Commercial Speech, Commercial Use, and the Intellectual Property Quagmire

Several recent disputes highlight the challenging questions of whether we should treat commercial uses differently, and, if so, under what circumstances. Consider the magazine Sports Illustrated’s publication of a commemorative issue devoted entirely to celebrating the basketball star Michael Jordan and his induction into the NBA Hall of Fame. Sports Illustrated offered two supermarkets free one-page spreads in exchange for selling and prominently featuring the magazine in their stores. Each of the supermarkets created congratulatory messages and images to celebrate Jordan’s induction. Jordan sued the supermarkets for false endorsement (under the Lanham Act) and for violating his right of publicity (under Illinois law). The case against one of the supermarkets, Jewel-Osco, was appealed to the U.S. Court of Appeals for the Seventh Circuit. The supermarket’s congratulatory spread included the market’s slogan—“Good things are just around the corner”—but did not otherwise refer to its stores or encourage any particular transaction. Jordan’s name appeared once in a sentence referring to his “elevation in the Basketball Hall of Fame,” and the page included a picture of sneakers with Jordan’s number (23) on each shoe’s tongue.

The availability of a First Amendment defense to the Lanham Act claims turned on whether the supermarket’s communication was classified as “commercial speech.” The Seventh Circuit held that it was, because the spread was encouraging consumers to frequent its markets. As a result, the court concluded that there was no First Amendment defense to the use of Jordan’s identity. Is such a conclusion justified either doctrinally or normatively? If Jordan had sued Sports Illustrated, the magazine would have had a First Amendment defense because it is not commercial speech. Should Sports Illustrated be exempted from liability solely because of this, even though its magazine is unquestionably sold for profit? What if the congratulatory advertisements were placed by a nonprofit (such as the free health clinic Chicago Community Health) to promote its services—should the analysis change? Is there something unique about the supermarkets’ speech (other than qualifying doctrinally as “commercial speech”) that justifies altering the analysis of false endorsement or right of publicity laws among these scenarios? If so, why?

Next consider throwing your child a birthday party with a Harry Potter theme. Can you make your own Harry Potter cake with characters and images from the movie? If you’re too busy or can’t bake and decide to buy one from a bakery, does the bakery have to get a license to depict Harry Potter and related images? Should it matter whether the bakery advertises or lists Harry Potter cakes as one of its options? What about a store that caters to fans of wizardry, from Lord of the Rings to Harry Potter, and provides a party space for those who want a wizardry-themed party? Can the store’s employees dress like Harry Potter characters and operate a pretend wizardry school without getting permission to do so from the movie studio or book publisher? The movie studio Warner Brothers recently filed suit against such a store. The cake and the wizardry parties raise potential copyright, trademark, and right of publicity claims. Should liability attach in any of these instances? Should we differentiate between the scenarios on the basis of whether the uses constitute commercial speech, or are for financial gain, or instead are not driven by profit motives?

Finally, consider a recent advertisement distributed online by the children’s toy company Goldie Blox that allegedly infringed the copyright to the Beastie Boys’ popular song from the 1980s, “Girls.” The advertisement shows three girls building amazing contraptions. A musical parody of the song plays over the ad. The original lyrics called for, “Girls—to do the dishes, / Girls—to clean up my room, / Girls—to do the laundry”; and to be available to the singer for sex. The Goldie Blox advertisement retains the tune from the Beastie Boys’ song, but changes almost all of the lyrics. The new lyrics include the following:

You like to buy us pink toys

And everything else is for boys. 

It’s time to change

We deserve to see a range

‘Cause all our toys look just the same

And we would like to use our brains. 

Girls—To build a spaceship

Girls—To code a new app

Girls—To grow up knowing that they can engineer that . . . .

The advertisement provides valuable social and political commentary on both the song and the world of gendered toys. Should Goldie Blox be disfavored in a fair use defense to a copyright infringement claim because the use is in an advertisement for a product and constitutes commercial speech? What if an identical video were posted by the Guerrilla Girls, an activist group whose members make various artworks (and appear in public in gorilla masks) to expose sexism and racism? Should these two uses be treated differently?

If the law distinguishes these various scenarios for purposes of IP law, there should be a developed basis for doing so, but thus far there has not been one. To date, no convincing basis has been articulated for distinguishing commercial and noncommercial speech and uses in IP laws. Consideration of these unexplored issues in IP law is particularly timely given recent decisions by the Supreme Court that call into question the future and scope of the commercial speech doctrine; the differential treatment of for-profit corporations; and the First Amendment limits on laws that restrict false or misleading statements, even when they are not commercial. Considering commerciality in IP law is also particularly important at this juncture because Congress has announced that it is embarking on a major review of copyright law. As we consider revising copyright laws, the role of commercial speech and commerciality more broadly must be part of the discussion.

Revisions to our trademark laws may also be on the horizon. The degree of confusion and inter- and intracircuit splits on the issue of commercial speech and commercial uses in trademark and false advertising laws under the governing Federal Lanham Act is untenable and should be part of any legislative reform project. In right of publicity law there are continued calls for federal legislation, calls that may gain traction because of the increasing recognition that state laws cannot be limited to state borders, especially with the dominance of the Internet, making the most expansive, speech-limiting state laws the ones that govern. If such a federal approach to the right of publicity moves forward, it must consider whether, and how, the right should be limited by the commercial nature of the persona at issue and whether it should matter if uses of that person’s identity are for financial gain or in advertising for commercial products or services (that is, in commercial speech). Current law on these questions is highly varied between states, and even within the same state it is often unresolved.

One of the challenges for courts, litigants, and scholars alike is that the term “commercial” is used to mean multiple things, even within the same body of law. In this Article, I not only identify the breadth of the confusion surrounding issues of commerciality in IP law, but also develop a taxonomy of what is meant by “commercial” in the context of IP. Greater precision of what we mean by “commercial” is required not only for clarity’s sake, but also to facilitate the deeper normative analysis that I engage in as I consider whether commercial speech and commerciality more broadly—particularly in the sense of seeking financial gain—are worthwhile determinants of liability in the IP context.

IP claims often overlap and complaints frequently include claims arising under trademark, right of publicity, and copyright laws. Although harmonizing the meanings of “commercial” is not required across these areas, to the extent that similar issues or defenses are raised it makes sense for the treatment of commerciality to be coordinated. To the extent that disparities of treatment are justified by constitutional law and a reliance on the commercial speech doctrine, the meaning of “commercial” must track commercial speech jurisprudence and be consistent across statutes and bodies of law. Thus far it has not. Moreover, if IP law truly relies on commercial speech for its discrimination against commercial uses, it cannot ignore the controversies that surround the doctrine nor ignore its arguably narrowing scope. Nor does the First Amendment require the disfavoring of commercial speech in the context of IP law, even if it permits it, making its importation a contested choice, rather than a fait accompli. Commercial speech can be valuable and worthy of robust speech protection; it can provide useful information and contribute to our cultural and expressive storehouse.

Other justifications for disfavoring commercial uses—in the broader sense of for-profit uses—also do not stand up to scrutiny. For example, commerciality is sometimes used as a proxy for market harm; but this is a weak proxy because not-for-profit uses can cause significant harms and for-profit uses can cause none. Moreover, evaluations of market harm can be directly analyzed and need not rely on such an inaccurate proxy. Nor is commerciality a good proxy for the value of the underlying use or its relative fairness or unfairness. For-profit uses can be fair, and not-for-profit ones unfair.

In Part I of the Article, I identify the different aspects of trademark, copyright, and right of publicity laws that raise the issue of commerciality and point out the many areas of confusion on questions as basic as the elements of these causes of action and defenses to them. I focus on these laws because issues of commerciality and free speech are the most prominent, but the analysis here applies more broadly to other areas of IP law, such as trade secrets and patent law.

In Part II, I develop a taxonomy of what is meant by “commercial” in IP law. I identify five primary meanings of “commercial”: First, “commercial” is used to indicate a use in commerce that falls within Congressional powers to regulate under the Commerce Clause. Second, “commercial” is used to identify commercial speech (as that term has been defined by the Supreme Court in its First Amendment jurisprudence). Commercial speech encompasses advertising for products and services, but also includes speech beyond the limited context of advertising. Courts often refer to commercial speech as speech that does “no more than propose a commercial transaction.” Nevertheless, as I will discuss, the exact contours of commercial speech have not been clearly delineated and the category sweeps more broadly than this definition suggests. A third definition of “commercial” is a broader reference to any for-profit use. The determination of what is meant by a “for-profit” use is itself contested. At times, “for-profit” is limited to instances in which there is an active interest in seeking financial gain (usually through sales), while at others it is meant more broadly as seeking any benefit (whether monetary or not). Fourth, and sometimes related to a for-profit use in a more general sense than mere financial profits, is the use of “commercial” to indicate a use that might cause an IP-owner market harm. Finally, “commercial” has been used as a pejorative term to indicate uses that are of lesser value—ones that are considered base or of limited expressive value. Uses can be commercial in all these ways or only in some, and “commercial” is sometimes used to indicate more than one of these definitions.

In Part III, I consider the justifications for using these various meanings of “commercial” as a basis for making determinations of rights, liability, and defenses to IP claims. The primary justifications for distinguishing commercial from noncommercial speech, and commercial from noncommercial uses (in the “for-profit” sense), are rooted in concerns over free speech and constitutionality, value, harm, and broader principles of fairness. I consider each of these justifications in turn and ultimately conclude that they fail to provide a convincing normative basis for distinctions rooted in commerciality and that none adequately explains the current contours of IP laws.

Finally, in Part IV, I provide some preliminary observations about the implications of this analysis and the importance of creating a more coherent IP law that better identifies when commerciality should and should not matter.