Imagine you go to the market. You’re looking to buy a certain product that you heard good things about. You walk down the aisle and you think you spot it – the name sounds like the one you heard before. You buy it, take it home, but it’s a dud. Turns out you’ve been snookered. The product isn’t the one you thought it was at all: it just had a similar sounding name to the one you were looking for.
Can the government do anything to prevent these scam products? Well, given a recent decision from the D.C. Circuit, that depends on who the seller of the scam product was. If it’s a political committee and your payment was a contribution, then, according to the D.C. Circuit, the First Amendment protects the scammer’s right to confuse you.
The decision, Pursuing America’s Greatness v. FEC, dealt with an FEC rule that prevents non-coordinated political committees—groups that exist to raise and spend money on elections—from using the name of a candidate in the group’s name. The groups would be free to talk about the candidate but only the candidate’s own committee could use her name in their title and project names. If the groups aren’t controlled by the candidate, then they can’t call themselves or their projects “Bob for America” or “Sue 2016”: names that might confuse contributors and voters into believing that the groups are the candidate’s official committees. A committee could use the candidate’s name in a project name, however, if it did so in a context that did not risk confusion. For example, if it did so in criticizing the candidate. So while a group could not call a project “Bob for America,” the group would be free to call the project “Defeat Bob,” as no one would be reasonably confused that such a project was associated with candidate Bob.
The need for that rule has proven necessary. So called “scam PACS”—political committees that raise money by confusing contributors as to their purposes and authority, and then embezzling all of the raised funds to enrich the groups founders—are prevalent in today’s elections. One author even credits them with “kill[ing] the Tea Party” by siphoning funds from legitimate political groups. The FEC’s rule is one (albeit inadequate) way to protect contributors from these groups.
That was until the D.C. Circuit found that the FEC rule violated the First Amendment. In the case, a group wanting to use the name of Mike Huckabee, a candidate for the Republican nomination, brought a challenge to the rule. Although the group was not associated with the Huckabee campaign, the group wanted to use Huckabee’s name on a website and Facebook page under the title, “I like Mike Huckabee,” to raise money for itself. The Court recognized the potential for confusion created by the group labeling the project “I like Mike Huckabee” even though it was not associated with the Huckabee campaign. Nevertheless, the Court found the rule triggered strict scrutiny: the highest level of scrutiny a court can apply to a law and one that requires the law serve a compelling interest and go no further than necessary to serve that interest. Applying that scrutiny, the Court found that, while preventing confusion was a compelling interest, the rule’s bar on the use of a candidate’s name went further than necessary to prevent confusion. The Court ruled that the only thing the FEC could do to prevent confusion would be to require the group to include a disclaimer informing others that it was not Huckabee’s official campaign committee.
A Warning from the Supreme Court Proves Wise
Notably, the D.C. Circuit based its ruling on a sleepy Supreme Court decision that would seem to have little bearing on campaign finance law: Reed v. Town of Gilbert. In Reed, a unanimous Supreme Court found that a town’s ordinance, which arbitrarily granted different privileges for different street signs based on such things as whether the sign contained a political message or directions to an event, constituted an impermissible content-based restraint that violated the First Amendment.
While unanimous in the ultimate result, the Court split on the right way to apply the test to determine whether a law impermissibly discriminated between speech based on its content. Three Justices, led by Justice Thomas, took a hardline approach to the test, finding that any law that “target[ed] speech based on its communicative content” triggers strict scrutiny under the First Amendment. In other words, if the law requires one to read the sign to understand how to apply the law to it, then the law is suspect and may only be maintained by showing a compelling state interest the law was narrowly tailored to serve.
A separate faction of the Court, however, thought that this formulation was too simplistic. While acknowledging that content-based restraints should trigger scrutiny to ensure they don’t hide unlawful viewpoint discrimination or weakly supported laws, these Justices argued that applying strict scrutiny to any law that differentiated between speech based on its content goes too far. Justice Breyer warned that “[r]egulatory programs almost always require content discrimination.” For example, one must read and comprehend a document to understand it is a security offering before one can apply the security laws to it, and the law will treat it differently depending on what it says. Similarly, one must read and understand that a document is a prescription drug label before one applies drug labeling laws to it. And even black-letter First Amendment law removes protection for some speech based on its content. One must review the “communicative content” of speech to understand if it constitutes fraud, obscenity, or fighting words: all categories of speech that receive no protection under the First Amendment. To the concurring Justices, Justice Thomas’s formulation risked sweeping aside all sorts of settled regulation on the simplistic basis that the law’s application turned on the “communicative content” of the speech.
Apparently, one regulation at risk was the FEC rule on political committee names. Although the concurring Justices did not mention campaign finance laws, the rule would seem to fit squarely in the realm of regulations they worried would be cast aside under Justice Thomas’s formulation. As the concurring Justices feared, the D.C. Circuit applied Justice Thomas’s formulation to find the FEC rule required the agency to look at the “communicative content” of the committee name to determine whether it posed a risk of confusion, triggering the strict scrutiny the court held the rule failed.
Of course, although the D.C. Circuit threw out the FEC rule based on Reed, it acknowledged that the FEC could had a valid interest in ameliorating confusion. The Court simply found that a disclaimer would suffice.
But that brings us back to the market. Under the D.C. Circuit’s understanding, the most the government could do would be to require the scam-product include a disclaimer somewhere on the box stating that it is not, in fact, the brand-name product its imitating. Fortunately, however, that is squarely not the rule.
Under black-letter trademark law, a competitor cannot use a confusing trademark or packaging that might lead consumers into buying the wrong product, even if that requires analysis of the trademark’s “communicative content.” The Government’s power is not limited to easily ignored disclaimers. Nor is it even limited to post-purchase remedies, such as allowing a mistaken consumer to sue for damages. Rather, the Government has the power, unrestrained by the First Amendment, to prevent a company from naming itself or its product in a way that’s likely to cause confusion.
The D.C. Circuit, however, neither discussed nor justified this contradiction in precedents.
Perhaps it thought trademark law was incomparable, however. Trademark law, after all, typically applies in the area of commercial speech, traditionally an area of speech that receives less protection (though even that is in question after Reed). Campaign finance law, in contrast, applies to political speech, the area with greatest protection under the First Amendment.
But the contrast is not so clear on closer look. The FEC’s rule did not affect political committees’ discussions about candidate qualifications or anything else related to an election or public policy. Rather, the FEC rule barred political committees—groups defined as entities the raise and spend money on campaigns—from using the candidate’s name in their own titles and from using candidate names in projects and “solicitations.” That is, the FEC’s rule applied to situations in which contributors or voters might be confused by the identity of the political committee, including in financial transactions with it.
Trademark law, moreover, is not limited solely to for-profit marketing, but equally applies to political fundraising and other political activities. Trademarks can provide a valuable service in the political sphere. According to the Second Circuit Court of Appeals (in a decision approvingly cited by the Supreme Court):
A political organization that adopts a platform and endorses candidates under a trade name performs the valuable service of communicating to voters that it has determined that the election of those candidates would be beneficial to the objectives of the organization. Thus voters who support those objectives can support the endorsed candidates with some confidence that doing so will advance the voters’ objectives. If different organizations were permitted to employ the same trade name in endorsing candidates, voters would be unable to derive any significance from an endorsement, as they would not know whether the endorsement came from the organization whose objectives they shared or from another organization using the same name. Any group trading in political ideas would be free to distribute publicity statements, endorsements, and position papers in the name of the “Republican Party,” the “Democratic Party,” or any other. The resulting confusion would be catastrophic; voters would have no way of understanding the significance of an endorsement or position taken by parties of recognized major names.
If that “catastrophic confusion” supports the application of federal trademark law to political committee names, then it can equally support application of federal campaign finance law, an area where confusion risks much more than merely a disappointed consumer.