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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lilly brought federal and California false advertising claims against Henry.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"tasting like a smooth whisky" is not a disclosure that there's no whisky in the bottle

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

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

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

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

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

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

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

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

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

 

mislabeling nut ingredients doesn't justify class action because not everyone has nut allergies

Fukaya v. Daiso California LLC, No. 23-cv-00099-RFL, 2025 WL 2644747 (N.D. Cal. Sept. 15, 2025)

Fukaya, who is allergic to tree nuts, alleged that Daiso failed to properly label its pre-packaged food products as containing tree nuts on its English-language ingredient lists, alleging the usual California statutory claims and breach of express warranty. The court denied Fukaya’s motion for class certification: individualized questions regarding reliance, causation, and damages were likely to predominate because the classes, as defined, were not limited to purchasers who are allergic to tree nuts or buying for others with such allergies.

Fukaya allegedly suffered a severe allergic reaction after eating a cookie she purchased from a Daiso store. The English translation of the ingredient list did not list any tree nuts, but the Japanese ingredient list (which was covered by the English translation) listed two tree nuts: almonds and hazelnuts. Later, she bought a different product that had an English ingredient list which did not list any tree nuts, covering a Japanese ingredient list that listed almonds. She alleged that she “would go back and purchase more pre-packaged food products from Daiso ..., but [is] concerned about the accuracy of the English language sticker labels.”

The problem was lack of evidence that “the omission of tree nuts from the English language ingredient list would be material to an objective reasonable consumer.” Certainly, a reasonable consumer with a tree nut allergy would find the omission material, but the proposed classes weren’t limited to purchasers who have tree nut allergies or are buying for others with those allergies. Because materiality wasn’t shown to be susceptible to classwide proof, individualized issues would predominate with respect to the elements of reliance, causation, and damages for each of her claims.

Fukaya argued that individualized issues do not predominate with regard to her UCL claim because, under the unlawful and unfair prong of the UCL, she need not show reliance. “However, even under the unlawful and unfair prongs of the UCL, a plaintiff alleging a misrepresentation must prove reliance in order to establish causation and harm.” Footnote: even if reliance weren’t required, the unlawfulness theory would be preempted by the FDCA.

Fukaya also failed to show that individualized questions would not predominate with respect to damages calculations. She didn’t present a damages model or theory of class-wide recovery, stating only that the calculation “will be a simple mathematical task, or one that Daiso itself can and has generated.”

Fukaya’s counsel declined to request a modification of the class definition, given the cost of litigation, and there was no evidence about numerosity for a nut allergy class. Nor could there be an injunctive relief class, because “Fukaya has not carried her burden of proof with respect to the existence of a pattern or practice of widespread mislabeling sufficient to satisfy Rule 23(b)(2).” At the motion to dismiss stage, the court ruled that Fukaya’s purchase of two similarly mislabeled products “supports an inference that other products are also mislabeled.” But at class certification, a plaintiff may no longer rely only on allegations that could permit plausible inferences in her favor. The existence of two mislabeled products was insufficient for the court to find that Daiso “acted or refused to act on grounds that apply generally to the class.”

sending DMCA notices about uncopyrightable work might be willful blindness, or not

Leszczynski v. Kitchen Cube LLC, 2025 WL 2551098, No. 8:23-cv-01698-MEMF-ADS (C.D. Cal. Apr. 4, 2025)

Previous discussion. I find this case interesting because of the underlying gadget, the Kitchen Cube, which has depressions on different sides corresponding to different standard measurements. Leszczynski alleged that he posted the 3D print files for the Cube online, and that various defendants downloaded the 3D print files and used the files to produce their own versions of the Cube, which they then sold for profit; the court allowed a breach of contract claim but rejected Lanham Act claims on summary judgment. Some of the defendants counterclaimed that Leszczynski issued take-down notices to Amazon containing material misrepresentations; the court found that material factual issues remained for trial.

Leszczynski applied a Creative Commons Attribution-Non Commercial-No Derivatives License to the 3D print files he uploaded. He’s never commercialized the cube and abandoned attempts to do so in 2018, though he’d like to do so in the future.  

In his take-down notices, Leszczynski stated “I am the creator and copyright owner of the cube design.” Counterclaimants claimed impairment to their sales. Leszczynski’s 2023 application for copyright registration for the cube was denied on the grounds that it was a useful article (without separability), and his request for reconsideration did not change things. Even though there was no copyright infringement claim in the case, this was relevant to whether his 512 notices were sent in good faith; he didn’t update or retract his notices after the Copyright Office ruled. In an email sent to defendants prior to filing suit, Leszczynski stated to defendants that “I have consulted with IP attorneys who specialize in this area, and they have affirmed the validity of my claims.” Later, in his deposition, Leszczynski testified that the conversation with an attorney prior to filing suit was “rough” and brief.

The court first ruled that the breach of contract claim wasn’t preempted by the Copyright Act. Contract claims, which have the extra element of agreement/the existence of a contract and ab breach thereof, are “generally” not preempted. “[I]mportantly Leszczynski does not seek to prohibit anyone from reproducing the text of his 3D print files, from distributing the files, from publicly displaying the files, or other possible uses of the files.” [The copyright in the files is distinguishable from the copyright in the cube—we don’t really know what the Office would think of the files, and just because they produce a useful article doesn’t mean there’s nothing copyrightable in the files themselves. I’m not sure that matters here, though.] The court further reasoned:

The rights Leszczynski asserts are far narrower than those that a copyright would grant. Although there is some overlap (particularly as to derivative works), Leszczynski does not assert most of the rights that are at the core of a copyright—namely reproduction of an idea in fixed media or public displays and performances thereof. He asserts a significantly different right by seeking to control certain uses of physical objects that can only be created using the code in the 3D print files. Further, he does not claim an exclusive right to be asserted against the world, and instead claims a right that can only be asserted against people who (purportedly) entered into a contract with him by downloading the file.

Unauthorized use of software’s end product is not the same thing as unauthorized copying of code.

Lanham Act: Failed for lack of harm. Because he never sought to sell the cube, he couldn’t show lost sales. His intent to commercialize the Cube in the future was speculative, and there was no evidence of harm to future sales. He also didn’t show that he ever had any reputation to harm nor that such a reputation suffered any harm. The Cube was downloaded 500,000 times, but there was no evidence on whether that number of downloads would lead to a reputation or how strong it would be. Even if people didn’t know that he was the original designer of the Cube, that would not show reputational harm. “It might be different if he had previously been well regarded and then Defendants caused people to lose respect for him.”

DMCA counterclaim: The undisputed facts didn’t definitively show whether Leszczynski knowingly made misrepresentations. The evidence suggested that when Leszczynski issued the take-down notices, his copyright application had not yet been ruled upon. But his lack of a registration, on its own, didn’t show knowing misrepresentation, since copyright arises “immediately upon the work’s creation.” “The fact that Leszczynski later learned that the work in question was not copyrightable does not retroactively make his statements knowing misrepresentations.” Also, there was no statutory requirement that he update or retract his take-down notices when his application was rejected; “the statute requires that the knowledge of falsity coincide with the submission of the take-down notice.”

Still, there was some evidence of knowledge, to wit, his statement that “I have consulted with IP attorneys who specialize in this area, and they have affirmed the validity of my claims.” He later testified that he had “two-minute conversations” with a lawyer or lawyers, whom he didn’t hire. The tension here could let the jury find knowledge or willful blindness. To act “knowingly” means not only to act with actual knowledge, but also to act “with an awareness of the high probability of the existence of the fact in question.” But a jury could also find otherwise.

2021 statements, even if false, not plausibly connected to 2024 sales loss

Trilogy Federal, LLC v. CivitasDX LLC, No. 24-2713, No. 25-792, 2025 WL 2651240 (D.D.C. Sept. 16, 2025)

Just looking at the false advertising-related aspects of a complicated dispute. The parties sought to sell things to the government, specifically the VA. Civitas (in counterclaims) alleged that Trilogy engaged in false advertising, and Trilogy argued that it had a First Amendment right to petition the government. The court rejected that argument “both because the First Amendment does not protect false commercial speech and because government contractors’ right to petition in this context only extends as far as issues of public concern.” In essence, “Trilogy raised concerns to government officials about the conduct of another private party acting imprudently in a commercial capacity, which falls outside of that core protection of the right to petition.”

Nonetheless, the Lanham Act claim (and related state law claims) failed. Trilogy allegedly made false and misleading statements about defendants’ services, but didn’t successfully plead that the falsity proximately caused harm, even assuming that the VA was a big enough client that communications with it could be “advertising or promotion.” Allegedly false statements at the end of 2021 weren’t plausibly connected to the VA’s decision not to renew defendants’ contract three years later. The alleged statements didn’t seem “inherently material” to the contracting decision, since they were mostly complaining about defendants’ solicitation of Trilogy employees, “only indirectly addressing defendants’ ability to perform their work.” There were no allegations of resulting VA adverse actions, such as a reprimand or counseling or other attempts to ensure defendants’ compliance with applicable VA policies. The assertion of harm, three years later, was too conclusory. Even if the statements could have harmed their reputation, “defendants still have not provided any facts indicating that the VA was influenced by or even remembered these emails several years later when awarding the 2024 contract.” The emails didn’t reveal any action taken, and there were no allegations that the individuals who received the emails were the same as those who made the 2024 contracting decision or that they even worked together. “Further, the intervening years, during which the VA continued to work with defendants and could make their own assessment of defendants’ services, makes too remote the alleged injury, undermining the necessary proximity between Trilogy’s emails and defendants’ failed bid.”

DC common law unfair competition, trade libel, and tortious interference claims failed for the same failure of proximate cause.

California UCL/FAL claims failed because the relevant conduct didn’t occur in California.

TM question of the day: more than meets the eye?

 My spouse and I both noticed this campaign around DC--it's some sort of miltech. But what does Hasbro think? I found a page where the ad agency brags about creating limited edition action figures, which do look a lot like Transformers, though it's not obvious that they actually ... transform.

Action figure(s?)

general competitor has Lanham Act standing even if it doesn't compete in alleged false advertiser's subcategory

Colorado Biolabs, Inc. v. Three Arrows Nutra, LLC, No. 3:25-CV-0601-D, 2025 WL 2524313 (N.D. Tex. Sept. 2, 2025)

CBL sued Three Arrows for breach of a settlement agreement and related claims; Three Arrows counterclaimed along similar lines. The parties sell iron supplements. CBL sells Proferrin, an which contains heme iron polypeptide sourced from bovine blood. This, allegedly, has a much higher absorption rate than non-heme iron, and is more desirable than plant-derived iron insofar as it can be taken with or without food and does not require a simultaneous dose of Vitamin C for absorption. Before the lawsuit, Three Arrows’ products were called IronRepair Heme Plus and IronRepair Simply Heme.

CBL noticed that Three Arrows’ products were colored brown, not black like Proferrin, and got suspicious. “Internal testing of Three Arrows’ products revealed that IronRepair Heme Plus contained only 3-7% of the amount of iron represented on its label and that IronRepair Simply Heme contained just 1-2% of the amount of iron reflected on its label. Further testing by an outside laboratory revealed that Heme Iron was ‘not detectable’ in IronRepair Simply Heme or IronRepair Heme Plus.” A lawsuit followed, which was settled by Three Arrows, among other things, rebranding its IronRepair products to eliminate all representations that the products constitute or contain Heme Iron.

Afterwards, various members of the Iron Protocol Facebook Group, an online community focused on iron deficiency, posted questions and comments about the omission of the word “heme” from Three Arrows’ new labeling. Three Arrows’ owner responded: “Nothing fishy going on. Heme iron is animal derived. Iron Repair is made from bovine spleen only.” Asked for further clarification, she responded that “[t]he batches currently in production will list Iron 20 mg [a]s non-GMO grass fed & finished bovine spleen.” In response to a question whether Three Arrows’ products are “all heme,” she posted that “the iron is 100% derived from bovine spleen (animal sourced).” (Originally she said “yes, the iron is 100% derived from bovine spleen (animal sourced),” but after CBL notified Three Arrows that it was in breach of the Settlement Agreement, she deleted the word “yes” from her post.)

CBL alleged that, through March 2025, Three Arrows tried to “dupe” its customers into believing that the IronRepair products contain heme iron by “simultaneously espousing the myriad benefits of Heme Iron over Non-Heme Iron, making clear that Heme Iron comes from animal sources, and stating that the IronRepair products are made with bovine spleen.” Its Amazon storefront also allegedly marketed its IronRepair products as containing heme iron by using old product labels and descriptions and Q&A responses that specifically include the word “heme.”

In addition, Three Arrows Brand Ambassador Hartigan (who’s paid a commission when customers buy using her discount code) manages and administers the Iron Protocol Facebook Group. CBL alleged that, in response to questions, Hartigan falsely communicated that the IronRepair products contain Heme Iron and posted disparaging statements regarding CBL, Proferrin, and the first lawsuit. Three Arrows allegedly didn’t correct these statements made on its behalf.

The settlement agreement didn’t bar claims based on conduct post-dating the agreement.

Common-law business disparagement under Texas law requires that “(1) the defendant published false and disparaging information about it, (2) with malice, (3) without privilege, (4) that resulted in special damages to the plaintiff.” “[P]roof of special damages is a ‘fundamental element of the tort.’ ” CBL failed to allege special damages, which require “direct pecuniary loss that has been realized or liquidated, such as specific lost sales, loss of trade, or loss of other dealings.”

CBL alleged that, in the Facebook group, Hartigan posted allegations that CBL only sued because it was “mad that they took a chunk of their market share and wanted to bleed them dry in legal battles. Easier for [Three Arrows] to settle on removing the word heme than going out of business due to legal fees” and similar statements. One group member then posted, “boo proferrin! I [heart] three arrows. I think this group and three arrows saved my life.” But that statement didn’t indicate that the lawsuit, or Hartigan’s comments, caused a lost sale as to that poster.

Lanham Act false advertising: were the statements disseminated broadly enough to constitute actionable commercial advertising or promotion? Three Arrows argued that the Facebook group wasn’t a commercial forum for advertisements, but instead a private online community, and isolated posts responding to others “are merely isolated comments unrelated to any commercial advertising campaign.” It also argued that “[m]erely posting information on a company’s own website, without more, is insufficient to establish broad dissemination to the relevant consumer base” under the Lanham Act and that “[t]he mere availability of product descriptions or comments on an Amazon page—without allegations regarding paid promotions, sponsored product placements, extensive advertising campaigns, or targeted consumer outreach—is insufficient to constitute actionable advertising or promotion.”

That argument goes about as well as you’d imagine. The only thing I’d even spend time on is the Facebook group. CBL alleged that it “has approximately 166,300 members,” and that “[b]ecause of its focus and membership, [it] is an important part of the iron supplement market and a valuable source of potential iron supplement customers.” Good enough for a motion to dismiss! Likewise, own-website and Amazon pages were “available to the consuming public at all times.”

In its advertising-related counterclaims, Three Arrows alleged that CBL implied in a post on the Reddit subreddit for persons with anemia that Three Arrows admitted liability in the first lawsuit; misrepresented on its own website that it is the only company that manufacturers heme iron in the United States when at least one other competitor also does so; and misrepresented to its customers the amount of heme iron that its products contain (10.5 mg/capsule versus less than 10 mg).

CBL challenged standing, because Three Arrows isn’t a domestic heme iron manufacturer and can’t make claims about its own products having heme iron. Three Arrows argued that, as a competitor whose products are made in the US, it was within the class of commercial actors with standing. The court agreed. Three Arrows adequately alleged competitive injury within the entire iron supplement market, not just the market for products containing heme iron. (And of course disparagement gives standing to the disparaged competitor.) Three Arrows’ alleged injuries—the loss of customers, confusion and deception in the supplement industry, and the deprivation “of business and good will”—were injuries to precisely the sorts of commercial interests the Lanham Act protects.

3d Circuit affirmance shows that false advertising damages remain hard to prove

CareDX, Inc. v. Natera, Inc., 2025 WL 2480117, No. 23-2427, No. 23-2428 (3d Cir. Aug. 28, 2025)

The court of appeals affirms the district court in this Lanham Act/coordinate Delaware state law case based on allegedly false claims Natera made about its organ transplant rejection detection product. A jury found for CareDx and awarded it damages, which were vacated by the district court.

The parties make and sell competing tests that use DNA to detect whether a patient’s body has rejected a transplanted kidney: AlloSure (CareDx) and Prospera (Natera). Natera’s advertisements pointed to results from two studies—a Natera study on Prospera and a CareDx study on AlloSure—to demonstrate Prospera’s superiority. Each study focused on accuracy: sensitivity (false negatives, which are especially dangerous as untreated rejection endangers patients) and specificity (false positives) as well as AUC (a composite measure of the two) and negative predictive value (measuring the percentage of correct negative results; higher NPV means fewer false negatives). The studies varied in their designs and methods.

The jury heard testimony that the CareDx study was multi-site, which meant that it could be generalized to the universal standard of care, while the Natera study was single-site, and thus “considerably less generalizable.” Likewise, the CareDx study used a prospective methodology, which created a lower risk of selection bias because patients were first selected and then biopsied and tested to see how AlloSure performed. But it also sometimes generated ambiguous results, “based on the reality that certain patients demonstrate partial rejection.” By contrast, the Natera study selected from already-existing patient samples that had been tested for organ rejection and were either “clearly not rejection [or] clearly rejection.” Also, the cohorts were different, which matters because the prevalence of the underlying condition—here, rejection—affects the sensitivity, specificity, and related results, precluding an apples-to-apples comparison.

Thus, witnesses from both sides testified that the studies couldn’t be directly compared—in contradiction to Natera’s advertising. The jury found 9 of 10 challenged claims literally false, found willfulness, and awarded $21.2 million in actual damages “attributable to Natera’s false advertising and/or unfair competition,” and $23.7 million in punitive damages “for Natera’s unfair competition.” The district court upheld the literal falsity finding but found insufficient evidence to establish the actual deception and reliance elements necessary for CareDx to recover damages under the Lanham Act, and in turn, establish the causation and harm elements necessary to recover damages under state law; prove wrongful interference with any business relationship, thereby precluding liability on CareDx’s unfair competition claim; and support a punitive damages award. Thus, the only remedy CareDx secured was an injunction. (Wonder what would have happened if CareDx had sought disgorgement.)

A plaintiff challenging establishment claims as literally false “satisfies its burden by showing that the tests did not establish the proposition for which they were cited.” There was sufficient evidence of that here.

For example, Natera represented that Prospera is “[m]ore sensitive and specific than current assessment tools across all types of rejection.” Based on evidence that “current assessment tool[s]” referred to AlloSure, a jury could reasonably find this was unambiguous and literally false, because Prospera’s specificity rate was lower than AlloSure’s in both studies, and the studies did not establish Prospera’s superiority given the evidence that the studies were not comparable. Similarly, claims of “better performance” “necessarily implie[d] that the studies are comparable and may be used to establish Prospera’s superiority.”

Natera argued that its claims couldn’t be literally false because they accurately reported the results of two studies. “However, by placing the studies’ results side-by-side, alongside claims that Prospera is superior to AlloSure, Natera necessarily implies that the results of the two studies are comparable and establish Prospera’s superiority. A claim of superiority based on comparison of incomparable metrics can be literally false.” So too with “Unparalleled precision,” which was not ambiguous in the context of a slide claiming superior sensitivity and NPV.

Likewise, a slide headed “[h]ighly sensitive across a range of rejection types and patients,” and a subheading stating, “[v]ariety of ethnic and racial demographics,” as well as “[a]ges,” including “[b]elow 18 years of age (n=49)” was also unambiguous. In context, “highly sensitive across a range of ... patients” above a subheading for various demographic groups, including an age group of under 18-year-olds, unambiguously conveys that it is highly sensitive for patients in that age group. Proximity mattered, and the study didn’t establish Prospera’s sensitivity for patients under 18 (since the ones in the study didn’t have any rejections).

For damages, a plaintiff must prove both falsity and actual deception. Although a plaintiff need not “prov[e] detailed individualization of loss of sales,” “there must be a showing of some customer reliance” on the false claim. CareDx’s evidence of consumer confusion, Natera’s success, and Natera’s willfulness didn’t suffice. (Once again I am pointing out that in a trademark case, courts would draw the opposite conclusions.)

The testimony of two CareDx employees about confusion was vague and conclusory, and failed to link the advertisements to any consumer purchasing decisions. For example, the testimony that the ads “caused a lot of confusion ... with our customers,” and that although there was not “significant patient impact initially,” later “there was more and more confusion, and then ... [more] usage of Prospera” lacked sufficient explanation. “These generalities do not satisfy CareDx’s burden of introducing evidence sufficient for a rational jury to find that consumers actually relied on or were deceived by Natera’s false claims in deciding to purchase Prospera instead of AlloSure.”

What about the success of the ad campaign? The evidence showed that (1) the comparative claims were a focus of Natera’s advertising campaign; (2) a “small factor” in Natera’s increase of sales was that the claims “pique[d] doctors’ interest[s]” in looking to the literature, and (3) Natera’s sales team was successful in converting “at least one AlloSure user[ ]” to Prospera. But that doesn’t show that consumers were actually confused. Neither did Natera’s willfulness (apparently, internal emails showing that its data folks raised concerns about the claims).

If you can infer bad intent from copying in trademark cases, and likely confusion from intent, why not here? Damage is explicitly an element in false advertising, and it should be but isn’t in trademark infringement, but that difference doesn’t itself require prohibiting an inference of damage from circumstantial evidence like the centrality of the false claim to an ad campaign.

The court also rejected consideration of CareDx’s corrective advertising costs, because although CareDx understandably worried about the false claims, it still didn’t show lost sales. [If the corrective advertising worked, how could it?]

keyword ad claim fails out of the gate, but bad (c) claim not yet challenged

Regalo Int’l LLC v. Aborder Prods. Inc, 2025 WL 2483167, No. 3:24-CV-03270-E (N.D. Tex. Aug. 28, 2025)

Eric Goldman on the keyword ad aspects of this case about pet and baby gates. Regalo alleged that Aborder sold “knock-offs of Plaintiffs’ patented safety gates” that are “marketed the same [as Regalo’s gates] by misusing Plaintiffs’ copyrighted photographs and federally registered trademarks and otherwise engaging unlawful, unfair competition.” This opinion doesn’t address the copyright infringement claims, though they seem like obvious, fee-shift-worthy junk to me. Crucially, despite referring to “trade dress,” there is no trade dress infringement count, nor does the complaint allege secondary meaning for the design of the gates.

When I read “copyright infringement,” I thought this would be bog-standard photo copying. But no, Regalo thinks it owns the idea of a picture showing a gate in a place you’d naturally put a gate, plus grateful female homeowner.

Regalo's "trade dress" (sic) in red boxes

Regalo photo

Regalo photo 2

Aborder gate with curved edges

Allegedly infringing Aborder photo 1

allegedly infringing Aborder photo 2

TM: Regalo tried to argue initial interest confusion based on defendants’ purchase of Regalos’ marks as ads in the Amazon eocosystem, but even in the Fifth Circuit, keyword advertising alone isn’t enough for IIC. There needs to be something else, such as a “click to call” ad leading to an extended conversation with a potential client—that is, something that approaches traditional bait and switch, with plausibly high sunk costs for the consumer.

The “something else” alleged here was (1) the visual similarity of the parties’ gates and (2) photos that “create product presentations that are confusingly similar to [Regalo’s] product listings.” The first is an unalleged product design trade dress claim, and the second is an unalleged packaging-type trade dress claim. Neither sufficed. The court found the allegations of confusing similarity conclusory. There were no allegations that the keyword ads were unlabeled (no screenshots were in or exhibits to the complaint) or that clicks resolved to deceptively generic purchase pages. In fact, Regalo alleged that clicks went to defendant’s product pages (labeled as such). General allegations that “many times” the sponsored ads “do not immediately make clear who the seller is” were insufficient to cross the line into plausibility.

The same vagueness doomed false advertising claims as to allegedly inauthentic customer reviews and systematic removal of negative reviews: “information and belief” wasn’t enough to call the reviews inauthentic or cherry-picked. Nor were the allegations that “a majority of [one defendant’s] reviews are rated with a scale of 1-5 without any comments, and nearly all of them positive” and that “over twenty of those reference Regalo and virtually all of them disparage or denigrate Regalo.” [But at least nobody disputed that fake reviews and review manipulation can be false advertising!]

The patent claims were plausible enough to need a claim construction hearing.