Rebecca Tushnet

Agilent Technologies, Inc. v. Axion Biosystems, Inc., 2026
WL 734986, No. 23-198-CJB (D. Del. Mar. 12, 2026)

Agilent alleged patent infringement and false advertising by
Axion in the advertising of its impedance-based cell assay products. E.g., “The
simple and sensitive assays of the Maestro Z accurately measure tumor growth
and immune cell killing of 3D cancer spheroid models.” Agilent contended that
the Maestro Z platform doesn’t actually accurately measure the impedance of 3D
spheroids, but only of cells in contact with electrodes on a 2D surface. 

The court granted Axion’s summary judgment motion. Even
assuming a genuine dispute on literal falsity and on whether the statements
were fact, not opinion, Axion still prevailed.

“For a false advertising claim seeking injunctive relief, if
a plaintiff can prove the statement in question is unambiguous and literally
false—then actual deception or a tendency to deceive is presumed and need not
be proven.” However, “where a plaintiff seeks only money damages for a Lanham
Act violation”—regardless of whether the plaintiff is asserting that the
statements are literally false or simply misleading—then “plaintiff must
present proof of actual deception.” Axion sought both an injunction and money
damages; for the injunction, actual deception could be presumed.

But there was not enough evidence of actual deception for
misleadingness or damages. A consumer survey or other customer testimony “is
not absolutely required if other evidence of actual customer deception exists.”
Agilent’s own corporate representative testified about the purported experience
of a prospective customer, but this was double hearsay, not admissible at
trial. [Agilent apparently didn’t respond that this was evidence of state of
mind subject to an exception.] She “could not recall [any] specific case” of
customers saying that they wanted the feature at issue. “This vague testimony
amounts to a conclusory assertion backed by no actual facts on the key point in
dispute.” Nor did the court’s reading of the record support the idea that
“Axion’s own collaborators, … who Axion stated are ‘representative of an Axion
customer,’ were deceived.” Given their extensive experience with the products, “whatever
views they came to regarding Axion’s products and their capabilities were
surely gleaned from their own extensive research efforts.”

Thus, claims requiring actual deception failed. The
remaining claim (literal falsity/injunctive relief) failed for want of a
showing of injury.  

Agilent’s damages theory wasn’t based on any lost sales
or reputational damage, and instead focused solely on prospective corrective
advertising costs. The Third Circuit “does not place upon the plaintiff a
burden of proving detailed individualization of loss of sales” as “[s]uch proof
goes to quantum of damages and not to the very right to recover.” And the
parties compete directly. Still, there was no real evidence of harm: the
testimony was “so vague, conclusory, and/or inadmissible that it cannot be good
evidence of anything.” [Now do trademark infringement!]

from Blogger https://tushnet.blogspot.com/2026/04/damages-requirement-trips-up-another.html

In re Vital Pharmaceuticals, Inc. (VPX Liquidating Trust v.
Owoc), 2026 WL 822473, No. 22-17842-PDR, Adv. Pro. No. 24-01009-PDR (Bkrcy.
S.D. Fla. Mar. 24, 2026)

This is an interesting case about false advertising and
individual officer liability in bankruptcy. The court begins:

Corporate officers who breach their
fiduciary duties do not become immune from accountability simply because they
are also the only stockholders. Florida law imposes fiduciary obligations on
directors and officers for the protection of the corporation itself—not for the
benefit of any particular class of shareholders, and not subject to waiver by a
sole owner who later finds it convenient to argue that no one was harmed but
himself. When those obligations are breached and the corporation is driven into
bankruptcy, the right to enforce them passes to the trustee or liquidating
trust.

Owoc was VPX’s founder, sole shareholder, sole director, and
CEO. A jury found that his and VPX’s false advertising of energy drinks was willful
and deliberate, resulting in a judgment approaching $300 million.

At its peak, VPK generated over $1 billion in annual revenue,
but its commercial success was based on claims about a proprietary ingredient that
Owoc called “Super Creatine.” VPX falsely advertised that it offered
significant physical and mental health benefits. VPX had “no corporate will
separate from Mr. Owoc’s own.”

Because the jury was instructed that “VPX and/or Mr. Owoc
acted willfully if they knew that their advertising was false or misleading or
if they acted with indifference to whether their advertising was false or
misleading,” its willfulness finding “necessarily encompassed a determination
that Mr. Owoc either knew that the advertising was false or acted with
indifference to whether it was.”

The judgment was one of the principal reasons for VPX’s
bankruptcy filing; the resulting trust sought to hold Owoc liable for breach of
fiduciary duty arising from the false advertising.

This claim requires: (1) the existence of a fiduciary duty;
(2) a breach of that duty; and (3) damages proximately caused by the breach.
Collateral estoppel applied to prevent Owoc from relitigating whether he
willfully and deliberately engaged in false advertising of Super Creatine.

As VPX’s sole director and CEO, Owoc owed VPX fiduciary
duties of care, loyalty, and good faith. A breach under Florida law requires at
least gross negligence, which is “synonymous with engaging in an irrational
decision making process.” The false advertising jury’s findings were
preclusive: “A director who causes the corporation to engage in a years-long
false advertising campaign that he knew was false, or acted with indifference
to whether it was false, is the precise ‘knowing and deliberate indifference to
the potential risk of harm to the Company’ that … breaches the fiduciary duty
of care.” The damages were the judgment entered against VPX. Thus, there was
liability (quantification of damages was for later).

The court rejected Owoc’s arguments, including that VPX was in
pari delicto (equal fault) with him and thus barred from making the breach
claim. The court disagreed: the doctrine “is not a tool for the powerful to
insulate themselves from the consequences of their own misconduct.” It was
designed for situations when two parties were independently at fault,
voluntarily engaged in the same wrongdoing, and then fought about their
relative entitlements arising from that shared wrongdoing. “In that situation,
a court steps back and says: we will not sort this out.” It follows that, “when
the parties were not independently at fault, when the plaintiff was not a
voluntary wrongdoer, or when the very nature of the claim is that the defendant
wronged the plaintiff rather than that both wronged each other,” the doctrine
doesn’t apply. That was the case here.

While a bankruptcy trustee cannot sue third parties for
their role in wrongdoing if the corporation itself was an equal participant
(given that corporations can’t act without individual humans so the humans’ wrongdoing
is attributed to the corporation), “an agent’s misconduct is not imputed to the
principal if the agent was acting entirely in his own interest and adversely to
the interest of the corporation.” “VPX’s liability in the Monster False
Advertising Litigation was the legal consequence of Mr. Owoc’s own conduct
being attributed to the entity he wholly controlled. The jury’s finding of
willfulness against VPX reflects Mr. Owoc’s willfulness, not some independent
institutional decision by VPX to deceive.”

Allowing Owoc to point to the fact that the law attributed
his acts to VPX as a shield against accountability to VPX would be “to let
fiduciaries immunize themselves through their own wrongful, disloyal acts—a
“transparently silly result.” And if Owoc could do it here, so could every sole
owner-operator, which would “systematically immunize the most powerful actors
in closely held corporations from the most fundamental obligations corporate
law imposes on them.”

Nor did the business judgment rule protect Owoc because of
the breach of fiduciary duty. “This is not a case of a business judgment gone
wrong — a risky but good-faith marketing strategy that backfired. It is a case
of a director who caused his corporation to make claims he knew were false or
misleading, or acted with indifference to whether they were false or
misleading. The rule was not designed to shield such behavior.”

from Blogger https://tushnet.blogspot.com/2026/04/ceosole-owner-is-liable-to-bankruptcy.html

Victory Global, LLC v. Fresh Bourbon, LLC, — F.4th —-,
2026 WL 836221, No. 25-5173 (6^th Cir. Mar. 26, 2026)

Lower
court decision discussed here.

Victory Global, d/b/a Brough Brothers claims to have become
the “first” African American-owned company to distill bourbon when it opened
its physical distillery in 2020. But Fresh Bourbon counters that it was the
“first” because its owners physically distilled their brand at another
company’s distillery two years earlier. Brough Brothers sued for Lanham Act
false advertising, but failed to identify any unambiguously false statements or
evidence of deception. The court of appeals affirmed the grant of summary
judgment to Fresh Bourbon.

Brough Brothers sold their its batch of bourbon under the
Brough Brothers label in 2020. The bottles truthfully disclosed that they were
distilled in Indiana. On New Year’s Eve in 2020, they distilled their first
bourbon in Kentucky.

Fresh Bourbon distilled using another distillery’s space starting
in 2018; eventually, Fresh Bourbon’s employees knew what they were doing and
got “free reign” [sigh] of the Hartfield distillery. It first sold its bourbon made
at Hartfield in 2020, using Hartfield’s federal license to sell to
distributors. The label stated: “Distilled and Bottled by Buchanan Griggs Inc.
Paris, Kentucky For Fresh Bourbon Distilling Company[.]” Fresh Bourbon owned
the recipe for this bourbon, and Hartfield agreed not to make it for others.
Eventually, Fresh Bourbon opened its own distillery and distilled its first
batch either in late 2022 or in early 2023.

“Given that Brough Brothers and Fresh Bourbon developed side
by side, various sources have made different claims about who came first.”

“If a defendant makes a literally false statement, the
defendant can identify no possible framing in which one could consider the
statement true.” [This is an overstatement—we can always imagine secret
definitions that make a statement true.]  By contrast, a misleading statement “requires
a reader to engage in some mental processing to determine its truth or falsity.”
[Also wrong: the whole point of falsity/misleadingness is that the reader does not
know the truth by way of the statement. A misleading statement requires some inference
that leads the reader to a false conclusion; the mental processing is the
process of determining what the statement is saying.] “If, for
example, an ambiguous statement is true under one interpretation but false
under another, the statement qualifies as potentially misleading (not literally
false). The same rule covers a technically true statement that lacks important
details.”

The court noted that other circuits have split over whether
the false/misleading line matters to materiality. Now here’s a line I like a
lot: Materiality “implements the statutory causation requirement because a
business is not ‘likely to be damaged’ from a claim that will not affect a
consumer’s decision on which product to buy.” The court declined to weigh in on
the split here (correctly recognizing that the Fifth Circuit had mistakenly cited
it as already having resolved the issue; indeed, the Fifth Circuit cited its
misunderstanding of other courts’ holdings as the reason it adopted a
separate-evidence-for-materiality requirement; the split emerged from a game of
Telephone).

Anyway, Brough Brothers bet it all on literal falsity. But
none of the categories of challenged statements met the “high” bar for literal
falsity.

First: The first to African Americans to “distill,”
“produce,” or “develop” Kentucky bourbon since the Civil War. For example,
Fresh Bourbon’s profile on X called the company’s bourbon the “first …
developed grain to glass by African Americans in the state of Kentucky.”

Brough Brothers’ expert conceded that it was “impossible to
verify” whether other African American distilleries existed before these two
companies because of the history of ignoring Black history. “At least with
respect to other bourbon makers, then, Fresh Bourbon’s statements are not ‘verifiable’
as false on this record.” So the alleged falsity was the message that Fresh
Bourbon made bourbon at its Lexington distillery before Brough Brothers made
bourbon at its Louisville distillery, when the truth was that Brough Brothers
obtained its distilling licenses and made its first batch of bourbon at its own
distillery in December 2020 before Fresh Bourbon completed the same tasks years
later. “If, then, the challenged statements unambiguously suggested that Fresh
Bourbon opened its physical location before Brough Brothers, they would likely
be literally false.” 

But there was another “reasonable” reading [applying the
correct standard rather than the “any reading” standard]: “that Fresh Bourbon’s
agents made its Kentucky bourbon first—no matter the physical distillery at
which it did so.” And that was true. Fresh Bourbon’s founders participated in
the distilling process at the Hartfield distillery starting in 2018. During
this time, Brough Brothers sourced their bourbon from Indiana and did not help
this producer in the distilling process. Under these circumstances, there was
ambiguity.

Brough Brothers argued that a party does not “distill,”
“produce,” or “develop” bourbon unless the party obtains licenses to open a
distillery.

But this technical claim has no
place in the “literally false” calculus—which requires a “bald-faced” lie. Fresh
Bourbon’s use of these verbs does not meet that high standard. In ordinary
language, one would naturally say that a party distilled or produced bourbon
when the party put the raw materials into a still and took the other steps
necessary to create the alcoholic beverage at the end.… These verbs also would
remain accurate even if the party lacked a license.

The legality claim thus “conflicts with the ordinary
understanding of the words.” And the facts showed that Fresh Bourbon’s team did
more than buy bourbon on Hartfield’s license; they physically participated in
the distilling.

Second: “[C]onsidered to be the first black-owned distillery
in Kentucky.” This phrase came from the Kentucky Senate’s resolution praising
Fresh Bourbon in February 2020, to which Fresh Bourbon’s website links. Brough
Brothers argued that it opened its Louisville distillery before Fresh Bourbon
opened its Lexington one, making this literally false.

But there was no evidence that Fresh Bourbon itself ever
claimed to have opened the first African American-owned distillery in
Kentucky. That the Kentucky Senate “considered” it to be the first, even if misleading,
wasn’t literally false. Also, “distillery” could mean different things in
different contexts. Although both dictionaries and Kentucky law define the term
as meaning a place where distilled spirits are made, “consumers do not
necessarily flip open a dictionary or check statutes when evaluating products.”
And Fresh Bourbon introduced evidence that companies often call themselves a
“distillery” even when they are “having a spirit bottled for” them by others. Brough
Brothers itself registered the name “Brough Brothers Distillery” in 2018—years
before it opened its physical location. The resolution itself suggested that
this was how the Kentucky Senate used the term, because it stated elsewhere that
Fresh Bourbon had “announced that they plan to build” a physical distillery in
Lexington. “[I]t would have made little sense for the resolution to refer to
Fresh Bourbon’s (unconstructed) venue as the first.” Under the understanding of
“distillery” that means a company that sells bourbon, Fresh Bourbon sold
Kentucky-made bourbon while Brough Brothers still sold Indiana-made bourbon, so
that was true.

Brough Brothers argued that Fresh Bourbon drafted the resolution
and was thus responsible for it, but the Senate didn’t use the language that
they drafted, which didn’t include the challenged statement. Thus the court
didn’t resolve the question of whether a state Senate resolution could be
attributed to a private party for Lanham Act purposes.

Likewise with other claims; the Senate resolution also said
that Fresh Bourbon “produces bourbon in the state of Kentucky with an African
American Master Distiller, the first in Kentucky since slavery[.]” Brough
Brothers argued that this statement was literally false because the putative
master distiller lacked the qualifications: “20+ years of experience operating
a distillery,” according to its expert. The putative master distiller “worked
full time at a bank and merely had an interest in bourbon as a hobby before he
took the job with Fresh Bourbon.” But the record showed that whether a producer
qualifies as a “master distiller” was opinion not fact; as one witness said,
the term is “more of a symbol” that some distillers coined in their marketing
to become “rock stars with the bourbon people.” He testified that there is “no
set experience level” or “no set anything” for that matter; the claim that a
master distiller must have 20 years’ experience would disqualify Brough
Brothers’ own master distiller. Brough Brothers’ expert conceded that it
“[b]asically” boils down to “a matter of opinion,” which is fatal to a Lanham
Act claim.

The court also declined to hold that these statements added
up to falsity by necessary implication. Unfortunately casting doubt on whether the
circuit actually recognized the doctrine, it understandably refused to “combine
statements from different sources into one ‘overall marketing scheme.’” Context
is vital, but “we have never treated every advertisement that a business has
ever made as the relevant ‘context.’” Even considered together, however, the
challenged statements were still ambiguous.

from Blogger https://tushnet.blogspot.com/2026/04/ca6-interprets-literal-falsity-narrowly.html