Satellite vs. Cable: How A Federal Appeals Court's Decision That DIRECTV Engaged in False Advertising Illustrates the Clash Between Courts' Review of Advertising and the First Amendment

By JULIE HILDEN
Tuesday, Aug. 21, 2007

What does an ad-war about High-Definition TV between DIRECTV and Time Warner Cable in New York City have to do with the First Amendment? It may help to look at a related example.

Suppose I told you that a federal appeals court had deemed a political flyer "literally false" - even while conceding that this falseness was implicit, rather than apparent to all on the face of the flyer, and that it was context-dependent. In addition, the court had issued an injunction commanding the flyer's authors to immediately stop distributing it, even before the court had reached any ultimate decision on the merits.

My guess is that you'd be appalled. You'd also point out an irony: This is a clear First Amendment violation, via an injunction issued by the very same federal court whose job it is to safeguard - not trespass upon - the First Amendment.

Indeed, it's one of the worst kinds of First Amendment violations - a prior restraint that keeps speech from being heard, thereby robbing the speaker of the reasonable option of speaking now and paying damages later.

In recent months, the U.S. Court of Appeals for the Second Circuit employed precisely the same reasoning used in our political-flyer hypothetical in its decision enjoining DIRECTV from continuing to disseminate certain advertising.

Can this decision be defended as significantly different from the hypothetical decision I described above, because it involved advertising and not political speech?

In this column, I'll argue that the answer is no.

The DIRECTV Commercials at Issue

At issue was a series of DIRECTV commercials that took aim at a competitor, Time Warner Cable (TWC). The commercials insisted that DIRECTV was superior to TWC on the grounds that only DIRECTV offered high-definition (HD) programming coming from the source, and that it is not enough simply to have an HD television set if one wants the best picture quality.

In one commercial, Jessica Simpson invites the viewer to check out her newly-sculpted body - the result of workouts to prepare for her role as Daisy Duke - on DIRECTV because "You're just not gonna get the best picture out of some fancy big screen TV without DIRECTV."

In another, William Shatner, playing his classic Captain Kirk role from "Star Trek," claimed it would be "illogical" to "settl[e] for cable" with a big screen TV. (Mr. Spock then took him to task for appropriating his "illogical" credo.) Meanwhile, Internet advertisements sent a similar message: "SOURCE MATTERS."

The Second Circuit's Decision

The Second Circuit panel's decision required it to interpret the federal Lanham Act's prohibition on false advertising, which encompasses a "false or misleading description of fact, or false or misleading representation of fact….in commercial advertising" pertaining to "the nature, quality [or] characteristics of….another's goods, services or commercial activities." However, because the Constitution trumps federal statutes, the Lanham Act's prohibition must be interpreted in a way that is consistent with the First Amendment.

That's true, under current Supreme Court doctrine, even if the speech at issue constitutes "commercial speech" - which is universally acknowledged to be covered by the First Amendment, but according to some courts in some cases, receives less protection than does political speech. (For more on the commercial speech doctrine, see my prior column.)

Nevertheless, the Second Circuit reached two conclusions that are jarringly inconsistent with basic First Amendment principles:

First, it held that, rather than making its own independent review of the advertisements at issue, it could properly defer to the district court's interpretations of the advertisements' meaning unless that determination was "clearly erroneous."

This makes little sense, however, for a court performing First Amendment review should never check its own independent judgment at the door. To the contrary, the court should conduct its own searching review, as if the meaning of the speech were a question of first impression.

Second, while the Second Circuit panel deemed the Simpson commercial "literally false," on the ground that it is "flatly untrue" that DIRECTV provides the "best picture quality" compared to cable, it deemed the Shatner commercial not literally false but simply misleading. Yet it still upheld the district court's decision to enjoin the commercial at a preliminary stage, even before the case had been litigated.

This decision, too, is highly problematic from a First Amendment standpoint. For a court to pull an advertisement because it sees it as clearly false on its face is one thing (though it is still very dubious whether courts should be the arbiters of the truth of speech). To pull an advertisement off the air because, at a preliminary stage, some consumer data -- collected by a self-interested party to the dispute (here, TWC) -- suggests that some consumers might be misled by it, is quite another.

Tolerating for Commercial Speech What Is Abhorrent For Political Speech

Readers may feel that my gripe here is really with the Lanham Act, not with the Second Circuit, and this is a fair point; it is the Act, after all, that takes aim at speech that is not only false, but also misleading or otherwise confusing.

However, the Second Circuit panel could have either admitted the First Amendment problems with the Lanham Act - which are not lessened by the fact they are so longstanding - or softened the clash between the Act and the First Amendment in several ways.

For example, the panel could have taken into account the increased power of counter-speech in the current media environment. Courts don't have to police speech when the market does it for them.

Here, the savvy viewers considering the DIRECTV-versus-cable issue are unlikely to be led, lemming-like, by Jessica Simpson or William Shatner alone, in their consumer choices. The Internet offers them a cornucopia of resources - including ratings, blog commentary, and expert opinion - to inform their choices. And this choice isn't an on-the-spot decision; it's a decision whether to subscribe to a service one hopes one will keep for years, and thus, a decision households are unlikely to make impulsively.

By comparison, with respect to DIRECTV's Internet ads, the Second Circuit panel rightly realized that smart web surfers would recognize the company's hyperbole for what it was, rather than swallowing it whole. But this trust in consumer sophistication did not carry over to the panel's analysis of the televised DIRECTV ads.

Of course, not only could viewers independently investigate the issue on the Internet, but TWC could also have enlightened them as to its point of view - calling DIRECTV a liar if it so chose, and potentially undermining the company's reputation for years to come if it persuaded viewers it was right, but the opinion did not suggest TWC ever took that tack. Given influential, high-profile commercials like the Apple Macintosh commercials attacking PCs that run on Windows, the effectiveness of directly (and cleverly) attacking a competitor cannot be underestimated.

In sum, courts should consider both modern media realities and longstanding First Amendment problems with the Lanham Act when false advertising cases come before them. These considerations militate strongly in favor of eschewing the solution the district court reached, and the Second Circuit panel approved, here: enjoining speech even before a case is fully litigated.


Hilden, who graduated from Yale Law School in 1992, practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99. Hilden is also a novelist. In reviewing Hilden's novel, 3, Kirkus Reviews praised Hilden's "rather uncanny abilities," and Counterpunch called it "a must read.... a work of art." Hilden's website, www.juliehilden.com, includes free MP3 and text downloads of the novel's first chapter.