distinguishing false establishment claims from lack of substantiation claims

Kurin, Inc. v. ICU Medical, Inc., 2024 WL 5416672, No. 8:24-cv-00564-FWS-ADS (C.D. Cal. Nov. 8, 2024)

The parties compete in the market for medical devices aimed at addressing blood culture contamination (BCC) in hospitals. BCC is both medically and financially costly. Kurin makes the Kurin Lock, while defendants make a series of syringes, collectively VI Syringes. Both allegedly operate similarly, by passively sidelining the initial 0.15mL of blood, which can contain contaminants from the patient’s own skin. However, defendants allegedly overclaimed their advantages in violation of the Lanham Act and coordinate state law.

First, the court found that early summary judgment was not appropriate given the need for some discovery. Defendants cited their own studies in support of their motion, and discovery was appropriate about those studies, as well as other factual claims made by defendants.

The court found that many of the challenged statements were insufficiently pled to be false advertising, though it granted leave to amend.

First, defendants claimed the VI Syringe “[i]mprov[es] sample quality by removing over 99.9% of contaminates.” They allegedly refer to a “Toxikon Clinical Lab Invitro Testing Diversion study” in support. It was not enough to allege, “[o]n information and belief,” that the Toxikon Study does not support the 99.9% Statement, because that was merely a lack of substantiation claim that private parties are not allowed to make. Kurin alleged that defendants’ “in-house study claims diversion of 94%, 97.2% and 98.6% of contaminants,” making the 99.9% claim literally false, but the court found that insufficient. Kurin needed to allege something like its own testing disproving the claim.

FDA Clearance: Kurin alleged that defendants falsely and misleadingly claimed that the FDA cleared their 99.9% Statement when its VI Syringe brochure referred to “Vascular Integrity FDA 510(k) documentation on file.” Kurin alleged that defendants falsely and misleadingly marketed the VI Syringe as if it were another, pre-existing medical device, the Brannon PortSyringe, so as to impute the latter’s Class II device FDA clearance to the former, even though the Brannon PortSyringe was for a two-step approach to collecting blood through a catheter for lab tests, not for blood cultures in hospitals.

The court found that this claim was precluded by the FDCA. It applied the 9^th Circuit’s PhotoMedex rule, which is pre-Pom Wonderful but probably consistent with it. A “central issue” in PhotoMedex was whether the defendant could impute a 510(k) clearance from one device to another and whether the 510K documentation was enough for the defendant to claim the device was “FDA Approved.” “Under the 510(k) process, if the Class II device is deemed “substantially equivalent” to a pre-existing device with prior clearance, ‘it can be marketed without further regulatory analysis.’ ” Thus, whether there was falsity here depended in part on what the FDA thinks, making it inappropriate for a Lanham Act claim.

False claims that the VI Syringe was patented: Ok to be brought under the Lanham Act since 35 U.S.C § 292’s prohibition on false marking isn’t exclusive, but not sufficiently alleged for purposes of Rule 9(b).

Claims about the VI “Microbial Diversion study,” allegedly performed in conditions that are inconsistent with routine blood culture collection which violate industry protocols for conducting performance studies. Thus, Kurin alleged, the study failed to account for four key points of contamination, in violation of industry standards. This was a classic establishment claim challenge, and sufficiently pled. (Note that, because competitors can bring California state law claims and have the Lanham Act standards applied to those claims in pari materia, a competitor-v-competitor case is the one place where you routinely get Lanham Act concepts like explicit/implicit falsity and establishment claims treated as features of state consumer protection law.) Defendants argued that their study was fine, but the court expressed “concern about evaluating the ‘persuasiveness’ of studies at the motion to dismiss stage.” And a Lanham Act plaintiff can plead literal falsity of product testing by “demonstrate[ing] that such tests ‘are not sufficiently reliable to permit one to conclude with reasonable certainty that they established’ the claim made.” Allegations that defendants’ study was not peer reviewed, did not account for the industry-standard four points of contamination, and that the sample size was too small to support their claims, sufficed to plead that the VI Study was scientifically unreliable.

Likewise, advertising that the VI Syringes “Help Reduce Risk of False Positives” by helping to reduce central line-associated bloodstream Infection (CLABSI) via the VI Syringe’s design to “avoid breaks in the aseptic technique required in multi-step line procedures that may contribute to CLABSI rates” was sufficiently pled to be a false establishment claim, for similar reasons. In the context of an establishment claim, falsity can be alleged by alleging that the claim is “unsupported by clinical data, peer-reviewed data or FDA clearance.” The establishment claim—tests prove—is itself falsifiable, distinguishing this from a bare lack of substantiation claim.

Kurin also alleged that “Defendants mislead clinicians payors, and others in the medical community” by claiming “that the VI Syringe includes a field that is free from bacteria or otherwise free from contamination.” The allegations here weren’t precise enough under Rule 9(b).

Finally, Kurin alleged that defendants’ claim that the VI Syringes “Help Reduce Hemolysis” was deceptive. Defendants’ “hemolysis study” concluded that the VI Syringe is “non-Hemolytic” based on ASTM F756 guidelines while using a sample size of three samples. It was not enough to allege that this sample size “is simply insufficient” to reach such a conclusion. “To prove that an advertisement claim based on product testing is literally false, a plaintiff must do more than show that the tests supporting the challenged claim are unpersuasive.” That’s just lack of substantiation. (I think this should be fixable—surely it’s possible to plead that scientists would not consider three samples to constitute a reliable study, and this is exactly the kind of claim that reasonable consumers would expect to be backed up with scientific evidence.) But the court thought that Kurin “has not alleged potentially fundamental flaws in the methodology, as it did for the VI Study.” (Why isn’t a sample size of three a fundamental methodological flaw? Wouldn’t a sample size of one be a fundamental methodological flaw? Now we’re in factual argument territory.)

reminder: Harvard/Yale/Stanford Junior Faculty Forum, June 2-3, 2025 submissions due soon

 Request for Submissions

Harvard/Stanford/Yale Junior Faculty Forum

June 2-3, 2025, Harvard Law School

Harvard, Stanford, and Yale Law Schools are soliciting submissions for the 2025 Harvard/Stanford/Yale Junior Faculty Forum, to be held at Harvard Law School on June 2-3, 2025. Twelve to twenty junior scholars (with one to seven years in teaching) will be chosen, through a double-blind selection process, to present their work at the Forum. A senior scholar will comment on each paper. The audience will include the participating junior faculty, senior faculty from the host institutions, and invited guests. The goal of the Forum is to promote in-depth discussion about particular papers and more general reflections on broader methodological issues, as well as to foster a stronger sense of community among American legal scholars, particularly by strengthening ties between new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected topics in public and private law, legal theory, and law and humanities topics, alternating loosely between public law and humanities subjects in one year, and private law and dispute resolution in the next. For the upcoming 2025 meeting, the topics will cover these areas of the law:

Administrative Law

Antidiscrimination Law and Theory

Constitutional Law—theoretical foundations

Constitutional Law—historical foundations

Criminal Law

Critical Legal Studies

Environmental Law

Family Law

Jurisprudence and Philosophy

Law and Humanities

Legislation and Statutory Interpretation

Public International Law

Workplace Law and Social Welfare Policy

A jury of accomplished scholars will choose the papers to be presented. There is no publication commitment. Harvard Law School will pay presenters’ travel expenses, though international flights may be only partially reimbursed.

QUALIFICATIONS: Authors who teach law in the U.S. in a tenured or tenure-track position as of the submission deadline (February 28, 2025) and have not been teaching at either of those ranks for a total of more than seven years are eligible to submit their work. American citizens or permanent residents teaching abroad are also eligible provided that they have held a faculty position or the equivalent, including positions comparable to junior faculty positions in research institutions, for less than seven years and that they earned their last degree after 2015. We accept jointly authored submissions, but each of the coauthors must be individually eligible to participate in the Forum. Papers that will be published prior to the Forum are not eligible. There is no limit on the number of submissions by any individual author. Faculty from Harvard, Stanford, and Yale Law Schools are not eligible.

PAPER SUBMISSION PROCEDURE: Electronic submissions should be sent to Rebecca Tushnet at rtushnet@law.harvard.edu with the subject line “Junior Faculty Forum.” The deadline for submissions is February 28, 2025. Remove all references to the author(s) in the paper. Please include in the text of the email your name, the title of your paper, your contact email and address through June 2025, and under which topic your paper falls. Each paper may only be considered under one topic. Any questions about the submission procedure should be directed to Rebecca Tushnet.

FURTHER INFORMATION: Inquiries concerning the Forum should be sent to Christine Jolls (christine.jolls@yale.edu) or Yair Listokin (yair.listokin@yale.edu) at Yale Law School, Rebecca Tushnet (rtushnet@law.harvard.edu) at Harvard Law School, or Norman Spaulding (nspaulding@stanford.law.edu) at Stanford Law School.

Christine Jolls

Yair Listokin

Rebecca Tushnet

Norman Spaulding

game spat expands beyond false advertising to TM and (c)

Skillz Platform Inc. v. Papaya Gaming, Ltd., 2025 WL 438387, 24cv1646(DLC) (S.D.N.Y. Feb. 7, 2025)

Previous discussion. Skillz sued its competitor Papaya, alleging false advertising under federal and state law. Papaya counterclaimed for the same causes of action and added trademark and copyright infringement as well as defamation and civil conspiracy claims. Here, the court partially granted Skillz’s motion to dismiss the counterclaims, and severed Papaya’s trademark and copyright counterclaims.

Papaya alleged: its multiplayer games allow users to deposit money and earn real cash prizes, along with in-game currency. “In a game, users typically compete with between five and twenty opponents for the highest score. Using an algorithm, Papaya arranges games by matching users of similar skill, as measured by each player’s performance in prior games.” Skillz operates a competing mobile gaming platform that hosts games created by third-party developers. “Skillz’s games involve only head-to-head gameplay, as opposed to games involving more than two players.”

Skillz allegedly markets its games as being uniquely fair and trustworthy with a badge indicating it is “Committed to Fair Play” and a claim that it will “[m]atch [users] with real players of equal skill” in its games. Skillz promotes its promise to “NEVER EVER employ bots” and “guarantee that every match you engage in is a true reflection of your skill level.” A 2024 “letter to our community” stated that the company was “committed to rooting out and eradicating cheaters, bad players, and bots,” and that its games would include “No unfair bots, not ever.” The letter said that Skillz used a “proprietary technology to ensure fair matching,” so that users could be “sure the competition is real, and so are your chances of winning.”

However, Papaya alleged, Skillz used and allowed the use of bots in its games, and it has unevenly matched players. Skillz “clarified that it uses bots only in certain non-cash games and in games where two human players compete asynchronously. In addition to permitting the use of bots on its platform, former Skillz employees say that the company sometimes manipulates the outcomes of games by unevenly matching players.”

Papaya alleged harms because some players’ experience with Skillz’s games  allegedly leads them to believe that all mobile gaming is rigged and stop using other games, like Papaya’s. Players also allegedly confuse the two platforms and attribute the unfairness of Skillz’s games to Papaya. “And if not for Skillz’s claims about the fairness of its games, some players may have played Papaya’s games instead of Skillz’s.” [This last theory seems like the only one where proximate cause logic favors Papaya.]

Papaya also alleged that Skillz claims that they can withdraw cash that they win on its platform “at any time.” “But some players have complained online and in reviews of Skillz’s platform that they were unable to withdraw money from their accounts when they attempted to do so. In some cases, players were unable to access their winnings because their accounts had been banned from the platform.”

Papaya alleged that Skillz smeared competitors “first, by creating an organization that accuses Skillz’s competitors of using bots in its games, and, second, by planting and disseminating an article that stated Papaya had admitted to using bots in its games.” This allegedly tarnished Papaya’s reputation and that of the mobile gaming industry generally.

The alleged “false front” website “Fair Play for Mobile Games” allegedly “encouraged and facilitated visitors’ filing of complaints about mobile gaming companies, other than Skillz and including Papaya, with state attorneys general.” It had a homepage banner “showing a counter that purported to display an increasing number of complaints filed with state law enforcement about Papaya and two other companies. That counter did not display an accurate number of complaints; in fact, each time a visitor arrived at the website, it would display the same number. The number would appear to increase every few seconds.” It also displayed a pie chart purporting to show the relative number of complaints relating to various games offered by Papaya and other companies, stating: “Bingo Cash and Solitaire Cash by Papaya Games have received the highest complaints so far followed by Solitaire Cash from Avia Games.” The figures allegedly didn’t reflect in real time any actual database of complaints being continuously updated, and there were similar problems with a map purporting to show the number of complaints submitted from each state. 

screenshot from alleged astroturf website

Papaya also alleged that Skillz had engaged in copyright and trademark infringement by copying specific games.

Lanham Act and GBL § 349: The court found that Papaya stated counterclaims as to claims arising from Skillz’s statements about its own products, but not to the extent that Papaya alleged violations based on Skillz’s claims about its competitors. That is, false advertising was sufficiently pled as to statements that games on Skillz’s platforms did not use bots, matched players evenly, and allowed users to withdraw funds at any time. The complaint plausibly alleged that these were material claims, “evidenced in part by customer reviews implying that Skillz’s users participated in its games because they thought they would be fairly matched against a human.”

Applying Rule 8, Papaya adequately alleged that Skillz used bots or unevenly matched players. It cited “Skillz documentation that refers to the use of bots” and “language used internally at Skillz, which, construed in the light most favorable to Papaya, could suggest that Skillz was manipulating the outcomes of games by unevenly matching players.” Skillz argued that bot usage in a narrow set of circumstances, such as in training games, was immaterial to consumers. But that was a factual question, and it wasn’t clear how limited the bot use allegedly was.

Withdraw cash at any time: Skillz argued that this wasn’t false in context, including Skillz’s website having an article called “why does it take 4-6 weeks to get my withdrawal.” While, “under certain circumstances, the presence of a disclaimer or similar clarifying language may defeat a claim of deception,” on a motion to dismiss the court would only consider a disclaimer located near the challenged language and “so clear that no reasonable addressee could believe the plaintiffs’ allegations of being misled.” Here, Skillz allegedly made the challenged claims in video advertisements and on another page of its website, not on the same page.

Statements about competitors: Papaya failed to sufficiently allege falsity. The allegations “are essentially that the website’s graphics caused consumers to be confused.” For example, the complaint counter allegedly “created a false sense of specificity and legitimacy,” but that didn’t mean that it was unambiguous or that it necessarily implied a constantly updated connection to a live database. Likewise, the claims that other companies are “scams” or “fraudulent” “do not necessarily and ambiguously imply a false message, because those words are not susceptible to a single clear, widely agreed-upon definition.”

Papaya failed to “plead sufficient facts to support a finding that consumers were confused or misled,” as is necessary to challenge “a statement that is not literally false.” The conclusory allegation that “a reasonable consumer ... would have been deceived” was insufficient. Papaya argued that the 4FairPlay website involved Skillz’s hiding its involvement to “give the impression” that 4FairPlay was unbiased, the “design” of the website suggesting its impartiality, and the website’s omission of Skillz as an option for the subject of complaints. “But these accusations do not identify ‘any description of fact,’ or statement about a product or service.” (Really? The question in a misleadingness case is what message consumers received, not whether it was said in words; and omissions generally do count! This is at least in tension with other cases finding that fake reviews/claims of independence were plausibly deceptive, something the FTC surely thinks.)

Papaya also failed to plead defamation. To show falsity, a defamation complaint “must plead facts that, if proven, would establish that the defendant’s statements were not substantially true.” “A statement is substantially true if the statement would not have a different effect on the mind of the reader from that which the pleaded truth would have produced.” And the counterclaim didn’t plead that the complaint counter, pie graph, and map were not substantially true. There was, for example, no allegation that multiple consumers had not complained about Papaya, or that the complaints about Papaya were not increasing over time.

Even if the counter gave the false impression of being connected to a live database, “the thrust of its presentation” was to urge viewers to “join a growing list of complainants.” Other statements about “fraudulent games” and “scams” were mere opinions. “Various other alleged aspects of the website, such as the solicitation of complaints against Papaya but not against Skillz, likewise are not factual statements.”

Papaya also alleged that Skillz defamed it by creating and sharing an article whose headline stated that Papaya “Admits Bot Use.” This was protected by New York’s fair and true report privilege. A statement is “a fair and true report if it is substantially accurate, that is if, despite minor inaccuracies, it does not produce a different effect on a reader than would a report containing the precise truth.” The complaint indicated that the article was about this litigation: a judicial proceeding. And the challenged headline was “substantially true” inasmuch as, at a conference, Papaya’s counsel stated that “at the pleading stage, we have not denied the use of bots” and that Papaya’s games “as currently constituted do not use bots.” Papaya’s brief stated: “Papaya does not represent that its games never include computerized opponents” and “Papaya has not denied or refuted that it deployed bots.”

Even if the Bonus.com headline may have been more accurate in saying that Papaya “has not denied or refuted that it deployed bots,” defamation does law does not require maximal accuracy, and Papaya does not plausibly allege that such a characterization would have a different effect on readers than that of what the headline actually said. Particularly in a headline -- an especially “condensed report of events,” -- New York law does not require the level of precision that Papaya’s arguments imply.

Trademark: Papaya plausibly alleged confusion with its logo marks, but not with its word marks. Skillz argued that the word marks -- “BINGO CASH,” “21 CASH,” and “SOLITAIRE CASH” -- lacked secondary meaning. It was enough at this stage to allege “longstanding, continuous use of the names and logos, which represent popular games that have been downloaded many times,” as to the logo marks, but not as to the word marks.  

[For the copyright claims, there doesn’t seem to be a lot there that isn’t scenes a faire for a game, but it might be important to look at other games in the market.]

Game 1 logos

quick research suggests that "daub" is a standard term for a bingo function

logos for game 2

logos for game 3

The marks were descriptive, thus requiring secondary meaning to protect.  The logo marks’ registrations on the Principal Register plus the other allegations were enough at this stage. But Papaya’s supplemental trademark registration for the word marks “disclaims use of any particular font style, size, or color in connection with the words.” The counterclaim didn’t explain how the word marks are presented to consumers or other facts “to support a claim that the word marks, by themselves, have become identifiers of the source of the games.”

Papaya plausibly alleged confusion of the logos.

There is clearly substantial similarity between the marks, as the logos use many of the same words, colors, and symbols and position these components similarly with respect to each other. The parties’ products are in close competition and are offered in essentially the same market. And a factfinder could find that the similarities of the logos, and Skillz’s likely knowledge of them as a close competitor, imply a degree of bad faith.

Skillz also counterclaimed that Skillz infringed copyrighted elements of Papaya’s game BINGO CASH. “The parties appear to agree that elements common to bingo-style games are not protectible, but they disagree about whether substantial similarity between other elements exists in the two games.” Various elements supported a plausible claim:

Those elements include a similarly colored and shaped “Bingo” button, similarly named and described bonus options (“Wild Daub”, “Daub any number”), similar shapes and colors used for certain bingo squares, and similarly colored and shaped icons similarly arranged above the bingo board. A motion to dismiss is not the appropriate vehicle to determine whether these elements are inherent parts of the unprotectible concept of bingo, or that they “necessarily result” from choosing to create a bingo game.

But severance was appropriate because copyright and trademark were very different claims, with new counterclaim defendants, and discovery here on false advertising had been ongoing.

J&J's talc subsidiary can bring trade libel but not Lanham Act claims against testifying experts

LLT Management LLC v. Emory, No. 4:24-cv-75, 2025 WL 438100 (E.D. Va. Feb. 7, 2025)

The defendants “published an article in a scientific journal, asserting that they had identified 75 people, additional to 33 in an earlier study, who had malignant mesothelioma but no known exposure to asbestos except through cosmetic talc.” LLT, J&J’s talc subsidiary, alleged that the statement was false. It allegedly identified six of the anonymous study subjects and alleged that the defendants, through their expert witness work, knew those subjects had been exposed to asbestos through other means. LLT alleged that defendants’ “real goal was to create a body of scientific literature to appease the plaintiffs’ bar, who hired the defendants as expert witnesses in tort cases against LLT.” After the defendants published their article, sales of J&J’s talc-based baby powder allegedly declined due to misinformation about the product’s safety—including in the defendants’ article.

This lawsuit represents yet another disturbing development in the “sue your critics” space and highlights the need for a federal anti-SLAPP regime. Here, the court dismisses the fraud claim on statute of limitations grounds and the Lanham Act claim because of a mismatch between the “commercial advertising and promotion” alleged and the falsity alleged, but allows injurious falsehood/product disparagement claims to proceed.

Trade libel: The court predicted that Virginia would consider this an “injury to property” tort claim with a five-year limitations period. LLT sued within that period, and was thus not barred by the statute of limitations.

Fraud: Virginia has a two-year statute of limitations for civil fraud claims. The court declined to give any weight to LLT’s conclusory allegation that it “could not have known of the [defendants’] fraud until recently.” LLT pled that it discovered the defendants’ fraud by “match[ing] ... the [a]rticle’s subjects to [ ] litigation plaintiff[s]” with “documented alternative exposures to asbestos” that were known to the defendants because of the defendants’ roles as expert witnesses in the subjects’ “underlying tort cases.” Of those six subjects, five were plaintiffs in lawsuits against LLT. Thus, there were no facts in the complaint giving rise “to a reasonable inference that LLT required any additional information, outside of what it already possessed because of its role in earlier litigation, in order to match the alleged study subjects to the testimony of the expert witnesses in their respective trials or to spot the non-talc asbestos exposures the experts identified in each case. And if the matching process itself took years, LLT should have said that, but it did not. Thus, it appears on the face of the Complaint that the study subjects’ alleged non-talc asbestos exposures were discoverable, given the exercise of due diligence, at the time the study was published.”

What about defendants’ alleged concealment of the truth? That allegation was not enough to make out a plausible claim that the defendants’ concealment tolled the statute of limitations. Tolling requires plausible allegations that “the defendant undertook an affirmative act designed or intended ... to obstruct the plaintiff’s right to file [the] action.” LLT alleged: (1) “statements reaffirming the false statements in the [a]rticle,”; (2) “refus[al] to disclose the identity of the 75 subjects of the [a]rticle,” for example refusing to testify about their identities in depositions and stating they didn’t retain documentation of those identities; and (3) “omit[ing] from their publication that their statements regarding the lack of alternative exposures were false and that they knew they were false.” That last wasn’t an affirmative act. Even assuming that (1) and (2) could be affirmative acts, such acts must actually “have the effect of debarring or deterring the plaintiff from his action.” But defendants weren’t alleged to have ever changed their claims that all 75 subjects were new, that none of the 75 study participants had known non-talc asbestos exposure, or to have revealed the study subjects’ identities. “But LLT was able to bring its fraud claim anyway. That makes it facially implausible that the defendants’ repetition of the alleged falsehood or nondisclosure of the study subjects’ names ‘had the effect’ of deterring filing of the claim.”

False advertising: potential laches problems, though defendants didn’t show prejudice (shouldn’t the burden be on LLT to plead around it where laches is pled on the face of the complaint?). But that didn’t matter because of the bigger problem requiring dismissal.

LLT plausibly alleged two categories of harm: (1) lost “sales volume and profits,” and (2) costs incurred to “respond to, defend against, and otherwise counteract the [defendants] false statements.”  Even though the article was distributed in a publication “whose audience is doctors, not consumers,” LLT plausibly alleged that the defendants’ intended and actual audience was the plaintiffs’ bar, rather than the scientific community. While actions by the plaintiffs’ bar allegedly contributed to consumer behavior, they were plausibly not “independent” of the defendants’ conduct, and thus didn’t defeat traceability. Nor did preexisting negative publicity for talc break the causal chain. “[T]he Court cannot assume that negative publicity had already influenced 100% of Johnson & Johnson’s customers before the article came out.” And LLT plausibly pled increased litigation costs as a result, since some people might have been motivated to sue by the article. Additionally, “[e]very time LLT has to defend against an expert witness who relies on the defendants’ allegedly false statements in litigation, it costs money LLT would not otherwise have to spend. That too is a fairly traceable injury.” [I have to wonder about the cognizability of that—seems like a collateral attack on the underlying tort litigation. If the expert’s testimony is allowed despite LLT’s objections, should LLT be allowed to sue over it?]

Likewise, the complaint plausibly alleged “a commercial interest in reputation or sales.”  What about proximate causation? Lexmark says that “a plaintiff suing under § 1125(a) ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising.” “[T]hat occurs when deception of consumers causes them to withhold trade from the plaintiff.” LLT plausibly alleged that defendants led consumers to believe that “cosmetic talc should be considered a probable cause of mesothelioma.” Although one prior study came to the same conclusion as the defendants’ article, “it is at least plausible that the earlier article was not an ‘independent’ case of consumer decisionmaking regarding Johnson & Johnson’s products, since LLT alleges the two publications were designed in concert, to create the impression that a ‘body of literature’ supported the defendants’ claims.” And “the defendants’ article did not merely cement the link to cancer in general—it purported to tie cosmetic talc to “mesothelioma,” which the defendants admit had not been the focus of earlier publicity around the dangers of Johnson & Johnson’s baby powder.”

What about commercial advertising or promotion? The complaint plausibly alleged that the defendants made their statements “in order to influence their own customers—plaintiffs’ attorneys—to hire them to provide expert opinions in tort litigation.” Here, the court stretches—it doesn’t go through the caselaw on identifying commercial advertising or promotion, but instead says that the “impli[cations]” of the article suffice to make it plausibly advertising: “something like ‘we will testify that we have identified 75 more people with mesothelioma who have no known asbestos exposure except to talc.’” That seems to be in tension with most of the false advertising cases about scientific studies as such, where for-profit companies subsidized studies that would allegedly promote their own products. Still, the court understood this as a limiting principle: the statements were only actionable to the extent that they were about the defendants’ own litigation services.

[This workaround has logical flaws of its own: “commercial advertising and promotion” is not an element of statutory standing, as the court assumes, but a separate requirement. If an advertiser, in the course of ordinary advertising for a noncompeting product, randomly falsely disparaged an innocent unrelated product, I think Lexmark would allow that claim. The statutory standing issue is whether the advertising proximately caused the harm, not whether the harm came from the part of the message that most directly served the advertiser’s interests. That’s one reason why we should police the definition of “commercial advertising or promotion” and not treat scientific articles as such in most cases.]

Anyway, doing it the court’s way: LLT had statutory standing to bring its Lanham Act claim only if the defendants’ statements “are construed to be about the defendants’ own litigation services.” But the complaint failed to allege that those statements—that they’d testify for plaintiffs—were false.

Injurious falsehood/product disparagement/trade libel: under New Jersey law, a plaintiff must allege (1) publication (2) with malice (3) of a false statement of fact (4) about the plaintiff’s product or property (5) that causes special damages. Publication and malice were adequately pled, the latter by alleging that defendants were informed in litigation about individual study subjects’ non-talc asbestos exposures or had access to the same information LLT used to demonstrate the alleged falsity of the defendants’ statements.

The court found that the statements at issue were statements of fact, not nonactionable opinion. They were clearly not figurative speech or rhetorical hyperbole, like name-calling, “which cannot reasonably be understood to be meant literally.” They were verifiable “because a factfinder can determine, based on proof at trial, whether any of the 75 study subjects had non-talc asbestos exposures that were ‘known’ to the defendants at the time they published the article, and whether any of the 75 subjects were common to the defendants’ study and the earlier study.” “While the Court takes seriously the ‘risk [of] chilling the natural development of scientific research and discourse’ that can arise from critiquing scientific opinions as though they were verifiable facts, it also has a duty to make all reasonable inferences in favor of the non-moving party at this stage of the litigation.” Thus, a jury “could verify the statements by deciding whether the defendants subjectively knew about non-talc asbestos exposures among the study subjects” and whether the subjects of their study were “additional” to the subjects in the previous study.

Moreover, “statements are not protected solely because they appear in a peer-reviewed journal.” “What matters is whether the facts are adduced through a scientific method, or whether they exist independent of the scientific process.” Defendants’ statements were plausibly construed as assertions about their own knowledge of the study subjects’ medical histories. “Those facts pre-existed the scientific process the article describes—in fact, they were discovered through litigation, not through any scientific method.”

And this was a claim about LLT’s product even without specific references to J&J, because LLT plausibly alleged that Johnson & Johnson’s talc-based products were “the leading brands among a discrete and limited number of cosmetic talc products in the market” and “maintained well over a majority of the market share for talc powder products in the United States.” Thus, “a consumer who learned of the defendants’ statements would understand the defendants to be calling into question the safety of Johnson & Johnson’s products.” The court expressed some interest in the argument that the allegedly false statements were “about the study, not about the talc-based products the study targets—that is, in saying they had 75 new subjects with no known non-talc asbestos exposure, the defendants were merely describing their data set, not commenting on the safety of any talc-based product.” But “it is reasonable at this stage to construe the allegedly false statements not as statements about the defendants’ method or assumptions, but as conveying the thrust of the whole publication—which is squarely about the safety of talc-based products like Johnson & Johnson’s.”

Special damages: The complaint didn’t identify specific customers Johnson & Johnson lost as a result of the defendants’ statements. But special damages are not extra-specific damages; they are simply “the loss of something having economic or pecuniary value.” It was enough to plead “loss of sales and customers” and “irreparable harm to its commercial reputation and goodwill.” [Lots of courts disagree about this, but I haven’t dived into the Virginia cases enough to see if Virginia is special.]

LinkedIn connection supports right of publicity claim for otherwise generic word

Joel E. Cape, PLC v. Cape Law PC, --- F.Supp.3d ----, 2024 WL 4839370, NO. 5:24-CV-5104 (W.D. Ark. Nov. 20, 2024)

The right of publicity claim in this case seems to hang on a LinkedIn connection. Joel Cape opened his law firm in 2013 under the trade name “Law Firm of Joel E. Cape, PLC,” but shifted in 2016 to “Cape Law Firm, PLC.”

In mid-2022, “Cape Law PC” incorporated in Arizona and launched an interactive online platform using the marks “CAPE” and “CAPE LAW.” “Despite various marks and online statements claiming that CLP is a law firm, … it is [allegedly] actually a legal referral service that matches customers in need of legal services to attorneys that CLP contracts with.”

By January 2023,

Joel Cape began receiving phone calls and emails at his firm from frustrated and confused customers who believed they had hired him to be their attorney when, really, they had signed up with CLP. … The most common complaints Joel Cape received from customers of CLP were: (a) the customer’s credit card had been charged without authorization; (b) the customer paid a fee and received no legal services; (c) CLP failed to appear in court or provide correct dates for court appearances; (d) the customer had a poor case outcome, such as dismissal; and (e) CLP failed to communicate or update the customer.

Joel Cape pled that his firm received over 1,000 calls from confused CLP customers, expressing frustration, seeking refunds, or attempting to cancel the monthly payments. Also,

CLP customers have expressed their dissatisfaction by posting google reviews intended for CLP on Plaintiff’s business’s listing with comments such as “this is a scam do not give them your credit card info,” “[t]hese people are not lawyers,” and “DO NOT hire them.” Disgruntled customers have also filed complaints against Plaintiffs with the Better Business Bureau, attributing CLP’s actions to Joel Cape and his law firm.

Joel Cape pled non-consumer confusion too: “When CLP has sent demand letters, some of the responses have been sent back to Joel Cape and his firm. Additionally, corporate recruiters and employment agencies have contacted Joel Cape when attempting to respond to CLP’s job postings.” Allegedly, “[p]art of the problem is that CLP’s website makes it difficult to find the name of an actual attorney that works for them. CLP does not provide accurate contact information for its attorneys to its customers or recipients of demand letters, leaving such parties to contact Joel Cape and his firm in error.”

CLP allegedly launched a Google advertising campaign using the mark “CAPE LAW FIRM.” And its LinkedIn page lists Joel Cape as an employee—“a mistaken association that CLP has failed to correct.”

The court found that Joel Cape successfully pled false advertising, despite some problems with proximate causation: “for 12(b)(6) purposes, the Court finds it plausible that the alleged reputational injury flows directly from CLP’s alleged deception that caused consumers to withhold trade from Joel Cape Entitities.”

Right of publicity: Cape seems like a generic word that wouldn’t itself violate the right of publicity even if there were a successful trademark/false advertising claim. Here, the LinkedIn page was key: “the Court finds it is plausible that CLP associated its page with that of Joel Cape, thereby using his ‘readily identifiable’ name and likeness for purposes of advertising and soliciting business.” Although CLP argued that such associations on Linkedln are within the individual’s control, not the affiliated organization’s, and submitted outside evidence of Linkedln’s functionality in support, that was not appropriate on a motion to dismiss. “The Linkedln affiliation provides the identifying context that might otherwise be lacking had CLP only used the generic word ‘cape,’ with no other connection to Joel Cape.”

Finally, the court dismissed Joel Cape’s negligence claim. The court declined to find that CLP owed a duty of care to the firm to not use its mark in a confusingly similar manner for purposes of negligence law. “[T]his Court does not see how § 1125(a)(1)(A) imposes a duty of care in the context of negligence.”

gray market material differences must come from products/warranties, not supply chain alone

Toyota Motor Sales, U.S.A., Inc. v. Allen Interchange LLC, 2025 WL 465815, No. 22-cv-1681 (KMM/JFD) (D. Minn. Feb. 11, 2025)

This discovery dispute says some interesting things about gray market goods. “This lawsuit involves claims and counterclaims between competitors selling Toyota parts to Toyota dealers in the United States.” Toyota objected to Allen’s importation and sale of Toyota parts in the United States. “Most parts in Toyota vehicles do not have aftermarket substitutes from independent third parties.… Toyota allegedly sells parts in the U.S. at significantly higher prices than the prices charged by other Toyota entities elsewhere in the world.” Arbitrage thus occurs.

Allen maintained that the parts it sold bore the same part numbers and were identical in design, function, and quality as Toyota parts that are intended for sale in the U.S. market. Toyota claimed that the parts have material differences from the “genuine” parts it sells, such as the absence of a manufacturer-backed warranty, the shipping of the parts, and the handling of “outdated” parts.

Toyota sought evidence about Allen’s supply chain and argued that this was relevant to showing material differences in the parts. “[A] material difference is a difference that a consumer would find relevant in deciding to purchase one item over the other, and courts have established this to be a low threshold.” The main alleged material differences were differences in warranty coverage and differences in “supply chain and/or quality control measures.”

The court accepted Allen’s argument that material differences have to relate to the products themselves (which could include warranty coverage). Toyota argued that if “Allen plans to argue that the Toyota Branded Parts it sells are covered by some type of ‘Manufacturer Warranty’ as advertised to the consuming public, Toyota is entitled to know what warranties, if any, are offered by Allen’s suppliers.” “But the Court does not see how Allen’s suppliers would have any documents relevant to whether Allen provides a warranty to its customers.” The potential warranty sources were Allen, its customers, or Toyota itself. “Suppliers merely divert the parts from an authorized Toyota supply chain to Allen, and whether the warranty that Toyota provides with its parts is valid is entirely up to Toyota and how the language of its warranty addresses parts acquired through the gray market.” Thus, the information Toyota sought about supplier warranties was irrelevant.

In addition, the court concluded, “supply chain differences or differences in quality control measures in and of themselves” can’t be a material difference:

Certainly, supply chain or quality control differences could cause material differences between parts, but material differences in the products must be observed in the products themselves. The Court does not recognize the validity of a claim of material difference that is premised solely upon differences in the processes by which parts are made, supplied, checked for quality, etc., but without a resultant detectable difference in the product itself. For the purposes of false advertising claims, the issue that the parties must address is whether there are material differences between the products, not why any such differences may exist. Any material differences that result from differences in these processes can be discovered by inspecting and testing the parts themselves.

In addition, the court declined to require Allen to produce documents seeking “All communications to or from [Allen] mentioning, involving, relating to, or otherwise concerning counterfeit automotive parts since January 1, 2016, to the present,” and “All documents Defendants reference or rely on in determining whether or not the TOYOTA BRANDED PARTS sold by Defendants are or are not counterfeit.” Toyota argued that these documents are relevant to Allen’s counterclaim challenging the veracity of Toyota’s statements to dealers that counterfeit parts are often intermingled with gray market parts. And it argued that a 2018 email to a Toyota employee stating that counterfeit headlamps were delivered to Allen from a company in Dubai provided further support for its position.

Allen argued that counterfeiting wasn’t at issue in this case (filed in 2022, after Toyota received the email). The court agreed. “The logical chain from an email alleging that Allen once received a delivery of counterfeit headlamps to relevance to this case about gray market parts is a long one, in which Toyota’s argument skips multiple important links… That Allen questions the veracity of Toyota’s intermingling statements does not create sufficient relevance to open discovery in this case to counterfeit parts. All Toyota has shown the Court is that Allen probably, once, took delivery of counterfeit headlamps.”

delay bars ROP/Lanham Act claims when Facebook use was open and plaintiffs were aware of lots of unauthorized use

Davalos v. Baywaych Inc., 2024 WL 5344434, --- F.Supp.3d ----, No. 21-11075-NMG (D. Mass. Sept. 30, 2024)

The caption seems to be a typo, but it’s one of the many right of publicity etc. cases by models against adult clubs that used their images in online ads. The defendant here gets summary judgment on laches.

The four images in dispute were posted on defendant’s Facebook page between August, 2013, and November, 2015. Plaintiffs sued in 2021. The court certified a question to the Massachusetts Supreme Judicial Court:

Under what circumstances, if any, is material publicly posted to social media platforms “inherently unknowable” for purposes of applying the discovery rule in the context of defamation, right to publicity, right to privacy and related tort claims?

The SJC answered:

Claims for defamation, violation of the right to privacy, violation of the right of publicity, and related claims that arise from material posted to social media platforms accrue when a plaintiff knows, or reasonably should know, he or she has been harmed by the defendant’s publication of that material. Given how “vast” the social media universe is on the [i]nternet, and how access to, and the ability to search for, social media posts may vary from platform to platform and even from post to post, that determination requires consideration of the totality of the circumstances regarding the social media posting, including the extent of its distribution, and the accessibility and searchability of the posting. The application of the discovery rule is therefore a highly fact-specific inquiry, and the determination of whether plaintiffs knew or should have known that they were harmed by a defendant’s post on social media must often be left to the finder of fact. If, however, the material posted to social media is widely distributed, and readily accessible and searchable, a judge may determine as a matter of law that the discovery rule cannot be applied.

Among other things, the SJC thus clarified that the “inherently unknowable” standard for the discovery rule is, under contemporary law, more accurately stated as a “knows or reasonably should know” standard.

The state tort claims were governed by a three-year limitation period. Under the discovery rule, a statute of limitations is tolled and will not begin to run until “[T]he plaintiff discovers or with reasonable diligence should have discovered that (1) he has suffered harm; (2) his harm was caused by the conduct of another; and (3) the defendant is the person who caused that harm.”

What a plaintiff knew or should have known is generally a fact question, but the burden is on the party asserting the discovery rule to demonstrate that an action is timely.

Plaintiffs here either stated that they were either unaware of the Facebook posts at issue until their attorney brought the posts to their attention in 2021 or could not recall how they became aware of the posts. Without information about how many people actually viewed the Facebook page at issue/the specific posts and without information about likes or shares, it was impossible to determine how widely circulated they were. Even wide circulation itself would not inherently prevent the application of the discovery rule. But, relatedly, there were not allegations the posts were ever concealed, kept secret, or restricted. “In fact, the purpose of the posts as advertisements for Club Alex indicates that they were meant to be circulated, not hidden, and plaintiffs offer nothing to rebut that inference. Even if the posts were in some way restricted and not readily accessible to plaintiffs, moreover, that would not be sufficient in and of itself to excuse plaintiffs’ failure to discover them.”

Most importantly:

[T]he facts leave no doubt that plaintiffs, all of whom license their images as part of their profession, had good reason to know that people were misappropriating their likenesses on social media. Indeed, plaintiffs have all been involved with numerous lawsuits related to other instances of misappropriation in the years following Club Alex’s posts. Plaintiffs were able to discover and act upon misappropriations in other cases and offer no reason why these posts were any different or less discoverable than others. … [T]he frequency with which plaintiffs have had their likenesses misappropriated renders reliance on the discovery rule suspect.

A footnote referred to Meta’s “facial recognition technology that, at all times relevant to this case, could have aided in such searches.”

True, social media is vast, with more than 350 million images uploaded to Facebook each day in 2013, but “[t]he fact that the allegedly misappropriated posts occurred amid a vast sea of Facebook posts does not … render plaintiffs’ lack of knowledge objectively reasonable. Nor is the fact that the posts may have required more than a perfunctory search to locate on Facebook enough to invoke the discovery rule’s protections.” Thus, there was no genuine dispute of fact on tolling the limitations period, and the state law claims were time-barred.

Lanham Act claims: instead of a limitations period, the Lanham Act uses laches, generally borrowing the most relevant state law limitations period to determine whether laches is presumed or not.  Plaintiffs argued that laches shouldn’t apply to deliberate infringement, but only the Second Circuit agrees. Other circuits consider deliberate infringement to be merely one factor in considering when to apply laches, a rule that “better align[s] with the equitable nature of laches than the Second Circuit’s brightline test.”

Here, the parties didn’t dispute that the most analogous statute of limitations is drawn from the Massachusetts Consumer Protection Act, with a four-year limitations period. Thus, laches was presumed. Laches requires: 1) a lack of diligence by the non-moving party in asserting their claims and 2) prejudice to the party asserting the defense. Plaintiffs failed to create a material dispute about reasonable diligence, for the reasons given above. “The only substantive piece of evidence plaintiff has proffered to the contrary is an affidavit of a legal secretary who claims that successful image searches can take ‘days or weeks to complete,’ but that does nothing to explain why an over eight-year delay is reasonable here.” The court again pointed to plaintiffs’ “host” of other lawsuits. “[T]he extent to which plaintiffs’ likenesses have allegedly been misused is sufficient to put them on notice.”

And for prejudice, the original club owner died in 2018. “Had plaintiffs brought their claim sooner, that individual would have had the opportunity to present potentially salient details about his intent and the likelihood of confusion the images may have caused.” Also, plaintiffs relied on a 2023 survey; defendants argued that, if plaintiffs had sued earlier, “it would have been possible to assess this issue based on potential clientele at the time the posts were made rather than a decade later. That deterioration in the face of delay is precisely the kind of prejudice the First Circuit has found to be meaningful.”

Given the totality of the circumstances, the court found laches even assuming the infringement was willful. A claim brought more than eight years after the final Facebook post was such a “lengthy” delay that it was easier to find prejudice.

Dastar bars claim against allegedly false copyright/licensing claims used to extract money from public domain works

McKenzie v. Artists Rights Soc., Inc., 2024 WL 4803870, --- F.Supp.3d ----, 2024 WL 4803870, 22 Civ. 1619 (JHR) (S.D.N.Y. Nov. 15, 2024)

McKenzie is an art publisher that worked with the late artist Robert Indiana to create and produce two images: one called “LOVE” and the other, “HOPE.” In the 1960s, the LOVE image “gained global popularity through display on commercial products, paintings, and outdoor sculptures,” all published without notice and thus in the public domain. 

LOVE sculpture, Wikimedia

HOPE sculpture, Wikimedia

In 2007, Plaintiff and Indiana created the HOPE image, “similar to the LOVE image,” which began competing with the LOVE image. Indiana didn’t claim copyright in the HOPE image either.

Nonetheless, Indiana entered into two contracts with a defendant-linked entity, Morgan, in the 1990s, pursuant to which Indiana purported to convey to Morgan all “copyright, trademark, and other rights” in LOVE—in addition to “the exclusive right to reproduce, promote, and sell” the LOVE image, “produce and fabricate,” own, and sell sculptures of LOVE, and the purported right to sue for copyright infringement of the LOVE image.

McKenzie alleged that “Defendants well knew” and “certainly know now” that LOVE was not, in fact, protected by copyright. Nevertheless, “Defendants ... combined together for at least two decades to fraudulently represent that they had and still have a copyright on the LOVE image” and engaged in false licensing to the tune of millions of dollars, harming plaintiff, which is authorized to “produce and market the HOPE [i]mage” and “is in direct competition with the LOVE image.”

The RICO claims failed because they were RICO claims (and untimely).

Lanham Act: McKenzie alleged that Defendants made false representations (1) in violation of § 1125(a)(1)(A), by claiming that “Morgan and ARS ow[n]ed the copyright to the LOVE image,” and (2) in violation of § 1125(a)(1)(B), by claiming “that ARS was authorized to license said copyright.” Neither survived Dastar. Cognizable misrepresentations regarding the “origin of goods” under § 1125(a)(1)(A) “refer[ ] to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.”

Although Dastar is about authorship, it also applies to claims “for false representation of ‘affiliation’ between the author and a distributor of communicative products,” even if through “a false assertion of license.” That was the essence of McKenzie’s complaint: Defendants “deceive[ ] the general public and the relevant market” that they have a copyright to LOVE—i.e., that Indiana (or his estate) provided them with the right to license products bearing the LOVE image.

What about false advertising? “Statements about whether a defendant has the right to use or distribute a work are not considered material ....” Thus, there was no actionable misrepresentation.

Even without that, Lexmark barred the claim. To allege causation, McKenzie pled that “HOPE and LOVE, as images, have no other competition than each other.” In addition, McKenzie alleged that defendants’ use of “the false copyright assertion in relation to its many licenses of the LOVE image has greatly enhanced the revenues derived from the LOVE image, and made it appear more valuable than the HOPE image given its supposedly copyright-protected status and the extensive public visibility it has acquired.” But McKenzie failed to allege that “consumers [e.g., potential licensees] were deceived by the fraudulent [copyright]” and “also that that deception” is what “led consumers to ‘withhold trade’ ” from McKenzie.

Plus, laches barred the claim.  Although “[i]n general, the defense of laches is not raised in a motion to dismiss[,] .... in certain circumstances, when the defense of laches is clear on the face of the complaint, and where it is clear that the plaintiff can prove no set of facts to avoid the insuperable bar, a court may consider the defense on a motion to dismiss.”

Although McKenzie averred that he “was unaware of the fraudulently concocted use of a false assertion of a ‘copyrighted’ LOVE image until ... February 25, 2020,” when one defendant was deposed in connection with a separate lawsuit, other allegations—including that, since 1999, defendants made “repeated” and “continuous” false assertions of copyright—undermined this position. He admitted that, “[b]efore the Hicks deposition [in 2020], [he] had seen the public advertising, observed that the large auction house and others all referred to the LOVE image as being copyrighted to Morgan and thus he believed ... that LOVE was copyrighted to Morgan.” At some point prior to Indiana’s death, he “notice[d] that virtually the entire artworld was marketing the LOVE image with the assertion that it was subject to a Morgan ‘copyright.’ ” He also alleged that, in 2007, thirteen years before the 2020 deposition, “Indiana would not authorize” him to produce a LOVE portfolio because Indiana “believed that Morgan had a copyright on the LOVE image based upon Morgan’s fraudulent representations to him that they had acquired one through his agreements with them.” Thus, he “knew” “or should have known” of any Lanham Act claim by no later than 2007. “The copyright registration status of the LOVE image was publicly available information that Plaintiff could, and ultimately did, uncover on his own.”

Thus, the delay in filing suit was inexcusable, and McKenzie didn’t rebut the defendants’ claims of prejudice based on their having continuously licensed LOVE since 1999 and the loss of evidence due to Indiana’s death.

literal falsity can exist even if there's a strained "truthful" reading

Kopp Development, Inc. v. Metrasens, Inc, No. 1:21cv1216, 2025 WL 371303 (N.D. Ohio Feb. 3, 2025)

Metrasens and plaintiff KDI compete in the market for ferromagnetic detectors, used to detect magnetic items (such as iron) on a person’s body or clothing before the person enters a room containing an MRI scanner. In 2018, Metrasens purchased a Kopp Ferralert Solo unit from a third-party located in Singapore and provided it, along with a Metrasens Ferroguard Screener unit, to a company called Intertek Testing & Certification. Intertek then issued a test report identifying the units by serial number and photos. The report concluded that “[t]he results of the testing showed that the Metrasens Ferroguard Screener had a significantly higher detection rate than the Kopp Ferralert Solo across the range of typical target objects.”

Metrasens then created a summary, which said in relevant part:

Ferromagnetic detection systems (FMDS) are not all the same. In an independent testing-laboratory comparison of 570 presentations of 9 typical risk items, there was a significant difference in the probability of items being detected, with Ferroguard Screener detecting 96% of presentations for the complete risk-item set, compared with 75% probability of detection for Kopp Ferralert Solo.

...

KEY FINDING

For smaller risk-Items, Ferroguard Screener proved significantly more effective at detecting threats to patient and staff safety and operational performance (94% of risk items detected) than the Kopp Ferralert Solo (56% of risk items detected).

...

TESTING METHOD

- Independent testing-laboratory  

- Standard, new, 2018 FMDS patient screening systems …

There were also comparative charts.

KDI’s owner testified that the Ferralert Solo unit that Intertek tested was an early prototype from when the product was first released in 2012, and that KDI had made several improvements to the Ferralert Solo product since 2012. In late 2020, KDI told Metrasens that the Intertek unit tested was an “old” version. Metrasens responded that it was unable to confirm the manufacturing date but offered to resubmit the products if KDI provided evidence that current versions were modified/upgraded. KDI responded that, if Metrasens hadn’t confirmed the manufacturing date, it objected to the claim that it tested “Standard, new 2018 FMDS patient screening systems.”

Previously, the court held that there was a genuine issue of material fact as to whether Metrasens’ advertisements proximately caused KDI to lose business from the University of Pittsburgh Medical Center, one of KDI’s existing customers, which also created a genuine factual issue on corresponding tort claims.

Although it excluded KDI’s proposed expert on damages, the court concluded that KDI could try to show evidence of damages with reasonable certainty at trial, including by showing the dollar value of the specific lost sales to UPMC or other sales evidence.

Here, the court addresses additional briefing it sought on when a presumption of money damages could apply.  Deception and injury are both components of causation. Notably, “the sort of proof of these elements a plaintiff must show varies depending upon whether damages or injunctive relief is sought.” Where the “rigorous” requirement of literal falsity is met, deception may be presumed; otherwise “[t]here must be evidence that a ‘significant portion’ of the consumer population was deceived.”

For injury, a plaintiff must generally prove damages, but they may be presumed in cases of willful deception where the plaintiff was the target of comparative advertising. And it is a rebuttable presumption. The court expressed some doubt that this presumption only applies to literal falsehoods—since it’s about the injury component, it doesn’t obviously require literal falsity if there’s willfulness & deceptive comparative advertising—but the parties assumed it to be the case, and anyway this was a literal falsity case.

Literal falsity: Metrasens argued that it didn’t outright say that the unit was made in 2018, just bought in 2018 and not used (new), which was true. But in context, “the meaning of the challenged statement is not ambiguous.” “[A]ny reasonable consumer of MRI screeners would interpret the statement ‘standard, new, 2018 FMDS patient screening systems’ as meaning that the KDI product involved in the testing was (1) standard; (2) new; and (3) manufactured and sold by KDI in 2018.” Although it quoted the (really misleading, ironically) Seventh Circuit statement that a literally false statement is “bald-faced, egregious, undeniable, or over the top,” the court explained that Metrasens was not required to explicitly state the date of manufacture to engage in literal falsity. In context of a guide allowing hospitals to compare the performance of the competing products on the market, “new, 2018” could not reasonably be interpreted to mean purchase date.  

However, whether this was true was a disputed factual question. KDI’s witness testified that he could identify it as a 2012 prototype because of its color and serial number. On the other hand, (1) Metrasens bought the KDI Ferralert Solo “on the open market as per a customer could have bought it;” (2) the model number of the KDI Ferralert Solo that Metrasens bought matched the model number of the KDI Ferralert Solo that was being sold at the time; (3) the price that Metrasens paid for the Ferralert Solo fell within the market price range for that product at the time; and (4) the box, packaging, and instruction manuals of the KDI Ferralert Solo purchased by Metrasens were “pristine.” The jury would have to decide. Presumption of damages: KDI argued that literal falsity plus comparative advertising, without bad faith, sufficed to presume damages. There’s logic to this—it’s not the bad faith that makes the damage so much more likely, it’s the direct comparison! But the court disagreed because it read the precedent to require literal falsity, bad faith, and comparative advertising.

KDI also argued that Metrasens acted with “recklessness amounting to willfulness” when it (1) purchased the Kopp Ferralert Solo product despite knowing that the supplier “had been known in the past to provide old stock;” (2) “willfully put out an ad” saying that the KDI product was a “Standard, new, 2018” model “with no support to label it as such”; and (3) decided to “keep up the campaign and continue to publish after express notice that the message was literally false.”

Even if Metrasens purchased the KDI Ferralert Solo without verifying the manufacture date and despite knowing that the supplier had provided “old stock” in the past, its witness testified, at length, to the many reasons why Metrasens reasonably believed that the KDI Ferralert Solo it purchased for Intertek’s testing was, in fact, KDI’s current 2018 model. This too created a jury question.

ambiguity over who was first African-American bourbon distiller in Kentucky dooms false advertising claim

Victory Global, LLC v. Fresh Bourbon, LLC, 2025 WL 366626, No. 5:21-62-KKC (E.D. Ky. Jan. 31, 2025)

After dealing with a motion to dismiss, the court now grants summary judgment in this case brought by one African American-owned bourbon seller against another.

Victory operates as Brough Brothers, which claims it was the first “African American owned bourbon distillery in the Commonwealth of Kentucky,” with the requisite licenses to operate a distillery by September 2020. By December of that year, it had distilled bourbon and filled its first bourbon barrel in a leased Kentucky facility. Brough Brothers alleged that Fresh Bourbon falsely advertised that Fresh Bourbon is the “first black-owned bourbon distillery in Kentucky,” and made other related claims. Fresh Bourbon didn’t lease a facility until early 2022 and did not obtain the required federal and state licenses to operate a distillery until September 2022. It began distilling its product at this facility in late 2022.

However, Fresh Bourbon submitted evidence that, in 2018, its representatives were “distilling” bourbon that it sold under the name “Fresh Bourbon” at Hartfield & Company Distillery in Paris, Kentucky, even though it didn’t own or operate its own distillery and could not legally have done so.

Challenged statements: 1) Fresh Bourbon was the “first black-owned distillery in Kentucky”; 2) Fresh Bourbon is the “[f]irst black-owned bourbon distillery coming to downtown Lexington” (not shown to be false); 3) “There had been no African Americans producing bourbon that weren’t slaves” until Fresh Bourbon did it; 4) Fresh Bourbon is “the first bourbon developed grain to glass by African Americans in the state of Kentucky”; and 5) Fresh Bourbon employed Kentucky’s “first African American Master Distiller in Kentucky since slavery.”  

Fresh Bourbon argued that it didn’t say that it was the “first black-owned distillery in Kentucky” but that it was “considered by the Commonwealth of Kentucky to be the first black owned distillery in Kentucky,” given Kentucky Senate Resolution No. 176, which stated, “The Fresh Bourbon Distilling Company is considered to be the first black-owned bourbon distillery in Kentucky.” An online news article made the “first black-owned distillery” statement, but not quoting any Fresh Bourbon representative, and Fresh Bourbon wasn’t shown to have used the article in any marketing. Thus, the actual statement wasn’t literally false, given the Senate resolution, even if the resolution was drafted by Fresh Bourbon’s representatives.

For the “producing” and “developing” statements, Brough Brothers argued that Fresh Bourbon’s “minimal contributions” to producing bourbon at Hartfield couldn’t constitute producing or developing bourbon. The court, however, found the statements “at least ambiguous as to the degree of involvement of the actor.” And the owner and master distiller of Hartfield testified that Fresh Bourbon representatives were eventually engaged in all aspects of the bourbon-making process, eventually had “free reign in the building,” did “everything” in the bourbon-making process without anyone from Hartfield present, and mashed and distilled the bourbon. The statements at issue didn’t claim to have a distiller’s license and permit. Plus, Brough Brothers’ own expert testified that it was “impossible to verify” whether Fresh Bourbon representatives were the first African Americans to make bourbon since slavery.

Similarly, the statement that Fresh Bourbon employed Kentucky’s “first African American Master Distiller in Kentucky since slavery” was “either ambiguous or an opinion, which cannot be the basis for a Lanham Act false advertising claim.” Apparently “Master Distiller” has no set definition. Brough Brothers’ own expert testified that the term has no “legal definition” and is “basically” a matter of opinion.

Even assuming that Brough Brothers had shown falsity, it still failed on materiality. Even with literal falsity, materiality must be shown.

If a company makes a literally false statement, then it can be presumed that the consumer who receives the statement was deceived. But whether that statement had any bearing on the consumer’s buying decision is a different issue…. For example, if a company advertises that its shampoo was manufactured in New Jersey, but it was actually manufactured in Pennsylvania, then it can be presumed that consumers were deceived about where the product was manufactured. But whether the place the shampoo was manufactured means enough to influence consumers’ buying decisions requires some evidence.

The fact that both parties used “first black-owned distillery” in their marketing campaigns was insufficient. Materiality “requires factual evidence concerning the relevant consumer market and the perspective of the potential customer in that market.”

State law claims also failed.

materiality surveys may not need controls

In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., No. 14-MD-2542 (VSB), 2025 WL 354671 (S.D.N.Y. Jan. 30, 2025)

This is a ruling on 19 motions to exclude expert testimony in this case, which is mostly an antitrust case; I will focus only on some false advertising-relevant rulings.

Keurig sought to exclude Hal Poret’s testimony, offered primarily for the purpose of showing that Keurig statements misled consumers into believing that its 2.0 Brewer worked only with Keurig’s K-Cups, and to provide an additional basis for one plaintiff’s false advertising damages expert, to rely on when estimating Lanham Act damages resulting from Keurig’s incompatibility statements.

The court started with a presumption favoring the admissibility of surveys. Poret didn’t test the exact language Keurig used, but that wasn’t fatal.  Although surveys “must ‘be designed to examine the impression presented to the consumer,’ ” “there is no obligation that the survey use the exact language challenged, or mirror the advertising conditions exactly.” Instead, Poret interviewed consumers about “what they did and why,” addressing the broader question of why consumers had not purchased competitor’s single-serve cups. His choice not to show the allegedly misleading ad campaign didn’t render the entire survey unreliable, since his methodology was well accepted in the survey field.

It was also not fatal that the survey lacked a control group. “Control groups are not the universal and inflexible requirement of survey research as Keurig seeks to portray them.” They’re useful when the survey is trying to determine the source of attitudes or beliefs or behaviors, or to “test directly the influence of [a] stimulus” such as a commercial. But “a control group may not be necessary if the risk of simply recording pre-existing values is not as great. For example, “a control group is not required for a survey that purports only to understand what developers perceive as relatively more or less important factors in their decision-making process.” That was the case here.

Likewise, Keurig’s arguments that the questions were biased and leading were insufficient to affect admissibility. The questions were closed-ended, but that can be legitimate. Certain respondents were asked to choose from a list of reasons that they did not purchase unlicensed pods. Some of these choices favored plaintiff’s position (e.g., “I heard or read that the Keurig 2.0 brewer works only with Keurig brand or licensed pods”) but some did not (e.g., “I prefer the taste of Keurig or Keurig-licensed brands.”). “Determining consumers’ preferences on these kinds of clearly defined alternatives is the kind of task for which close-ended questions are frequently more appropriate.”

The court also rejected the criticism that the universe was unrepresentative because Poret “imposed near-equal age distribution within his sample survey,” creating an underinclusive universe of respondents whose ages matched neither the population of Keurig users nor the population of the United States. The survey population of interest was Keurig 2.0 Brewer owners, which was appropriate.

Another plaintiff expert was Sarah Butler, who was offered to testify both on Keurig’s testing of competitor cups and her own surveys. Keurig objected to the first, because it argued that her “training is in consumer surveys, not laboratory testing of physical products.” But she was qualified to opine on whether Keurig’s comparisons between K-Cups and competitive cups adhered to “specific research standards and methodology.” Butler was an expert on survey research, market research, sampling, and statistical analysis. Her evaluation related to research standards and methodology generally, and not merely to “product testing,” and thus she was qualified to opine on whether the methodology of a research study allows for statistically valid conclusions to be drawn. Her non-survey testimony concerned whether the cup testing conducted by Keurig followed “generally accepted research standards for comparative product tests—such as objectivity, sufficient sample size, use of control groups where appropriate, and testing protocols—necessary for reliable statistical analyses,” and therefore aligned with her experience, training, and expertise.

As for her surveys—one of home users and one of out-of-home users like office users—the court also allowed them. For the home users, Butler made adjustments to the control group to ensure that “respondents who had previously been exposed to Keurig’s false advertising campaign were controlled for.” In devising her survey, Butler noted her concern that “the rates in the Control group may be driven by past exposures to statements made by Keurig about the unreliability of Competitive Cups.” “Mitigating the impact of preexisting beliefs on survey feedback is a sound objective in survey research. Indeed, failure to control for the impact of preexisting beliefs can render a survey unreliable.” Where a control group without preexisting beliefs is unavailable, “social scientists sometimes employ statistical weights or adjustments to the control groups. … Given the threat that preexisting views pose to survey validity and the broad use of far more intensive methods of control group weighing in modern econometric methods, I do not agree with Keurig that there is no scientific justification for Ms. Butler’s modification of the control group.”

For the out-of-home group, Keurig argued that there was no control group at all, but that survey targeted “individuals responsible for beverage supplies or contracts with beverage suppliers for their office or business location to evaluate the impact of Keurig’s relationships with Distributors[ ] on purchasing behaviors in the Away-From-Home Market.” Thus, it didn’t seek to test the impact of a particular stimulus or statement on these individuals, and a control group wasn’t as necessary.

Keurig also objected to questions in the first survey that it argued created a false dichotomy between “licensed” and “unlicensed” pods as well as the use of words like “unapproved” that it deemed biased, along with stronger warranty language than Keurig itself used. Keurig’s rebuttal expert conducted a survey along its proposed lines which yielded substantially different results.

The court disagreed. Keurig’s own materials used “unapproved,” so it was fair to ask consumers about that, and the other questions didn’t suggest answers in an impermissibly leading way. Although there were differences between “affecting” a warranty and “voiding” a warranty, “none are so strong that exclusion of the survey is warranted or that it becomes more likely than not that Ms. Butler’s opinion is unreliable. Although Keurig’s survey produced different results, this is to be expected—surveys conducted in different ways produce different results.” Cross-examination was the remedy.

The court also rejected sample-based criticisms of the second survey, noting that samples don’t have to be perfect.

Keurig also criticized the use of “recall-based measures” (i.e., questions about past purchasing decisions) in the first survey, on the grounds that “[i]t is widely recognized that recall-based measures do not yield reliable responses.”  “[R]ecall bias, which recognizes the potential for inaccurate responses due to fading memories over time,” is a known issue with survey reliability. But that went to weight rather than admissibility. And asking about aggregate decisions over a long term is less problematic than asking about very specific things. Likewise, adding an “I don’t know” option can mitigate the problem, which was done.

WIPIP: Copyright: Incentives and the Digital Age

Tang, Creative Labor in the Age of Platform Capitalism

Theories of expressive work and creativity: lead to idea that AI training itself is not a © problem b/c it doesn’t use work expressively. Past idea: digital creativity enhances autonomy by giving individuals greater roles in authoring their own lives. When people are creative, making new things out of old things, become producers, they exercise and perform freedom and become the sort of people who are free. Semiotic democracy.

This model is challenged by paradigm shift in digital creation. From early days of YouTube—hotbed of amateur creativity—to current situation of rightsholder synergy. “Collaborative model” in which “rights holders” and “online creators” are partners in sharing viral profits. YouTube’s ContentID, along with Meta and TikTok, allows users to take bits and pieces without themselves needing to pay. This changes how we think about digital creativity on the internet. Those autonomy arguments are actually no different than autonomy arguments made by Uber, Postmates, and other gig economy companies—greater flexibility for a bohemian lifestyle. But we know that’s not true. Creators relied on TikTok for their livelihoods—Uber drivers are subject to algorithmic black box whims; YouTube doesn’t make its monetization/demonetization policies public. At best, platforms are oligopolistic for creators.

Platforms have always gathered that meaning-making expression into data; made it clear when they changed TOS to make it explicit that they were using data to train generative AI. The analysis of the datafication of creative works can learn from privacy scholarship, which has asked: how does privacy law evolve from dignitarian individualistic notions focusing on noneconomic invasions for the era of mass privacy invasions through gathering data en masse?

Q: historically, the vast majority of artists have failed. Maybe the platforms make things better [or don’t make things worse] by allowing artists to find their audiences.

A: consider TV writers negotiating for uses of AI.

Rosenblatt: This is part of a story of precarity; sounds like freedom but isn’t—gig economy analogy is convincing. What does this do for ©? TV writers—that’s WFH. The one thing these creators have is ©, and what good does it do them? Very little. YouTubers have © but it doesn’t seem to be relevant. Is there something else we should be doing?

A: all these arguments—the payments would be minimal, it would be too hard to track all the uses—have been made in privacy, so we could look there. WFH: challenge to the idea of the inextricable link b/t work and the author.

Lunney, Incentives and Music Composition

Fundamental premise of ©: more rights means more $ for righsholders means more creative output. This paper is looking at music composition: does revenue increase output? Does revenue increase number of composers? RIAA shipment data in constant dollars—going back to 1962. Steady climb; 80s recession and recovery; Napster/filesharing decrease until 2015, back to the early 60s level, and then starts to rise again. ASCAP etc. payouts also have to be considered for composers, and there we see a steady increase rather than sharp drops, with a few blips. With both taken into account, you still see a filesharing effect, but not quite as drastic as for recording revenues (and not much recession effect).

What happened to composers? Hot 100: a relative measure of quality rather than absolute, since it’s competing with the current alternatives. More money means fewer top hits rather than more contenders. For absolute measures of quality, looked at decay over time. The 90s (high revenue period) songs did worse than expected. The low-revenue 2006-2015 period is where people are still listening to the songs today. Can control for various variables including teenage population and revenue is still uncorrelated or negatively correlated with revenue.

Superstar composers: only 2 from the 1990s, many more from other lower-revenue decades. So more money is associated with fewer and lower quality hit songs, fewer first appearance songwriters, and fewer superstar songwriters. Next steps: more data, looking for varied output based on quality of hit, and revisiting assumption of equal shares of songwriting credits.

Rosenblatt: what the trends are in publishing deals—are the deals better/worse/different/360? Industry practice has changed considerably over that period.

A: good question, but his core question is does more © yield more music? Why it does or doesn’t is an interesting Q but not his main one.

Fromer: Movies: Blockbusters are often perceived as less creative; gatekeeping around who is allowed to produce them—is there anything like that dynamic here?

A: certainly gatekeeping on the artist side. Harder to tell on the publishing/composing side. We hear about artists being taken advantage of. [We definitely hear about composers forced to share credit with performers in order to get the song recorded by them.]

Fromer: Artists wanting to work with a particular hitmaker may matter.

A: we’re increasing the number of composers on average in a hit song, for sure.

Q: some songs are on the Billboard 100 forever.

A: sure, it’s not a perfect measure of quality, but that’s why I also look at whether it’s still being streamed years later.

Q: another possibility: look at # of DMCA takedowns to measure popularity/quality.

Cathy Gellis: did the Copyright Act of 1976 coming into effect have any relation to what happened to spike revenue in 1978? But also note that the “filesharing collapse” was also correlated with the collapse of record stores, which wasn’t just about filesharing but was also about the prices record companies were charging to record stores that made them unsustainable.

A: hard to explain 1978. But you’re right, there’s a lot going on. And only looking at Hot 100, so there may be other things going on, although the music industry is highly skewed to the top.

Q: Number of composers being added: people are preemptively adding composers w/similar style b/c of fear of Blurred Lines type lawsuits.

Pager, Copyright's Extended Duration as Feature not Bug

Most valuable works may struggle before they are recognized as valuable—Van Gogh died penniless. Moby Dick, Citizen Kane were commercial failures. Art from marginalized communities may take time to be recognized.

Publishers will only invest in works that they think will pay off fast if © term is short. Does that mean © needs to last 100 years? Not arguing for any particular term. But could play with a variable term. Return to a renewal term—option. That would allow mainstream iconic works to renew, which would be bad; could couple it with some sort of revenue cutoff, so the works that have had returns on their investment can’t renew.

RT: Renewal restrictions: as far as I know most blockbuster movies have technically lost money; so how would that work?

A: could go by box office/gross.

RT: What about the naïve economic model here? The midlist is already gone from publishing with life + 70—publishers are already not investing in works that will pay off over 20 years, even with that very long term.

A: you might take more risks on an unknown if you think there’s more money around.

RT: what does that have to do with the term? Your time horizon is still going to be 1 year. [See also “I’ll be gone, you’ll be gone.”]

Jake Linford: you’re really telling a desert story not an incentive story: this person deserves a reward and we need to create some sort of system to give them a reward.

Tang: there’s tons of data that the industry is becoming more risk-averse and more winner-take all, not willing to tolerate failure, despite its concentration (because of its concentration?). [Cory Doctorow and Rebecca Giblin say that the way to deal with the bully taking your kid’s lunch money is not to give your kid more lunch money; this is a statement about © rights.]