An advertisement congratulating Michael Jordan on his induction into the Basketball Hall of Fame constituted commercial speech, the Seventh U.S. Circuit Court of Appeals has ruled.

The federal appellate panel’s decision reverses a lower court opinion and moves the case forward to consider Jordan’s publicity rights claim against the advertiser.

The dispute began in 2009 when Jordan was inducted into the Hall of Fame. Sports Illustrated offered grocery chain Jewel-Osco an ad page in a commemorative issue in exchange for stocking the magazine in its stores. Jewel-Osco’s marketing department created the ad, which featured an image of a pair of basketball shoes with the number 23 under text reading: “A Shoe In! After six NBA championships, scores of rewritten record books and numerous buzzer beaters, Michael Jordan’s elevation in the Basketball Hall of Fame was never in doubt! Jewel-Osco salutes #23 on his many accomplishments as we honor a fellow Chicagoan who was ‘just around the corner’ for so many years.”

The ad also featured Jewel-Osco’s logo and slogan “Good things are just around the corner.”

Jordan sued, alleging the ad violated Illinois’s Right of Publicity Act, a state deceptive practices statute, and the federal Lanham Act. Relying on the First Amendment, Jewel-Osco moved to dismiss the suit on the grounds that the ad was noncommercial speech and entitled to full constitutional protection. A federal district court agreed last year.

But the 7th Circuit reversed, finding the ad to be commercial speech and therefore subject to the laws invoked by Jordan.

The ad “prominently features the ‘Jewel-Osco’ logo and marketing slogan, which are creatively and conspicuously linked to Jordan in the text of the ad’s congratulatory message,” the panel wrote. “Based on its content and context, the ad is properly classified as a form of image advertising aimed at promoting the Jewel-Osco brand.”

Adopting a broad interpretation of the term “commercial,” the Court characterized Jewel-Osco’s ad as “image advertising” or “institutional advertising,” as distinct from product advertising, where a single item is promoted. The Court explained that image advertising occurs when a product or service is not explicitly offered for sale and instead the brand itself is promoted.

“Jewel’s ad has an unmistakable commercial function: enhancing the Jewel-Osco brand in the minds of consumers. This commercial message is implicit but easily inferred, and is the dominant one,” the Court said. “The ad is plainly aimed at fostering goodwill for the Jewel brand among the targeted consumer group – ‘fellow Chicagoans’ and fans of Michael Jordan – for the purpose of increasing patronage at Jewel-Osco stores.”

An opposite holding “would have sweeping and troublesome implications for athletes, actors, celebrities, and other trademark holders seeking to protect the use of their identities or marks,” the panel concluded. “Classifying this type of advertising as constitutionally immune noncommercial speech would permit advertisers to misappropriate the identity of athletes and other celebrities with impunity.”

To read the opinion in Jordan v. Jewel Food Stores, Inc., click here

Why it matters: The 7th Circuit emphasized that modern commercial advertising “is enormously varied in form and style,” and took pains to explain the intent behind institutional advertising. Although the lower court sided with Jewel-Osco in part because it found that “readers would be at a loss to explain what they have been invited to buy,” the federal appellate panel recognized the value of using “appealing images and subtle messages” to build goodwill for a brand. “There is no question that the ad serves an economic purpose: to burnish the Jewel-Osco brand name and enhance consumer goodwill,” the Court wrote. Jordan filed a similar suit against a steak restaurant that ran a congratulatory ad in the same commemorative issue. Dominick’s called Jordan “a cut above” near a steak coupon in its ad, and a federal district court judge found the steakhouse liable. A trial on damages is expected later this year.