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.