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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“battery tender” isn’t generic for guess what, but keyword advertising is fine

Posted on August 14, 2026 by rtushnet

Deltona Transformer Corporation v. NOCO Company, — F.4th
—-, 2026 WL 2236806, No. 24-13590 (11th Cir. Aug. 4, 2026)

Competitors aren’t generally allowed the same freedom as consumers
to “genericize” a term. Here, the 11th Circuit finds no error in a district
court’s holding that “battery tender” wasn’t generic, despite calling the
product category at issue by that name throughout the opinion (“specialized
vehicle-battery chargers called ‘battery tenders’”—they recognize when a battery
is fully charged so they don’t overcharge and degrade it, an innovation when
introduced). [What is the name of this specialized subcategory, if not “battery
tender”? This is an exercise for the reader because the court sure won’t tell
you, but moments in the opinion offer “battery-maintaining chargers” or “trickle
chargers.”]

Deltona federal registrations for “Battery Tender” and
“Deltran Battery Tender.” NOCO made similar charges and advertised its own products
as “battery tenders.” A jury found for Deltona on its federal and state
infringement claims, and further concluded that NOCO had engaged in false
advertising in violation of federal law. The court of appeals kicked out some
of the theories—specifically, based on keyword purchases and Lanham Act false
advertising—and remanded to recalculate damages.

The allegedly infringing conduct: (1) bidding on Deltona’s
marks as “keywords” and using them to trigger NOCO’s ads in Amazon search
results; (2) using the term “battery tender” in the text of its own Amazon ads;
(3) incorporating the term “battery tender” in its product descriptions on
Amazon; and (4) holding out its chargers as “battery tenders” in communications
with marketing firms and customers.

Category (1) couldn’t infringe, but the rest could. NOCO’s
position was summarized by a sales manager: An email drafted by Nook and sent
by a NOCO sales manager to a potential customer said, “We understand Battery
Tender is a well known brand, but most customers usually refer to the function
(battery tender meaning a trickle charger), than the actual brand.” Internal
documents showed that NOCO was willing to use “tender” and “battery” in ways
that were “passive aggressive.”

The director of advertising at a company that handles
Deltona’s marketing testified that one of its customer-service agents spoke to
a consumer who had initially reached out to NOCO and was “very confused” when
one of its employees “referr[ed] to [NOCO’s] products as a battery tender
charger.” And an email exchange in the record shows that a retailer considering
whether to stock a new line of battery tenders reached out to NOCO with an
inquiry about Deltona’s product.

The jury held that Deltona was entitled to actual damages of
$1.3 million and that NOCO had committed intentional misconduct or gross
negligence, entitling Deltona to punitive damages of $5.75 million. The
district court ordered NOCO to disgorge profits of over $12 million and issued
a permanent injunction. The injunction prohibited NOCO from “selling,
marketing, advertising, [or] promoting” its products using the terms “Battery
Tender,” “Deltran Battery Tender,” “Deltran,” or “Tender,” the latter of which
was included because “[t]here was abundant evidence that [the company’s] use of
‘tender’ on its own was done in a way that caused customer confusion and
infringed [Deltona’s] Marks.” The injunction exempted keyword purchases and
comparative advertising.

Deltona had a genericity survey, but the jury could have
rejected it. The marks weren’t inherently generic because they were registered;
they were descriptive with acquired secondary meaning. “The fact of registration
puts a heavy thumb on the scale against genericness.” [Does that mean that the
burden is clear and convincing evidence? Or something else?]

“Battery tender”

entails some level of abstraction—“tend[
]” is more a metaphorical than literal description of what a battery tender
does, which is to preserve the battery by maintaining its charge. That makes
“battery tender” more like “vision center”—which might sell glasses and contact
lenses but doesn’t literally sell “vision”—than, say, “liquor store”—which is
nothing more than a store that sells liquor. Indeed, the term “battery tender”
might even be suggestive; it “suggest[s] characteristics of the good[ ]” and
seems to require at least some “effort of the imagination” to understand how
the product works.

Sigh. Nothing has “inherent” meaning with the partial exception
of onomatopoeia.

Deltona’s co-founder made up the term based on an analogy to
a ship’s tender. [But if he made it up to identify this new category and
distinguish it from prior types of chargers, that shouldn’t matter—“dry ice” didn’t
have to be the term for solid carbon dioxide.] The court says that, “as a matter
of historical fact, it’s not accurate to say that ‘battery tender’ referred
from the very beginning simply to ‘a kind of battery-charging device,’” but
doesn’t explain what the generic word was at the very beginning.

NOCO’s consumer survey found that 78% of 558 respondents
reported that they believed that “Battery Tender [was] a type of product”
rather than a reference to a particular brand. The jury was free to reject
that, though; Deltona had challenged the survey’s methodology on the ground
that it included people who might simply have been “exposed” to battery tenders
[generic use again!] “from shopping near [them]” when walking through an
automotive store or department.

The court then held that keyword bidding alone can’t be
trademark infringement because the use of the plaintiff’s mark for
keyword-bidding purposes occurs “behind the scenes.” [Twenty years later, they
figure this out. Sincerely: thanks, Abitron!] Likelihood of confusion
“turn[s] on what the consumer s[ees] on the screen and reasonably believe[s],
given the context.” (Citing Eric Goldman and the Second, Ninth, and Fifth
Circuit cases to similar effect.)

Use in product titles and product descriptions on Amazon,
however, was potentially infringing, as was use in communications with
marketing firms and consumers, so that part of the award was upheld. Unlike
keyword advertising, “[t]he inclusion of ‘battery tender’ in the description
automatically not only affected Amazon search results but also drove shoppers
searching for Deltona’s battery tenders to NOCO chargers without alerting them
in any way—through a ‘sponsored’ tag or otherwise—that they weren’t really
looking at battery tenders.”

“A reasonable jury certainly could have concluded that these
explicit statements to customers—that ‘battery tender’ was a generic term—were
likely to confuse them.” (Confuse them about what? Not about source or sponsorship,
given the statement that it was generic.)

The Florida Deceptive and Unfair Trade Practices Act damages
award was also problematic, even though the Lanham Act violation could also violate
FDUTPA. Monetary relief in the form of actual damages is available only to a
“person who has suffered a loss as a result of a violation of this part,” and Florida
law generally defines actual damages as “the difference in the market value of
the product or service in the condition in which it was delivered and its
market value in the condition in which it should have been delivered.” Thus,
Deltona couldn’t base its damages on “harm to its reputation or goodwill,” because
consequential damages like that aren’t compensable under FDUTPA.

Finally, the district court erred by instructing the jury on
false advertising under the Lanham Act based on the same conduct. Deltona’s
complaint alleged unfair competition and false designation of origin under the
Lanham Act; it never separately articulated a false advertising theory. It was
not enough to use the phrase “misleading description and representation of
fact,” when read in conjunction with the complaint’s “numerous allegations
involving advertisements” and its generic citation to § 43(a), to warrant a
separate jury instruction on false advertising under § 43(a)(1)(B).  In context, the complaint clearly referred to §
43(a)(1)(A). NOCO neither expressly nor impliedly consented to trying a
false-advertising claim.

The court of appeals had “substantial and ineradicable
doubt” whether the jury was properly guided, so that part of the judgment was
reversed.

Disgorgement was appropriate, given the willful conduct. [Recalculation
doesn’t seem to be required because of how disgorgement is assessed—even kicking
out the keyword advertising doesn’t seem to matter (though you’d think that
sales made through keyword ads alone wouldn’t have the right causal
relationship).]

Also ok: an injunction extending a ban on standalone use of “tender.”
“[E]ven though NOCO seems to have ceased its misconduct, the record shows that
it has, after brief interludes, repeatedly returned to infringing Deltona’s
marks.” “In fashioning relief against a party who has transgressed the
governing legal standards, a court of equity is free to proscribe activities
that, standing alone, would have been unassailable.”

But the damage award needed to be reassessed, so remand for
a new trial it was.

from Blogger https://tushnet.blogspot.com/2026/08/battery-tender-isnt-generic-for-guess.html

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is an avocado a vegetable or a fruit? Court says it’s ambiguous

Posted on August 14, 2026 by rtushnet

Parashos v. Once Upon A Farm, No. 26-cv-00314-EMC,  2026 WL 2283647 (N.D. Cal. Aug. 7, 2026)

Once Upon A Farm allegedly violated California consumer
protection laws by misleadingly labeling its baby product as the “Wild Rumpus
Avocado ‘Fruit & Veggie Blend’ ” when in fact it contains no vegetables
(but does contain avocados). The court found the claim implausible.

The front of the pouch displays multiple images of avocados,
along with images of apples, banana, and pineapples. The back lists its
ingredients as pineapple, banana, apple, avocado and mint.

The FDA classifies avocados as fruit and mint as an herb. So
does the pouch contain “veggies”? The target audience is allegedly “health-conscious
parents” who are “willing to pay a premium to ensure that the food that they
provide to their children is nutritious and includes vegetables.” Plaintiff
brought the
usual California claims.

Dismissal is appropriate if the claim that a label is
misleading “runs counter to ordinary common sense or the obvious nature of the
product.” And “a survey of dictionary definitions, of which the Court takes
judicial notice, suggests that the question of whether an avocado is a
vegetable is not so clear-cut in common parlance, notwithstanding the technical
botanical definition of avocados as a fruit.” Avocados, which contain a pit
like peaches or cherries, fit the scientific definition of the “product of
fertilization in a plant with its modified envelopes or appendages,
specifically : the ripened ovary of a seed plant and its contents.” But another
meaning of “fruit” is “the usually edible reproductive body of a seed plant
especially: one having a sweet pulp associated with the seed.” “Avocados, like
peppers, zucchini, and other botanical fruits, lack the ‘sweet pulp’ that would
place them firmly within the ‘fruit’ category of popular usage.” Avocados also
fit within broad definitions of “vegetable” such as “a usually herbaceous plant
(such as the cabbage, bean, or potato) grown for an edible part that is usually
eaten as part of a meal.” Different dictionaries variously call an avocado a
fruit or a vegetable.

Famously, in construing a tariff statute, the Supreme Court
held that while “botanically speaking,” tomatoes are fruits, in “the common
language of the people,” they are vegetables. Nix v. Hedden, 149 U.S. 304, 307
(1893), as are the technical seeds beans and lentils. Avocados are like
tomatoes: “commonly served at meals as ingredients in e.g. burritos and
sandwiches, and not, like fruits, as a sweet snack or a part of a dessert. And
people eating chips and guacamole are not likely to think they are eating a
fruit dip.” At the very least, the claim wasn’t unambiguously false. See, e.g, Henderson
v. Gruma Corp., 2011 WL 1362188 (C.D. Cal. Apr. 11, 2011) (granting a motion to
dismiss on the grounds that a label promising “Garden Vegetables” was confirmed
by the inclusion of avocado powder, dehydrated onion, garlic powder, and bell
pepper); Gates v. Upfield US Inc., 2024 WL 3362857 (C.D. Cal. July 9, 2024)
(“Avocado oil is a type of vegetable oil known for its healthy qualities”; granting
a motion to dismiss because a product labeled “made with avocado oil” and “79%
vegetable oil spread” would not imply to a reasonable consumer that the product
was made without other forms of vegetable oil).

Nor was this plausibly misleading. The front label was ambiguous
enough that a reasonable consumer would have consulted the back label. “Ambiguous”
in this context does not simply mean “susceptible to more than one reasonable
meaning,” but rather that a reasonable consumer “would necessarily have
required more information before concluding that the products’ front labels
were making a specific promise.” Such “inherent ambiguity” was present here.
The context reinforced that, with explicit reference to “Avocado” in the name
of the product and a label showing multiple images of avocados, as well as
bananas, apples, and pineapples. There was no other conceded vegetable shown. “There
is thus an ambiguity as to whether the product contains vegetables other than
avocados. Faced with this ambiguity, the reasonable consumer is expected to
check the back label for complete information.”

The likelihood that a reasonable consumer would look to the
back label was underscored by the fact that the product’s “target audience” was
allegedly “health-conscious parents” who “would have particular reason to check
the back label.”

from Blogger https://tushnet.blogspot.com/2026/08/is-avocado-vegetable-or-fruit-court.html

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trademark claim proceeds with essentially no detail, despite trade dress failure

Posted on August 13, 2026 by rtushnet

Honest Company, Inc., v. Butterblu, LLC, 2026 WL 2211834,
No. 2:26-cv-00019-WLH-MBK (C.D. Cal. Jul. 28, 2026)

Honest sued former partner Butterblu for trademark
infringement and related claims. Honest sells products in the diaper and wipes,
skin and personal care, and household and wellness categories. It registered two
trademarks for HONEST registered for swaddling and crib blankets and various
children and infant related products, and also owned HONEST BABY CLOTHING (and
logo) for baby and toddler-related products.

The parties previously entered into an agreement (where
Honest took over ownership of all products in inventory, and Butterblu sourced,
marketed and sold these products in exchange for a service fee. Honest alleged
breach for, among other things “secretly developing and selling a baby apparel
product line in direct competition with Honest Baby Clothing brand products.”
Honest claimed rights in two print designs with stylized holiday trees and a
striped, pastel rainbow used on various products that Butterblu allegedly copied.

claimed Honest design

Claimed Honest design

Consumers allegedly commented on online forums, such as
Reddit, that Butterblu’s products “look like” Honest products but “rebranded”
or similar language, that Butterblu is the “creator” of Honest’s products, and
otherwise expressed confusion as to the source of and/or affiliation between
the parties’ respective products. Honest alleged that “at least one” consumer
has contacted Honest with questions about a recent purchase in which the
consumer intended to buy Honest products from Amazon but instead received
products bearing a Butterblu label.

Honest pine PJs
Butterblu pine PJs

Honest rainbow PJs

Butterblu rainbow PJs

Butterblu’s website allegedly includes a misleading statement that “Honest’s new leadership team ultimately decided to exit the apparel space.”

Showing a common tolerance for trademark claims, despite Butterblu’s argument that Honest didn’t plead use of its marks, it was enough to allege that Butterblu “has used Honest’s intellectual property without authorization” and “mislead consumers and prospective consumers into believing the Infringing Products are affiliated or associated with, or sponsored by, Honest” and to submits screenshots showing that Butterblu “sold products that bear striking resemblance to its own products.” Products, not marks. Ugh.

And pleading that Reddit users have commented on forums about Honest and Butterblu products looking similar and have expressed confusion “as to the source of and/or the affiliation between the Parties’ respective products” also sufficed.

Plus, “many courts have held that an ex-licensee’s continued use of a trademark is enough to establish likelihood of confusion,” and the court agreed. Ugh again! Which trademark? Especially because the court also says that the trade dress infringement claim failed for want of pleading secondary meaning.

Explain to me how this screenshot shows use of the Honest marks?

Honest alleged that intentional copying showed secondary meaning. But “proof of deliberate copying is not determinative … competitors may intentionally copy product features for a variety of reasons.” Thus, pleading intentional copying alone is insufficient. The online comments about “looking like” or “rebranding” weren’t enough because they didn’t specifically discuss the two claimed prints, and “looking like” does not equal confusion. Why doesn’t this also doom the claim about trademark infringement, since the commenters doesn’t seem to depend on the word marks or logo?

False advertising: Butterblu argued that Honest’s own public statements confirm the truth of the alleged false statement that Honest was exiting apparel, and, that the continued availability of remaining products during a sell-through or transition period does not render the “apparel-exit” statement false. But “[w]hether the alleged misrepresentations are false or misleading is a factual question generally inappropriate for resolution on a motion to dismiss.” The complaint alleged that “HONEST-branded apparel continues to be advertised, offered for sale, and sold to consumers, contrary to the representations made on Butterblu’s website” and that “Honest has a one-year sell off period for existing inventory.” Honest also argues that Butterblu knew that the statement was misleading because Honest explicitly stated in its earnings release that it was “ ‘exiting our relationship with our current apparel provider’ —i.e., Butterblu” and did not state that it was exiting the apparel space as a whole. This was enough on a motion to dismiss.

from Blogger https://tushnet.blogspot.com/2026/08/trademark-claim-proceeds-with.html

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consumers face more skepticism than competitor in online gaming case

Posted on August 13, 2026 by rtushnet

Mitchell v. Skillz Platform Inc., 2026 WL 2212876, No.
26-cv-00674-AMO (N.D. Cal. Jul. 31, 2026)

Although competitors can aggregate harm to sue under the Lanham
Act, consumers—the direct victims of false advertising—tend to have more
trouble. Skillz
just lost a big claim to its main competitor over falsely advertising that
it didn’t use bots in mobile cash games. Here, with similar allegations under
various state laws, the consumers struck out. Plaintiffs didn’t sufficiently
allege reliance, causation, or lack of an adequate remedy at law (for the
restitution claim).

Representations that users match with “real players” and
have “no bots guaranteed” were plausibly false and deceptive, as were representations
that users match with “players of equal skill.” But the representation that
users can make “easy withdrawals” was non-actionable puffery with no set
meaning.

The claims failed because plaintiffs didn’t allege that they
relied on or even read any particular representation. “Most of the
representations are allegedly located across Skillz’s website and social media
accounts, so it is not reasonable to infer that Plaintiffs must have seen them.”
Even an in-app badge displayed “in front of every single player, every time
they launch a Skillz-powered application” since at least the beginning of 2024
wasn’t enough to plead that they actually read the alleged misrepresentations. Seems
pretty fixable, but language quoted rejecting the RICO claim was bad news (and
maybe another reason to avoid RICO claims): “[A]s the Ninth Circuit noted in a
similar case, ‘there may be no single, logical explanation for gambling—it may
be an addiction, a form of escape, a casual endeavor, a hobby, a risk-taking
money venture, or scores of other things.’ As a result, it may well be that the
representations ‘did nothing to influence [users’] perceptions’ or that users ‘played
fully aware of how the [platform] operate[s].’” While the evidence in the
competitor case tends to negate that idea, “users had to launch a Skillz
application before seeing the in-app badge, so they might have already decided
to play before seeing the representations at issue here.”

from Blogger https://tushnet.blogspot.com/2026/08/consumers-face-more-skepticism-than.html

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Novo struggles once again to allege deception by sellers of compounded drugs

Posted on August 13, 2026 by rtushnet

Novo Nordisk v. Zealthy Inc., 2026 WL 2212889, No. 25-cv-06391
(ALC) (S.D.N.Y. Jul. 31, 2026)

Novo Nordisk makes the FDA-approved Ozempic, Rybelsus, and
Wegovy, while Zealthy markets and facilitates access to drug products,
including compounded medications containing semaglutide. Novo alleged that Zealthy
made false representations to consumers that compounded semaglutide medications
are “equivalent” to Plaintiffs’ medications, “clinically studied,” “evaluated
by the FDA,” and “deemed safe and effective.” Specifically, Zealthy stated that
“GLP-1 medications, with active ingredient semaglutide, are FDA-approved for
type 2 diabetes and have proven effective for weight loss,” “[m]edications with
the active ingredient semaglutide have shown 15-20% average weight loss,” and
“semaglutide is the active ingredient in Wegovy and Ozempic,” among other
similar messages. This allegedly violated the Lanham Act and NY GBL § 349.

The court found that Novo failed to state a claim.

Lanham Act false advertising: As to FDA approval, Novo
argued that Zealthy’s statements about GLP-1 medications being FDA-approved were
false in that such statements represent compounded semaglutide products as
FDA-approved. But Zealthy also facilitates prescription of Novo’s FDA-approved
medications, and so its statements could reasonably describe Novo’s own
medications, making them not literally false. Novo failed to allege facts
indicating likely deception and thus didn’t properly allege implicit falsity.
It also failed to allege deliberate deception, which could lead the court to presume
deception.

Clinical efficacy: Novo argued that Zealthy misled consumers
by describing semaglutide medications as effective without having conducted any
clinical studies on the products. But Novo bore the burden of showing falsity,
not lack of substantiation.

Equivalence: Novo pointed to statements that “semaglutide is
the active ingredient in Wegovy and Ozempic,” “Zealthy also offers semaglutide,
the active ingredient in Ozempic® & Wegovy®,” and “[i]f you were thinking
about doing the medication or you were on the medication and insurance doesn’t
cover it anymore, this is a great replacement, it’s the same medication,
semaglutide, and it works just the same.” But there was no showing of falsity
there. Although Novo alleged that compounded medications were manufactured
through different processes, and that compounded medications do not have the
same “effectiveness assurances” as FDA-approved drugs, that wasn’t enough to allege
that the two types of medications do not “work [ ] the same.”

However, Novo would have had standing if it had pled falsity/misleadingness.
Indeed, the court would be inclined to presume injury given that the ads drew
direct comparisons between Novo’s products and compounded drugs. In addition,
claims about FDA approval were not FDCA-preempted because (1) it’s preclusion
when it comes to the federal Lanham Act, and (2) the court wouldn’t have to
interpret or apply the FDCA to conclude that compounded drugs aren’t FDA-approved.
On the other hand, “[e]valuating whether Defendant falsely asserted that
compounded medications have shown certain levels of weight loss, and whether
such statements could only be made with the backing of clinical trials, may
well be precluded by the FDCA.” So too with equivalence.

Given this result, the court declined to address the state
law claims.

from Blogger https://tushnet.blogspot.com/2026/08/novo-struggles-once-again-to-allege.html

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not with a bang, but with a whimper of whipped dogs? VIP prevails in Ninth Circuit

Posted on August 13, 2026 by rtushnet

VIP Prods., LLC v. Jack Daniel’s Properties, Inc., No.
25-2027 (9th Cir. Aug. 4, 2026)

VIP prevailed on remand on the confusion claim but lost on dilution by tarnishment.
The court of appeals reversed, holding that JDI didn’t show that VIP’s parody
dog toy product would tarnish the marks it proved were famous—the Jack Daniel’s
name and overall trade dress (which seems to mean the bottle shape &
general colors, not the print components thereof).

Although this was a fact question, the court of appeals can “correct
errors of law, including . . . a finding of fact that is predicated on a
misunderstanding of the governing rule of law.” Bose Corp. v. Consumers Union
of U.S., Inc., 466 U.S. 485, 501 (1984).

The key error of law was to fail to disaggregate what JDI
owned into famous and non-famous matter. Fame requires a “household name.” But
the district court declined to “delineate between ‘Jack Daniel’s’ and ‘Old No.
7’ when finding that Jack Daniel’s trademarks are famous,” accepting JDI’s
argument that “[a]ll of VIP’s Bad Spaniels marks associate all of Jack Daniel’s
famous marks with poop, regardless of whether the marks themselves reference
poop.” This erroneously lowered JDI’s burden. “The TDRA does not permit
borrowing fame from one senior mark to establish the fame of another.” The
district court didn’t conduct any separate analysis as to “Old No. 7,” and the
record didn’t show that it was famous, so no tarnishment claim could rely on it.

The “Bad Spaniels” mark “does not itself refer to
defecation” and therefore was not facially tarnishing. The court then concluded
that dilution requires a “mark-to-mark” comparison, not a general comparison. “[C]ourts
may not consider senior marks that are not famous or junior marks that are
dissimilar when determining the likelihood of reputational harm to the senior
mark.” Given that, JDI’s other senior marks, including “Old No. 7,” were irrelevant.
As for  “43% POO BY VOL.” on the dog toy,
“that phrase does not mimic or reproduce any famous, similar mark. The
equivalent language on JDPI’s product, ‘40% ALC. BY VOL. (80 PROOF),’ is not a
mark.”

The question was whether either famous mark was “portrayed
in an unwholesome or unsavory context” that is likely to tarnish the reputation
of the famous marks. The district court reasoned that “‘Bad Spaniels’ creates a
negative association with Jack Daniel’s whiskey by associating whiskey with dog
feces and is likely to tarnish Jack Daniel’s trademarks,” even though “ ‘Bad
Spaniels’ as a trademark [for a chew toy] does not tarnish Jack Daniel’s.”

While “using a famous mark or a closely related depiction on
a product that is of poor quality or pornographic or illegal may be tarnishing
if the other requisites are met,” the proof here failed. JDI’s expert Dr.
Simonson testified that there would be tarnishment based on the “Associative
Network Model” supported by “numerous empirical studies.” But he didn’t conduct
any studies on Bad Spaniels specifically. He first asked “whether the allegedly
dilut[ing] product will bring or call to mind the allegedly diluted mark”; then
“whether it has affected the brand equity and brand association of the
allegedly diluted mark.”

Since the point of VIP’s product was to bring Jack Daniel’s
whiskey to mind, the key was the second step; Simonson testified that it was
satisfied by “conclusions that apply to all products and services regarding the
impact of adding a negative association onto the association of the existing
brand.” Specifically, “when food or beverage is associated with defecation,
disgust is generated in the consumer’s mind with respect to that food or
beverage.” Simonson acknowledged that “[n]o [consumer] would think that there’s
poo in the Jack Daniel’s product” but that VIP nevertheless “created a mental
association between Jack Daniel’s and poo, or Old No. 2, and therefore, for
those people exposed to this product, [VIP] diluted or more specifically,
tarnished the Jack Daniel’s whiskey.”

First, it was error to rely on “Old No. 2,” which wasn’t famous.
Second, even including that reference, the testimony didn’t establish a harmful
association between any such reference and JDPI’s two famous marks—“Jack
Daniel’s” and its registered trade dress. Although Simonson opined that “it
really doesn’t matter whether” poop-themed references are made “on this thing
that looks very much like a Jack Daniel’s bottle, or any other product that
creates an association between Jack Daniel’s and defecation,” but Bad Spaniels was
“a parodic dog toy not intended for human consumption. There is no evidence in
the record from which a court could reasonably infer that scatological
references made on a dog toy have the same likelihood of generating disgust as
identical references on a consumable product meant for humans might.  Dr. Simonson’s opinion to the contrary is
pure conjecture.” There was no evidence that recognizing a negative message on
one parody product would harm the reputation of the referenced product. Simonson’s
reliance on the ANM “ignores that Bad Spaniels is an obvious parody. “ “[P]arody
is a relevant factor in evaluating likelihood of dilution,” even if not dispositive
(citing Haute Diggity Dog, Deere, and Hormel v. Jim Henson
Prods. as well as the Timmy Holedigger case cited by the Supreme Court in JDI
and Jordache v. Hogg Wyld).

The parody’s dual message impacts the dilution analysis
because, “where a parody is successful and ‘not particularly subtle,’ it is a
common-sense conclusion that consumers are more ‘likely to see [it] as the joke
it was intended to be.’” It was error to disregard the parody in the context of
tarnishment. “Dr. Simonson’s analysis ignored the effect of a ‘humorous
difference’ on whether Bad Spaniels harms the reputation of JDPI’s famous marks”
(emphasis added).  Although survey or expert
testimony isn’t required, JDI here rested its case on expert testimony, which
was insufficient here.

from Blogger https://tushnet.blogspot.com/2026/08/not-with-bang-but-with-whimper-of.html

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