The Supreme Court has developed a separate level of First Amendment protections for commercial advertising. Although an overall trend toward greater protection for commercial speech has emerged in the Supreme Court's opinions, the Court has reiterated that commercial speech is not protected to the same extent as other forms of protected speech.
When the Court first considered the issue in Valentine v. Chrestensen (1942), it discounted the notion that commercial advertising deserved First Amendment protection, upholding a New York ordinance forbidding street distribution of handbills. The Court did not recognize First Amendment protection for commercial speech until the justices explicitly overruled the Valentine decision in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976).
In Virginia Pharmacy, the Court decided that commercial speech did fall within the scope of the First Amendment. It declared unconstitutional a statute banning the advertisement of prescription drug prices. The Court reasoned that such advertisements conveyed vital information to consumers who depended upon a free flow of commercial information. During the 1970s, the Court granted commercial speech a significant amount of First Amendment protection, focusing on consumers' right to make informed decisions.
This approach also guided the Court in Central Hudson Gas and Electric Corp. v. Public Service Commission (1980), in which it set a new standard of protection for commercial speech. In overturning a statute banning certain advertising by utilities, the Court stated that the First Amendment's application to commercial speech rests upon the informational function of advertising. The resulting four‐part test for determining the constitutionality of advertising regulation included: (1) whether the expression concerns lawful activity and is not misleading; (2) whether the asserted governmental interest is substantial; (3) whether the regulation directly advances the governmental interest; and (4) whether the restriction is no more extensive than necessary to further the governmental interest.
During the 1980s, however, the Supreme Court handed down a series of decisions restricting First Amendment application in the commercial arena. In Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico (1986) the Court upheld a Puerto Rico law banning the truthful advertising of legal casino gambling. The Court continued its deference to state legislative judgments in Board of Trustees of the State University of New York v. Fox (1989). The Court not only upheld a university's ban of commercial speech on campus, but also declared that governments need not use the “least restrictive means” to regulate commercial speech. The “least restrictive means” rule in the fourth part of Central Hudson test was amended into a “reasonable fit” standard between legislative interests and the regulations employed to accomplish them. To apply a more rigid standard, the Court said, would be inconsistent with the subordinate position of commercial speech under the First Amendment.
However, a shift toward greater protection for commercial speech developed in the 1990s. In Cincinnati v. Discovery Network (1993), the Court struck down a city ordinance banning newsracks of advertising brochures for aesthetic and safety reasons. The Court ruled that although the city had a legitimate goal of preserving the safety and aesthetics of the community, it failed to show a reasonable fit between the rule and its stated purpose. In 44 Liquormart v. Rhode Island (1996), the Court continued to invalidate unjustifiably broad statutes curbing commercial speech. In 44 Liquormart, the Court was faced with a First Amendment challenge to Rhode Island's statutes banning advertising of liquor prices. The Court said that the state government failed to prove that the restriction on truthful speech actually reduced liquor sales and promoted temperance. Rhode Island had several alternatives to a ban on price advertising that would reduce drinking without infringing on the right of free speech, such as raising taxes on alcohol or educational campaigns.
The principles underlying the decision in 44 Liquormart were reiterated in Greater New Orleans Broadcasting Association, Inc. v. United States (1999) and Lorillard Tobacco Co. v. Reilly (2001). The Greater New Orleans case on gambling and the Lorillard Tobacco decision on cigarette advertising reaffirmed the doctrine that truthful commercial speech about lawful activities enjoys qualified protection from government regulation. However, a comparison of this doctrine with the traditional First Amendment analysis demonstrates that commercial speech receives a lesser degree of protection. For instance, there is no requirement under traditional First Amendment analysis that the underlying activity be lawful or that the speech not be false or misleading. In addition, with noncommercial speech cases the governmental interest must be “compelling” rather than just “substantial.”
Given the limited scope of First Amendment protection for commercial speech, determining whether an expression is commercial or noncommercial can be a key issue. In the 2002 California Supreme Court case Kasky v. Nike, Inc., the public relations campaign Nike employed to defend its controversial overseas labor practices was called into question. The California Supreme Court ruled that the public relations materials, including press releases and letters to newspapers, were commercial speech, therefore making them subject to California's consumer protection statutes prohibiting false and misleading advertising. The Supreme Court agreed to hear the appeal, but the Court dismissed the case in June 2003 without shedding further light on the status of commercial speech. The question of how to define fully commercial speech remains to be answered.
— Patrick Garry; revised by Soontae An
