Antitrust Law Daily Wrap Up, ADVERTISING—7th Cir.: Supermarket chain’s ad congratulating Michael Jordan was commercial speech, (Feb 20, 2014)

By Thomas Long, J.D.

A full-page advertisement congratulating Michael Jordan on his induction into the basketball hall of fame, placed by supermarket chain Jewel Food Stores in a Sports Illustrated commemorative magazine, constituted commercial speech and was subject to claims brought under the Illinois Right of Publicity Act, the Lanham Act, the Illinois Consumer and Deceptive Practices Act, and Illinois common law, the U.S. Court of Appeals in Chicago has held (Jordan v. Jewel Food Stores, Inc., February 19, 2014, Sykes, D.). A decision of the federal district court in Chicago, finding that the ad was noncommercial in nature, was reversed and the case was remanded.

In 2009, Jordan was inducted into the Naismith Memorial Basketball Hall of Fame. To commemorate the occasion, Time Inc. published a special edition of Sports Illustrated Presents celebrating Jordan’s career. About a month prior to publication, a sales representative for Time contacted Jewel and offered Jewel free advertising space in the magazine in return for a promise to stock and sell copies of the magazine in its stores. Jewel placed a full-page ad in the issue, featuring a pair of basketball shoes with Jordan’s number 23 displayed on them, with the headline “A Shoe In!” The copy said “Jewel-Osco salutes #23 on his many accomplishments as we honor a fellow Chicagoan who was ‘just around the corner’ for so many years.” The page displayed the Jewel-Osco logo and its tag line “Good Things are just around the corner.”

Soon after the magazine went on sale, Jordan filed suit against Jewel in Illinois state court alleging violations of the Illinois Right of Publicity Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Illinois common law of unfair competition, and the Lanham Act. Jewel removed the case to federal court.

After completion of discovery, Jewel moved for summary judgment, raising the First Amendment as a defense and arguing that its ad constituted noncommercial speech entitled to full constitutional protection. The district court agreed with Jewel that the ad was noncommercial speech. The parties agreed that the noncommercial-speech determination provided a complete defense and conclusively defeated all of Jordan’s claims. Accordingly, the district court entered final judgment in favor of Jewel, and Jordan appealed.

Commercial speech classification—context. The appellate court first noted that, although Jordan had conceded the point, it was not clear that Jordan’s trademark and right-of-publicity claims automatically failed if Jewel’s ad were determined to be noncommercial speech. The case was a “clash of private rights,” the court said, and there was no judicial consensus on how to resolve conflicts between intellectual property rights and free speech rights. The U.S. Supreme Court had not addressed the question, and lower courts had issued decisions with varying balancing tests and frameworks borrowed from other areas of free-speech law. However, due to Jordan’s concession on the issue, the court could sidestep this complexity, and it turned to the task of classifying Jewel’s ad as commercial or noncommercial speech for constitutional purposes.

Commercial speech doctrine. Classifying speech as commercial in nature did not remove it from the ambit of the First Amendment entirely. Commercial speech was entitled to constitutional protection, but governmental burdens on commercial speech were scrutinized more leniently than burdens on fully protected noncommercial speech, the court said. The rationale was that commercial speech was more easily verifiable by the speaker, and it was more “durable” and less likely to be chilled by regulations.

The U.S. Supreme Court had defined commercial speech as “speech that proposes a commercial transaction.” Board of Trustees of State University of New York v. Fox, 492 U.S. 469, 761 (1989). However, the Seventh Circuit stated, that definition was “just a starting point.” Speech that does no more than propose a commercial transaction fell squarely within the definition of commercial speech, but other communications could constitute commercial speech even if they contained discussions of important public issues.

The appellate court noted that the Supreme Court had made it clear that advertising that links a product to a current public debate is not thereby entitled to the full constitutional protection afforded noncommercial speech. Zauderer v. Office of Disciplinary Counsel of the Sup. Ct. of Ohio, 471 U.S. 626, 637 n. 7 (1985). There is a “common-sense distinction” between commercial speech and other forms of speech, the Seventh Circuit said, and the court was to give effect to that distinction.

The court cited the case of Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60 (1983), as providing guideposts for classifying speech that contains more commercial and noncommercial elements. In that case, the defendant challenged a federal statute prohibiting the mailing of unsolicited contraceptive advertisements. The Supreme Court held that, although the defendant’s pamphlets did not expressly propose a commercial transaction, they constituted commercial speech because the pamphlets were a form of advertising, they referred to specific commercial products, and they were distributed by the defendant for economic purposes.

The Seventh Circuit stated that, under Bolger, relevant considerations in determining the commercial or noncommercial nature of speech included whether: (1) the speech was an advertisement; (2) the speech referred to a specific product; and (3) the speaker had an economic motivation for the speech.

Application of doctrine to Jewel’s ad. Jewel argued that the ad did not propose a commercial transaction and therefore did not satisfy the leading test for commercial speech. In the appellate court’s view, it was clear that the textual focus of the ad was a congratulatory salute to Michael Jordan on his induction into the Hall of Fame. However, the literal meaning of the words in the ad was not all that mattered, the court said. The text had to be evaluated in context, taking into account the enormous variety in the form and style of modern commercial advertising.

An advertisement that promotes brand awareness or loyalty is no less “commercial,” the court said, if it does not explicitly propose a transaction in a specific product or service. Commercial messages often are general and implicit.

In this case, Jewel’s ad served two functions, in the court’s view. First, it congratulated Jordan. Second, it promoted Jewel’s supermarkets. According to the court, the ad’s “unmistakable” commercial function of enhancing the Jewel-Osco brand in the minds of consumers was “implicit but easily inferred, and [was] the dominant one.”

Jewel argued that the ad was an example of its longstanding corporate practice of commending local community groups on notable achievements. The ad congratulating Michael Jordan, however, was different from an ad congratulating a local community group, in the court’s opinion. Both ads would generate goodwill for the advertiser, but unlike a community group, a famous athlete needed no gratuitous promotion, and his identity had commercial value. Such an ad could only be understood as a promotional device for the advertiser. Jewel’s ad could not be considered a benevolent act of good corporate citizenship, the court said.

The commercial nature of the ad was further indicated by its display of Jewel-Osco’s graphic logo and slogan. The bold red logo was prominently featured in the center of the ad and in a font size larger than any other on the page. The logo and the slogan were styled in their standard trademark manners. The ad, the court said, was plainly aimed at fostering goodwill for the Jewel brand among the targeted consumer group—“fellow Chicagoans” and fans of Michael Jordan—for the purpose of commercially promoting Jewel-Osco stores.

Although the ad did not mention or depict a specific product, it implicitly encouraged readers of the magazine to patronize their local Jewel-Osco stores. In this sense, it was just a different genre of advertising; instead of offering a specific product or service for sale, it promoted brand loyalty. This distinction did not make the ad “noncommercial,” the court said.

Accordingly, the court held that Jewel’s ad was commercial speech, which defeated its constitutional defense, permitting Jordan’s case to go forward. In closing, the court noted that the only federal claim in the case—Jordan’s claim for false endorsement in violation of Sec. 43(a) of the Lanham Act—required proof that Jewel’s ad caused a likelihood of confusion that Jordan was a sponsor for Jewel-Osco or endorsed its products and services. The merits on this issue had not been briefed; therefore, the case was remanded to permit the parties to address the question of whether the Lanham Act claim warranted a trial, and, if not, whether the district court should retain supplemental jurisdiction over the state-law claims.

The case is No. 12-1992.

Attorneys: Frederick J. Sperling (Schiff Hardin LLP) for Michael Jordan. Anthony R. Zeuli (Marchant & Gould) for Jewel Food Stores, Inc. Mark E. Enright (Arnstein & Lehr LLP) for SuperValu, Inc. and Time, Inc. Steven E. Feldman (Husch Blackwell LLP) for Vertis, Inc.

Companies: Jewel Food Stores, Inc.; SuperValu, Inc.; Time, Inc.; Vertis, Inc.

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