The Fifth Circuit Court of Appeals reversed a U.S. District Court’s dismissal of a lawsuit challenging the constitutionality of a Texas law stating that the subject domain name may be commercial speech entitled to some First Amendment, freedom of speech rights. Gibson v. Texas Dept. of Insurance, Case No. 11-11136 (5th Cir. Oct. 30, 2012) (available here). Gibson owned and used the domain TexasWorkersCompLaw.com.
Texas Department of Insurance issued a cease and desist letter to Appellant John Gibson, arguing that his use of the words “Texas” and “Workers’ Comp” in the domain name of his website violated § 419.002 of the Texas Labor Code. The statute prohibited: “Any term using both ‘Texas’ and ‘workers’ Compensation’ or any term using both Texas and Workers’ Comp” § 419.002 Texas Labor Code.
Gibson was fined. He then sued the State of Texas and argued that the statute violates various constitutional provisions including the First Amendment’s guarantee of freedom of speech, the Fourteenth Amendment’s guarantees of equal protection and due process, and the Fifth Amendment’s prohibition on takings. Gibson argued that the regulation is not content-neutral, and therefore the appellate court should evaluate the regulation under the test traditionally reserved for content-based discrimination.
Texas’ law did not prohibit Gibson’s use of his domain name because of the viewpoint it expresses, nor did it prohibit all speech relating to workers’ compensation in Texas. See Hill v. Colorado, 530 U.S. 703, 719, 722-23 (2000) (holding that a statute is content-neutral when it “places no restrictions on – and clearly does not prohibit – either a particular viewpoint or any subject matter that may be discussed by a speaker”).
The proper issue before the court was whether the district court erred in finding that the statute (a) prohibits commercial speech, and (b) is a valid prohibition of commercial speech under the test set forth in Central Hudson. Cent. Hudson Gas v. Pub. Serv. Comm’n, 447 U.S. 557, 562-63 (1980).
The domain name and blog may do “more than propose a commercial transaction.” Bolger v. Youngs Drug Prods. Corp.,, 463 U.S. 60, 66 (1983). The domain name may nevertheless be considered commercial speech if (i) it is an advertisement of some form; (ii) it refers to a specific product; and (iii) the speaker has an economic motivation for the speech.
The court assumed that the domain name TexasWorkersCompLaw.com was commercial speech without making a definitive ruling on the concept. The Court then evaluated whether the statute presents a valid restriction on commercial speech under the test set forth in Central Hudson. To answer this question, the Court looks to whether the speech restricted by the statute is “false, deceptive, or misleading.” Bates v. State Bar of Ariz., 433 U.S. 350, 383 (1977). If so, it is not entitled to First Amendment protection. The Supreme Court and the 5th Circuit have distinguished between two types of misleading speech: that which is “inherently likely to deceive,” and that which is only “potentially misleading.” Pub. Citizen, Inc. v. La. Attorney Disciplinary Bd., 632 F.3d 212, 218 (5th Cir. 2011) (citing In re R.M.J., 455 U.S. 191, 202-03 (1982)). In order for speech to fall outside of the First Amendment’s protection, the speech must either be “inherently likely to deceive,” or “the record [must] indicate that a particular form or method of advertising has in fact been deceptive.” R.M.J,, 455 U.S. at 202. Cases involving trademark infringement involve inherently deceptive speech because they contain a significant risk that an infringing party will freeload on the goodwill that has been created by the original trademark. See Friedman, 440 U.S. at 11-16.
While Texas feared that Gibson’s domain name may confuse the public, there was no showing that the domain name is incapable of being viewed in a non-deceptive manner. See Pub. Citizen, 632 F. 3d at 219. Second, there has been no factual findings to support an allegation that the domain name is actually deceptive. See, e.g., R.M.J., 455 U.S. at 202; Joe Conte Toyota, Inc. v. La. Motor Vehicle Comm’n, 24 F.3d 754, 756 (5th Cir. 1994). Therefore, the domain name at issue was entitled to some First Amendment protection.