The “law” that’s involved here is US Code Title 4, Section 4 (a/k/a 4 U.S.C. §4):
Sec. 4. – Pledge of allegiance to the flag; manner of delivery
The Pledge of Allegiance to the Flag, ”I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.”, should be rendered by standing at attention facing the flag with the right hand over the heart. When not in uniform men should remove their headdress with their right hand and hold it at the left shoulder, the hand being over the heart. Persons in uniform should remain silent, face the flag, and render the military salute.
Actually, all of 4 U.S.C. is kind of interesting, and noteworthy in both its unenforceability and its frequent breaches (most particularly the use of the flag in advertising).
The portions about not being used as clothing were something my parents always spoke about when they saw flags as clothing, but I didn’t know about the “no flags on napkins and other temporary items” that can be thrown away. I bet most stores have items like that on sale right now.
Let alone using flags on advertisements. Yeesh.
That’s how my dad’s boy Scout troop got a dozen flags years ago, say circa 1976. They were being used to advertise a housing development, or at least that’s what the city or county thought and made them take them down. The flags were relaced with colorful non-flags and the U.S. flags were donated to the scouts.