weak infringement case + bad litigation conduct = fee shift for anticompetitive suit over descriptive term

Posted on August 27, 2026 by rtushnet

BBK Tobacco & Foods LLP v. Central Coast Agriculture Inc.,
No. CV-19-05216-PHX-MTL, 2026 WL 2445019 (D. Ariz. Aug. 20, 2026)

Previously.
Although BBK forced Central Coast to an (expensive) trial on its very weak
infringement claims over the use of “raw” on smoking-related products, it is
now subject to a fee award. “[W]hen a company pushes flimsy legal arguments
with scorched-earth, win-at-any-expense litigation to bully its competitors
into submission,” it harms consumers by raising prices. “In about two hours,
after a two-week trial, the jury returned a verdict fully in favor of Central
Coast,” finding no infringement based on the shared word “raw.” “The jury’s
verdict makes perfect sense, since the trademarks have nothing else in common
other than this three-letter combination. Tellingly, BBK could not introduce a
single instance of actual customer confusion.”

But it took over seven years, plus a trip to the Ninth
Circuit and the aforementioned jury trial, to get there.

Central Coast (CCA) was the prevailing party because it is now
free to use its RAW GARDEN mark without the threat of an infringement suit by
BBK. Even though BBK succeeded in voiding CCA’s pending intent-to-use
applications, both parties were free to use the marks just as before, and
defeating CCA’s cancellation counterclaims left BBK’s registrations just as
they already stood. By contrast, “[h]ad BBK prevailed on the infringement
claims, CCA would have faced damages and an injunction against its Raw Garden
brand, and the defense verdict removed that exposure.” BBK’s successful defense
of CCA’s counterclaims didn’t make it a prevailing party, because CCA succeeded
on the infringement claims that drove the litigation.

Octane Fitness provides that “[a]n ‘exceptional’ case
is simply one that stands out from others with respect to the substantive
strength of a party’s litigating position (considering both the governing law
and the facts of the case) or the unreasonable manner in which the case was
litigated.”

BBK argued that the court of appeals, in reversing the initial
grant of summary judgment already found the Sleekcraft factors “evenly
matched or tip[ped] only slightly in favor of either party” and remanded for
trial, foreclosing any finding that its position was weak. But that’s not what
the court of appeals did—it said that likely confusion “is a factual question
ordinarily reserved for the trier of fact.” (See Sepehr Shahshahani’s useful Fact-Law
Confusion for why this is a silly thing to say.) The Ninth Circuit’s “evenly
matched” observation “established only that the question could not be resolved
on summary judgment … and, in any event, it described a summary judgment record
rather than the proof ultimately presented at trial.” Nor was the panel even
unanimous on that point.  

“And this Court, having presided over a two-week trial and
observed the evidence develop live before the jury, is well positioned to
assess the strength of the merits of BBK’s arguments.” The trial bore out all
the weaknesses in the central factors. For example, there was no evidence of actual
confusion, even though the RAW and Raw Garden brands had been sold in some of
the same California dispensaries together for more than five years. “The
absence of actual confusion over so lengthy a period of concurrent use in the
same market is itself powerful evidence that confusion is unlikely.”

Nor was this unclear to BBK until trial. At summary
judgment, the Court found the record “contain[ed] no evidence of actual
instances of confusion,” and that the relevant deposition testimony of BBK’s
founder was “uncorroborated and self-serving” and insufficient even to create a
triable issue, particularly because BBK’s own Rule 30(b)(6) witness was unaware
of any confusion. “That BBK could marshal no more than this, after years of
head-to-head sales in the same dispensaries, strongly indicates confusion was
not occurring.”

BBK’s affirmative confusion evidence came from a survey that
produced net confusion rates of roughly 11.9 percent. Rates in that range are
“not so high as to constitute persuasive evidence in favor of confusion,” and
“survey confusion numbers that go below 20% need to be carefully viewed against
the background of other evidence weighing for and against a conclusion of
likely confusion.” Weighed against the marks’ visual dissimilarity and the lack
of other evidence of confusion, the survey did not show that confusion was
“probable, not simply a possibility.”

Nor was BBK’s position on mark similarity justified. “Marks
must be compared as a whole and as they appear in the marketplace, rather than
by taking a deconstructionist view of the different components of the marks,
and across appearance, sound, and meaning.” Apart from the shared descriptive term
“raw,” the Court found the marks “visually…not similar” and possessed of
“significantly different commercial impressions,” such that “consumers could
readily distinguish between the parties’ products as they appear in the
marketplace”—a dissimilarity that “weigh[ed] strongly against a likelihood of
confusion.”

But this was not the sole reason to find exceptionality,
merely a factor weighing in favor of it.  [Comment: if we’re almost never going to allow
TM cases to be rejected at summary judgment, then a fee shift for pressing
ahead with an expensive trial despite clear weakness in the case is one of the
few remaining constraints on abusive litigation, and should be available even
in the absence of litigation misconduct. But that’s a worse solution than just
actually applying the summary judgment standard.] “The manner in which BBK
litigated this case supplies the additional showing that, combined with the
weakness of its proof, makes this case exceptional.”

Most significantly, BBK relied on a photograph of a
purported Raw Garden product bearing RAW-branded cones, and the Court
sanctioned BBK’s counsel under Rule 11 for advancing allegations about that
photograph “that counsel must have known were false.” There was no evidence
that BBK itself fabricated the photograph, but counsel had been repeatedly
warned was not genuine, “and a party’s counsel’s conduct is properly considered
in the exceptional-case analysis. Knowingly pressing fabricated evidence to
defeat summary judgment is the sort of conduct that makes a case stand out from
others.”

That wasn’t the end of it.

BBK introduced, both before and
during trial, late-disclosed evidence of supposed actual confusion that it had
never produced in discovery, including an affidavit dated years after the close
of fact discovery and testimony that roughly fifty people had approached [its
principal] expressing confusion. That testimony was at odds with BBK’s own
verified discovery responses, in which it had repeatedly denied awareness of
any actual confusion. A litigant’s reliance on confusion evidence it withheld
through discovery and sprang at trial supports an exceptional-case finding.

This litigation conduct reinforced the court’s conclusion
that BBK “pursued scorched-earth tactics aimed at securing exclusive rights to
the ordinary word ‘raw.’” The court noted “BBK’s broader litigation practice of
strong-arming other companies out of using the term.” It repeatedly threatened
and sued businesses that incorporated “raw” into their marks. “Trademark law
does not exist to let a single company annex a common, descriptive word and
wield costly infringement suits to keep competitors from using it.” Octane
Fitness allows the court to consider anticompetitive motive. “The trial
record indicates that part of BBK’s aim was to position itself to claim the ‘raw’
name for its own use as the cannabis market moves toward national legalization.”

CCA got over $2.5 million in fees, less than half of what it
requested. So BBK was still able to impose a lot of costs on it.

from Blogger https://tushnet.blogspot.com/2026/08/weak-infringement-case-bad-litigation.html

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use of (R) on goods for which mark is not registered might be literally false

Posted on August 27, 2026 by rtushnet

Southern Marsh Collection, LLC v. Dixie Decoys, LLC, 2026 WL
2431220, No. 24-00905-BAJ-EWD (M.D. La. Aug. 19, 2026)

This opinion deals only with defendant’s attempt to get
claims against its allegedly false use of the ® symbol dismissed; it is otherwise
a trademark and copyright infringement case. Southern Marsh sells a variety of
outdoor apparel and accessories using a duck-style logo; it has several
registrations for its trademarks, including the logo and the slogan “PRESERVE
THE TRADITION.” Dixie Decoys allegedly uses a registered mark for its outdoor
apparel that is confusingly similar to Southern Marsh’s, as well as “Preserve
the Sporting Tradition” and “Preserve Your Sporting Tradition,” which allegedly
infringes.

Southern Marsh duck
Decoy duck

These are really weak, anticompetitive claims, but the usual deference given to trademark claims here extends even to the false advertising claim based on misuse of the ® symbol, which is that Dixie Decoys does have a registration for the logo, but only for “Waterfowl hunting decoys.” Nonetheless it uses the ® symbol more broadly.

The court found that general allegations of harm to Southern Marsh’s reputation and goodwill sufficed to plead both standing and sufficient harm to survive a motion to dismiss. That is, let’s say, unusual in false advertising cases. I tell my students to tell, and challenge, “harm stories,” but other than reciting the word “harm,” there is no harm story here. People might believe that Dixie Decoys has a trademark registration for its logo for apparel and … what? True underpants gnomes reasoning here.

The court also rejected Dixie Decoys’ argument that the use wasn’t literally false because there was a registration. “Federal trademark registration is not totally untethered from the goods or services identified in the registration, as Dixie Decoys contends…. [G]iven that federal trademark registration rights are goods-specific, this Court similarly finds that Southern Marsh has plausibly alleged that Dixie Decoys’ use of the ® symbol next to the challenged marks on goods outside of the registration could be a literally false statement of fact.” Thus, no evidence of deception was required, and anyway Southern Marsh alleged that consumers were deceived, which was enough at the pleading stage. [Materiality?]

from Blogger https://tushnet.blogspot.com/2026/08/use-of-r-on-goods-for-which-mark-is-not.html

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Midjourney can’t force Disney to disclose the prompts it used that didn’t generate material in complaint

Posted on August 27, 2026 by rtushnet

Disney Enterprises, Inc. v. Midjourney, Inc., No. 2:25-cv-05275-JAK-AJR,
2026 WL 2055488 (C.D. Cal. Jun. 15, 2026)

This is what seems like a significant discovery dispute; I’m
not an evidence scholar, but there’s interaction with the fair use analysis
that copyright folks should attend to.

Plaintiffs sued Midjourney over its image and video
generation “diffusion models,” arguing that they infringed both by copying their
characters in training and by distributing copies of those characters in images
and videos to Midjourney subscribers.

Midjourney sought to compel plaintiffs to produce: “(1)
documents concerning their development, use of, and policies regarding
generative artificial intelligence (‘AI’) tools for image and video creation,
and (2) the complete set of Midjourney prompts and outputs that Plaintiffs (or
their agents) used” for the operative complaint. The court granted the request
in part for (1) but found (2) was privileged.

Plaintiffs objected to producing documents about third-party
datasets they used in connection with any AI tool and similar documents. They
agreed to produce nonprivileged responsive documents “sufficient to show
instances in which [Plaintiffs] authorized its employees or contractors to use
generative AI to generate images and/or video outputs intended for consumers,
featuring the asserted works.” As for the prompts, they agreed to produce
nonprivileged responsive documents “sufficient to identify the prompts used to
create the image[s] generated by Midjourney shown in the complaint and put at
issue in this action, and the side-by-side outputs contemporaneously generated
in response to such prompts,” but not the prompts that they didn’t choose to
include.

Midjourney argued that these discovery requests were
relevant to both its defense of fair use, as well as its equitable defense of
unclean hands.

Fair use: Midjourney argued that its requests bore on
multiple elements of fair use, including transformativeness. But the court didn’t
buy its argument that, “if Plaintiffs are developing and deploying diffusion
models (employing the same technology, training techniques, and public data as
Midjourney), that is a powerful concession that such models produce something
fundamentally new and useful—relevant evidence of the transformative nature of
that (and Midjourney’s) technology.” After all, Warhol says “the same
copying may be fair when used for one purpose but not another.” [But this would
be the same purpose, just a different user, no?] The SDNY has agreed that “the
relevant inquiry under the first fair use factor concerns a defendant’s use of
a plaintiff’s copyrighted material, not a downstream use of defendant’s
allegedly infringing material by a copyright-holder plaintiff.” In re OpenAI,
Inc., Copyright Infringement Litig., 800 F. Supp. 3d 602, 608 (S.D.N.Y. 2025). Likewise,
New York Times Co. v. Microsoft Corp., 757 F. Supp. 3d 594 (S.D.N.Y. 2024),
held that the fair-use factors “do not require a court to examine statements or
comments a copyright holder may have made about a defendant’s general industry,
whether the copyright holder has used tools in the defendant’s general
industry, whether the copyright holder has admitted that other uses of its
copyrights may or may not constitute fair use, or whether the copyright holder
has entered into business relationships with other entities in the defendant’s
industry.”

Public benefits (part of factor four after GvO): But GvO
“made clear” that balancing the public benefits against the losses to copyright
owners would not “always [be] relevant to the application of fair use,” and focused
on the consequences of Google’s copying, not anything that the plaintiff
(Oracle) did in its own business.

Nor was this evidence relevant to market harm. Relevant
discovery would include the loss to plaintiffs and how the challenged use might
“kill demand for the original,” as well as discovery directed to Midjourney concerning
the public benefits from the copying.

What about industry custom and practice? Wall Data Inc. v.
Los Angeles Cnty. Sheriff’s Dep’t, 447 F.3d 769, 778 (9th Cir. 2006), says that
courts “should bear in mind that fair use is appropriate where a reasonable
copyright owner would have consented to the use, i.e., where the custom or
public policy at the time would have defined the use as reasonable.” But that’s
dicta. [This is contrary to what one might have thought was happening two
decades ago.] Sure, “industry custom and practice may be relevant to the
analysis of fair use in a particular case,” but “courts consistently reject the
argument that ‘everybody else is doing it’ as a defense to copyright
infringement.” This is really about the (narrower) defense of unclean hands.

But the equitable defense of “unclean hands is recognized
only rarely, when the plaintiff’s transgression is of serious proportions and
relates directly to the subject mater of the infringement action.” Indeed, “the
alleged wrongdoing of the plaintiff does not bar relief unless the defendant
can show that he has personally been injured by the plaintiff’s conduct.”

Thus, plaintiffs’ development, use of, and policies
regarding generative AI were not relevant to the defense of unclean hands
because none of the discovery would establish inequitable conduct that is both
directly related to plaintiffs’ claims and injured Midjourney. [Other than through
preventing competition with this lawsuit.]

Still, the requested discovery was potentially relevant to
establishing: (1) the potential market for or value of the copyrighted work;
(2) industry custom and practice; and (3) the defense of unclean hands. But plaintiffs
agreed to produce documents sufficient to show their business plans, roadmaps,
research reports, other studies, and approvals of their actual or proposed
development or training of generative AI intended for consumers, including
their contractors’ authorized use of generative AI intended for consumers, as
well as documents about some related matters. That was enough. Documents
related to the actual or proposed development of generative AI not intended for
consumers were not relevant, or not enough to be proportional. However, the
court granted the motion to compel plaintiffs to also produce documents sufficient
to show plaintiffs’ approval of the use of generative AI to generate images
and/or video outputs intended for consumers, featuring the asserted works,
which is relevant to the market-harm factor.

Requests for training-related documents had some relevance
to establishing industry custom and practice, but had to be narrowed to focus
on actual or proposed development of generative AI intended for consumers. “By
contrast, Plaintiffs’ training of generative AI tools not intended for
consumers would not provide evidence of industry customs and practices that
would be relevant to Defendant’s defense of fair use,” or, if relevant, not enough
to justify the burden of production. Thus, plaintiffs needed to produce
non-privileged responsive documents sufficient to show their “development,
training, or contemplated development or training of any generative AI to
generate images and/or video outputs intended for consumers, featuring the
asserted works, including training datasets, datasources, or model weights.”

Midjourney prompts: Plaintiffs agreed to produce documents
sufficient to identify the prompts used to create the images generated by
Midjourney shown in the operative complaints, as well as the side-by-side
outputs contemporaneously generated in response to such prompts.

Midjourney argued that “withholding prompts and outputs
related to images not used in the operative complaints would allow Plaintiffs
to artificially inflate the universe of allegedly infringing outputs, distort
the damages calculus, or misrepresent their own engineered images as examples
of third-party infringement.” But “the volume of prompts and outputs related to
images generated for potential use in the operative complaints, but not
actually used, is infinitesimal compared to the true scope of this case which
involves tens of millions of subscriber prompts associated with Plaintiffs’
copyrighted works.” Given the current statistical sampling protocol that the
parties are finalizing, withholding the prompts wouldn’t distort a damages award.

The non-used prompts and outputs were protected work
product.  The work-product doctrine
protects “from discovery documents and tangible things prepared by a party or
his representative in anticipation of litigation.” This was “classic” pre-suit
investigation and efforts to prepare the operative complaints. Such unused prompts
and outputs were “core” work product because they necessarily reveal counsel’s
“mental impressions, conclusions, opinions, or legal theories developed in
anticipation of litigation.” This kind of opinion work product “is virtually
undiscoverable.” 

Midjourney argued that plaintiffs waived protection by
submitting prompts to Midjourney in the first place because Midjourney’s Terms
of Service make prompts and outputs public by default and grant Midjourney a
license to reproduce, prepare derivative works of, publicly display, publicly
perform, sublicense, and distribute their inputs. But “waiver of attorney
work-product protection requires more than the disclosure of confidential
information, it requires an act inconsistent with the adversary system.” Pre-suit
investigation was not inconsistent with the adversary system. Nothing stops
Midjourney from conducting its own investigation of prompts submitted by plaintiffs
and their counsel, though.

“Accepting Defendant’s view of selective disclosure would
virtually eliminate the protection for attorney work product in the context of
any court filing because every court filing inherently reflects strategic
choices of counsel in what facts to include and even what legal arguments to
make.”

Comment: If you believe, as many people seem to, that “how
hard was it to get the model to generate an allegedly infringing output?” is a
relevant question, then the rulings here make it harder to conduct that
inquiry. I’m no evidence expert, but the ruling seems to make
probabilistic/guardrails inquiries off-limits to fair use, which seems
directionally wrong to me. (Burden-shifting might help—one could say that if
the defendant puts in evidence that it tried to make it hard to generate
infringing outputs, then the plaintiff has to do more to show that those
guardrails didn’t work, which wouldn’t necessarily require disclosure of
attorney work product. This is my optimistic reading of the reference to the
millions of prompts at issue in this case.)

from Blogger https://tushnet.blogspot.com/2026/08/midjourney-cant-force-disney-to.html

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Private label brands show lack of exclusive use for Pedialyte’s trade dress claim, but bad social media use saves TM claim

Posted on August 27, 2026 by rtushnet

Abbott Laboratories v. Revitalyte LLC, 2026 WL 2374024, No.
23-1449 (DWF/DTS) (D. Minn. Apr. 30, 2026)

The court here allows part of Abbott’s infringement claim to
proceed, including against “compare to Pedialyte,” which I think is wrong,
though Revitalyte did other sketchy stuff that is less clearly comparative. It
rejects Abbott’s trade dress claim, in part because so many house brands have
the same or similar trade dress.

The parties compete in the market for oral electrolyte
solution (OES), drinks intended to relieve symptoms of dehydration. Pedialyte
now expands beyond the pediatric market and is now also sold to adults for
illness-and exercise-related dehydration; Abbott briefly advertised it as a
remedy for alcohol-related dehydration/hangover. Abbott dominates the OES
market with over half of the total sales in the category.

Three kinds of Pedialyte: regular, advanced and sport

It defined its claimed unregistered trade dress as:

the clear rectangular plastic
bottle; the bottle’s rounded corners; the placement and appearance of the two
ridges or “ribs” around the bottle’s circumference; the placement and
appearance of the bottle’s gently sloping shoulders; the bottle volume of roughly
one liter; the wrap-around label encircling the middle 50-60 percent of the
bottle with the name of the product prominently displayed horizontally; the
bright colors of the various Pedialyte flavors as visible above and below the
label; the color palette, size, and alignment of the wrap-around label; and the
size, color palette, and appearance of the shrink-wrapped screw-on.

Abbott claimed use since 1986, despite slight change in the
bottle specifications.

“[C]onsumer research showed that parents and doctors wanted
something non-breakable with the ability to see the fluid level. Abbott chose a
square bottle shape for the plastic container to mimic packaging from sterile
irrigation bottles; the medicinal feel communicated to parents that the product
was safe and trusted for medical purposes. Abbott also added the shrink-wrap
cap to show the consumer if the product had been tampered with.” [There’s more functionality evidence but it is irrelevant.]

Revitalyte targets young adults seeking relief from
alcohol-related dehydration. “The link with alcohol abuse and other off-color
themes is explicit in the company’s marketing. Its social media pages are rife
with references to excessive drinking, hangovers, and partying.”

In the original Revitalyte bottle, the shrink-wrapped cap
included the text “Compare to Pedialyte.” The back of the wrap-around label
included a disclaimer that Revitalyte was not associated with Pedialyte. Revitalyte
also partnered with Barstool Sports on Revitalyte Black Label. Revitalyte
initially used PBM Nutritionals as its manufacturer; PBM designed and supplied
the bottle itself (it didn’t offer different shapes), the placement of the
label, the shrink-wrapped cap, and the “Compare to Pedialyte” language. PBM had
a trademark registration for its “block shaped bottle.” “Revitalyte could have
further customized by removing the ‘Compare to Pedialyte’ on the shrink-wrapped
cap, but chose not to because it would have been more expensive.”

private label with “compare to Pedialyte” on cap

Since 2024,
Revitalyte has sold only 20-ounce products and no longer uses PBM as a manufacturer.

current bottle

Revitalyte’s admitted goal was to be an adult version of
Pedialyte— “the same product but purchased in the liquor store instead of
having to go to the baby aisle.” It used a square bottle to communicate that
the product was part of the OES category by matching the category leader. 

also three kinds of Revitalyte

Also:

Revitalyte’s marketing strategy has
leaned into the similarity with Pedialyte®. Revitalyte’s website said it was
the “same electrolyte formula found in the baby aisle.” Revitalyte’s website
also included screenshots of social media posts discussing Pedialyte® by name.
(Further, Revitalyte advertised its products using a comparison to Pedialyte®.)

This resulted in consumer confusion, e.g., a social media
post calling Revitalyte “Revitalyte by Pediatlyte.” Other posts called Revitalyte
Black Label Barstool’s version of Pedialyte (it’s not obvious to me that
reflects confusion, but the court thought so). Revitalyte didn’t shut down this
confusion. Instead, it shared those posts on its social media pages. This
proved to be a bad plan.

retweet of “Revitalyte is the adult version of Pedialyte”

Retweet of “barstool sports brand pedialyte”

similar

quote post of “like Pedialyte” (which should be fine)

Pedialyte tagged as producer of Revitalyte

Revitalyte used social media posts mentioning Pedialyte

Trade dress infringement: Abbott failed to show that its
trade dress was protectable. It had no direct evidence of secondary meaning. “Given
that Abbott did commission an expert on a related issue, that omission is
telling.” Instead, it relied on its advertising and sales; proof of Revitalyte’s
intent to copy; and instances of actual confusion by consumers.

If “advertising promote[s] the product’s functions and
appearance, not its source,” then advertising expenditures are not probative. The
ads in the record focused on function, e.g., the resealable cap, ability to
pour and measure, and visibility of the liquid touted as “conveniences” to
parents.

Similarly, sales are probative of secondary meaning only if
they can be traced to the use of the claimed trade dress. Abbott’s “sales are
impressive, but there is no indication that the trade dress specifically was
responsible.”

Intentional copying can indicate secondary meaning, but “when
a defendant clearly labels its products with its own trademark, the inference
of secondary meaning is rebutted.” The Revitalyte trademark was used
conspicuously on the bottle and Revitalyte used an express disclaimer. The
evidence suggested an intent to compete, which wasn’t sufficient to establish
secondary meaning.

Consumer confusion can also be evidence of secondary meaning.
But here, its significance was  “refuted
by the ample evidence of third-party products with similar packaging because it
shows a lack of exclusive use. When there are similar components used among
various products, it is more difficult for a consumer to attribute that feature
to any one source.” The PTO told PBM , that the applied-for mark was not
inherently distinctive because “it is a common practice in the industry to
market electrolyte replacement solutions … [in] bottles with narrow necks
that slope down to straight sides.”

Even more telling, the Pedialyte®
bottle design was based off medical irrigation bottles. Any claim that the
bottle’s features are indicative of only one source is belied by the fact that
the bottle design was initially copied from a different type of product. The
ubiquity of the square bottle shape in the OES market and in medical packaging
suggests that it cannot be attributed to a single source in the minds of
consumers.

Abbott argued that the third-party products were “private
label brands,” less likely to confuse consumers. Its evidence here is sealed
(grrr) but its consumer expert opined that, because Revitalyte is “branded,”
that’s more likely to be confusing. “But regardless of whether consumers think
Revitalyte® is a private label or national brand, the market is still saturated”
(citing Versa Prods. Co. v. Bifold Co. (Mfg.) Ltd., 50 F.3d 189, 216 (3d Cir.
1995) (“The use of private labelling undermines a claim that a product’s
appearance denotes its source, because consumers will be less likely to
associate the multifariously labeled product with a single source.”)). Thus, Abbott
couldn’t show the exclusive use of the trade dress required to establish
secondary meaning.

After all that, “Compare to Pedialyte”—the most standard
comparative message there is—kept Revitalyte in trouble, along with its hinky
social media. The court noted that defendant didn’t provide much in the way of
argument on trademark infringement, making it hesitant to grant summary
judgment.

The various factors could support a finding either way: The
products are similar (thus, “compare”). The different target audiences and
different retail locations cut against likelihood of confusion. There was “ample
evidence of Revitalyte’s intent to align with the Pedialyte® name, even
purposely rhyming with Pedialyte®, which indicates an intent to ‘pass off’
Revitalyte® as part of Abbott.” But Revitalyte’s use of “compare to” and its
own branding indicated an intent to differentiate (ciating Conopco, Inc. v. May
Dep’t Stores Co., 46 F.3d 1556, 1571 (Fed. Cir. 1994) (finding that a “compare”
statement “draws a clear distinction” between products)). Thus, there was a
material question of fact on likely confusion.

[Now, how do we segregate the confusion evidence based on
name from that supposedly based on shape/trade dress? There’s going to be a
causation problem. “Compare to” isn’t likely to cause confusion, but the online
behavior much more plausibly is. But that wasn’t clearly based on the name
itself, where the overlap in suffix “lyte” has a pretty descriptive meaning. If
anything, the strongest claim is false association under 43(a) based on the online
conduct, not even really trademark infringement as such.]

Trademark dilution: Revitalyte conceded the fame of
Pedialyte. “The textbook example of trademark dilution by tarnishment is the
association of a mark with an unsavory context. Revitalyte readily associates
its brand with alcohol abuse and uses a crude advertising approach.” Thus, a
fact finder could find tarnishment of Pedialyte, “a product centered on health
and, often, children’s health specifically.” But Abbott did, at one point,
advertise it as a cure for hangovers, so Abbott’s own attempts to identify with
that market would justify a finding that associations with alcohol are not a
tarnishment to the brand.  

Revitalyte briefly argued that the use of the “compare to”
statement mitigates any risk of reputational harm because consumers know they
are separate products. True, comparative advertising is exempted from dilution
claims.

But, making up something that isn’t in the dilution provision,
“the comparative advertisement exception only applies if the user does not do
anything to suggest sponsorship or endorsement.” [So apparently the jury can
only find dilution by tarnishment if it also finds confusion? Cool with me, I
suppose.] And here,

Revitalyte’s attempts to align with
Pedialyte® go far beyond a mere “Compare to Pedialyte” statement on the bottle.
There are multiple documented examples of Revitalyte reposting social media
posts that describe Revitalyte® as owned by Pedialyte® and Revitalyte did not
correct that factual error. In some of those posts, there is either no Revitalyte®
bottle or no shrink-wrapped seal, so the comparative language is not present to
clarify the lack of a relationship. Those advertisements suggest sponsorship by
Pedialyte®, which distinguishes this case from those which allow comparative
use.

I hate to borrow a bit from copyright law, but this might be
better addressed by a use by use analysis. Under no circumstances should the (not
misleading) statement “compare to Pedialyte” ever constitute dilution or be
enjoined. But the other uses weren’t comparative advertising and weren’t
eligible for that exception.

Abbott also moved to preclude Revitalyte’s rebuttal expert
on the “private label” point above. “[R]ebuttal evidence may be used to
challenge the evidence or theory of an opponent—and not to establish a
case-in-chief.” Id. A rebuttal expert “may only respond to evidence offered by
the defendant.”

Though we can’t see it, Abbott’s expert report analyzed
whether Revitalyte is better described as a private label brand or a national
brand by applying the “4Ps” framework: place, product, price, and promotion and
concluded that Revitalyte “exhibits the hallmarks of a national brand.” The
report further opined that, as a result of the positioning as a national brand,
a meaningful segment of consumers is likely to perceive that Revitalyte is
associated with Pedialyte. He didn’t conduct a survey.

The rebuttal report was about a confusion survey that
purportedly showed de minimis confusion between Pedialyte and Revitalyte
bottles. It didn’t address the issue of national brands versus private labels,
nor the 4Ps framework. “Even if using a different approach, [the] rebuttal
testimony must have engaged with the 4Ps framework or addressed the central
question of national brand versus private label.” Thus this report was
excluded.

Given that Abbott was seeking only disgorgement, Revitalyte
wasn’t entitled to a jury. [Disgorgement would nicely solve the obvious
causation problems, too.]

from Blogger https://tushnet.blogspot.com/2026/08/private-label-brands-show-lack-of.html

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9th Circuit orders class decertified: common issues on materiality/damages insufficient without deception

Posted on August 25, 2026 by rtushnet

Rusoff v. Happy Group, Inc., — F.4th —-, 2026 WL
2387098, No. 24-7706 (9th Cir. Aug. 17, 2026)

Court’s summary:

This is a deceptive advertising
class action concerning “pasture raised” labels on egg cartons. After excluding
the opinion of plaintiffs’ expert on egg industry standards, the district court
found that plaintiffs’ inability to demonstrate consumer deception on a
class-wide basis “precludes a finding of predominance” under Federal Rule of
Civil Procedure 23(b)(3). The court nonetheless certified the classes based on
assertedly common questions of materiality and damages. Because plaintiffs did
not meet the requirements of Rule 23(b)(3), we reverse the grant of class
certification.

USDA recognizes caged and cage free eggs; the latter has two
subcategories, organic and free range. USDA considers “free range,” “pasture
raised,” and certain similar terms to be synonymous. But there are a number of
other standards from associations and retailers who operate voluntary
certification programs, which egg producers pay to participate in. To these
certifying organizations, “pasture raised” is the more stringent standard, so
certified pasture-raised eggs tend to command a price premium in the market. But
the certifiers’ standards differ, e.g., one requires at least 2 square feet of
uncovered outdoor area per hen, while another requires about 22 square feet per
hen available for potential use (though only about 5.5 square feet needs to be
accessible to the hens at any one time if there’s rotation).

Happy Egg’s egg cartons advertise that its hens are “free
range” and “pasture raised on over 8 acres.” Plaintiffs alleged that the more
stringent “pasture raised” standards are the dominant industry standards, and
that consumers paid a price premium for Happy Egg products based on the
company’s implied compliance with these standards (even though Happy Egg did
not identify either standard on its cartons).

Plaintiffs’ expert opined that “the prevailing consumer
expectation is that an egg producer making a free-range or pasture-raised claim
is adhering to the commonly accepted standards pertaining to such claims as set
by the AHA or HFAC.” The lead plaintiffs testified that they didn’t know about
the standards’ content. The court found that one expert didn’t have a
methodology for examining different egg products in Seattle, rather than
California or New York (where the class members resided).

There was also a consumer survey expert. The survey results
found that using both the “pasture raised” and “free range” labels led
consumers to conclude that the eggs were both pasture-raised and free-range,
whereas with only a “free range” label, they concluded that the eggs were
free-range, but not pasture-raised. The survey did not address whether a
reasonable consumer understood “pasture raised” as aligned with either allegedly
dominant standards. For materiality, survey respondents were 8.1 times more
likely to state a preference for the eggs that included the “pasture raised on
over 8 acres” representation.

Thus, plaintiffs’ theory of deception required both experts:
the first to show that “pasture raised” had a commonly understood meaning tied
to the dominant standards, while the survey would show that a reasonable
consumer would understand Happy Egg’s “pasture raised on over 8 acres” claim to
mean that its eggs were pasture-raised.

But the district court excluded the first expert, whose
methods for assessing what a reasonable consumer would understand—such as
photographing egg cartons in stores near his home for his own “personal
purposes”—were unreliable, as they “[did] not pass the standards that he would
expect of his own survey consultant.” Then, the survey lacked a key foundation
piece, and couldn’t prove predominance.

But the district court still certified the class under Rule
23(b)(3) after finding that materiality and damages were common questions that
predominated.

The district court correctly excluded the first expert’s
opinions as unreliable because they didn’t come from “a rigorous evaluation of
how a reasonable consumer understands the term ‘pasture raised.’” As a result, “on
the foundational issue of deception, plaintiffs failed to make the required
showing.” It wasn’t enough to show that certain industry standards are dominant
without connecting that to consumer beliefs.

Plaintiffs responded that deception is governed by an
objective “reasonable consumer” standard, which means that all claims by any
plaintiff will necessarily rise and fall together. “But in order to reach the
reasonable consumer analysis, a plaintiff must first show, on a classwide
basis, what deceptive marketing or false advertising a reasonable consumer
could have been misled by.” Thus, “[w]here the theory of deception is tied to
an industry standard, evidence must be brought forward showing that there is a
commonly understood industry standard, and that a reasonable consumer would
associate a given representation with that standard.”

Then, the district court erred by not weighing the common
issues against the individualized issues and determining whether the common
issues are, on balance, important enough to justify class-wide treatment
despite the existence of individualized issues. Deception is a central element
of the claims. “[O]n this record, the lack of a classwide showing on deception
cannot be overcome by supposedly common issues of materiality and damages that
are unmoored from any classwide showing of actionable wrongdoing.”

from Blogger https://tushnet.blogspot.com/2026/08/9th-circuit-orders-class-decertified.html

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court finds ROP claim preempted where model initially consented to being in ad

Posted on August 25, 2026 by rtushnet

Delacruz v. Roc Nation LLC, No. 2:25-cv-11864-AH-(SSCx), 2026
WL 2455107 (C.D. Cal. Jul. 28, 2026)

Should copyright preemption apply to a right of publicity
claim where the original, consented-to use of the work was created for
advertising? The court here answers yes, although I think I would say no under
conflict preemption.

Delacruz is a professional model “whose likeness has been
featured in advertisements throughout the world.” Roc photographed her for a
fee in connection with an advertising and marketing campaign for Megan Thee
Stallion’s Hot Girl Summer swimwear.  She
allegedly granted consent only for use in social media, but Roc used her
likeness on physical, public billboards. She sued for California statutory and common
law misappropriation of her right of publicity and false endorsement/false
advertising under the Lanham Act. (A breach of contract claim was apparently
dropped.)

The question in the 9th Circuit is whether the use of the
likeness forms the basis of a publicity rights claim—if so, it’s not preempted.
On the other hand, “merely interfering with the distribution, display, or
performance of a copyrighted work” is preempted. While existing precedent “strongly
implies that misuse of an individual’s likeness is the ‘basis’ of a
publicity-right claim when the name or image is exploited in advertising or on
merchandise,” the circuit has considered other factors. For example, where
there’s not voice imitation, but rather licensing of an existing sound
recording, “the entirety of the allegedly misappropriated vocal performance is
contained within a copyrighted medium” and there is preemption. (This is
downstream of §301 preemption just being a bad fit for the relevant
considerations, as I have argued—the court here, like many before it, mixes and
matches statutory and conflict preemption reasoning, not to its benefit.)

The court here also drew on Second Circuit precedent, which
looked at whether a plaintiff’s name or likeness was “extracted in any way to
appear independently from how it originally appeared” in the works at issue. Melendez
v. Sirius XM Radio, Inc., 50 F.4th 294 (2d Cir. 2022). Fleet v. CBS, Inc., 50
Cal. App. 4th 1911 (1996), also found preemption where “the only alleged
exploitation occurred through the distribution of the actor’s performance in a
motion picture.”

Thus, it wasn’t enough to avoid preemption that the photos
were (re)used in commercial advertising when they were created as commercial
advertising. Under such circumstances, the plaintiff was objecting to the “ ‘unauthorized
distribution and republication of a copyrighted work, not the exploitation of
[her] likeness on an unrelated product or in advertising.’ In other words, the
entirety of the misappropriated likeness is contained within a copyrighted or
copyrightable medium.” She consented to the commercial use of the photographs; her
claims arose from the further distribution or duplication of those photographs.

 

Nimmer says that a claim “deserve[s] to be preempted …
[involving] facts of a party trying to suppress the very copyrighted work to
which she had earlier voluntarily contributed.” Therefore, “the conclusion
cannot follow mechanically that all advertising is actionable.” Following
Nimmer, plaintiff “collaborated in the creation of a copyrighted advertising
product,” and “even if she … can also adduce a contractual dispute” regarding
the scope of placement of such photographs, her collaboration “precludes her
from using the right of publicity to squelch exploitation of that copyrighted
work for its intended purpose of appearing on” Hot Girl Summer swimwear
advertisements.

True, Toney v. L’Oreal USA, Inc., 406 F.3d 905 (7th Cir.
2005), allowed a publicity rights claim to proceed when the defendant used the
ad in which she appeared beyond the authorized time period, but the court
thought that conflicted with Ninth Circuit precedent. “[T]he commercial use
element does not qualitatively distinguish the right of publicity claim from a
claim in copyright because the claim involves acts of distribution for
commercial use. Thus, the claim does not involve additional elements beyond the
reproduction of copyrighted works.”

Lanham Act: There was no literal falsity. Her theory was
that the billboards were misleading because it suggested that she endorsed the
Hot Girl Summer swimwear to billboard viewers when she sought to endorse the
swimwear to social media viewers only.

However, by agreeing to participate
in the photoshoot for the advertising campaign, Plaintiff effectively lent her
endorsement of the Hot Girl Summer swimwear. Plaintiff does not allege that
there was anything about that endorsement that communicated a limitation to certain
viewers only, such that the photograph was misleading when it was posted on a
billboard. Moreover, Plaintiff does not allege a theory of likelihood of
confusion where the only plausible confusion alleged is who was to receive the
message, not anything about the message itself.

from Blogger https://tushnet.blogspot.com/2026/08/court-finds-rop-claim-preempted-where.html

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compounding pharmacy must face drugmaker’s Lanham Act claims based on false 503B compliance statements

Posted on August 17, 2026 by rtushnet

Pacira BioSciences, Inc. v. Nephron Sterile Compounding
Center, LLC, No. 3:23-cv-05552-CMC, 2026 WL 2267750 (D.S.C. Aug. 6, 2026)

Pacira sells an FDA-approved pain management drug called
EXPAREL. Nephron allegedly made various false and misleading statements about
two of Nephron’s competing compounded drug products. Specifically, Nephron
allegedly represented those products as compliant with Section 503B of the FDCA,
and as safe, effective, and superior to EXPAREL. The court granted partial
summary judgment to both sides on the resulting Lanham Act claim.

Section 503B defines an “outsourcing facility” as a facility
that “is engaged in the compounding of sterile drugs”; “has elected to register
as an outsourcing facility”; and “complies with all of the requirements of
[Section 503B].” Outsourcing facilities may distribute compounded drugs without
obtaining a patient-specific prescription. They are also exempt from the FDCA’s
new-drug approval process and certain labeling and supply-chain requirements. But
they have to satisfy 11 statutory “conditions.”

The condition central to this case restricts outsourcing
facilities’ use of “bulk drug substances” in compounding. They can’t be used
unless the government properly identifies a clinical need or a drug shortage.
In 2016, the FDA said it needed time to evaluate nominations and wouldn’t act
when a bulk drug substance appeared on a list of “Category 1” substances the
FDA maintained on its website, which “may be eligible for inclusion on the
[clinical need] list, were nominated with adequate supporting information for
FDA to evaluate them, and [had] not been identified by FDA as presenting
significant safety risks.”

Nephron compounded BKK, a compounded drug product consisting
of bupivacaine, ketorolac, and ketamine; later, it switched to RKK, with
ketorolac, ketamine, and ropivacaine. Nephron advertised and sold them as “503B
products” and as lower-cost alternatives to Pacira’s EXPAREL. In August 2019,
Pacira wrote to the FDA urging it to take action against Nephron over its
“illegal marketing and promotion” of BKK. It sued in November 2023, alleging
false advertising of both products in terms of 503B compliance, comparability
to/substitutability for Exparel, and related safety/efficacy claims.

Laches barred claims based on BKK; Pacira knew about the
alleged false advertising since at least August 2019 and failed to offer more
than conclusory argument to rebut the presumption of prejudice arising from its
more than four-year delay in filing suit (period borrowed from state law). Even
without the presumption of prejudice, defendants noted that several key
witnesses no longer work for Pacira; some witnesses often could not recall
basic facts related to the litigation during their depositions, and two, “both
of whom reside beyond the subpoena power of the court, indicated they do not
intend to appear at trial.” Of the 28 Nephron employees identified in Pacira’s
Rule 26(a) initial disclosures, 17 were now former employees, including 11 who
“would have still been current employees had Pacira filed within three years of
January 2020.” “The unavailability of witnesses, faded memories, and changes in
personnel are all indicators of evidentiary prejudice.”

But RKK came later and was allegedly discovered later. Nephron
identified no “facts otherwise indicating a lack of vigilance” on the part of
Pacira.

The court first held that the RKK Section 503B claims
weren’t statements of opinion. Though lay claims about law are generally
opinion, sometimes a law is “so clear on its face that no good faith doubt
concerning its interpretation [is] possible, even without an explicit statement
from [a court or agency].” In that circumstance, the law’s meaning is “so clear
as to be a fact for Lanham Act purposes,” and Section 503B is “clear on its
face.” Determining whether an outsourcing facility’s claims of compliance with
Section 503B’s “bulk drug substance” provision are true “requires no more than
consulting two lists.”

Nephron argued that Section 503B permits an outsourcing
facility to market and sell a drug (say, RKK) without FDA approval as long as
the individual components of that drug appear on the drug shortage list. But
that wasn’t true: the drug shortage exception allows outsourcing facilities to
“compound using bulk drug substances” only if “the drug compounded from such
bulk drug substance appears on the drug shortage list.” Section 503B also defines
“compounding” as “the combining, admixing, mixing, diluting, pooling,
reconstituting, or otherwise altering of a drug or bulk drug substance to
create a drug.” That’s what making RKK is.

Nor did the FDCA preclude Pacira’s Lanham Act claim. The
“logical building blocks” of Pom Wonderful apply with equal force to
“drug marketing, medical device labeling, cosmetics branding, or any other kind
of marking or representation which would fall under both the Lanham Act and the
FDCA,” Thus, “courts adjudicating Lanham Act disputes outside of the food and
beverage realm” have “almost uniformly” interpreted POM Wonderful “to
cover products in other FDA-regulated industries,” including pharmaceuticals. The
issue here was not an exception because it wouldn’t “require the expertise of
the FDA to resolve,” would call on the court “to make an original determination
on an issue committed to the FDA’s discretion,” or would “otherwise conflict
with an affirmative policy judgment by the FDA.”

The court declined to consider alleged falsehoods not
identified in the complaint: statements allegedly conveying that RKK was
compounded “in compliance with Section 503B” or “in a 503B-compliant
outsourcing facility,” along with the specific statements that RKK is “generic
to or substitutable for EXPAREL,” provides “improved value” over EXPAREL,
“reduces post-operative pain[,] complications, risk of readmission, length of
stay, [and] patient morbidity and mortality,” “eliminates opioid related
adverse drug effects,” and has “low reported incidents of nausea and vomiting.”

Were they false? Nephron’s product lists and pricing sheets were
distributed to members of group purchasing organizations (GPOs), healthcare
systems, and individual hospitals, enough to constitute commercial
advertising/promotion. They listed RKK among Nephron’s “503B Products.” This
was a false claim as matter of law: “By listing RKK under that heading, Nephron
necessarily communicated to purchasers that RKK belonged to the class of
products meeting the statute’s requirements; no other conclusion can be drawn
from its designation as a ‘503B Product.’”

But statements that Nephron is “a leading manufacturer of
503B outsourcing products” weren’t literally false; appearing at the bottom of
a Nephron “Opioid Free” product handout featuring BKK, RCK, and RKK “could be
understood as conveying that Nephron manufactures ‘503B outsourcing products’ as
part of its broader business, without necessarily implying that BKK, RCK, and
RKK fall within that category.” Pacira’s survey didn’t test the “leading
manufacturer” statement, so Nephron got summary judgment.

Nephron’s “503B outsourcing facility” logo appeared
throughout Nephron’s materials, including the “Opioid Free” handout and the
product label for RKK. Again, this was too ambiguous to be literally false.
Here Pacira did have a survey, presenting respondents with a sample marketing
email about BKK. Pacira’s expert concluded that a net 14.8% of respondents
believed BKK was a Section 503B-compliant drug. “That percentage would
ordinarily be sufficient to support a finding that an advertisement misled or
tended to mislead consumers.”

The court denied Nephron’s motion to exclude. First, though
the email shown to participants focused only on BKK, the deception rate
calculated by Butler could be “extrapolated” to RKK; the difference went to
weight rather than admissibility:

This is not a scenario where Pacira
seeks to extend survey results to an entirely separate and untested statement
(as with the “leading manufacturer” statement). Rather, the same “503B
outsourcing facility” logo appeared on the product labels for both BKK and RKK,
and it is not immediately clear consumers would perceive the logo differently
depending on the product to which it was affixed. Under these circumstances,
the weight to be given [the survey’s] findings, as applied to RKK, is for the
jury to decide.

Other challenges also went to weight: Using closed-ended
questions after open-ended questions has both critics and supporters and their
limits could be the subject of cross-examination. The survey asked, “Which of
the following, if any, are message(s) communicated by this email?” and offered
the following response options:

1. BKK, an admixture of bulk drug
substances from Nephron, is a 503B compliant drug

2. BKK, an admixture of bulk drug
substances from Nephron, is opioid free

3. BKK, an admixture of bulk drug
substances from Nephron, is packaged in syringe form

4. None of these

5. Don’t know / unsure

Respondents who selected the first option were asked a
follow-up open-ended question to assess why they believed this.

Nephron argued that closed-ended questions should be avoided
when testing consumer deception because they are “highly susceptible to demand
effects and focalism.” But “there is nothing inherently wrong in using
closed-ended questions to test consumer impressions.” They can be “suitable for
assessing choices between well-identified options” and “may remind respondents
of options that they would not otherwise consider or which simply do not come
to mind as easily.” And open-ended questions have their own problems, such as
decreasing reporting of actually-held views: “respondents answering open-ended
questions may be less likely to report some information that they would reveal
in response to a closed-ended question when that information seems self-evident
or irrelevant” (quoting Shari Diamond). They also require subjective coding:
“Because respondents are answering in their own words and may not provide
precise answers, many answers are simply not clear enough to definitively
evaluate or categorize reliably.” Also, the “Don’t know / unsure” answer choice
is a recognized way “to screen out respondents who may not have an opinion on
the issue under investigation.”

Nephron also argued that the survey expert made “excessive
and biased” changes to the stimulus shown to the control group. The control
group saw an email that (1) removed both instances of the “503B outsourcing
facility” logo; (2) added a disclaimer stating, “Note: the admixture of bulk
drug substances sold as BKK is not compounded in compliance with Section 503B”;
(3) removed the statement “Nephron continues to strive to provide drugs that
are critically short and meet all needs of the Country!”; and (4) modified the
statement “This is something that will be huge in helping hospitals decrease
opioid and Exparel use” by deleting the reference to EXPAREL. The disclaimer,
Nephron argued, was “overly broad and inaccurate” because it “would likely lead
participants to conclude that no part of BKK is 503B-compliant.”

It was logical to address only BKK in the disclaimer because
that was the specific product being tested by the survey. “The court struggles
to see why respondents needed to be informed of the compliance status of
bupivacaine, ketorolac, and ketamine individually when they were being asked
about the admixture BKK.” Anyway, this was for cross-examination.

Finally, Nephron argued that the survey was an improper
“reading test” because the stimulus was visible while respondents answered
questions. Again, experts disagree on this, so it was for cross-examination and
competing expert testimony. Thus, there was a genuine issue of material fact on
misleadingness for use of “503B outsourcing facility” logo on the “Opioid Free”
product handout and RKK’s product label.

Statements that RKK (1) is “generic to or substitutable for
EXPAREL” and (2) provides “improved value” over EXPAREL: Pacira didn’t show any
use of the exact phrase. The closest it got was one email stating “Nephron
produces BKK, RKK, & RCK as generic, clinical need medications as requested
by physicians across the country.” That didn’t mention EXPAREL at all.  Summary judgment granted on (1).

The “improved value” statement was in the “Opioid Free”
product handout. But it didn’t make an express or implicit comparison to
EXPAREL, and it was puffery.

RKK safety and efficacy: these statements claimed that RKK
(1) “reduces post-operative pain[,] complications, risk of readmission, length
of stay, [and] patient morbidity and mortality”; (2) “eliminates opioid related
adverse drug effects”; and (3) has “low reported incidents of nausea and
vomiting.” These weren’t establishment claims [side note that courts used to be
much more open to the argument that scientific/health claims are establishment
claims by necessary implication, which seems right to me], and Pacira showed
only that they weren’t substantiated.

Of the remaining statements, there was no genuine dispute
that “503B Product” was material, given that GPO customers “required Nephron to
warrant that the compounded drugs it sold complied with Section 503B.” “Parties
do not typically bargain for guarantees on matters they consider unimportant.
That Nephron’s contracts with GPOs included an express warranty of Section 503B
compliance is compelling evidence that such compliance mattered to purchasers
of RKK.”

But the materiality of the “503B outsourcing facility” logo
was still in dispute.

There was also a factual issue of injury based on evidence
that certain customers who had previously purchased EXPAREL (1) began buying
RKK when it came on the market, (2) simultaneously reduced their purchases of
EXPAREL, and (3) were members of GPOs that had received Nephron pricing sheets
listing RKK as a “503B Product.” So these issues, and damages and/or
disgorgement, remained for trial.

from Blogger https://tushnet.blogspot.com/2026/08/compounding-pharmacy-must-face.html

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anti-Chinese memory chips blog & report weren’t commercial speech despite alleged competitor funding

Posted on August 17, 2026 by rtushnet

Yangtze Memory Technologies, Inc. v. Micron Technology, Inc.,
2026 WL 2350276, No. 1:25-cv-01795 (CJN) (D.D.C. Aug. 13, 2026)

On the one hand, there’s a risk of suppressing valuable
noncommercial speech if we apply the Lanham Act too broadly; on the other,
there’s a risk of allowing false advertisers to launder claims through
supposedly noncommercial speakers if we interpret it too narrowly. Here, the
court finds the political valence of anti-China speech relevant to determining
that the alleged falsity was not made in commercial speech.

YMTC alleged that defendants ran an astroturfing campaign
that discouraged customers from purchasing memory chips from YMTC due to its
connections to the Chinese government. Defendant Micron competes against YMTC
in the market for memory chips. It allegedly worked with defendant DCI, a
public affairs firm, “to erect a sophisticated … ‘astroturfing’ campaign …
to damage YMTC’s reputation and business for their own profit.” It allegedly funded
a website called China Tech Threat that “purport[ed] to be focused on policy”
but was actually a front “to disseminate favorable messages about Micron’s
products and disparaging messages about YMTC’s competing products.”

For example, CTT published a blog post, “As YMTC Booms,
China Aims to Dominate Flash Memory Industry,” asserting that YMTC was
associated with “criminal activity, including a Social Security spoofing scam,
identity theft and cyber extortion.” A June 2022 report, “Silicon Sellout: How
Apple’s Partnership with Chinese Military Chip Maker YMTC Threatens American
National Security,” implored “Apple to voluntarily end its partnership with
YMTC” and “source its chips from existing suppliers like Micron.” [Yeah, if the
funding facts are as stated, that seems like commercial speech to me.]

Apple allegedly suspended its plans to purchase chips from
YMTC in October 2022, resulting in “hundreds of millions of dollars in lost
revenue.” The astroturfing campaign also allegedly “inflicted lasting damage on
YMTC’s reputation and commercial standing across the technology sector.”

The court found Article III standing because YMTC pled “a
plausible chain of events that links DCI’s actions to YMTC’s injuries.” DCI
argued that other sources gave the same warnings, “[b]ut the existence of,
perhaps, an equally important player in the story does not erase [DCI]’s role.”

However, the blog post and report were not actionable under
the Lanham Act, despite including apparently factual claims such as “YMTC chips
equipped with spyware and installed on Apple devices could funnel collected
data back to Beijing” and “Electronics with embedded chips are enabled with a
‘kill switch’ …. Such features, under Chinese military production, could be
enabled … to shut down remotely by an unauthorized Chinese government actor.”

The court primarily reasoned that the 2021 blog post and
2022 report do not constitute “expression related solely to the economic
interests of the speaker and its audience,” which strikes me as a way to insulate
all factual claims from scrutiny given that we’re at a point in which anything can
be politicized. But:

The blog post warned about the risk
of China overtaking the United States in the flash memory industry and
accordingly encouraged the Trump administration “to implement controls to stop
the flow of [semiconductor manufacturing equipment] to China.” Given this clear
focus on national security concerns, the post was not primarily—much less
solely—about economic interests. As for the report, although it at least
arguably contained some references to economic competitors in the chip
industry, the vast majority of it either outlined the foreign policy risks of
the deal between YMTC and Apple or proposed potential solutions to mitigate
those risks. The report mentioned that the deal may have economic implications,
but it was far from solely focused on that aspect.

The court also thought that the post and report weren’t “speech
proposing a commercial transaction,” and that “this non-advertising medium
strongly counsels against YMTC’s position.” (Just because astroturfing isn’t identified
as a conventional ad shouldn’t make it ok!) “[E]ven if Micron, through DCI and
China Tech Threat, would potentially benefit financially from seeing its
competitor’s reputation suffer, that general economic motivation cannot alone
transform the specific means at issue here—a blog post [and report] flagging
national security concerns—into commercial speech.”

What about references to specific products, also part of the
commercial speech inquiry? Well, discussing the potential risks of “YMTC chips”
“generally” aren’t enough to constitute a reference to a specific product. That
conclusion seems quite bizarre. An entity that sold flavored condoms, different
sizes of condoms, lubricated and unlubricated condoms, and then touted condoms generally
is making a specific
product reference (Young of Bolger v. Young made Trojans, and also
wanted to send flyers promoting condoms generally as well as Trojans
specifically). And targeting a specific producer seems certainly within the
Lanham Act’s concerns (see also “commercial activities” in 43(a)(1)(B)).

Ultimately, the court concluded, the publications are
“political speech expressing a point of view, not commercial speech attempting
to promote a good or service.” They called for government—not consumer—action. “YMTC’s
attempt to focus on only four statements out of a 20-page report and one
sentence out of a two-page blog post cannot overcome the overwhelmingly
political nature of the publications.” This also distinguished Ariix, LLC v.
NutriSearch Corp., 985 F.3d 1107 (9th Cir. 2021), which concerned a review
guide “that compares and reviews nutritional supplements sold in the direct
marketing industry”— “a much more commercial publication.” [Again, this
distinction seems wrong to me. The issue in Ariix wasn’t that
publications about nutritional supplements are inherently more likely to be
commercial speech—plenty of such speech is noncommercial. It was the secret
control by a funder who was spoken of well in the guides. And there was no
showing in Ariix that the disparaging matter was a significant part of
the guides, which covered lots of different supplements.]

from Blogger https://tushnet.blogspot.com/2026/08/anti-chinese-memory-chips-blog-report.html

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heavy weather for heavy metals in infant food

Posted on August 17, 2026 by rtushnet

Choudhry v. Mead Johnson & Co., 2026 WL 2349932, No. 25-cv-09480
(ER) (S.D.N.Y. Aug. 13, 2026)

Plaintiffs alleged that various Enfamil infant formulas
contained arsenic, cadmium, and lead, heavy metals that present significant health
risks, particularly to young children, and “can cause serious and often
irreversible damage to brain development,” including from “low levels of
exposure.” They sued for false advertising under NY law.

They allegedly relied on the following claims on the
packaging: “ ‘Brain Building,’ ‘#1 Recommended Brand by Pediatricians,’ ‘The
Only Hypoallergic [sic] Formula With LGG® Probiotic,’ ‘No Artificial Growth
Hormones,’ ‘LGG® probiotic to help support digestive health’ and ‘does not use
table sugar,’ ” along with “expert recommended,” and some others. They alleged
that reasonable consumers would not think these products contained heavy
metals.

A consumer survey conducted by their counsel found that
77.8% of survey participants answered “No” when asked, “After seeing the label
would you expect arsenic, cadmium, lead, and/or mercury in the infant formula?”
The survey followed up:, “how important, if at all, would it be to your
purchasing decision if the infant formula you purchased contained, or risked
containing, even a small amount of arsenic, cadmium, lead, and/or mercury,” and
71.0% of participants answered “Very important,” 25.4% “Important,” and 3.6%
“Not at all important.” Mead Johnson received judicial notice for the fact that,
“[i]n April 2026, the FDA released a report finding low levels of Heavy Metals
in many infant formulas, cautioned that this was not automatically reason for
alarm, and that additional guidance is forthcoming, but did not provide a
timeline for that guidance.”

The court declined to apply the primary jurisdiction
doctrine. White v. Beech-Nut Nutrition Co., 2024 WL 194699 (2d Cir. Jan. 18,
2024) vacated the district court’s dismissal of a similar case based on the
primary jurisdiction doctrine; detailed consideration wasn’t required because “the
FDA had no expected timeline to provide actionable guidance on the safe levels
of Heavy Metals in infant formulas, which outweighed ‘any advantages of
deferring to the FDA under the primary jurisdiction doctrine.’” That was still
true.

Also, courts are well-suited to determine if a product’s
packaging was misleading or deceptive. This case didn’t require the court to
determine what levels of heavy metals should be permissible, so there is not “a
substantial danger of inconsistent rulings.”

Standing for unpurchased products: although the ingredients
weren’t identical, the same alleged misrepresentation was on all of them, which
was enough at this stage.  

GBL §§ 349 and 350: Not subject to 9(b) pleading requirements.
Mead Johnson questioned plaintiffs’ reliance, but they alleged that they “read
and relied upon the packaging of the Infant Formulas when making their
purchasing decisions,” which sufficed.

Material misleadingness to “a significant portion of the
general consuming public or of targeted customers, acting reasonably in the
circumstances”: Courts will not permit such claims “where the plaintiffs’
alleged inference appeared fundamentally incompatible with basic common sense.”
Plaintiffs didn’t allege that the formulas advertised that they didn’t have
heavy metals, “but that the packaging misleadingly represented the products as
healthy, safe, and nutritious when they contained or risked containing Heavy
Metals,” with claims like “Brain Building,” “expert recommended,” and “#1
Recommended Brand by Pediatricians.” The court agreed that the survey bolstered
this inference.

Interesting comment:  

Plaintiffs’ pleading satisfies this
low burden because it demonstrates that the majority of consumers would
assume the product did not contain Heavy Metals based on its label. This does
not definitively establish that a reasonable consumer would be misled by
the packaging. However, at this stage, despite certainly requiring an
inferential leap, Plaintiffs sufficiently allege that this supposed deception
is not “patently implausible” such that the Court can determine as a matter of
law that reasonable consumers could not be misled by the packaging. (emphasis
added)

Is the court saying that a majority of consumers could still
be unreasonable? Empirical v. normative claims about reasonable consumers are
scattered throughout cases, with courts rarely articulating the relationship
between “reasonable” and “common.”

Anyway, implicit misrepresentation was plausible. What about
an omission theory?  Mead Johnson argued
that plaintiffs failed to allege that knowledge about heavy metals was solely
in its possession and that consumers could not obtain the information, and also
that heavy metals in food is widely known.

At the motion to dismiss stage, “a plaintiff bringing an
omission-based claim for § 349 liability must show that ‘the business alone
possesses material information that is relevant to the consumer and fail[ed] to
provide this information,’ or that plaintiffs could not ‘reasonably have
obtained the relevant information they now claim the [defendant] failed to
provide.’ ” This was sufficiently alleged. Plaintiffs alleged Mead Johnson’s
superior knowledge; that consumers reasonably expected Mead Johnson to test for
heavy metals and disclose that information to the public; that Mead Johnson
deceptively hid that it failed to monitor for the presence of heavy metals in
its products; and that consumers could not detect their presence without
conducting scientific tests.

Materiality to a reasonable consumer: not a separate
element, but it would be reasonable to assume that heavy metals’ presence would
be material because of their health risks.

For common law fraudulent misrepresentation, Mead Johnson
argued that its efforts as part of a trade organization to lobby against a
California bill that would require disclosure of heavy metals content was
insufficient to plead scienter because it is “legitimate First Amendment
activity,” not “conscious misbehavior.” That alone wasn’t sufficient to
establish the required “strong circumstantial evidence” of scienter, but it
could bolster the claims.

However, unjust enrichment was dismissed as duplicative.

from Blogger https://tushnet.blogspot.com/2026/08/heavy-weather-for-heavy-metals-in.html

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a lot of balls: golf ball manufacturer states claim for allegedly false UV light comparison

Posted on August 14, 2026 by rtushnet

TaylorMade Golf Co. v. TopGolf Callaway Brands Corp., 2026
WL 2244259, No. 3:26-cv-250-GPC-BJW (S.D. Cal. Aug. 4, 2026)

TaylorMade sued Callaway, a competitor in the golf ball
market, for federal and state false advertising/unfair competition. TaylorMade
alleged substantial investment in innovating and advertising its golf balls,
including a golf ball for tour-level performance known as “TP5 Brand.” Callaway
has a TP5 brand golf ball equivalent called “Chrome Tour” golf balls.

TaylorMade alleged a misinformation campaign, including
through sales reps and influencers and promotion to third-party golf
publications.

TaylorMade’s TP5 Brand golf balls allegedly have two layers
of coating: the first inner layer is white paint, and the second outermost
layer is “clearcoat” that has a low concentration of “optical brightener” for cosmetic
and stain-resistance purposes. TaylorMade alleged that the optical brightener
had no impact on ball flight, distance, spin trajectory, or any other
performance attribute. However, the “clearcoat has the highest potential impact
on ball performance in flight” and therefore, its intentional thin coating
approach is allegedly a deliberate design decision to improve ball performance.
“As such, the splotchiness on its balls under UV light is Plaintiff’s design
choice to have a single, thin, clearcoat layer to prioritize performance and
not inferior quality or performance.”

TaylorMade alleged that Callaway similarly applies two
layers of coating to their Chrome Tour golf balls, but both layers contain
clearcoat with optical brightener, resulting in a brighter appearance that
allegedly does not increase quality or performance.

TaylorMade was not alleging that uneven paint application
cannot impact golf ball performance or quality; rather, it claimed that
Callaway’s UV light demonstration was an unreliable way to evaluate paint
coverage, paint uniformity or golf ball quality and performance. “In fact, the
UV light demonstration only reveals the distribution of optical brightener
additives, a cosmetic ingredient that has no bearing on ball flight.” Thus,
using a UV light demonstration to make comparative quality claims was
false/misleading—but that is what Callaway allegedly did.

For example, one sales agent stated that the demonstration would
show whether there is “too much paint” on the ball, and if so, would result in
a “mudball.” “Mudball is a derogatory term used to describe a golf ball that
has a bad flight, trajectory, shape and distance due to the presence of mud on
the ball and is the ‘bane of any pro golfer’s existence.’” The sales rep
claimed that dark spots on the ball could “potentially act like a piece of mud
is on the ball and who knows where the ball is going to go… all about quality
control.”

Thus, TaylorMade challenged the following claims: (1) the
use of UV light can measure golf ball quality or performance; (2) the
difference in appearance of golf balls under UV light are indicative of overall
golf ball quality and performance, (3) the uniform appearance of Calloway’s
golf ball dimples and brightness under UV light is indicative of superior
quality or performance; (4) TaylorMade’s golf balls are “mudballs”; and (5) TaylorMade’s
quality control is inferior to Callaway’s.  

TaylorMade further alleged that the UV light test is
unreliable, misleading, and lacks standardization “because it is highly
sensitive to other variables including wavelength and intensity of UV light,
distance and angle of which the light is held, the duration of the UV light
exposure, prior UV exposure, and ambient lighting conditions, none of which can
be standardized.”

This campaign was allegedly extensive. For example, MyGolfSpy,
“a popular digital platform with over 22 million consumers,” published
“Callaway Doubles Down on Speed and Precision With New Chrome Tour, Chrome Tour
X, and Chrome Soft Golf Ball” which contained several statements from the alleged
misinformation campaign and had a “DIY side note” encouraging consumers to
conduct their own UV light demonstration as a way to measure a golf ball’s
quality and performance based on its “paint coverage.”

Callaway argued that its claims were puffery.  A claim that golf balls act “like a piece of
mud” due to the uneven paint coating on the ball which negatively impacts the
ball’s ability to fly straight was a specific and measurable claim and not
puffery, as were the other claims about UV light as a method of proof.  The complaint explained why the UV light
demonstration wasn’t reliable.

Did TaylorMade have standing under California’s UCL and FAL?
Yes, it sufficiently pled lost sales: “because Defendant is a direct
competitor, any alleged false misrepresentations about the quality and
performance of TaylorMade’s golf ball will increase sales of Callaway’s golf
balls and cause sales of TaylorMade golf balls to decrease.” Also, it was
independently sufficient that TaylorMade allegedly lost money when it incurred
financial expenses to combat the misinformation campaign by responding to
inquiries from customers who saw or heard about the UV light demonstration.

What about reliance? In federal district courts, the
majority view is that a plaintiff must allege its own reliance and not the
reliance of third parties. But the court here adopted the minority view that a
“competitor may allege false advertising claims under the UCL and FAL without
alleging its own reliance and need only allege it suffered an injury, loss of
money or property, as a result of the alleged misrepresentations.” [seems
correct]

Given the alleged Lanham Act violation, “unlawfulness” UCL claims
survived, as did unfairness claims, which would allegedly “encourage a race to
the bottom” where competitors will resort to misleading demonstrations and
pseudo-scientific claims rather than competing on the actual merits of their
products.

from Blogger https://tushnet.blogspot.com/2026/08/a-lot-of-balls-golf-ball-manufacturer.html

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