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Marketing Community Wins Major Victory in U.S. Supreme Court Decision

The marketing community has won a major victory in a U.S. Supreme Court decision involving data mining.  In a 6-3 decision in Sorrell v. IMS Health, Inc., No. 10-779, the Supreme Court upheld a decision by the U.S. Court of Appeals for the Second Circuit striking down a Vermont law that restricts the use of prescriber histories for purposes of marketing or promoting prescription drugs to physicians.  The decision is particularly important because it effectively reversed two earlier First Circuit Court opinions that had upheld similar laws in Maine and New Hampshire.  While the case involves data mining for pharmaceutical companies, the decision is very important for the ability of all marketers to collect and use information about consumers in order to target their messages to the right audience.

ANA filed a “friend of the court” brief with the Supreme Court in March urging the Court to overturn the Vermont law.  We were joined in the brief by the American Advertising Federation (AAF) and the American Association of Advertising Agencies (4As).  The brief was written by Robert Corn-Revere, noted First Amendment attorney with the law firm Davis Wright Tremaine LLP.  We had also filed a “friend of the court” brief with the Supreme Court in the appeal of the New Hampshire case but the Court decided in 2009 not to hear that case.

Vermont’s Prescription Confidentiality Law (PCL) bans the sale or use of prescriber-identifiable (PI) data to market or promote prescription drugs and bars pharmaceutical companies from using PI data for such promotion unless the prescriber consents.  The PI data contains no information about patients and is routinely used by pharmaceutical detailers to focus their marketing efforts to individual physicians.

The Second Circuit struck down the Vermont law, but in IMS Health Inc. v. Ayotte, 550 F.3d 42 (1st Cir. 2008), the First Circuit upheld a similar New Hampshire law, holding that data mining for marketing purposes is not protected by the First Amendment because it constitutes mere conduct and not speech.  Indeed, the Supreme Court noted that the First Circuit had characterized prescriber-identifying information as a mere “commodity” with no greater entitlement to First Amendment protection than “beef jerky.”
The Supreme Court rejected that approach, stating:  “This Court has held that the creation and dissemination of information are speech within the meaning of the First Amendment. . . Facts, after all, are the beginning point for much of the speech that is most essential to advance human knowledge and to conduct human affairs.  There is thus a strong argument that prescriber-identifying information is speech for First Amendment purposes.”     

This is one of the most important commercial speech cases to come before the Supreme Court in a decade.  It is a strong reaffirmation of the substantial protection that advertising enjoys under the First Amendment.  We are very pleased that the Court has made clear that data mining for marketing purposes is fully protected by the First Amendment.  That is critical to the ability of all marketers, not just those in the pharmaceutical area, to effectively target their messages.   

Bob Corn-Revere has a further writeup of the case which includes the Court’s language that we believe will have impacts in other pending advertising cases.

If you have any questions about this matter, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA’s Washington, DC office at (202) 296-1883.

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