court allows false advertising claim based on manipulation of Amazon’s “variation” system

Posted on October 7, 2025 by rtushnet

Corsair Gaming, Inc. v. Choice Electronics Inc., 2025 WL
2822691, No. 5:25-cv-00045-BLF (N.D. Cal. Oct. 3, 2025)

Corsair sued Choice for alleged infringement by selling
used, unauthorized, or counterfeit Corsair computer/gaming products. This
opinion deals with Choice’s counterclaims. The false advertising part of those counterclaims
rests on Amazon’s “variation” system.

The court declined to dismiss counterclaims for declaratory
judgment of noninfringement and cancellation of Corsair’s mark for naked
licensing. Although use by a related company (here, a different Corsair entity
than the owner of record) counts as use, the allegations here were that the
entity that used the mark wasn’t supervised at all by the owner of record and
thus didn’t qualify as “related.” The Lanham Act specifically defines “related
company” as “any person whose use of a mark is controlled by the owner of the
mark with respect to the nature and quality of the goods or services on or in
connection with which the mark is used.”

False advertising: Vendors and third-party sellers can create
“variation” relationships between substantially similar products that differ
only in specific, narrow ways. Such products will appear on the same product
detail page, with each variation, e.g., color, size, or count, selectable. Because
of variations’ close similarity, the product detail page displays the total
number of ratings and the average star rating for all products in a given
variation relationship. Amazon’s  “variation policy” prohibits vendors from
grouping together fundamentally different products within the same variation
relationship.

Choice alleged that Corsair “knowingly manipulates Amazon
listings in order to show inflated and unwarranted reviews for its products by
misleadingly listing new products as ‘variations’ of pre-existing products,
instead of creating new listings for new products,” causing consumers to be
“deceived and confused into believing that Corsair Products have amassed
significant amounts of positive reviews and high ratings, when, in fact, such
reviews and ratings merely relate to a prior product.” The court agreed that
this stated a claim.

First, Choice plausibly alleged competitive harm enough to
satisfy both Article III and the Lanham Act. And, even assuming that Rule 9(b)
applied, the counterclaims adequately pled with specificity how Corsair allegedly
created a variation relationship between three different computer monitors
despite substantial technological differences. Choice wasn’t required under
Rule 9(b) to catalogue every single instance in which Corsair improperly
created a variation listing.

Related state law claims also survived, except for counterclaims
about the Corsair warranty, which was allegedly misleading to consumers but not
causally connected to harm to Choice. The warranty allegedly was unenforceable
under state law precluding sales-channel restrictions on warranties, but allegedly
misled consumers by creating the false impression that Corsair Products
purchased through Choice’s Amazon storefront were not subject to the same
protections and thus “discouraged and dissuaded consumers from purchasing
genuine Corsair Products from Choice Electronics.” But these allegations were “conclusory
and wholly speculative.” [Could a survey have fixed this?] Similarly, Choice
couldn’t sue based on the alleged legal violation under an “unlawfulness”
theory under California or New York law because it lacked sufficient injury.

from Blogger http://tushnet.blogspot.com/2025/10/court-allows-false-advertising-claim.html

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court rejects affiliation confusion theory for lack of harm, declines to order tarps over P’s goods

Posted on October 6, 2025 by rtushnet

Survitec Survival Prods., Inc. v. Fire Protection Service,
Inc., 2025 WL 2782332, No. H-21-312 (S.D. Tex. Sept. 30, 2025)

This case demonstrates exactly why harm to the plaintiff
should be explicitly a part of a trademark case that relies on extended
theories of confusion (that is, non-source confusion). It shows in great detail
why any theoretical confusion about affiliation would have been completely
irrelevant to both parties’ customers—which is why they make assumptions/don’t
bother to think about the issue.

The court introduces the case:

Survitec Group Ltd. is the parent
of a large group of corporate entities, including some that make maritime
survival equipment, such as life rafts. Fire Protection Service, Inc. sells and
services this kind of equipment. Beginning in the 1970s, Fire Protection and
some Survitec entities operated under an oral agreement allowing Fire
Protection to use Survitec-entity trademarks, trade names, and brand names and
to serve as a dealer and servicer of Survitec-branded products. Survitec Group
Ltd. terminated that agreement in 2017 after it acquired a Houston company that
serviced life rafts and could compete with Fire Protection and similar
companies in the Houston area.

Survitec here alleged that Fire Protection continued to use
its trademarks without authorization, in violation of Texas and Louisiana law
and the Lanham Act. After a bench trial, the court found that Survitec failed
to prove its claims. [There are a lot of trademarks, I assume because of a private equity rollup trying to decrease competition in the field, but it turns out their specific identities don’t matter.]

Survitec’s termination letters demanded that Fire Protection
“cease using all trademarks, trade names and brand names of Survitec and its
group companies,” with each notice listing a different, but overlapping, group
of trademarks. “The letters did not prohibit Fire Protection from accepting
Survitec-branded life rafts needing service or repairs and sending the rafts to
a certified third party to do the work. Nor did the letters require Fire
Protection to inform customers that it was outsourcing service and repair work
to certified third parties.”

To service life rafts, both the U.S. Coast Guard and the
equipment manufacturer—in this case, a Survitec entity—must certify the
servicing technician. The certifications of two Fire Protection technicians
were set to end the same month that Survitec Group Ltd. sent the termination
letters, but Survitec Group Ltd. extended their certifications through the
December 2017 termination date and immediately terminated the certifications of
a third technician.

Fire Protection tried to sell its inventory of
Survitec-branded products during the pre-termination period, including working
to facilitate the repurchase of that inventory by a Survitec entity whose
standard practice is to repurchase leftover inventory from terminated dealers. But
the Survitec delayed in doing so, including by waiting until December 2018 to
issue Fire Protection a return authorization. Because of that delay, and
because Survitec’s termination letters forbade Fire Protection from selling its
Survitec-branded inventory to third parties after the termination date, some of
the inventory expired.

The parties agreed that under the first-sale doctrine, Fire
Protection could resell genuine Survitec goods that Fire Protection had
purchased before the termination. Thus, Survitec’s actions and inactions
prevented Fire Protection from recovering the value of that inventory.

After the termination, Survitec entities filled orders from
Fire Protection for the resale of safety equipment other than life rafts, such
as personal flotation devices and worked with Fire Protection to service life
rafts for the entities’ customers. Those Survitec entities serviced life rafts
for some of Fire Protection’s customers. And Fire Protection serviced some
third-party-branded life rafts for Survitec when, for example, customers had rafts
that were subject to an exclusive servicing arrangement with Fire Protection.  

“After its termination as a licensed Survitec dealer, Fire
Protection continued to assist customers who needed Survitec-branded life rafts
serviced by subcontracting the servicing work to certified third-party
servicers…. Fire Protection would accept orders to service customers’ life
rafts; outsource the service work to a certified subcontractor; and return the
life raft to the customer with an invoice that included all the work.” Sometimes,
Fire Protection notified its customers that it was no longer a
Survitec-authorized service station and that it was outsourcing the service
work on the customers’ rafts.

Fire Protection used a brochure and line sheet that it used
at trade shows and posted to its website before the termination that included
some Survitec logos among over fifty brands for which Fire Protection offers
some good or service, which it removed when a Survitec representative notified
Fire Protection that they were still accessible online. Fire Protection also
continued to use its pre-termination stock of printed brochures at trade shows
after termination, until it ran out of brochures sometime in 2020. It also displayed
lists of domestic and international products that it sells; Fire Protection
updated its website in January 2021 to remove two remaining references.

brochure

website listing

In addition, the U.S. Coast Guard continued to list Fire
Protection as an authorized servicer of Survitec-branded products after the
termination. But the website included a disclaimer stating that the Coast Guard
is not liable for “any reliance on its [website’s] accuracy, completeness, or
timeliness.” No party told the Coast Guard to update its website until Fire
Protection did so in April 2023.

Coast Guard listing

In addition, when Fire Protection shipped customers’ rafts
to authorized service stations, the Survitec marks were on the life rafts, and
Fire Protection’s name was on the transporting vehicles. And when Fire
Protection’s subcontractors returned the Survitec-branded life rafts after
servicing them, the certificates that were required by federal regulations
included the Survitec entities’ marks as the manufacturer. Regulations required
both identification of the manufacturer and of the facility that had serviced
the life raft.

There was no evidence that any of these uses caused harm or confusion
that affected Survitec’s goodwill. Two witnesses testified that they thought
Fire Protection was still an authorized service station after the termination,
but didn’t convince the court that Fire Protection’s limited use of the
Survitec marks caused any economic or other harm to the plaintiffs.

One witness testified that her former employer used Fire
Protection to service its Survitec-branded life rafts; that she did not know
that Fire Protection outsourced the servicing work; and that she assumed Fire
Protection serviced the life rafts itself because federal regulations require
the manufacturer’s certification to service life rafts. The court gave this
(paid) testimony little weight, since she didn’t testify that Fire Protection’s
use of the plaintiffs’ marks confused her; rather, she testified that she
simply assumed Fire Protection was an authorized service dealer doing the
service work itself because it accepted a request to service Survitec-branded
life rafts. A rare and welcome intervention of causation reasoning in a
trademark case!

Her assumption that there would be no outsourcing was
unreasonable, as subcontracting is a normal part of the industry. In addition,
as part of her job, she reviewed certificates of servicing, which identify the
entity that serviced a life raft, including the certificates that Fire
Protection returned, which showed outsourcing on Survitec-branded rafts to an
authorized, third-party service provider. She had no complaints about the
quality of Fire Protection’s work or the price it charged. After she left her
company, Fire Protection told employees that it had to outsource some of their
requests for life-raft servicing, and the employees continued to use Fire
Protection to service the company’s rafts. Thus, Fire Protection did not retain
the company as a customer by failing to disclose that it subcontracted the
servicing of Survitec-branded life rafts. (The theory here is really a false
advertising theory.)

The other witness testified similarly, though he said that,
if he had known that Fire Protection outsourced the life-raft servicing, he
might have sought another service provider. But he lacked personal knowledge of
the transactions with Fire Protection, and he did not testify that Fire
Protection’s limited use of the plaintiffs’ marks caused his assumption that
Fire Protection was doing the service work itself. He also testified that Fire
Protection told one of his technicians that it had to ship their rafts to a
different facility for servicing. The possibility of outsourcing its life-raft
servicing did not cause him to look for other service providers with no
complaint about the quality or price.

Indeed, Fire Protection was the only local service station
in Corpus Christi, and ships often face a short period between docking and
their next voyage, creating the need for “tried-and-true service providers that
can service or repair life rafts in a short timeframe.” Further, “many
customers’ vessels often have life rafts and other safety equipment from
multiple manufacturers and are unlikely to use multiple service providers to
avoid outsourcing service work on life rafts from a single manufacturer.” Thus,
there was simply no causal link between use of Survitec’s marks and Fire
Protection’s sales, or any damage to Survitec. (The court also noted that, even
had some customers stopped using Fire Protection if they knew that Fire
Protection was subcontracting its servicing work on Survitec-branded rafts,
there was no credible evidence that those customers would have chosen a
Survitec-owned service station to do the work. In non-TM fields, this could be
an Article III standing problem.)

Nor was there any evidence of damage to the plaintiffs’
brand image or goodwill from the conduct at issue—the plaintiffs conceded that
Fire Protection could subcontract the work, just argued that Fire Protection
should have disclosed it. The court found no legal basis to conclude “that Fire
Protection infringed Survitec’s trademark by accepting work on Survitec-branded
rafts without disclosing to customers that it was not an authorized service
station.”

Survitec’s harm theory was that the failure to disclose
might give customers the impression that Survitec-branded rafts are expensive. But
there was no supporting evidence; “Fire Protection delivered its customers a
quality service at a price they paid without any evidence of complaints.”

Legal conclusions: Some of plaintiffs’ claims failed because
Fire Protection did not use the marks in commerce. Specifically, marks used on
the Coast Guard website weren’t use in commerce under trademark law. The
plaintiffs cannot state a claim for Fire Protection’s miscellaneous uses of
their marks. Use on a government website related to “regulatory approval,” not
to the sale of goods or services. “The Coast Guard does not accept payment for
listing information on its website, does not accept payment for individuals’
use of its website, and does not contain advertising or links to other
commercial websites. The presence of a mark on that website is not actionable,
commercial use.”

It was also not actionable to ship life rafts and resell
servicing certificates because of first sale. It was inevitable that Survitec’s
marks would be used in reselling its products. Also:

Plaintiffs’ counsel later suggested
that, to avoid infringement, Fire Protection should have draped tarp over
Survitec-branded life rafts that Fire Protection picked up from a ship and
drove to a servicing facility in a truck bearing Fire Protection’s name.
Plaintiffs’ counsel argued that the rafts had to be covered to avoid suggesting
to onlookers that Fire Protection had manufacturer and Coast Guard
authorization to service Survitec-branded rafts. This argument presents an
absurdity that the first-sale doctrine is supposed to prevent.

“In the absence of any credible evidence of confusion or
harm supporting the plaintiffs’ theory of infringement based on Fire
Protection’s transporting Survitec-branded rafts from ships to servicing
facilities, the court ‘decline[s] to expand the reach of’ trademark
protections.”

So too with Fire Protection’s use of plaintiffs’ marks on
servicing certificates that it returns to customers along with their serviced
life rafts. The servicing certificates are “valid and authentic documents,
created by life-raft manufacturers, including the plaintiffs, and sold to
authorized service stations. Federal regulations require their use and
prescribe their content and form.” Thus, the use of these certificates wasn’t
commercial use, and also subject to first-sale.

There was some potential for confusion about whether Fire
Protection was authorized to perform service work on Survitec-branded rafts
after Survitec had terminated that authorization.

The court started with the multifactor test, though it’s not
really suitable for affiliation confusion. It recognized this problem by reasoning
that nominative fair use and first sale “inform the likelihood-of-confusion
analysis.” Thus, Fire Protection would not be liable for using the plaintiffs’
marks on its website or in its brochure if doing so merely identifies the goods
or services it offers. “Fire Protection infringes the plaintiffs’ trademarks,
however, if its advertisements suggest that it is selling specific goods or
services with the plaintiffs’ endorsement.”

But the website, brochure, and line sheet weren’t likely to
cause a consumer to believe that the plaintiffs have an association with, or
endorse, Fire Protection. The court noted that the line sheet put plaintiffs’
marks among about 50 others, offered both sales and services, and also touted that
Fire Protection is the only manufacturer-authorized Viking service station in
Texas. Likewise, the website includes a long list of manufacturer names
(without logos) whose goods Fire Protection sells.

These types of “crowded, list-based advertisements, with no
other special indication of affiliation,” are the kind as to which no reasonable
jury could find affiliation confusion. Even with the special feature that, because
of federal regulation, a representation that Fire Protection services, as
opposed to merely sells, Survitec-branded rafts comes with a consumer
expectation that the service station has technicians certified by the
manufacturer, “[a] consumer is unlikely to believe that Fire Protection has
technicians certified by over fifty brands.” Few service stations are certified
by more than a handful of manufacturers. And the express statement that it was
a Viking-authorized service station “create[ed] the inference that it was not
manufacturer-authorized to service other brands.”

Plaintiffs’ failure to provide evidence of actual confusion confirmed
this finding. Their confusion witnesses “testified only that they thought Fire
Protection was affiliated with the plaintiffs because it accepted their
requests to service Survitec-branded life rafts, not because of Fire
Protection’s use of the plaintiffs’ marks. This is not evidence of confusion;
it is evidence that some consumers made faulty, and unwarranted, assumptions
that Fire Protection was not subcontracting the servicing of some life rafts.”
The relevant misrepresentation has to come from the defendant, not from some
other source, including an assumption that a seller of legitimate goods is an
authorized dealer or repair shop. “An erroneous and unreasonable consumer
assumption is not actionable infringement. The fact that this is the strongest
evidence of confusion that the plaintiffs introduced at trial generates an
additional inference against finding a likelihood of confusion.”

There was one exception—page 7 of the brochure indicated
that Fire Protection was authorized to service some of Survitech’s brands.  This was likely to lead consumers to believe
that the parties were affiliated, because only service stations with
technicians certified by manufacturers can service that manufacturer’s life
rafts. [For what it’s worth, I don’t even think that’s true, if “affiliation”
is read in its ordinary legal meaning—I’m not “affiliated” with the place I got
my driver’s license; I’m a graduate of various schools, but hardly an affiliate
of most of them.]

Page 7 claiming to service some Survitec brands

But this “technical” infringement didn’t entitle them to
actual or statutory damages. There was no proof of monetary harm, as required
for actual damages.  As discussed above, Fire
Protection neither gained nor retained customers because those customers
thought Fire Protection was authorized to service Survitec-branded life rafts. Thus,
Fire Protection was not unjustly enriched by its misrepresentation.

Also, kind of hilariously,

complicating the plaintiffs’ proof
of injury is the fact that Fire Protection used Survitec entities as
subcontractors. If Fire Protection had lost its customers, the plaintiffs could
have lost the customers that Fire Protection had referred to it. Third-party
service stations could have captured a greater proportion of the business that
left Fire Protection. In other words, Fire Protection’s subcontracting may have
helped, rather than hurt, the plaintiffs’ business.

Thus, the court could find neither actual damages nor unjust
profits from the infringement.

Survitec had another theory: Fire Protection damaged their
goodwill by accepting servicing work for the plaintiffs’ branded life rafts,
outsourcing that work, and increasing the prices the customers paid to cover
the prices that the third-party servicers charged Fire Protection for the
servicing work. This would allegedly cause consumers to believe that
Survitec-branded rafts are more expensive. [Wouldn’t it more plausibly prompt
you to find a cheaper servicer?]

The record undermined the theory: there was no evidence that
Fire Protection charged more than other raft-servicing establishments for
similar work, whether done in-house or outsourced; no one complained about the
price; and the record suggested that plaintiffs’ goodwill and reputation were
not particularly price-sensitive. In particular, Survitec didn’t control the
price that its authorized service stations charge their customers or the profit
margin the service stations may generate from servicing. “If the plaintiffs
were concerned about associating their brand with high prices, they could have
contracted to limit the prices that the authorized service stations could
charge. There is no record evidence that they did so.” As to Fire Protection
allegedly encouraging customers to switch to Viking by raising prices on
Survitec, “an authorized service station could, without infringing on the
plaintiffs’ marks or violating any other obligation to the plaintiffs, raise
the servicing prices on Survitec-branded rafts to influence customers to select
other brands. Generally, switching customers from one brand to another is not
improper business behavior; the law favors competition among manufacturers
selling different brands of the same type of product.’”

Ultimately, the plaintiffs didn’t tie their damages theory
to their theory of trademark infringement.

What about counterfeiting and statutory damages? The marks/uses
remaining in the case didn’t qualify. Two marks were unregistered; one was
registered, but not for the services at issue, only for the underlying life
rafts.

Dilution: Ugh.  Survitec
argued that Fire Protection’s failure to disclose to customers that it was
subcontracting the service work on Survitec-branded rafts gave customers the
impression that Survitec-branded rafts were expensive.

First, there was no federal fame. Slightly misstating the
law, the court says that marks must be both registered and famous, not just
distinct, so the unregistered marks couldn’t qualify. Even for the registered
marks, they introduced no proof that those marks were “famous,” that is, “widely
recognized by the general consuming public of the United States.”

Texas dilution: there was no proof of tarnishment via Fire
Protection’s acceptance of requests to service Survitec-branded rafts or Fire
Protection’s outsourcing of that work. The fact that the plaintiffs did not
control the prices that authorized service stations could charge also weighed
against any finding that Fire Protection charged prices that tarnished the
plaintiffs’ reputation.

False designation of origin/reverse passing off (because the
subcontractor provided the services): The traditional concern in a
reverse-passing-off case is that the actor “misrepresent[s] the relative
capabilities or accomplishments of the parties, thus creating the likelihood of
a future diversion of trade to the actor.” Thus liability attaches “only if the
actual producer can establish both the fact of a misrepresentation and a
likelihood of harm to its commercial relations.”

Most of the Survitec entities lacked standing, only the ones
Fire Protection used as a subcontractor and whose servicing work Fire
Protection allegedly passed off as its own. Plus, there was no proof of passing
off. “The case law does not recognize an affirmative duty on the part of a
seller to disclose the identity of the manufacturer or producer of goods
offered for sale; liability is imposed only on the basis of an express or
implied misrepresentation that the goods have been produced by the actor or a
third person.” Fire Protection hadn’t been shown to represent to customers that
it did the servicing work on Survitec-branded life rafts in-house. Whatever
witnesses assumed, Fire Protection always provided its customers with the
servicing certificates that clearly identified the entities that serviced the
Survitec-branded rafts. Customers are required by regulation to maintain these
certificates, which customers review “to ensure that they show that the life
rafts are properly serviced and to log the date of inspection so that the life
raft is serviced again at the proper time.” Because the service station name
and number are conspicuously next to the date of inspection, a Fire Protection
customer “would immediately know that a subcontractor—in this example, Donovan
Marine—serviced the rafts.”

certification example
big Survitec stamp on document provided to customer

Finally, the plaintiffs didn’t show harm.  In a subcontracting situation, there is a stronger presumption that the subcontractor “implicitly consented to sales under the seller’s trade name or trademark.” The plaintiffs didn’t try to protect its commercial interests through contractual arrangements with Fire Protection. They sent to Fire Protection and its customers certificates that identify Survitec Survival Products, with special stamps to clearly mark that a Survitec entity serviced the raft:

No reverse passing off.

False advertising:

The market for life raft services had multiple players, so there was no presumption of damage from false comparative advertising. And there was no evidence of harm from Fire Protection’s failure to change its brochure after the termination to remove the statement that it was an authorized service station, nor of unjust enrichment to Fire Protection. Plaintiffs’ damages expert provided no causation analysis.

from Blogger http://tushnet.blogspot.com/2025/10/court-rejects-affiliation-confusion.html

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Second Circuit reverses literal falsity finding based on dispute over meaning of “brand”

Posted on October 6, 2025 by rtushnet

Zesty Paws LLC v. Nutramax Laboratories, Inc., — F.4th
—-, No. 24-1810, 2025 WL 2810078 (2d Cir. Oct. 3, 2025)

The court of appeals reverses the district
court opinion discussed here, which had granted a preliminary injunction on
Zesty’s Lanham Act false advertising claim about Nutramax’s “#1 brand of pet
supplement” claims, remanding for re-analysis of both literal and implied
falsity. A concurrence would have remanded only on implied falsity.

The district court reasoned that Nutramax is a brand, and it
is undisputed that the combined sales of Nutramax pet supplement products
exceeded the combined sales of Zesty Paws pet supplement products. The district
court therefore concluded that Zesty Paws’s advertising claims were likely
literally false. The court of appeals agreed with Zesty that its #1 brand
advertising claims were not unambiguously false given that they were at least
reasonably susceptible to the interpretation that they compared Zesty Paws’s
combined sales to the sales of each individual brand of Nutramax’s pet
supplement products, such as Cosequin and Dasuquin.  

It was undisputed that the sales of each of Nutramax’s
individual products do not exceed Zesty Paws’s aggregate product sales. (Gotta
admit, I’m on Nutramax’s side here. Burger King isn’t the number one fast food
brand even if it sells more Whoppers than McDonald’s sells Big Macs.)

The court of appeals began with the proposition that, “if
the language or graphic is susceptible to more than one reasonable
interpretation, the advertisement cannot be literally false.” The district
court erred by focusing exclusively on whether Nutramax had shown that Nutramax
is a brand. But “Nutramax had the burden of showing not only that the #1 Claims
could have referred to Nutramax, but that, to a reasonable consumer, they
unambiguously did so.” But the district court didn’t explain why Zesty Paws’s
proffered interpretation—namely, that the #1 Claims compared the Zesty Paws
brand to only the individual brands of pet supplements Nutramax sells, such as
Cosequin and Dasuquin—was unreasonable. (Because it’s apples to oranges?)

Also, the district court did not sufficiently address “much
of Zesty Paws’s evidence” supporting the reasonableness of its interpretation
it advances, such as evidence that Nutramax’s product packaging featured
Dasuquin and Cosequin labels in larger font, while simultaneously displaying
the Nutramax label in a smaller font, referring to Nutramax as the “Company,”
or relegating the Nutramax label to the back of the product packaging. Internal
Nutramax documents also showed that Nutramax employees viewed Nutramax’s
individual named products, not Nutramax, as its “principal brands.” “The
strength (or lack thereof) of the Nutramax brand is probative as to whether a
reasonable consumer could understand the #1 Claims to compare the Zesty Paws
brand to only Nutramax’s individual product brands, rather than to Nutramax
itself.” Thus, the district court should address on remand whether the #1
Claims are so unambiguous that a reasonable consumer could not share Zesty
Paws’s interpretation. It could also analyze implicit falsity.

Judge Menashi concurred in the judgment, reasoning that, on
this record, the #1 Claims cannot be literally false, because “brand” was
susceptible to more than one reasonable interpretation given the parties’
divergent branding strategies—Zesty Paws’ “branded house” strategy versus Nutramax’s
“house of brands.” “Even if it would be reasonable to regard Nutramax itself as
a brand—and to understand the #1 Claims to compare all Zesty Paws products to
all Nutramax products—the record forecloses the conclusion that the #1 Claims
are susceptible only to that interpretation.”

After all, Nutramax’s own marketing materials distinguish
between these “brands” and the parent “company” Nutramax. The packaging for
Cosequin prominently identifies Cosequin as the “#1 Veterinarian Recommended
Brand,” but Nutramax appears only in small print on the back of the bottle. Dasuquin
likewise touts itself as the “#1 Joint Health Brand Recommended by
Veterinarians,” with a Nutramax logo in smaller print at the top, and it
specifically refers to Nutramax as the “#1 Veterinarian Recommended Supplement
Company.” Nutramax internally referred to its “house of brand[s],” a portfolio
of “16 brands” with “1 national brand of scale (Cosequin).” Its internal
analyses identified Cosequin and Dasuquin as brands that compete against Zesty
Paws and admitted that Zesty Paws “holds the #1 brand spot in supplements.” Thus,
the concurrence would have remanded only for implicit falsity.

from Blogger http://tushnet.blogspot.com/2025/10/second-circuit-reverses-literal-falsity.html

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A couple of Third Circuit amicus briefs (AI training and false advertising harm)

Posted on October 3, 2025 by rtushnet

Thomson Reuters v. Ross, arguing that training is fair use. With Edward Lee of Santa Clara Law, Matthew Sag of Emory University, Pamela Samuelson of UC Berkeley School of Law, Christopher John Sprigman of New York University School of Law.

And an amicus with Alexandra Roberts in support of a petition for rehearing in CareDX v. Natera, discussed here. The argument is that circumstantial evidence of harm can suffice in a Lanham Act false advertising case.

from Blogger http://tushnet.blogspot.com/2025/10/a-couple-of-third-circuit-amicus-briefs.html

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HomeVestors opinion shows that post-JDI Rogers v. Grimaldi can’t give security to titles

Posted on October 1, 2025 by rtushnet

HomeVestors of America, Inc. v. Warner Bros. Discovery, Inc.,
2025 WL 2301911, No. 22-1583-RGA (D. Del. Aug. 8, 2025)

Rogers v. Grimaldi no longer provides a path to early
dismissal for many expressive uses in titles. For titles, it might be an
affirmative defense, though even there the path seems rather narrow.

HomeVestors, which has registrations for THE UGLIEST HOUSE
OF THE YEAR, WE BUY UGLY HOUSES, and UGLY HOUSE?, and uses THE UGLIEST HOUSE OF
THE YEAR in connection with a yearly home renovation contest for its
franchisees, sued defendant WBD for its TV show, “Ugliest House in America.”

The court held that the Rogers defense required a
trial on whether the use was source-identifying. HomeVestors argued that
Ugliest House in America must be source-identifying because it is the title of
a television series, because WBD and its production company have characterized
it as source-identifying in contracts with each other and with the host of the
show, and because the titles of many of WBD’s other television shows are
registered trademarks. WBD argued that none of those things were legally
relevant, and that it presented unrebutted evidence—survey data—indicating that
the public does not associate Ugliest House in America with HGTV or WBD.

The court found a material factual dispute on use as a mark.

Specifically, HomeVestors alleges that the marks are similar
(how does this bear on trademark use by WBD?), that both parties run a
contest related to ugliest homes (how does this bear on trademark use by WBD?),
that internet searches for HomeVestors’ marks return results for WBD’s show
(how does this bear on trademark use by WBD?), that promotional materials for
the show emphasize the words in common with HomeVestors’ marks (at least
plausibly relevant to whether WBD is making trademark use), that WBD,
either itself or through its agent, initially sought to take advantage of
consumer recognition of HomeVestors’ brand for casting purposes (maybe relevant),
and that WBD is actively competing with HomeVestors franchisees for houses and
homeowners (ditto).

But how are these things to be weighed against the survey evidence
or the principle “TV show titles are trademarks”? The court says: “Where, as
here, a program’s title plainly describes its subject matter, a reasonable
fact-finder could conclude that the title is not source-identifying” (citing Down
to Earth Organics, LLC v. Efron, 2024 WL 1376532, at *4 (S.D.N.Y. Mar. 31,
2024) (concluding at the pleading stage that the program title “Down to Earth
with Zac Efron” merely “identif[ied] the subject matter and tone of the
[s]eries” and was therefore subject to the Rogers test)). WBD also
offered evidence that it chose the title Ugliest House in America solely for
its descriptive value, along with survey evidence suggesting that “consumers do
not associate the title ‘Ugliest House in America’ with a specific source.” 

The well-recognized problems with trademark use
inquiries—necessary as they may be—are on full display here, especially since “use
to describe the nature of the show” gives people reasons to watch the show or
participate in the show. That is, descriptive use can promote the show! Thus it is very difficult to disentangle from
“trademark use.”

The same reasons prevented summary judgment on descriptive
fair use.

The court also rejected WBD’s trademark misuse/unclean hands
defense, because asserting trademark rights, even if unjustifiably, doesn’t
constitute misuse or unclean hands.

Confusion: There was a genuine dispute because there was “some
visual similarity, including the emphasis on UGLIEST HOUSE,” and similarity is
the most important factor. 

HomeVestors mark

WBD ads

In addition, there was evidence that could be actual
confusion evidence, though WBD disputed its meaning. Specifically, HomeVestors
argued that the National Association of Realtors confused the names of WBD’s
show and HomeVestors’ contest” and that “one of HomeVestors’ own marketing
vendors confused the names of WBD’s show and HomeVestors’ contest.”

Finally, intent was disputed, because “WBD’s predecessor
entity published an article on HGTV’s website … discuss[ing] HomeVestors and
its famous ‘We Buy Ugly Houses’ billboards[,]” and that “[i]n November 2020,
the title clearance report provided by [the production company WBD hired] to WBD—before
the show premiered—identifies HomeVestors UGLY HOUSES marks.” Although
knowledge of the mark alone is insufficient, the fact that WBD’s production
company explored a collaboration with HomeVestors “could plausibly suggest that
WBD sought to trade on HomeVestors’ goodwill.”

Even though there’s no way HomeVestors’ marks are household
names among the general consuming public, the court also denied summary
judgment on dilution, holding that the parties just repeated their arguments on
confusion.  

The court also left disgorgement for trial (that bench trial
has now occurred) as well as objections to proposed expert testimony. Issues of
intent and delay were contested for disgorgement. For the expert testimony, I
noted WBD’s objection to testimony that the houses featured on UHIA would make
for good HomeVestors purchases, and thus that the parties compete. WBD argued,
in my view correctly, that (in this specific context) this claim wasn’t
relevant to the issue of confusion. “[W]hether the parties compete at all might
be probative of whether they compete in the minds of consumers.” In the TV show
v. home flipper situation, though, whether the houses were actually suitable
for both parties’ purposes doesn’t seem connected to whether reasonable consumers
would think that HomeVestors operates or endorses a TV show.

from Blogger http://tushnet.blogspot.com/2025/10/homevestors-opinion-shows-that-post-jdi.html

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We have (less of) the meats: court mostly denies Arby’s motion to dismiss in misleading photos case

Posted on October 1, 2025 by rtushnet

Alongis v. Arby’s Restaurant Group, Inc., 2025 WL 2772810, 2:23-cv-6593
(NJC) (LGD) (N.D.N.Y. Sept. 29, 2025)

The court declines to dismiss claims under the NY GBL that
Arby’s photographs misrepresented (1) whether its roast beef was rare rather
than fully cooked and (2) the amount of meat in a sandwich by at least 100%. The
photos are on Arby’s website, on menu ordering boards located within the store,
and in the drive-through at every Arby’s store location in New York such that,
plaintiff alleged, “every customer will view said photographs prior to the time
of the purchase.”

advertised/actual

Rare roast beef:  It
was plausible that the photos would mislead reasonable consumers, since they visually
depict reddish, light-colored meat, which is associated with rare, rather than
fully-cooked, roast beef. The claim could not be dismissed as puffery; the
photos weren’t “subjective statements of opinion which cannot be proven false.”
Rather, it can be readily determined whether the meat actually used in the
photographs consisted of rare meat. Nor was the photo “patently hyperbolic” and
thus unreliable. Even in the context of a relatively lower priced and fast meal,
it was plausible that a reasonable consumer would believe they’d receive rare
roast beef. Thus, “a fact-intensive inquiry on how a reasonable buyer would
react” was required. The court distinguished cases where an ingredients list
would disclose the truth, as well as cases involving verbal statements that
were puffery, because the photos here were “both provable as true or false and
also plausibly deceptive and misleading.”

Unlike some other courts, the court here also allowed the
plaintiff (at this stage!) to include online purchasers in his proposed class
definition, because the alleged misrepresentations were identical.

Volume misrepresentation: Similar reasoning with respect to
non-half pound sandwiches. “The advertisements of the Half Pound Roast Beef and
Half Pound Beef ‘N Cheddar sandwiches consist not only of the photographs of
these Sandwiches, but also their names, which are additional affirmative
statements communicating that each of these two Sandwiches contain a half pound
of meat.” It was implausible that a consumer ordering a Half Pound Sandwich
could do so without actually using the name, and there was no allegation that
they received less than a half a pound of meat. For the other sandwiches, “in
each photograph used in the advertisements, the meat in the sandwiches
plausibly appears to constitute at least double the amount of meat in the
sandwiches actually purchased.” Other cases involving only photos of single
ingredients were inapposite.

from Blogger http://tushnet.blogspot.com/2025/10/we-have-less-of-meats-court-mostly.html

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court dismisses popcorn calorie/slack fill claims for failure to account for popcorn’s compressibility

Posted on October 1, 2025 by rtushnet

Borgen v. Hershey Salty Snack Sales Co., 2025 WL 2753734,
No. 24-cv-1635-BJC-JLB (S.D. Cal. Sept. 2, 2025)

I just like the facts here: Plaintiffs alleged that
defendants’ SkinnyPop popcorn has too much slack fill. In particular, they alleged
that the brand name and package info led them to believe that “they could
consume the portion sizes described on the bag and in the number of servings
described in the bags.” But their personal experience and investigation allegedly
show that the SkinnyPop bags contain “less popcorn than what Defendants
promise” and thus short-sells the consumer. If the nutrition facts are correct,
based on the actual popcorn present in the bags, they alleged that “there are
significantly more calories per serving … than advertised,” and the
“SkinnyPop” name and the amount of calories in each serving is false and
misleading

The court dismissed the claim as implausible, because
reasonable consumers understand that weight is more important than volume when
it comes to packaged popped corn, since kernels might disintegrate in the bag
and thus pack more tightly, changing a serving size’s volume.

The court first rejected a preemption argument. Plaintiffs
weren’t challenging a measurement technique or the nutrition facts as such, but
arguing that the labeled approximation of cups included on the nutrition
information was woefully inaccurate compared to the actual measure of cups
contained in a bag of SkinnyPop. They alleged that their sampling of 11 bags of
SkinnyPop showed “up to approximately 43% less than what is labeled and
promised.” This theory didn’t seek to impose any requirement non-identical to
federal law.

The court also rejected defendants’ argument that the use of
“about” to qualify the serving size information precluded liability.  “SkinnyPop may not escape liability for
providing far less product to consumers by using disclaimers such as ‘about’ or
‘approximate.’”

However, the remaining argument—that plaintiffs failed to
allege whether the weight of the popcorn differed from what was claimed
on the bag—succeeded. “[T]o accurately consider whether or not less product is
indeed being delivered, weight is a relevant consideration given that the
volume of popcorn is more likely to change based on the popcorn’s configuration
when purchased.” The court relied on “the common understanding that popcorn’s
configuration is highly mutable.”  In
particular, “a reasonable consumer purchasing pre-popped popcorn would
understand that while the volume may vary depending on whether the popcorn is
in whole or broken pieces, the weight is likely to remain consistent.”
Plaintiffs couldn’t state a claim by focusing solely on the highly variable
volume, without addressing the actual weight. If a consumer noticed a volume
discrepancy, but also found that the weight matched the representation on the
bag, “a reasonable consumer, using common sense, would likely assume that any
difference in volume was due to the popcorn being broken into smaller pieces
during transit.”

Leave to amend was granted if the plaintiff could make weight-based allegations.

from Blogger http://tushnet.blogspot.com/2025/10/court-dismisses-popcorn-calorieslack.html

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Audible’s expiring credits covered by Washington’s gift certificate law, court rules

Posted on September 30, 2025 by rtushnet

Hollis v. Audible, Inc., 2025 WL 2689123, No. 2:24-cv-01999-TL
(W.D. Wash. Sept. 19, 2025)

State consumer protection laws sometimes address very
specific topics; this case addresses the intersection of one such law with
Audible’s membership, which provides customers (including me) with a certain
number of credits on a monthly or yearly basis. Audible advertises that these
credits are “good for any title in our premium selection, yours to keep
forever.” Unused Audible credits expire one year after issue, including credits
bought as gifts for other people.

Hollis alleged that this practice is in violation of
Washington law, which makes it “unlawful for any person or entity to issue, or
to enforce against a bearer, a gift certificate that contains…[a]n expiration
date.” Hollis sought to represent a class of all persons within the United
States who purchased Audible credits that expired within the applicable statute
of limitations.

“In 2004, the Washington State Legislature passed RCW
19.240.020 to ‘prohibit acts and practices of retailers that deprive consumers
of the full value of gift certificates, such as expiration dates, service fees,
and dormancy or inactivity charges on gift certificates.’ ” The Legislature
intended the statute to “be liberally construed to benefit consumers.” The law defines
gift certificate to mean “an instrument evidencing a promise by the seller or
issuer of the record that consumer gifts or services will be provided to the
bearer of the record to the value or credit shown in the record.”

The court found the statute ambiguous in relevant part.
Given the consumer-protective aim of the legislature, the court interpreted
“gift certificate” broadly. Interpreting the term “value or credit shown in the
record” as meaning “a stored value or credit worth a specified amount” of
“money, services, or goods” or the balance credited to a person’s account,
respectively. “Or credit” could not be rendered superfluous. Audible argues
that “[t]he word “value” refers to vouchers that show a cash value that was
purchased (e.g., a $10 Starbucks gift card), while the word “credit” captures
store credits (e.g., a receipt showing a $25 credit after a product return).” “But
there is no meaningful distinction between these examples, which both show a
redeemable cash value: $10 and $25, respectively.”

This wasn’t an unlimited reading: “For example, a voucher
containing a promise to provide ‘car washes’ would not identify a value or
credit and would thus be outside the scope of the statute; in contrast, a
voucher containing a promise to provide ‘four car washes’ would identify a
credit to the voucher user, though not necessarily a monetary value.” Nor would
it cover time-limited admissions passes, such as “monthly passes to a parking
garage, admission passes to theme parks, physical training packages, music
lessons, and bus passes good for a certain number of rides.” Temporally
restricted tickets didn’t have “expiration dates”—the nature of the
goods/services such as an admission ticket to a theme park, or a monthly bus
pas, was that they were provided for a particular duration. A dated “club
pass,” “parking code,” or “event ticket” does not contain an “expiration date”
if its “value or credit” is for admission to a particular club, parking area,
or event on a particular date—neither later nor sooner. Those were merely
“dates,” not “expiration dates.”

What about the focus on “gift certificates”? Audible argued
that its credits cannot be gifted, and thus cannot fall under the statute’s
definition of gift certificates. But the legislative definition of “gift
certificate” didn’t require that it had been transferred by a donor. Anyway,
the plaintiff alleged that “Audible allows account holders to gift books to
anyone…for example, an account holder could use 5 credits to buy books for 5
friends.” So the court denied the motion to dismiss.

 

from Blogger http://tushnet.blogspot.com/2025/09/audibles-expiring-credits-covered-by.html

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pharmacos face judicial resistance to claims against compounding pharmacies for weight loss drugs

Posted on September 29, 2025 by rtushnet

Three cases showing aspects of the challenges, only one of which even partially survives:

Novo Nordisk, Inc. v. Brooksville Pharm. Inc., 785 F.Supp.3d
1123 (M.D. Fla. 2025)

Novo Nordisk sells FDA-approved drugs containing semaglutide,
Wegovy, Ozempic, and Rybelsus. Brooksville is a pharmacy that sells compounded
drugs containing semaglutide.

Under Section 503A of the FDCA, a pharmacist may not
compound “any drug products that are essentially copies of a commercially
available drug product.” But an exemption allows compounded drugs “for an
identified individual patient based on the receipt of a valid prescription
order or a notation, approved by the prescribing practitioner, on the
prescription order that a compounded product is necessary for the identified
patient.” And it also allows compounding when drugs are on the FDA’s drug
shortage list, which was true of Ozempic and Wegovy from approximately March
31, 2022, until February 21, 2025. Brooksville was thus permitted to compound
“essentially copies” of Ozempic and Wegovy without a patient-specific
prescription, and “outsourcing facilities” were allowed to compound the active
pharmaceutical ingredients.

With the drugs off the shortage list, Brooksville claims it
will now revert to the FDCA’s traditional compounding standard and “only sell
compounded drugs containing semaglutide pursuant to individualized
prescriptions calling for a custom compound that is materially different from
Novo’s FDA-approved drugs.”

Novo Nordisk alleged that Brooksville was manufacturing and
selling adulterated and misbranded drugs in violation of the Florida Drug and
Cosmetic Act. Novo Nordisk acquired samples of Brooksville’s compounded
semaglutide in 2023 and 2024; its tests in Norway showed that Brooksville’s
samples had potency in the 81-87% range of labeled potency, while third party
testing of the 2024 samples showed a potency of 92.9% and 95.8%. The level of
impurities in Brooksville’s compounded semaglutide was mostly within Novo
Nordisk’s own drug product specifications.

Unlike Novo Nordisk, compounders such as Brooksville are not
required to report adverse events to the FDA. Novo Nordisk alleged that the
impurities in Brooksville compounded semaglutide pose immunogenicity risks, but
there are no reports of injury due to impurities in Brooksville’s compounded
semaglutide in the record. Five Brooksville customers complained that their
prescriptions were ineffective.

Novo Nordisk sought injunctive relief under FDUTPA for
violations of a “statute … which proscribes unfair methods of competition, or
unfair, deceptive, or unconscionable acts or practices,” here the Florida DCA’s
prohibition on selling adulterated and misbranded drugs.

Article III standing: injury-in-fact was present because
each sale of compounded semaglutide was likely a sale taken from Novo Nordisk,
even if some of Brooksville’s 24,000 customers might choose another compounder
over Novo Nordisk and even if Brooksville was right that at least 50% of
customers cannot afford Novo Nordisk’s branded version. But was the claim moot
and unredressable? Now that the shortage for Ozempic and Wegovy is over, compounding
is only allowed where “a change [is] made for an identified individual patient,
which produces for that patient a significant difference, as determined by the
prescribing practitioner, between the compounded drug and the comparable
commercially available drug product.”

Novo responded that, “because Brooksville intends to
continue compounding semaglutide products [via individualized patient
prescriptions], Novo continues to have claims that such conduct is unlawful
because those products are adulterated and misbranded.” Moreover, because
Brooksville was compounding in bulk prior to the FDA’s declaration of a
shortage for Ozempic and Wegovy, Novo speculated that “there is nothing
stopping [Brooksville] from making that same unilateral judgment in the
future,” so the Court should “doubt that Brooksville will engage in any
cessation of its current activities.”

“There are circumstances where a defendant’s voluntary
cessation of challenged conduct may moot a case after all, but the standard for
that is ‘stringent’: A defendant’s voluntary conduct may moot a case only if
‘subsequent events made it absolutely clear that the allegedly wrongful
behavior could not reasonably be expected to recur.’ ”

Despite not finding the record entirely clear, the court
reasoned that “the patient-specific semaglutide that Brooksville compounds
post-shortage would presumably be ‘materially different’ from the semaglutide
it was compounding during the shortage.” Plus, Brooksville’s decision to cease
compounding copies was not necessarily a “voluntary” cessation since it was
legally required to do so. “Brooksville continued to litigate this suit from
its inception all the way to summary judgment, and only raised a voluntary
cessation argument after a change in the FDA’s shortage list during the
pendency of the litigation.” Thus, the allegedly wrongful behavior (i.e.,
compounding misbranded and adulterated semaglutide in bulk) could not
reasonably be expected to reoccur. The court could longer provide “meaningful
relief” to Novo because the case was moot.

Also, Novo sought an impermissible “obey-the-law” injunction
with a prohibition on selling a “drug … that is adulterated [and]
misbranded.” “While the Florida DCA defines what counts as an adulterated and
misbranded drug, these definitions are incredibly vague and wholly lack any
specificity to put Brooksville on notice of what specific conduct would be
enjoined”:

For example, what impurities with
amino acid additions and deletions in Brooksville’s compounded semaglutide
would count as “contaminated” or “injurious to health?” Who would test the “purity”
and “quality” of Brooksville’s semaglutide to determine if it fell below a
certain standard? What labeling counts as “false or misleading” when each
semaglutide prescription compounded is discrete and patient-specific
post-shortage?

This couldn’t be defined within the four corners of an
injunction. And to do so would be to allow private enforcement of the Florida
DCA, even though there’s an explicit commitment of enforcement authority to the
state.

Even without mootness, the claim was impliedly preempted by
the FDCA. To “escape implied preemption,” the alleged conduct must “give rise
to liability under state law even if the Act did not exist.” A claim that
“relies on a state statute which itself relies on the federal statute, not
traditional state tort law theory,” “exist[s] solely by virtue of the FDCA …
requirements.” An FDCA-related FDUTPA claim has to fit through a “narrow gap”:
“a plaintiff has to sue for conduct that violates a federal requirement
(avoiding express preemption) but cannot sue only because the conduct violated
that federal requirement (avoiding implied preemption).” Novo did not squeeze
through that gap. The FDUTPA claim was based on “unlawfulness,” that is,
predicate violations of the Florida DCA, whose express goal was conformity and
uniformity with the FDCA. This wasn’t a “traditional state tort law” claim
which “predate[s] the federal enactments in question[.]” (A deception-based
claim, by contrast, wouldn’t exist just because of the violation of the FDCA.)

Finally, the FDUTPA claim failed on the merits. Under
FDUTPA, a plaintiff must prove “(1) a deceptive act or unfair practice; (2)
causation; and (3) actual damages.” Plaintiffs need not be consumers, but “Florida
case law requires a plaintiff to prove harm to a consumer or consumers.” Actual
patient harm was the proper standard at the summary judgment stage, and it wasn’t
in the record.

Novo argued that, since compounders like Brooksville are not
required to report adverse events to the FDA, Novo should not have a burden to
show actual consumer injury. “But most defendants in a FDUTPA lawsuit are not
sending adverse event reports to a state or federal agency. That’s why parties
in a lawsuit conduct discovery. Plaintiff’s hypothetical possibility of some
future injury to Florida consumers based on impurities in compounded
semaglutide (which could be materially different given that Brooksville is only
providing patient-specific prescriptions post-shortage) is insufficient to
survive summary judgment.”

As for deception, the allegation was that Brooksville
deceived consumers by selling compounded semaglutide with a potency less than
what is reported on the label. But, while five (out of 24,000) Brooksville
customers reported that their semaglutide perceptions were “ineffective,” Novo
didn’t test the potency of the compounded semaglutide these customers received.
Without evidence of consumer harm, Novo was entitled to summary judgment. (The
harm from deception can also be from paying too much for what the compound was
worth, but the court doesn’t seem interested in that or the fact that deception-based
claims should escape preemption.)

Eli Lilly & Co. v. Adonis Health, Inc., 2025 WL 2721684,
No. 25-cv-03536-JST (N.D. Cal. Sept. 24, 2025)

Lilly sells Mounjaro and Zepbound, which are FDA-approved
drugs for the treatment of diabetes, weight management and sleep apnea. Defendant
Henry is a telehealth platform that markets compounded versions of FDA-approved
medications. Lilly alleged that Henry markets and sells compounded versions of
Lilly’s drugs and misrepresents that these drugs are as safe and effective as
Lilly’s products. Henry also allegedly advertises its medications as being
“patient-specific,” but instead “sells the same mass-produced, compounded
tirzepatide products for all patients.” Lilly also alleged that the lack of
efficacy of Henry’s untested compounded tirzepatide medications causes harm to
Lilly’s goodwill in the marketplace.

Lilly brought federal and California false advertising
claims against Henry.

Statutory standing: Henry argued that it didn’t compete with
Lilly because Henry is not a drug manufacturer but a “telehealth platform” that
“provides medical practice management and services to independent licensed
healthcare providers” who can “in turn assess, diagnose and treat patients,
which may include prescribing medications like compounded tirzepatide.” The
court disagreed. Henry’s “competition with” Lilly was “reflected in [Henry’s]
advertising itself, which draws direct comparisons between” Lilly’s
FDA-approved tirzepatide medications and Henry’s compounded tirzepatide
products. The parties were direct competitors in the market for tirzepatide
products because both Henry and Lilly market and sell tirzepatide-containing
drugs to the same potential customers. In addition, Lilly plausibly alleged
financial harm. Also, even if the market has numerous competing weight loss products,
Lilly alleged that Henry competes in the market for tirzepatide-containing
medications used for weight loss, a significantly narrower segment of the
market.

Henry argues that the fact that both the FDA-approved and
compounded versions of the medications require a prescription “breaks any chain
of proximate cause” because “[i]t is ultimately the provider’s decision to
prescribe an appropriate medication for a particular patient.” But courts have
routinely found that Lanham Act claims can be maintained for prescription drugs.
For similar reasons, Lilly had standing to bring state law claims.

Lilly alleged two broad types of false statements in its
complaint: (1) that Henry falsely claims that its medications are “safe and
effective” even though “no clinical trials demonstrate that compounded
tirzepatide—in any form—is safe, effective, or even approved for human use,” and
(2) that Henry “deceives consumers by touting its products as ‘patient-specific
medication[s]’ ” when “[i]n reality, Henry does not sell ‘patient-specific’
tirzepatide at all, but rather sells the same mass-produced, compounded
tirzepatide products for all patients.”

Applying the heightened pleading standards for fraud under
Rule 9(b), “a plaintiff may not sustain false advertising claims based solely
on ‘lack of substantiation’ grounds.” The court found that claims under theory
(1) were impermissible for that reason. [I’d have been inclined to say that
statements about prescription drugs are likely to be establishment claims, even
implicitly, such that Lilly could disprove them by showing that they weren’t
proven as long as Lilly also was able to show that they were establishment
claims, e.g. with evidence of consumer perception.]

However, Lilly’s personalization-based claims survived. Lilly
alleged that these false statements lure patients away from FDA-approved
tirzepatide products because patients could believe that they will receive
“patient-specific” weight-loss medications from Henry. Henry argued that, because
it adheres to FDA’s compounding requirements, Lilly’s claims were preempted. I

Lilly adequately alleged falsity of “individualized
treatments,” “Tailored Treatments,” and “patient-specific” medications that
“meet[ ] each patient’s unique needs,” by alleging that Henry in fact offers a
“standard treatment plan [where] each patient will receive the same pre-made
dosage of tirzepatide, over the same amount of time, regardless of any
patient’s individualized circumstances.”

Henry’s alleged compliance with the FDCA was immaterial to
whether the advertising of “patient-specific” “tailored” or “individualized
treatment” is false. As understood by “any linguistically competent person,”
the statements indicated Henry specifically creates individualized medication
plans for each patient, and thus Lilly plausibly alleged literal falsity.

Nor was there preemption. Even if the FDCA didn’t exist, it
was perfectly possible to evaluate the truth or falsity of “tailor-made” or
“individualized treatments” when the treatment is in fact standardized. And
anyway, even if the FDCA preempted Lilly’s state UCL and FAL claims as to
personalization statements, the Lanham Act claims would still survive.

Eli Lilly & Co. v. Willow Health Services, Inc., 2025 WL
2631620, No. 2:25-cv-03570-AB-MAR (C.D. Cal. Aug. 29, 2025)

Defendant Willow is a “technology platform to connect
registered users of [its] Website with Physicians and pharmacies for medical
consultations and dispensing of medications prescribed by the Physicians.” It sells
compounded medications, which incorporate tirzepatide, also the active
ingredient in Mounjaro and Zepbound. Lilly alleged that its tirzepatide
medicines are tested and approved only for under-the-skin injections (not for
administration in any oral form), to treat serious diseases, such as type 2
diabetes and chronic weight management issues in obese adults and overweight
adults with at least one weight-related condition (not for cosmetic weight
loss), and without additives, such as vitamins.

By contrast, Willow’s compound tirzepatide drugs are allegedly
in “oral form,” mixed with “additives,” and are marketed for “cosmetic weight
loss,” even though no clinical trial has studied tirzepatide for cosmetic
weight loss, for safety and efficacy of oral use, or for the effect of additives.
In addition, Lilly alleged that Willow’s claim of “personalized” drugs was
false because its drugs were “standardized compound tirzepatide drugs in
predetermined dosages.” Finally, Willow allegedly falsely claimed that the
compounding pharmacies it works with “pass rigorous evaluations and are subject
to the same high standards,” but Willow allegedly sourced its drugs from
compounding pharmacies who have “serial records of regulatory violations.” Lilly
brought California state and federal false advertising claims.

Willow argued that it wasn’t a direct competitor because it
sold a different product (oral, and with additives) for a different condition (cosmetic
weight loss), which Lilly didn’t.  Nonetheless,
competition with Lilly was “reflected in [Defendant’s] advertising itself,”
which “draws direct comparisons” between both tirzepatide products. Again, the
parties “vie for the same dollars from the same consumer group”—consumers with
diabetes or obesity who want to lose weight.

Nonetheless, Lily failed to plead a single lost sale or a single
instance where a consumer decided to select a compounded tirzepatide provided
by Willow instead of Lilly’s products because of any allegedly false ads. It was
not enough to allege that Willow’s ads might make consumers “conclude that any
tirzepatide is ineffective,” or “may even draw unwarranted conclusions about
the safety and effectiveness of [Plaintiff’s] FDA-approved tirzepatide
medicines,” or to allege that the advertisements may “steer patients away from
[Plaintiff’s] tested, proven medicines.” There was no plausible “chain of
inferences” showing how Willow’s advertisements could harm Lilly’s business. “Even
if Plaintiff did not have data about lost sales, Plaintiff could have presented
testimony or survey evidence that indicated consumers may be swayed one way or
another to Defendant’s product. Instead, Plaintiff only provides conclusory
allegations.”

Thus, Lilly failed to sufficiently allege a commercial
injury under the Lanham Act. It also failed to allege proximate cause, which
ordinarily requires “economic or reputational injury flowing directly from the
deception wrought by the defendant’s advertising; and that that occurs when
deception of consumers causes them to withhold trade from the plaintiff.”
Proximate causation may be adequately alleged when “there is likely to be
something very close to a 1:1 relationship between” a plaintiff’s lost sales
and the sales diverted to a defendant. Here, though, “regardless of what an
advertisement says or what a consumer wants to buy, obtaining a prescription
medication requires a physician to prescribe it. A physician prescribing a
compounded medication is the proximate cause of a consumer/patient using
compounded medication instead of Plaintiff’s medication.” Thus, Willow’s ads
were not what “causes [consumers] to withhold trade from the plaintiff.” [I don’t
think this accurately reflects the reality of what doctors—especially doctors
accessed through Willow’s site—do these days.]

This Lanham Act standing analysis also applied in similar
fashion to the California claims, which require lost money or property.

As to the merits, on the safety/effectiveness claims, these
were mere lack of substantiation claims and not actionable by private parties. Lilly
responded that it was challenging Willow’s claim that its products were
clinically proven to cause and maintain weight loss, because the products
themselves have not undergone any clinical testing at all. But Willow wasn’t
alleged to have advertised that its products were clinically tested, only that
Tirzepatide was. [This is the kind of implication that really should be actionable;
Lilly can surely afford a consumer survey, even if it shouldn’t have had to do
so before a motion to dismiss.]

Personalization: Unlike the previous case, the court here
considered that a properly compounded drug, manufactured for “an identified
individual patient based on the receipt of a valid prescription order or a
notation, approved by the prescribing practitioner, on the prescription order
that a compounded product is necessary for the identified patient,” was
personalized by definition. “Personalization does not mean that every
compounded medication must be different for every patient; it, instead, need
only be tailored to the specific goals of the patient.” Thus, the claim that compounded
tirzepatide “is a custom-prepared version of the drug, mixed specifically for a
patient by a compounding pharmacy” was true.

Compliance: The court found the statement that Willow
“partner[s] with leading compounding pharmacies that pass rigorous evaluations”
was non-actionable puffery and opinion. The claim didn’t identify any specific
type of testing or evaluation.

from Blogger http://tushnet.blogspot.com/2025/09/pharmacos-face-judicial-resistance-to.html

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“tasting like a smooth whisky” is not a disclosure that there’s no whisky in the bottle

Posted on September 22, 2025 by rtushnet

Pizzaro v. Sazerac Co., 2025 WL 2682673, No. 23-CV-2751
(KMK), No. 23-CV-4323 (KMK) (S.D.N.Y. Sept. 18, 2025)

The court certifies a class of purchasers alleging deception
in their purchases of Fireball and Parrot Bay malt beverage (16.5% ABV) that
looked a lot like Fireball whisky (33% ABV) and Parrot Bay rum (21% ABV in
coconut flavor) under NY’s GBL.

Things I noted: material misleadingness to a reasonable
consumer was a common question, which predominated; individual reliance was not
required.

Sazerac argued that different labels defeated predominance:
“Labels on 100 ml and 355 ml bottles, as well as on the outer packaging of
6-packs and 10-packs, describes Fireball Malt as ‘tasting like a smooth
whisky’– a clear sign that the product is not a whisky.” In addition,
“[p]urchasers of 6-packs or 10-packs of Fireball Malt would have seen the ABV
printed prominently on the customer-facing panel of the package.” It also
argued that the different bottle and label sizes undermine a survey that found that
63% of consumers for Parrot Bay Malt and 66% of consumers for Fireball Malt
believe they contain distilled spirit because the survey only used images of 50
ml bottles.

But materiality could be established on a class-wide basis,
and misleadingness could be measured by an objective reasonable consumer
standard, also class-wide. Differences in the labels were not fatal:

Even if parts of the label like the
“malt beverage” font are larger, other aspects of the label that could have
misled consumers like the name “Fireball,” Dragon logo, “Red Hot” tagline, and
“Cinnamon” statement are also larger. If a jury finds that the combination of
these aspects would mislead a reasonable consumer to think they are buying
whisky or rum instead of malt, the issue is resolved for the entire class
without an individual inquiry.

As for “tasting like a smooth whisky,” that didn’t mean “not
a whisky.” “A reader could reasonably understand the label to mean that the
product is indeed whisky that tastes smooth like an expensive, well-aged whisky
despite being a cheaper whisky.”

Sazerac argues that there could be no price premium because
it line prices the products, which means “assigning a single, uniform price to
all products sold in identical quantities.” When, as here, “the concern about
the proposed class is not that it exhibits some fatal dissimilarity but,
rather, a fatal similarity—[an alleged] failure of proof as to an element of
the plaintiffs’ cause of action—courts should engage that question as a matter
of summary judgment, not class certification.” Plaintiffs’ conjoint analysis
for the price premium matched their theory of the case, which was all that was
required.

The court also pointed to In re Gen. Motors LLC Ignition
Switch Litig., 407 F. Supp. 3d 212 (S.D.N.Y. 2019), in which “Judge Furman
helpfully distinguished between cases with dangerous defects and classic
mislabeling cases for when the use of historical pricing data is apposite.” He
reasoned that “where the alleged misrepresentations and omissions concern
dangerous defects,” it is difficult to account for supply-side factors because
“products containing such defects are rarely (if ever) sold (or allowed to be
sold by regulators) when the defects are fully disclosed.” But “[i]n a classic
mislabeling case,” using historical pricing data to account for supply-side
factors in conjoint analyses “makes sense.” Here, “even if consumers purchase
malt beverages under the mistaken impression that beverages are whisky or rum,
an emergency room visit will not be necessary if consumed in moderation.”

 

from Blogger http://tushnet.blogspot.com/2025/09/tasting-like-smooth-whisky-is-not.html

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