WASHINGTON -- A US Appeals Court yesterday ruled that the so-called Conflict Minerals clause within the 2010 Dodd-Frank Act violates the First Amendment. The ruling by a three-judge panel could foreshadow a striking of the law by the full court later this year.

The panel voted two to one that the part of Dodd-Frank that requires a company to publicly disclose whether its products use conflict minerals violates free speech protections afforded by the First Amendment.

Companies now must decide whether to continue efforts begun in some cases years ago to report any use of conflict minerals, either direct or by those in their supply chain, to the US Securities and Exchange Commission ahead of the May 31 deadline instituted by Dodd-Frank.

The rules cover the use of tantalum, tin, gold and tungsten mined in the Democratic Republic of Congo. Affected companies -- basically, any firm that is publicly traded -- must file a conflict minerals report with the SEC and also publish that report, generally on its web site.

What the court majority found problematic about the law was the disclosure requirement, which puts the onus on the OEM to potentially undermine its own product in the eyes of the consumer.

"Products and minerals do not fight conflicts," the Court said. "The label ‘conflict free’ is a metaphor that conveys moral responsibility for the Congo war. It requires an issuer to tell consumers that its products are ethically tainted, even if they only indirectly finance armed groups."

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