Fiskars can’t cut down $1.4 million disgorgement award

Posted on November 10, 2025 by rtushnet

Fiskars Finland OY AB v. Woodland Tools Inc., 2025 WL
3124111, No. 22-cv-540-jdp (W.D. Wisc. Nov. 7, 2025)

Previously
in this false advertising case the court sent to a jury part of Woodland’s
claim against Fiskars for false advertising, based on Fiskars’s statements
about the cutting power of its tools, and some of its statements that certain
products were designed in the United States. The jury sided with Woodland and
the court ordered disgorgement of about $1.4 million of Fiskars’s profits.
Here, the court denies JMOL to Fiskars as well as Woodland’s requests for
attorneys’ fees and prejudgment interest.

Fiskars argued that Woodland showed no evidence of harm,
such as diverted sales. There was no evidence of any specific lost sale, but
Woodland wasn’t required to present such evidence to get the equitable remedies
of injunction and disgorgement, only a likelihood of future injury. “The
likelihood of future injury is readily shown when the parties are direct
competitors and the false statement implicates the plaintiff’s product.” Here,
the evidence showed that the parties’ tools appearing side-by-side on the
shelves of some retailers. And 14.5% of Woodland’s survey respondents construed
Fiskars’s “3X More Power” claim to be a comparison to competitive products,
while Fiskar’s own expert testified that 43.9% of survey respondents considered
Fiskars’ cutting power claims in making their purchases. A reasonable jury
could find likely future harm.

As for the design origin claims, they were unambiguously
false. One of Fiskars’s witnesses testified that the design origin claims
didn’t resonate with consumers. But they were at least implicitly comparative,
and Fiskar’s survey found that 37.1% of survey respondents considered the
design origin claim in making their purchase of Fiskars tools. A reasonable
jury could also find likely future harm here.

Fiskars argued that the quantified cutting power claims weren’t
actionable statements of fact because they had no ascertainable meaning. Even
if this argument weren’t waived, the verdict was supported by substantial
evidence. A claim that Fiskars’s cutting tools were “powerful” might be
unquantifiable puffery, but “more power” implies a comparison with something
else. “That comparison could be tested and confirmed or disproven, even if the
claim is ambiguous because the object of the comparison isn’t stated.” “More
power” wasn’t “a completely vacuous or inherently subjective claim like ‘better,’
or even the resolutely ambiguous ‘local.’” And adding the quantifier “3X more
power” “suggests an even more specific comparison that has somehow been
measured or calculated.” People didn’t have to know exactly how to believe it.

The survey evidence “showed that a substantial number of
respondents took the cutting power claims to mean three times more power in
comparison to competitive products.” But this wasn’t true. Fiskars’ evidence
showed that the original comparison was between Fiskars’s mechanically
advantaged tools and single-pivot tools. Although the claim was ambiguous, a
significant number of prospective purchases interpreted the cutting power
claims to be a reference to competitive products, and that interpretation was
false.

 

Fiskars argued that Woodlands didn’t test enough different
products to show that the claims were false as to all. But given the origin of
the claim in a comparison with single-pivot tools, there was no reason to think
that Fiskars could support the claim that its tools were better than
mechanically advantaged tools. (This is perhaps an understandable instance of
burden-shifting, at least with respect to the burden of production, or an
adoption of the Third Circuit rule that making a claim that you have literally
no reason to think is true constitutes falsity.)

Materiality: Although one Fiskars witness testified that
neither the cutting power claims nor the design origin claims resonated with
consumers, there was “ample testimony” that Fiskars invested a lot in touting
its cutting power claims. A retailer requested “aisle violators” promoting the
3X claims, suggesting that it regarded the cutting power claims as important.
Woodland employees, who used to be Fiskars employees, testified about the
importance of the claims; the jury could have found them to be biased, but it
didn’t have to. And Fiskar’s survey could also be used to show materiality: 43.9%
and 37.1% were “alone” enough to suggest materiality.

Fiskars’ survey also asked respondents what factors were
important to the purchasing decision, asking them to allocate 100 points among
them. Cutting power scored an average of 7.7 points; design origin scored an
average of 5.5 points. Fiskars argued that these scores were too low to find
materiality, but “manufacturer or brand name” was the factor ranked third
highest among the nine options, and it only scored an average of only 10.1. Although
other factors accounted for an average of 86.8 points, the expert didn’t
testify that cutting power or design origin were irrelevant, and the jury could
weigh the survey in Woodland’s favor.

Still, this wasn’t an exceptional case, just a thoroughly
litigated one; no fees (or prejudgment interest). On the patent claims,
Woodland argued that Fiskars made little effort to investigate its claims and
brought this case as an illegitimate effort to quash legitimate competition,
promising to go after Woodland Tools with “scorched earth” tactics using the
world’s largest law firm. “The case had a David and Goliath feel to it, due
mainly to the relative size of the parties. And there’s no doubt that Fiskars
pursued the case aggressively.”

Still, the court found Fiskars’s outrage “understandable”
because Woodland Tools was founded by former Fiskars employees, and there was
some evidence that “some of those employees were laying the groundwork for the
new competitor while they were still working for Fiskars. Some of the employees
left with Fiskars work product and software code.” Although Woodland prevailed
on these claims at summary judgment, “that doesn’t mean that the actions of
Woodland Tools employees were unimpeachable, or that Fiskars pursued legal
action out of pure spite. Part of Fiskars’s goal was to impede competition from
Woodland Tools, but that’s an ordinary and lawful purpose of litigation over
trade secrets and intellectual property.”

The court didn’t award Lanham Act fees because it assessed
reasonableness in the overall context of this case, which featured multiple
claims.  Woodland’s “success in showing
willful false advertising based on the 12 cutting power claims and one of the
design origin claims [was] a small part of a much larger case.” And, though
Fiskar’s false advertising was willful, it wasn’t particularly egregious. The
cutting power claims weren’t literally false, and only a minority of survey
respondents interpreted them as a comparison to competing products or found
them material. Nor was Fiskars’s litigation conduct exceptional.

Prejudgment interest: Under the Lanham Act, there is a
presumption that “victims of violations of federal law” are awarded prejudgment
interest, but the decision is ultimately committed to the discretion of the
court. The court would have awarded prejudgment interest for damages reflecting
the time value of the money, but not for disgorgement in the absence of actual
damages. Prejudgment interest would be a penalty, not compensation.

from Blogger http://tushnet.blogspot.com/2025/11/fiskars-cant-cut-down-14-million.html

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Star Wars mod wars: claims over a touted but unreleased mod have to go to trial

Posted on November 5, 2025 by rtushnet

Mickelonis v. Aspyr Media, No. 8:23-cv-01220-MWC-ADS, 2025
WL 3050071 (C.D. Cal. Oct. 2, 2025)

Interesting video game related dispute: Aspyr develops video
games, including by recreating and re-releasing historic games on modern
platforms like Steam and Nintendo Switch. Aspyr has a longstanding relationship
with Lucasfilm to release historic Star Wars games, including Knight of the Old
Republic II: The Sith Lords (KOTOR II). Players adopt the personal of a Star
Wars character and guide that player through a storyline.

Many games allow players to add their own content, including
maps, designs, and other features. Gameplayers also release new, unofficial
content, called “mods” or “downloadable content.” “The game studios that
release these games are not the designers of these mods, and the mods often
have gameplay or other issues.” Years after KOTOR II’s 2004 release on Xbox, a
group of modders discovered previously unreleased code in the game itself and
created the mod at issue here; the group included programmers, fans who
supplied new voice-overs, and others. Aspyr characterized the mod as involving
“a few new characters and an alternate ending,” while plaintiffs argued that
the mod had “a significant amount of unreleased and unfinished content,” which
the modders “unlock[ed], fill[ed] out, debug[ged], and complete[d] … ,” including
“expanded locations, new dialogue and voices, new character interactions, and
even a new planet.”

Aspyr re-released KOTOR II for Steam, Nintendo Switch, Xbox,
and others in 2017. When re-releasing KOTOR II for Steam, Aspyr negotiated with
the developers of the Mod for them to release the Mod at the same time; the Mod
would be free on Steam, just as it had been when the developers released it in
the early 2000s. Aspyr also contacted the modders, who signed a formal release
on behalf of the developer group, for free release on the Switch. The parties
disagree on what happened next.

Aspyr’s Star Wars games historically cost between $9 and $15
to consumers. As for marketing,

 Many of KOTOR II’s users are drawn to the game
because of Star Wars, rather than a general interest in video games. Accordingly,
when marketing to those consumers, Defendant focused on emphasizing the Star
Wars theme and the Lucasfilm logo. Other users were more focused on KOTOR II’s
game type—a first-person, choose-your-own-adventure story, and the bulk of
Defendant’s advertising focused on these users. That advertising included a
YouTube video showing actual gameplay and describing the game’s story.

One of its YouTube videos had, in the final four seconds, an
announcement reading “Coming Soon: Restored Content DLC.” Nintendo posted the
same trailer on its e-shop for KOTOR II where consumers would purchase the
game. Aspyr tweeted about the Mod and referred to it publicly multiple times. It
released a version of KOTOR II for Nintendo Switch while the release of the Mod
was still pending. And then, as the existence of this litigation signals, it
didn’t release the Mod, apparently because Lucasfilm got cold feet/wanted
releases from people who weren’t findable. During the attempt to reach agreement,
a higher-up told people that “all marketing activity should be paused,” but the
marketing team did not remove several ads, including the YouTube video
announcing the release and various tweets.

Thus, in June 2023, Aspyr announced that it couldn’t release
the Mod and offered a free game to maintain customer loyalty. It sold 160,000
copies of KOTOR II worldwide.

Plaintiffs provided evidence that some consumers were
motivated by the Mod, e.g., “They knew no one would buy it without the [Mod]”
and “Restored Content DLC? That’s really good, more than what I expected…
Serious?! Even the current Xbox version doesn’t have it. I might need to buy
it… If that’s true it’s a must buy to me,” and then “Fuck Aspyr for not
offering us refunds and for straight up bait and switching us (which is illegal
by the way)” and “Free game key. How about a refund guys. This was one of the
key selling points of the port, a lot of people only bought it because they
expected the [Mod].”

Plaintiffs submitted expert reports indicating that economic
damages could be readily determined and that the Mod was likely material. Aspyr
provided countervailing expert reports contesting these points. Hal Poret surveyed
over 300 individuals who played KOTOR II for Nintendo Switch and found that
96.3% of respondents stated that they were satisfied with the overall purchase,
while 1.7% said that they were dissatisfied, and that “[w]hen asked for all the
reasons that come to mind for why respondents were satisfied or dissatisfied
with their purchase of the game, 0.7% of respondents (2 out of 300) mentioned
anything having to do with restored DLC.” Asking people about satisfaction with
something they’ve paid for runs into significant problems of post-purchase rationalization;
plaintiffs’ expert also argued that the survey “suffer[ed] from a severe
validity issue, that is, it failed to measure what is supposed to
measure—material impact of the ‘deceptive’ and ‘false’ advertising message
about the Restored Content DLC upon relevant consumer’s intention to purchase KOTOR
II,” with “an invalid measurement of materiality, an incorrect definition of
universe and a major leading question.”

Although the court denied class certification under the laws
of a number of states, the case continued.  

The court declined to grant Aspyr summary judgment on
materiality, since a reasonable jury could reject Poret’s study. Aspyr argued
that the plaintiffs were a weird, small segment of the buying public, not
reasonable consumers, but plaintiffs’ own testimony plus the online comments
would let a reasonable jury decide otherwise. The court noted that, “[i]n
determining whether a statement is materially misleading under California law,
the primary evidence … is the advertising itself.” “Given that the last image
that anyone viewing the announcement YouTube video saw were the words ‘Coming
Soon: Restored Content DLC,’ and that [redacted] [ed. note: argh!], a
reasonable jury viewing the advertisement could also find materiality based on
its contents.” Although “materiality depends on the perspective of the
consumer, not the perspective of the defendant,” the advertising itself was
evidence.

Standing: Aspyr argued that, because the plaintiffs couldn’t
prove that the Mod had any economic value, they lacked standing. Again, this
was a contested material issue.

Injunctive relief: Aspyr argued that it had ceased marketing
the Mod, but plaintiffs pointed to persisting online traces claiming that the DLC
was “coming soon” on “affiliate platforms that it controls, including IGN and
Gamespot.” The evidence that Aspyr controlled these sources was “limited,” but
Aspyr provided no counterevidence and thus couldn’t get summary judgment.

Aspyr then argued that it lacked the requisite knowledge
until March 2023, when Lucasfilm told it that Lucasfilm wouldn’t approve the
release. It argued that the laws of California, Oregon, South Carolina, and
Colorado required knowledge of the deception, or at least negligence (for
California). For claims seeking injunctive relief under the California UCL, the
court found knowledge unnecessary, while the CLRA does require knowledge (for
damages). There was a genuine dispute of material fact about Aspyr’s knowledge.
There was evidence that, when it started advertising, Aspyr lacked approval,
and “Coming Soon” could confuse the public into believing that the game would
certainly have a DLC, “when there remained a distinct possibility that the DLC
would never receive approval.” A reasonable jury could conclude that the ad was
knowingly false.

Oregon: “[D]efendant[’s] representations violated the
[Oregon] UTPA only if, at the time that they were made, defendant[ ] knew or
should have known that [its] services did not have the qualities defendant[ ]
represented them to have.” There was also a genuine dispute here.

South Carolina:  The
plaintiff from this state alleged that he bought the game before it was available
for purchase, so the claim failed regardless of the legal standard around knowledge.

Colorado: “[a] CCPA claim will only lie if the plaintiff can
show the defendant knowingly engaged in a deceptive trade practice.” Thus,
Colorado’s consumer protection law “provides an absolute defense to a
misrepresentation caused by negligence or honest mistake,” meaning that
liability “is dependent upon knowledge or intent existing at the time of the
advertising conduct and the remediable damage that results from that conduct.” Still,
there was a genuine dispute of material fact.

Reliance: Plaintiffs’ declarations that they saw the
marketing materials sufficed to create a genuine dispute of material fact.

Texas: Plaintiffs failed to give the required notice under
Texas consumer protection law before suing.

The court also denied plaintiffs’ motion for partial summary
judgment on falsity. “Viewing the evidence in the light most favorable to
Defendant, Plaintiffs have not offered sufficient evidence to show that they
were reasonable consumers rather than consumers with specialized knowledge.” And
they didn’t satisfy their burden to prove that the statements were false when
made; a reasonable jury could find that “Coming Soon” wasn’t false “based on
the progress that had already been made in obtaining approvals to release the
DLC, including its receipt of approval from the ‘Mod leaders.’”

from Blogger http://tushnet.blogspot.com/2025/11/star-wars-mod-wars-claims-over-touted.html

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Reading list: consumer protection and the industries who regularly sue their regulators

Posted on November 5, 2025 by rtushnet

Nicholas R. Parrillo, Administrative Law as a Choice of Business Strategy: Comparing the Industries Who Have Routinely Sued Their Regulators with the Industries Who Rarely Have

George Washington Law Review, Vol. 93, No. 5, pp. 1031-1195 (2025) 
Abstract:

For some large and powerful industries, it has long been normal and
even routine for businesses to sue their federal regulator. For other
large and powerful industries, it has been rare for the last twenty-five
to forty years or more. This variation is enormous yet almost entirely
unknown to the literature on administrative law.

This Article
documents and analyzes this variation in one type of federal regulation:
public health and safety. For every major federal health-and-safety
regulator, I search dockets to identify every judicial challenge to the
agency’s actions brought by the agency’s principal regulated
industry—whether by individual companies therein or by trade
associations—during the period from 2013 to 2021 and, for several of the
agency-industry pairings, for additional time periods extending as far
back as the 1980s and as recent as 2024. The pairings covered are the
following: the Food Safety and Inspection Service at the U.S. Department
of Agriculture and meat and poultry processors; the Food and Drug
Administration and drugmakers; the National Highway Traffic Safety
Administration and automakers; the Federal Aviation Administration and
airlines; the Consumer Product Safety Commission and children’s product
companies; the Nuclear Regulatory Commission and nuclear plant
operators; the Occupational Safety and Health Administration and
employers generally; the Mine Safety and Health Administration and coal
mines; the Environmental Protection Agency and power companies; the
Federal Motor Carrier Safety Administration and for-hire trucking
companies; and the Centers for Medicare and Medicaid Services and
hospitals and nursing homes. For each pairing, I use the data on
judicial challenges as the starting point for a qualitative discussion
of how big or small a role litigation plays in agency-industry
interaction.

I find that industry judicial challenges tend to be
few and marginal when two conditions are met. The first condition is
that companies in the industry have a thick relationship with the
regulator—that is, each company knows the regulator will be making
repeat decisions impacting its business into the indefinite future, so
each company has a stake in winning the agency’s trust and goodwill. The
second condition is that, with regard to the agency action at issue,
industry economic interests are aligned with the mission of the
regulator. This is especially the case for agency action that has the
official purpose of protecting the health and safety of the industry’s
own consumers, as opposed to protecting industry workers or victims of
externalities of industry conduct. In protection of consumer health and
safety, the industry and the regulator are more likely to view each
other as on the “same team,” and industry tends to (1) see the regulator
as a source of credible guarantees that help attract business, (2) fear
the “bad look” with consumers that conflict with the regulator could
cause, and (3) seek influence and leverage over the agency by less open
and adversary means than litigation. 

from Blogger http://tushnet.blogspot.com/2025/11/reading-list-consumer-protection-and.html

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claims about game provider’s bot use in “fair” and “skill-based” games must go to trial

Posted on October 30, 2025 by rtushnet

Skillz Platform Inc. v. Papaya
Gaming, Ltd., 2025 WL 3012836, 24cv1646(DLC) (S.D.N.Y. Oct. 27, 2025)

Most recent previous opinion discussed here.
Skillz sued its competitor in the “real-money skill-based mobile gaming” market
for violating the Lanham Act and NY GBL § 349 by stating or implying that its
games pit human players against each other when in fact Papaya employed bots
against human players. Here, the court denies summary judgment to Papaya.

“In RMSB games,
players are matched by the platform with other users on games created by third
parties and compete to win cash prizes or for game rewards.” Skillz most
commonly offers head-to-head competition between two players, while Papaya
offers multi-player tournaments with larger cash prizes. In various ads, Papaya
has described its games as “fair” and “skill-based,” represented that Papaya
has “no vested interest” in and does not “profit” from who wins or loses its
tournaments, and refers to “players” “over the age of 18,” “individuals,” and
“winners” as the users on its platform. Its video ads showed images of humans
playing games, and claimed that its games “are directly determined by your
level of skill” and that Papaya will “match [you] against players with similar
skills.”

It was undisputed
that Papaya used bots in its games from 2019 until at least November 2023. Its
liquidity bots filled in user slots to ensure that a tournament “won’t stay
open for too long” as it awaits players. Its tailored bots were used to create
“a predetermined outcome” where Papaya “want[s] the player to finish at some
predefined rank,” which requires “control[ling] the scores of the rest of the
players.” All players in a tailored-instance outside the ‘receiving’ player”
are bots. “Papaya customers inquired between 2021 and 2023 whether they were
playing against other human beings or against a computer or a bot. Papaya’s
responses generally emphasized that it matched players with similar skill
levels and assured the complaining customers over 200 times that ‘we do not use
bots.’” Papaya even closed the accounts of two players who expressed suspicion
about Papaya’s use of bots.

Papaya regularly
identified Skillz as its largest direct competitor and benchmark for
performance assessments. During Papaya’s bot era, Skillz saw a decrease in
market share while Papaya saw an increase.

Papaya argued that Skillz
lacked sufficient evidence that any of its advertising statements communicated
a false message to consumers, were material, or caused Skillz injury. The court
disagreed.

A reasonable jury
could find literal falsity or falsity by necessary implication, leading to a
presumption of deception. Papaya’s representations that its tournaments are
“fair,” “skill-based,” and only between “players” and “individuals” who are
“over the age of 18” could be false based on the undisputed evidence of bot
use. Similarly, statements that Papaya has “no vested interest” in who wins or
loses, and that it does not “profit on the outcome of a Tournament,” could be literally
false because there is evidence that Papaya used bots to control the outcomes
of tournaments (and speed them up so players could use their winnings on new
games). [Frankly, I’d be inclined to grant summary judgment to Skillz on
falsity!]

Papaya argued that it
never expressly stated in its advertisements that there were no bots in its
games. “The issue is what a reasonable consumer would understand Papaya’s
statements to mean. Should a jury find, for instance, that the advertising
necessarily and unambiguously implied that only human players competed in
Papaya’s games, it would be entitled to find that the advertising was literally
false.”

Papaya argued that
“skill-based,” “fair,” “players,” and “individuals” were not literally false
because those terms had multiple meanings. [Insert goose meme: what meanings?
What ones???]. The jury could find that, in context, they were literally false
or false by necessary implication. Papaya’s expert concluded that skill played
a greater role than chance in the outcome of Papaya’s tournaments, regardless
of bot usage. So what? It was undisputed that Papaya used tailored bots to
control the outcomes of tournaments. Papaya “could prevent players from winning–or
allow them to win–no matter how they performed in the game.”

Papaya also argued
that its statements that it had “no vested interest” in and did not “profit” on
tournament outcomes were accurate, because Papaya made less money in sessions
with bots because bots do not pay entry fees. Its experts opined that human
players received more in total cash prize awards due to Papaya’s use of bots. That
was a jury question. [Seems pretty inconsistent with the profit motive—did
human players walk away with more money total because of bots, or did they play
more games/stay longer?]

Implied falsity: This
can be shown through either “extrinsic evidence of consumer confusion” or
“evidence of the defendant’s deliberate deception,” the latter of which must be
“egregious” to “create[] a rebuttable presumption of consumer confusion.”

There was
sufficient evidence for a reasonable jury to find deliberate deception, given
Papaya’s repeated denials of bots’ existence. E.g., when one player asked, “Is
every single player I play against in a tournament a real player or are there
computers playing at times?”, Papaya responded, to “clarify that we do not use
bots or computer players” and that “if it were possible to control [tournaments]
manually, it would not be fair to other players.” Papaya CSRs were instructed
to escalate any complaints that referenced bots to management, and one employee
stated that a customer service representative “displayed poor judgment” by
keeping open an account of a consumer who had complained about bots and
demanded a refund. Papaya had an internal policy of removing posts in its
Facebook group that mentioned bots.

Papaya argued that
there should be no presumption of deception because Skillz failed to provide
evidence that any intent to deceive was linked to a specific challenged
statement. But internal statements by executives and the company’s awareness of
consumer confusion, among other things, are relevant to intent. Here, there was
evidence that Papaya and its executives recognized that its use of bots “did
not align” with its public statements and that this “misalignment” confused
customers.

Indeed, executives
decided to respond to a consumer who asked for a direct answer on whether
Papaya used bots by informing the user that the platform has “real players” and
placing the blame on “rare cases where players use automated systems.”
Recognizing that consumers noticing bots on the platform was a growing issue
and impacted “trust in our fairness,” Papaya executives modified its bots’
performance to make bot profiles appear more human so that fewer users would
detect their usage going forward. Another employee stated: “While understanding
the need for bots, the margin of their winnings should be smaller and less
obvious to our players.” A reasonable jury could find intentional deception,
despite the testimony of Papaya’s Rule 30(b)(6) witness, who stated that
instances in which Papaya told customers that it did not use bots were “an
unfortunate mistake” committed by the customer support vendor and “not Papaya’s
position.” The court noted that “Papaya’s executives have not made similar
representations. They invoked their Fifth Amendment privilege to remain silent
during their depositions and have not offered affidavits in support of this
motion.” [Yikes.] Regardless, there was enough to go to a jury.

Skillz also offered
extrinsic evidence of consumer confusion created by Papaya’s use of the terms
“skill-based,” “fair,” “players,” “winners,” “individuals,” and “no vested
interest,” in its advertising. Along with individual consumer responses, Skillz
provided survey evidence.

Respondents had
played at least one of four games that Skillz and Papaya offer on their
platforms. Upon watching a Papaya ad, 45.8% of respondents indicated that they
believed that the game used solely human players. The survey next presented
respondents with a mock app store description constructed from Papaya’s public
statements:

Solitaire
cash makes sure to match players against other opponents with a similar skill
level to ensure a fun and fair experience for everyone. You’ll be matched with
other players within the same skill level, and you will get the same deck – so
the game is totally fair and skill-based. The outcome of Solitaire cash is
based on the skill of the players, rather than luck or chance. Solitaire cash
has no vested interest in who wins or loses, nor does it profit on the outcome
of a tournament that we provide.

After reading the
description, 60% of respondents indicated that they thought the game included
only human players.

Papaya argued that
the survey was inadmissible because it did not use a control, stripped the
statements to which respondents reacted of their “real world” context, and did
not survey the appropriate populations, excluding prospective game players and
thereby including too many men. These were issues for cross-examination, not
demanding exclusion.

Papaya didn’t
explain what kind of control could have improved the survey’s reliability.
[This is a missed opportunity! A control ad could have just described the game
mechanics and not the opponents and tested whether consumers thought they’d
received any message about whether they were playing against other humans. I
wouldn’t be at all surprised if the net confusion levels were still pretty
high, given the explicit claims. Still, the court didn’t appear to understand
the purpose of a control: “The survey is designed to test the impression
created by the words Papaya chose to describe its games. Testing responses to
statements that Papaya did not use in its advertising would be neither relevant
nor illuminating.”]

Papaya also argued
that the survey wrongly screened for past players of RMSB games, not
prospective consumers to whom the ads were directed towards, who differed
demographically. Skillz’ expert filed a supplemental report looking at what
happened when he removed randomly selected male respondents to match the ratio
of male to female respondents in Skillz’s own survey of Skillz’s actual
customers. The differences were, he reported, statistically insignificant.

Materiality: While
the materiality of the falsity and the injury to the plaintiff resulting from
the defendant’s falsity are “separate essential elements … where the
defendant and plaintiff are competitors in the same market and the falsity of
the defendant’s advertising is likely to lead consumers to prefer the
defendant’s product over the plaintiff’s,” proof of injury to the plaintiff may
also demonstrate the materiality of the falsehoods.

Skillz relied on
evidence that consumers complained to Papaya and closed their accounts with
Papaya when they came to believe that Papaya was using bots in its games, as
well as on Papaya’s efforts to deceive consumers about its use of bots. It also
offered a second survey that sought to measure the likelihood of consumers
continuing to play if they learned that some of their opponents in real-money
games whom they thought were human were actually bots.

Half
the respondents were randomly asked if they would “continue” to play if they
were informed that some of their opponents were bots, and the other half were
asked if they would “stop” playing. Of the former group, 51.2% of respondents
indicated they would be unlikely or very unlikely to continue playing. Of the
latter, 66.8% indicated they would be likely or very likely to stop playing.

[It seems to me
that with less evidence of deception, that amount of a swing (over 15% of
respondents) from a small wording change would be concerning—but frankly, even
if you take 51.2% as a midpoint and say that it might reflect only a range from
35%-66% materiality, those are big enough numbers that it shouldn’t matter.
Which is also to say that I’m not sure that you should draw anything but
qualitative conclusions from surveys like this. Also:]

The survey had a control: half the
respondents were also asked if they would continue playing – with the other
half being asked if they would stop – if they were informed that they had to
wait one hour to learn the results of the game. Here, the numbers were 40.8% (unlikely
or very unlikely to continue playing) and 54.8% (likely or very likely to stop
playing), suggesting that the wording affected about 15% of respondents, which
with these numbers didn’t matter much. “At bottom, regardless of how the question
was phrased, a significant number of respondents showed a propensity to cease
playing when they learned there were bots in the games.”

Papaya argued that the survey didn’t measure the materiality
of bots, but rather the materiality of learning of intentional deception. That
went to the weight of the survey, not its admissibility. [Especially if there
was intentional deception!]

Papaya also argued that bots are so ubiquitous in the
industry that consumers “fully expect” them to be deployed, and that its
failure to disclose was in line with industry practice. “These arguments fail
to engage with the evidence of deception and materiality offered by Skillz.”

Injury: Injury “can be established when defendant and
plaintiff are competitors in a relevant market and plaintiff demonstrates a
logical causal connection between the alleged false advertising and its own
sales position.” Papaya regularly identified Skillz as its largest competitor
and benchmark for performance assessments, and Papaya’s growth in market share
in 2021 coincided with Skillz’s decline in market share. “Even if Skillz were
unable to quantify its damages with sufficient certainty to recover those
damages, it could seek injunctive relief and disgorgement of the defendant’s
ill-gotten profits.” And Skillz offered an expert to calculate both damages to
Skillz and Papaya’s unjust enrichment, the latter of which was between $650 and
$719 million, depending on whether that profit was measured by Papaya’s cost
savings from its use of bots or by how much less it would have earned without
deception. That report was admissible and relevant.

Papaya argued that “the but-for world in a false advertising
case must be one in which the false statements were never made and cannot be
one in which the accused business practice did not occur.” But the expert’s
choice was not unreasonable. “There is evidence that Papaya may not have been
able to operate in the RMSB marketplace at all if it publicly and accurately
disclosed its use of bots.” If it did so, it might have been classified as a
gambling platform by app stores—unlike RMSB platforms, gambling platforms hold
a stake in the results. RMSB games don’t involve “playing against the house”
and are supposed to collect the same revenue regardless of who wins, whether
from entry fees, advertising revenue, or in-app purchases. “[H]ad Papaya disclosed
its use of bots, Papaya may have been faced with the regulatory and tax
requirements with which gambling platforms must comply. In addition, it may
have lost access to app stores and payment processors and have been excluded
from the RMSB market.”

GBL claims survived for the same reasons.

from Blogger http://tushnet.blogspot.com/2025/10/claims-about-game-providers-bot-use-in.html

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bad Lanham Act claim, swept up with bad patent claim, triggers Rule 11 sanctions

Posted on October 30, 2025 by rtushnet

Raydiant Oximetry, Inc. v. ALC Medical Holdings LLC, —
F.Supp.3d —-, 2025 WL 3022882, No. 25-cv-00392-VC (N.D. Cal. Oct. 29, 2025)

Baseless patent and false advertising claims produce a big
Rule 11 award. The patent stuff is eye-popping, and it’s hard to imagine that
Rule 11 would have been appropriate just for the false advertising claim, which
was baseless only because the challenged statements didn’t occur in “commercial
advertising and promotion”/weren’t part of an organized campaign to penetrate
the market. But still—a warning!

I’ll let the court introduce the facts:

This dispute began when ALC Medical
Holdings sent Raydiant Oximetry a demand letter alleging that Raydiant’s
medical device [a uterine device used to treat postpartum hemorrhaging] infringed
ALC Medical’s patent. This accusation was false. Raydiant’s device has a
“placement marker” that is permanently affixed, while the device claimed in ALC
Medical’s patent requires an adjustable placement marker. In fact, the Patent
and Trademark Office declined to approve the patent application until it was
narrowed to require that the placement marker be adjustable.

Unfortunately, patent plaintiffs
send baseless demand letters to defendants with some regularity. But this was
no ordinary fishing expedition. To the contrary, all evidence available to ALC
Medical and its lawyers at the time they sent the letter pointed strongly
towards noninfringement. The sole founder of ALC Medical, Jennifer West, used
to work at Raydiant. She helped develop Raydiant’s device and knew that it did
not have a moveable placement marker. There was a reason for this design
choice: Raydiant concluded that if the device’s placement marker were moveable,
it would be dangerous to the patients who use it. Presumably for the same
reason, the device West developed after she left Raydiant does not contain a
moveable placement marker, even though her company’s patent requires one.

Thus, when Raydiant brought an
action in this Court seeking a declaratory judgment of noninfringement, ALC
Medical and its lawyers should have apologized and walked away.… Instead, they
doubled down. They brought counterclaims against Raydiant, including one for
infringement, asserting again that Raydiant’s device possessed a moveable
placement marker. They also falsely alleged that West’s own device practiced
the invention—that is, that her device had a moveable placement marker.

In support of the infringement
counterclaim, ALC Medical and its lawyers submitted several diagrams depicting
Raydiant’s device. On each diagram, they cited the YouTube video of a
presentation Raydiant gave at an industry conference, indicating that the diagrams
originated from the slide deck used in that presentation. But that was not
entirely true. The lawyers manipulated one of the diagrams, superimposing
dotted lines to make it seem like Raydiant’s device had a moveable placement
marker. Nothing in Raydiant’s actual slide deck or the video of the
presentation suggested that was the case.

Subsequently, Raydiant allowed ALC
Medical and its lawyers to inspect the device. The inspection confirmed what
all the evidence had previously suggested: the placement marker was not
moveable…. ALC Medical and its lawyers … embarked on a ham-fisted scramble to
avoid liability for Raydiant’s attorneys’ fees. First, they refused to dismiss
their infringement counterclaim (or their equally frivolous false advertising
counterclaim) unless Raydiant also agreed to dismiss its declaratory judgment
action, with each side to bear its own fees and costs. Naturally, Raydiant
refused. Then, ALC Medical and its lawyers filed a frivolous motion to dismiss
Raydiant’s declaratory relief action for lack of jurisdiction, claiming falsely
that Raydiant’s device was an “investigational device” immune from infringement
claims. Later, they cobbled together a covenant not to sue that they argued
mooted Raydiant’s declaratory relief claim, even though it clearly did not. At
each step of the way, the position taken by ALC Medical and its lawyers became
increasingly disconnected from the reality of the situation ….

Raydiant was awarded over $1.4 million in attorneys’ fees,
with ALC Medical and its law firm Womble Bond jointly and severally liable.

The false advertising counterclaim was based on Raydiant’s
presentation of its device at the Stanford Medicine Pediatric & Maternal
Innovation Showcase, a pitch competition. Sanctions are warranted under Rule 11
if “(1) ‘the [challenged pleading, written motion, or other paper] is legally
or factually baseless from an objective perspective,’ and (2) the attorneys
failed to conduct ‘a reasonable and competent inquiry before signing and filing
[it].’ ” The court found that both counterclaims “easily [met] this test.”

Just a bit from the patent discussion: Womble Bond denied
bad faith in submitting the altered exhibit, asserting that the annotated
dashed lines were made with a different font and in red color to distinguish
the exhibit from the original slide. “This is difficult to swallow,
particularly because counsel only submitted a black and white copy of its
counterclaims to the Court, and the two fonts apparently used on [the exhibit]
are not easily distinguishable. If Womble Bond and ALC Medical had truly been
concerned about not misleading the Court, as opposed to disguising the
baselessness of the infringement counterclaim, they could have easily included
a disclaimer alongside the image clarifying that it had been annotated.”
Practice tip ahoy!  

The Lanham Act counterclaim alleged that Raydiant’s
discussion at the pitch session of its device’s being “cleared” or “approved”
by the FDA was misleading because the device is a Class II device exempt from
premarket notification requirements. “ALC Medical and its counsel knew or
should have known that the claim was objectively baseless under Ninth Circuit
law,” because only “commercial advertising or promotion” is actionable under 15
U.S.C. § 1125(a)(1)(B). This requires: (1) commercial speech; (2) made by a
defendant who is in competition with the plaintiff [note that this is not
necessary post-Lexmark]; (3) for the purpose of influencing consumers to
buy the defendant’s goods or services; and (4) “disseminated sufficiently to
the relevant purchasing public to constitute ‘advertising’ or ‘promotion’
within that industry.” A presentation at a one-off grant competition, “clearly”
does not constitute “commercial advertising or promotion” under that
definition. The court distinguished cases involving a press release and a
conference presentation whose slides were posted on the defendant’s website.
The pitch competition was more akin to “private statements made to actual and
potential customers” that were insufficient to constitute sufficient
dissemination. Thus, the counterclaim was “frivolous from the time it was filed.”

 

from Blogger http://tushnet.blogspot.com/2025/10/bad-lanham-act-claim-swept-up-with-bad.html

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allegedly false claims for compounded weight loss drugs didn’t plausibly threaten Eli Lilly’s reputation

Posted on October 28, 2025 by rtushnet

Eli Lilly & Co. v. Mochi Health Corp., 2025 WL 2998166,
No. 25-cv-03534-JSC (N.D. Cal. Oct. 24, 2025)

Another of the cases in which Eli Lilly’s attempts to
protect its GLP-antagonist market do surprisingly badly, once again
highlighting the higher standards imposed on false advertising plaintiffs
compared to trademark plaintiffs. Lilly sued defendants, alleging a scheme to
mislead consumers into purchasing compounded versions of Lilly’s FDA-approved
medications, Mounjaro and Zepbound, under California state and federal false
advertising law. Defendants compound tirzepatide, which is the key ingredient
in Lilly’s drugs.

Mochi allegedly changed the dosages for all its customers
without consulting them or receiving a clinical indication from a physician, in
violation of California’s prohibition on the corporate practice of medicine. In
addition, Lilly alleged that Mochi also included “additives” such as
niacinamide and pyridoxine, without patient consent or a clinical indication. Lilly
points to a complaint posted by a Mochi customer on the Better Business
Bureau’s website, indicating their dissatisfaction with the unilateral decision
to add niacinamide to the compounded medication; the complaint said that the
customer had broken out in a rash, which a dermatologist opined was caused by
the niacinamide. Mochi released statements in response to customer queries,
claiming that the additives were “not clinically significant” and changes were
dependent on the pharmacy used to fill the prescription. Lilly alleged that
this again violated the prohibition on the corporate practice of medicine.

As for false advertising, Mochi allegedly misrepresented the
source of its products by claiming that it is a generic of Lilly’s Mounjaro and
Zepbound; misrepresented its compounded tirzepatide medications as safe and
effective based on studies conducted of Lilly’s products; falsely claimed that
its compounded tirzepatide drug was “personalized”; falsely claimed that its
pharmacy partner voluntarily stopped compounding tirzepatide medications; and
falsely advertising Mochi’s founder and CEO as a licensed physician.

How did this allegedly harm Lilly? Lilly alleged that it
suffered irreparable harm to its brand and goodwill because Mochi promised
unobtainable results and traded on the credibility of Lilly products. The
complaint alleged:

When consumers fail to achieve
desired results from Mochi Health’s combination injection, consumers may
conclude that tirzepatide is ineffective in general— an outcome made more
likely given Defendants’ reliance on Lilly’s clinical studies and their explicit
claims that their product functions identically to Lilly’s products, with the
additives having no clinical significance. Worse still, if consumers are harmed
using compounded tirzepatide products from Defendants—where their dosage and
formulation are subject to repeated arbitrary changes based solely on
Defendants’ business relationships without any clinical justification—consumers
may even draw unwarranted conclusions about the safety and effectiveness of
Lilly’s FDA-approved tirzepatide medicines.

The court found no Article III standing. The only harm Lilly
alleged to itself was reputational: if Mochi’s products didn’t work, consumers
might conclude that Lilly’s products were also ineffective, and if they harmed
consumers, consumers might conclude that Lilly’s products were also harmful.

Lilly argued that, given its claim of reputational injury,
competition wasn’t required for proximate cause; it was enough to allege that
the defendant damages the product’s reputation “by, for example, equating it
with an inferior product.” But that still required Lilly to allege a factual
basis to support its conclusion that its reputation has been damaged by
comparison to an inferior product. The complaint didn’t do so; it didn’t allege
that Mochi’s compounded product failed to help consumers lose weight, nor did
it allege facts that plausibly support an inference of failure. “Lilly appears
to argue the mere fact a medication is compounded makes it an inferior version
of an FDA-approved product with the same active pharmaceutical ingredient. But
compounding is a federally recognized and regulated pharmaceutical practice ….”
As a result [this is a proximate cause “as a result,” not a but-for cause “as a
result”], “the existence of compounded tirzepatide medications does not, in
itself, plausibly support harm to the reputation of a tirzepatide manufacturer.”
More would be required for this theory: “facts supporting an inference that
Mochi Health’s compounded medication fails to meet consumer expectations about
tirzepatide.”

Similarly, Lilly didn’t plausibly allege that Mochi customers
were harmed by the compounded medications “such that they could draw
unwarranted conclusions about the safety and efficacy” of Mounjaro or Zepbound.
A “lone internet post by an unidentified individual” didn’t support a plausible
inference that Mochi customers could reasonably draw a negative inference about
Lilly’s product. There were no allegations that Health misled consumers into
thinking there was no niacinamide, pyridoxine, or glycine in the medication; “the
customer who allegedly complained of a rash knew of the niacinamide in the
product prior to using it, and remarked on how it was a new addition compared
to their previous prescription.” Thus, this allegation showed a customer who
understood the difference, which wouldn’t support an inference that Lilly could
be harmed.   

No Article III standing, no federal case.  

from Blogger http://tushnet.blogspot.com/2025/10/allegedly-false-claims-for-compounded.html

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Coinbase can’t force claim for injunctive relief into arbitration

Posted on October 24, 2025 by rtushnet

Khan v. Coinbase, Inc., 2025 WL 2985378, No. A172063, —
Cal.Rptr.3d —-, (Ct. App. Oct. 23, 2025)

The appellate court affirmed the denial of Coinbase’s
attempt to send Khan’s false advertising claims to arbitration, holding that
Khan sought public injunctive relief and that the arbitration agreement’s
attempted waiver of the right to seek public injunctive relief was invalid. It
rejected Coinbase’s argument that the relief sought was not for the “public”
because only people who signed up for a Coinbase account were exposed to the
targeted representations.

Coinbase is a digital currency exchange. Khan alleges that
Coinbase charges customers a “hidden” transaction fee, the spread fee. “For
example, when a customer seeks to make a purchase, the spread fee is not
displayed on any of the screens that the customer reviews when placing an
order. Nor is the spread fee included in the amount of the ‘Coinbase fee’ that
is displayed to consumers.” Instead, Coinbase quotes a market price for various
digital currencies, and after the customer indicates how much of a particular
currency he or she wants to purchase, the customer is shown an “Order Preview” with
a slightly higher price, either one or two percent. The only way for a customer
to discover that Coinbase is charging this added fee is if the customer clicks
a “tooltip” icon next to the word “Price.”

Coinbase allegedly designed its platform to take advantage
of less sophisticated customers by charging a spread fee only to consumers who
use Coinbase’s “default trading option,” and not imposing a spread fee on
customers who select the platform’s “Advanced” trading option. He brought UCL
and FAL claims.

Coinbase’s TOS include an arbitration clause with a “Waiver
of Class and Other Non-Individualized Relief.” It states that “only individual
relief is available,” and it precludes any customer or user from consolidating
his or her dispute with that of another customer or user. Additional language
expressly prohibits an arbitrator from awarding non-individualized relief:
“Subject to this Arbitration Agreement, the arbitrator may award declaratory or
injunctive relief only in favor of the individual party seeking relief and only
to the extent necessary to provide relief warranted by the party’s individual
claim.” And a severability clause provides that if the waiver is deemed
“unenforceable as to a particular claim or request for relief (such as a
request for public injunctive relief),” that claim or request for relief shall
be severed and litigated in court. All disputes relating to the purported
waiver of class or other non-individualized relief “shall be decided by a court
of competent jurisdiction and not by an arbitrator.”

The trial court found that the arbitration agreement
contained an impermissible waiver of the right to obtain public injunctive
relief, and that Khan was indeed asserting claims for public injunctive relief.
“[T]he injunctive relief sought is not limited to private parties or the
putative class and will benefit the public at large,” and the “nature of the
harm alleged” and “the statutory basis” for Khan’s claims showed that he was
seeking public injunctive relief. Thus, he could not be required to arbitrate.

The California Supreme Court has held that a provision in
the parties’ arbitration agreement that purported to waive the right to seek
public injunctive relief in any forum was invalid. Injunctive relief available
under California’s consumer protection statutes can be either public or private:
“public injunctive relief … is relief that has ‘the primary purpose and
effect of’ prohibiting unlawful acts that threaten future injury to the general
public”; by contrast, relief “that has the primary purpose or effect of
redressing or preventing injury to an individual plaintiff—or to a group of
individuals similarly situated to the plaintiff—does not constitute public
injunctive relief.”

Public injunctive relief is available to private plaintiffs
suing for violations of California’s consumer protection statutes,
notwithstanding amendments to those laws that require private plaintiffs to
have suffered individual injury. A private plaintiff who has suffered an injury
in fact due to a violation of the UCL or FAL is filing the lawsuit “on his or
her own behalf, not ‘on behalf of the general public,’ ” even if one of the
remedies sought is injunctive relief, “ ‘the primary purpose and effect of’
which is ‘to prohibit and enjoin conduct that is injurious to the general
public.’ ”

The waiver of public injunctive relief was invalid under
Cal. Civil Code section 3153, which provides: “Any one may waive the advantage
of a law intended solely for their benefit. But a law established for a public
reason cannot be contravened by a private agreement.” Waiver of a statutory
right is permissible only if the “ ‘statute’s “public benefit … is merely
incidental to [its] primary purpose,” ’ ” and “ ‘ “any public purpose” ’ ”
would not be seriously compromised by the waiver. This is not true of waiver of
public injunctive relief under consumer protection laws.

Here, “Khan alleges that particular Coinbase conduct in
operating its online cryptocurrency exchange constitutes a deceptive business
practice that is likely to deceive or confuse the public; he alleges this
unlawful conduct is ongoing; and he seeks injunctive relief solely to prohibit
Coinbase from continuing to violate the statutes in this manner.” That was
enough to establish the public nature of the relief Khan sought, and how that
relief would benefit the general public if he is able to establish his claim. “[A]
complaint to enjoin future violations of California’s consumer protection laws
seeks public injunctive relief when the relief sought is not limited to the
plaintiff or a defined group, but is oriented to and for the benefit of the
public at large.”  Here, Khan sought
relief against practices that allegedly mislead members of the public who seek
to buy, sell, or convert digital currency on Coinbase’s platform.

Thus, the waiver was invalid, even if included in an
arbitration agreement; arbitration is on an equal footing with other contracts,
but the FAA’s savings clause permits courts to declare arbitration agreements
unenforceable “ ‘ “upon such grounds as exist at law or in equity for the
revocation of any contract.” ’ ” “The principle that a law established for a
public purpose cannot be contravened by private agreement is a generally
applicable contract defense, not a defense that applies only to arbitration or
that derives its meaning from the fact an arbitration agreement is at issue.”

 

Coinbase contended that the relief sought in the complaint was
private because Khan sought to compel Coinbase to make additional disclosures
to existing customers, and thus challenged conduct that is not directed at the
public. But the complaint didn’t seek an order compelling Coinbase to make any
disclosures specifically to Khan or any defined group of individuals.

Coinbase responded that the injunction Khan seeks couldn’t
possibly benefit the public because only existing Coinbase customers could
access the platform on which the allegedly unlawful conduct occurs. But the
court wasn’t willing to allow Coinbase to “insulate itself from a public
injunction simply by requiring a consumer to create a user account before
engaging with Coinbase and its platform. In our view, the unlawful business
practice that Khan describes and seeks to enjoin affects the general public
because any member of the public may access and elect to use Coinbase’s online
platform.” The user account requirement was “simply the online equivalent of
driving to, parking at, and walking into a brick-and-mortar store,” “the
threshold a potential customer must cross before transacting business with
Coinbase.” Coinbase did not “demonstrate that it restricts access to its
services in a meaningful way,” or that “any member of the public cannot simply
create credentials and access Coinbase’s services.” “[W]e would surely say that
an injunction preventing a grocery store from advertising one price in the
grocery aisle, while charging a higher price at the register, was a public
injunction even though it protected only customers who entered the store to buy
groceries.”

Coinbase argued that the threshold of establishing a user
account was materially different from walking into a store because signing up
for a user account requires a potential customer to sign a contract agreeing to
arbitrate claims, “but of course no agreement to arbitrate a claim seeking
public injunctive relief is enforceable, so we do not see this difference as
dispositive.”

In addition, conduct directed at a defendant’s customers can
at least sometimes support a request for public injunctive relief. “When the
primary purpose of an injunction is to prohibit an ongoing violation of
consumer protection laws, the relief sought is usually public relief because
the benefit to the plaintiff or a group of similarly situated individuals is
not materially different from the benefit that inures to the broader public.” Here,
Khan wasn’t seeking a specific change to Coinbase’s platform that would benefit
him alone, or existing account holders alone, but not members of the public who
become future users of the Coinbase platform. An injunction can both benefit a business’s
existing customers and also benefit the public generally.

from Blogger http://tushnet.blogspot.com/2025/10/coinbase-cant-force-claim-for.html

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“GMO-free” avocado oil isn’t deceptive even if all avocado oil is GMO-free

Posted on October 22, 2025 by rtushnet

Whiteside v. Chosen Foods, LLC, — F.Supp.3d —-, 2025 WL
2460192, No. 3:25-cv-00481-CAB-DDL (S.D. Cal. Aug. 26, 2025)

xkcd, “Free”

XKCD may hate it, but the law will allow it.

Plaintiff alleged that defendants misleadingly advertised
their avocado oil by using a non-GMO label, because all avocado products are
free from GMOs. The court found that reasonable consumers would not receive the
message that other avocado oils had GMO ingredients from the label claims
“non-GMO” and/or “non-GMO Project Verified.” The latter was literally true. “As
a matter of law, the reasonable consumer and purchaser of the Products would
understand that the Non-GMO Project Verified label means that the Products are
certified by the Non-GMO Project,” and nothing more. The court agreed with
defendants “that a reasonable consumer who cares about the GMO status of
ingredients knows that there are no commercially available genetically
engineered avocados, and if consumers had any questions about the Non-GMO
Project’s certification standards, they would review those standards.”

Given that reasonable consumers are expected to know a fair
amount about the world, “as a matter of law, the reasonable consumer of the
Products would understand that only certain foods are available in both non-GMO
and GMO forms, that certain ingredients—including avocado oil—are only
available in a non-GMO form, and that avocado oil is a non-GMO alternative to
canola or vegetable oils.” I think this is a lot to expect of reasonable
consumers—a far better justification would be that reasonable consumers don’t
think through the implications of a claim for other products unless they’re
given more reason to do so than this. “Given this context, a reasonable
consumer would not interpret the Products’ label to represent anything about
whether other avocado oil products contain GMOs or the GMO-free status of
commercially available avocados.”

from Blogger http://tushnet.blogspot.com/2025/10/gmo-free-avocado-oil-isnt-deceptive.html

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Another “natural” claim proceeds for pet food labeled “natural + vitamins, minerals, and other nutrients”

Posted on October 21, 2025 by rtushnet

Cobovic v. Mars Petcare US, Inc., — F.Supp.3d —-, No. 24-CV-7730
(ARR) (JAM) (E.D.N.Y. Jun. 20, 2025)

Cobovic alleged that the use of the word “natural” on the
front label pet food was false and misleading under NY law because the products
actually contain “multiple synthetic ingredients.” True, the label includes the
phrase “Plus Vitamins, Minerals and other nutrients,” but Cobovic alleged that
a reasonable consumer would assume that the vitamins, minerals, and other
nutrients are themselves “natural” rather than “synthetic.” She also alleged that
“some of the synthetic ingredients in the Products,” such as xanthan gum,
cannot be categorized as vitamins or minerals, such that the label is false
either way.

The court read past cases to come to a consensus that “the
relevance of the product’s ingredient list depends on whether or not the
allegedly deceptive statement is considered ‘ambiguous.’” Where the plaintiff’s
claim “turns on” the “unavoidable interpretation” of the statement in question,
“the reasonable consumer is not expected to consult the ingredient list to
ascertain the label’s meaning,” but ambiguity requires a reasonable consumer to
consult the ingredient list “in order to clarify his or her understanding of
the label.” “Consumers who interpret ambiguous statements in an unnatural or
debatable manner do so unreasonably if an ingredient label would set them
straight.”

Plaintiff satisfied that standard. Labelling a product that
contains synthetic and/or artificial ingredients as “natural” may be false or
misleading, and it need not state that the product is “all natural” or “100%
natural” for a reasonable consumer to infer that the product is free from
synthetic ingredients. Moreover, at this stage, defendants didn’t meaningfully
contest the allegations that the products contain multiple synthetic
ingredients.

Defendants did argue that the phrase “+ vitamins, minerals,
and other nutrients” indicates that things that are not ingredients might not
be natural, rending the label “true and accurate.” But, on the allegations,
even assuming that the adjective “natural” does not modify the words “vitamins,
minerals, and other nutrients,” at least one ingredient—xanthan gum—appeared to
be neither “natural” nor a “vitamin, mineral, or other nutrient[ ].” Moreover,
the ingredient list didn’t definitively resolve the grammatical ambiguity
concerning the application of the adjective “natural.” The problem with
consulting the ingredient list here was that it assumed that a reasonable
consumer can identify which listed ingredients are natural and which are not.
But that was not a factual assumption the court was willing to endorse,
especially because many “naturally occurring forms of the same vitamins and
minerals have similarly difficult-to-pronounce names.” A jury might ultimately
conclude that the ingredient list would be intelligible to an ordinary shopper,
and that “the appearance of ingredients that are obviously synthetic on [the
Product’s] ingredient list undercuts plaintiff’s theory of deception,” but not
on a motion to dismiss.

from Blogger http://tushnet.blogspot.com/2025/10/another-natural-claim-proceeds-for-pet.html

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claims about scientific studies might imply FDA approval

Posted on October 21, 2025 by rtushnet

BioGaia USA, LLC v. Probiotiv Naturals LLC, 2025 WL 2946910,
No. CV 25-3592 PA (MBKx) (C.D. Cal. Sept. 5, 2025)

BioGaia sued Probiotiv – a competitor in the sale of
priobiotic dietary supplements for oral health, for false advertising;
Probiotiv counterclaimed for false advertising and the court declines to
dismiss the counterclaim.

Probiotiv allged that BioGaia made unlawful health claims
that BioGaia products “[d]efend against common dental issues,” provide “that
good bacteria that your body needs to stay healthy every day,” and “promote
healthy gums and teeth” that violate the Lanham Act. Priobiotiv further alleged
that BioGaia’s claims that probiotics are backed by research and are clinically
studied mislead consumers to believe that BioGaia products are effective like
drugs, convey a false sense of scientific consensus and regulatory compliance,
and mislead consumers to believe that the products provide the therapeutic
benefits mentioned on the labels. Statements that its products are subject to
clinical trials and longstanding research and trusted worldwide were allegedly
likely to cause confusion and deceive consumers as to the scientific approval
or endorsement of the products. [New category of endorsement confusion found!]

BioGaia argued FDCA preemption/preclusion. Although “the Fourth Circuit
has held that false advertising claims based on allegations of implied
governmental approval are not allowed absent an allegation that there was an
explicit representation of government approval,” Mylan Lab’ys, Inc. v. Matkari,
7 F.3d 1130 (4th Cir. 1993), and many courts have followed it, courts have also
recognized a false advertising claim based on a theory of implied government
approval where it is adequately alleged that “the message ‘our product is
FDA-approved’ was actually conveyed to consumers.” That just requires the court
to be convinced of the plausibility of the plaintiff’s theory of deception,
usually because of statements that are drug- or FDA-adjacent (e.g., references
to “off-label” use or use of formularies/systems that are usually reserved for
FDA-approved products).

Here, BioGaia’s use of phrases such as “clinically proven,”
“most clinically studied,” and “backed by 30+ years probiotic research” allegedly
conveyed a false sense of scientific consensus and regulatory compliance. That
was more than implied governmental approval [from silence]. [That is, this
court seems to read the preemption line as rejecting any theory that people
assume that products are legally on the market, thus making their mere presence
an implicit representation about legality. But people probably do assume this.
I’m not sure why even that wouldn’t be enough if you proved the elements
required for a Lanham Act violation (communication of a false/misleading
message, materiality, harm) along with a clear enough FDCA violation. I
understand the problems with predicting how the FDA would come out where it has
discretion; that’s a decent reason for declining to find determinable falsity,
but there are some pretty clear scenarios out there where a Lanham Act claim
doesn’t require agency interpretation to determine falsity, or where the
interpretation is statutory and thus the agency has no special expertise.]

Anyway, this also allowed a state-law false advertising
claim to survive.

from Blogger http://tushnet.blogspot.com/2025/10/claims-about-scientific-studies-might.html

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