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Law of Advertising and Public Relations

by: Megan Angelo

Law of Advertising and Public Relations JMC-40016-001

Marketplace > Kent State University > Culture > JMC-40016-001 > Law of Advertising and Public Relations
Megan Angelo

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Study Guide
Timothy A. Roberts (P)
Study Guide
Advertising, public relations, Studyguide
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This 11 page Study Guide was uploaded by Megan Angelo on Wednesday April 27, 2016. The Study Guide belongs to JMC-40016-001 at Kent State University taught by Timothy A. Roberts (P) in Spring 2016. Since its upload, it has received 26 views. For similar materials see LAW OF ADVERTISING AND PUBLIC RELATIONS in Culture at Kent State University.

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Date Created: 04/27/16
Study Guide Commercial Speech Doctrine Central Hudson v. Public Service Commission - Current 1 Amendment advertising precedent - Supreme Court created a 4-prong test to assess the constitutionality of restrictions on commercial speech Background - During energy crisis of 1970’s the Public Service Commission of New York banned advertising/ promoting the consumption of electricity - After the crises abated, the PSC continued the ban as a conservative measure Utility Disagrees - Central Hudson Gas and Electric Co. sued to overturn the ban, arguing st that it violated their 1 Amendment right to exercise free speech without warranted government regulation Lower courts upheld the ban st th Question: Dos it violate the 1 and 14 Amendments? Outcome: - Ruled the ban was unconstitutional- the ban was too broad Legacy: - 4 pronged test- assess if regulations were constitutional 4- Pronged Test Part 1- Does the speech promote illegal activity or products, or is it false or misleading? - If yes, regulation is constitutional - If no, the government can relate ONLY if it can successfully answer the next three questions Part 2- Does the government have a substantial interest in regulating the speech in question? - Government has burden of proof- public interest Part 3- Does the manner in which the government actually seeks to regulate directly help the government achieve this substantial interest? Part 4- Is the regulation no more extensive than necessary “narrowly tailored” to further the substantial government interest? Central Hudson- 4- Pronged Test Applied to the Case 1.)Not misleading or illegal 2.)Substantial government interest- conserve energy 3.)Would help achieve substantial government interest - Connection- advertising and the demand for electricity 4.)Ban too broad and not narrowly tailored- ban was overturned - No complete ban - The ban suppresses speed that in no way impairs that state’s interest in energy conservation Impact: Court retreated from its anti-paternalism stance 4- Prong test established 1.)A level of intermediate scrutiny for commercial speech 2.)A greater tolerance for commercial speech restrictions that still exists today Loose Garment: Posades de Puerto Rico Association v. Tourism Company of Puerto Rico (1986) - No advertising within the area- for gambling- they didn’t want the residents to gamble- tourists were ok - Seen as an exception to Central Hudson Case State University of New York v. Fox (1989) th - Centered on 4 - Prong - Advertising of a Tupperware party in a dorm room- No commercial Solicitation- regulation of SUNY - Supreme Court ruled for SUNY - Required a reasonable fit Rubin v. Coors Brewing (1995) - Prohibited beer companies from displaying alcohol content on labeling - Outcome- people need to know the content- so it’s now legal Development of Commercial Speech Doctrine 4/5 Loose Garment- but will be needed for the research paper Definition – is still under debate - Proposes a transaction – 49 states- Not California - Too narrow? Why is it regulated? - Second class citizen- according to the first amendment - Intermediate scrutiny Penny press- news important to the readers End of 1800’s prompted concern for ad claims - Rstulations grew as advertising grew - 1 regulation- “Printers Ink” – criminal sanctions and fines o Developed a model statute for false ad claims in 1911 Federal Trade Commission - Established in 1914- address deceptive business acts and practices - Grew to oversee enforcement of commercial speech Food and Drug Administration – 1930 - Monitors commercial speech in FED Sectors Valentine v. Chrestensen (1943) MMC. Pg. 21 - Legal commercial speech doctrine classifying it as regulated speech - Purely commercial speech - Distributed handbills/ flyers - Included cost of tour - This broke the city ordinance - Revised the handbill- 1 side talked about the tour- no price- on the other side it protested the ordinance - He won twice and the city appealed - Supreme Court revised the ordinance - Purely advertising - Not protected Bigelow v. Virginia (1975) - “underground” Virginia Weekly - Ad for abortion - Misdemeanor- cant advertise about abortion - Virginia Weekly ran an ad for an organization in New York- where you can get an abortion - Two lower courts- Bigelow- guilty - Supreme Court- Bigelow- won o Factual information o “public interest”- beyond commercial speech - Helped widen protection to commercial speech - “advertising is not stripped of all First Amendment protection” Virginia Citizens Consumer Council v. Virginia State Board of Pharmacy (1976) - Virginia statue – prohibiting prescription drug advertising- such ads are considered to be “unprofessional” - Board of Pharmacy claimed- ignorant consumers might be swayed to patronize the store with the lower cost rather than the higher quality alternatives - Citizens- it is the right of consumers to know alternatives with respect to drug prices - Right of Consumers - Council said consumers have 1 Amendment right to know the prices - District court- struck down - Board appealed - Supreme Court- affirmed the District Court o Cant restrict public knowledge about lawful competitive pricing Importance st th - Extended 1 and 14 Amendment rights to commercial speech, even when the advertisers interest is “purely economic” - Narrowed the 1 Amendment commercial speech exception to speech that touted an illegal product or activity and to false misleading and deceptive commercial claims Federal Trade Commission 4/14/16 Lanham Act: allows businesses to sue each other for unfair practices - False advertising/unfair business practices - consumer cannot sue a business To Win: 1.)the advertiser made factually false claims about the product 2.)the ad could or did deceive a large segment of the target population 3.)the deception was an important part of the ad 4.)the product was sold across state lines 5.)the competitor (plaintiff) was likely to be harmed by the deception FTC – 1914 Ad Regulation - consumers can file complaints - most complaints resolved through a “consent order” Corrective Orders - can ban future commercials speech which includes products or services - can require a commercial speaker to publish corrective information - if cease-and-desist is ignored – seek civil law remedy - guilty of a criminal misdemeanor Liability - independent commercial speakers- agencies - original manufacturers or providers of the products FTC and Commercial Speech - Supreme Court- often upholds regulation of commercial speech as constitutional - False or deceptive speech gets more attention and regulation - FTC- jurisdiction extends to all forms of communication used for publicity and marketing purposes False Commercial Speech - False based on the perception of the commercial message by the receiver of the message - Statement of fact is made - Includes sins of omission as well - Conveyed as an objective statement of fact and is false Deceptive Commercial Speech - A representation, practice, or omission likely to mislead consumers - Content- interpreted reasonably under the circumstances - Material representation that could influence consumers decision- respect to purchase a product FTC - Expects advertisers to prove claims- burden of proof - Substantiated in advance Puffery - An exception to the rule - No one would rely on its exaggerated claims - Subjective claims do not require prior substantiation - Ex.) “Better Ingredients, Better Pizza” - Used for promotion- not deception - Subjective and cannot be quantified Endorsements Testimonials - Celebs and other non- employee spokespeople endorsement statements require prior substantiation - “Experts” must have adequately evaluated the product or service prior to endorsing Influencer Endorsements - Ethically it is imperative that brands be transparent with consumers – proper disclosure of compensation FTC Section 5 - “clear and conspicuous” disclosures of compensated relationships brands have with bloggers and publics - Blogger- 2008- required to disclose compensation - 2013- refined disclosures- required on social media including- Vine, Pinterest, Twitter - Ex.) # Ad # Sponsor Enforcement - Erratic enforcement Requirements “Clear and Conspicuous”- Disclosure 1.)Proximity of disclosure- same tweet 2.)Prominence of disclosure- clearly 3.)Multimedia- includes audio and video 4.)Presentation Order- must be seen before article or purchase Health and Beauty - Viewed with special scrutiny - Minimum of two independent clinical trials Food and Drug Administration - Approving new drugs, medical devices, and food additives for safety and effectiveness o Set standards for foods and labeling o Must meet via testing - Inspect production, manufacturing sites - Issue public warnings- take legal action if unsafe products threaten public welfare FDA and Commercial Speech Jurisdiction 1.)Regulating information about the contents and safety of prescription drugs as they are advertised and promoted 2.)Tobacco advertising - Content- based regulation of prescription drug information - Require detailed list and proportion of the ingredients must be prominent and readable - Generic equivalent must be listed as well Side effects: - “summary” of specified information about its safety and effectiveness - Suggesting new uses could re-classify it as a “new drug” Red Flags: Commercial speech on prescription drugs will be deemed false, unfair, or misleading if: 1.)Fails to indicate potential side effects 2.)Exaggerates the effectiveness of a drug 3.)Doesn’t specify the negative effect of long-term usage 4.)Claims a drug is more effective than a competitors without scientifically valid support 5.)“represents” … that a drug is better, or more effective or useful in a broader range of conditions or patients without at least two clinical trials indicating so Monitors- ensures 1.)Statistics are valid: sample sizes are appropriate 2.)There are no false or misleading interpretation of data Enforcement: - Seek injunctions to stop sales - Confiscate products - Can seek criminal penalties against companies and advertisers Graphic Tobacco Warnings- 2009 - Family Smoking and Prevention and Tobacco Control Act - They wanted more graphic warnings on cigarette packs - Show a non-smokers lung and a lung of someone that has smoked for 30 years R.J. Reynolds- sued – aimed at discouraging use- not purely factual Split appellate - District and 2 ndCircuit Courts ruled- Reynolds- Did not prove the third prong of the Central Hudson - 9 Circuit Court- ruled for FDA FDA- bows out - No graphic warning labels What is Commercial Speech? 3/31 Under debate - Traditional- any speech that “ proposes a transaction” - Too narrow? - Economically motivated? Economically beneficial- more accurate? Why is it regulated? - Second- class citizen- in terms of the first Amendment - “intermediate” scrutiny rather than “strict” scrutiny - Protects children- swayed by commercials Commercial vs. Non- Commercial - Kasky vs. Nike - Fuzzy legal distinction between corporate and commercial speech New York Times vs. Sullivan (1964) - Not considered commercial speech - No commercial speaker - No economic motivation - Political Speech Bolger vs. Youngs Drug Product (1983) - Mailed out circulars about condoms - Violated a federal mailing statute (offensive mail) - Argued- non-commercial speech - Violated first amendment - Talked about benefits of condoms- public health Outcome - Ruled- commercial speech - Link a product to a current public debate Kasky vs. Nike (2002) - Nike accused of operating overseas sweatshops- child labor - Ordered an independent audit of its labor practices- outside party- Andrew Young- Former United Nations Ambassador Results: - Most allegations made were false Response: Mixed/ Whitewashed - Questions about authenticity and some of the findings - Quotes were questionable Nike- Started and IMC Campaign with advertising and public relations - Promote audit findings and counter claims - Ad space in newspapers - Letters to editors, and letters to college athletic directors Audit found to be lacking - Marc Kasky- California Resident - Sued for false statements - State law in California- ( California Business Professional Code) - Allowed- considered commercial speech California- Superior Court - False advertising and unfair practices- California Code Nike’s Response: - Corporate Speech- this does not apply Question: Nikes Campaign is it commercial or non-commercial speech Superior Court- sided with Nike Kasky Appealed: dismissed Supreme Court- Appealed again - Sided with Kasky- reversed lower court’s decisions o Limited- Purpose Test- California- determine if commercial speech - 1.) the speaker- is the speaker engaged in commerce - 2.) intended audience- are they actual or potential buyers of those likely to repeat the message (media, press release) - 3.) the content of the message: is the message commercial in nature? (facts about the business products- services, operation for the purpose of promoting sales) Applications: - Courts ruled- “ Commercial in Character” - Commerce - Letters to editor Case was sent back- courts needed to determine other claims Nike- U.S. Supreme Court - Agreed to rule on it and heard some oral arguments - Then decided No- not until the California appellate court makes its ruling - This meaning they were not ready to make a decision themselves Nike and Kasky settled out of court - $500,000 overseas worker education - Donate $1 million to Fair Labor Association Impact: BE CAREFUL! – May be deemed commercial speech in another state- website Federal Communications Commission FCC- Broad scope - Regulates interstate and international communications- radio, TV, wire, satellite and cable in all 50 states - 5 commissioners- appointed by the President - Confirmed by the U.S. Senate - 5 year term - Only 3 can be in the same political party Created by Telecommunications Act 1943 Mission: 1.)Regulate frequencies- TV and radio don’t “own” the frequencies they broadcast from a. They receive license from the FCC 2.)Monitor content of broadcasts to ensure they were directed to meet “the public interest convenience and necessity” The public owns the airwaves - FCC can decide not to renew a license - And they can fine broadcasters NBC v. U.S. and CBS v. U.S. - Supreme Court upheld the right of the FCC to impose fines and regulate content of broadcasts Telecommunications Act of 1996 - Overhauled telecommunication regulation - FCC began deregulation of ownership and began overseeing of the internet Advertising and Public Relations 1.)Net neutrality- equal pay for service 2.)Behavior marketing and privacy


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