Brewer’s label isn’t protected free speech, Texas appeals court rules

By David Hutton | Oct 27, 2017

Texas Third District Court of Appeals in Austin.  

AUSTIN – The Texas Third District Court of Appeals has ruled that a brewer’s effort to market a T.G.I. Friday’s brand of beer isn’t protected free speech, reversing a lower court ruling in the case.

The Texas Alcoholic Beverage Commission (TABC) had appealed a Texas trial court decision in favor of Mark Anthony Brewing Inc., which stated that TABC regulations violated the First Amendment protections of free speech.

The case was heard by Chief Justice Jeff Rose and Justices Scott Field and Cindy Olson Bourland. Rose wrote the opinion in the case.

Mark Anthony produces a T.G.I. Friday’s brand of malt liquors under a trademark license agreement from the restaurant chain.

When Mark Anthony sought an application for the brand, the TABC rejected the request, claiming its rules prohibit a manufacturer from using a retailer’s trade name and trademarks on its products.

When Mark Anthony asked the TABC to reconsider, it declined.

The brewer then filed a declaratory judgment against TABC, hoping to get a ruling on the constitutionality of the TABC rule and decision. It sought declarations that banning labels with a retailer’s name are a violation of commercial speech under the First Amendment.

Further, the brewer doesn’t violate “thing-of-value” prohibitions, and statutory provisions banning the labels are unconstitutional, Mark Anthony argued.

In its appeal, the TABC maintained that the district court was in error when it concluded that the labels related only to lawful activity and were as a result protected under the First Amendment.

Moreover, the TABC also alleged the challenged rules and statute didn’t violate the First Amendment.

“Because we agree with TABC that Mark Anthony’s speech here is not entitled to First Amendment commercial-speech protection, we need only address TABC’s first issue,” Rose wrote in the opinion.

For commercial speech to be protected by the First Amendment, it has to deal with lawful activity and it can’t be misleading, the chief justice said.

While the label technically doesn’t concern lawful activity under the state’s alcoholic beverage regulations and tied-house ban, T.G.I. Friday’s has the power to oversee the quality of the brewer’s products and as a result has some limited control over the interest.

Mark Anthony has maintained in court documents that the trademark licensing agreement doesn’t violate TABC statutes because the control the chain has isn’t “coercive.”

The brewer also noted that the labels can’t be tied to unlawful activity because sales of malt beverages are legal in Texas.

Citing Ford Motor Co. v. Texas Department of Transportation, Rose noted that the labels are factual and promote the sale of a product that is legal in Texas.  However, it is “part of an integrated course of conduct (that) violates Texas law,” and thus is not entitled to First Amendment protection, he said in the decision. 

The brewer argued that Ford doesn’t apply because the case relates to advertising an activity – in that case online retail sales that didn’t go through a dealer – that state law made illegal.

“In sum, Mark Anthony’s speech here is related to unlawful conduct and, therefore, is not entitled to First Amendment protection,” Rose wrote in the opinion. “Accordingly, we sustain TABC’s first issue on appeal. And having done so, we need not address its remaining issues.”

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