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Chapter 15: Regulation of Advertising
Chapter 15
Regulation of Advertising
What’s The Big Picture for Chapter 15?
Chapter 15 is one of those chapters that are necessary for students who are advertising majors,
public relations majors, or marketing majors in your class. The material is clearly more relevant
to them than it is to most students who are journalism majors or telecommunications majors.
This chapter has many different components from which you might choose as they are stand
alone. One particular section, however, would seem to be essential for all communications
majors if you choose to cover either the entire chapter or only part of this chapter: “Advertising
and the First Amendment.” This section includes a discussion of the “Commercial Speech
Doctrine,” which, with its three conditions, lends itself easily to the creation of examination
questions.
Note: It is possible to devote an entire class period to the “Commercial Speech Doctrine” section
if you want to teach it in depth. This is the only section you may want to cover in the chapter if
you are pressed for time or if you don’t have students who are advertising majors and public
relations majors.
Students who are advertising majors would find the section titled “Federal Trade Commission”
(FTC) important. (This is similar to how a telecommunications major would find the material in
Chapter 16 on the Federal Communications Commission (FCC) essential.) How much depth you
choose to go into about the FTC obviously is up to you. It would seem, however, that at a
minimum, the FTC’s general rules against deceptive advertising should be covered, such as
follows:
• The two critical components of the FTC’s rules against deceptive advertising discussed in
the text
• The three key factors—as outlined in a gray-shaded textbox titled “FTC DEFINITION OF
FALSE OR DECEPTIVE ADVERTISING”—that emerge in the actual implementation
and application of these two critical components
This chapter of the textbook has new cases and controversies scattered throughout, making it up
to date in all areas. Some highlights of new content for the twentieth edition of the textbook are
as follows:
1. New content on the 2016 Lanham Act case against Chobani by Dannon and General Mills
involving an injunction over Chobani’s ads for Greek yogurt
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Chapter 15: Regulation of Advertising
2. A new gray-shaded textbox titled “Who Counts as a Competitor in the Lanham Act Ring?”
discussing the U.S. Supreme Court’s decision in the 2014 case Lexmark International, Inc.
v. Static Control Components on who has standing to bring a false advertising claim under
the Lanham Act
3. New discussion on the FTC’s antitrust case against the Staples, Inc. for its proposed
acquisition of Office Depot
4. Updated material on controversies involving Backpage.com, including whether the website
should have immunity under the Communications Decency Act Section 230
Teaching Tip: Visit the FTC Website and Find an Interesting Topic
Visit the FTC’s website at http://www.ftc.gov to find recent press releases involving FTC’s
actions against individuals or corporations. You can also search for these releases directly at
https://www.ftc.gov/news-events/press-releases. Find a press release that is fairly recent and that
you think will interest your students while teaching some key points about what the FTC does
and its enforcement powers. Print the press release, and make copies for students in your class.
Then, hand it out in class, and read it over together to discuss it. Alternatively, if you are going to
use the Internet in your classroom, pull up the press release online. Everyone will, thus, be on the
same page, as it were, and you’ll have a new example that goes beyond the material in the
textbook.
What Might I Choose to Skip?
Three small sections in the chapter can easily be eliminated if you find yourself pressed for time
or if you simply want to reduce the workload for your students.
• First, although it may be of interest to students who are inundated with spam e-mails (and
while its requirements make for easy testing on exams), you might choose not to cover the
section on the CAN-SPAM Act titled “Regulating Junk E-Mail and Spam.”
• Second, you also might choose not to cover the discussion of the national do-not-call
registry that is contained in the section titled “Federal Regulation.”
• Finally, the section titled “Advertising Agency/Publisher Liability” could also be passed
over.
Problem Questions
1. The state of California adopts a law banning advertising for all pesticides. The statute is
immediately challenged by pesticide makers.
The state argues that the use of such products by homeowners and others is causing a
serious pollution problem in the state’s streams and rivers and that it is killing fish and
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Chapter 15: Regulation of Advertising
other marine species. State biologists have produced a report that proves that nearly 30
percent of all fish killed in rivers and streams die from pesticide poisoning. While the state
cannot ban the use of the chemicals, it argues that if the pesticides are not advertised, then
the sale of pesticides will surely drop substantially. This will help the water pollution
problem.
Pesticide makers admit that the runoff of chemical pesticides does cause a problem in some
streams and rivers, but they argue that most pesticides (55 percent) sold today are not
harmful to anyone, including fish. 30 percent of all pesticides sold are not even made from
chemicals, but they are produced from natural substances. Finally, they say that the state
has not produced any studies to show that a ban on advertising will reduce the use of
pesticides. “In other states where this was tried, the sale of the pesticides remained
unchanged,” they said. Pesticide makers argue that the law violates the First Amendment.
a. Outline the test that the court will use to evaluate whether or not this new law is
constitutional.
Answer: The test is known as the Central Hudson test. Truthful advertising for legal
goods and services can be regulated, provided that the government can satisfy the
following three requirements:
b. Apply this test to the pesticide law, and determine whether the state could
constitutionally ban the advertising of all pesticides.
Answer: The regulation would not pass the test. There is clearly a substantial state
2. You are the attorney for a company that wants to produce a new magazine called
“MAXIM-UM-SKIN.” The magazine is not obscene under the legal definition of obscenity
(Chapter 13), but it does have some sexual content and nudity. The owner of the company
wants to send e-mails about the magazine to people who have neither asked for the
magazine nor who have requested an e-mail about it. Put differently, the owner wants to
send mass quantities of spam e-mails asking people to subscribe to the start-up’s
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Chapter 15: Regulation of Advertising
publication because spam is a very cheap and potentially effective way of doing business.
As the company’s attorney, what do you advise your client about what to include in spam
e-mails?
Answer: The threshold piece of advice to give to the company owner is to make sure that
all of the content in the e-mail advertisements is truthful and not misleading. If the material
in spam is false or misleading, then it will receive no First Amendment protection under
the commercial speech doctrine and the Central Hudson test.
3. A company called Skinny, Inc. runs a television (TV) ad boasting that its new diet cola,
“Diet Fever,” is the “best tasting diet drink on the market” and that “Diet Fever will allow
you to lose 20 pounds in two weeks while lowering your blood-sugar count.” A rival
company called Know Phat, which makes its own diet drink, disputes both the assertions
made by Skinny, Inc. and asks the FTC to investigate the claims made in the “Diet Fever”
ad.
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Chapter 15: Regulation of Advertising
a. Will Skinny, Inc. be allowed by the FTC to continue to call “Diet Fever” the “best
tasting diet drink on the market”? Explain.
b. Will Skinny, Inc. be allowed by the FTC to continue to state that “Diet Fever will
allow you to lose 20 pounds in two weeks while lowering your blood-sugar count”?
Explain.