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Learning the Rights and Wrongs of Commercial Speech

Michael Jordan recently learned that his achievements on the basketball court do not translate into success in court when his opponent is the First Amendment.

In a ruling against Mr. Jordan, a federal judge in Chicago determined that a grocery store's full-page ad in a 2009 Sports Illustrated congratulating him on his election to the Basketball Hall of Fame was not a commercial advertisement and was entitled to full First Amendment protection.

The decision essentially gutted the star's suit, which had claimed that the ad infringed on his trademark and business interests, and exploited his name and identity for commercial gain without his permission.

While the outcome means that advertisers have some protection against such celebrity suits, companies carry the risk of committing fouls, especially as the definition of "advertising" continues to expand, and online, mobile and owned-media platforms provide new ways to engage with consumers.

What's the play?
Commercial speech is speech that promotes a commercial transaction, and it doesn't receive the same broad First Amendment protection as noncommercial speech. The decision reinforces that not all communication from a company is "commercial speech" just because the company has an inherent profit motive in everything it does or says.

Jewel Foods was invited to participate in the commemorative issue of Sports Illustrated honoring Jordan for free in return for selling the issue at checkout displays. The company's page pictured a pair of basketball shoes emblazoned with 23 (Jordan's number during most of his career with the Chicago Bulls), the Jewel-Osco logo and slogan, "Good things are just around the corner" and a message congratulating Jordan, "a fellow Chicagoan," on his accomplishments.

The judge concluded that the page was not actually an advertisement, even though everyone associated with it referred to the placement as an "ad" -- a convenient, shorthand term. The text praised Mr. Jordan, not Jewel products or services. The messaging would need to propose or invite a commercial transaction, or refer to a specific product or service -- neither of which this ad did -- to justify stripping it of some First Amendment protections. (Mr. Jordan also sued Dominick's Finer Food, another Chicago-area store, for a similar ad that included a $2-off coupon, which the judge said may have crossed the line into commercial speech.)

The athlete's argument that Jewel's logo and slogan were intended to enhance its brand's value and promote its stores, thereby making the page a commercial ad, also missed the mark, according to the judge. The logo was the most effective way to identify Jewel as the well-wisher, and the slogan personalized the message and reinforced the notion of the company as a "fellow Chicagoan."

Home or away?
Where and how content appears affect whether it is commercial speech. In this case, the "ad" appeared in the commemorative SI. Jewel didn't buy the ad space, and it didn't own the media outlet. But the outcome might have been different had Jewel run the ad in its store circular, or on its website or Facebook page. Content on such owned-media channels is more likely to be considered commercial speech because their main (and some might argue, only) purpose is promotion of the brand, and its products and services.

The decision isn't an impenetrable guard against celebrity lawsuits. The court hasn't yet dismissed the suit entirely. Mr. Jordan's team has asked the judge to reconsider the decision and will be allowed to appeal the case's outcome.

The takeaway is that while congratulatory ads, if done right, are not commercial speech, lots of other content is.

Paid advertising in traditional media that promotes is obviously commercial speech. Other forms of messaging that tie well-known people to a brand without their permission may leave marketers open to lawsuits.

This article was co-authored by Brian Socolow and Tammy Brandt.

Brian R. Socolow is a partner in Loeb & Loeb’s Sports Group. He represents individuals and organizations in the sports industry in contracts, advertising, intellectual property and related matters.