Legalmatter

By: Brian J. Meli

Back in the quaint old days of the the 1970’s and early 80’s, when the Internet was still a college science project and social networking was something you did around a water cooler, the US Supreme Court decided a series of First Amendment cases that established the modern-day boundaries between inviolate non-commerical speech (personal, religious, political speech) and less revered, but still important commercial speech.

The result was a distinction between communication that’s subject to government restriction on the basis that it’s false or misleading (commercial), and speech that’s beyond the reach of regulation no matter how untrue or inaccurate it may be (non-commerical). It’s a distinction—and a precedent—that still stands today, nearly 40 years and numerous technological revolutions later. But the longevity of the distinction has less to do with the clarity of the decisions that formed it, and more to do with the Supreme Court resisting reexamination of an issue that, now more than ever, demands drawing boundaries between concepts that can be almost impossible to distinguish, let alone define.

The basic premise that cases like Central Hudson Gas v. Public Service Commission and Bolger v. Young’s Drug Products established was that commercial speech was speech that proposed a commercial transaction. But even back then things weren’t always so simple, and so the Court identified the following three factors to assist a finder of fact in determining whether speech is intended to promote the exchange of ideas, making it worthy of the highest level of protection; or the exchange of services, so to be eligible for comparatively less. While the Court noted that no single factor is dispositive one way or the other, all of them should be considered together:

Advertising format:  Is the message delivered via a medium that is typically used to deliver a sales message? (i.e. does it walk and talk like an ad?)

Product references: Does the message refer to a particular product or service by name?

Commercial motivation: Is the primary motive of the speech economic gain?

The Bolger test, as it came to be known, was never very easy to apply in practice, with things like public service announcements, sponsorships, product placements and public relations efforts seemingly falling squarely at the crossroads of the First Amendment and commercial regulation. But in comparison to today’s standards, the process of defining those activities seems elementary in hindsight.

The big communication trend of today is content marketing, which at its core can be boiled down to the de-advertising of advertising. Essentially it’s about informing or entertaining consumers with content that’s either unrelated or indirectly related to what you’re selling in the hope that it will give consumers a reason to develop a relationship with your company, an affinity for your brand, or a preference for your services.  However you define it, creating messaging for brands that doesn’t smack of product shilling is big business and getting bigger by the day.

For marketers, content has always been king because of its ability to drive revenue. The better the content, the higher the price the content provider can demand from advertisers. But now with the content becoming the ad (if you can even still call it that) both are being redefined. And as that happens, the era of the ‘commercial’, when the very name of the message defined what type of speech it was, is becoming an amusingly quaint memory.

As the popularity of content marketing explodes, the crisscrossing lines between entertaining, educating and selling are becoming tangled to a degree unimaginable in the 1980’s. Social media, blogging, and grassroots and guerrilla marketing tactics are allowing advertisers to engage and interact with customers in new, more welcome and essentially less advertising-like ways. At best these tactics are demoting the Bolger test a starting point for commercial speech analysis, and at worst rendering it a useless relic of a bygone era. Browse the Bolger factors with an eye to content marketing, and it isn’t hard to see why:

• The basic definition that commercial speech is speech proposing a commercial transaction would exclude the overwhelming majority of content marketing
• The ‘advertising format’ factor tends to exclude content marketing, the very purpose of which is to shun the traditional sales pitch in favor of the non-traditional soft-sell.
• In most cases the ‘product reference’ factor is equally exclusionary. A company white paper, or a newsletter streamed on an RSS feed is meant to look and feel like a consumer help guide. Start filling those tactics with product plugs and they start losing the credibility that makes them such powerful marketing tools.
• The ‘commercial motivation’ factor, which has always been the murkiest of them all, becomes even more so in the context of content. All marketing, even the content variety, is of course ultimately intended to convert paying customers at some point, but what makes content marketing so unique is how attenuated the link between content dissemination and consumer action can be. Often the goal of a social media strategy is to plant a seed of persuasion in a customer’s mind that won’t bear fruit for months, or even years later.

The issues that content marketing raises aren’t new. Advertisers have been embedding sales pitches inside TV shows, magazines, and self-help literature for as long as those media have existed.  What is new though is the percentage of advertisers that are now doing it. At the same time that it’s becoming more and more natural for these two variations of speech to be fused at the hip, social media–with its broad reach and non-existent cost of entry–is ensuring that this hybrid speech is being disseminated at a previously inconceivable rate. This environment raises both the likelihood that the government will eventually step in, and the stakes if it does.

What those stakes may be is difficult to say at this point. The commercial speech debate is primarily an academic exercise at the moment, but it raises questions that can go from the hypothetical to the real-world in a single high-profile lawsuit.

Many small businesses today encourage employees and contractors to write blogs, send tweets, and post status updates about everything and anything, no matter how tangentially related to the business, in order to get their name out. Is this speech subject to the same regulations that it would be if it were printed on a 14′ x 48′ freeway billboard? Or is it untouchable no matter how inaccurate or misleading it may be? Content that includes factual inaccuracies involving overt product claims can no doubt be the subject of enforcement actions, but where is the line drawn?

It’s already the case that bloggers who promote products and services are engaging in commercial speech if they’re being paid for their efforts; at least the FTC is comfortable concluding so, requiring blogger compensation disclosures for such practices. But how much further can this type of regulation be stretched? Can you find yourself on the wrong end of an FTC or private action because one of your employees posts an article that overstates a market need, understates a product drawback, or leaves out vital information entirely? What if a customer uses social media to gripe about your product, and in an effort to do damage-control an employee responds with information that isn’t entirely accurate? If the speech is considered commercial in nature, and the misrepresentation is deemed both misleading and material to a future consumer’s purchase decision, then according to the deceptiveness prong of the FTC Act, the answer is yes.

What’s needed in light of the evolution in how companies interact with their customers is a fresh review of the commercial speech dichotomy, taking into account modern communication abilities and widespread media practices. While that may not happen for some time, some state courts have begun taking matters into their own hands. The early results though have not been favorable if you’re an advertiser or a civil libertarian.

For example, The California Supreme Court’s decision in Kasky v. Nike Inc. established California’s own limited-purpose test, incorporating the advertising format and commercial motivation factors from Bolger, while adding its own factors, including the identity of the speaker and the intended audience. The attempt to update Bolger for a new era was an encouraging development to be sure. Less encouraging though was the court’s finding that under its broad new test, Nike’s public relations response to claims that it used overseas sweatshops constituted commercial speech, and could therefore be subject to a consumer protection action.

Whether Kasky represents the first step in a broader move toward widening the scope of commercial speech, or simply an isolated example of one state’s overreaching, remains to be seen. But considering that Kasky was decided well before content marketing or social media were even part of the popular lexicon, it should serve as a warning signal to businesses that they should not take their First Amendment rights for granted.

While a definitive review of the commercial speech definition on the federal level may be some time in coming, advertisers shouldn’t allow uncertainty to constrain their good-faith marketing efforts. But they should be mindful of everything that’s being put in front of the public on their behalf; whether they consider it an advertisement or not. At the very least they should assume their company’s Facebook page and Twitter accounts carry less inherent First Amendment protection than their personal ones do, and treat every communication they send out like it’s a ‘commercial.’ If advertisers are doing everything they can to ensure the accuracy of their public communications prior to publication—no matter the form—they will minimize their risk that someone will claim to be unfairly deceived or misled by them.

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and The Law Firm of Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different.