Protesters: Nike has no 'right to lie'
In an important test of free speech, the US Supreme Court is deciding whether sportswear giant Nike can be sued for allegedly misleading US consumers over the production of its sports shoes.
The company has been accused of deceiving the public by denying its shoes were made under sweatshop conditions in Asia.
But Nike says it should be allowed to defend its business practices in an open debate and has the right to free speech under the First Amendment of the US constitution.
Nike has been facing a suit under a California consumer protection law from activists - led by Marc Kasky - who are entitled to sue as individuals if they believe the company misled the public in its advertising.
Anyone with a whim, a grievance and a filing fee can become a government-licensed censor
Solicitor General Ted Olson
The sportswear company asked the California courts to throw out the lawsuit on free speech grounds, but lost in the state's Supreme court, which ruled that its rebuttal of campaigners' claims about sweatshop conditions amounted to "commercial speech" designed to promote its products.
The US Government, which has been supporting Nike in court, says the ruling will give activists too many rights to sue companies.
Solicitor-General Ted Olson told the court that "anyone with a whim, a grievance and a filing fee can become a government-licensed censor" if the California ruling was upheld.
Nike's attorney, Lawrence H Tribe of Harvard Law School, argued that the California court decision would "have a chilling effect" on genuine debate about globalisation
He said that Nike had become "the poster-child of the anti-globalisation movement" and had the right to put forward its own version of the facts.
But Mr Kasky's co-counsel, Patrick Coughlan, said that the case was not about globalisation, but about specific claims Nike made about its products which were untrue.
Is commercial speech protected?
The case hinges around the difference between "commercial speech" - such as advertising designed to sell products - and other statements by companies.
The US Supreme Court has always found it difficult to draw the line between advertising and promotion - which is subject to consumer law - and general speech, which is protected by the First Amendment.
Speech is commercial in its content if it is likely to influence consumers in their commercial decisions... For a significant segment of the buying public, labour practices do matter in making consumer choices
California Supreme Court ruling
Justice Stephen Breyer pointed out that in the Nike case, it was evidently both, and he challenged the lawyers to say how they would draw the line.
Mr Coughlan said that "when they make specific representations about the conditions under which their products are made that are false, that's not OK because consumers rely on what companies say".
That was the standard adopted by the California Supreme Court, which broadened the definition of commercial speech when it ruled last year against Nike.
Commercial speech, it said, included any statements by companies intended to reach potential buyers that is likely to influence these consumers in their purchasing decisions.
But according to Mr Tribe, commercial speech is about pushing a specific product to sell it, not letters to the editor or press releases.
And he warned that the same standard could be applied to political advertising, leading to the courts deciding on the competing claims of politicians in the next election.
The outcome is seen as having huge implications for what businesses may or may not be able to comment on in future.
Nike says it has already suspended publishing its corporate responsibility statement for fear of lawsuits.
The case against Nike was brought five years ago in California by consumer activist Marc Kasky, who said it had misled the public about conditions for its workers in Vietnam, China and Indonesia.
The firm was said to have mounted a false advertising and public relations campaign, portraying itself as a "model of corporate responsibility" in an effort to boost sales.
Nike lawyers say that under the California consumer law, activists do not have to prove the statements false, but only that they could be "misleading".
The case has also been complicated by the fact that the California consumer law gives any citizen the right to sue companies whether or not they are supported by the state government.
Outside the Supreme Court, anti-sweatshop activists were demonstrating against Nike, and condemning the "corporate right to lie."
They displayed a large mock-up of a Nike sneaker outside the Supreme Court, with a copy of the Constitution underneath it.
"Tell the Truth - Just Do It!" read one protester's handmade sign.
Nike has the support of big business organisations, the news media, the American Civil Liberties Union and the AFL-CIO union federation.
Mr Kasky is backed by California and 17 other states, four members of the US House of Representatives and environmental, consumer and human rights groups who oppose sweatshop conditions.
The Supreme Court is expected to rule by the end of June.