“shipping protection fee” providing no extra protection was plausibly misleading drip pricing

DeMarco v. DNVB, Inc. (Thursday Boot Co.), No. 25-CV-3076
(GHW) (RFT), 2025 WL 4378637 (S.D.N.Y. Dec. 5, 2025) (R&R)

Thursday Boot sells shoes, apparel, handbags, and
accessories on its website, which offers “free shipping and returns in the U.
S.” according to a banner at the top of the webpage. Each product on the
website is listed with an “Honest Pricing Guarantee,” promising the “Best Price
offered year-round.” Upon checkout, however, a “Shipping Protection” fee of
$2.98 was automatically added to the customer’s cart, with an option for the
customer to deselect the Fee. Customers are told that if the Fee is not paid
Thursday Boot “is not responsible for damaged, lost, or stolen items during
shipping.” However, defendant ships its products via UPS, which will reimburse
purchasers of lost or damaged packages. Defendant also has an Amazon storefront
on which it sells its products and offers free shipping, without the Fee.

Plaintiffs alleged violations of NY’s GBL (along with common
law contract/unjust enrichment claims which the magistrate recommended
rejecting). Although the magistrate thought there was no standing for
injunctive relief, the basic deception claim was plausible.

Whether the Honest Pricing Guarantee was a deceptive
practice depends on whether the Fee was misleading, which it plausibly was.
Defendant argued that there was no misleadingness because (1) the Fee was
clearly disclosed on the checkout page “in the same size and font as the
product price, together with an adjacent option to remove the charge”; (2)
shipping protection is distinct from shipping, so that a charge for shipping
protection did not negate Defendant’s promise of free shipping; and (3) the
shipping protection bought by the Fee provided value to buyers by allowing them
to recover from Defendant for lost or damaged packages, thereby relieving
buyers “of the responsibility to pursue relief” for lost or damaged packages
from the shipping companies.

But it was plausible the combination of the free shipping
representation and the negative option to remove the Fee was misleading to
reasonable consumers and that Defendant’s behavior was made more misleading by
Defendant’s last-minute inclusion of the Fee, aka “drip pricing.” Plus, the
statement that Defendant was “not responsible for damaged, lost, or stolen
items during shipping” could plausibly lead “a consumer to believe that they
will bear all risk of loss” if they did not pay the Fee, even though buyers
were already entitled to such compensation.

Full disclosure occurs when a party “is provided with all
the information necessary to understand [a] practice and its consequences.” Whether
the disclosure provided plaintiffs with sufficient information to understand
the significance of the Fee was a question of fact that couldn’t be assessed on
a motion to dismiss. While a reasonable consumer would understand the
difference between shipping and shipping protection, “the website provided
insufficient information to allow reasonable consumers to understand the nature
of the shipping protection secured by the Fee.” A reasonable consumer likely
would be unaware that the carrier would, under ordinary contract principles,
bear the risk of loss or damage during transit. The check-out statement that if
a customer did not pay the Fee, defendant would not be “responsible for
damaged, lost, or stolen items during shipping” was “technically accurate,” but
the failure to disclose that the carrier was responsible for loss or damage
during transit might “undermine [the] consumer’s ability to evaluate his or her
market options and to make a free and intelligent choice.”

Also, even if a reasonable consumer would have understood that
the shipping fee added defendant’s commitment to bear the risk of loss or
damage, it wasn’t clear that they would know that the fee was optional.  Adding the fee to customers’ carts at the very
end of the transaction “added to the confusion and could plausibly have misled
reasonable consumers about whether the Fee was optional.” Articles cited by the
defendant in support of its motion to dismiss, which state that offering
shipping protection has become commonplace, “also opine that adding fees for
shipping protection at the end of the transaction is misleading to the average
consumer.”

from Blogger http://tushnet.blogspot.com/2026/02/shipping-protection-fee-providing-no.html

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WIPIP Panel 3: Deepfakes, Celebrities, and Movies

A Digital Right of Publicity for the AI World (Emma Perot)

Prehistory: ROP covers lookalikes, soundalikes, video game avatars
(at least for realism).

Persona as training data. Theories of personality: users
informed about use; many social media companies do not allow opt-in or opt-out;
performers can be subject to exploitative terms. Unjust enrichment: in absence
of compensation for training and licensing to third parties. Incentives
undermined, though this won’t apply to the average social media user. We tend
to favor art we think is made by humans. W/o proper protection we’ll undermine incentives.

Input stage: is consent obtained? Maybe, sort of, via terms
of service, contracts with publishers, agreements made pre-AI.

Output stage: could be identifiable or unidentifiable. The
latter isn’t really a problem for ROP. But the ability to create unidentifiable
persona makes input approach important—persona has been used for the training.
Risk of nefarious uses already addressed in many situations; but expressive
uses could be covered which could interfere with realistic depictions, e.g. in
biopics. If you’re conveying information about the person perhaps we want to
allow that (as opposed to casting them in a role).

No FAKES: positives—exception for satire/parody, disclaimers
not permitted. Negatives: doesn’t address training, uses to create composite
figures, licenses last too long (10 years). SAG-AFTRA agreement: more positive
b/c TV/theatrical uses they say: each capture and use of digital replica should
be consented to and compensated.

Need clarity on how consent for input is sought and how
outputs will be treated in expressive works. Avoid labor displacement.

Betsy Rosenblatt: Different interests from people who make a
living from their persona v. someone who is more concerned w/privacy.

Lisa Ramsey: theories of persona is one framing, but what
are the goals of the law is another. What are you trying to protect? Right to
make $ from performing? Right to stay out of database?

[Persona is a bad fit for a consent-to-train framework because
the details of a person’s life etc. are facts. You may be thinking about songs
and movies, but the NYT wants to be able to license its news stories w/o being
overridden by the subjectss. Moreover, persona is constructed with others. When
I tell my life story, my husband’s life story is inherently implicated.

Incentives: if you are relying on the preference for human-made
work, what you want is a disclosure regime; licensing by the person will lead
to lots of deception.]

Transformative Celebrity (Rebecca Curtin)  

ROP claims might be implicated by methods users use—Zarya of
the Dawn looks a lot like Zendaya, and that’s b/c the prompter used her name to
produce a character who resembles Zendaya. Use of names in prompts alone, w/o
reference to whether an infringing result is produced, has been raised by artists
who alleged that allowing users to request art in the style of X was a
violation of the ROP.

Transformative use was imported into ROP from ©, but © has
recently devalued new meaning and message. Should ROP follow ©? Should © return
to focus on new meaning, especially for use of persona? Does it make sense for ©
and ROP defenses to differ?

Transformativeness is not the worst approach of the
possibilities in ROP.

Warhol’s commerciality test sounds a lot like the
predominant use test in ROP cases (yuck).

Thinks Griner v. King was wrongly decided by 8th
Cir.—use of “success kid” meme was not fair use even used in political speech.
Inherently expressive way of using image as cultural reference, but court
reasons that controlling the commercial use of the template was the point of seeking
© and thus not transformative—devalues what the politician was trying to say. Warhol
is undervaluing new message & meaning, and expanding that approach to ROP
would be devastating to the transformative power of celebrity itself.

Charles Duan: the speech is out there; it’s just a question
of who gets paid/the rents.

A: chills speech by future potential speakers.

RT: experience w/state dilution law suggests courts are
neither willing to use nor capable of using two different tests with the same name.
Return to productive use, but this time for the ROP?

Trademark Law’s Trouble with Titles (Stacey Dogan)         

What would have happened if Barbie, the movie, was made
by a truly subversive entity instead of by Mattel? TM handles titles very badly
in ways that are becoming more problematic after JDI. Alone in the Dark lawsuit—based
on video game suing over title of movie Alone in the Dark, one of many films
under the same name.  Several courts in
the wake of JDI have concluded that titles may be source indicating, meaning
that Ds have to go through the regular LOC standard, which is much less
speech-protective. But these courts have gotten it wrong.

Titles and TMs do have some things in common. But
differences in purpose function and impact on audiences versus impact on consumers;
differences in consequences of extending legal rights to titles (speech impacts)—which
should mean different legal rules. Reference to titology, literary theory of
what titles mean.

Looks at different contexts: titles as TMs, recognized by early
20th-c courts as basis for unfair competition claims, but rightly
with a high standard requiring explicit misleadingness; Rogers and titles as
alleged infringement; Dastar and its conception of TM’s relationship to
expressive works (TMs identify source of physical object; titles are not TMs in
this view, but indicate a relationship b/t author & expression); and then JDI
and Kagan’s understanding of “use as an indication of source.” This should be
understood narrowly to preclude the treatment of titles as TMs.

Goal: easy resolution of most cases. Presume titles are not
source-indicating uses, which means that Rogers-like speech protection is
appropriate. But Rogers needs an update: can’t later claim TM rights based on
expressive uses. Some kind of estoppel, though implementation is tricky.

How to draw the line b/t mere use in title and other uses?
Advertising of title/work should clearly be allowed, but what about merchandise?
Advertising in connection w/merch?

Ramsey: would only apply rules against people who asserted
TM rights by applying for registration, claiming in a pleading, or maybe using
TM symbol—treat as omission. But what about Harry Potter and the ___? If there’s
no inherent meaning before adopted, maybe allow TM, but something like Alone in
the Dark already had meaning and thus shouldn’t ever be protectable.

A: two different forms of expressive use: one set of terms
involves common meaning like Alone in the Dark; also important to be able to engage
in nominative fair use-like titles like Barbie Girl.

Rosenblatt: how much do we need title exceptionalism to get
to this place? Dastar: relationship b/t title and content is not a source
relationship. We can understand that some titles are descriptive, generic,
arbitrary and approach them that way. (I don’t think arbitrary titles are
marks! Use as a mark is a separate requirement from placement on Abercrombie.)
But she’d limit that to rights claims; whereas when titles are the source of
alleged infringement we should treat that differently.

A: we have title exceptionalism on the protection side and
should retain it b/c of the expressive cost of granting rights. Titles are
creating more problems than characters—most of the Rogers character cases are
easily resolved in favor of the defendant b/c courts have found that use w/in a
work is more purely expressive.

FIRST: Archival Encounters That Set History in Motion
(Claudy Op den Kamp)

Videographic presentation of history of first film ©
registration in US.

from Blogger http://tushnet.blogspot.com/2026/02/wipip-panel-3-deepfakes-celebrities-and.html

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WIPIP Panel 2: Copyright and Culture

  Copyright’s Invisible Hand: Subsidizing America’s Cultural
Institutions (Guy Rub)

© sometimes requires payment from more intensive users,
sometimes not. Exclusive rights: unbundling—buy a book to read v. buy a book to
adapt to movie. Fair use is sometimes bundling: buy a book to parody it,
treated together w/ordinary readers; buy a book to extract facts for own work, fact/expression
distinction bundles that user with other just-readers.

First sale: also bundling—museums and libraries pay the same
as private purchasers. Subsidizes cultural institutions. Legislative process:
ensure that libraries won’t be harmed by Copyright Act; 109(2) does not apply
to libraries. Congress spent a lot of effort over time to treat libraries
separately and promised to revisit the law if libraries started to suffer.

Why does this matter? Digital distribution is the elephant
in the room, and the Internet Archive case with CDL.

Lemley: are we balkanizing fair use?

A: that ship may have sailed.

Theory, Technology, and Culture in the Development of the
Legal Musical Work (Lauren Wilson)                    

Gap between legal and musical understandings of what a
musical work is. Structure: Before the 1909 Act; 1909 hearings; before the 76
Act; 76 Act hearings.

Before 1909: the musical work was lines on a page, thus
writings. But most major American cities developed an orchestra in the second
half of the 1900s, exposing them to more music. Phonograph invention: originally
for preservation; 1890: gramophone introduced. Sound recordings quickly recognized
as a teaching tool for rhythm, tempo, accent, etc. Also as brutally honest
records.

1909 Act hearings: Music publishers brought figures it hoped
Congress would find sympathetic, like John Philip Sousa who hated records.
Recording industry didn’t have household names; appealed to egalitarianism/access
to music even w/o resources to invest in intensive musical training. Publishers
won: Congress recognized records as ©able for the musical work authors, but not
as works of their own.

Claim made by industry: Sound recordings were neutral records
of sounds as they happened. But Victor published ads “Both are Caruso”—the singer
and the record. Authenticity was a non-issue until record companies needed to
convince the public that recordings were authentic.

By the mid-20th century, recordings are standard
way to experience music. Music publishers adopt similar strategy of putting
composers on the stand, but they aren’t household names as they were before. Claimed
that © protection for recordings would boost revenue allowing them to support “good”
music, “serious” music that members of Congress would enjoy. Received some
protection, though that protection is still limited compared to that for the
musical work. Fictions about musical technology and taste led to a failure of
imagination. Publishers could have brought the Beatles or the Beach Boys, Janis
Joplin or Jimi Hendrix—the industry was buzzing with innovation. Congress
squeezed concepts of creativity into existing legal boxes.

Q: quoting from a sound recording is almost always
infringement so there’s more rights there.

A: yes, but no general public performance right. “Literal”
copying is very strictly prohibited, but imitations are fine.

Matt Sag: Class, race and gender seem likely to have been
important.

A: 76 hearings particularly—they chose only Western art
music composers so excluded Black artists.

Caponigri: Comparative insights? Enrico Caruso—artists traveling
from different places to different audiences.

Lemley: interesting to think about how those structures
differ as b/t music and e.g., movies which we don’t pull apart. Plays also preexisted
movies, just like the musical work.

Buccafusco: we weren’t worried about record piracy until the
1960s [side note that I think that “we” is doing a ton of work here; there were
big “pirate” operations but not much home taping before that], but want to make
sure it doesn’t screw up the mechanical reproduction right for musical works,
so we have to limit the sound recording reproduction right in new ways.

Reproduction v. Reference (Benjamin Sobel)

Copyright cases are treating references as reproductions.
Example from Salinger v. Colting: do you deny that he is Holden Caulfield? A:
No. That is a key example of the mistake made in certain derivative works cases:
treating a reference as sufficient to create an infringing derivative work. Inexplicable
cases where substantial similarity of expression isn’t there: character names, sequels,
and other noncopying derivatives. Maybe answer keys. Referring to expression in
some other work, evoking it in reader’s mind—that’s not the same as
reproduction.

What is the law they’re actually applying? Apparently they’re
measuring referential specificity: it’s about the strength of a referential
relationship, not presence of original expression: how tightly the character
name corresponds to the characteristics we associate with the character. Towle
(Batmobile) case—nothing in the analysis there turns on expressive qualities.

There’s no reason we should care about characters’ names,
but they play a central role in some courts’ vision of copyrightability: Posner
in Gaiman v. McFarlane—it’s harder if the character has no name. Names aren’t
expressive, they’re too short.

Sequels: the law of character copyright suggests that if the
character changes significantly across works then I don’t have a copyrightable
character at all. But I should have the number of copyrightable works I have
written.

Persistent conflation of identity with similarity. Is the
character Mr. C Holden Caulfield? It’s irrelevant!

Anderson v. Stallone: does it reproduce copyrightable
expression in a short treatment? Or does it just use Rocky’s name. The court
says it doesn’t matter b/c the characters “are” the same. But identity is not
substantial similarity. Anakin Skywalker from The Phantom Menace “is” Darth
Vader but it’s ridiculous to say they’re similar. A child who is not covered in
burns who races a pod racer is not similar to the character of Darth Vader.

The reproduction right isn’t a reproduction right—it covers
much more than what you would colloquially describe as a “copy.” It has a
principle, similarity, but the philosophical concept is exemplification:
possession plus reference. A tailor’s swatch refers to the identified fabric
& color by possessing the qualities to which it refers. Reference inquiry
is copying in fact; possession inquiry: has to possess the relevant aesthetic
features.

The problem for these cases is that a name doesn’t “exemplify.”
It designates, but does not describe.

What role does the derivative work right play here? Can it
be meaningfully distinguished from the reproduction right as expanded?

He believes: the reproduction right in a character can never
be infringed by using its name. Assume you replace all instances of Sherlock
Holmes’ name in a PD story with “Harry Potter,” that doesn’t appropriate
copyrightable expression from JKR. Likewise: Calling something a sequel doesn’t
make it a substantially similar copy.

In a suit alleging improper appropriation, a character’s name
in both works should be excluded from the substantial similarity analysis (even
if relevant to copying in fact). Prejudicial effect far outweighs its probative
value.

Maybe the derivative work right would be another story.
Reserving judgment. Either the derivative works right could be about something
other than similarity, thus substantial similarity is not required for
derivative works, or maybe this is a formal argument for why these cases are illegitimate
b/c similarity is and should be the bedrock of ©.

Matt Sag: Ordinary observer standard: when the ordinary
observer is presented with the name of a character, they remember a whole
narrative backstory; isn’t that driving those cases?

A: descriptively accurate, but not reproduction! Maybe that’s
what the derivative work right is.

Caponigri: could Dastar help? Content of work/originator of
work isn’t supposed to be source indicator. The reference here is sort of like
passing off/evoking associations in mind. [Maybe these are just TM cases]

Buccafusco: Barbie Girl is an example where reference doesn’t
seem to infringe ©.

Shani Shisha: Courts are saying “I know it when I see it”
and applying a but-for causation standard.

Occult Copyrights (Ari Lipsitz)

Rider-Waite-Smith tarot: a © story. The 1909 public domain
deck has slightly different colors from the 1971 © claim. The publisher has
acted as a steward and exploiter of the legacy of the RWS deck. New matter
claimed: lithographic reproduction of designs & text.

Attributes of an occult ©: public domain core, derivative
shell, and © owner uses mechanics of system—registration, notice, licenses—to yield
a perception of protection & supracompetitive benefits. Evergreening:
routinely republishing minor variations to reinforce the “aura” of ©.
Litigation avoidance: often no enforcement at all, or only C&Ds, leading to
market power: popularity of asset replaces monopoly right. No one else will
compete even if they could.

Doctrinal rejoinder: anyone should be able to reproduce the
work, and their contributions shouldn’t govern the original, but that’s not the
reality. You’re not buying the work for the derivative contributions but for the
PD asset.

Lemley: shouldn’t AI & other tech make market entry easy
if not for the false © claims?

A: yes, they used to assert exclusive right to use this deck
for digital readings, but don’t seem to try to enforce any more. [Presumably they’ve
found another path to profit.]

from Blogger http://tushnet.blogspot.com/2026/02/wipip-panel-2-copyright-and-culture.html

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WIPIP, BU Panel 1: Trademark Theory and Practice

Trademarks, Functionality, and Competition (Glynn Lunney)         

Came in late; 3d Circuit is not a good circuit for trade
dress (11.8% success for claimants, almost always on functionality (71% of
wins)). 5th Circuit at the other end—50% success, functionality only
successful as a defense 20% of the time.      

Functionality is a trump card, not a balancing test.
Problem: Inwood test is dicta; the real problem the Court saw was
failure to defer to dct on factual finding, but the dct applied the standard
“is the feature an important ingredient in the commercial success of the
product?” and that’s the Pagliero standard. And dct should only get
deference if it didn’t make an error of law. Functionality is for non-branding
purposes. Morton-Norwich isn’t beneficial to consumers; we need more
attention to whether there is competition and less to whether it is “fair” by
avoiding copying of attractive features/role of incentive to create design
should be irrelevant.

Err on the side of functionality; just b/c some trade dress
may be nonfunctional doesn’t mean we should analogize from Coca Cola bottle to
trade dress generally. 5th Circuit wrongly reverses the hierarchy of
the Lanham Act.

Beebe: why not go further and adopt Easterbrook’s approach:
if it does anything other than indicate source then no protection?

Lunney: if there’s only one consumer who wants it for its
shape alone, that’s a little troubling—average/reasonable/ordinary consumer is
a standard construct.

Tertiary Meaning (Sari Mazzurco)                

Concept: Distinctiveness that is cultural and especially
indigenous that should trump TM distinctiveness. Genericness/secondary meaning
both ask about what the primary meaning is: the producer or the product.
Failure to function doesn’t have a uniform test but PTO does ask whether
something serves only as an expression of a concept/sentiment and is widely
used by third parties so it wouldn’t be perceived as a source indicator for the
goods concerned.

Each test applies awkwardly to symbols that are significant
to cultural groups. Imagine that Hermes began using a traditional pattern from
kente cloth on its bags. Kente cloth is used in rituals, has
spiritual/cosmological significance. Hermes could use the coercive power of the
state to try to bar those uses even if the third parties are using the pattern
in a manner consistent with its cultural purpose. Relevant public for
genericness and secondary meaning is likely consumers; F2F looks for wide use
by third parties. West Africans likely wouldn’t represent a big enough
percentage of those groups.

Meaning-making is a social practice, always emergent and
conceptual, rarely universal, never subject to exclusive control—always
negotiated and contested, with power dynamics at play. Source distinctive
meaning can vary across time and contexts. But people might not silo meaning
across groups. And people might fight over meaning in TM context: Matal v. Tam.
Groups have asymmetric power—dominant groups have more ways to establish their
preferred meaning. Ability to leverage coercive power of state helps. If Hermes
wants to establish secondary meaning for a kente pattern, it has many tools to
do that, including TM’s privileging of source-identifying meaning.

Conclusions: include cultural groups in relevant public for
genericness/secondary meaning; consider cultural meaning in F2F determinations;
cultural groups should receive priority even when a third party is first to
“use” the mark in concept; recognize that noncommercial uses by cultural groups
are outside the scope of trademark law.

Felicia Caponigri: how does the cultural meaning of Hermes
bear on this?

RT: (1) Adapt doctrine of foreign equivalents analog: can
use for 240,000 people in the US!

(2) Cost-benefit analysis underlies the DFE and other TM doctrines:
you consider the interests of the smaller group more significant if they’d lose
something significant like a coherent existing meaning and the rest of the
public has no particular need for the symbol. Fire cider genericness case;
otokoyama for sake; bond-OST for cheese.

(3) Noncommerciality mess: selling kente cloth for cultural
uses would not be noncommercial; Hermes would not target the wearers in the US,
but the sellers/importers.

21st Century Trademark Surveys (Rebecca Tushnet)

Surveys are a mess; routinely criticized as missing the
point and also dispositive in some key cases especially involving free speech
issues. Budweiser Oily, JDI.

Repetition of questions: source, business affiliation, again
and again—prompting respondents to answer positively.

One survey asked three times what people thought of aluminum
as an antacid ingredient until the third question yielded 45% of people who
thought that aluminum was bad for them. The court gave the survey little
weight. Johnson & Johnson-Merck Consumer Pharms. Co. v. SmithKline Beecham
Corp., 960 F.2d 294 (2d Cir. 1992).

Compare L & F Prods. v. Procter & Gamble Co., 845 F.
Supp. 984, 996 (S.D.N.Y.1994) (repeating questions “also serves the purpose of
clarifying otherwise-ambiguous first responses by probing the implications of
previous answers”), aff’d, 45 F.3d 709 (2d Cir.1995), with Am. Home Prods.
Corp. v. Procter & Gamble Co., 871 F. Supp. 739, 748 (D.N.J.1994)
(excessive probing undermined credibility of survey evaluating arguably
implicit messages).

Lack of definition: asking why do you say that is not the
same thing as what do you think affiliation means

Lack of clarity about what the statute means: statute uses
affiliation to mean two different things in the same section
(a) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association: here, association is something that
can be either true or false, thus confusing or nonconfusing

(c) association arising from the similarity between a mark
or trade name and a famous mark that impairs the distinctiveness of the famous
mark—here, association refers to mental processes and the association is not
false; the consumer really does think about Nike when seeing Nikepal 

Ideas: training module; don’t repeat but have choose as many
as apply; include an option “this is about the trademark owner” –other
thoughts?

Jake Linford: pilot study on tarnishment: we did for a
screener try to define tarnishment—lost 1/3 of respondents. We had tried to
define it on our own terms—why not use the statute? Part of the work is
defining the term.

Lisa Ramsey: Informational uses of TMs/comparative
advertising. Expressive: parody, satire. Decorative: colors, shapes. Does this
use provide information? [not sure that’s as helpful b/c courts don’t care, they just
care about the confused subset]

Laura Heymann: should the survey question think about the
harm at the heart of this: when we ask these questions are we trying to figure
out solely what consumers think or what they do? [again, minimum change
principle, though I appreciate the larger project of course—but consumers are
really bad at telling you what affects their behavior so materiality might not be best assessed in a confusion survey]

Lunney: how much do you think controls help? [not much b/c
of tendency to elaborate]

Is Teflon really any good?

Caponigri: context of surveys—Instagram might differ.

Stacey Dogan: depends on what affiliation confusion is.

RT: I think this is much easier than you might think.
Affiliation specifically is a term of art across many statutes. I don’t love
Chief Justice Webster, but we’re in a period where he’s very influential.

Education, Wealth, and Weird Trademark Surveys (Jake Linford
with Justin Sevier)             

In the US, and perhaps systematically among scholarly
studies, our studies are WEIRD (Western, Educated, Industrialized, Rich, and
Democratic). We are undersampling low-education and low-income consumers and
not sufficiently correcting for the undersampling. Most surveys don’t even
report education or wealth.

Hypothesis: lower education consumers are more likely to be
confused. But it might matter either way. In our study of tarnishment, there is
directionally a burnishment effect but the sample size is so small as to create
a lot of noise.

A null effect is also potentially interesting.

Is wealth as important as education? May be easier to
measure one thing than two. Eventually will look at litigated surveys.

[RT: WEIRD usually describes the population: this is
implicit in your not challenging whether we’re oversampling Westerners,
industrialized, democratic (though political orientation might be increasingly
important). Linford: yes, but we are undersampling education/wealth.

Compare surveys among educated consumers:
doctors/pharmacists? Luxury goods]

Caponigri: we need the relevant population

Roberts: correcting for those things might be wrong
depending on the product

Q: Does dilution have a corollary with considering
sophisticated consumers? Or is a dilution survey different in who it should
target?

Trade dress protection study: Higher education: the more
likely you are to prioritize competition; lower education: more likely to
prioritize protecting status.

Heymann: is that a function of the survey format v. actual
behavior in the market—the survey context/this is a test that I have to get
right/this is like an educational experience? Less experienced with the
environment the survey is creating.

A: a fair question, but don’t want to presume.

Lunney: how much do surveys really matter? Judges like them
if they agree w/judges’ preconceived outcomes.

A: sure. We have been making claims as we run surveys that
they might tell us something about how TM law is or isn’t working; if none of
us are asking the right people, then we have to change our claims.

from Blogger http://tushnet.blogspot.com/2026/02/wipip-bu-panel-1-trademark-theory-and.html

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Deadly automatic litterbox might be falsely advertised as “safe”

Gomez v. PetPivot, Inc., 2026 WL 507708, No. 25-cv-5622
(LJL) (S.D.N.Y. Feb. 24, 2026)

“Safe” is the kind of word that is general enough that it
might be puffery, but courts think that safety is important enough that they
sometimes consider it falsifiable. Here, defendant’s self-cleaning litterbox
product gruesomely killed plaintiffs’ cat after they received the litterbox as
a Christmas gift. (I will not give you the details but they were awful, and it
was difficult to remove the cat’s body.) It was “advertised as remaining
partially open at all times, with no complete enclosure that could entrap a
pet.” On the PetPivot website, Amazon.com, and promotional materials, PetPivot
marketed the Autoscooper as “smart,” “safe,” and “fully automated” and equipped
with multiple “safety protection devices,” including that the system would
automatically stop operating when a cat was inside the chamber. “The Amazon
listing for the PetPivot assured consumers that the device can operate safely
without supervision.”

Although individual defendants from PetPivot were dismissed
for lack of personal jurisdiction, the court allowed NY GBL false advertising
claims to proceed. GBL Sections 349 and 350 require proof of causation but not
“proof of justifiable reliance.” “Reliance is the causal link between an
alleged deceptive practice and a consumer’s decision to transact business with
the defendant, whereas causation refers to the link between an alleged
deceptive practice and an actual injury sustained by a consumer as a result of
such practice.” Thus, causation can be shown by evidence either that the plaintiff
would not have entered into the transaction or would have taken precautionary
measures with the product had they known the truth.

Here, plaintiffs didn’t claim they bought the product in
reliance on defendants’ representations, but rather that they relied on those representations
when accepting and using the product in the home. That sufficed: they alleged a
“connection between the misrepresentation and … harm from, or failure, of,
the product.” Also, applying Rule 8, they adequately identified the
misrepresentations at issue.

Can the death of a cat qualify for negligent infliction of
emotional distress where neither plaintiff was threatened with physical harm? “Bystander”
claims for NIED in New York are limited to “immediate family,” but the courts
have declined to define the outer boundaries of that phrase.  New York courts have allowed a grandmother to
pursue a claim for bystander recovery following the tragic death of her
grandchild, relying on the “legislative recognition of the changing nature of
society’s understanding of family and the special relationship between
grandparents and grandchildren.” By contrast, the relationship between aunts
and uncles and their nieces and nephews didn’t qualify. “[T]he inquiry is
objective; it asks not whether the grandmother and her grandchild had an
exceptionally close bond, but whether New York law has evolved to recognize
grandparents as a ‘discrete, limited class of persons that enjoys a special
status under modern New York family law.’” 

A lower NY court also found that a
pet dog could be classified as “immediate family.” New York Domestic Relations
Law (“DRL”) requires a “best interest” framework for determining the custody of
pets, similar to the framework for children, in recognition “that ‘for many
families, pets are the equivalent of children and must be granted more
consideration by courts to ensure that they will be properly cared for after a
divorce.’ ” The court also considered societal norms regarding pets in hotel
rooms and on planes, and concluded that “considering the various accommodations
made for companion animals in general, along with the deep and affectionate
bond Plaintiffs shared with their dog, it stands to reason that companion
animals … could also be recognized, as a matter of common sense, as immediate
family.” However, it limited the rule to situations in which “the pet was
leashed to the plaintiff at the time the negligent act occurred and the
plaintiff herself was exposed to danger.” Thus, this case did not support extending
NIED to the death of a cat outside the presence of, and danger to, her person. Her
exposure to danger “did not go beyond witnessing the mechanical movement of the
machine and unplugging it from the wall.”

For the remaining claims, “New York courts treat pets as
personal property and consequently do not permit damages for emotional distress
or loss of companionship.” But punitive damages might be available for strict
products liability and GBL violations under appropriate circumstances.  

from Blogger http://tushnet.blogspot.com/2026/02/deadly-automatic-litterbox-might-be.html

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Amicus in support of cert in Lanham Act intent/damages case

 Truth in Advertising, Barton Beebe, Mark Lemley, Alexandra Roberts and I just filed a brief arguing that the Supreme Court should clarify the role of intent in Lanham Act cases.

from Blogger http://tushnet.blogspot.com/2026/02/amicus-in-support-of-cert-in-lanham-act.html

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Does “Dead Weeds in 1 Day” mean the entire weed will die, or just the visible part?

Scotts Co. v. Procter & Gamble Co., 2026 WL 482655, No.
2:24-cv-4199 (S.D. Ohio Feb. 20, 2026)

Previously, the court rejected Scotts’ request for a
preliminary injunction of the trade dress of P&G’s Spruce brand of weed
killer products, finding that it was not likely to be confused with Scotts’
Miracle-Gro. Scotts also makes Roundup and Ortho, relevant to the false
advertising claims addressed here. The court dismissed one part of the claim
but allowed the rest to survive.

Scotts challenged four different P&G statements (combined
with certain visuals).

Dead weeds in 1 day

First, “Dead Weeds in 1 Day” and its accompanying visuals.  Scotts alleged that this was “literally false”
because Spruce weed killer will not kill the entire weed within one day. Spruce
is a “minimum risk product” as defined by the Environmental Protection Agency,
and “[t]o date, all minimum risk products work by making contact only with the
exposed portions of the plant and none directly affects the roots of the
plant.” Thus, while “[w]ith regular application at certain dosages over time, a
minimum risk product may eventually exhaust the roots’ storage of nutrients by
repeatedly removing its leaves,” it will not kill the entire weed within one
day.

Statement 2 uses the same visuals and has the same alleged
problem: “Spruce works differently by dehydrating the weed down to the roots
for dead weeds in just 1 day.”

visible results in 1 hour

Statement 3 promises “FAST Visible Results Within 1 Hour” or
“visible results in 1 hour,” accompanied by before and after visual depictions.
Scotts alleged that these “after-application images do not accurately portray
typical results” of Spruce weed killer’s effects after only one hour.

Spruce works differently image

Statement 4 is titled “Spruce Works DIFFERENTLY.” It also
says “WEEDS DEHYDRATE TO DEATH,” “1 HR,” and that “Without water, weeds
dehydrate and die fast, showing visible results in 1 hour,” and was allegedly misleading
for the same reasons.

P&G argued that Rule 9(b) should apply because false
advertising “sounds in fraud.” Although this argument routinely works in
consumer protection cases (because courts don’t like them), it fails here, as
it sometimes does in Lanham Act false advertising cases. (Never in regular
trademark cases, as far as I can recall.)

As P&G conceded, “[n]o Circuit has yet ruled on whether
Rule 9(b)’s pleading standard generally applies to Lanham Act false advertising
claims.” P&G’s theory of the law is that “if an element of any claim
‘requires an allegation of duplicity,’ it ‘implicates Rule 9(b)’s purpose’ and,
therefore, Rule 9(b)’s heightened pleading standard applies.” And, because
Scotts alleged intentional deception, the claim sounded in fraud.

But, as the court noted, “Lanham Act false advertising
claims do not have a scienter element, so it is hard to see how they would
require an allegation of duplicity.” The Sixth Circuit has applied the Rule
9(b) pleading requirements to some causes of action missing an intent
requirement on par with the intent required for fraud—for example, to innocent
misrepresentation. “But typically, courts do so when a ‘unified course of
fraudulent content’ forms the basis of those non-fraud claims—especially if
pleaded alongside fraud.” This is designed to prevent evasion of Rule 9(b).

Here, though, Scotts’ false advertising claim was based on
the allegedly false and misleading nature of the statements themselves, not on
the allegation that P&G is “willfully … intending to deceive consumers.” “That
is, if the statements are false, liability could attach even absent intent. So
there is no indication that Scotts’ actual claim is fraud, with the false
advertising claim only pled to circumvent Rule 9(b)’s strictures.”

More generally, “Lanham Act false advertising claims, while
also based on ‘false’ statements, seem different in kind than traditional fraud
claims.” Rule 9(b) is designed to ensure defendants have sufficient notice to
respond. “But allegedly false or misleading advertisements typically run over
an extended period of time, making it ‘unreasonable and contrary to the Sixth
Circuit’s liberal construction of Rule 9(b) to require Plaintiff[s] to identify
the exact day, hour or place of every advertisement’ that caused them harm.” Scotts
clearly identified the statements it challenged, providing P&G all of the
notice needed for it to respond. (It would also be possible to decide that this
satisfied 9(b), as some cases have done.)

In addition, Lanham Act claims differ because Scotts was not
alleging that it itself was defrauded, but that its customers are. “[G]iven
that Scotts itself was not the defrauded entity, some of the who, what, when,
where, and why questions that form the typical grist for Rule 9(b) may turn on
information that Scotts itself does not have—information that instead rests
only with the allegedly defrauded customers.”

Turning to the merits, Scotts plausibly alleged that
statements 2-4 were false or misleading, but not the literal falsity of
statement 1.

Recall that, on Scotts’ theory, Spruce weed killer does not
directly affect the weed’s roots, so it does not (indeed cannot) kill the
entire weed within one day (as the roots are still alive). P&G pointed out
that the visuals do not depict the subterranean portion of the plant, and
argued that “a ‘dead weed’ refers to a plant evidencing visible necrosis as
featured in the accompanying image.” A statement “cannot be literally false if
it reasonably conveys multiple meanings,” and that was the case here. “While
consumers might plausibly take ‘dead weed’ to mean that the entire plant is
dead, and will not grow back, consumers could also plausibly consider a weed
evidencing visible necrosis (i.e., the visible green part is now brown and
dead) to be a ‘dead weed.’”

Scotts did plausibly plead that Statement 1 was misleading. Statement
2 could also cross the line to literal falsity by claiming to dehydrate the
weed “down to the roots for dead weeds in just 1 day.”

This is not ambiguous. The obvious
meaning of this statement is that Spruce works—apparently in contrast to other
weed killers—by dehydrating the whole plant, including the roots. It is not
plausible that reasonable consumers would take the phrase “down to the roots”
to mean just the above-ground portion of the weed. “Down to the [whatever
thing]” conveys finality and the exhaustion of that thing. If coffee is good
“down to the last drop,” one expects that the last drop will be good, as well.
And if an event is planned “down to the last detail,” that means that the last
detail is accounted for, too. True, sometimes phrases using this structure can
mean something like “everything is gone except the thing.” For example, if a
house is burned “down to the ground,” that does not suggest that the ground
itself has burned. But even then, “down to [something]” means that the entirety
of the thing is exhausted. The house burning “down to the ground” means that
everything that can burn has; no part remains. Either way, weeds dehydrated
“down to the roots” conveys that the roots, too, are dehydrated. Accordingly,
there are not multiple reasonable interpretations of Statement 2 and Scotts has
sufficiently alleged that it is literally false and misleading.

Statements 3 & 4 were also both plausibly false and
misleading. “Scotts is alleging that weeds treated with Spruce weed killer will
not have the visible results in one hour that the images depict. Or in other
words, if you spray weeds with Spruce and wait one hour, the weeds do not in
fact look like the pictures. Whether these images are actually inaccurate, and
if the images and statements together are actually misleading consumers, are
issues the Court will address later.”

from Blogger http://tushnet.blogspot.com/2026/02/does-dead-weeds-in-1-day-mean-entire.html

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(c) licensor’s claims about competitor’s allegedly worse licenses were opinion, not falsifiable fact

Tresóna Multimedia, LLC v. Pre-Cleared Ltd. D/B/A ClicknClear,
2026 WL 480858, No. 25-cv-6202 (GBD) (S.D.N.Y. Feb. 19, 2026)

Tresóna, a music copyright licensing entity, sued competitor
ClicknClear for NY state and federal false advertising. The court dismissed the
claim.

Since 2009, Tresóna has allegedly been issuing music
licenses, on behalf of music rightsholders, to a “niche market” of “scholastic,
community, and professional organizations.” Its main clients “include vocal
ensembles, marching bands, color guards, show choirs, and other similar
performing arts groups.” Its licenses cover certain musical works and sound
recordings, including for “print, synchronization, dramatic performance, and
remixing.”

ClicknClear entered the U.S. market in or about 2016 and
later attempted to move into the “niche market” that Tresóna operates in –
issuing licenses for musical works and sound recordings to scholastic,
community, and professional organizations. It offers “licenses to various
performance sports in which teams perform alongside recorded music, including
artistic swimming, cheerleading, color guard, dance, dressage, figure skating,
fitness, gymnastics, indoor skydiving, jump rope, and band/vocal ensembles.”

ClicknClear’s website informs consumers that “[t]here is
often misleading information about what rights are required for ensembles to
make an arrangement of music to accompany your routine.” ClicknClear states
that “the rights that are needed to use a song in your performance” include the
right to 1) “[p]ractise alone;” 2) “[s]et choreography to the song(s);” 3)
“make copies of the arrangement for personal (practise) use; and 4) “[p]erform
the routine in public with music: practise and competition.” ClicknClear states
that “ClicknClear offer[s] all of these rights with our standard license.”

ClicknClear further purports to offer “legal services,” on
its website, including “legal advice for owners and users of intellectual
property rights, copyright and related rights.” And it offers a “License
Verification System” (“LVS”) feature on their website that purports to evaluate
and verify third party licenses, including Tresóna’s licenses. Users select the
events at which the user is performing or competing, upload a sound recording
of the sound, and upload proof of licensing documentation. The LVS returns one
of three possible outcomes for the user; “green” for licensed, “yellow” for
unverified, and “red” for unlicensed. The LVS only returns an automatic “green”
result if the license is from ClicknClear, while any license issued by third
parties will return a “yellow” result. ClicknClear has stated that when
consumers receive an “unlicensed” or “unverified” result via the LVS, it causes
them to “panic.”

In a prominent Facebook group for marching band arrangers, an
individual defendant suggested (and then retracted after Tresóna’s C&D)
that ClicknClear is able to offer better licenses at a lower price than Tresóna
because Tresóna does not use a “pre-cleared model.” In a presentation given to
potential consumers, ClicknClear suggested that its licenses are “stronger”
than those offered by Tresóna as they cover “all” of the rights necessary,
while suggesting that “Tresóna does not offer a full license but rather only a
certificate.”

First, the challenge to ClicknClear’s statements about what
rights are necessary: Tresóna argues that the statements were both literally
and impliedly false because these are “illusory” rights that consumers do not
need in all situations. The court found that these were non-actionable opinions
about the law. “As both sides agree, the necessity of these rights involve
unclear and contested areas of copyright law. Indeed, ClicknClear and Tresóna
devote most of their briefing to arguing whether or not each subset of the
necessary rights (to set a choreographed routine, to publicly perform, and to
practice alone) are actually needed by consumers.” Given this dispute,
ClicknClear is “expressing an opinion on an inconclusive question of law” and
“not making representations of verifiable or ‘hard definable facts.’ ”

Even if these weren’t opinions, they were ambiguous:
ClicknClear mentions on its website, quite ambiguously, which rights are
“required for ensembles to make an arrangement of music to accompany your
routine.” “In order for these statements to be literally false, Tresóna would
have to plausibly allege that there is no instance in which these rights are
required.” But whether or not these rights are needed in a given case depends
on the outcome of a “fact-specific and [ ] individualized inquiry” in this
“unsettled area of copyright law.”

That didn’t prevent misleadingness, but for that, Tresóna needed
to “allege that consumers or retailers were misled or confused by the
challenged advertisement and offer facts to support that claim” or allege deliberate,
egregious deception. It didn’t. It alleged that “[c]ustomers have told Tresóna
that they are facing pressure from their federations and governing bodies to
use ClicknClear instead of Tresóna,” and “the pressure is driven at least in
part because of ClicknClear’s false and misleading statements as well as the
LVS.” But it was not enough to “identify[ ] a broad swath of people [that were]
allegedly deceived.” (Now do trademark complaints.) “Tresóna fails to identify
any ‘federations’ or ‘governing bodies’ that pressured consumers, nor does
Tresona allege how this pressure has caused customers to buy ClicknClear’s
licenses as opposed to Tresóna’s. And even if Tresóna did allege that customers
were buying ClicknClear licenses as opposed to Tresóna’s, Tresóna does not
allege how these decisions were because of ClicknClear’s necessary rights
statements as opposed to other reasons for purchasing ClicknClear’s licenses.”
[I dunno, ‘take this license and not that one to protect yourself against expensive
lawsuits’ seems pretty clear in its pressure effect.]

Merely stating that there have been “LAWSUITS for copyright
infringement” was literally true and thus not actionable. It also didn’t relate
to an “inherent quality or characteristic of the product [at issue].”

License verification system: Was it misleading that all
other licenses issued by third parties, including Tresóna’s, will return a
“yellow” result, meaning the license’s legality is “unverified,” or red for
“unlicensed”? No: “The LVS, ultimately, is an inherently subjective rating
system that evaluates the quality of third-party licenses. Indeed, the outcome
of the LVS is dependent on which factors ClicknClear believes to be important
in evaluating a license. ‘A reasonable consumer would view [LVS’s] rating as
just that – the defendant’s evaluation.’”

And even assuming the statements were impliedly false or
misleading, Tresóna similarly failed to allege sufficient indications of
consumer confusion. “The unauthorized practice of law is not a basis for a
Lanham Act claim.”

Anti-Tresóna statements: ClicknClear’s statements about
Tresóna’s “very bad reputation,” its representations that ClicknClear licenses
are “better” or “stronger” than Tresóna’s, and its assertions that ClicknClear
was in a “strong position” to harm Tresóna were nonactionable puffery.

By contrast, ClicknClear’s statements in 2021, 2024, and
2025, that Tresóna does not use a “pre-cleared model,” or that Tresóna does not
offer a full legally compliant license but instead offers a “certificate,” were
statements of facts that could be proven true or false. Still, Tresóna didn’t
offer facts as to how these statements actually misled the public or affected
their purchases, or that the statements were commercial speech: “part of an
organized campaign to penetrate the relevant market.” “The statements alleged
here, one in a Facebook post that has now been deleted, and two upon
information and belief, do not suggest ‘widespread dissemination within the
relevant industry,’ and more aptly resemble ‘isolated disparaging statements’
that ‘do not have redress under the Lanham Act.’”

The court didn’t have to reach the state claims, but it commented
that Tresóna also failed to allege how ClicknClear’s statement constituted harm
to the public interest, as opposed to another business.

from Blogger http://tushnet.blogspot.com/2026/02/c-licensors-claims-about-competitors.html

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Fairlife brand name plausibly misleading where cows allegedly lived abuse-filled lives of suffering

Bhotiwihok v. Fairlife, LLC, № 2:25-cv-01650-ODW (AGRx), 2026
WL 413749 (C.D. Cal. Feb. 13, 2026)

“In 2014, Select Milk, a dairy cooperative, partnered with
Coca-Cola to launch Fairlife, a company with an eponymous line of premium milk
and milk products…. Fairlife promotes, and charges more for, high levels of
environmental sustainability and animal care.”

Fairlife bottles include the phrase “Recycle Me” on their
labels and are stamped with a recyclability arrow, and it claims that its farms
are “top in the industry for environmental sustainability.” Plaintiffs alleged
that 0% of Fairlife bottles are recyclable and that the sustainability
practices at Fairlife’s farms cause disproportionate environmental damage.

Fairlife also allegedly claims to follow industry-leading
animal care standards and to have zero tolerance for abusive practices at farms
supplying its milk, as represented by its logo:

But successive independent investigations have allegedly uncovered
“horrendous animal abuse” at farms supplying Fairlife’s milk, which I will not
recite but are indeed horrendous.

Plaintiffs alleged the usual
California claims
.   

Although the court found that plaintiffs hadn’t plausibly
alleged enough Coca-Cola involvement to keep the parent company in, claims
against Fairlife survived. The only allegations with sufficient particularity
involved the Fairlife Logo and the recyclability claims on Fairlife’s bottle
label. Nor did plaintiffs successfully plead fraudulent omission. Courts have
required plaintiffs to “describe the content of the omission and where the
omitted information should or could have been revealed, as well as provide
representative samples of advertisements, offers, or other representations that
plaintiff relied on to make her purchase and that failed to include the
allegedly omitted information.” Although plaintiffs pled that Fairlife
“intentionally fail[ed] to disclose material information about the products,”
including that Fairlife’s products are derived from abused cows and that the
products’ packaging is not recyclable, they didn’t identify where this
information should or could have been revealed or which specific
“advertisements, offers, or other representations” omitted critical information.
Leave to amend granted if there was more.

Fairlife logo

Claims based on the logo survived as a plausible misrepresentation
of Fairlife’s animal care practices. “[B]rand names can be an especially
powerful source of misleading information,” even if the brand name itself is
not a recognized word. Combining the words “fair” and “life” together in a
brand name “may reasonably lead to the assumption that the subject of the brand
lives a ‘fair life.’” Superimposed on a cartoon picture of a cow, “the
implication becomes unmistakable: the cows are living a fair life. Thus, it is
well within reason for a consumer to believe that, based on the Fairlife logo,
the cows supplying Fairlife’s dairy products are living lives free from abuse.”

Fairlife argues that its logo was nonactionable puffery. But
the Fairlife brand name, “at bottom, suggests that the cows are living lives
free from abuse.” That was specific enough for a reasonable consumer to rely
on, especially in context of the cow image. “Taking as true at this pleading
stage the substantial evidence that shows Fairlife sources its dairy from cows
that live dreadful and appalling lives, it is plausible that Fairlife’s
labeling is misleading.” This may be an example of the line of cases that
refuses to find puffery when no reasonable person could agree that an otherwise
capacious term applied.

Recyclability claims on the bottle: Fairlife argued that California
provided a safe harbor provision through October 4, 2026. The FAL’s specific regulation
of recyclability claims specifically does not apply to “[a]ny product or
packaging that is manufactured up to 18 months after the date the department
publishes the first material characterization study required” by the law (or
before January 1, 2024 if that was later). “Read plainly, it appears that the
California Legislature intended to give companies eighteen months after
publication of a generally applicable material characterization study to comply
with recycling guidelines.” This occurred on April 4, 2024. This safe harbor provision
foreclosed the recyclability claims until later in the year. When “specific
legislation provides a ‘safe harbor,’ plaintiffs may not use the general unfair
competition law to assault that harbor.” Nor may they use express warranty
claims.

from Blogger http://tushnet.blogspot.com/2026/02/fairlife-brand-name-plausibly.html

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disgorgement can’t be a lottery windfall–even when D was engaged in illegal gambling

TNT Amusements, Inc. v. Torch Electronics, LLC, 2026 WL
411747, No. 4:23-CV-330-JAR (E.D. Mo. Feb. 13, 2025)

Previously.
TNT leases traditional arcade games in retail locations throughout Missouri.
Torch Electronics leases “no-chance” gaming devices in the same market. A jury
accepted TNT’s argument that Torch’s devices are illegal slot machines that
divert TNT’s customers in violation of state law. Statements that the devices
eliminated chance were false, and therefore the statement “this amusement
device does not fit any definition of a ‘gambling device’ in the state of
Missouri and is not prohibited for use by you” was also false. The jury awarded
$500,000 in damages, which the court found was $125,000 for lost profits and
the rest for injuries to TNT’s reputation and goodwill. (In a separate opinion,
2026 WL 413322, the court enters declaratory judgment that these are illegal
gambling devices in Missouri, given the trial evidence, including from both
parties’ experts, that the games contain “multiple elements of chance.”)

The court also found the case exceptional for purposes of
attorneys’ fees. “[T]he Missouri Gaming Commission declared Torch Devices
illegal in 2019. However, because the Commission’s jurisdiction is limited to
licensed operators, Torch simply ignored the Commission’s opinion and continued
to operate outside the Commission’s regulatory reach.” The Missouri Highway
Patrol and multiple local law enforcement agencies also warned Torch that its
devices were illegal, and several prosecutors pursued charges against its
customers, and one store was convicted. “Missouri jurisprudence since 1913 has
held that a gaming machine with a prize viewer is still a gambling device.
Appellate courts in sister states have reached the same conclusion in recent
years, as cited in the Commission’s 2019 opinion.”

Thus, “Torch was on notice since at least 2019 that its
commercial representations defied the realities of the legal landscape and were
therefore willfully and deliberately false when viewed in context. Torch simply
chose to ignore existing authority in pursuit of profit. For the same reasons,
the substantive strength of TNT’s position, both in fact and law, was
exceptionally compelling, as reflected by the jury’s swift and significant
verdict in TNT’s favor.” There were also some litigation shenanigans.

The court also planned to award partial disgorgement;
out-of-circuit precedent suggests as factors “whether the defendant had the
intent to confuse or deceive, whether sales have been diverted, the adequacy of
other remedies, any unreasonable delay by the plaintiff in asserting its
rights, the public interest in making the misconduct unprofitable, and whether
the case involves palming off.” And, as the Supreme Court said, “A ‘defendant’s
mental state is a highly important consideration in determining whether an
award of profits is appropriate.’ ” Ultimately, “the district court is given
broad discretion to award the monetary relief necessary to serve the interests
of justice, provided it does not award such relief as a penalty.”

From 2017 to 2023, Torch collected over $5.5 million from
100 machines in locations where it overlapped with TNT, though Torch operates
more than 6,000 devices statewide and might have profited by $68 million in the
past year alone. The court declined to order statewide disgorgement (which
suggests that Torch will still continue to break the law unless stopped by
regulators) but did ask for briefing on appropriate disgorgement.

Torch relied on Retractable Techs., Inc. v. Becton Dickinson
& Co., 919 F.3d 869 (5th Cir. 2019), “where the Fifth Circuit opined that
disgorgement, separate from recovery of diverted profits, would have
constituted a windfall to the plaintiff.” The court found this non-binding case
“largely inapposite,” but noted that it still affirmed the broad discretion of
a district court to consider the equities.

Torch also argued that it had a good faith belief in the veracity
of its statements, based on a 2017 opinion letter from a Chicago law firm and
the fact that some county prosecutors opted not to pursue charges involving
Torch devices. “But the opinion letter was supplied by an Illinois lawyer prior
to the Missouri Gaming Commission’s unequivocal warning in 2019, and the county
prosecutors who abstained from pursuing charges did so in direct reliance on
Torch’s false statements at issue here…. Overall, the evidence belies any
objectively reasonable claim of good faith.”

In addition, Truck Equip. Serv. Co. v. Fruehauf Corp., 536
F.2d 1210 (8th Cir. 1976), although based on an earlier version of the statute,
supported the view that “where the evidence shows willfulness and bad faith,
disgorgement may exceed a plaintiff’s demonstrated losses in order to serve as
a deterrent.” The court was also sympathetic to TNT’s argument that “the Lanham
Act offers multiple forms of recovery precisely due to the inadequacy of
diverted sales and the difficulty of proving the full extent to which a
defendant’s misconduct has harmed the plaintiff or impacted the market.” The
court wasn’t convinced that the amount awarded by the jury fully compensated
TNT for the totality of its market injury, given that TNT was a
long-established business that suffered a loss of 35% after Torch entered; some
of TNT’s accounts lost to Torch had been TNT customers for 20 to 30 years. Though
the parties compete for floor space, TNT’s owner explained that “it’s not a
fair fight” and “We can’t generate the revenue that slot machines generate.”

The court also found that deterrence was an important
consideration and that disgorgement would serve the interests of justice and further
the public interest of making Torch’s conduct unprofitable. “If Torch hadn’t
falsely represented and marketed its devices as ‘no-chance’ games exempt from
Missouri’s definition of a gambling device, Torch couldn’t have operated
anywhere in its current territory. Rather, it could only have operated in
licensed casinos subject to state gaming taxes benefiting public education. One
hundred percent of its revenue is attributable to its misrepresentations.”

However, given the scope of Torch’s operations, “a
disgorgement award sufficient to render Torch’s advertising unprofitable would
inevitably result in a ‘lottery-level windfall’ to TNT.” Thus, disgorgement
limited to overlapping locations was appropriate to deter Torch’s willful
conduct “and render it at least slightly less profitable, to fully compensate
TNT for its market loss, and to serve the greater interests of justice given
the unique circumstances of this case.” Consumers spent over $32 million on Torch
devices in overlapping locations alone during the relevant period. “Torch has
profited tremendously from its misrepresentations and had avoided regulation,
taxation, and prosecution by virtue of its government relations efforts and the
Gaming Commission’s limited jurisdiction. In this regulatory void, TNT’s
lawsuit not only vindicates its own competitive interests but also protects
consumers from the fallacy of ‘no-chance’ gaming going forward.” Further
briefing, and possibly discovery, was required to set the size of the award.

from Blogger http://tushnet.blogspot.com/2026/02/disgorgement-cant-be-lottery-windfall.html

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