Applause can come with a big price tag

Paying tribute to celebrity can sometimes be an expensive proposition. A Chicago grocery store chain found this out the hard way when the US Court of Appeals for the Seventh Circuit handed down its decision in Jordan v Jewel Food Stores Inc (Case No 12-1992, February 19 2014).

The facts are straightforward. In 2009 basketball superstar Michael Jordan was inducted into the Naismith Memorial Basketball Hall of Fame. Sports Illustrated decided to produce a commemorative issue to mark Jordan’s Hall of Fame induction. Jewel Food Stores Inc agreed to provide floor space to promote the issue. In exchange, Jewel was permitted to place a full-page congratulatory notice in the commemorative issue, which purported to pay tribute to Jordan, once a mega-celebrity in Chicago. Jordan, an unquestionably fine basketball player, but an especially astute businessman and promoter, saw in the congratulatory notice something much more - a royalty-free advertisement linking the promotion of the Jewel brand with Jordan’s celebrity.

The notice combined textual, photographic and graphic elements and prominently displayed the Jewel-Osco logo and Jewel marketing slogan “Good things are just around the corner”, both of which are trademarked. The Jewel logo and slogan were positioned in the centre of the page, above a photograph of a pair of basketball shoes, each of which bore Jordan’s player number 23. The congratulatory text read:

"A Shoe In! After six NBA championships, scores of rewritten record books and numerous buzzer beaters, Michael Jordan’s elevation in the Basketball Hall of Fame was never in doubt! Jewel-Osco salutes #23 on his many accomplishments as we honour a fellow Chicagoan who was 'just around the corner' for so many years."

Shortly after Sports Illustrated launched its commemorative issue, Jordan filed suit against Jewel, alleging violations of the federal Lanham Act, Illinois Right of Publicity Act, Illinois Deceptive Trade Practices Act and the common law of unfair competition. Jordan sought $5 million in damages, enhanced damages under the Lanham Act and punitive damages under state law.

Following discovery, Jewel filed a motion for summary judgment seeking dismissal of all claims on the basis that its congratulatory notice was non-commercial speech and thus protected under the First Amendment to the US Constitution. Jordan sought partial summary judgment that Jewel’s conduct was not constitutionally protected. The district court agreed with Jewel, determining that its congratulatory notice was non-commercial, constitutionally-protected speech, and dismissed all claims. Jordan appealed.

The Seventh Circuit panel first expressed some doubt as to the propriety of the parties’ framing of the issue on appeal because it viewed the dispute as purely a clash over private rights and not a public-law constitutional challenge. It noted, however, that Jewel and Jordan had agreed that, if Jewel’s congratulatory notice was “non-commercial speech” in the constitutional sense, then the First Amendment would provide a complete defence to all claims in the lawsuit. Consequently, the panel agreed to play in the ball court that the parties set for themselves, despite its doubts.

In determining whether Jewel’s conduct constituted commercial speech, the panel applied the Supreme Court’s test from Bolger v Youngs Drug Prods (1983). Under that test, relevant considerations include “whether (1) the speech is an advertisement; (2) the speech refers to a specific product; and (3) the speaker has an economic motivation for the speech”. It noted that no one factor of this test is dispositive and all factors are not necessary to determine the commercial or non-commercial nature of the speech.

Analysing the first Bolger factor, the Seventh Circuit concluded that, amid the celebratory applause on the occasion of Jordan’s elevation to the Hall of Fame, Jewel’s notice had an unmistakable commercial function - enhancing the Jewel brand in the minds of consumers. The court further determined that this commercial function, although implicit, was easily inferred and was the dominant message. Although the ad did not invite consumers to engage in any specific commercial transaction, the court explained that image or brand advertising is ubiquitous in all media today, and the ad implicitly encourages consumers to patronise their local Jewel-Osco store. “The ad is a form of image advertising aimed at promoting goodwill for the Jewel-Osco brand by exploiting public affection for Jordan at an auspicious moment in his career.”

The panel made quick work of the remaining two Bolger factors. Although the Jewel congratulatory notice did not promote a specific product or service, the court found it nevertheless promoted patronising Jewel supermarkets. The panel also determined that the ad had an unmistakable economic motivation - “to burnish the Jewel-Osco brand name and enhance consumer goodwill”. In view of the Bolger factors, the Seventh Circuit held that Jewel’s tribute to Michael Jordan in Sports Illustrated’s commemorative issue qualified as commercial speech, which defeated Jewel’s constitutional defence. It reversed the district court’s summary judgment in Jewel’s favour and remanded.

When honouring a superstar, refrain from patting your own back and promoting your goodwill. Otherwise, be prepared to pay tribute - of the monetary kind.

Keith M Stolte, McDermott, Will & Emery LLP, Chicago