Rebecca Tushnet

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

Posted in Uncategorized | Tagged false advertising | Leave a comment

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

Posted in Uncategorized | Tagged false advertising, patent, procedure | Leave a comment

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

Posted in Uncategorized | Tagged consumer protection, false advertising, standing | Leave a comment

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

Posted in Uncategorized | Tagged consumer protection, false advertising | Leave a comment

“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

Posted in Uncategorized | Tagged false advertising, fda, preemption | Leave a comment

New Jersey would not recognize a common law tort of false advertising, says fed ct

Posted on October 17, 2025 by rtushnet

Pim Brands, Inc. v. New Cibo Vita LLC, No.
25-cv-01418(MEF)(AME), 2025 WL 2938602 (D.N.J. Oct. 16, 2025)

The parties compete in the market for yogurt-covered fruit
snacks, and the plaintiff alleged false advertising, including unfair
competition claim under New Jersey common law. Here, the court rules that New
Jersey does not recognize an unfair competition claim that is based, as here,
only on an allegation of false advertising that is not comparative and does not
involve passing off, and thus doesn’t assert interference with some property-type
interest. (Also, in a footnote, unfair competition can include “antitrust-type
claims” or “what amount to claims for tortious interference with contract”;
query how an antitrust claim is an interference with the plaintiff’s property.)

The court characterized the tort as relatively new (late 19^th
century) in origin, but quickly assumed a definite shape: “The essence of the
wrong in unfair competition consists in the sale of the goods of one
manufacturer or vendor for those of another; and if defendant so conduct its
business as not to palm off its goods as those of complainant, the action
fails.” Howe Scale Co. of 1886 v. Wyckoff, Seamans & Benedict, 198 U.S. 118
(1905). Thus, the tort was about “palming off.” It protected consumers, but
only indirectly and only by protecting a company’s “brand equity.” [Not a
particularly contemporaneous term.] It differed from trademark by covering,
e.g., “palming off of what we would today call service marks” and “palming off
based on brand symbols that for one reason or another could not be formally
registered as trademarks.”

But the tort stretched “a bit” to encompass INS v. AP
misappropriation. They still shared the “core DNA” of being property-like. But “[i]f
a company engages in false advertising—if it says something untrue about its
own product—how is it potentially taking property from another company? … [L]osing
out on possible future business is a long way from being deprived of
here-and-now property (or quasi-property).”

Thus, a false advertising claim is not an unfair competition
claim. American Washboard Co. v. Saginaw Manufacturing Co., 103 F. 281 (6th
Cir. 1900), was the key case involving false advertising that a washboard was
made with aluminum, rejecting a false advertising claim on the ground that “the
private right of action in [unfair competition] cases is not based upon fraud
or imposition upon the public, but is maintained solely for the protection of
the property rights of a complainant.” Courts around the country “routinely
stick to the line [American Washboard] drew.”

Thus, the court predicted that the New Jersey Supreme Court
would hold that there can be no unfair competition claim based only on a false
advertising theory, as the one relevant NJ appellate case had held. Tris
Pharma, Inc. v. UCB Manufacturing, Inc., 2016 WL 4506129 (N.J. Super. Ct. App.
Div. Aug. 29, 2016).

True, the Third Circuit stated in an infringement case, pre-Tris
Pharma, that “the federal law of unfair competition under § 43 (a) [of the
Lanham Act] is not significantly different from the New Jersey [common] law of
unfair competition[.]” But that was only true with respect to passing off (and
other things like the relevance of common-law agency principles).

Finally, the court noted, the Third Circuit has indicated
that “where two competing yet sensible interpretations of state law exist, we
should opt for the interpretation that restricts liability, rather than expands
it, until the Supreme Court of [New Jersey] decides differently.” Travelers
Indem. Co. v. Dammann & Co., Inc., 594 F.3d 238 (3d Cir. 2010) (cleaned
up). [I’m not sure Chief Judge Becker of blessed memory would endorse this
view—he thought of judging as the process of doing justice, and he was willing
to evolve the common law towards that end.]

from Blogger http://tushnet.blogspot.com/2025/10/new-jersey-would-not-recognize-common.html

Posted in Uncategorized | Tagged false advertising, trademark | Leave a comment

Conspicuous Consumers, NYU Engelberg Center

Posted on October 17, 2025 by rtushnet

Welcome and Keynote: Nancy Mahon, SVP, Global Corporate
Citizenship & Sustainability, The Estée Lauder Companies

Interesting talk; I learned that UK consumers respond well
to claims that a product decreases the company’s carbon footprint, but US
consumers aren’t interested in that and want to know about the effect on their
own carbon footprint.

Sustainability in the Eye of the Beholder

Rochelle Dreyfuss, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)

Anna Tischner, Jagiellonian University in Krakow: European
TM law can override sustainability despite EU’s attempted commitment to carbon
neutrality. Hermes won a case against an atelier that incorporated scarves into
new clothes. But her research shows consumers understand that refurbished etc.
goods have qualities not reflecting on the TM owner. Need more space for this. British
case didn’t allow refurbishment to convert devices to electric, but only b/c
the advertising was confusing—which is correctable, and thus perhaps a positive
sign.

Maggie Chon, Seattle University School of Law: Discussed
certification marks as ways to build consumer trust/purchase interest. Issues:
standards represented by certification mark can be opaque; hard to figure out
what they really require. Also, certifications can compete and have different
standards—consumers aren’t equipped to figure out which “fair trade” marks are
more stringent or less stringent.

Jessica Silbey, Boston University School of Law: Project
w/Mark McKenna on interviews with designers: insist on design as a process, not
an outcome; they want to unify form and function; and they consider themselves
human-focused, oriented to solving problems. In the sustainability context,
they want to act as moral entrepreneurs. Coherence, minimalism, sustainability,
accessibility, and inclusivity are goals—coherence and minimalism seem
aesthetic but they’re also about avoiding material waste. The last three are
considerations they think necessary for good designs/progress: the ability for
everyone to use the design. E.g., designing for an insulin pen that will
actually be used (many people don’t take their meds). OXO dustpan designed to
be used by all kinds of hands.

Aaron Perzanowski, University of Michigan Law School: Right
to repair and sustainability—appliances, electronics, vehicles need fixing; can
that be done outside authorized channels? Firms have strong incentives to
assert control over repair process, which can be incredibly lucrative. Fixing
cracked phone screens is $3 billion/year in US alone. Expensive repairs also
drive new device purchases. 150 million mobile phones are discarded per year;
60 million metric tons of e-waste a year. About 70% of toxic waste in US
landfills is e-waste. DMCA as a big problem; 1201 exemptions allow repair of,
e.g., tractors, but no one is allowed to distribute a tool to others to do
this, so farmers better be good programmers.

Patent law can also be an issue, as can individual component
parts covered by utility or design patents, giving power over price and
availability. Especially problematic given incredibly low standards for design
patent—big uptick in auto parts as well as home appliances. Fed Cir did away
with longstanding test for obviousness of design patents in GM v. LKQ; what
that means in long term is not yet clear but could mean fewer low value design
patents. Trade secrets are also an issue, but claimants can’t usually defend
them—the info is generally ascertainable through simple reverse engineering. We
don’t need to respect your wishes not to disclose info just b/c you’d make more
money if you kept it to yourself.

TM too (already covered by other speakers). Biggest problem
here is importation—exhaustion. But TM law prevents “material differences” and
courts are much too eager to find such differences—a difference in warranty;
existence of phone support (even for ball bearings). Nominative fair use does a
good job in its lane, though.

So far we’ve passed right to repair laws covering 100
million people in US, including in California. Also worked on National Defense
Authorization Act to get right to repair requirements in any purchase DoD
makes.

Tischner: EU design law has a repair clause for spare parts.
This allows independent manufacturers to make & sell parts that reproduce a
protected design as long as it’s genuinely for repair. The real tension comes
from TM law, not design law—the design law exception doesn’t apply horizontally
across IP, so companies use TM to block repair and control markets. Surveyed
professionals: saw logo on repair part as description of part, not indication
of origin. TM law is also normative, but results of our and similar empirical
studies should inform TM policy.

Q: do designers think about repair?

Silbey: They think about durability.

Perzanowski: there’s a tradeoff b/t durability and
repairability, which we need to recognize and educate about. Sometimes the
market recognizes this, as for cars. Not so much whether it’s designed for
repair but who gets to do the repair there. Consider relatively direct
regulatory intervention in design: mandating user-replaceable batteries on
consumer electronics, for example. If Apple was required by law to make a
swappable battery, it would probably do a really good job, but it won’t if it’s
not forced to; we’ve already seen this work with USB-C.

The Consumer Scientist

Chris Morten, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)

Fran Visco, National Breast Cancer Coalition: created a
science education program for patient advocates: how to analyze clinical
trials, interpret statistical information, understand the cell cycle—important
for determining endpoints.

Hilary Koch, Advocate for people living with diabetes:
continuous glucose monitors existed, but couldn’t be monitored
remotely—advocates like Koch created an open source solution for this. Likewise,
devices didn’t talk to each other; created open solution for that. Able to
sleep through the night for the first time in 10 years! Huge improvement in
diabetes management. Non-FDA approved device was better than anything on the
market b/c patients came together to make it themselves. Everyone had to make
it themselves (adding software to FDA-approved devices) to avoid FDA [and
1201?]. But someone was available to provide advice 24/7. Now there’s an FDA
approved device to talk to other devices, and one reason is b/c of the earlier
patient-based devices. Non-approved devices are also still out there and ahead
of the FDA-approved devices thanks to patient scientists.

She also had a really interesting discussion of how each
patient’s experience is different and they’re experts on their own experiences
and need more control: women want information on how their menstrual cycles
affect them and want to be able to press a button on their device to flag this;
many hospitals don’t allow insulin pumps, but today’s insulin pumps take care
of everything and this rule makes diabetics terrified to go into hospitals for
other issues.

Steve Woloshin, Dartmouth Geisel School of Medicine: patients
are often underrepresented in product design, testing, and regulatory approval.
Communication with patients to understand what the products (tests, devices,
drugs) do and how to use them is vital but it’s often an afterthought. DTC ads:
oversight is spotty and they aren’t required to tell you how effective they
are. Covid home test kits example: Although they did test the instructions,
which was good, they didn’t test whether people understood what results they
were getting—have to use Bayes’ law to understand the chance that you’re
infected, given a positive or negative test result. It’s easy to get wrong and
the instructions didn’t explain it at all. Empirical tests showed that 33% of
people in a high risk group (symptoms, exposed to someone with determined
covid) would not understand the risks of a negative result. Were able to reduce
that to 14% with revised instructions, and to decrease unnecessary quarantine
decisions. An untested communication can be as dangerous as an untested drug.

DTC ads: Billions of dollars spent on them; people see 9
drug ads/day. But they overstate benefits/downplay harms/overstate certainties.
There’s a lot of opportunity to make ads better but the system is
reactive/slow. FDA announced that it will revisit DTC ads. Dozens of warning
letters about ads, largely b/c visual messages were allegedly misleading (take
this drug and you’ll be able to climb mountains). Good start, but tip of
iceberg. Basic problem: ads fail to tell consumers how well the drug works. Often
unclear what outcomes the drug treats, or even conditions. Quantify the
outcome! Same for common serious harms.

Current regs say you have to discuss benefit, but benefit
just means indication under current rules—so if you say “decreases cholesterol”
you’re done. But does that affect your chance of having a heart attack? Does it
cut it in half from 2% to 1%? Something else? Nothing in current regs about
quantifying benefits or harms; nothing about pretesting ads for accurate
communication. Should have a drug facts box like a nutrition facts box.

Charles Duan, American University Washington College of Law:
standard IP incentive theories don’t explain open source innovations here,
which involve huge amounts of effort donated to the community. People who
change their diets to improve their health are also experimenting on
themselves—self-motivation is very important. Need to think about how to
regulate open source devices, where there isn’t a wealthy drug company behind
them.

IP Rights as a Signal to Consumers

Jeanne Fromer, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)

Chris Cotropia, University of Richmond School of Law: Do
patent claims matter to consumers? No, not really. There’s a false marking
provision in patent law that seems to think that they might. Patent is more
about communication between competitors/producers, less about consumers.
Patent’s justification: Incentive for invention, and for commercialization. Get
the new, useful, nonobvious thing created and produced. But can communicating
to consumer create a direct feedback effect?

Notice statute: can’t get patent damages unless infringer
has notice. Can be actual, or constructive by marking the patented product. The
audience is not the consumer, but competitors. False marking statute, though,
has consumers in mind—can’t mark product as patented or patent pending if
that’s not true; initially empowered qui tam actions. Theory was a consumer
oriented theory—that there was potential harm to the consumer. Lots of people
engaged in false marking b/c they had, e.g., plastic molds; the patent would
expire and they’d keep using the molds. Entrepreneurial lawyers started suing;
then AIA changed the law to require competitive harm from the false marking. So,
what information are consumers getting from the patent marking?

Study
by Alexander Billy & Neel Sukhatme: convinced drugstores to let them
enhance marking on actually patented products in some drugstores and not
others; they found essentially a perfect null effect. Tried again on Mechanical
Turk with vignettes and found the same null effect. Do find that “patented”
label leads survey respondents to think that the product was more innovative;
didn’t translate into willingness to buy. Another study, Gavin Milczarek-Desai
& Derek E. Bambauer: showed ads, some said patented, patented pending,
Consumer Reports supports, or nothing, and found no variation, but “patent
pending” may have a slight effect on reported willingness to buy. His own
study: crowdfunding campaigns. Found same (lack of) effect. Patent label didn’t
change success right, but “patent pending” had higher success rate. In lab,
people are 2x as likely to invest in a project that says “patent pending” as
opposed to “patented” or nothing. Consumers are just looking at the products and
deciding if they want to buy. Why might “patent pending” be different? Might
seem even more innovative—haven’t even had time to get a patent yet! But we
don’t know.

Jacob Noti-Victor, Cardozo Law: Copyright side—copyrights
are also not strong signals to consumers. There may be a theory that the © next
to a work confers legitimacy, but hasn’t seen empirical studies. Maybe video
game industry achieved some legitimacy by using ©? But we do know that
consumers don’t know what © means when they see it.

©’s human authorship requirement and effects of AI: enabled
or even manufactured consumer-facing signals of things consumers do care about,
such as authenticity. There’s no authorship for computer generated works as
such—long tradition of not recognizing nonhuman authorship. Trickier when
there’s a human and an AI system. Human prompting isn’t sufficient for human
authorship, CO says, even with detailed prompt engineering/iterative prompting.
Office based this on a reading of the law and the mechanics of the
technology—there’s too attenuated a connection b/t the prompt and the final
output; the prompter can’t predict or conceptualize the expressive
output—there’s no requisite causation/connection b/t idea and expression. Like
Chapman Kelly garden case where 7^th Circuit says a garden is too
unpredictable to be ©able. But there can be protection for human selection,
coordination, and arrangement of AI products—curatorial decisions around AI
content, not AI content itself; will be thin copyright.

Office’s choices here are coextensive with consumer
preferences for process: preferences tied to the means of production and not
solely to the output. Fair trade coffee. Consumers are more likely to want to
buy non-AI work; this isn’t just squeamishness but ethical priorities and
desire for authenticity that affects consumer decisionmaking especially in
aesthetic contexts. Authenticity can have dark sides, but it’s also a way to
acknowledge the social role of art and its role in moral identity/self-identification.

Office requires disclaimers of AI generated material.
Registration potentially provides info to consumers. Could be a good record,
assuming copyright claimants are telling the truth. But more can be done.

Mark McKenna, UCLA School of Law: Most obvious way IP rights
might signal to consumers is by being a marketing tool: claimant advertises it
has an IP right to show the product is meritorious or unique compared to other
products, and that might work even w/o a clear idea of the content of the
right. The patent evidence is interesting; maybe there’s an analogy here to how
some colleges publicize percentage of faculty w/terminal degrees and others
don’t feel the need to do so; maybe at the top end, producers assume you know
they’re innovative (Apple) and don’t prioritize patents.

GIs: could also publicize the characteristic of a good as
being (supposedly) geographically
unique.

What about feedback loops where existence of rights feeds
back into scope of rights? TM: b/c those rights depend on consumer
understanding, but consumer understanding can be shaped by their beliefs about
what law allows/requires. The existence of rights depends on consumer
understanding, b/c it determines whether there’s been trademark use, or
secondary meaning to make it a TM; the scope of rights depends on consumers’
beliefs about what others are allowed to do. The rules on secondary meaning
give a lot of weight by actions taken by putative owner to claim the existence
of rights: creates incentives to publicize claims—the nature of putative mark’s
presence in ads matters a lot. Matters even more when the claimed matter is
complex; courts will often condition protection on “look for” advertising—to
call it out from the background noise.

Claims of rights in relation to certain kinds of uses of TM
can also shape consumer understandings in ways that turn out to affect legal
scope. This is true at the retail level—particular uses of a particular mark,
like NFL’s assertion of extremely broad rights in “Super Bowl” TM. Threatens
bars, churches, community organizations that advertise they’ll (legally) show
the Super Bowl. Even if there’s no suggestion of sponsorship other than the use
of “Super Bowl.” These are paradigmatic nominative fair uses and shouldn’t be
w/in the scope of the NFL’s rights, but the NFL has been unbelievably
successful with these threats, so most references are to “the Big Game,” which
itself is both cause and effect of consumer beliefs. But by the same logic, NFL
can claim rights in “the Big Game.”

This effect can also work at the wholesale level—entire
categories of uses like merchandising—50 years ago no one thought universities
had the sole right to use university marks on T-shirts. Madison, like every
other college town, was full of T-shirts featuring UW marks, some of which
predated UW’s own use on t-shirts. But a major campaign branded these as
counterfeits; leveraged relationship with university bookstores to control
major apparel companies. Strategy seems to have worked; many people now believe
the law requires university permission even though no one thinks the university
is responsible for the quality of the t-shirts. PTO even made up the “secondary
source” rule: use on the front of a T-shirt functions as a mark if the mark is
known in some other setting. Created ©-like rights in anything related to them,
justified by reference to the consumer understanding they’ve created. Can also
be used for, e.g., mid-century modern design—association of design w/designer
can be leveraged into “source” claims for the actual furniture.

Consumer understanding can be shaped, and some claimants are
well situated to do so and have strong incentives to do it; but we shouldn’t
hand over the game to claimants.

Rebecca Tushnet, Harvard Law School

I decided to frame my part of this panel as “can claims of
IP rights mislead consumers in a way that triggers general advertising
law?” I’m going to start with two requirements of false advertising law that
don’t generally apply to IP rights. First, federal false advertising law
targets only false or misleading statements in “commercial advertising or
promotion.” This is probably not a big barrier for the kinds of claims at issue
here, but it’s worth keeping in mind: use instructions, as discussed in the previous
panel, might not be advertising (though it likely depends on the product). Second,
materiality: to be actionable, a false or misleading statement has to be the
kind of statement that is likely to affect consumers’ decisions, as opposed to
TM law, which doesn’t require materiality for infringement.

As we already heard, materiality is often a problem in
litigating alleged IP-related falsehoods, including false patent marking – most
of the time, consumers don’t really care about patent rights. In addition, a
Supreme Court case, Dastar v. Twentieth Century Fox, limited the scope of the
federal Lanham Act in a way that turns out to be relevant to IP-related
signals. That case interpreted the language barring any “false designation
of origin, false or misleading description of fact, or false or misleading representation
of fact, which … is likely to cause confusion … as to the origin …
of goods” to mean only references
to physical origin, rather than the source of ideas or expressions
embodied in a product.

Lower courts have subsequently held that Dastar limits the
scope of federal false advertising law b/c representations about IP rights
aren’t representations about physical origin; thus, falsely stating or implying
that your music is properly licensed does not constitute a false representation
covered by the act. Courts also interpret many state consumer protection laws
to be coextensive w/the Lanham Act, though it’s possible to argue that some are
broader. There is also a limiting case where the representations are not just
about IP rights but also state or imply facts about the physical product:
Crocs, Inc. v. Effervescent, Inc., No. 2022-2160 (Fed. Cir. Oct. 3, 2024).

Crocs sued competitors for patent infringement; defendant
Dawgs counterclaimed for false advertising about the characteristics of the
primary material Crocs uses to make its footwear products, a material it
promoted as the “patented,” “proprietary,” and “exclusive” “Croslite.” But
“authorship, like licensing status, is not a nature, characteristic, or
quality, as those terms are used in Section 43(a)(1)(B) of the Lanham Act.” By
contrast, “here, the false claim that a product is patented does not stand alone.
Dawgs presents allegations and evidence that the falsity of Crocs’ promotional
statements is rooted in the nature, characteristics, or qualities of Crocs’
products.” So the question will generally be whether the statement about IP
rights conveys a factual claim about the more tangible characteristics of the
good (or service) at issue.

Finally, I want to introduce as an additional framing point
that law, including product liability law, often doesn’t require TM licensors
to take responsibility for their products even when consumers might expect that
and even when the TM probably drove the sales—arguably false advertising should
not accept this result. Example: Troncoso v. TGI Friday’s Inc., 2020 WL 3051020
(S.D.N.Y. Jun. 8, 2020)

Troncoso purchased a bag of snack chips labeled “TGI Fridays
Potato Skins Snacks,” mistakenly believing the chips to contain real potato
skins given that the restaurant chain TGI Fridays sells a Potato Skins
appetizer that includes the flesh and peel of the potato. But, even though the
TGIF branding is probably what led consumers to have a lot of their
expectations about the product, and even though the court found that the
product was plausibly deceptive, the trademark owner was off the hook. The
court said: “TGIF may be liable for that misleading labeling under GBL §§ 349
and 350 and principles of common-law fraud only if it engaged in making the
misleading labeling.” The allegation of licensing “does not suggest that TGIF
was involved in any aspects of the labeling beyond its own trademark, which
Plaintiff does not allege is misleading”

It’s an example of IP rights—the right to license the mark
to others—as false signals. I’ll end with a potentially contrasting case:
Puma v. Wal-Mart Stores East, LP, No. A-1-CA-38023, 2022 WL 3221810, — P.3d –
(N.M. Ct. App. Aug. 9, 2022) The Pumas alleged that defendants violated the New
Mexico Unfair Practices Act based on their purchase of a Black &
Decker-branded coffeemaker.

Based on Black & Decker’s reputation, the Pumas thought
the coffeemaker would be better than the lower-priced store brand and paid more
for it as a result. However, Black & Decker did not in fact design,
manufacture, distribute, or warrant the coffeemaker. The district court, after
a bench trial, found that defendants’ conduct constituted an “unfair or
deceptive trade practice.”

Thus, the presence of the trademark plus the absence of any
disclosure on the product or the advertising could deceive reasonable consumers
about either (1) the relationship between Black & Decker and Applica; or
(2) that the product was in fact a product of Applica, rather than of Black
& Decker. The court pointed out that the name, “Black & Decker 12 Cup
Programmable Coffeemaker” “emphasized that the ‘Black & Decker’ name was an
important characteristic of the Coffeemaker; these statements tended to deceive
a reasonable consumer, and Defendants knew or should have known that potential
purchasers of the Coffeemaker would likely regard information about the
Coffeemaker being a Black & Decker product as material.”

The court emphasized that it was not holding “that the use
of a trademark by a licensee pursuant to a trademark licensing agreement by
itself constitutes an unfair or deceptive trade practice,” or that individual
or widespread licensing was “per se irrelevant” to the inquiry. Nor was
evidence of the quality of the licensed product “per se irrelevant.” Rather,
the court of appeals was simply holding that the Lanham Act did not govern the
UPA claim, “and that, under the circumstances of this case, Defendants’ knowing
and willful use of ambiguity as to material fact, which tended to deceive a
reasonable consumer, constituted an unfair or deceptive trade practice.” I tend
to believe we’d be better off if we held TM owners more clearly to their
bargain—when they license in order to make a product more attractive, we should
recognize that the TM is helping to sell the licensed product and thus hold
them jointly liable for quality.

from Blogger http://tushnet.blogspot.com/2025/10/conspicuous-consumers-nyu-engelberg.html

Posted in Uncategorized | Tagged conferences, copyright, patent, presentations, trademark | Leave a comment

California’s limits on use of “doctor” in healthcare settings are constitutional regulations of commercial speech

Posted on October 13, 2025 by rtushnet

Palmer v. Bonta, 2025 WL 2882948, No. EDCV 23-1047 JGB (SPx)
(C.D. Cal. Sept. 19, 2025)

Plaintiffs alleged that California Business and Professions
Code § 2054(a), on its face and as enforced, violates the First Amendment
because it provides, in relevant part:

[a]ny person who uses in any sign,
business card, or letterhead, or, in an advertisement, the words “doctor” …,
the letters or prefix “Dr.,” … or any other terms or letters indicating or
implying that the person is a physician and surgeon … without having at the
time of so doing a valid, unrevoked, and unsuspended certificate as a physician
and surgeon under this chapter, is guilty of a misdemeanor. No person shall use
the words “doctor” or “physician,” the letters or prefix “Dr.,” … or any other
terms or letters indicating or implying that the person is a physician and
surgeon … in a health care setting that would lead a reasonable patient to
determine that person is a licensed “M.D.” or “D.O.”

The Board of Registered Nursing supported this law only if
it allowed nurses with a terminal degree (i.e., Doctor of Nursing Practice) to
use “Dr.” “regardless of setting” so long as they indicated their profession or
specialty on their badge and in communication. Bonta, on behalf of the Board of
Registered Nursing, filed an Accusation against Erny, who is a Doctor of
Nursing Practice (DNP), for “representing to patients that she was a medical
doctor” in violation of Section 2054; the District Attorney for San Luis Obispo
County then sought an injunction, civil penalties, and other equitable relief
against her. She was ordered to pay $19,750 in civil penalties.

Plaintiff Palmer also holds a DNP. Between 2020, when she
earned her DNP, and 2023, Palmer (1) wore a clinician’s jacket embroidered with
“Dr. J. Palmer, FNP-C”; (2) introduced herself to patients, “I’m Dr. Jacqueline
Palmer. I’m a nurse practitioner”; (3) signed her name on official clinic
documents using the title “Dr.” and “FNP” as a post-nominal; and (4) was not
aware that it was illegal to use the title “Dr.” on her clinician’s jacket or
in any other way so long as she disclosed that she was a nurse practitioner.
Palmer always disclosed to patients that she is a nurse practitioner and never
practiced outside of her scope of practice for licensure.

Nonetheless, patients have assumed that Palmer was a medical
doctor. The American Medical Association’s survey results that show that 39% of
patients believe that a DNP is a physician.

After learning about the legal actions against Erny, Palmer
stopped wearing her clinician’s jacket, stopped signing official clinic
documents using the title “Dr.,” and asked others not to refer to her as “Dr.”
She would like to return to her previous practices. Other plaintiffs had
similar stories.

There is nothing that a nurse practitioner that has a DNP
can do that a nurse practitioner that does not have a DNP cannot. DNP programs
range from one to two years; they can be online with no in-person classes; they
don’t have stringent admission requirements; they may not have, and plaintiffs’
programs didn’t have, courses in, e.g., anatomy, biology, biochemistry,
immunology, physiology, pathology, or pharmacology; so too for clinical work
with patients/patient interaction.

One plaintiff testified that he believed that he would
attract more patients to his aesthetic clinic if he can call himself “Dr.
Hanson” as opposed to not using the title “doctor,” because “[i]f patients were
given the opportunity to pick between two clinics, one with Dr. Hanson and one
with Mr. Hanson written on it, most would gravitate to the former.” Plaintiffs
didn’t know whether patients know what the letters DNP, PHN, MSN, MASE, BSPT,
or FNP-C mean (all relevant terms for credentialing) and largely didn’t know the
terms until they sought more credentials.

Plaintiffs argued that Section 2054 is a content-and
speaker-based restriction on speech, and thus subject to strict scrutiny. The
court rejected this argument.

Facial challenge: Plaintiffs argued that the law “sweeps in
its ambit an array of professionals who are not physicians or surgeons but who
still can truthfully (and regularly) call themselves ‘Dr.’: psychologists
(PsyD), pharmacists (PharmD), naturopaths (ND), physical therapists (DPT), and
Ph.Ds (including honorary Ph.Ds).” In a First Amendment facial challenge, “[t]he
question is whether a substantial number of the law’s applications are
unconstitutional, judged in relation to the statute’s plainly legitimate
sweep.”

“The first step in the proper facial analysis is to assess
the state laws’ scope.” “What activities, by what actors, do the laws prohibit
or otherwise regulate?” The second step “is to decide which of the laws’
applications violate the First Amendment, and to measure them against the
rest.” The party bringing the First Amendment facial challenge has the burden
to show the full scope of the law’s coverage; to identify which of the law’s
applications are constitutionally permissible and which are not; and, ultimately,
to show that the law “prohibits a substantial amount of protected speech
relative to its plainly legitimate sweep.”

The California Court of Appeals has found that the “purpose
of [S]ection [2054] is to protect the public,” specifically by regulating the
use of certain professional titles associated with the medical field—i.e.,
“Dr.” and “doctor”—in healthcare-related advertising and healthcare settings. The
court found this was a regulation of commercial speech. The “use of
professional titles and certifications in advertising, yellow-pages listings,
business cards, and stationery is commercial speech.”

Plaintiffs argued the law expanded into noncommercial space
by adding the phrase “in a healthcare setting that would lead a reasonable
patient to determine that person is a licensed ‘M.D.’ or ‘D.O.’ ” Because the
patient is already seeking out care from plaintiffs by the time they use “Dr.”
or “doctor” in a healthcare setting, they argued that they were engaged in
noncommercial speech and that any commercial speech was inextricably
intertwined with fully protected speech.

Although using “doctor” in a healthcare setting wasn’t a
traditional ad format, it was still commercial speech: The “specific product” plaintiffs
sought to advertise when using “Dr.” or “doctor” in healthcare settings was “the
expertise, knowledge, and quality of services these professional titles convey
to patients and colleagues.” And they had an economic motive for the speech: “to
solicit [and retain] a patient base” and improve their professional brand.

The facial challenge failed because the law regulated
misleading speech, and even if it went beyond that, was ok under Central
Hudson.

As-applied challenge: The Supreme Court has distinguished
between “inherently misleading” speech and “potentially misleading” speech.
When “advertising is inherently likely to deceive or where the record indicates
that a particular form or method of advertising has in fact been deceptive,”
the advertising enjoys no First Amendment protection. The government may ban
this type of commercial speech entirely. But if the speech is only “potentially
misleading,” in other words, “if the information also may be presented in a way
that is not deceptive,” Central Hudson (intermediate) scrutiny is
required.

But here, the record indicated that plaintiffs’ particular
form or method of advertising has “in fact been deceptive.” It was undisputed that patients assumed Palmer
was a medical doctor and that plaintiff Hanson makes it a point to explain to
patients that he is not a physician when they call him “Dr.” Thus, the speech was
inherently misleading even though it communicates truthful information. Plaintiffs
conceded as much by agreeing that the use of “Dr.” or “doctor” in healthcare
settings without further clarification generally refers to licensed physicians
or surgeons. Accordingly, “[t]he assumption that substantial numbers of
potential clients would be so misled is hardly a speculative one.”

California not only regulates the title “doctor,” it
regulates the licensing and practice of physicians and surgeons. Plaintiffs didn’t
meet these statutory requirements, and thus their use of “Dr.” or “doctor” was
inherently misleading.

Even if it was only potentially misleading, the regulation
would still satisfy Central Hudson in advertising and healthcare
settings. California has a substantial interest in “protecting consumers from
those who falsely hold themselves out as licensed physicians but [who] have not
been duly licensed.” What about the fit between the legislature’s ends and the
means it chose?

Plaintiffs argued that “at least as applied to nurse
practitioners with DNPs, [who truthfully refer to themselves as “Dr.” or
“doctor,”] [S]ection 2054[ ] does not directly advance Defendants’ only stated
interest because it does not prevent fraudulent misrepresentations.”

Under Central Hudson, “the State must demonstrate
that the challenged regulation advances the Government’s interest in a direct
and material way,” which requires it to show “that the harms it recites are
real and that its restrictions will in fact alleviate them to a material
degree.” Empirical data, studies, anecdotes (whether in-state or
extra-jurisdictional), history, consensus, and common sense are all relevant.
Here, the “harms [California] recites are real” because the speech has caused
some patient confusion. And it was reasonable to infer that some consumers will
assume that Plaintiffs are licensed physicians or surgeons if they use “Dr.” or
“doctor” in healthcare settings and in advertising materials promoting medical
services even if Plaintiffs also identify themselves as DNPs, as borne out by
the AMA survey showing 39% of patients believe that a DNP is a physician and
plaintiffs’ own ignorance of what the letters DNP meant until they started
pursuing higher education.

What about less restrictive alternatives? Plaintiffs argued
that they were already required to disclose and explain their license and
credentials, and California’s false advertising and unfair business practices
laws already address concerns about patient deception. However, “[i]n
considering the restriction imposed on commercial speech, [courts] do not
require that it be the least restrictive means available.” Rather, what is
required is “a reasonable fit between the legislature’s ends and the means
chosen to accomplish those ends.”

Here, Section 2054 didn’t limit plaintiffs’ ability to
describe themselves as DNPs or to otherwise accurately state their credentials.
So there was a reasonable fit.

from Blogger http://tushnet.blogspot.com/2025/10/californias-limits-on-use-of-doctor-in.html

Posted in Uncategorized | Tagged commercial speech, false advertising, first amendment | Leave a comment

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Rebecca Tushnet

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

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New Jersey would not recognize a common law tort of false advertising, says fed ct

Conspicuous Consumers, NYU Engelberg Center

California’s limits on use of “doctor” in healthcare settings are constitutional regulations of commercial speech

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