Commercial and Political Speech

The First Amendment to the U.S. Constitution protects the right of speech from government interference. Although the First Amendment was written in absolute terms—“Congress shall make no law”—the U.S. Supreme Court has never treated it as absolute, allowing the government to regulate some types of expression to varying degrees. Two such types or categories of speech that receive different levels of protection are commercial and political speech.

Political speech, which is speech about issues of public importance, receives the greatest First Amendment protection from government regulation because such speech is seen as essential to self-governance and the protection of the democratic process. It is feared that the threat of government sanctions will “chill” individuals and cause them not to speak out on political issues. Commercial speech, on the other hand, is speech involving business or economic transactions. It receives lesser First Amendment protection under the premise that some government regulation of such speech is necessary to protect consumers from unscrupulous businesses. It is also believed that government regulation of commercial speech will not chill businesses; they will just find other ways to promote their products and services if their speech is restricted.

Until the second half of the 20th century, commercial speech was not considered worthy of First Amendment protection at all. Not long after the U.S. Supreme Court extended the First Amendment’s reach to commercial speech, the Court recognized the political speech rights of corporations. Today, corporate speech can be either commercial or political, with both types receiving at least some protection from government regulation. But deciding whether corporate speech is commercial or political can be problematic.

This entry will begin by talking about commercial speech and its treatment under the First Amendment. It will then discuss the tests used to classify corporate speech as either commercial or political. It will end with a discussion of how the courts treat political speech cases under the First Amendment.

Commercial Speech

Corporate communication directed toward customers or consumers typically falls into the commercial speech category. Advertisements promoting a product or service are clearly commercial speech. But so too are public relations materials that further the marketing function, such as brochures and news releases announcing the launch of a new product. Until the second half of the 20th century, the U.S. Supreme Court treated what it called “purely commercial advertising” as unworthy of First Amendment protection. Commercial speech was simply a business activity in that it served to promote a product or service and as such did not rise to the level of societal importance befitting speech protected by the First Amendment. The justices also argued that commercial speech typically involves factual claims, such as the qualities of a product or service, that can be proven true or false. Political speech, on the other hand, tends to be more subjective and less empirically verifiable because it is based on ideology. But at the heart of the Court’s thinking about commercial speech was paternalism. The Court sought to protect consumers from misleading and deceptive promotional materials.

But beginning in the 1960s, the Court began to change its stance on commercial speech. An ad by a civil rights organization appearing in the New York Times was considered political speech, rather than commercial, despite its format. It was, the Court held, the content of the expression and not the vehicle of dissemination that was the deciding factor in determining the category of speech. A few years later, the Court ruled that an ad for legal abortion services should be protected from government regulation because the information the ad contained was important to consumers for informed decision making. It was the first time the Court acknowledged that commercial speech could have societal value and therefore was deserving of First Amendment protection.

Despite that recognition, commercial speech is still viewed as less valuable than political speech. In the Central Hudson Gas & Electric Corp. v. Public Service Commission case of 1980, the Court set out a test to be applied when the constitutionality of a government regulation of commercial speech is being questioned. Judges must ask themselves the following questions:

• Does the speech warrant First Amendment protection? In other words, is it for a lawful purpose, and is it accurate? Commercial speech that is deceptive or that promotes an unlawful product or service is not deserving of protection.
• Does the government have a substantial interest in regulating the speech? The protection of the health, morals, safety, and welfare of society is usually sufficient reason for this part of the test.
• Does the regulation directly advance the government’s purpose? For example, if a city government wants to reduce alcohol consumption within the municipality, it will need to show that preventing stores from advertising liquor prices will help it achieve that goal.
• Is the regulation no broader than necessary to achieve the goal? That is, it cannot restrict more speech than it needs to.

Although the Central Hudson test is used in all cases involving government regulation of commercial speech, its application is not always consistent. The Court continues to expand First Amendment protection for truthful, nonmisleading commercial speech, even of products and services such as tobacco, alcohol, and gambling. At the same time, however, the Court tends to limit the ability of professionals, such as attorneys, accountants, and dentists, to advertise their services.

Clearly, advertisements for products and services are commercial speech, but it can be difficult to classify corporate speech when it is not directly marketing related. The Court has addressed the issue of what constitutes corporate commercial speech only once, in Bolger v. Youngs Drugs. In that 1983 case, which involved an informational brochure, the Court asked itself three questions: (1) Was the brochure meant to be an advertisement? (2) Was a particular product referenced? (3) Was the brochure’s dissemination economically motivated? Any of the three factors individually would not be sufficient to render the brochure commercial. But combined, they supported a finding that it was.

The California Supreme Court adapted the Youngs Drugs test in its analysis of Nike’s speech in response to sweatshop allegations. Nike, the athletic equipment manufacturer, was accused in the early 1990s of contracting for the manufacture of its products with overseas factories that engaged in abusive labor practices. In an effort to defend itself and its business operations, Nike issued news releases and wrote letters to university presidents, among other communications, outlining the steps it had taken to ensure that workers were not abused by its contractors. Activist Marc Kasky brought a lawsuit against Nike in California under the state’s false advertising statute, claiming that Nike’s messages were false and misleading. Nike argued in its defense that the statements were protected political speech and therefore the statute did not apply.

In Kasky v. Nike, Inc., the California court held that the speech was indeed commercial speech because Nike is a corporate speaker, its messages were directed to consumers, and the content involved its own business practices. Had Nike discussed the issue of overseas sweatshops in general terms, the speech would have been deemed political. But Nike turned it into commercial speech by addressing its own operations, and therefore, the speech had to be truthful and nonmisleading to satisfy the California false advertising statute. From a corporate reputation perspective, it would be more desirable to have Nike’s speech classified as political. No company ever wants to find itself the subject of a false advertising allegation. And while Kasky was free to take the sweatshop debate directly to Nike and make it personal, Nike was constrained by the parameters of the commercial speech protections.

Thus, while commercial speech now has First Amendment protection, it remains a lesser-protected category of speech. The courts recognize that the content of commercial speech can be important to an individual’s decision making, but they are still concerned that corporations will take advantage of unsuspecting consumers. Thus, the commercial speech right is framed as a consumer’s right to access information, not as a business’s right to advertise. Consumers are entitled to truthful, accurate information about a product or service. Therefore, false commercial speech is not protected.

Political Speech

Political speech receives the greatest First Amendment protection because it is believed to promote both societal and individual interests. First, political speech is essential to self-governance. The strength of a democracy depends on the ability of citizens to make informed choices, and that will only happen if people have access to information and can debate the issues publicly. Having the freedom to dissent is also thought to allow for peaceful transitions of power. Violence occurs when people believe that their voices are not being heard. Similarly, open discussions are necessary in the search for truth. Ideas must be continually tested in the marketplace for a society to grow and develop. As a result, some false speech is to be expected. And finally, the ability to express oneself leads to self-fulfillment or self-realization. It is what makes us human.

But freedom of speech is a fragile right that requires constant vigilance to ensure that individuals are not deprived of it. Government leaders have the greatest to lose from its exercise and also have the power to limit it. Thus, when a government seeks to restrict political speech, the Court applies what is known as strict scrutiny to determine whether the regulation is constitutional. Under the strict scrutiny standard, the government must establish that it is seeking to protect not just a substantial interest, as is the case with commercial speech, but a compelling one. The government must also show that the law is narrowly tailored to achieve that interest. To be narrowly tailored, the law must encompass only as much speech as is necessary to achieve the goal. And finally, the law must be the least restrictive means to achieving the goal.

Because many see freedom of speech as a right belonging to individuals, it was not originally extended to corporations. Corporations cannot, after all, “speak”; nor can they achieve self-actualization. But in 1978, the Court for the first time held that corporations do indeed have political speech rights. In First National Bank of Boston v. Bellotti, the bank sought to inform the public about the potential effects of a tax amendment to the state constitution prior to a referendum on the issue. A state law prohibited corporations from spending money on referendums that did not directly affect their business. As it had done in the area of commercial speech, the Court held that the issue was not whether the speaker had First Amendment protection but whether the speech itself was deserving of it. In other words, was the speech of importance to the public? In this case, the public had a right to know the bank’s position on the issue before voting.

In later cases, the Court expanded the right of corporations to speak on political and social issues. It held that the speech of corporations could not be restricted simply because a government did not like the content of that speech. Nor could a corporation be compelled to promote speech it did not agree with. Thus, a public utility did not have to include in its billing statements material from a consumer group opposing the utility’s rate increase request.

Despite those rulings, corporations have never had as extensive rights as individuals do when it comes to political speech because corporations are considered by some to be potentially corrupting influences. They are too big and have too much power in society to be granted extensive political speech rights. The fear is that they will “buy” politicians through large campaign contributions or at least that those contributions will create the impression that they have “purchased” political favors, leading voters to lose trust in the system. Thus, Congress has, over the years, enacted campaign finance reform laws to protect the democratic process from perceived corruption. Specifically, the laws set limits on the amount of money that could be contributed to political campaigns and prohibited corporations from using their general treasury funds for communications in support of a candidate. Recently, challengers to those laws have found a sympathetic ear in the Court. Since 2007, the Court has effectively removed most of the restrictions on corporate political speech.

First, the Court acknowledged that advertising in support of a candidate or issue during an election is core political speech. Then, in 2010, it agreed that corporations could spend money from their general treasuries in support of political positions and to influence election outcomes so long as the messages were produced independently and not connected with any particular candidate. Most recently, the Court removed the limits on the total campaign contributions corporations can make in an election on the basis that aggregate limits have no effect on political corruption.

Political speech is seen as the most important type of speech and the one most deserving of First Amendment protection because it serves a vital role in society. A government can restrict such speech only when it has a compelling reason to do so. Although corporations do have political speech rights, that right can be regulated to protect the election process.