Published by LawTechie - January 22, 2010 - LawTechie

Today, in a 5-4 decision, the US Supreme Court struck major parts of the McCain-Feingold campaign finance restrictions, clearing the way for unions and major corporations to pour money into political issue advertising.

In stark language the court acknowledged it was overturning its own precedents, but Justice Anthony M. Kennedy, writing the majority opinion, said the justices were now returning to “ancient First Amendment principles.””The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether,” Justice Kennedy wrote in an opinion joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Samuel A. Alito Jr. and Clarence Thomas.

Implications for Small Business

Citizens United v. FEC carries one major implication for the small business community: Big Business and Big Business Unions can now donate as much as they want to political issue advertising. What this means is that where the small business community’s interests were once protected from the obvious inequity between what Small Business and Big Business could afford to spend, the small business community must now find ways to compete with potential opposition endowed with much deeper pockets.

The fact that big business interests often find themselves in opposition to small business is fairly intuitive: In many industries, Big Business is represented by the old, established companies while Small Business is comprised of young, upstart competitors. Small businesses are not subject to many of the union and labor laws and the accompanying expenses that big businesses must eat.

As of today’s decision, there are a slew of political issues which could be used to create burdens on an industry in an effort to make it too costly for the young upstarts to compete with their established counterparts. Small businesses would do well to join and contribute to the relevant small business lobbies, such as the US Chamber of Commerce, as a way to mitigate the threat and level the monetary playing field.

Free Speech Implications

Ultimately, today’s decision was predicated on what the Court saw as an unconstitutional restraint on free speech rights by certain McCain-Feingold provisions. While there are real concerns that today’s ruling will expose the political process to interests-based corruption, the Court did not forbid Congress from ever regulating political donations by corporations.

The real lesson is that Congress ought to tailor restrictions, as necessary as they may be, in a narrower fashion to avoid running afoul of the United States’ most basic liberties.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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