Commercial Speech and the 1st Amendment

Cite this article as: Jason Mance Gordon, "Commercial Speech and the 1st Amendment," in The Business Professor, updated January 2, 2015, last accessed April 2, 2020, https://thebusinessprofessor.com/knowledge-base/commercial-speech-and-the-1st-amendment/.
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Commercial Speech and the 1st Amendment
What is Commercial Speech? The 1st Amendment of the US Constitution offers limited protection to commercial speech.

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Commercial Speech and the 1st Amendment

There is only a limited right to undertake commercial speech. Such expressions necessarily involve third parties who take actions based upon that speech. The government’s regulation of commercial speech is based upon the potentially negative effect on the general welfare of society. The limitation upon the regulation of commercial speech is that the government must have a compelling state interest to justify the restriction.

  • Note: Common law holds that corporations have limited rights to free speech that are very similar to those of individuals. The Constitutional standards applied by a court when determining the validity of government laws or actions limiting an individual’s rights are discussed in a separate section.
  • Example: Business practices that knowingly deceive individuals may constitute fraud. Many deceptive advertising practices violate consumer protection laws. The federal and state governments require disclosure of material information about publicly-held companies. All of these examples demonstrate a balance between protecting the public and protecting the freedom of speech afforded individuals.

Discussion: Can you think of any type of commercial speech that is prohibited by federal, state, and local laws? What is the risk to the public of allowing this type of unregulated speech?

Discussion Input

  • Input on Discussion: Think about laws concerning fraud or misrepresentation. Also, think about the various agencies charged with regulating this type of speech (Hint: SEC, FTC, FBI, etc.). The risk is the financial harm to the individual who is affected by this speech.

Practice Question: Hickory, NC is famous for its production of fine wood furniture. Every year, thousands of people and stores come to Hickory to purchase furniture. Numerous companies that produce their furniture in other places have opened shops in Hickory to sell to customers. These companies routinely assemble the pieces of furniture in Hickory and advertise the furniture as “Made in Hickory”. The town passes an ordinance prohibiting this practice. If a merchant challenges the ordinance, what will the court examine in determining whether the ordinance is constitutionally valid.

Proposed Answer

  • The court would likely examine the purpose or goal behind the ordinance. It would then determine whether the objective is compelling in nature. It would determine whether the ordinance is the sole manner of achieving that objective. It would also weigh this rule against the potential harm suffered by customers purchasing these products, the venders who actually produce their goods in Hickory, and the town of Hickory’s reputation.

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