nonprofits' promotion of "abortion reversal" services was commercial speech

National Institute of Family and Life Advocates v. Bonta, No. 2:24-CV-08468-HDV-(MARx), 2025 WL 1140450 (C.D. Cal. Mar. 6, 2025)

Not sure this one survives appellate review, but we’ll see. NIFLA sued for injunctive relief against California AG Bonta over his public statements and pending consumer protection lawsuit against third parties involving abortion pill reversal (“APR”). APR is “a controversial and unproven practice that attempts to ‘reverse’ a chemical abortion through the administration of high doses of progesterone.” NIFLA alleged that his statements and lawsuit chilled its First Amendment right to advertise the practice using language that the AG considers false and misleading.

The court denied the motion, finding that plaintiffs were engaging in commercial speech when they advertised medical services, for which they had an economic incentive despite being nonprofits. The First Amendment does not protect commercial speech that is inherently misleading. “APR has been tested in the crucible of litigation by three separate federal courts, and in all three cases the safety and efficacy of APR has been found wanting.” The court also conducted its own independent review of the expert submissions, and found “a dearth of credible scientific evidence supporting the APR-related statements upon which Plaintiffs seek injunctive pre-clearance.” The plaintiffs were entitled to their own religious beliefs, but not to their own facts. The court couldn’t find likely success on the merits given the evidence.

Plaintiffs alleged that, as the result of the AG’s statements and enforcement actions, California NIFLA members have canceled or postponed plans to advertise about APR options, or to offer APR[.]” Their main worry was a lawsuit the AG filed in late 2023, which is still pending, against two anti-abortion nonprofits for alleged false and misleading statements about the safety, efficacy, and impact of APR, alleging violation of the consumer protection laws.

Plaintiffs accepted that, as a matter of state law, the false advertising provisions invoked by the AG applied only to commercial speech. That might be dispositive in a future enforcement action. “Preliminarily enjoining the Attorney General from enforcing the state’s laws against speech that the laws do not apply to is unnecessary at best and violative of federalism at worst, as it would require the Court to assume that State officials will improperly enforce state law in the future.”

Identifying commercial speech is fact-driven. “[S]trong support that the speech should be characterized as commercial speech is found where (a) the speech is an advertisement, (b) the speech refers to a particular product, and (c) the speaker has an economic motivation.”

Plaintiffs conceded their intent to advertise, but argued that only advertisements “in the context of commercial transactions” count as commercial. Their speech couldn’t be commercial, they reasoned, because the APR service providers do not charge for APR services. But First Resort, Inc. v. Herrera, 860 F.3d 1263 (9th Cir. 2017), found that a nonprofit’s advertisements to non-paying recipients were “advertisements” in the commercial sense because they were about the provision of medical services rather than the “exchange of ideas.” Such was also the case here.

Likewise, the speech referred to a particular product—a medical treatment—also favoring commercial speech treatment. Finally, one of the benefits that plaintiffs provide to members is advising them on APR, which “is a powerful economic motivation since it is through their members that Plaintiffs raise funds. And Plaintiffs do not dispute that they engage in grant fundraising based, in part, on their APR advocacy and technical support.”

The court distinguished Bernardo v. Planned Parenthood Federation of America, 115 Cal. App. 4th 322 (2004), which found that Planned Parenthood’s statements about the lack of a link between abortion and breast cancer weren’t commercial speech. In that case, though, PP had provided summaries of and citations to research both supporting and challenging the existence of a link, and even a caveat conceding that “abortion does not offer the same protection against breast cancer as a full-term pregnancy.” “Thus, in Bernardo, it was clear that defendant was presenting a position on a scientific debate rather than promoting a particular treatment.”

By contrast, plaintiffs “are encouraging the proliferation of a specific medical intervention.” Indeed, instead of encouraging consumers to contact a “qualified medical provider for personal medical evaluation and services” as in Bernardo, plaintiffs direct the public to contact providers of APR or conduits thereto. For example: “Contact your Medical Director and other physicians and providers in your community to let them know of the successful abortion pill reversal rates...[and] [u]rge these medical professionals to review the research article offer [sic] this protocol as part of their practices.” In Bernardo, PP provided information for “personal education, but nothing on [its sites] constitutes a recommendation for medical care.” “The opposite is true here.”

Because the speech was commercial, Central Hudson applied. There’s no protection for false or misleading commercial speech—except! “Inherently misleading” commercial speech may be banned outright, but if the speech is only “potentially misleading,” it’s protected when the “information may be presented in a way that is not deceptive.” On this record, the statements that plaintiffs wanted to make were inherently false and misleading. In very brief, “reversal” is false because even taken on its own terms, APR is just adding a higher concentration of progesterone, “ostensibly to better the odds that these molecules ‘outcompete’ the mifepristone in binding to the progesterone receptors,” which in theory would then increase the chance of continued pregnancy (if the patient hasn’t already taken the second pill—this only works even in theory if only the first pill has been taken).

Also, there’s no credible scientific evidence that APR is safe. The American College of Obstetricians and Gynecologists and others warn of an increased risk of hemorrhage or serious complications. In one especially telling detail, plaintiffs’ expert opined that progesterone can be used safely based in part on a study finding “no statistically significant difference [in preterm delivery or birth defects] compared to the general population” in cases where mifepristone was unsuccessful in terminating the pregnancy. As the court noted, that study nowhere even asked whether the women were ok.

And there’s no credible scientific evidence that APR is effective.

Even if the statements were only potentially misleading, Central Hudson analysis applied, and California has a substantial interest in protecting consumers from misleading advertising by medical professionals. “While the advertising at issue here is not strictly by medical professionals, it is about medical treatment purportedly carrying the weight of medical authorities—which is the principal concern underpinning the state’s interest.” The state also had the burden to show that the regulation directly advances the asserted government interest, and the fit between interest and regulation must be reasonable/narrowly tailored to achieve the ultimate goal. That test was satisfied: the fit between consumer protection and enforcing against false advertising for a medical procedure was “more than reasonable.” (For what it’s worth, I think this is a weird application of the difference between inherently and potentially misleading, which I understand to mandate, for the latter, a requirement to let the speaker to try again with a more nuanced version of the claim. But given the procedural posture, it may not make any more sense to ask whether there are some pro-APR claims that could be clarified enough to be nonmisleading; I would think plaintiffs would have to identify qualified claims they wanted to make, which they didn’t.

Nor would enforcement against plaintiffs constitute viewpoint discrimination. The government is presumed to be acting unconstitutionally when enforcing laws against speech if “the specific motivating ideology or the opinion or perspective of the speaker is the rationale for the [enforcement].” This requires a showing of both discriminatory purpose and discriminatory effect. But there was insufficient evidence of a “policy plan, or pervasive pattern” of enforcement sufficient to merit an injunction. The AG filed a grand total of one enforcement action on this topic; that case was scheduled for trial this year. Two press releases and a few public appearances on the matter didn’t override 18 months without a second action. “Indeed, perhaps the strongest evidence that Plaintiffs themselves are not concerned about a ‘pervasive pattern’ or ‘plan’ is the fact that this motion for injunctive relief was filed nearly a year after the state court proceedings were initiated.”

Plaintiffs complained that the AG was going after them and not after Planned Parenthood, but what distinguished the two was “the undeniable fact that California’s law enforcement officer views the APR statements as false and injurious to public health (again, correctly in all likelihood based on the submitted evidence). That should be the end of the analysis.” There was no nonenforcement against a pro-choice center making the same inherently false claims.

"defeat devices" in trucks plausibly deceptive because they rendered vehicles unlawful to drive

Biederman v. FCA US LLC, --- F.Supp.3d ----, 2025 WL 458831, No. 23-cv-06640-JSC (N.D. Cal. Feb. 11, 2025)

This is a putative class action over alleged “defeat devices” in diesel engines installed in RAM 2500 and 3500 pick-up trucks. Plaintiffs alleged that defendants’ representations about the trucks’ performance and compliance with regulatory standards were false and misleading since the vehicles could only perform as advertised while emitting pollutants beyond established limits. In addition, defendants’ emissions recall, issued to make the trucks legally compliant, allegedly reduced vehicle performance beyond defendants’ representations.

Plaintiffs alleged RICO claims, which failed because they were RICO claims, as well as California statutory and common-law claims, including fraud and breach of express and implied warranty. Some of the non-RICO claims survived.

First, plaintiffs couldn’t bring fraudulent concealment claims on behalf of a nationwide class, as to which they lacked standing.

Preemption: Are claims of compliance with regulatory standards preempted?

The Clean Air Act includes an express preemption provision:

No State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to this part. No State shall require certification, inspection, or any other approval relating to the control of emissions from any new motor vehicle or new motor vehicle engine as condition precedent to the initial retail sale, titling (if any), or registration of such motor vehicle, motor vehicle engine, or equipment.

But defendants didn’t explain how this would expressly preempt consumer protection claims, and there was a presumption against preemption for those. Plaintiffs’ state-law misrepresentation claims mostly didn’t “exist solely by virtue of” defendants’ disclosure requirements to the EPA. The court asked “whether Plaintiffs’ allegations could plausibly state a misrepresentation claim absent EPA regulation.” Plaintiffs alleged misrepresentations about: 1) “a clean-burning DEF system that made it so it would emit less pollutants than earlier models and/or equivalent gasoline-powered trucks;” 2) “good fuel economy;” 3) “low cost of ownership;” and 4) “strong towing and hauling capabilities.” Defendants also allegedly didn’t disclose the existence of “defeat devices” in the trucks, which could only perform as advertised while emitting pollutants beyond the legal limit, consumer expectations, and a comparable gasoline-powered vehicle. These “claims require proof of both more and less than what is required to enforce the federal standards.” No proof of an actual violation of EPA emissions standards was required, nor that the device would qualify as a “defeat device” as defined by federal regulation. Instead, defendants could be liable if they “installed and concealed software in the cars that reasonable consumers would have wanted to know about.” “Mere reference to regulatory standards, such as EPA emissions levels, does not alone infringe on the regulatory scheme.”

However, the court did find preempted claims relating to ads that the trucks complied with EPA and California Air Resources Board regulations. If the alleged false statement is that the trucks “complied with emissions law and regulations,” then plaintiffs could not prove their case absent a finding that defendants violated EPA regulations. (I gotta wonder whether this type of analysis should survive Loper Bright—I guess it’s an EPA regulation and not a statute, but if we exclude this, then do defendants get to argue that there’s no material difference to consumers between just claiming compliance with federal law versus also making the nonpreempted claims, thus insulating their other claims from liability as well? This decision seems to conflict with cases holding that a clear misrepresentation of FDA approval is actionable, but maybe the argument just below answers that.)

It didn’t matter that the EPA determined that defendant Cummins committed fraud, so a jury wouldn’t be second-guessing the agency’s determinations. Cummins denied the allegations despite entering into a consent order. And a fact finder could find that defendants did comply with EPA regulations, which would throw the agency’s allegations into doubt.

Both deceptive statements and deceptive omissions were plausibly alleged; as to the latter, plaintiffs pled that defendants had exclusive knowledge of material facts not known to the plaintiffs; materiality was alleged via allegations that plaintiffs would not have purchased the trucks or would have paid less had they known about the defeat devices. “Additionally, the EPA’s regulatory scheme and the Clean Air Act’s prohibition on defeat devices further suggest the presence of such devices in vehicles is material to consumers.” Even if plaintiffs also needed to allege that the omitted fact “affects the central functionality” of the product, which was not clearly required by California law, they’d done so, given that it’s illegal in California to “operate or leave standing upon a highway a motor vehicle that is required to be equipped with a motor vehicle pollution control device ... unless ... [the device] is correctly installed and in operating condition.” So this was a driveability issue.

Express warranty claims under the California Commercial Code failed because plaintiffs didn’t show that the defect persisted past multiple attempts to fix it. Implied warranty of merchantability claims failed for want of vertical privity; plaintiffs weren’t third-party beneficiaries to the contract between defendant FCA and the dealerships selling the trucks. But California’s Song-Beverly Act does not require vertical privity between the parties as an element of an implied warranty claim, and plaintiffs plausibly alleged that the trucks were unmerchantable because they could not be legally driven.

Washington's anti-spam law covers any misrepresentations in subject line of commercial email

In re Brown v. Old Navy, LLC, 2025 WL 1132243, --- P.3d ----, No. 102592-1 (Wash. Apr. 17, 2025)

Deciding a certified question, the Washington Supreme Court held over dissent that the state’s anti-spam law covers all commercial emails with false or misleading information in their subject lines, not just false or misleading information about the commercial nature of the message. The majority reasoned that the statute’s language is plain: “No person may initiate the transmission ... of a commercial electronic mail message ... [to] a Washington resident that: ... (b) [c]ontains false or misleading information in the subject line.”

Plaintiffs alleged that Old Navy violated the law by sending them e-mails that, for example, announced that a 50 percent off promotion was ending even though the retailer continued to offer the 50 percent off promotion in the days following the initial e-mail.

Along with ordinary statutory interpretation principles, the majority reasoned, “[w]e construe remedial consumer protection statutes ... liberally in favor of the consumers they aim to protect.” But even without that, plain meaning settled the question: to violate this provision, “an e-mail subject line does not need to deceive consumers about the subject or purpose of the email—it merely needs to contain false or misleading information … even when the false or misleading information in the subject line does not deceive consumers about the advertising purpose or commercial nature of the e-mail.”

Old Navy argued that the legislature intended to prevent spammers from tricking people into opening spam, but not to create an “enhanced anti-fraud provision” that provides statutory damages only when deception is in the commercial e-mail’s subject line. The majority disagreed: targeting the header and subject lines made sense to fight spam because these are “the two pieces of information consumers first glean when faced with the choice of deleting a message or engaging with its content.” The legislature targeted a specific deceptive practice, and also made violation of the anti-spam law a per se violation of the general consumer protection statute. This is a categorically deceptive practice, as to which the legislature concluded that statutory damages were appropriate. “Accordingly, CEMA [the anti-spam law] does not require a showing of injury for statutory damages to be awarded because the injury is receiving the e-mail that violates CEMA. There is nothing absurd about CEMA’s focus on subject lines or CEMA’s allocation of statutory damages to falsity in the subject lines.”

Old Navy also argued that “banal hyperbole” like “Best Deals of the Year” could lead to liability if there was an end-of-the-year sale. But that was about what falsity/misleadingness meant, and puffery was the right doctrine to deal with it. “Promotions that state ‘Best Deals of the Year’ are not misrepresentations and do not communicate information that retroactively becomes false (and actionable) under CEMA because market conditions change such that a better sale is later available.”

A dissenting justice would have read the law as unambiguously narrower; it concluded that the legislature was concerned about the costs to consumers of having to open mail to figure out that it was commercial, and the examples cited focused on subject lines that were not clear that they were ads.

New in my TM collection

 Ebay is really great for this sort of thing:

Glade Plug-in in the shape of a pine tree

See Car-Freshner v. S.C. Johnson & Son, 70 F.3d 267 (2d Cir. 1995).

The Battle for Our Attention: Empirical, Philosophical and Legal Questions: Northeastern University School of Law

 Panel 3 - Media and Communication Systems for Attention Capture

 This panel will address how different fields, from media studies to economics, think about attention, how it is captured and valued. Do different types of media (political news, advertisements, sexual content, etc.) produce different attentional patterns? How is attention captured through technology? What issues does attention distortion raise? 

David Simon, Associate Professor of Law, Northeastern University (moderator)

Nick Seaver, Associate Professor of Anthropology, Tufts University

Attention as a method of control—a name for how we can be disciplined/enrolled into projects of bosses or other people who want to control us. If we thought of attention that way we’d change how we regulated and valued attention.

Mouse jiggler: one form of resistance to this type of discipline. Bosses use bossware to surveil whether you’re “working.”

That also reveals just how lousy our techniques for detecting attention are. Very hard to know! We use “impressions” or sales as proxies. Self-driving cars use torque on the steering wheel to check whether you’re prepared to take over—but that means that you can just use a weight to “pay attention” for you. Even the most safety-focused forms of “attention” have been turned back into discipline from above.

Bridget Todd, Fellow at Berkman Klein Center

Podcasting: what makes it different? Identity mediates our experience of digital technologies. Podcasting is inherently a medium for people who like to talk. Opposite of short-form content, with some exceptions. Deep dives into complicated/nuanced issues. [Books?] Requires attention!

Asking “who benefits from this attention?”: conflict entrepreneurs. They effectively hijacked conversations around identity. Our current media landscape is tailor-made for conflict entrepreneurs to do this. It makes us more divided, suspicious, lonelier, and less curious. Focuses attention on differences among individuals, values, identities. Bite-size journalism makes people more black-and-white in their thinking, less nuanced. What can we do? More exposure to complicated narratives: a man who waited for 6 hours to speak in support of an anti-trans bill in Wisconsin, and listened to the advocates speaking about their lives, and changed his mind.

Rebecca Tushnet, Professor of Law, Harvard University

Maybe by accident the flip side of Professor Seaver’s talk. My fields are IP and advertising: and what I suggest those fields tell us is that attention can be owned, but when attention is not an object of ownership, it is not regulated. We value ownership of attention but not its other possible characteristics. One thing that means is that we often are unable to measure the thing that we say is ownable. A well-known quote, attributed to retail mogul John Wanamaker, says: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

I also have something of a side note, or a cautionary one: courts often believe things about human cognition that are simply wrong, and it is hard to make them change their minds because they often consider their beliefs about cognition to be common sense. An example from copyright:

In an important copyright case, Judge Learned Hand wrote that “everything registers somewhere in our memories, and no one can tell what may evoke it” – Learned Hand was a great judge but a terrible neuroscientist: as it turns out, we do not process a lot of sensory input that we get, and it is never encoded in memory, not long-term or short-term. But courts still rely on this principle to hold that musicians may have engaged in subconscious copying without knowing about it, and it is very hard to get a court to reject a factual assertion made by Learned Hand.

Lots of similar assertions about how consumers think in TM.

More relevantly to attention in particular, copyright’s fair use test distinguishes between unauthorized uses that are justified and unauthorized uses that use another’s work “merely . . . to get attention or to avoid the drudgery in working up something fresh” which are less likely to be fair—so one of the things the copyright owner owns by default is the right to your attention based on their expression.

Similarly, TM: TM focuses on the ability of a mark to identify the source of a product—a mark is communicative, and a good mark captures attention. The ability to be recognized and noticed is at the core of what a good trademark is! That means that unauthorized attention-getting uses might be infringing. Initial interest confusion is a concept that explicitly relies on the idea that a trademark might get a consumer’s attention and then the seller might sell them something else, and that’s infringing even though no sale is ever completed as the result of confusion. At the same time, we distinguish between initial interest confusion and mere distraction/comparison—it can be legitimate to catch the consumer’s eye by, e.g., comparative advertising.

Likewise, trademark’s protections for truthful uses can be limited if the user uses “too much” of the mark—relies too heavily on its attention-getting power, as courts have ruled in cases like a former Playboy playmate’s website that repeated that she was Playmate of the Year too many times, or a luxury resale website emphasizing Chanel products too heavily in its advertising.

Dilution: making it harder for a mark to stand out/capture your attention—Delta is diluted versus Xerox which is not: no real empirical evidence this does harm to TM owners but the sense of unfairness suffices to get courts to condemn what they see as free riding

Outside of ownership, my fields don’t have ways to think about attentional harms

Advertising law: getting attention is unregulable because only falsifiable claims can be evaluated—even advertising systems that purportedly require factuality don’t generally regulate attention-grabbing in general, especially in the visual or oral realm.

Regulation of sponsorships and endorsements are an example: FTC is focused on metadata disclosure—disclosure that content is sponsored—as well as on whether endorsers make claims that need substantiation. The thought is that audiences can calibrate their attention or the credibility they give to the claims once there’s disclosure—but it’s important to understand the underlying dynamic which is that sponsored content is something that audiences have a harder time tuning out—it’s not like a banner ad that you can just have attentional blindness towards.

Indeed, advertising is often seen as a tax on audiences or the price they pay for other content, even though availability of information is necessary for an efficient market. James Kellner, the chairman and CEO of Turner Broadcasting, stated that people who skip TV commercials are violating their contract with TV companies who provide ad-supported programming. He grudgingly accepted that “there’s a certain amount of tolerance for going to the bathroom.”

Attention is owed—but the givers of attention are not the ones who are in control. That assumption or expectation that advertising is hostile to its audiences’ interests, perhaps perversely, itself gives some credibility to the idea that most attempts to capture audience attention are legitimate—we expect the audiences to be running away, so we also expect the advertisers to be lunging forward to catch the audiences in any way they can.

Emily West, Professor of Communication, UMass

Attention, inattention and convenience: from book Buy Now: How Amazon Branded Convenience and Normalized Monopoly. Inattention allows us to draw attention to things that we find more rewarding; can distract us from consolidation of corporate power. Production of user inattention is strategic and purposeful. If content was the bait for ad-supported media, convenience is the bait in the digital economy for greater platform enclosure of time, spending, attention. Ease at the center of any interaction/exchange; facilitates inattention to multiple steps, research, complexity—a structure of feeling and a logistical form. Decreases discernment and price sensitivity—decisional muscles get flabby. Get out of the habit of going to the store, the news, etc.—these things come to us. Google’s AI answers remove even the need to consider the search results. Offering itself as authoritative source, but it’s a digital ad company and not a library.

Simon: Different visions: Attention & control; attention as an asset or point of conflict; attention as ownership/ownership of attention; attention as convenience. TM law allocates control over attention-getting to make it easier to find stuff. Attention can also be an asset to employers. And to sellers who offer convenience (or maybe your desire not to pay much attention is the asset there).

Seaver: there are boundary objects or trading zones where disciplines meet—but people are often talking about different things (a “suitcase term”). Are these definitions of attention all the same? Attention is a big bag, but that can be appropriate!

West: the temptation is to go to individualized responses—“I just need to be more careful/buy less/pay more attention”—but it’s the mental infrastructure we live with. The firms have 150 psychologists on staff and it’s not a fair fight.

Q: Seaver/Tushnet: Does attention exist or is it just about metrics that we use for owning, controlling people/their behaviors? A proxy for something deeper. Todd/West: podcasting and convenience—podcasts are regularly being used to fill free time, raising the question whether they are really deeper dives. Attentional experience different from that of reading books (we can do other stuff while we listen). Current attention ecosystem: media strategy that has to do with trying to reach the individual or the population that is the most remote from the issue; anyone who actually knows what’s going on is alienated by the way the news promotes the issues, but the goal is not to reach people who understand—instead, it’s to reach the people who know the least.  

West: longform content is just another method of platform enclosure. Amazon/Tiktok equivalents of QVC where you can just watch and click to buy.

RT: TM doctrines prioritize form over substance: TM is a shortcut to compress information about the product/service: you see Coca-Cola and remember the taste and the advertising and the lifestyle. But the TM owner is allowed to change quality/characteristics without notice even though continuity is supposedly the justification for the right. The obligation created by reputation is not reciprocal.

Seaver: Attention is used as a proxy for productivity (the mouse jiggler) or safety (the steering wheel)—the real value is the thing that the attention is attached to, like truth (for media). Historically specific in the modern era, perhaps.

Q: Do you think that attention can justly be owed? RT: I’m attempting to describe how IP thinks about these issues; it depends on the doctrine. Bundle of content and attention—attention might be owed if it were really an efficient market if you were really free to choose it instead of something else. It’s not fair if there’s monopoly control or market distortion.

Seaver: we tend to assume that neuroscience has to be consulted, but if attention is just a word for “people should be able to do things on their own schedules and at their own behest” you don’t need neuroscientists for that. When Trump was elected in 2016, there was a lot of attentional discourse: (1) how could this have happened, we (the polity) weren’t paying attention; (2) everything he does is a distraction (to/for the polity) from something else; (3) he has no attention span. These are three levels of attentional discourse. The polity pays attention by writing things in the papers even though we traditionally assume that writing things in papers leads to the polity paying attention.

West: Advertisers like digital advertising because it can show you the breadcrumbs of how you spent your ad dollars and whether someone clicked—more behavioral.

RT: disagree—that’s only for some types of ads. Coca-Cola doesn’t use behavioral advertising, and there’s lots of ad fraud. And only some types of transparency. Amazon may tell you cost per click, but it doesn’t tell you how you get put on the first page of search results, and it could change how it organizes its site and destroy you at a moment’s notice.

Seaver: note that the jiggler is not super effective resistance; interesting to see the pushback. Doesn’t find it morally objectionable, but defeating the safety device on a car is—but they’re framed the exact same way by their users.

trademark use is easier with a suggestive mark than with a descriptive one

Medical Depot, Inc. v. Med Way US, Inc., --- F.Supp.3d ----, 2025 WL 948334, No. 22-CV-01272 (OEM) (SIL) (E.D.N.Y. Mar. 28, 20

This case focuses on trademark “use.” The parties are medical supply companies who use similar marks—“Med-Aire” and “MEDAIR®”—to brand the medical air mattresses they sell.

Plaintiff, dba Drive, has sold air mattresses using the “Med-Aire” mark since 2007. From 2007 to 2023, Drive’s “Med-Aire” mattresses amassed gross sales of $160 million. “Med-Aire” was used on at least some of Drive’s external packaging for its medical air mattress products intermittently since 2007. Drive used the ™ symbol in connection with its “DRIVE” trademark for its “Med-Aire” mattress products between 2007 and 2020. But it didn’t use the ™ symbol in connection with its “Med-Aire” mark until 2020, two years after Med Way started using its “MEDAIR®” mark. “Med-Aire” appeared on at least certain shipping labels for Drive’s air mattress products, alongside product descriptions in the same font, color, size, location, typeset, and style as the rest of the product descriptions, at least intermittently, since 2007. “Med-Aire” appeared inside and on the cover of a user manual included with at least some “Med-Aire” air mattress systems, and on the face plate of the air pump that accompanied the mattress system, which is sold separately. “Med-Aire” also appeared in at least some of Drive’s catalogs and brochures since “as early as 2007.” Drive also distributed monthly promotional “Med-Aire” product catalogs. And “Med-Aire” was displayed in flyers at retailers of “Med-Aire” products since 2011, at trade shows since 2007, and on websites since at least as early as 2009.

Med Way, meanwhile, displayed MEDAIR on its goods in interstate commerce since at least as early as April 1, 2019. Med Way stamps “MEDAIR®” on its medical air mattresses and pumps. In late 2019, Med Way hired counsel to conduct a trademark clearance search for the term “MEDAIR,” and variations thereof, which did not reveal Drive’s “Med-Aire” mark. It filed a use-based application for “MEDAIR” in connection with “air mattresses with pump, for medical purposes” with a first use date of April 1, 2019; it was registered in 2020.

Drive and its affiliates have 67 federally registered trademarks. Drive waited until July 8, 2020, to do a clearance search for the term; having done so, it found MEDAIR and then tried to register Med-Aire for “[m]edical products, namely, therapeutic mattresses” and the like. The PTO ultimately suspended Drive’s application pending disposition of Med Way’s prior-filed application; Drive’s cancellation petition is suspended pending the outcome of this litigation.

The court found that Med-Aire was suggestive because “it requires some imagination and some thought” to understand the kind of goods it refers to; it was obviously medical, but it wasn’t obviously a mattress. This is the wrong standard because it’s only half the question: the appropriate inquiry is, knowing the goods, does it require imagination to connect the goods with the mark? The classic Abercrombie spectrum gets its name from a case in which the court found SAFARI distinctive for some apparel items but not others. Noodles would be descriptive for a restaurant, but arbitrary for a furniture store. Courts often get this wrong, but they shouldn’t. Here, the court was apparently encouraged in its error by both sides.

The court then turned to trademark use. Citing Alexandra J. Roberts, Trademark Failure to Function, 104 IOWA L. REV. 1977 (2019), the court stated: “To merit protection, a trademark must be ‘used in a trademark way,’ meaning that it ‘must appear where consumers expect a trademark to appear, and it must be sufficiently set off from the surrounding text and images to attract notice.’” The court also looked to Jack Daniel’s and the TTAB. A mark “must be used in such a manner that its nature and function [as a trademark] are readily apparent and recognizable without extended analysis or research and certainly without legal opinion.” Scholastic Inc. v. Speirs, 28 F. Supp. 2d 862 (S.D.N.Y. 1998), aff’d, 199 F.3d 1323 (2d Cir. 1999) (cleaned up).

“Common indicators suggesting that a word or phrase might be viewed by the public as a trademark include large font relative to surrounding text, all capital letters or initial capitals, distinctive print style, use of color, and prominent position on a label or in an advertisement. In short, a mark must stand out from the surrounding text.” Advertising expenditures can also be circumstantial evidence, as can sales. (Though you still need to know which part of the sales experience counts as a trademark!)

Conceptual strength also matters.  “For example, where a mark is fanciful, ‘even though [the mark] may be embedded in other text, there is no danger that [the mark] will be interpreted as merely descriptive or informational matter ... As such, its only purpose is to provide a unique identifier to a product that is otherwise identified only by a generic name and technical explanatory, information’” (citing In Re Eli Lilly & Co., 2015 WL 4241138 (T.T.A.B. 2015)).

Using these principles, plaintiff used “Med-Aire” as a trademark. “Med-Aire” “consistently appears as the first word or phrase in product descriptions, uses initial capital letters, appears at the product point of sale listings, appears in advertising and promotional materials, is referred to by consumers as ‘Med-Aire’ in voluminous consumer communications, is suggestive, and products bearing the mark have amassed millions of dollars in sales, all of which supports finding that the mark has been used as a source identifier.”

The court distinguished Jaymo’s Sauces LLC v. Wendy’s Co., 19-CV-01026, 2021 WL 4712685, at *4 (C.D. Ill. Oct. 8, 2021), which held that “S’Awesome” was not an adequate source identifier for sauce in part because of the term’s nonprivileged placement, the sauce label’s emphasis on other (descriptive) terms, and the comparatively small, plain font of “S’Awesome,” as well as marketing materials that featured only “occasional” use of the “S’Awesome” term. Here, Drive used “Med-Aire” as an individual product mark and also used a house mark on its products; that’s fine. “Drive does not emphasize other non-trademarked phrases, images, or terms relative to ‘Med-Aire’ on labels and in promotional materials,” and frequently used “Med-Aire” in promotional materials.

The lack of brand awareness surveys or marketing experts was not dispositive, nor was it dispositive that consumers often refer to “Drive” mattresses or product numbers. Drive also submitted evidence of consumer communications about “Med-Aire” products, demonstrating that consumers did perceive “Med-Aire” as a source identifier.

“Size, location, and other characteristics may be determinative for trademark use for descriptive terms that have acquired secondary meaning,” but were less important for suggestive terms.

With nothing else in serious dispute, Drive had priority and showed likely confusion as well as its entitlement to cancellation of Med Way’s registration.

But its state law unfair competition claim, which required bad faith, failed because Med Way presented evidence that it relied on a trademark clearance search and advice from counsel. There was also no fraud on the PTO.

Med Way’s dilution counterclaim also failed because Drive was the senior user and because Med Way’s mark was not famous.

State law false advertising counterclaims also failed for want of public injury. “Med Way’s evidence consists of a reference to ‘mediocre reviews,’ but many products receive ‘mediocre reviews,’” and anyway there was no showing of how Med Way’s mattress reviews compared.  

The court declined to award disgorgement. There was no finding of extreme difference in quality or bad faith, or even that Med Way benefited from its infringement. Even though Med Way’s principal physically examined Drive mattresses to see what a competitor’s mattresses looked like, “a person could reasonably examine the physical mattress alone—without the point of sale listing, or the user manual, or an advertising flyer—and not encounter the ‘Med-Aire’ mark” based on Drive’s own exhibits. And, though Med Way continued its use after Drive’s objection, Med Way’s CEO and Med Way’s attorneys expressed a genuine belief that although Drive used “Med-Aire,” it was not the senior user of the mark.

Although Drive didn’t delay in protecting its rights or have unclean hands, the balance of the equitable factors weighed against profit disgorgement. Instead, it was entitled to a permanent injunction.

Trademark question of the day

 At a hotel recently, I was presented with this gem: "Staybill," a guide to hotel/local attractions.

Does it matter that PLAYBILL is registered for, inter alia, "making hotel reservations for others"?

whether a product was discontinued doesn't relate to its “nature, characteristics, qualities, or geographic origin"

Memjet Technology Limited v. Vanguard Graphics International, LLC, 2025 WL 976915,  No. 3:23-cv-1810-JES-AHG (S.D. Cal. Apr. 1, 2025)

The parties sell digital inkjet products for use in commercial industries. Plaintiffs alleged that defendants disseminated a communication to approximately twenty businesses in the digital inkjet printing industry stating that “Duraflex print head will no longer be produced by Memjet effective immediately” and that they were “disappointed in Memjet’s decision ...” and will “provide even better options ...” moving forward. This allegedly libeled Memjet by telling its customers that Memjet was discontinuing Duraflex printheads immediately without warning to its customers and suggested that the Duraflex printheads were “substandard, obsolete, and becoming irrelevant within the print industry.” Plaintiffs also alleged that the communication “violated” Memjet’s trademarks by displaying the Duraflex name and logo. Plaintiffs sued for Lanham Act false advertising, trade libel, intentional/negligent interference with prospective economic relations, and California UCL violations.

Defendants successfully sought dismissal of the dismiss the trade libel claim, the UCL claim, and the Lanham Act false advertising claim.California trade libel requires: (1) a false or misleading statement; (2) which specifically refers to the plaintiff’s product or business; and (3) clearly derogates that product or business. Statements about Duraflex being discontinued weren’t clearly derogatory, despite allegations that they prompted “countless” phone calls, emails and in-person inquiries and that one of plaintiffs’ larger OEM providers “indicated that it would significantly reduce its DuraFlex printhead forecast as a result of the Communication.” But ‘[t]he defamatory character of the language must be apparent from the words themselves.’ ”  “[A] statement that the Duraflex printheads are being discontinued effective immediately, even if true, would not necessarily or clearly carry an implication that something was wrong with the product or business. For example, unexpected discontinuation of a product could result from a supply chain issue with a part or from a personal issue with the business owner that has nothing to do with how the business is run or the product’s quality.”

UCL: Only allows injunctive relief/restitution. Plaintiffs’ claim for money spent on corrective advertising wasn’t restitution but damages, and they didn’t seek injunctive relief, so the claim had to go.

Lanham Act: This one I’m dubious about, but the court held that a statement that a product was being discontinued didn’t relate to its “nature, characteristics, qualities, or geographic origin.”

Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137 (9th Cir. 2008), says that phrase relates to “characteristics of the good itself” and not to false statements regarding their copyright license status. Characteristics of a karaoke recording, for example, include “the original song and artist of the karaoke recording, and the quality of its audio and visual effects.” Whether a product was discontinued was not a characteristic of the good itself. (What about plaintiffs’ services or “commercial activities”? The court dismissed the complaint without leave to amend, because this was their second try.)

Reading list: Margaritha Windisch, Unveiling the Bond Between Artists and Their Work: A Vignette Study

Unveiling the Bond Between Artists and Their Work: A Vignette Study

38 Pages Posted: 12 Feb 2025 Last revised: 19 Feb 2025

Margaritha Windisch

Date Written: January 31, 2025

Abstract

This paper empirically measures the bond between artists and their work. In a pre-registered vignette study, the impact of generative AI (Artificial Intelligence) in the creation process on the relationship between artists and their creations is investigated. The study provides evidence for the personality-rights theory of copyright law, predominant in continental Europe, which emphasizes a close personal bond between creators and their creations. While other theories of copyright law, such as the incentive and the labor theory, have already received much attention from the empirical research community, the personality-based approach to copyright law has been primarily discussed as a mere theoretical concept. To address this knowledge gap, over 200 art students from the five top art schools in Switzerland participated in an online vignette study where they were randomly assigned to go through the creation process of visual artwork using either (i) traditional drawing tools on a canvas, (ii) digital drawing software on a tablet, or (iii) an AI image generator. The results record the degree of the participants' emotional attachment to their artwork and indicate a nuanced relationship between technological tools and the artist's bond to their work. While there is no significant di!erence in emotional attachment between traditional and digital drawing tools, using an AI image generator leads to a statistically significant decrease in the artist's bond to their work and their perception of the work as their own intellectual creation. These findings suggest that the use of generative AI tools to create artwork impacts the extent to which artists can personally express themselves in their artistic endeavors, which has significant implications for policymakers in the fields of copyright law and technology as they navigate the landscape of copyright protection and authorship of AI-generated works. 

Canadian-origin "Truffettes de France" are plausibly misleading

James v. Chocmod USA Inc., 2025 WL 950509, No. 1:22-cv-01435 JLT SKO (E.D. Cal. Mar. 28, 2025)

Plaintiffs sued over defendant’s “Truffettes de France” (trans. “Truffles from France”), which are, despite the name, made in Canada. They brought the usual California claims.

Even if the truffles were not physically different, and if—as defendant argued—it uses the same recipe in France as it does in Canada and doesn’t charge more based on place of manufacture, California law holds that there is a cognizable injury. As the California Supreme Court held in Kwikset:

To some consumers, processes and places of origin matter. … Whether a wine is from a particular locale may matter to the oenophile who values subtle regional differences.

...

For each consumer who relies on the truth and accuracy of a label and is deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she paid more for than he or she otherwise might have been willing to pay if the product had been labeled accurately. This economic harm—the loss of real dollars from a consumer’s pocket—is the same whether or not a court might objectively view the products as functionally equivalent. … Two wines might to almost any palate taste indistinguishable—but to serious oenophiles, the difference between one year and the next, between grapes from one valley and another nearby, might be sufficient to carry with it real economic differences in how much they would pay.

Chocmod tried to defend by arguing that it had trademark rights in its brand name and thus no reasonable consumer would be deceived, particularly because the back label “explicitly states” that they were made in Canada. Initially, Moore v. Mars Petcare US, Inc., 966 F.3d 1007 (9th Cir. 2020), held:

[B]rand names by themselves can be misleading in the context of the product being marketed. Descriptive brand names require of the consumer “little thought,” which can make consumers susceptible to purchasing because “they won’t have the time or interest to read about [the product] on [the] website or the back of the box.” Thus, a product called “One a Day” gummy vitamins, which required two gummies a day for a full dosage, is explicitly misleading.

The court rejected Chocmod’s argument that “any reasonable consumer should ... be expected to review the packaging to determine the country of origin, if that is something the consumer feels is important.” The front-label representations were plausibly misleading to reasonable consumers, who aren’t required to look beyond the front of the box. Only if reasonable consumers couldn’t think they’d answered their questions with the front of the package—only if they’d “necessarily require more information before reasonably concluding that the label is making a particular representation”—do courts consider the back as potentially resolving an inherent ambiguity.  (Emphasis mine.)

The brand name “Truffettes de France,” or “Truffles from France,” was not ambiguous and would plausibly mislead a reasonable consumer. This was much clearer than ambiguous images or phrases addressed in other cases. Cf. Culver v. Unilever United States, Inc., 2021 WL 2943937 (C.D. Cal. June 14, 2021) (front labels “Paris,” Depuis 1747,” and “Que Maille”; court explicitly distinguished “de Paris”); Eshelby v. L’Oreal USA, Inc., 664 F. Supp. 3d 417 (S.D.N.Y. 2023) (“L’Oreal Paris” on front label could lead reasonable consumers to think that the company originated in Paris, but not that any particular product was); La Barbera v. Ole Mexican Foods Inc., 2023 WL 4162348 (C.D. Cal. May 18, 2023) (“Phrases like ‘The Taste of Mexico!’ are at once true in every meaningful sense and meaningless; the point is that they are different in kind from stating the Products are from Mexico.”).

Here, there was an actual representation about the truffles’ county of origin, which was “so misleading” that a reasonable consumer “need not search elsewhere for the truth.” Chocmod argued that the product name was no different from French onion soup, French fries, Belgian chocolates, Mexican burritos, or Chinese chicken salad. The court was open to the idea that “French truffles” would be insufficient to satisfy the reasonable consumer test. But “from France” was different. The label didn’t make representations about style or recipe, which would be different. Moreover, “the reasonableness of a consumer’s belief that a salad or other perishable item was shipped from another country is incomparable to his relative belief as to a shelf-stable product like chocolate, which was, in fact, shipped from another country—Canada.”

is selling stolen goods trademark infringement?

Tentantable.com, LLC v. Aljibouri, 2025 WL 959656, No. 22-CV-78-LJV (W.D.N.Y. Mar. 31, 2025)

Not sure I’ve seen this before! Is selling stolen goods trademark infringement? No, this court says, and that has to be right.

Plaintiffs sell “various inflatable products such as bounce houses[,] water slides, and...air blowers used to inflate such products,” as well as “party tents, pole tents, [and] banquet tents with associated tables and chairs.” They claim trademark rights in “Zoom Blowers,” “ ‘Pogo’ inflatables,” and “PartyTentsDirect.com.” They also alleged rights in “a black and yellow housing for an air blower.” Their application “for the yellow and black color scheme” is pending at the PTO.

Defendant Mohammed Aljibouri began working at Tentandtable as a “warehouse supervisor” in October 2019. After he quit, they allegedly discovered that had been “entering orders” and “making deliveries” of the plaintiffs’ goods for which they had no record and had not been paid. He also had “stole[n]...property” from the plaintiffs’ warehouse. And even after he left, he made unauthorized orders by signing in as a Tentandtable user.

Defendants sold the plaintiffs’ products, which “bear[ ] the [p]laintiffs’ names and trademarks[,] including Tentandtable.com, Zoom Blowers, Pogo Bounce House[,] and Partytentsdirect.com.” They also allegedly sold yellow and black air blowers that look “similar[ ]” to the plaintiffs’ air blowers.

The RICO claims failed because they were RICO claims.

Trademark infringement as to the allegedly stolen goods: Selling goods that have been altered so that they “do not meet the trademark owner’s quality control standards”—or failing “to observe a restrictive condition on the sale of a product”—and thereby causing “consumer confusion” may be infringing. But “repackaging of goods is not trademark infringement if it does not deceive the public or damage the mark owner’s goodwill.” But the complaint didn’t allege these things. “[T]he mere fact that the defendants sold the plaintiffs’ goods with the plaintiffs’ trademarks without their permission is not enough to state a Lanham Act claim.”

Burton v. Label, LLC, 344 F. Supp. 3d 680 (S.D.N.Y. 2018), rejected similar claims against a former employee, where the allegations were that the former employee had “use[d] his position as a Label salesman to sell items represented to be Label goods by placing orders with Label suppliers” and then keeping the profits for himself. Unlawfully pocketing proceeds that belonged to an employer does not constitute false designation of origin. ML Fashion, LLC v. Nobelle GW, LLC, 2022 WL 313965 (D. Conn. Feb. 2, 2022), likewise rejected Lanham Act claims based on sales of unaltered but allegedly stolen goods. There was no actionable misrepresentation-by-omission that they had the right to sell the goods.

As for the more conventional trade dress claims, they failed too. First, a trade dress plaintiff must “offer ‘a precise expression of the character and scope of the claimed trade dress.’ ” This is vital to assessing protectability, infringement, and the scope of any relief. The court was unconvinced that plaintiffs had provided the requisite articulation here. The complaint focused on the air blowers’ yellow and black “design[ ],” “configuration,” “scheme,” and “appearance.” But they said little more than “yellow and black.” And a “focus on the overall look of a product does not permit a plaintiff to dispense with an articulation of the specific elements which comprise its [trade] dress.” Images attached to the complaint couldn’t relieve plaintiffs of this burden. Still, the Second Circuit has cautioned that “a plaintiff that articulates the components of its trade dress with the requisite precision should not have its claims prematurely dismissed” regardless of whether the trade dress claimed is sufficiently distinctive.

So the court turned to distinctiveness and found it insufficiently pled. (It was also skeptical about conclusory allegations of nonfunctionality.)

Product design trade dress always requires secondary meaning, including the primarily color-based claim here. Plaintiffs did not succeed in the “formidable task” of pleading secondary meaning for product design. The complaint was silent on the first four factors courts consider: (1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, and (4) sales success. As to (5), attempts to “plagiarize” the mark, plaintiffs alleged copying by defendants, but not by anyone else. “[C]urts have found that when a complaint alleges that only the defendants have violated the plaintiff’s trade dress, this factor weighs against an inference of secondary meaning.” As the court noted, “if allegations of the defendant’s plagiarism were itself enough, this factor always would weigh in favor of finding acquired secondary meaning.” Finally, the length of the mark’s use was pled as being since January 2015, and the complaint didn’t specify that they have used this design “exclusively,” although plaintiffs referred to the design as “unique.” “But even assuming the plaintiffs have sufficiently alleged more than seven years of exclusive use, that would not be enough to state a plausible claim in the absence of any facts relevant to the other factors.”

The court declined to exercise supplemental jurisdiction over remaining claims.

district court misunderstands "fake sale" claims, finds price not to be a "statement"

Nguyen v. Lovesac Co., 2025 WL 950511, No. 2:24-cv-01293-TLN-JDP (E.D. Cal. Mar. 28, 2025)

Weird decision finding that a price isn’t an actionable representation, which—even if true—ignores the difference between a price and a putative former price represented by a strikethrough, which implicates specific provisions of consumer protection law enacted precisely to protect consumers from false and misleading price comparisons. Nguyen alleged that Lovesac inflates its product prices for the sole purpose of marking them at a discounted “sale” price.  Price quotes allegedly include a purported “discount” the customer is receiving on their purchase, which correlates with a “limited time sale” and a fictitious strikethrough reference price accompanied by a purported percentage off. Lovesac allegedly warrants to consumers that their purchase received a certain “% off” of their purchase, resulting in “-$XX” to the initial subtotal.

The court initially found that Nguyen didn’t sufficiently allege which sofa he purchased, though he did allege the price. He didn’t allege any “particular size, fill, material, or any of the other customizable features he purchased.” The complaint also failed to allege, about the investigation purporting to show that the “sales” were not really sales, “what products were tracked, what the prices were on specific dates, whether any individual item prices were identified or tracked, whether the investigation included the specific ‘Sactional’ items Plaintiff purchased, or any other meaningful details about the investigation.”

More concerningly, the court rejected Nguyen’s allegations of misleadingness where the product he bought “displayed an original, strike-through price of $7,175.00, representing [a] purported $1,793.75 ‘discount.’ ” The court instead relied on cases holding that “the price of a product can[not] constitute a representation or statement about the product.” Parent v. Millercoors LLC, No. 3:15-cv-1204-GPC-WVG, 2016 WL 3348818 (S.D. Cal. June 16, 2016); Boris v. Wal-Mart Stores, Inc., 35 F. Supp. 3d 1163 (C.D. Cal. 2014). But a “price” is not a juxtaposition with a putative former/regular price—as evidenced by the fact that legislatures around the country bar specifically false advertising relating to “sales.” It’s not the actual selling price that makes the misrepresentation—it’s the struck-through price presented as some sort of ordinary price. But the court missed that distinction: “pricing about the product alone cannot constitute a representation or statement about the product.”

The California Supreme Court, however, has specifically held that a consumer who buys a product in reliance on a false/misleading reference price has suffered an injury. Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013) (citing Dhruv Grewal & Larry D. Compeau, Comparative Price Advertising: Informative or Deceptive?, 11 J. PUB. POL’Y & MKTG. 52 (1992) (“By creating an impression of savings, the presence of a higher reference price enhances subjects’ perceived value and willingness to buy the product. . . . [E]mpirical studies indicate that as discount size increases, consumers’ perceptions of value and their willingness to buy the product increase, while their intention to search for a lower price decreases.”)). As the Hinojos court pointed out, the “what a great bargain!” effect is exactly why the California legislature barred the practice.

trademark question of the day

 

"One Wing to Rule Them All" ad from Moby Dick. "Marinated in Moby's secret spices and flame-kissed to perfectoin, these delicious wings have the power to put fellowships at risk!"

advertising game device's legality amidst gambling prosecutions could violate the Lanham Act

TNT Amusements, Inc. v. Torch Electronics, LLC, 2025 WL 947506, No. 4:23-CV-330-JAR (E.D. Mo. Mar. 28, 2025)

The parties compete in the market for “retail amusement devices.” TNT owns and leases out traditional arcade games and similar amusement equipment (e.g., foosball and pool tables, dart boards, pinball machines, juke boxes) to various retailers. Torch leases putatively “no-chance” gaming machines. TNT alleged that Torch operates illegal slot machines and touts them as legal. Here, the Lanham Act false advertising claim survives for a jury, but the RICO claims are tossed out on summary judgment because they’re RICO claims.

I’m going to try to strip down the extensive regulatory background, but gambling is heavily regulated in Missouri. Relevant definitions include:

(4) “Gambling”, a person engages in gambling when he or she stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his or her control or influence, upon an agreement or understanding that he or she will receive something of value in the event of a certain outcome. …

(11) “Slot machine”, a gambling device that as a result of the insertion of a coin or other object operates, either completely automatically or with the aid of some physical act by the player, in such a manner that, depending upon elements of chance, it may eject something of value. A device so constructed or readily adaptable or convertible to such use is no less a slot machine because it is not in working order or because some mechanical act of manipulation or repair is required to accomplish its adaptation, conversion or workability. Nor is it any less a slot machine because apart from its use or adaptability as such it may also sell or deliver something of value on a basis other than chance.

Possession of a gambling device is a Class A misdemeanor. Any building used for unlawful gambling is considered a public nuisance.

Torch’s game machines feature at least five game themes, and each theme offers several play levels. “A game theme is a series of visual images displayed to entertain the player, revealing a combination of winning or losing symbols on each turn. A play level dictates the payment required to play the next turn.”

picture of a "no chance" device

The record showed that the software for a Torch device has a randomly selected starting point for each theme/play level combo. “From any given starting point, for each turn of play, the software cycles through pre-determined and finite sequential pools of 60,000 to 100,000 outcomes, depending on the game theme,” like a counter (but not in numerical order) ticking forward one at a time until it cycles back to the beginning. “There is nothing a player can do to alter the payout amount of a turn before or after the player inserts money.”

Torch devices only take bills, “so, if there is a balance of $0.25 when a player decides to stop playing, there is no way to recover that amount.” Each device has an optional “prize viewer” that allows the player to preview the next payout amount, but only the next payout amount. “So, for example, if a player selects the prize viewer and sees that the next payout amount is $0 and she wants to obtain a better result, she must play through that $0 turn and continue playing. She cannot skip ahead. If she wants to know the payout of the second, third, or any future turn, she must pay for and play through those additional turns.” Using the prize viewer doesn’t change the odds, though “Torch devices are configured to enable the commercial operator to adjust the settings to require a player to pay extra to use the prize viewer.” According to a specialist with the Missouri Gaming Commission, absent the preview feature, Torch machines “essentially play just like a slot machine.”

Torch advertises that the devices are not gambling machines. Until September 2022, its website said:

Torch’s No Chance Game Machines are legal. Torch’s No Chance Game Machines are an innovative non-gambling game machine.

Why are No Chance Game Machines different?

Under Missouri law, a “gambling device” is defined as having three elements: consideration (money in), prize (money out), and chance (unknown outcome).

Torch’s No Chance Games obviously have the elements of “consideration” and “prize”, but have been carefully designed to eliminate the element of “chance” (which Missouri law defines as the material component of a gambling device). If the player does not like the predetermined outcome, they can choose not to play. If they have a balance on the machine, they can redeem their balance at any time.  

The “Prize Viewer” option on NCGs eliminates chance.

In mid-September 2022, Torch revised its website to state only this:

Torch’s No Chance Games are the first of an entirely new entertainment concept; a game in which there is no element of chance.

Importantly, the player may view each and every outcome which may entitle them a prize before playing the game. They may simply touch the “Prize Viewer” button on the game console and view the result of the game before playing. As such, the player can decide if they want to play the game or not based on the pre-determined outcome.

Each Torch device bears a disclaimer:

The Amusement Device to which this disclaimer is attached provides each player of the device with information on the specific outcome of each electronic amusement game offered thereon. The information with respect to each such outcome is provided prior to such player’s participation in any such game. Consequently, this amusement device is designed to provide no contest and no chance in the games offered to its players.

… In Missouri (as in most states), in order to be considered “gambling,” an element of chance or a contest must be present in the activity … As noted above, this amusement device is designed to offer no contest of chance as the outcome is known by players before any amusement game is initiated. Therefore, the activity offered by this device clearly does not meet the definition of “gambling.” As a result, this amusement device does not fit any definition of “gambling device” in the state of Missouri and is not prohibited for use by you. …

Torch "no chance" ad

Its ad flyers make similar claims, as do its oral representations. “As such, Defendants have not taken measures to prevent problem gamblers or gambling addicts from playing Torch devices, nor have they taken measures to prevent children from playing other than instructing customers not to allow it.” Torch doesn’t have a gaming license.

At least 20 locations where defendants operate Torch devices are current or previous customers of TNT. There have been as many as 15,000 Torch devices in Missouri. TNT’s customers have directed TNT to remove at least 19 machines from overlapping locations in order to make room for Torch devices. The Torch games displaced TNT games because they made more money (and revenue is split with retailers).

You will not be surprised to learn that the history of evading gambling regulations is long:  

Over 100 years ago, in City of Moberly v. Deskin, 155 S.W. 842 (Mo. App. 1913), a Missouri appellate court was asked to determine whether a slot-machine-like gum dispenser was a gambling device. The machine had a prize preview feature showing in advance what the player would receive on the next play. The defendant argued that each turn was a separate and independent business transaction and there was no chance involved as the player knew in advance what he would receive for his nickel. The court rejected this theory, finding the defendant’s position “unsound” because the “contrivance” was clearly intended to “allure” the player into continuing in the hope of a better outcome.

Deskin is still good law; Missouri legalized some gambling in 1994 but made no change in its definitions that would abrogate its rule. The parties, other operators, and officials have nonetheless debated the legality of “no-chance” prize viewer games and proposed various legislative changes specifically drafted to encompass machines with a preview feature, but nothing has happened yet. In January 2017, Torch obtained a legal opinion from a Chicago law firm concluding that “no chance” gaming devices were legal under Missouri law, and Torch maintained this position in contacts with prosecutors. After Torch’s owner met with the Phelps County prosecuting attorney, the latter informed local law enforcement that he would not pursue prosecution involving Torch devices. But, around the same time, local officials in Franklin County warned Torch that the Missouri Gaming Commission deemed the devices illegal and the prosecutor would “absolutely consider prosecution regardless of Phelps County opinion.” TNT also secured an advisory opinion from the Missouri Gaming Commission in 2019 that the devices were indeed gambling devices and slot machines notwithstanding the prize viewer feature. Torch’s lawyer acknowledged the Commission’s position but recommended that Torch maintain its public stance that that “MGC has nothing to say about Torch’s games.” In 2023, defendants were denied a business license in Branson based on the Gaming Commission’s position that Torch devices are illegal, and a Platte County prosecutor successfully charged a business with a class E felony for operating “no chance” prize viewer devices in local convenience stores in 2019. Other attempted prosecutions were dismissed or are ongoing, as are fights over seizures of Torch machines as illegal gambling devices. “In their field investigations, Commission representatives observed consumers playing Torch devices like slot machines without using the prize viewers.”

Torch’s challenge to TNT’s standing went nowhere; the parties were direct competitors and there was enough evidence for a jury to conclude that there was a causal connection between Torch’s sales and TNT’s claimed losses. TNT provided evidence of TNT machines that were replaced with Torch devices and its witness also testified that many customers have asked her if TNT offers products similar to Torch games. There were other possible explanations why customers removed TNT devices, such as wanting newer equipment or more profitable devices, but that was a fact question for the jury.

What about falsity? Torch made extensive claims that the devices didn’t involve chance and weren’t gambling devices. Were these non-actionable statements of opinion, or potentially falsifiable? Courts sometimes refuse to consider statements about legality to be falsifiable in the absence of a “clear and unambiguous statement” from the regulator. For example, Coastal Abstract Service, Inc. v. First American Title Insurance. Co., 173 F.3d 725 (9th Cir. 1999), held that, “[a]bsent a clear and unambiguous ruling from a court or agency of competent jurisdiction, statements by laypersons that purport to interpret the meaning of a statute or regulation are opinion statements, and not statements of fact.” The court thought the Eighth Circuit would agree, and cited Dental Recycling N. Am., Inc. v. Stoma Ventures, LLC, No. 4:23 CV 670 CDP, 2023 WL 6389071 (E.D. Mo. Oct. 2, 2023) (allowing Lanham Act claim where a defendant represented that its product was compliant with EPA regulations when technically it was not; reasoning that “an opinion by a speaker who lacks a good faith belief in the truth of the statement is actionable”).

Under these circumstances, the evidence was sufficient to go to a jury. The representations on Torch’s website and devices were clearly intended to be “reasonably interpreted as a statement of objective fact” and not merely opinion. And the anti-gambling law requires only “an element of chance.” “[I]t is now undisputed that Torch devices contain random entry points at each play level in each game theme.” There could be as many as three million potential outcomes, reflecting “a material degree of chance such that a jury could find literally false Defendants’ unambiguous representation that ‘chance has absolutely no role.’” The law even says “a slot machine is no less a slot machine when it delivers something of value on a basis other than chance – e.g., large sequential pools.” The court didn’t see a meaningful difference between randomly reshuffling each time and “random-entry-point 100,000-outcome pools yielding three million possibilities.” There was absolutely no reason for the state to intend to regulate one technology and not the other. See Thole v. Westfall, 682 S.W.2d 33, 37 (Mo. App. E.D. 1984) (“In the slot machine games, the objects that appear on the screen are determined by the devices’ electronic circuitry and the player has no control over which combination of objects will appear. Thus, from the player’s point of view, winning is purely a matter of luck, a matter of chance.”). [Exactly!]

In addition, the decidedly mixed and often unfavorable results of Torch devices’ encounters with the law provided context to show “Torch’s actual knowledge that its legal assurances were false, or at least patently misleading.” Unlike cases where no clear guidance existed at the time of the statements, “Defendants have been well aware since 2018 that the Missouri Gaming Commission, state and local law enforcement, numerous county prosecutors, and at least one state circuit court have deemed Torch devices illegal under Missouri law.” The Platte County conviction, for example, was a “clear and unambiguous ruling from a court … of competent jurisdiction” even without appellate review, and the Gaming Commission’s 2019 opinion was “an equally clear declaration by the competent agency. On this record, Defendants cannot credibly claim that their unambiguous representations of legality – asserted as unequivocal fact on the website and on each device – were mere lay opinions lacking the benefit of clarity from a court or agency.”

Even without literal falsity, a jury could readily find misleadingness/deceptiveness, “especially given that law enforcement officials explicitly warned Defendants that their customers would be prosecuted for operating the devices. Torch was so acutely aware of this real risk that it offered to fund customers’ legal defense. This belies good faith and at least creates a triable issue as to Defendants’ knowledge.”

game over for allegations relating to misattributed/distorted consumer complaints

Skillz Platform Inc. v. Papaya Gaming, Ltd., 2025 WL 918411, 24cv1646(DLC) (S.D.N.Y. Mar. 26, 2025)

Previously, the court partially granted Skillz’s motion to dismiss Papaya’s amended counterclaims; Papaya sought leave to file further amended counterclaims, which the court denied.

The parties compete in the market for mobile games that allow users to spend and win money (and in-game prizes). “Users of Papaya’s games typically compete with between five and twenty opponents. … The Skillz platform hosts games, each of which allows gameplay between only two players, created by third-party developers.” Skillz allegedly “engaged in a multipronged campaign to discredit Papaya in the eyes of the public and law enforcement officials regarding Papaya’s use of robots or ‘bots.’”

The challenged conduct included an alleged “false-front organization called 4 Fair Play” that “solicited complaints from consumers about Papaya and other competitors of Skillz.” As alleged:

Skillz forwarded these complaints to state attorneys general. But before doing so, it added stock language to the complaint, which said “I’m a resident of your state and I would like to make you aware of a mobile game that is defrauding consumers like me out of their hard-earned money. I strongly believe the following games use AI or ‘bots’ to scam players by pretending that those are real players.” It then listed the games selected on the complaint form. Skillz did not tell complainants it was adding this language. Most complaints that 4 Fair Play received did not mention bot use, but the stock language, which misleadingly appeared to have been written by the complainant, was added to them anyway. Skillz “spot checked” the complaints that it forwarded to law enforcement, but it otherwise did not vet them to make sure they came from real people.

This Skillz-added material in the forwarded consumer complaints was not alleged in the previous counterclaims.

The 4 Fair Play website also included short quotations purportedly from consumers complaining about Papaya’s games. “These testimonials, each one or two sentences long, were attributed to consumers identified only by initials and state of origin … or by the game they had played.” Skillz itself allegedly drafted some of those testimonials, and they had not come from real consumers. “Other testimonials did come from real consumers but had been edited by Skillz.” The fact that these weren’t real consumers or real quotes was added to the proposed counterclaims.

[Gotta say, if we had a working FTC, this would be the kind of thing that the FTC considers deceptive, though it might well leave the parties to private remedies given their incentives to litigate and the lack of direct sales from the website.]

Finally,

[p]ortraying itself as a “public policy group conducting research,” 4 Fair Play contacted Skillz employees … and offered recipients $300 for participating in interviews meant to “better understand the mobile gaming industry.” An internal guide, which was edited by Skillz executives, encouraged interviewers to ask questions about Papaya’s use of bots. The involvement of Skillz and 4 Fair Play in this scheme was hidden.

Despite NDAs, two former Papaya employees participated in interviews and “disclosed information about when and why bots are used and the coding behind the bots, among other things.” Using this information, Skillz publicly accused Papaya of using bots. It also sued Papaya for false advertising about lack of bots. The proposed counterclaims added an unfair competition claim based on these facts.

The existing surviving counterclaims relate to Papaya’s challenges to Skillz’ advertising that its own platform did not use bots, matched players evenly, and allowed customers to withdraw cash at any time.

The new allegations didn’t change the outcome for Papaya. Misleadingly adding to consumer complaints before sending them to state law enforcement doesn’t violate the Lanham Act because it’s not “commercial advertising or promotion.” It also doesn’t violate NY GBL § 349 because it doesn’t involve consumer-facing representations/consumer-oriented conduct.

That leaves defamation, but falsity requires pleading that the alleged statement is not “substantially true,” meaning that it “could have produced no worse an effect on the mind of a reader than the truth pertinent to the allegation.” But Papaya didn’t allege that “the substantive content of this stock language was false—just that it was misattributed.” Nor did it allege that state authorities ever did anything with these communications or that they became public. There was thus no allegation of harm, “reputational or otherwise.” The statements couldn’t be per se actionable, which requires proof that the statement “impugns the basic integrity or creditworthiness of a business.” But, while “the integrity of Papaya’s business practices and its deception of the public about its historic use of bots to compete with customers in its games of ‘skill’ are at the heart of this case,” Papaya didn’t deny such undisclosed historic use in the proposed amended complaint, and thus wouldn’t be able to prove the falsity of the supposedly defamatory statement at trial. Footnote: “In recent depositions, none of Papaya’s individual deposition witnesses denied the historic use of bots, as they all asserted their Fifth Amendment rights against self-incrimination rather than testifying to any potentially disputed facts.” [Yikes!]

Misattribution of testimonials: Both Lanham Act and GBL claims require materiality, and Papaya didn’t allege that the content of the testimonials (accusing Papaya of using bots or being unfair generally) were false, nor that numerous real consumers were not submitting complaints along these lines. Even if the consumers “(barely) identified by the website –‘J.P. from Florida,’ ‘Bingo Cash Player,’ and the like” didn’t write “the specific words included in the displayed testimonials,” it was not plausible that the misattribution was material and caused injury.  

[N]o reasonable jury could find that anyone’s purchasing decisions would have been affected (or that consumers would be affected in any other meaningful sense) by the fact that a real “J.P. from Florida” did not say the words, “I have genuinely never played a game that is so rigged in my life.” While parties generally “should be given the opportunity to develop their evidence to demonstrate materiality,” the pleadings must set forth some plausible basis for the defendant to ultimately be held liable.

Finally, the interview scheme wasn’t actionable. “The essence of an unfair competition claim under New York law is that the defendant misappropriated the fruit of plaintiff’s labors and expenditures by obtaining access to plaintiff’s business idea either through fraud or deception, or an abuse of a fiduciary or confidential relationship.” Although Skillz allegedly used deceptive means to obtain information about Papaya’s business, there were no allegations that Skillz actually did anything with that information. Yes, Skillz told reporters that Papaya was using bots in its games. But according to the complaint itself, “Skillz was publicly accusing Papaya of using bots well before the interviews took place anyway.” Given that context, “characterizing the accusation that Papaya used bots as a trade secret is a stretch at best.” And even if it was, this conduct wasn’t unfair competition.