It's ironic when people use this quote to justify banning "harmful speech", not knowing it was an excuse for jailing peaceful protesters under the police-state 1918 Sedition Act. 'Shouting "fire" in a crowded theater' is a phrase from Oliver Wendell Holmes, Jr.'s opinion in the Schenck v. United States in 1919, which held that the defendant's speech in opposition to the draft was not protected free speech under the First Amendment.

Holmes Jr's opinion was overturned by Brandenburg v. Ohio in 1969, which limited the scope of banned speech to that which would be directed to and likely to incite imminent lawless action (e.g. a riot).