Advertising Law
 

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Puffery is allowed. Puffery is a boastful opinion such as "this product is great." Facts are different from opinions. Facts such as the amount of calories in a food product or the how fast a particular car can go from zero to sixty miles per hour have to be accurate.

Commercial Speech Doctrine-Valentine v. Chrestensen (1942) began the commercial speech doctrine. This case established that the courts can regulate commercial speech.

Advertising enjoys some protection as commercial speech- Virginia State Board v Virginia Citizens Council (1976)

Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976) (USSC+)

Appellees, as consumers of prescription drugs, brought suit against the Virginia State Board of Pharmacy and its individual members, appellants herein, challenging the validity under the First and Fourteenth Amendments of a Virginia statute declaring it unprofessional conduct for a licensed pharmacist to advertise the prices of prescription drugs....

Held:

1. Any First Amendment protection enjoyed by advertisers seeking to disseminate prescription drug price information is also enjoyed, and thus may be asserted, by appellees as recipients of such information. Pp. 756-757 .

2. "Commercial speech" is not wholly outside the protection of the First and Fourteenth Amendments, and the Virginia statute is therefore invalid. Pp. 761-773 .

(a) That the advertiser's interest in a commercial advertisement is purely economic does not disqualify him from protection under the First and Fourteenth Amendments. Both the individual consumer and society in general may have strong interests in the free flow of commercial information. Pp. 762-765 .

(b) The ban on advertising prescription drug prices cannot be justified on the basis of the State's interest in maintaining the professionalism of its licensed pharmacists; the State is free to require whatever professional standards it wishes of its pharmacists, and may subsidize them or protect them from competition in other ways, but it may not do so by keeping the public in ignorance of the lawful terms that competing pharmacists are offering. Pp. 766-770 .

(c) Whatever may be the bounds of time, place, and manner restrictions on commercial speech, they are plainly exceeded by [p*749] the Virginia statute, which singles out speech of a particular content and seeks to prevent its dissemination completely. Pp. 770-771 .

How far far the government go in regulating commercial speech?

1977- Supreme Court ruled that the state laws ban attorneys from advertising violated the First Amendment. Now about 1/3 of all lawyers advertise.

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The test for commercial speech regulations are from the Central Hudson Gas v Public Service Commission Case of 1980.

Central Hudson Gas & Elec. Corp. v. Public Service Comm'n, 447 U.S. 557 (1980) (USSC+)

Held: A regulation of appellee New York Public Service Commission which completely bans an electric utility from advertising to promote the use of electricity violates the First and Fourteenth Amendments. Pp. 561-572 .

If the communication is neither misleading nor related to unlawful activity, the government's power is more circumscribed. The State must assert a substantial interest to be achieved by restrictions on commercial speech. Moreover, the regulatory technique must be in proportion to that interest. The limitation on expression must be designed carefully to achieve the State's goal. Compliance with this requirement may be measured by two criteria. First, the restriction must directly advance the state interest involved; the regulation may not be sustained if it provides only ineffective or remote support for the government's purpose. Second, if the governmental interest could be served as well by a more limited restriction on commercial speech, the excessive restrictions cannot survive.

So this means that commercial speech can be regulated if:

It is misleading or concerns an illegal product, OR if
There is a substantial government interest, AND
The regulation directly advances that government interest, AND
The regulation is narrowly tailored to that interest.

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Liquormart,Inc. et al. v. Rhode Island

May 13, 1996

Petitioners, a licensed Rhode Island liquor retailer and a licensed Massachusetts liquor retailer patronized by Rhode Island residents, filed this action seeking a declamatory judgment that Rhode Island laws banning the advertisement of retail liquor prices except at the place of sale violate the First Amendment. In concluding that the ban was unconstitutional because it did not directly advance the State's asserted interest in the promotion of temperance and was more extensive than necessary to serve that interest, the District Court reasoned that the party seeking to uphold a restriction on commercial speech carries the burden of justifying it and that the Twenty first Amendment did not shift or diminish that burden. In reversing, the Court of Appeals, inter alia, found "inherent merit" in the State's submission that competitive price advertising would ultimately increase sales, and agreed with it that the Twenty first Amendment gave its advertising ban an added presumption of Validity.

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Government agencies that can regulate advertising

FTC-Federal Trade Commission

FTC -Section 5(a) of the FTC Act states "unfair or deceptive acts or practices in or affecting commerce are declared unlawful" (15 U.S.C. � 45(a)(1)).

The FTC can rule if the advertising has deceptive representations, omissions or practices likely to mislead reasonable consumers.

Special rules exist for comparative advertising, celebrity endorsements, and affirmative disclosures (EPA mileage, warnings...)

The FTC has several actions it can take:

consent decrees
cease-and-desist orders
corrective advertising

FTC and Advertising law

Recent FTC cases Most cases have a press release that summarize the findings.

FDA regulates labeling and packaging of foods and drugs. The Nutritional Labeling and Education Act (NLEA) of 1990 has legal standards for using terms such as fresh, light, low fat and reduced calories (http://www.fda.gov/opacom/laws/lawtoc.htm and http://www.cfsan.fda.gov/~dms/lab-ind.html#industry)
Merck & Co. reached a $58 million settlement with 30 state attorneys general over ads for Vioxx. Direct To Consumer ads for Vioxx will have toi be preapproved by the FDA before the ads are aired(May 22, 2008).

FCC- Federal Communication Commission- indirect control with licensing of broadcast stations.

Patent and Trademark Office- regulates trademarks, patents and copyright

U.S. Post Office

State laws

Nongovernmental Review Boards and Guidelines-BBB, NAD,NARB

Recent Updates Legal Review: The FTC Fires a Warning Shot After AnnTaylor’s Blogging Adventure

FDA Law Blog

Resources

Guide to Advertisng Law

http://www.lawresearch.com/v2/practice/ctadver.htm

International Ad Law see Global Advertising