• by Erik Sass , Staff Writer @eriksass1, January 7, 2009

Tuesday the U.S. 9th Circuit Court of Appeals delivered a setback to out-of-home advertisers in Los Angeles with its decision to uphold the city's 2002 ban on new outdoor advertising. Specifically, the court found that the ban did not violate the First Amendment right to free speech, reversing the decision of lower courts. The plaintiff, MetroLights, had challenged the provision against off-site advertising, in which a building surface is used to advertise a product not sold there. But the rebuff has implications for digital out-of-home advertising, a main target of the city's ban.

The legal case -- which is sure to continue as advertisers appeal the ruling -- has attracted the attention of out-of-home advertisers across the country, as L.A. is something of a proving ground for new out-of-home tactics. An automobile Mecca with heavy commuter traffic, its freeways and streets are lined with billboards, including a growing proportion of digital displays, some showing full-motion video. In recent years these have triggered a backlash, leading to a number of legal battles.

The most recent round began with the apparent unraveling of a legal settlement agreed to by the city government with Clear Channel and CBS Outdoor in 2006. Per the settlement, the outdoor advertisers agreed not to challenge the city's 2002 ban on new billboards, in return for being allowed to upgrade over 800 existing static displays to digital. This agreement seemed to be holding together until last fall, when Clear Channel Outdoor converted a static sign to digital in the well-heeled bohemian neighborhood of Silver Lake.

The well-connected residents of Silver Lake complained that the city's regulation of outdoor advertising was toothless and ineffective, demanding action. In November, Los Angeles city officials recommended that no new billboards be permitted for six months to allow the city to reformulate the 2002 law regulating out-of-home advertising in a way that would withstand challenges on First Amendment grounds. The moratorium could be extended at three-month intervals, if the Los Angeles City Council needed more time to finish revising the rules. The most recent legal victory may prompt the Council to take a more aggressive stance as its members revise the law.

L.A. faces a rising tide of digital outdoor advertising. In September, the lead developer of the $2.5 billion Live LA downtown revitalization project proposed a giant complex of digital signs mounted on the LA Convention Center. Local residents have already registered their opposition to the sign complex, which would have a surface area larger than a football field.