: The general FTC practice to allow advertisers to follow FTC rules and correct violations before the commission takes action.
Consent Order: An agreement between the FTC and an advertiser stipulating the terms that must be followed to address problematic advertising; also called a consent agreement.
Cease and Desist Order: An administrative agency order prohibiting a person or business from continuing a particular course of conduct.
Litigated Order: A FTC order filed in administrative court and enforceable by the courts whose violation can result in penalties, including fines of up to $10,000 per day.
Substantiation: The authority of the FTC to demand that an advertiser prove its advertised claims.
Corrective Advertising: The FTC power to require an advertiser to advertise or otherwise distribute information to correct false or misleading advertisement claims.
Standing: The position of a plaintiff who has been injured or has been threatened with injury. No person is entitled to challenge the constitutionality of an ordinance or statute unless he or she has the required standing - that is, unless he or she has ben affected by the ordinance or statute.
Federal Trade Commission (FTC): A federal agency created in 1914 with the purpose to promote free and fair competition in interstate commerce; this includes preventing false and misleading advertising.
Puffery: Advertising that exaggerates the merits of products or services in such a way that no reasonable person would take the ad seriously. Usually, puffery is not illegal given that a reasonable person understands the claim is not to be taken seriously.
Opinion Letter: An informal FTC communication providing general advice about advertising techniques.
Advisory Opinion: A FTC measure that offers formal guidance on whether a specific advertisement may be false or misleading and how to correct it.
Industry Guides: In advertising, a FTC measure that outlines its policies concerning a particular category of product or service.
Trade Regulation Rule: A broadly worded statement by the FTC that outlines advertising requirements for a particular trade.
Voluntary Compliance: The general FTC practice to allow advertisers to follow FTC rules and correct violations before the commission takes action.
Consent Order: An agreement between the FTC and an advertiser stipulating the terms that must be followed to address problematic advertising; also called a consent agreement.
Cease and Desist Order: An administrative agency order prohibiting a person or business from continuing a particular course of conduct.
Litigated Order: A FTC order filed in administrative court and enforceable by the courts whose violation can result in penalties, including fines of up to $10,000 per day.
Substantiation: The authority of the FTC to demand that an advertiser prove its advertised claims.
Corrective Advertising: The FTC power to require an advertiser to advertise or otherwise distribute information to correct false or misleading advertisement claims.
Important Cases
Central Hudson Gas & Electronic Corp. v. Public Service Commission of New York (1980): Ruling in favor of Central Hudson Gas & Electronic Corp. Court ruled that New York's ban violated the right to commercial speech.
Sorrel v. IMS Health Inc. (2011): The Court held that a Vermont statute which restricted the sale, disclosure, and use of records revealing the prescribing practices of individual doctors violated the First Amendment.
Virginia State Pharmacy Board v. Virginia Citizens Consumer Council (1976): The Supreme Court ruled that a state could not limit pharmacists' right to provide information about prescription drug prices.
Relevant Doctrine
The Commercial Speech Doctrine:
Central Hudson Gas & Electronic Corp. v. Public Service Commission of New York (1980): Ruling in favor of Central Hudson Gas & Electronic Corp. Court ruled that New York's ban violated the right to commercial speech.
Sorrel v. IMS Health Inc. (2011): The Court held that a Vermont statute which restricted the sale, disclosure, and use of records revealing the prescribing practices of individual doctors violated the First Amendment.
Virginia State Pharmacy Board v. Virginia Citizens Consumer Council (1976): The Supreme Court ruled that a state could not limit pharmacists' right to provide information about prescription drug prices.
Relevant Doctrine
The Commercial Speech Doctrine:
- The government may regulate advertising that is false, misleading or deceptive.
- The government may regulate advertising for unlawful goods or services.
Even accurate advertising for legal goods and services may be regulated if the government demonstrates:
- A substantial state interest behind the regulation.
- The regulation directly advances the state's interests.
- A reasonable fit between the state's interest and the regulation.
The Free Flow of Commercial Information: In Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, the U.S. Supreme Court established that:
- "Freedom of speech" applies to both the speaker and the receiver of information.
- "Speech does not lose its First Amendment protection because money is spent to project it, as in a paid advertisement"
- Speech that only proposes a commercial transaction is not so removed from "any exposition of ideas" that it lacks all protection.
- The need to make intelligent informed, economic decisions in a free enterprise economy drives the public interest in entirely commercial information.
- Some forms of commercial speech, including deceptive or misleading ads, may be regulated.
Lanham Act: A federal law that regulates the trademark registration process but also contains a section permitting business competitors to sue one another for false advertising.
Lanham Act Standing: In 2014, the U.S. Supreme Court established that a plaintiff has standing to bring suit under the Lanham Act when:
Current Issues or Controversies
Dealing with third party merchants. I.e. Amazon, eBay. Should they be liable?
Lanham Act Standing: In 2014, the U.S. Supreme Court established that a plaintiff has standing to bring suit under the Lanham Act when:
- 1. The defendant's actions occurred inside "the zone of interest" of the Lanham Act, and
- 2. The injury to the plaintiff is "proximately caused" by the defendant's actions.
False & Misleading: The FTC policy statement establishes the three part federal definition of false and misleading advertising
- 1. The ad must involve a "material" representation, omission or practice.
- 2. The material representation must be likely to affect the consumer's conduct or decision with regard to a product or service.
- 3. The representation must be likely to mislead a reasonable consumer acting reasonably in the circumstances.
Dealing with third party merchants. I.e. Amazon, eBay. Should they be liable?
My Questions & Concerns
1. What is considered an unlawful good or service?
1. What is considered an unlawful good or service?
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