Andrew Goldstein, PCC’s long-time General Counsel, is a partner with Freeborn & Peters LLP, a Chicago-based, full-service law firm headquartered in the heart of downtown Chicago. Andy is the head of Freeborn & Peters' Intellectual Property/Information Technology group. The Firm focuses its practice in the areas of Complex Litigation; Business Law Services; Bankruptcy, Reorganization and Creditors’ Rights; and Government and Regulatory Law. With more than 120 attorneys, the Firm is committed to provide paramount legal counsel to clients while maintaining an advanced level of responsiveness and individual attention.

Advice and Perspective

(Published January 2007)

What Are Your Legal Liabilities When You Issue A Press Release?

By Andrew Goldstein, PCC General Counsel

Under established constitutional principles, news stories, such as articles in newspapers and magazines, are entitled to full protection under the First Amendment and cannot be the subject of a false advertising claim. The following case reaffirms this legal principle.

A recent case involved a published article based on a press release, which upheld the principle that the publisher that printed the release or the party that distributed the press release, are not subject to any liability for false advertising. The case, Croton Watch Co., Inc. v. National Jeweler Magazine, Inc., 2006 WL 2254818 (SDNY 2006), involved competing watch designers and manufacturers, Croton Watch Co. and Teslar Inside Corporation.

In an earlier case, Teslar sued Croton for trademark infringement based on a watch design. The case was mutually settled by the parties. Under the settlement agreement, which was approved by a consent order of the court, neither party admitted liability and Croton agreed to cease sales of its watch.

Teslar distributed a press release about the case to National Jeweler Magazine, which published a short article entitled "Teslar wins trademark case." The article stated that Teslar had "won a trademark infringement case" against Croton and that the "judge ruled" that Croton’s watch violated Teslar’s rights.

Croton objected to both the title and content of the article, contending that the characterization that Teslar "won" the lawsuit was false as no party admitted to any wrongdoing in the settlement agreement. Croton sued Teslar and National Jeweler Magazine for, among other things, false advertising and defamation.

Croton argued that because the magazine reporter wrote the article based on a press release from Teslar, the magazine provided "free advertising" for Teslar in hopes of obtaining advertising from Teslar. Croton claimed that the "article itself was in fact an advertisement masquerading as a news story, promoting Teslar’s reputation while disparaging that of Croton’s." Therefore, Croton argued, the article was "extremely commercial in nature."

The court ruled that the National Jeweler article was not an advertisement and was not commercial speech. If the article was held to be "commercial speech," Croton could sue for false advertising. However, the court held that Croton could not sue for false advertising "simply by alleging that defendant [Teslar] caused a journalist to write the article, the content of which plaintiff [Croton] finds objectionable." The court stated that a "journalist’s article is not commercial advertising, commercial promotion or commercial speech. Rather, it is speech that is traditionally granted full protection under the First Amendment. The non-commercial nature of a journalist’s article cannot be overcome by plaintiff claiming an improper purpose motivated the publisher to run the article."

Accordingly, the court held that there was "no basis to infer that the article was not a true news piece" and the court dismissed the false advertising charges. The court also dismissed the defamation claim because in the prior case, Teslar obtained an order of the court prohibiting the sale of the Croton watch. Therefore, it could be reasonably interpreted that Teslar achieved its goals in the prior litigation, and the references to Teslar winning its case were not false statements and were not defamatory.

This case reaffirms well-established legal principles that news stories and journalists’ articles are entitled to the full protection of the First Amendment. Since the journalist or the publisher control the content of the publication, neither the journalist nor the publisher will be liable for a false advertising claim for an article even if the article is based on a press release from a commercial entity. An advertisement, however, which does no more than propose a commercial transaction, is deemed to be "commercial speech" that is subject to limited protection under the First Amendment and can be subject to false advertising claims.

The case also upholds the protection for "substantial truth" for the media. A journalist’s interpretation of facts will not subject the journalist or the publisher to liability for defamation, and something more is required for a defamation claim than minor inaccuracies or less than a literal characterization of the facts.

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