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.”