WASHINGTON (AP) -- Amway Corp. lost a Supreme Court appeal Monday in its six-year fight with rival Procter & Gamble Co. over rumors that P&G was linked to devil worship.
The court, without comment, declined to review a lower court's decision that rumors spread to hurt a company are not entitled to free-speech protection. The case grew from P&G's allegation that Amway and a group of Amway distributors spread the old, baseless story about P&G and Satanism.
False rumors began linking P&G's former crescent-shaped "man in the moon" logo to Satanism in the late 1970s. The false story also spread that P&G's president had revealed his association with the Church of Satan during a national television interview.
P&G claims distributors for Amway revived the rumors in 1995 when a distributor recounted a version of the TV-show rumor on the company's national voice mail system for distributors. Ada, Mich.-based Amway sells household products, many of which compete with Procter & Gamble's brands, directly to customers.
Cincinnati-based P&G has sued 15 times to stop the rumors, eight times involving Amway or its distributors. P&G won't disclose how much it has spent on the fight, but Amway, now known as Alticor Inc., says it has tallied $30 million in legal bills since the suits began six years ago.
More than 60 lawyers for the two sides have generated more than 2 million pages of documents in three federal lawsuits filed by the companies in Utah, Texas and Michigan.
A federal judge in Texas threw out some of P&G's claims in 1999, and ruled for Amway in another part of the case.
On appeal, a three-judge panel of the 5th U.S. Circuit Court of Appeals upheld part of the lower court ruling but ruled that P&G's trademark and racketeering claims should go forward.
Speech, in this case a rumor, gets no First Amendment protection if the "speakers' motives in spreading the Satanism rumor were economic," the appeals court wrote. The appeals court sent the case back to the lower court and ordered the judge to look at P&G's claims under a trademark law that makes it a civil offense to misrepresent goods, services or commercial activities.
Amway has said the company has tried to help P&G stamp out the rumors. The Amway distributor who left the first message issued a retraction days later, but P&G claims the damage was done.
Amway argued in court that even though the rumor was false, spreading it was allowed as a matter of free speech.
The company drew the backing of several media organizations when it asked the full 5th Circuit Court to rehear the issue. P&G was trying to stifle what the press, consumer advocates and others can say about businesses, Amway argued.
When that argument failed, Amway hired Kenneth Starr, a former solicitor general and independent counsel, and appealed to the Supreme Court.
Starr argued that the high court should clarify its views on the First Amendment and commercial speech, such as advertisements.
It is a tangled area of the law, and the Supreme Court has been unable to work out a single, clear test for defining commercial speech and its coverage under the First Amendment. Advertisements are subjected to government regulation that is not applied to other kinds of speech.
The court is also divided. Justice Clarence Thomas is on record as supporting equal treatment for commercial and noncommercial speech -- advertisements could get the same free-speech shield as a protester in the town square. So far, the other justices have not agreed.
Lawyers for P&G argued that the appeals court looked at the question of motive correctly, and argued that the decision should stand. The company also said it is too early for high-court involvement.
The case is Amway v. Procter & Gamble, 01-29.