Morrison v. Yippee Entertainment, Inc., No. 25-7161 (9th Cir. Nov. 5, 2026)

In 2025, the Ninth Circuit held that Yippee’s TOS provided reasonably conspicuous notice, but that decision did not resolve if consumers manifested assent to the TOS. On remand, the district court said there was no assent. On appeal, with a completely different panel of judges than the 2025 panel, the Ninth Circuit agrees.

This is the screen in question (the panel opinion doesn’t display it):

Citing Godun, the panel says:

The sign-in wrap here did not explicitly and unambiguously identify how a user manifested assent to the arbitration agreement. The advisal on Yippee’s webpage said that a user agreed to the terms containing the arbitration agreement by “clicking below,” but there is no unambiguous reference that this required the user to click the “Start subscription” action button. Instead, there were six clickable items “below” that advisal: hyperlinks to Yippee’s terms of service, cookie policy, and privacy policy; slightly farther down, the “Start Subscription” button; and directly below that, hyperlinks to Google’s terms of service and privacy policy. There is no explicit indication which of these clickable items “below” manifests assent to arbitrate.

Motion to arbitrate denied.

Yippee’s execution was suboptimal, but also, c’mon. Kicking out this TOS formation for the offer/acceptance mismatch was pretty harsh. Look at the screen again. Below the “by clicking below” line, there are 5 text links embedded in text and one giant blue button saying “start subscription.” It would have been trivially easy for Yippee to say “by clicking the ‘start subscription’ button” rather than the vaguer “by clicking below” phrase. At the same time, did consumers not understand what was going to happen when they clicked on the “start subscription” button?

This switcheroo from the last 9th Circuit decision is a good example of how Godun encouraged formalistic pixel-policing to nuke any TOS formation with even small flaws. It probably also didn’t help Yippee to have a complete turnover in the court’s panel composition.

* * *

In re Snowlake, Inc. Data Security Breach Litigation (Nader v. LendingTree LLC), No. 25-7045 (9th Cir. Nov. 4, 2026)

Note: The caption contains a typo. This is Snowflake’s Data Security Breach Litigation, not Snowlake’s.

This panel doesn’t show its screenshots either. The panel says the TOS formations are both sign-in-wraps that don’t pass muster: “the Websites here did not provide reasonably conspicuous notice of the terms of use containing the arbitration provision.”

the district court properly found that the font size, the clutter of the webpages, and the general layout all evidenced a lack of conspicuousness. As in Berman, both Websites’ terms were printed in a tiny font “considerably smaller than the font used in the surrounding website elements.” “[T]he comparatively larger font used in all of the surrounding text naturally directs the user’s attention everywhere else.”  And unlike in Keebaugh, which featured a sign-in screen that “lack[ed] clutter” with the notice directly below the action button, here, like in Berman, “the textual notice is [] deemphasized by the overall design of the webpage, in which other visual elements draw the user’s attention away from the barely readable critical text.” The QuoteWizard form also requires the user to scroll past larger and more conspicuous text elements, including “Good News! We’ve Found Matches For You!” and the operative bright green box inviting the user to “Get My Quotes.” LendingTree’s forms similarly place the Terms of Use hyperlink well below the confirmation button to “View Your Rates,” and the page contains various other hyperlinks that draw attention away from the Terms of Use link. “The notice seems to fade into the irrelevancy of other aspects of the page” because the webpage has multiple hyperlinks and “varying font sizes and images.”

I went back to the appellant brief to grab the screenshots. Here is the QuoteWizard TOS formation screen:

Putting the TOS offer below the action button, with some intervening white space, is definitely suboptimal.

Here is LendingTree’s TOS formation screen:

There are so many things that could be improved about this screen, including how it’s weird they form the TOS at the stage where the consumer enters their phone number. However, I think the small number of topics on this page make the TOS offer more conspicuous. There is so much text below the action button that it’s impossible to miss, despite the many flaws in its presentation. After seeing this screenshot, I think this analysis from the panel was quite ungenerous:

LendingTree’s forms similarly place the Terms of Use hyperlink well below the confirmation button to “View Your Rates,” and the page contains various other hyperlinks that draw attention away from the Terms of Use link.

The fact that bright minds might disagree leads to the obvious countermove to reduce the risk of failed TOS formation:

The post Ninth Circuit Reminds Businesses: “Clickwrap or It’s Crap” appeared first on Technology & Marketing Law Blog.

This adage is constantly on my mind when I read SAD Scheme opinions. On the one hand, the plaintiffs routinely exhibit, at most, a gross disregard for due process and the rule of law. On the other hand, I often see a lot of flat-out bad lawyering.

But must it be either one or the other? ¿Por qué no los dos?

* * *

This SAD Scheme case was filed by the copyright owners of Steal a Brainrot, a game in Roblox. As usual, the plaintiffs sought an ex parte TRO. The plaintiffs supplemented the complaint with at least two filings:

• Exhibit 1 to the TRO motion: “a declaration filed by Yingchun Hou in support of the motion for a TRO (“Hou Exhibit”) that, as Hou attests on the public docket, demonstrates Plaintiffs’ inability to verify a current physical address associated with any of the fourteen Defendants.”
• Exhibit 2 to the complaint: “[s]creenshot evidence showing each Defendant on Schedule A selling infringing [c]ounterfeit [p]roducts.”

Putting aside the Exhibit [#]/Schedule [Letter] labeling conflict, notice what’s missing: the actual Schedule A. The court says succinctly: “without the “Schedule A” referenced in the complaint, the Court cannot confirm who, in fact, the defendants are whom Plaintiffs seek to restrain.”

In other word, it’s hard to win a Schedule A case without actually, you know, filing the titular Schedule A. The court denies the motion for an ex parte TRO for now.

It is easy enough for the plaintiffs to cure this defect by filing the Schedule A. Still, how should we classify this crucial omission per Hanlon’s razor? An attempt to bend/break the rules? Sloppy? Embarrassing? All of the above and worse?

[Personnel note: the complaint is still under seal, so I cannot see who filed it. However, the opinion references Shengmao Mu of Whitewood Law as Plaintiff’s counsel.]

In a footnote, the court adds:

At least one court has ruled in a similar context that the practice of “incorporat[ing] the names of . . . [d]efendants by reference . . . ‘does not satisfy Rule 10(a) or achieve its intended purpose.’” Rule 10(a) “is not a mere procedural nicety,” but rather “protects the public’s legitimate interest in knowing which disputes involving which parties are before the federal courts.”

Amen. I wish more judges would adopt this view!

* * *

On the assumption that the fatal omission will be cured, as a courtesy, the court provides some freebie tips about other potential problems with this case:

Personal Jurisdiction. The plaintiffs submitted a declaration from a consultant, Jay Harvey Paragoso, stating in conclusory fashion that “[a]ll the injuries and damages described above are taking place in the United States, including in New York.” This does not impress the court:

Plaintiffs have made no allegations, submitted no evidence, and advanced no arguments that the original event which caused their injury was in New York. And even if the allegation from the Paragoso Declaration were enough to show that each Defendant caused an injury in New York, it does not establish that any Defendant “regularly does or solicits business . . . in the state” or “expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from . . . international commerce.”

To establish jurisdiction, the plaintiffs also tried:

the barebones allegation that, “[a]ccording to Plaintiff[s’] test purchases, Defendants’ internet-based stores offer for sale and accept orders of Counterfeit Products from and offer to ship such Counterfeit Products to New York addresses.” The declaration from Plaintiffs’ counsel Shengmao Mu (“Mu Declaration”) qualifies that the statement in the complaint is made only “upon information and belief” and adds, “I do not state that counsel or counsel’s staff completed purchases from every Defendant because the declarations and Complaint on which I rely do not establish that fact.” The Paragoso Declaration merely attests that “numerous fully interactive e-commerce stores, including those operating [Defendants’] [s]eller [a]liases, . . . were offering for sale and/or selling infringing products embodying [Plaintiffs’ copyrighted works] to consumers in this Judicial District and throughout the United States.” The Paragoso Declaration refrains from making the assertion that any of the Defendants, much less all of them, actually sold any infringing products to consumers in the State of New York—or even entered into any transaction at all with such consumers.

So did the plaintiffs make test buys or not? If the complaint alleges test buys but the supporting declaration does not, that discrepancy like another Hanlon’s razor and a possible basis for sanctions. I doubt we’ll see such sanctions, though. Courts routinely tolerate mistakes like this from SAD Scheme counsel. But they should not, especially in ex parte proceedings, where the defendants are not around to defend themselves and any factual errors by the lawyer pose a greater risk of causing pernicious judicial errors.

Irreparable Harm. The plaintiffs tried at least three justifications for an ex parte TRO:

• it’s needed to prevent the “loss of control of reputation, loss of trade, and loss of goodwill.” The court says: where’s the supporting evidence?
• the defendants may abscond the funds. “Plaintiffs must make a showing that the harm that they will suffer before judgment is issued cannot be repaired through a money judgment.”
• it’s needed to “preserve their right to an equitable accounting of Defendants’ profits,” but the court responds “Plaintiffs must still demonstrate that their ability to obtain that accounting would be irreparably harmed without a prejudgment asset freeze.” (In a footnote, the court wonders if copyright damages are an equitable remedy).

The court’s bottom-line: “This is all to say, “a temporary restraining order is an extraordinary remedy that will not be granted lightly.”” Yet, sadly, after thousands of SAD Scheme cases, ex parte TROs have turned into routine, everyday events.

Case Citation: Speedy Simulator Gaming, LLC v. Schedule A Defendants, 1:26-cv-08931-LJL (S.D.N.Y. Oct. 26, 2026)

Prior Blog Posts on the SAD Scheme

• Spam-Filtered Email Service Unwinds a $13M Default Judgment–Imagination Products v. Omont
• Judge Barker (E.D. Tex.) Disassembles Two SAD Scheme Cases
• Court Wipes Out SAD Scheme Default Judgment Due to Improper Email Service–Deckers v. Litfun
• SAD Scheme Plaintiff Must Pay $40k to Defendant–Guangzhou Tinpod v. Schedule A Defendants
• New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants
• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post It’s Hard to Win a Schedule A Case Without Filing the “Schedule A”–Speedy Simulator v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

This is not a SAD Scheme case, but it is adjacent. The plaintiff sued the Chinese defendant but did not seek an ex parte TRO. It requested, and received, permission to serve the defendant by email. When the defendant no-showed, the court granted a default judgment to the plaintiff and awarded $13M+ damages against Omont.

If this had been a SAD Scheme case with a typical ex parte TRO, Omont would have learned of the proceedings, regardless of any attempted service, from the resulting marketplace freeze. Since that didn’t happen, Omont claims it first learned of the lawsuit when the marketplace delisted some of its items in response to the default judgment. The defendant went back into its email account, found the attempted email service in its spam folder, and then quickly ran to court to challenge the default judgment.

The court permits the challenge to the default judgment because:

defendant did not have notice of the suit. It is unsurprising that an email from an unknown foreign attorney would end up in defendant’s spam folder. Because, as defendant points out, there was no injunction in this case, there was no way for defendant—other than meticulously monitoring its spam folder—to learn about this litigation before the default judgment was entered against it. The court finds that the lack of notice afforded to defendant in these circumstances qualifies as “inadvertence, surprise, or excusable neglect.”

(Raise your hand if you “meticulously monitor” your spam folder LOL. Then again, you should. All of the email notices I get about class action settlements affecting me always mysteriously seem to end up in my spam folder, so I do actually get a few pennies for sorting through the spam).

The court adds that Kangol also “clarified a couple of months after the default judgment was entered here [that] the Hague Service Convention prohibits service by email in China.” This is true but incomplete. Kangol held: “if the Hague Service Convention applies, then service was improper because the Convention prohibits service by email in China. But the district court must first determine whether the Convention applies at all,” and remanded the case to determine the applicability of the Hague Convention. This court doesn’t address that threshold issue explicitly in this opinion.

Because of the new information,

The default judgment order awards plaintiff $13,335,764.46 in damages from defendant. The court cannot sustain such a significant award on a default judgment entered against a defendant who was not properly served.

This is also not precise. The court cannot sustain *any* damages award–even $1–against a defendant who was not properly served. The problem isn’t the size of the damages award; it’s the lack of due process.

There’s another problem with this case: now that the defendant is available to point out the case’s flaws, the trade dress claim may fall apart. The court says “defendant has shown that it has a meritorious defense” because “Defendant challenges that plaintiff’s alleged trade dress is inherently distinctive or has acquired secondary meaning.” This makes sense, because a supplemental trademark registration does not establish the mark’s validity. So it’s possible, or perhaps probable, that the court will find that the plaintiff has no rights to the color orange–and never did.

AND YET…the doctrinal limitations of the supplemental registration were available to the court before issuing a $13M final judgment, yet the judge greenlighted the default judgment nonetheless. The plaintiff would have gotten away with it but for the post-default adversarial advocacy.

It would be more fun watching default judgments fall apart if the stakes weren’t so serious. These situations may indicate that the court reached the wrong final conclusion. Each time that happens, it’s a reminder that courts routinely chunk their independent evaluation of unopposed advocacy; and worse, judges routinely don’t sanction or punish plaintiffs in those circumstances. This system of lopsided advocacy is irreparably broken, which reinforces why we need more due process in our adversary-based adjudication system, not less.

[Note 1: the court didn’t appear to take any steps to address the continued legitimacy of the trade dress claims against the other defaulted defendants, even though a busted trade dress would render the other default judgments also illegitimate. There are over $7M of other default judgments at stake, so this is not a small detail.].

[Note 2: Similarly, if email service against Omont was impermissible, does that mean or suggest that email service against the other defendants had the same defect? If so, that would be another reason to unwind the default judgments against them, but the court didn’t appear to ask that question either].

The “the email went to my spam folder” defense sounds a little like the venerable but typically mockable “dog ate my homework” defense (which doesn’t really even work in the digital era). Yet, the spam filter story has been told over and over about email service, and each failed service has extraordinary consequences for due process and the rule of law. The inevitability of spam filtered service emails–combined with the $13M mistake the court made predicated on email service–is a very good reason why email service should be extraordinarily rare, not a ready fallback when service is difficult via more traditional means.

Case Citation: Imagination Products Corp. v. ComingHere Direct, 2026 WL 3093999 (N.D. Ill. Oct. 16, 2026)

* * *

BONUS: Kiel James Patrick, LLC v. Schedule A Defendants, 2026 WL 3015613 (D.R.I. Oct. 7, 2026). Another TRO falls apart when the defendants show up. The false designation of origin claim becomes suspect:

the Court agrees with the Answering Defendants’ conclusion that “Plaintiff has not identified a single competent piece of evidence showing that the challenged images were copied from [its] website, altered from [its] photographs, or generated by AI to impersonate [it].” At this stage, the Answering Defendants are also correct that Plaintiff has failed “to identify the specific KJP image URLs, file names, metadata, EXIF data, watermark evidence, or reverse-image-search results that would be necessary to support such a claim.” Meanwhile, the Answering Defendants have offered product-image evidence from an “independent sourcing agent, 1688.com,” which illustrates that the images on their website were generated by a different commercial source than Plaintiff’s website. A review of Plaintiff’s website further reveals that the images submitted by the Answering Defendants look dissimilar to Plaintiff’s advertising materials, even if there is some similarity between the sweaters. Despite this similarity, the Court is only tasked with determining whether the challenged advertising imagery is likely to confuse consumers as to the origin of the sweaters. The Court cannot conclude so.

Same with the false advertising claim:

Plaintiff has not introduced any evidence that convinces this Court that the Answering Defendants made a false representation, nor that consumers have been misled or deceived by the images on the Answering Defendants’ website. Furthermore, there is no evidence on the current record that the Answering Defendants copied Plaintiff’s trademarks or made a particular claim about their products that is verifiably false or misleading. Plaintiff has also failed to provide any evidence of injury or anticipated injury

The court’s walking back of the plaintiff’s claims sure makes issuance of the original TRO look terrible.

It is not a happy development to see false designation of origin and false advertising claims rolled into the SAD Scheme, especially given their fact-dependent nature that increases the odds of ex parte judicial errors.

Prior Blog Posts on the SAD Scheme

• Judge Barker (E.D. Tex.) Disassembles Two SAD Scheme Cases
• Court Wipes Out SAD Scheme Default Judgment Due to Improper Email Service–Deckers v. Litfun
• SAD Scheme Plaintiff Must Pay $40k to Defendant–Guangzhou Tinpod v. Schedule A Defendants
• New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants
• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post Spam-Filtered Email Service Unwinds a $13M Default Judgment–Imagination Products v. Omont appeared first on Technology & Marketing Law Blog.

• Shangyou Jiayi Lighting Product Co., Ltd. v. Schedule A Defendants, 2026 WL 2948520 (E.D. Tex. Sept. 30, 2026) and
• Haiying Liu  v. Schedule A Defendants, 2026 WL 2948569 (E.D. Tex. Sept. 30, 2026)

As per the new norm, these cases appear to be Chinese companies suing their Chinese competitors in US court. Another example of how rapidly the Chinese learn from U.S. (judicial) “innovations.”

Judge Barker issued two very similar opinions. Neither went well for the plaintiffs. Many of his points fundamentally reject standard SAD Scheme arguments that are prevalent in many other cases.

Given their extensive overlap, I’ll cover the Shangyou Jiayi Lighting case first and then discuss some differences in the Liu opinion.

Shangyou Jiayi Lighting

Judge Barker starts with an obvious yet often undervalued point: “Schedule A cases can have an uncertain fit with the Federal Rules of Civil Procedure and due process.” I would have gone further and said the cases categorically don’t comply with FRCP or due process, but at least this shows he understands the gaming risk.

Email Service of Process

“Two circuits have now held that the Hague Convention, when it applies, prohibits service by email on defendants in China. The court agrees with that analysis….The court agrees with the Second Circuit’s recent conclusion that, where the Hague Convention governs service of process on a defendant in China, it prohibits service by email. ”

The plaintiff weakly argued that it was hard to find the defendants’ physical addresses. That did not go well:

Plaintiff argues that defendants primarily use electronic communications to operate their businesses and communicate with customers and third-party sales platforms. That answers the wrong question. Conducting business online and communicating mainly by email bear on whether email is reasonably calculated to give notice under Rule 4(f)(2) or (3) and the Due Process Clause…It says nothing about whether any defendant’s physical address is known. And only that question controls whether the Convention applies here.

A defendant may do business entirely by email and still have a physical address that is known or discoverable with diligence….

Diligent efforts to find a defendant’s address include more than just stating the difficulty of the endeavor….

Plaintiff has put forth no evidence that it could not find defendants’ Chinese addresses despite diligence. So plaintiff has not established this exception to the Hague Convention’s application.

Personal Jurisdiction

“Even the approaches most favorable to Schedule A plaintiffs rely on a completed sale of an accused product into the forum. As explained below, the record here shows no such sales by any defendants.”

The plaintiff’s items of evidence “are screenshots of Amazon checkout pages listing an address in Plano, Texas, which is within this district, but no completed purchases. Pages showing that a product could be shipped to the forum do not establish a sale into it.”

Asset Freeze

As usual, the plaintiff sought to freeze of the defendants’ money held in third-party accounts and obligate third-party services to freeze the money. The plaintiff backed off the freeze order on the third-party services, but the court also highlights a jurisdictional problem: “To the extent the proposed order would have been binding on the platforms directly, apart from any relationship to defendants, it would still have adjudicated defendants’ interests in their own property without jurisdiction over them.”

Unmasking Subpoenas

Judge Barker rejects a general discovery order to third-party services. However, “If plaintiff believes that a platform’s records would show sales of accused products shipped to Texas, it may move for leave to serve targeted subpoenas for that limited purpose.”

Joinder

“Schedule A cases often join dozens or hundreds of unrelated online sellers in a single action based on little more than their alleged infringement of the same intellectual property. Courts have increasingly rejected that practice.”

Here, the plaintiff narrowed the defendant list to the point where the judge accepts joinder:

The concern that can arise with Schedule A joinder in other cases is not present here because plaintiff does not sweep together unrelated sellers. It sues sales channels allegedly operating together under one operation. Plaintiff supports the connection among the defendants with allegations beyond the alleged infringement itself: use of the same or similar advertising look and feel, product images and descriptions, and tactics to evade enforcement efforts. On plaintiff’s theory, its claims against each defendant arise from the sale of the same accused products by the same operation and will present common questions of fact. That satisfies § 299(a) at this stage.

I don’t know about this. SAD Scheme plaintiffs routinely claim that the defendants all use the “same or similar advertising look and feel, product images and descriptions, and tactics to evade enforcement efforts.” To me, this looks like a standard plaintiff boilerplate roboargument.

Sealing of Filings

Temporary sealing can serve a legitimate purpose in an ex parte proceeding. It can prevent a defendant from defeating relief before the court can act. But that justification lasts only as long as the application for ex parte relief is pending, and it ends once the court has ruled. The court has now denied the temporary restraining order and asset restraint. Now that the court has ruled, the public’s interest in access extends to the ruling itself and to the record on which it rests. And no document sought to be sealed is claimed to contain confidential business information or personal information warranting protection.

Continued sealing would also undermine protections for defendants in the federal rules. A plaintiff may voluntarily dismiss an action without a court order before defendants answer. But the federal rules protect defendants against repeated litigation of the same claim: A second voluntary dismissal of the same claim operates as an adjudication on the merits. And a court in which the claim is refiled may award the costs of the prior action and stay proceedings until they are paid.

Those protections, and the related-case disclosures that courts require when a case is filed, depend on the prior action being discoverable. If this record remained sealed and the case were dismissed by plaintiff, neither defendants nor another court could readily learn that the claims had been asserted or that relief had been sought and denied. That concern is not hypothetical in Schedule A litigation.

It’s great that Judge Barker recognizes the risks of plaintiffs dragging defendants through multiple lawsuits until the plaintiffs get the positioning they want. Docket transparency is a partial cure, but more is needed too.

Notice to Defendants of the TRO Request

The plaintiff didn’t notify the defendants of the TRO request and didn’t adequately explain why not:

The reasons offered for proceeding without notice are generic. Plaintiff says only that defendants “can and likely will take immediate steps to permanently alter the status quo, including but not limited to steps such as registering new e-commerce stores under new aliases and moving any assets to offshore bank accounts outside the jurisdiction of this Court.” Nothing in the record describes anything these defendants have done to suggest they would dissipate assets or evade an order.

Judge Barker blows up the standard SAD Scheme plaintiff expectation that it’s obvious every Chinese defendant will go rogue. That claim requires more facts than just rote recitation.

Likelihood of Success on the Merits

Judge Barker notes the problems with testing the claim’s legitimacy in an ex parte proceeding:

Ordinarily, an accused infringer can defeat preliminary relief by raising a “substantial question” of infringement or validity. But, here, no defendant is present to do so. That makes it all the more important that the court at least attempt to test plaintiff’s showing on its own terms—and make its assessment of likelihood of success with eyes wide open to the limitations of a one-sided presentation.

This is true with utility patent claims and even more true for design patent claims. Our adversarial system depends on defendants calling attention to the weak points of the plaintiffs’ claims. Judges are not well-positioned to intuit what defendants might hypothetically say if they were around.

With respect to claim 1 of the patent:

The claim chart features only a single unidentified product, which plaintiff alleges—with no declaration, affidavit, or legal analysis—is “representative of all of the Infringing Products identified in Schedule A”. The photographs of the unidentified product contain a few labels purporting to identify only a lamp, with its conducting-wires, light-emitting components, conductor and insulating layers, plurality of openings, and conduct-or-contact surfaces. This is facially insufficient to establish a likelihood of success on the merits where the limitations of Claim 1 are far more substantial than the limited number of identified details in each photo. In fact, plaintiff’s showing is scarcely more than the screenshot-only presentations that have drawn criticism in other Schedule A cases….

the court cannot comprehend how a chart exemplifying a mere “perfunctory submission” can be said to show a likelihood of success on the merits.

The chart refers to “Defendant #10 Infringing Product” in the singular, and it does not say which listing the photographed product came from or how plaintiff examined it. But plaintiff accuses 14 separate products of infringement. Nothing in the record shows that each accused product contains the structure depicted in the chart, except for plaintiff’s assertion that they are “identical … in all aspects relevant to the [patent] claims.”…

“[S]imply mimicking the language of the claims when identifying infringement” fails to establish even reasonable notice of plaintiff’s theories of infringement, and it is certainly insufficient to find a likelihood of success on the merits….

The product identifiers listed in the motion cover some 14 listings. Plaintiff has not shown a likelihood of infringement as to any of them.

Asset Freeze Redux

“because a utility patent plaintiff’s monetary remedy is legal damages, a federal court lacks authority to freeze a defendant’s assets to preserve that remedy.” [cite to Grupo Mexicano de Desarrollo]

Judge Barker also explains how an asset freeze would reach assets unrelated to the alleged infringement:

an asset freeze preserves only assets that may be needed to satisfy that equitable relief. But the proposed order would bar defendants from transferring “any money held by a Third Party Provider,” without regard to location, amount, or source. Plaintiff now concedes that defendants may continue selling non-accused products. Yet the proposed order on file would reach the proceeds of those very sales. And it would freeze all funds associated with defendants’ storefronts and with any other accounts later identified….

The requested freeze would thus restrain defendants’ entire business to secure a claim for damages that plaintiff has not attempted to quantify.

Overfreezes are ubiquitous with the SAD Scheme. The plaintiffs usually cannot model how much money is atttributable the defendant’s infringing conduct (if any) at the ex parte TRO stage (pre-discovery). Thus, the TRO routinely freeze all of the defendant’s assets, including proceeds of non-infringing conduct. That is categorically a due process violation.

Echoing the Eicher Motors case, Judge Barker flags the harms that an asset freeze can cause (emphasis added):

The requested freeze would do more than preserve the status quo. Defendants would first learn of this suit when their accounts were frozen. The freeze would reach “any money held by a Third Party Provider,” including the proceeds of products that plaintiff concedes defendants may keep selling. Such a freeze “locks down defendants’ assets” and can cause “severe or fatal cashflow problems for the defendant, which may not be able to pay its vendors, employees, or lawyers.”…

Without defendants’ participation, moreover, the court has no reliable way to weigh the harm that the freeze would cause them or plaintiff’s likelihood of success in overcoming any invalidity or non infringement defense. An asset restraint that impairs a defendant’s ability to answer the claims against it is not a measure that preserves the status quo pending a hearing. It is a measure that may prevent a hearing from ever occurring.

This is such an obvious point, and yet judges often elide it. Ex parte TROs are supposed to temporarily preserve the status quo, but SAD Scheme ex parte TROs routinely disrupt the status quo and change the parties’ substantive rights. That is another part of their due process problems.

Bond

The court doesn’t grant the equitable relief, so no bond was required. Nevertheless, Judge Barker pushes back on the plaintiff’s request:

The proposed order would freeze “any money held by a Third Party Provider” of 14 defendants. It would bar sales of some 14 product listings. The court is not satisfied that a mere $10,000 injunction bond would properly compensate defendants in the event that the requested TRO, if entered, turns out to have been legally or factually improper.

In my SAD Scheme Standing Orders paper, I note that judges don’t have any rigorous methodology for setting bond amounts. This is especially a problem in ex parte proceedings, where the judge has no indication of how the ex parte TRO will impact defendants.

Implications

Reading this opinion, this meme kept coming to mind:

In my ideal world, Judge Barker would have rejected the entire premise of the SAD Scheme cases, rather than poking holes in multiple individual pieces. Even so, this opinion calls out many problems with standard SAD Scheme lawsuits. Many of those problems are essentially manifestations of an overdeveloped sense of entitlement, i.e., “I’m an IP owner, so I deserve everything I ask for without question.” Fortunately, Judge Barker doesn’t rubberstamp those requests.

Liu Case

The Liu decision has a lot of overlapping language with the Shangyou Jiayi Lighting decision, so I will just highlight some of the new incremental points of interest.

Personal Jurisdiction

The only evidence the motion offers for those assertions is one sentence in plaintiff’s declaration, stating that defendants “collectively advertise, distribute, and sell the accused product into the United States, including Texas.”

That sentence identifies no sale, buyer, shipment, or date in Texas. It attributes the conduct to defendants collectively rather than to any one of them. And it has no stated basis. Plaintiff resides in Shaanxi Province, and the declaration refers only to “my investigation,” without saying what that investigation involved….

Exhibit 1 is a Facebook page for “Tiny Land Inc” that lists Shanghai Tailan as the entity responsible for the page. Exhibit 2 consists of photographs of a product box. Exhibit 3 is a Chinese corporate-records printout for Shanghai Tailan. None of these materials mentions a sale, a shipment, or a customer in Texas….

For the tinylandus.com website and the Wayfair store-front, plaintiff’s exhibits include only checkout pages listing Sherman, Texas, shipping addresses, with no completed purchase. For the Walmart storefront, the exhibits show only items placed in a shopping cart. Pages showing that a product could be shipped to the forum do not establish a sale into it.

Though the plaintiff didn’t highlight it, there was one sale delivered to a Texas address. The court says that evidence might provide enough support for jurisdiction for that sale.

Joinder. “Plaintiff supports the connection among the defendants with evidence beyond the alleged infringement itself: the Facebook page, the product packaging, and the shared email domain.” I’ve seen weaker evidence in support of joinder, but this could also be a roboargument.

Notice before the ex parte request. As further evidence that the plaintiff didn’t have any reason to assume asset dissipation on notice, the court says “The business operator that plaintiff identifies is, per plaintiff’s own evidence, a registered company with a known address that has operated under the same name for years.”

Likelihood of success on the merits.

With respect to claims 1 and 8:

Plaintiff argues that the accused products “practice each and every limitation of at least independent claims 1, 8 and 9” of the asserted patent. But plaintiff’s claim chart addresses only claim 9. The chart expressly states that plaintiff “reserves the right” to assert claims 1 and 8 later, “based on further investigation and discovery.”

I’m pretty sure that’s not how pleading burdens in patent cases are supposed to work, but in SAD Scheme cases, plaintiffs often get away with a lot.

With respect to claim 9:

Plaintiff’s chart maps each limitation of claim 9 to photographs of a physical product. The photographs include labeled images of what plaintiff identifies as the annular and protective sleeving pipes, and images with a measuring tape comparing framering diameters before and after folding. That is a more substantial showing than the screenshot-only presentations that have drawn criticism in other Schedule A cases.

It’s amazing how much judges appreciate the plaintiffs taking small but seemingly obvious information steps like labeling photos, given how often SAD Scheme plaintiffs cut procedural corners and impose significant workloads on the judge’s staff. It’s still not enough in this case:

First, it concerns a single, unidentified product. The chart refers to “Defendants’ Accused Product” in the singular, and neither the chart nor plaintiff’s declaration says which listing the photographed product came from, who obtained or examined it, or how. Plaintiff accuses 20 listings across four sales channels, identified by seven Amazon ASINs, three Walmart product IDs, three Wayfair product IDs, and seven website product IDs. These include a standalone 69-inch crawl tunnel and multipiece sets combining tents, ball pits, and tunnels of different sizes. Nothing in the record shows that each accused product contains the structure depicted in the chart.

Second, several of the chart’s key entries restate the claim language without explaining how the photographed structure meets it….

Third, plaintiff’s validity showing consists entirely of the statutory presumption. That presumption does carry weight at this stage. But on an ex parte record, the court has no way to assess prior art or other alidity challenges a defendant might raise.

This looks like another IP Privilege card. “I have a patent, so I win.”

Judge Barker summarizes the discussion:

At most, therefore, plaintiff has made a preliminary showing that the single product photographed in its claim chart likely meets the limitations of claim 9 and no patent-specific showing as to its likely validity. It has made no showing as to claims 1 and 8 and no showing as to any other accused product.

Bonus: The Smiley Company SPRL v. Schedule A Defendants, 1:25-cv-26045-RS (S.D. Fla. Sept. 23, 2026).

A Smiley case is likely going to fall apart due to misjoinder:

counsel for Plaintiff informed the Court that Defendants are likely located in the same region, China, and are operating in the same manner by selling infringing products online. Counsel for Plaintiff did not set forth any specific allegations explaining how the 50 remaining Defendants were connected to one another.

Simply alleging that Defendants have violated Plaintiff’s trademark in the same way is insufficient.

Great. At the same time, 32 defendants in that case have already been dismissed, likely because they settled a case that apparently violated joinder rules from day 1. Will the court take a look at the (il)legitimacy of those dismissals and any resulting settlements? Or did the plaintiff already reap the economic spoils from those 32 defendants based on an ex parte TRO that never should have issued?

Prior Blog Posts on the SAD Scheme

• Court Wipes Out SAD Scheme Default Judgment Due to Improper Email Service–Deckers v. Litfun
• SAD Scheme Plaintiff Must Pay $40k to Defendant–Guangzhou Tinpod v. Schedule A Defendants
• New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants
• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post Judge Barker (E.D. Tex.) Disassembles Two SAD Scheme Cases appeared first on Technology & Marketing Law Blog.

In Kangol, the Seventh Circuit said that email service to Chinese defendants isn’t permitted unless the defendant’s address is unknown. So at issue in this case is Deckers’ diligence about determining the defendant’s address. Here’s what Deckers did:

Deckers explained that it searched for the address and entity associated with Litfun’s Amazon account on Google Maps, Baidu Maps, and Bing Maps.  Deckers also searched for the address and entity associated with an earlier lawsuit it brought against a Walmart store using the seller alias “LITFUN” on the same platforms. The searches did not locate either of the addresses “and/or” defendant at these addresses….

While Litfun concedes that it has not taken steps to register its business or address with Google Maps, Baidu Maps, or Bing, it notes that at least two “well-known,” publicly available Chinese databases show the correct address and company name.

The court criticizes Deckers’ effort: “Deckers failed to make reasonably diligent efforts to ascertain and verify Litfun’s mailing address before seeking email service.” The court explains:

• “no authoritative case holds that being unable to verify a defendant’s address on three search engines—despite the address being verifiable on other popular platforms—constitutes reasonable diligence”
• “at least some of the screenshots taken from plaintiff’s searches depict buildings located at the searched address (as opposed to vacant plots of land). Indeed, counsel’s declaration stated only that the searches did not locate the searched address “and/or” did not locate defendant at the searched address. Reasonably diligent efforts require more. Plaintiff’s use of “and/or” suggests that some physical addresses were returned in the search results but were not specifically tied to defendant in the search results. If an investigation reveals a physical address, reasonable diligence calls for a next step to determine whether that address could be tied to the defendant through other reasonably available sources” (emphasis added).
• “it is unclear from the record that plaintiff made its alleged efforts before resorting to email service…Plaintiff did not contend that it had exercised reasonable diligence before requesting email service….Before moving for electronic service of process, Deckers needed to take meaningful steps to verify defendant’s address. For example, Deckers could have used more than a search engine (such as more specialized corporate directories or databases) or sent a representative to the reported addresses to confirm that defendant was not operating there” (emphasis added).

So the court lays out two challenges to other SAD Scheme plaintiffs seeking email service of Chinese defendants. First, the plaintiffs have to actually try to find the defendant’s address; and second, if they have some indication that the defendant has a physical address, they have to take reasonable investigatory steps to resolve its accuracy before pleading that the defendant’s address is unknown. This may sound intuitive, but remember the SAD Scheme lives in a parallel due-process-optional universe.

Of course, the court’s standards require plaintiffs to be fully forthcoming with judges in ex parte proceedings and to do individualized defendant-specific homework–steps that SAD Scheme plaintiffs have routinely been allergic to taking. So long as judges rubber-stamp SAD Scheme plaintiff requests, plaintiffs will get away with illegitimate requests to serve Chinese defendants by email. But if other judges follow this opinion’s approach, SAD Scheme plaintiffs will routinely ace themselves aced out of email service and have no good way of serving Chinese defendants. That will have a major impact on the SAD Scheme.

* * *

Litfun also claimed that Deckers “pinches” defendants from cases as a form of judge shopping (echoing Prof. Fackrell’s nomenclature). The court says:

Plaintiff’s litigation practice can look like judge shopping, but the conduct also fits a pattern of a repeat litigant adapting to and complying with the variety of practices employed by different judges in this district….

it is not improper for a plaintiff to proceed against dismissed defendants in a new case where the original judge concluded that the defendants had been misjoined in the first place

Thus, the court rejects Litfun’s request for sanctions for Deckers’ alleged judge-shopping in this case. But the judge does warn that “this does not mean that plaintiff should be entitled to drop a defendant from a complaint over and over again without consequence.” The court acknowledges the potential for plaintiff gamesmanship:

Plaintiff’s technique of effectively achieving a dismissal without a Rule 41 notice by filing a new complaint under Rule 15(a) suggests a gap in the rules….Until the Federal Rules of Civil Procedure close that gap, policing these dismissals falls under the court’s inherent authority

This is what I and others have been saying for years. Plaintiffs exploit soft spots in IP law and FRCP to achieve unjust results. Judges have to plug these doctrinal gaps, especially when the plaintiffs are proceeding ex parte and the judges are not hearing any counternarratives from defendants. Until judges properly supervise and sanction such abuses, plaintiffs will keep filing defective SAD Scheme cases and getting outcomes that defy the rule of law.

Here, the judge concludes that Deckers’ prior dismissals of Litfun were not in bad faith, so the judge does not issue terminating sanctions. Instead, Deckers can try to serve Litfun through the remaining service options, if the time for service has not passed.

Case Citation: Deckers Outdoors Corp. v. Litfun, 1:25-cv-10080 (N.D. Ill. Sept. 14, 2026)

Prior Blog Posts on the SAD Scheme

• SAD Scheme Plaintiff Must Pay $40k to Defendant–Guangzhou Tinpod v. Schedule A Defendants
• New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants
• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post Court Wipes Out SAD Scheme Default Judgment Due to Improper Email Service–Deckers v. Litfun appeared first on Technology & Marketing Law Blog.

The opinion summarizes:

As part of its ubiquitous ride-hailing service, Uber permits a user to order “guest rides” for third parties remotely. Guest riders can travel unaccompanied by the user and need never have downloaded Uber’s app orcreated an account themselves. This case concerns what legal obligations a guest rider owes to Uber by virtue of using the service.

In this case, Cheryl ordered an Uber ride for her husband Carroll. Carroll suffered significant personal injuries on the ride. Uber sought to direct Carroll’s claims to arbitration. The court says Carroll never agreed to Uber’s TOS, so no arbitration.

The court summarizes its legal conclusion:

Uber relies on its having sent Carroll a text message before the guest ride that included a hyperlink to the Terms and stated that taking the ride would manifest his assent to them. But Uber cannot show that Carroll ever saw its unsolicited message, and contract law imposes no duty to read a contract that one does not know exists. Uber alternatively submits that Carroll could be separately bound to arbitrate his claims under Cheryl’s contract with Uber. Carroll does not seek to enforce his wife’s contract, however, and he had no more notice of its terms when he took the guest ride.

Why Didn’t the Text Message Work?

Uber texted Carroll:

Your Uber from Cheryl is arriving in 10 minutes. \n \nBy taking this trip, you agree to the Uber Terms of Use & Privacy Policy: t.uber.com/lgl. \n n\Track here/nhttps://trip.uber.com/Wu8vBbIYEf3A \n\nReply STOP to opt out from SMS notifications.

The court says that Carroll did not have inquiry notice:

Under the design of Uber’s guest-rider system, it never required Carroll to click on an “I accept” button or its equivalent, or to otherwise expressly confirm his acceptance of the Terms. Nor was Carroll presented with a website- or app-based interface that contained a link to the Terms and stated that taking the ride would manifest his assent to them. Instead, Uber simply sent Carroll a text message with that information and anticipated he would see it before taking the ride. But individuals are not on inquiry notice when they must “ferret out hyperlinks”—even when they are already using the apps or webpages on which the links appear….In focusing on the layout and language of the text message it sent Carroll, Uber skips over a critical difference between this case and the mine run of internet-contracting cases: Carroll never saw the message, so it is irrelevant whether he would have been on inquiry notice from the message had he seen it.

Uber suggested that Carroll surely saw its text. The court responds:

The system Uber designed did not require guest riders to read the text messages Uber sent them before using the service. Nor did its system as a practical matter require guest riders to open the messages to obtain information about their rides…

we disagree that an objectively reasonable person in Carroll’s position necessarily would have read the text message from Uber before taking the guest ride….At least until they enter the vehicle, the guest rider’s relationship to Uber’s service is entirely passive; they need never have interacted with the company in any way. In that context, it is far from apparent that a reasonable person would expect to receive an unsolicited text message calling for them to examine voluminous contract terms in the short window before their ride arrives. And although Carroll’s practice of never reading text messages may be idiosyncratic, there is no legal duty to perpetually monitor one’s phone for incoming messages that may contain contract terms interspersed with other text.

“Never reading text messages” sounds like aspirational goals for many of us.

Other Ways of Binding Carroll

Carroll isn’t a third-party beneficiary of Cheryl’s TOS with Uber. “Carroll is not seeking to enforce Cheryl’s contract with Uber, nor did he otherwise consent to be bound by its terms….if Carroll was an intended third-party beneficiary of the contract between Cheryl and Uber, that would simply mean he could sue Uber to enforce its obligations to Cheryl. That is a far cry from saying he incurred his own obligations to Uber from a contract to which he was not a party.”

Also, “Even assuming the guest ride counts as a direct benefit that Carroll accepted under Cheryl’s contract with Uber, Uber’s [equitable estoppel] argument still fails. We have explained that Carroll lacked actual or constructive notice of the terms on which that benefit was being offered, so he did not “knowingly” accept any benefit.”

What Could Uber Do Differently?

In my Internet Law course, I describe a phenomenon of TOS formation “leaks,” where people can reach their desired goal without going through the otherwise mandatory TOS formation process. Uber guests are an example of such a leak in Uber’s TOS formation process.

Uber will always have a problem binding every rider to a TOS (and thus arbitration). If an Uber member requests a ride that includes unrelated individuals, Uber doesn’t know who the additional passengers are or have any direct contact with them sufficient to form a TOS with them. Thus, Uber inevitably has limited arguments to divert non-members into arbitration.

In this respect, Uber is in a better position to bind Uber “Guests.” If Uber gets an order for a guest, it could cancel the ride unless the guest agrees to the TOS, such as requring the guest to reply to its text (as the court says, “Uber, for instance, could require guest riders to confirm receipt of the Terms by responding to its text message”) or clicking through some TOS offer screen before the guest order is confirmed. However, I doubt these options would be very popular. For example, guests may not have a cellphone or may have some infirmity that explains why third parties are handling their affairs.

Alternatively, Uber could put the burden on drivers to ensure that everyone who gets in the car has agreed to Uber’s terms somewhere/somehow.

First, Uber could require everyone ordering a ride to specify the identity of riders and their contact info, and then confirm them like the guest protocol I mentioned above. This would require drivers to then block access to guests who didn’t assent to the TOS. I don’t think anyone would love this solution, including drivers who might face physical threats for denying rides or potentially leave people stranded in dangerous situations.

Second, Uber could put some kind of TOS disclosure on car windows, such as “by entering this vehicle, you agree to the TOS.” (Call it a…window-wrap?). Putting aside the legal dubiousness of a window-wrap, it would require drivers to implement this properly on their cars, and the odds of that are prohibitve. (Also, a car usually has multiple doors, and each one would need the disclosure if the window-wrap were to work against everyone).

In sum, it’s quite possible that Uber may never be able to bind all riders to arbitration. Then again, I don’t recall taxi services in their day routinely being able to bind their riders to arbitration either.

Case Citation: Walker v. Uber Technologies, Inc., No. 24-7154 (D.C. Cir. Aug. 28, 2026)

* * *

Schlueter-Beckner v. SimpliSafe, Inc., No. 25-4933 (9th Cir. Aug. 31, 2026)

SimpliSafe’s TOS formation via a sign-in-wrap failed for lack of visibility. The Ninth Circuit doesn’t show the screen, but the lower court opinion included this:

The Ninth Circuit first explains why it focuses only on the bottom “place order” widget, not the one on the right:

Because the fill-in items that required action and attention from the consumer were all in the left-hand column, the overall design of the page deemphasized the right column and drew focus toward the “Place order” button at the bottom of the left column. This emphasis is reinforced by the fact that the preceding “Shipping” webpage in the purchase process similarly placed the fill-in items on the left-hand side, with a similar blue action button at the bottom. Moreover, SimpliSafe presented no evidence to show that Plaintiffs must have used the “Place order” button on the right-hand side or must have read the disclosure on that side to finalize their purchase. Therefore, any insufficiency with the bottom disclosure—which may have been the only disclosure the user saw—would mean SimpliSafe failed to show its webpage provided reasonably conspicuous notice.

Then, the Ninth Circuit says that the bottom TOS offer isn’t prominent enough:

The disclosure’s placement, font size, and font color drew the user’s attention away from the disclosure. There was significant white space between the disclosure and the “Place order” button; the text of the “Place order” button was seemingly twice the size of the disclosure’s text; and the “Place order” button contrasted more against the white background than the disclosure’s gray text….

Go back and double-check the white space between the TOS offer and acceptance button. Seriously?

The court continues:

Above the bottom disclosure, the purchasing webpage includes a line of text warning users their credit card information would be automatically saved to the account for future use. This warning is in larger font than the disclosure, italicized, and in navy text against the light gray background. As a result of these design choices, the credit card notice contrasts starkly on the page and draws the eye. So, while SimpliSafe utilized design elements to ensure the user saw the warning aboutretaining credit card information, “they have not done the same to alert a consumerto the Terms of Use.”

Would you say that the credit card warning was so much more prominent than the TOS offer?

Some plaintiffs also signed up for alarm monitoring, and that signup process failed too. The TOS offer labeled the TOS “SimpliSafe Terms and Consent to Communicate, for Notifications and Alerts.” The court said that sounds like the TOS only related to SimpliSafe’s messages, not a more comprehensive set of TOS terms.

Also, the TOS offer and acceptance button didn’t match:

the disclosure stated “[b]y submitting this number” Plaintiffs agreed to the terms, but the action button on the webform only stated “Next.” This mismatch of terms could easily confuse users.

As I”ve said before:

* * *

Uhl v. Roblox Corp., No. 25-5057 (9th Cir. Sept. 3, 2026)

Roblox’s TOS contains an arbitration clause but “Roblox did not move to compel arbitration—for months on end.” Roblox claimed it needed to know the plaintiff’s username to determine if the case was arbitrable, but Roblox didn’t seek any discovery to resolve this ambiguity. Instead, it litigated the preliminary stages of the case in court, including a removal motion, a remand, and a substantive motion to dismiss.

This makes it look like Roblox sandbagged the arbitration issue. The majority summarizes:

a party cannot ask the district court to dismiss a complaint on the merits, holding in reserve a claimed right to arbitrate that will be exercised only if it does not like the district court’s decision.

Judge Bumatay (a TAFS judge) dissents, saying the law wasn’t settled or clear that Roblox was waiving its arbitration rights by proceeding as it did.

The post Uber Guests Aren’t Bound By Uber’s TOS–Walker v. Uber appeared first on Technology & Marketing Law Blog.

I presume the plaintiff and many of the 44 defendants are Chinese entities. This case appears to be another example of how the SAD Scheme has become one of the U.S.’s most popular exports to China.

The plaintiff claims that the defendants infringed its copyright, including registration #VAu 1-517-249, titled “Black Castor Oil 1 and 3 Other Unpublished Works.”

As usual with SAD Scheme cases, the plaintiff initially obtained an ex parte TRO. Then, Shenzhen Moulis Electronic Co., Ltd., on behalf of 18 defendants (the “Aliver Defendants”), appeared in the case and started poking holes in the plaintiff’s assertions.

Following the preliminary injunction hearing, the plaintiff dismissed the defendants voluntarily with prejudice. Voluntary dismissals are a standard tactic when SAD Scheme cases become contested. From the plaintiff’s standpoint, it’s better to cut loose the squeaky defendants who might disrupt the entire case, so the plaintiff can keep squeezing the other defendants.

However, it is less typical for the plaintiff to voluntarily dismiss the defendants with prejudice. Normally that occurs only after a settlement, which did not happen here. The court calls the plaintiff’s dismissal with prejudice “unusual.”

The Aliver Defendants then sought a 505 attorneys’ fee shift of nearly $40k, which the court grants.

Did the Aliver Defendants Prevail?

When copyright plaintiffs are losing, a voluntary dismissal provides a way to reduce any residual exposure, because judges rarely order a fee shift for a defendant who is already out of the case. Also, at least in the 11th Circuit, a court doesn’t have the statutory authority to issue a fee shift to a defendant dismissed without prejudice.

But here, the plaintiff dismissed with prejudice, and the court treats the requested fee shift here as a novel question: “does a defendant prevail if the dismissal materially changes the relationship between the parties but the dismissal does not require judicial imprimatur other than a perfunctory order closing the matter?”

The court says yes: “Plaintiff sought damages and injunctive relief against the Aliver Defendants but obtained neither.” The court notes how badly the case was going for the plaintiff:

At the preliminary injunction hearing, the Aliver Defendants argued—and the Court agreed—that Plaintiff was unlikely to prevail on the merits of its copyright claim against the Aliver Defendants. The Court’s denial of preliminary injunctive relief was based on multiple glaring issues with Plaintiff’s claim, including that Plaintiff failed to allege or provide evidence to support that the Aliver Defendants had access to or copied Plaintiff’s alleged copyrighted artwork and failed to rebut the other issues raised by the Aliver Defendants regarding Plaintiff’s creation, ownership, and publishing of the alleged copyrighted artwork.

It was only after the Court denied Plaintiff’s PI Motion, on the basis that Plaintiff was unlikely to prevail on the merits of its claim, that Plaintiff voluntarily dismissed its claims against the Aliver Defendants with prejudice. The fact that Plaintiff’s notice of voluntary dismissal was with prejudice—as opposed to without prejudice—is persuasive here even if the dismissal did not require judicial imprimatur. A voluntary dismissal without prejudice generally leaves the parties as though the action had never been brought and does not prevent the plaintiff from refiling. By contrast, Plaintiff’s notice of voluntary dismissal with prejudice permanently barred Plaintiff from reasserting the same copyright claims against the Aliver Defendants….

here, the Court denied Plaintiff’s PI Motion on the ground that Plaintiff failed to demonstrate a substantial likelihood of success on the merits and identified on the record the specific deficiencies in Plaintiff’s allegations against the Aliver Defendants. In doing so, the Court effectively “rebuffed” Plaintiff’s claims.

Ultimately, the rights of the parties were conclusively resolved following the preliminary injunction ruling: Plaintiff’s subsequent voluntary dismissal with prejudice permanently barred re-litigation of the very claims the Court had already found deficient. The Court’s rejection of the viability of Plaintiff’s claims coupled with Plaintiff’s with-prejudice dismissal renders the Aliver Defendants prevailing parties

So, the big mystery of this case: why did the plaintiff choose to dismiss with prejudice? Occam’s razor suggests that it was an unforced error.

(To be clear, we should favor plaintiffs dismissing with prejudice rather than without. Dismissals without prejudice leave a Sword of Damocles hanging over the defendants’ heads, with associated inhibiting effects).

[UPDATE: a reader wrote to me: “defendants in this sort of case can put P’s in the position where dismissals MUST be with prejudice (or at least by stipulation or with court permission) by filing an answer or an MSJ.”]

Factors Supporting 505 Fee Shift

Having determined the defendants’ eligibility for a fee shift, the court decides it’s appropriate to issue a fee shift here because:

• “Aliver Defendants achieved complete success.”
• “Plaintiff’s copyright theory was objectively unreasonable. Plaintiff alleged infringement of unpublished works but did not adequately allege access, even after the Aliver Defendants identified that deficiency”
• “compensation and deterrence favor fees” because it encourages plaintiffs to scrutinize their claims (which they should be doing anyway)

This is a good reminder of why copyright owners have not embraced the SAD Scheme as thoroughly as trademark owners. While the copyright and trademark statutes both have attorneys’ fee shifting provisions, courts are more willing to grant fee shifts in copyright cases. As we’ve seen for decades, it’s hard to run a copyright-based online trolling campaign when fee shifts cause the profit meter to run in reverse.

Implications

In contrast to the resolution of many SAD Scheme cases, this case resolved comparatively favorably for the defense. The defendant got the claims dismissed and an award of their attorneys’ fees.

Great, but this outcome still isn’t good news. The court wrongly issued a TRO based on an apparently defective copyright claim. Worse, as the court itself described, the case had “multiple glaring issues”–but, I guess, not glaring enough for the court to catch them at the TRO stage? In other words, had the judge more aggressively policed the plaintiff’s ex parte requests, this case never should have proceeded against the Aliver Defendants. Further, the judge doesn’t acknowledge her complicity, order any further sanctions against the plaintiff, or even scold the plaintiff for extracting an undeserved TRO from her.

The court’s choices not to hold the plaintiff fully accountable or lament her role in the scheme is one of the reasons the SAD Scheme keeps perpetuating. In plaintiffs’ efforts to create SAD Scheme omelettes, they routinely and predictably break some eggs, and the courts don’t adequately impose consequences for the messes they make. #StopTheSADScheme.

Case Citation: XYZ Corp. v. Schedule A Defendants, 0:24-cv-61886-JB (S.D. Fla. Sept. 3, 2026)

SUPPLEMENT: Ningbo Jiaruisi E-Commerce Co., Ltd. v. WHAM-O Holding, Ltd., No. 1:26-cv-10701 (N.D. Ill. complaint filed Sept. 3, 2026). This lawsuit represents some of the fallout from the Seventh Circuit’s Kangol v. Hangzhou Silk decision, which rejected email service on many Chinese defendants. The complaint summarizes its purpose:

to obtain relief from default judgments and related orders entered in Northern District of Illinois “Schedule A” cases against mainland-China defendants who were incorrectly served via email pursuant to FRCP 4(f)(3) and not through the Hague Service Convention, did not appear, did not settle, and were subjected to default judgments, asset restraints and collection. Plaintiff seeks declaratory and equitable relief, including relief from void judgments, an accounting, restitution of funds collected under such judgments, taxable costs and reasonable attorneys’ fees and litigation expenses to the extent authorized by law, including from any common fund or monetary benefit created, preserved, or restored through this action, prejudgment and post-judgment interest, and related relief necessary to restore the parties to the position they would have occupied absent the improper entry and enforcement of those judgments.

This case reinforces how judges don’t voluntarily clean up, or even acknowledge, any mistakes they made in past SAD Scheme rulings. Following Kangol, it’s now clear that a huge number of SAD Scheme defendants were not properly served, but what steps are the courts voluntarily taking to correct those due process violations? As far as I can tell, none. I’m not sure if this lawsuit is the right redress mechanism, but I hope the harmed defendants find some relief.

Prior Blog Posts on the SAD Scheme

• New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants
• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post SAD Scheme Plaintiff Must Pay $40k to Defendant–Guangzhou Tinpod v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

This lawsuit raises one of the venerable but surprisingly vexing copyright law questions: when is a price copyrightable? That might sound like a stupid question because “facts” aren’t copyrightable and a price seems like it should be characterized as a “fact.” And yet…the copyright law jurisprudence is littered with cases saying or implying that individual prices could be copyrightable (e.g., the abysmal CDN v. Kapes opinion), as wacky as that may seem. These cases have imperiled various important social activities, such as price comparisons.

This court, in contrast, treats the copyrightability of prices as the easy question I always thought it should be

Ideally, the clean lower court ruling would have finally ended the price copyrightability drama. Instead, the Second Circuit did a “well, actually….” and revives the case.

[A reminder that in this case, Nivoda never published Rapaport’s prices directly. Instead, Nivoda displays “percentages representing the difference between Nivoda’s price for the diamond and the price for that category of diamond in the Price List, not a display of the entire List itself.”]

The court summarizes its views on when numbers are facts:

Where the expression takes the form of a number, “[t]he question then becomes the possible range of that number.” Determining this range allows the court to assess whether the number is an “original creation[],” deserving of copyright protection, or merely a “pre-existing fact[],” free to be copied.

No, this makes no sense. How can a single number be expressed as a range of numbers???

What’s slowing down courts is when a number is the distillation of an estimator’s asset valuation. Valuations aren’t a precise science, so any numerical expression of a valuation isn’t a “fact” but an “opinion” and could very well be expressed as a range rather than a single number. Yet, as the lower court held, we can’t separate the estimator’s opinion from the fact that the estimator held this numerical opinion. That inseparability triggers copyright’s merger doctrine. This means anyone should be free to republish the estimator’s numerical “opinion” without copyright entanglements.

The Second Circuit, harvesting years of precedential doubt it has sowed on this point, cannot reach such a clean outcome:

Without evidence to establish how the Price List is created, however, the court lacked a basis for concluding that this idea is what is reproduced in the Price List. As pled, the Price List reflects Rapaport’s “opinion as to the market value of any diamond based on size, color, and clarity,” based on Rapaport’s “analysis and sophisticated expert industry opinion.” Rapaport does not allege, for example, that the List reflects nothing more than the average transaction prices for particular types of diamonds in a particular time span, based on an aggregation of reported sales. To the contrary, text accompanying printed versions of the Price List emphasizes that the List reflects Rapaport’s “opinion” of prices, which may differ “substantially” from “actual transaction prices.” Thus, for the limited purpose of our analysis, drawing all reasonable inferences in Rapaport’s favor based on the facts alleged in the complaint and other facts appropriately considered at this stage of litigation, we identify the “idea” at risk of merging with Rapaport’s expression, as “Rapaport’s opinion as to the value,” as opposed to the actual “market price” (meaning the price set by the market) of particular diamonds based on their size, color, and clarity….

No, this makes no sense. The process of manufacturing a number should be irrelevant to its copyrightability. Even if the valuation required the most creative process that has ever existed in human history, the estimator’s valuation becomes a fact about the estimator holding that opinion.

Still harvesting the decades-long bad precedent, the court continues:

In order to determine whether all possible expressions of a party’s opinion
regarding diamond price valuation are “substantially similar,” we must assess the possible range of these estimates. In doing so, we evaluate whether the number is better considered a “mechanical derivation[]” of a pre-existing fact, or an “original creation[],” resulting from “some minimal degree of creativity….

the values included in Rapaport’s Price List, as alleged, reflect Rapaport’s “opinion” as to hypothetical products meeting certain specifications, based on Rapaport’s “analysis and sophisticated expert industry opinion.” On appeal, Rapaport emphasizes that the values included in the Price List do not express the “actual market price of any-real world diamond,” but rather its “opinion as to what should be the sales prices for different classes of hypothetical diamonds.” Perhaps most relevant, unlike the actual market price of particular futures contracts (which the settlement prices in New York Mercantile aimed to capture mostly by reference to a fixed set of trading data), the value of a diamond—like that of a used car—may depend on any number of facts beyond current trading data, such as subjective considerations of personal opinion and aesthetic preference. Rapaport alleges in its complaint that it arrives at the values included in the Price List by reference to factors beyond raw trading data, such as its “extensive market research and proprietary knowledge,” and its “decades of knowledge, investment, and industry relationships.” At this stage of the litigation, we are obliged to take them at their word. Only discovery can tell whether the sources and processes used by Rapaport in fact more closely resemble those used by NYMEX to determine settlement prices, and not (as alleged) those used by the Red Book editors for used-car valuations.

Devastating. This is some seriously bad epistomology. Here’s a possibility: a number could be BOTH an opinion (a valuation estimation) and a fact (the estimator’s published belief) AT THE SAME TIME. If the court had entertained that possibility, this should have been an easy dismissal (as the lower court held).

And what goal does this hack philosophizing advance? It suggests that every copyright claim over single numbers will not be resolvable on a motion to dismiss (and maybe not on summary judgment either). That’s a lot of socially wasteful litigation.

The court addresses other policy matters in wholly unsatisfactory ways:

the List attempts to value hypothetical products whose ultimate value is tied, at least in part, to subjective preferences. We are therefore not persuaded that failing to apply the [merger] doctrine will “seriously impair the policy of the copyright law that seeks to preserve free public access to ideas.”…

Nivoda does not suggest, nor does the present record indicate, that Rapaport would still have an incentive to produce the Price List if it lost its exclusive rights over that publication. The Price List “is available by paid subscription only” and, Rapaport asserts, is the product of “significant time, resources and expense,” resulting from the company’s longstanding “industry and customer relationships.”  Accordingly, applying the doctrine appears unlikely, based on what we must assume to be true at this point in the proceedings, to serve copyright’s aim of encouraging the authorship of innovative works.

Feist eliminated sweat-of-the-brow justifications for copyright. Apparently the Second Circuit prefers a pre-1991 world. Oops, I’m not sure I can reference the number 1991. I might have infringed on someone’s copyright.

On remand, I hope the lower court embraces the full spectrum of ways this case should resolve in favor of the defense. Ultimately, I hope this opinion becomes another mockable tangent in courts’ decades-long quixotic quests to manufacture copyrights for single numbers.

Case Citation: Rapaport USA, Inc. v. Nivoda USA, LLC, 25-1065 (L) (2d Cir. Sept. 4, 2026). Judge Nardini, a Trump appointee, authored this opinion.

BONUS: The Construction Specifications Institute, Inc. v. Zerodocs.com, Inc., 2026 WL 2600412 (C.D. Cal. Sept. 1, 2026). The court summarizes the plaintiff’s work:

The work at issue in this copyright and trademark case—the CSI MasterFormat—is a classification system that has been, for decades, the national standard for identifying construction bids. CSI’s 2020 edition of its MasterFormat contains a taxonomy system for classifying and organizing technical information and project details in architectural, engineering, and construction projects. Specifically, each component of a project can be identified by a standardized six-digit number, which can be expanded to eight digits when greater detail is required, accompanied by a standard title that is usually a descriptive word or short phrase…

CSI’s MasterFormat Maintenance Task Team (the “MFMTT”) is tasked with conducting ongoing reviews of the MasterFormat, and the MFMTT has adopted a biennial revision process. Users of the MasterFormat can submit commentary and proposals to the MFMTT for review and approval. The MFMTT bases its approval and revision process on several broad, flexible criteria. The MFMTT draws on user feedback and proposals to make its revision and addition determinations. All proposals must pass through a two-stage process before they can be approved by the MFMTT.

The court’s description of the defendant’s activities:

Zerodocs distributed a product called “SimpleSpec” that is composed of a collection of pre-written word processing document templates. The SimpleSpec templates were created in 2017 to help users write bid proposals that comply with the MasterFormat classification system. Each SimpleSpec template is directed to one entry in CSI’s MasterFormat system.

Zerodocs used CSI’s “CSI” mark on its website to refer to CSI’s MasterFormat, but it did so without CSI’s authorization. Those references accurately reflect the source of the standards to which the Zerodocs SimpleSpec templates were written—the MasterFormat standard…

Zerodocs has adopted the structural style of MasterFormat into its Vendor Specs, and it uses CSI’s MasterFormat framework. Specifically, Zerodocs’s SimpleSpec offers at least 457 templates organized in the MasterFormat framework. CSI further identifies that, in March 2024, Zerodocs’s website displayed at least 199 SimpleSpec specifications that are identical to the 2020 edition of CSI’s MasterFormat. CSI shows that SimpleSpec contains templates that use specific number and title combinations from the MasterFormat—e.g., “03 30 00—Cast-In-Place Concrete.”

Though Zerodocs copied something, there was no copyright infringement. The “divisions, numbers, and titles of the MasterFormat are short phrases, and, therefore, they are not protected elements.”

The taxonomy isn’t copyrightable either:

CSI’s descriptions are factually concise, and they identify “specific work results and construction practices.” For example, in the section for Concrete, there is no room for creative expression because CSI must necessarily be as concise as possible and identify the specific work result—i.e., Concrete. In describing the sections and title of the taxonomy, CSI is “knuckling under” to facts about materials used or jobs performed in construction projects. Furthermore, whether a description is updated or adopted by the MFMTT’s revision process is a rote, four-step process that asks if the new description better defines the subject matter, is more useful, or is more appropriate. Those are utilitarian queries, not creative endeavors. Even if the MFMTT wanted to change a description, it prioritizes established industry terms and introduces new terms only when necessary. No “blood is shed” in the MFMTT’s revision process…

CSI assigns descriptors as concisely as possible by using words that best describe the subject.

I don’t think knuckles or blood have a lot to do with the copyrightability of taxonomies, but it might make a good Netflix series. Also, I’m not sure an author’s utilitarian aim dictates whether a work is expressive. Still, this court is at least doing better than the Rapaport court.

Zerodocs argued Baker v. Selden resolved the case. I do love topical citations in the 2020s to the nineteenth century classic, but the court points to rogue decisions from the 3rd and 7th Circuit that found taxonomies copyrightable despite the Selden case. Instead, “the Court is unpersuaded that CSI’s MasterFormat is wholesale uncopyrightable simply because it is a system. Rather, as previously discussed, the Court concludes that CSI’s MasterFormat did not meet the threshold for copyrightability of a taxonomy, as guided by American Dental and Southco.”

The court dismisses the trademark claims due to the nominative use doctrine.

The post Courts Still Can’t Let Go of the Possibility that Individual Prices are Copyrightable–Rapaport v. Nivoda appeared first on Technology & Marketing Law Blog.

if all of plaintiff’s requested ex parte relief were to be granted, plaintiff would at the outset be entitled to broad discovery with serious consequences to defendants. Plaintiff would first be authorized to serve expedited discovery on the Financial Institutions, who would be obligated to provide all known e-mail addresses and mailing addresses for defendants, as well as information relating to defendants’ assets and accounts “regardless of the hosting platform or institution.” Having received that information, and still without notice to any defendant, plaintiff could then freeze the assets maintained in any of the accounts identified through expedited discovery of 100 different international defendants. Acknowledging that plaintiff’s request for an asset restraint is in no way cabined only to accounts through which defendants sell the allegedly infringing products, this restraint would presumably apply to all of defendants’ accounts and assets regardless of their relation to this case. Only after discovery has been provided and the assets frozen would plaintiff notify any of the defendants of the existence of this action, through a proposed procedure inconsistent with the requirements of international service under the Hague Convention.

Judge Buchwald wraps up this overview of the SAD Scheme with a conclusion that seems obvious to me but shockingly isn’t yet obvious to all judges: “It may not be an exaggeration to say that once plaintiff’s requested relief has been authorized, the case is effectively over.”

Given the tenor of this overview, unsurprisingly the judge rejects the case’s “merits.”

On the design patent claim, Judge Buchwald says the “plaintiff has failed to show a likelihood of success on the merits for the simple reason that plaintiff has chosen not to submit its own product nor a physical example of any of defendants’ products for comparison.” The plaintiff tried a standard SAD Scheme trick of placing orders, taking screenshots, and then canceling the orders. The screenshots aren’t enough for the judge to “make a meaningful comparison sufficient to support the ‘extraordinary and drastic’ relief that plaintiff seeks.” She explains why test buys are needed to satisfy the Egyptian Goddess standard:

any existing differences between the products sold by defendants and those sold by plaintiff are of paramount importance. In this context, particularly given that plaintiff asserts design patent claims against 100 separate defendants, the Court is unable to determine from screenshots alone that plaintiff has satisfied the ordinary observer test and is likely to succeed on its design patent claim against each of the 100 defendants.

Click on image to play the GIF

In a footnote, she adds some lemon juice to the paper cut: “The position in which plaintiff finds itself is a self-inflicted wound. Plaintiff made a conscious choice to cancel each of the orders it placed, thus depriving the Court of the ability to meaningfully compare the products.”

#TestBuysOrBust.

With respect to the copyright claim, the plaintiff claims copyrights in the marketing photos. However, due to the high volume of defendants, the case preparation appears suspect: “plaintiff’s exhibits reflect that 22 of the 100 defendants have not violated plaintiff’s copyright.” These errors are enough to inhibit the judge from granting any requested copyright relief.

In a footnote, she adds: “if the plaintiff’s concern was truly in protecting their copyright, the Digital Millenium Copyright Act contemplates that copyright holders may enforce their copyright directly through service providers like Amazon.” I’m not sure we should fully celebrate the DMCA’s remedial powers here, but the DMCA’s notice-and-takedown option highlights what the plaintiff is trying to do here. Is the plaintiff trying to stop the sale of infringing items, or is it running a trolling campaign? The SAD Scheme is a widely preferred tool of choice for the latter; DMCA takedowns, not so much.

Judge Buchwald also questions the standard SAD Scheme argument for joinder. She points out that “the fact that plaintiff placed 99 separate orders to the same address in Manhattan undercuts the idea that defendants are related because the use of a single purchasing address would have placed defendants on notice that litigation was forthcoming.” This assumes that the order details reach the defendants even if the orders are canceled–I’m not sure if that’s true. In any case, the judge doesn’t act on her joinder concerns yet, but it seems like that will be a hurdle for the plaintiff.

Plaintiff’s TRO request denied.

I didn’t check to see if this is Judge Buchwald’s first SAD Scheme case, but either way, her strong and negative reactions to the scheme are commendable and, I hope, persuasive to her judicial colleagues.

Case Citation: CJB Global Imports, Ltd. v. Schedule A Defendants, 2026 WL 2517616 (S.D.N.Y. August 26, 2026).

* * *

BONUS: The Galleon Guild, Ltd. v. Schedule A Defendants, 2026 WL 2495610 (S.D. Fla. July 17, 2026). As usual, the court initially granted the SAD Scheme plaintiff’s requested ex parte TRO and allowed email service, followed by preliminary injunctions. Then, the case got reassigned to a new judge (Judge K. Michael Moore), and the plaintiff’s good times stopped.

The new judge inquired about jurisdiction, and the plaintiff’s answers sucked. First, the court rejects the “on information and belief” framing for the plaintiff’s fact claims, saying that a judge:

need not accept allegations made on information and belief where there is insufficient factual support to make those allegations plausible rather than just conclusory. Given that Plaintiff’s Complaint is largely full of the sort of generalized, form allegations that appear in many Schedule A complaints, the Court is not inclined to give credence to allegations made on information and belief

Second, the judge isn’t impressed with the plaintiff’s standard presentation of evidence by screenshots: “Plaintiff provides screenshots of order screens (which show orders that were not actually placed, let alone shipped into Florida) showing only that it seemed possible to place orders with Defendants that would ship to Florida.” Instead, to satisfy the Florida long-arm statute, the plaintiff must show that the defendant “actually sells trademark-infringing goods to Florida residents through his website.” #TestBuysOrBust.

The court reinforces that evidence of sales in Florida also may be required to satisfy Constitutional due process: “Where a defendant has merely existed on a website and has not consummated a sale into Florida, or even tried making a sale into Florida, there is no personal jurisdiction….[the court] is not holding a single sale into Florida would be sufficient to confer personal jurisdiction, only that Plaintiff has not plausibly alleged such a sale has occurred.”

While this case has reached its logical denouement, remember that the plaintiff long ago got the ex parte TRO, alternative service, and a preliminary injunction. In other words, a case that the court lacked jurisdiction to hear nevertheless caused a whole lot of judicially authorized damage anyway.

Prior Blog Posts on the SAD Scheme

• Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi
• Federal Circuit Rebuffs SAD Scheme Plaintiff–Shenzhen Jisu v. Annex A Defendants
• Court Rebuffs Emojico’s SAD Scheme TRO Request
• Seventh Circuit Limits Email Service to Chinese SAD Scheme Defendants–Kangol v. Hangzhou Silk
• SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants
• Judge Shopping & Schedule A (Guest Blog Post)
• SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei
• SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants
• A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants
• New Article Alert: “SAD Scheme Standing Orders”
• Greer Burns Law Firm Sanctioned for “Willfully Abusive” and “Egregious” SAD Scheme Judge-Shopping
• Schedule A: Ten Notable Developments in 2025 (Guest Blog Post)
• Second Circuit Rejects Email Service on Chinese Defendants in Baby Shark SAD Scheme Case
• 11th Circuit Sidesteps the SAD Scheme’s Problems–Ain Jeem v. Schedule A
• Another Shill Article Tries to Normalize the SAD Scheme
• Court Sanctions Plaintiff’s Lawyer for Unverified Claims That the Defendant Was Hiding–Guangzhou Youlan Technology Co. Ltd. v. Onbrill World
• SAD Scheme Cases Are a Cesspool of IP Owner Overreaches–Nike v. Quanzhou Yiyi Shoe Industry
• District of New Jersey Adopts SAD Scheme Standing Order
• Court “Sanctions” SAD Scheme Judge Shopping—Crimpit v. Schedule A Defendants
• Chicago-Kent SAD Scheme Symposium TOMORROW
• Amicus Brief Urges Seventh Circuit to Award Attorneys’ Fees in SAD Scheme Case–Louis Poulsen v. Lightzey
• Court Rejects Schedule A Claims Against Sellers of Compatible Parts/Accessories (Cross-Post)
• Judge Kness: the SAD Scheme “Should No Longer Be Perpetuated in Its Present Form”–Eicher Motors v. Schedule A Defendants
• SAD Scheme Lawyers Sanctioned for Judge-Shopping–Dongguan Deego v. Schedule A
• Judge Ranjan Cracks Down on SAD Scheme Cases
• Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo
• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post New York Judge Shuts Down a SAD Scheme TRO Request–CJB Global v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

“Grok, is it bad when TOS formation fails?”

“Grok, what are best practices for TOS formation and does our current TOS formation process satisfy those?”

* * *

The plaintiff claims Grok “disclosed private and confidential information.” Grok sought to transfer the case to N.D. Tex. per its TOS forum selection clause. Everyone agrees the case should transfer if the TOS was properly formed. It was not.

The Wrap Taxonomy

Here is the applicable TOS formation screen at account signup. Everyone agrees this is a sign-in-wrap.

Here is the screenshot when Grok users submit queries:

The court says the chat screen is closest to a sign-in-wrap as well.

Thus, the court follows the now-standard Chabolla framework for reviewing sign-in-wraps.

Transaction Context

Unhelpfully, the parties obviously didn’t think this factor was important:

the Parties devote little space to addressing the transactional context at play here. Defendant offers one sentence in a footnote in its reply brief, citing to Oberstein and contending that “signing up for an account is the type of transaction that contemplates an ongoing relationship.” Plaintiff does not discuss this issue.

This raises another question for Grok: “Grok: is it good when a litigant fails to provide advocacy for one of the elements the court will analyze?”

The court says the plaintiff should have assumed there were applicable terms:

The first factor is that, although an account is “not required” to use Grok, Plaintiff chose to make one anyway. The second is that, after making that account, Plaintiff used Grok repeatedly “throughout 2025 and 2026” to “enter[] queries related to sensitive information about finances, investment strategy, private health conditions, business projects, and other private information.” In the Court’s view, a user who affirmatively chooses to make an account when doing so is optional and recurrently uses the corresponding web service should reasonably contemplate “some sort of continuing relationship” accompanied by terms and conditions. That Plaintiff used Grok to discuss sensitive personal information also weighs in favor of the notice requirement.

From my perspective, anyone who voluntarily chooses to use Grok extensively has placed themselves into a caveat emptor situation. It’s like the Farmer and the Snake parable.

Reasonable Notice on the Sign-Up Screen

The court then turns to the visibility of the TOS offer language, starting first with the sign-up screen. The court says there is a visual discontinuity between the TOS offer and the acceptance buttons:

although a reasonable user is presented with four sign-up methods, he ultimately selects only one. Having made that selection, the other sign-up options necessarily become “superfluous.” Even if a user chose the sign-up option closest to the bottom of the webpage (the option to “Sign up with Google”), Defendant’s contention that the notice is “positioned immediately below” is still incorrect. The language that is directly below the “Sign up with Google” button reads: “Already have an account? Sign in[.]” A reasonable user who is on Defendant’s sign-up page to sign up for a Grok account, which is how Defendant contends Plaintiff agreed to its terms, would likely see that text and read no further because, by definition, it does not pertain to him

The court is doing some tricky but important work here. Basically, she’s saying that once a user encounters language that isn’t applicable to them, they will stop reading and proceed. So here the “Already have an account? Sign in” language acts as a visual barrier that moots everything below it for a user who is signing up for the first time. Perhaps if the TOS offer language were closer to the buttons and more prominent, it could have overcome that visual barrier. But putting the language above the sign-up buttons would have avoided this limitation. (Or, better yet, two clicks).

The court doesn’t like the TOS offer language presentation either:

The contrast between the white hyperlink and the black background is notable, but it says nothing of the contrast between the hyperlink and the text immediately adjacent to it….the difference between light gray and white is a matter of degree and hardly one that maximizes visibility. Moreover, any distinction that this color variation provides is offset by the fact that other non-clickable text such as the “Create your account” heading is also in white…. the single colorful feature—the multi-colored Google logo on the “Sign up with Google” button—is near the center of the screen, likely drawing a reasonable user’s attention more than the monochromatic notice text at the bottom of the page does

I guess the judge doesn’t love monochromatic screens as much as Musk does?

The court summarizes:

Although the transactional context suggests that Plaintiff should have expected to be bound by contractual terms, the Court finds that the sign-up screen notice is not reasonably conspicuous because of “the notice’s distance from relevant action items, its placement outside of the user’s natural flow, and its font—notably timid in both size and color.”

I’m still waiting for courts to clarify what the “user’s natural flow” means. It brings to mind the great Dave Mason song (RIP).

Chat Screen TOS Formation

The chat screen formation evaluation doesn’t fare any better (and maybe a little worse?):

it is patently untrue that the notice is “directly beneath the query box.” Nothing is directly beneath the query box except a lot of empty space. Moreover, the query box is the only action item on the chat page, and as such a user’s “most obvious and natural next step” is to input text into that box. Because the query box is on the top third of the page and no additional graphics or text give the user any reason to look beyond it, the notice at the bottom of the website is “buried” beyond “the periphery” of where a user would be looking.

A “lot of empty space” “buries” the TOS offer language.

The court also noticed the lack of underlining to signal the link: “The only factor distinguishing the hyperlinked text and the adjacent text is the font color, and, as the Court noted, white and light gray are not “contrasting font colors.””

X pointed to a long list of court cases upholding its TOS formation. The court says there were factual differences in all of those cases. I imagine this will be contested on appeal.

Implications

One more question for Grok: “Grok, after reading this opinion, please suggest the six most important changes we should make to increase the likelihood of TOS formation.” The list would be trivially easy to implement; and there’s no reason Grok waited this long to figure it out.

This opinion is a good example of how Chabolla expedites the TOS formation failure in screens like this. This implementation was possibly marginally passable pre-Chabolla. Now, in my opinion, it’s clearly deficient, but in easily avoidable ways.

Case Citation: Skaggs v. X.ai, LLC, 2026 WL 2352969 (N.D. Cal. August 13, 2026). Defense counsel in this case is Kenneth Michael Trujillo-Jamison, Willenken LLP.

* * *

BONUS: Trimble v Entrata, Inc., No. 25-1975 (4th Cir. Aug 11, 2026).

This case involves the RentalPortal service, which allows tenants to pay their rent but charges a convenience fee for the pleasure of doing so. It sounds like RentalPortal used a clickwrap: “Although users could not finalize their rent payments until they had checked the box indicating their agreement to the Terms, they were not required to click on, scroll through, or otherwise actually review the hyperlinked Terms.”

Tenants sued for the convenience fee collection. RentalPortal moved to send the case to arbitration. TOS formation isn’t at issue. Instead, the plaintiffs challenge consideration.

In an echo from Harris v. Blockbuster from 2009 and the more recent Johnson case, a majority of the panel (over a dissent by Judge Rushing) says the arbitration clause is illusory because “Appellant’s Terms include a Change Clause that expressly gives it the unfettered discretion to unilaterally modify the arbitration agreement without any meaningful limitation.”

The change clause reads:

At [ResidentPortal], [users] are bound by the version of this Agreement that is in effect on the date of [the user’s] visit. This Agreement may change from time to time, so please review it when you visit [ResidentPortal].

The majority says:

Under a plain reading, a person who visits ResidentPortal is automatically bound by the Change Clause the moment ResidentPortal is accessed. The fact that users must click the assent button as part of the user interface in order to make rental payments does not alter the fact that any user paying rent is already bound by any modified terms merely by visiting ResidentPortal in the first instance. We have repeatedly held this type of “change in terms” clause to constitute an illusory promise under Maryland law….

there is no language in the Change Clause here requiring Appellant to provide its users with notice before or even after modifying the terms….

the Notices Clause states that any notices Appellant chooses to provide will be posted to ResidentPortal. But it also provides that the Terms automatically apply if and when Appellee visits ResidentPortal. So, there was no way for Appellee to receive notice of modifications or review them without automatically assenting to them. Therefore, the purported ability of Appellee to opt out of accessing the website and thereby decline the modified terms is illusory because it exists solely at Appellant’s pleasure…

it is entirely in Appellant’s discretion to modify the Terms, and the only restriction on that authority is Appellee’s choice to access ResidentPortal to pay her rent — which is no choice at all, as she is automatically bound by the version of the Terms posted the moment she accesses the website, even though at the time she accesses it, she would not know whether there is any posted notice of new Terms.

The majority concludes:

because the Terms here “allow[ed] [Appellant] to escape all of its contractual obligations at will” and did not provide Appellee with effective notice of any modifications, the agreement to arbitrate here is precisely the type of promise we have previously found to be illusory under Maryland law

Arbitration denied.

Given what we learned in Harris v. Blockbuster 17 years ago, it’s incredible that in 2026 we’re seeing these kinds of TOS amendment implementations. Any TOS amendment clause that purports to permit TOS amendments without actual notice to the users is a toxic provision for the entire TOS. Here, RentalPortal can easily form a new contract through a clickwrap each time the user pays rent, so this outcome was incredibly easy to avoid.

The post Grok’s TOS Formation Failed–Skaggs v. X.ai appeared first on Technology & Marketing Law Blog.