The court starts out: “Plaintiff’s pursuit of a preliminary injunction in this “Schedule A” patent infringement suit fizzled out after plaintiff abandoned its appeal of my order denying that relief.” The bond amount was $10k. One of the restrained defendants sought damages out of the bond.

The defendant claimed $94k of damages due to the TRO. The court said the evidence supporting the $94k wasn’t adequate.

As a plan B, the defendant sought the $10k bond. A subsequent defense affidavit cured some of the court’s initial evidentiary objections.

The plaintiff objected to the defendant’s evidence as “self-serving.” Say what?? Every litigant provides self-serving evidence–including the plaintiff’s “self-serving” allegations when it requested–and received–the improperly granted TRO. By design, the adversarial system of adjudication expects each side to tell their best story and discredit the other side’s best story. That system breaks down when proceedings are ex parte, like the TRO the court ordered, because the plaintiff’s self-serving statements can go unchecked. So it’s WILD for a SAD Scheme plaintiff to object that a *defendant’s* filing is self-serving. As the Genie said in Aladdin:

With the defendant’s additional evidence, the court awards the $10k bond to the defendant. While that amount probably doesn’t fully compensate the defendant for its losses, the defendant still got more justice than most SAD Scheme defendants get.

I’m blogging this incident because it raises an obvious question: how do, and should, courts determine the amount of bonds that SAD Scheme plaintiffs must post to support their TRO requests? I am not aware of any bond-setting formula that courts have adopted to calculate optimal bond rates. (If you are aware of any literature on this point, I’d appreciate the referral). As a result, courts seemingly set completely arbitrary bond amounts. Of course, the defense can’t request higher bond amounts in ex parte proceedings, so the court has no idea how much harm any defendant could suffer from the TRO.

In my study of SAD Scheme judicial standing orders, I noted that “As of December 29, 2025, the web pages of Judges Alonso, Durkin, and Valderrama (all N.D. Ill.) specify a presumptive bond amount of $1,000 per SAD Scheme defendant.” As the dollars at issue in this case suggests, that amount is almost certainly too little, perhaps by one or even two orders of magnitude.

Judges have the discretion to set higher bond amounts in SAD Scheme cases. To avoid outcomes like this case, I hope they will assert that discretion more aggressively. As a fallback plan, they should be more open to scrutinizing the plaintiff’s possible bad faith in requesting the TRO, so that a too-small bond amount doesn’t improperly cap the defendant’s damages.

Case Citation: Bright Head, LLC v. Schedule A Defendants, 1:24-cv-13410 (N.D. Ill. April 6, 2026). #StopTheSADScheme

The post SAD Scheme Defendant Gets Damages Payout from the Bond–Bright Head v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

In a split opinion, a majority says this TOS formation failed:

Zeus chose to bury the page containing that agreement behind a hyperlink that itself was written in small, gray text that Tejon did not have to click. This text was located beneath large, red action buttons that Tejon did have to click. Was the hyperlink text enough to put Tejon on notice that clicking on the large, red buttons would subject him to binding arbitration? We find that it was not.

* * *

As usual, the majority starts with the wrap taxonomy. The majority says that there are only two wrap options: clickwrap or browsewrap. I wish there were zero nodes on the wrap taxonomy, but if we’re going to have a taxonomy, two nodes is too few to capture the diversity of TOS formation practices. Importantly, the majority doesn’t leave room to categorize the screen as a “sign-in-wrap,” which is how I think it would be how other circuits characterize it.

With only two choices, the majority says this TOS formation process is a “browsewrap.” (The dissent says the “parties agree that Zeus’s subscription page is a browsewrap agreement,” so the problem may lie in Florida/11th Circuit law forcing the binary choice). Once that wrap characterization is made, it’s pretty well accepted that browsewraps aren’t enforceable. In practice, the majority closely followed the Berman opinion from California, which was a sign-in-wrap opinion, and the majority had many other sign-in-wrap precedents to consider if it went looking. #EndTheWrapTaxonomy.

Despite the wrap tangent, the majority proceeds with the standard approach of reviewing whether the TOS disclosure was sufficiently conspicuous. The majority says no.

• “Zeus placed [the hyperlink] beneath two large, red action buttons that were prominently featured at the center of the page.”
• “Zeus’s terms of service hyperlink is printed in a small font on the bottom half of the page. It is easy to overlook given the larger font sizes and bolder colors of other elements on the page.”
• “all the text below the red action buttons, including the hyperlinked terms, appears in a dim, gray color.” The “dim” color phrase reminds me of the Chabolla reference to “timid” fonts.
• The underlined text was indistinguishable from the other text, and “Zeus’s hyperlink is not highlighted in a different color and is not in all capital letters.” CAPITAL LETTERS…SERIOUSLY?
• “Zeus’s terms of service notice simply does not say anything about arbitration. It would have been simple enough for Zeus to state plainly that clicking on one of the red buttons would subject any dispute between the user and Zeus to binding arbitration….Zeus chose instead to place the provision on a separate terms of service page. Having made that choice, it was required to design its website to ensure that a reasonable user would know to click to view the terms of service page, and it failed to do so.” Ugh, I’ve complained many times about this problem with layered notice. A court can always second-guess that the layered notice should have included the thing that is being contested by the plaintiff. This makes layered notices impossible because the top layer has to reference every possibly challengable term, which is all of them.

Notice that the majority doesn’t engage with the transaction context, another key part of the Ninth Circuit Chabolla/Godun tests. In general, the Ninth Circuit presumes that consumers signing up for a subscription will expect terms to govern their ongoing relationship. The majority doesn’t consider that possibility.

The majority summarizes:

None of the things that we have discussed—location on the page, font size, contrasting color, capital letters, underlining, informational content, and so forth—is individually required to pass a conspicuousness assessment. The point of these design elements is to place a reasonably prudent internet user on notice of the agreement at issue. The internet site owner may utilize some combination of these elements, or perhaps something else entirely, to bring attention to the agreement. Even better, the owner could use a clickwrap agreement. But Zeus chose to do none of this.

Judge Branch, a TAFS judge, dissented. She says the “hyperlink was centrally positioned directly beneath the action buttons, where the user’s attention is easily drawn; colored in light gray to contrast with the black background; underlined; appeared the same size as most of the text on the page; and set apart from a block of text below. A reasonably prudent person would not have missed it.”

(As usual, there was zero empirical support from either the majority or dissent for any assessment of what a reasonable consumer would think).

* * *

This ruling brings to mind the lament of Judge Bybee in the Chabolla decision: “Our decision today will drive websites to the only safe harbors available to them, the clickwrap or scrollwrap agreements.” You’ve been warned (repeatedly).

Case Citation: Tejon v. Zeus Networks, LLC, Case No. 24-11114 (11th Cir. May 1, 2026)

BONUS: U.S. v. Blocker, No. 25-1536 (7th Cir. May 5, 2026)

the fact that a contract is lengthy and poorly understood does not justify reading it with a thumb on the scale. The language of this contract unambiguously permits Dropbox to scan all files at its option and reveal the contents for five specified purposes—and Blocker does not deny that, having discovered child porn, one or more of these purposes applies.

The post 11th Circuit Rejects TOS Formation–Tejon v. Zeus appeared first on Technology & Marketing Law Blog.

The court contextualizes the case:

Intellectual property lawsuits like this one have flooded the Northern District of Illinois. In a typical case, the IP holder files trademark or copyright infringement claims against multiple foreign merchants selling goods on e-commerce platforms like Amazon or Etsy. The plaintiff joins the defendants in a single lawsuit, identifying them in a sealed document attached to the complaint as “Schedule A,” a practice that gives this increasingly common and controversial form of litigation its name. Before defendants are served, a Schedule A plaintiff seeks an emergency temporary restraining order, prejudgment restraint on the defendants’ assets, and electronic service of process, all ex parte. Often, defendants never respond or stop participating in litigation, so the district court must enter default and award statutory damages to the plaintiff with little or no information about the extent of the infringement.

This case follows much of the typical Schedule A playbook. Since 2017, China-based Huajie has sold clothing under the “bellelily” trademark on the website www.bellelily.com. In 2021, Leyibei, also based in China, began selling similar clothing on its similarly named website, www.bellelliy.com. (The “I” and an “L” are transposed in the two names.)

The panel clearly knows about the SAD Scheme, even though it hasn’t heard many appeals yet. For example, the judges already know that SAD Scheme cases are “flooding” the court system and are “controversial.”

Note that this case involves two Chinese litigants fighting in U.S. courts. That is a thing nowadays. Apparently, the Chinese vendors have adopted the philosophy “if you can’t beat ’em, join ’em.” The SAD Scheme gives them another tool to attack their competition. On the plus side, I guess the U.S. is exporting its litigation norms to foreigners. On the minus side, foreign competitor-on-competitor litigation sometimes has nothing to do with protecting U.S. consumers from harmful “counterfeits.” As the stereotype goes, the Chinese are skilled at copying U.S. innovations, and I guess the copiable innovations include the SAD Scheme.

Unlike many SAD Scheme cases, the defendant initially showed up to contest this lawsuit. However, by the time the rightsowner requested summary judgment, the defendant stopped participating.

As a result, the defendant defaulted, and the rightsowner submitted a proposed final judgment. The rightsowner’s proposed order was “barebones” and didn’t justify the rightsowner’s damages request. As a result, the lower court judge issued a final judgment that said the defendant’s infringement was willful and approved an injunction. However, instead of the rightsowner’s requested damages of $2M for willful trademark counterfeiting and $100k for cybersquatting, the district court–without explaining the decision–only awarded the mininum damages for each claim, i.e., $1k each claim, for a total of $2k. DOINK.

The rightsowner appealed the district court’s minimum damages award to the Seventh Circuit. The defendant didn’t show up to contest the appeal, so the rightsowner’s advocacy was completely unrebutted. And yet…the rightsowner still found a way to lose. DOINK AGAIN.

The per curiam opinion summarizes: “it may be better practice for district courts to briefly explain their reasoning in cases like this, but we decline to give Huajie a second bite at the apple.”

The opinion explains:

Huajie failed to offer evidence or arguments in favor of maximum damages, so the district court did not err by failing to offer a robust explanation of its ruling. Huajie argues that the district court should have circled back to its motion for summary judgment to search for support for its damages award. But it was Huajie’s job to make its case for maximum damages on default to the district court, not the court’s job to search through the record for support…

After the district court entered default, Huajie needed to offer evidence and arguments in support of the damages award. But…its proposed order, unaccompanied by any contemporaneously filed motion for entry of default judgment, lacked any rationale to support the maximum award. Although Huajie sought maximum statutory damages in its earlier motion for summary judgment—arguing that only a substantial award could compensate it for its losses and deter future misconduct—it failed to direct the court to those earlier arguments. So Huajie invited the consequence of which it now complains…

we affirm on a basis obvious from the record: nothing immediately available to the district court was adequate to support a $2 million award.

Because Huajie failed to establish its entitlement to the considerable damages it requested, we uphold the district court’s award of minimum statutory damages. We also take this opportunity to remind litigants that the race is not over after the entry of default. A plaintiff with a default in hand still must support a request for damages with evidence and argument.

Judge Pryor dissents in an opinion that recaps a lot of the same material as the per curiam opinion, suggesting that Judge Pryor hoped to write the majority opinion. She says there’s not enough substance in the district court’s judgment to permit the appellate court to evaluate if the district court judge exercised his discretion properly:

The [district court’s] order does not explain how and why the district court landed on its statutory damages award for willful trademark infringement ($1,000) or cybersquatting ($1,000), and nothing else in the record provides any hints. There’s simply no indication the district court exercised its discretion…

a district court must provide some explanation to support its exercise of discretion in fashioning an award of damages to satisfy due process and facilitate appellate review, even in Schedule A litigation regarding statutory damages

For that reason, Judge Pryor would have remanded the case so the lower court judge could explain the damages amounts.

Created by ChatGPT April 2026

I hear the point raised by Judge Pryor. Judicial rulings without explanations leave everyone scratching their head and stymie appellate review. For example, you may recall the avoidable drama created when the Fifth Circuit lifted the stay on Texas’ Social Media Censorship Act without issuing an opinion, making it virtually impossible to challenge at the Supreme Court. (The Supreme Court eventually eviscerated that law). However, in this case, the per curiam opinion persuasively explained that “Huajie invited the consequence of which it now complains” and doesn’t deserve a second bite at the apple.

When the dust settled, the rightsowner walks away with a whopping $2k in damages from this defendant, which is surely a substantial financial loss in light of the appeal costs. However, it also got an injunction, which may or may not be valuable.

* * *

It’s a bummer the Seventh Circuit once again didn’t substantively address the overall viability of the SAD Scheme. As I’ve repeatedly complained, the merits of SAD Scheme cases will rarely reach the appellate courts. The appellate courts’ silence helps the scheme persist.

At the heart of this appeal are two interrelated issues:

1) The rightsowner cut corners on its advocacy, not supporting its proposed final judgment with a rationale that the judge could rely on, and

2) The lower court judge (Judge Seeger, a savvy judge about SAD Scheme abuses) cut corners on issuing the final judgment. This might be the result of the extreme workloads that SAD Scheme cases impose on judges and/or the rightowner’s weak advocacy.

In my opinion, it’s always noteworthy when a plaintiff loses unopposed cases, because they are almost certain to win if they simply make a proper showing of their legal rights. Each time I wonder how they blew the layup.

Case Citation: Shenzhen Huajie Technology Co., Ltd. v. Shenzhen Leyibei Technology Co., Ltd., No. 25-2659 (7th Cir. April 29, 2026). The rightsowner’s lawyers were Adam Edward Urbanczyk and Brian M. Swift of AU LLC.

The post SAD Scheme Plaintiff Gets Default Win But Blows the Layup on Damages–Shenzen Huajie v. Shenzen Leyibei appeared first on Technology & Marketing Law Blog.

This case is a different lawsuit against Classpass, this time over unredeemable Classpass credits. Despite the unmistakable message from the Ninth Circuit that TOS formation screens should be reviewed exactingly, Judge Orrick of the N.D. Cal. district seems to be living in the past. He surprisingly holds that Classpass successfully formed its TOS and sends the case to arbitration. Why did Classpass succeed here when it failed last year at the Ninth Circuit? (If you expect a logical and sensible answer to that question, you must be new to the blog).

* * *

The named plaintiff, Blackburn, navigated through three relevant TOS formation screens. The opinion never precisely identifies which one successfully formed the TOS. It seems like all three did?

(The TOS contained an arbitration clause that everyone agrees applies to this lawsuit if the TOS was properly formed).

Blackburn created her Classpass account in 2019 by navigating this screen and choosing the option to continue with her Facebook credentials (the 2019 Sign Up Screen):

A few days later, in the next screen, she acquired her subscription membership through Classpass’ refer-a-friend program (which entitled her to additional credits) (the 2019 Checkout Screen):

In 2023, Blackburn reactivated her Classpass membership by navigating this screen (the 2023 Reactivation Checkout Screen):

Everyone seems to accept the court’s characterization that all three screens are “sign-in-wraps.” That turns us over to the now-familiar three-part test for evaluating sign-in-wrap formation.

Element 1: Reasonably Conspicuous Notice

Blackburn challenged the 2019 Login Screen’s visibility on three grounds:

• It was part of a 5-screen signup sequence. The court responds “the screens are not cluttered and follow a logical flow.”
• The TOS offer was the smallest font size on the screen. The court says it was the same size as other fonts on the screen.
• The TOS offer language was below the “Continue with Facebook” button she clicked. The court says “the “Terms of Use” is bolded, underlined, and in traditional hyperlink blue. That offsets any real concern that a reasonably prudent Internet user would not know or be aware that those hyperlinks existed just below the “Continue with Facebook” button.”

The court is also OK with the 2019 Checkout Screen visibility. The court acknowledges the TOS offer language in grey font, but says the:

text is still visually set apart from the other font that appears on the screen, despite the fact that it does not appear in blue font….

the hyperlinks are denoted by a bolded light grey font and underline, sufficiently contrasting the white background. Further, the “large text block[]” to which Blackburn refers is actually a two-sentence paragraph separated in space by the one-sentence paragraph denoting the Terms of Use, which makes the presentation of the Terms of Use hyperlink even more noticeable

The court is similarly OK with the 2023 Reactivation Checkout Screen visibility:

The text referring to the Terms of Use is once again just above the commitment button, written in light grey, but bolded font, and while not denoted in traditional hyperlink blue, is set apart from the rest of the text on the screen such that its presence draws the eye. The primary difference between the 2023 Reactivation Checkout Screen and the 2019 Checkout Screen, as Blackburn points out, is that the 2023 Reactivation Checkout Screen includes a black and bolded pronouncement to the user that “you’ll automatically be charged for a full-priced monthly credit plan subscription” and includes, in blue and underlined hyperlinked font, access to information about which Fees may apply. Those decisions to add additional notice of specific terms do not take away from ClassPass’s efforts to make the Terms of Use conspicuous by setting them apart in bolded, underlined font, in a separate paragraph with font color that contrasts the white background.

Element 2: Transaction Context

The Ninth Circuit punted on this factor in Chabolla (wrongly, IMO, because it’s clearly intended to create a long-term subscription), so this court does too. This court adds: “unlike in Chabolla, Blackburn took the additional step and created a ClassPass account by logging in with her Facebook account.”

Element 3: Manifestation of Assent

“Blackburn clicked a button after being presented with a hyperlink to the Terms of Use.”

The court distinguishes Chabolla:

in Chabolla, there was no indication that a user was ever signing up. Here, at the top of the 2019 Sign Up Screen there is a heading that unambiguously reads in bold lettering: Sign up

Blackburn pointed out that in the 2019 Signup Screen, the disclosures inconsistently and ambiguously refer to both “the” TOS and “our” TOS. The court responds that the argument “makes no sense. If a user is signing up through a preexisting Facebook account, that user must have necessarily already agreed to be bound to any Terms of Use or other terms of Facebook. It is not ambiguous to a reasonable Internet user signing up for an account or membership with ClassPass, even by way of Facebook, that any newly presented Terms of Use are those of ClassPass, not Facebook.”

With respect to the 2023 Reactivation Checkout Screen, Blackburn pointed out that the TOS offer language referred to “the” button but there were two buttons below it. The court responds:

“the” in the context of the 2023 Reactivation Screen must mean “either,” because a user attempting to access the 45 free Credits can only click one button to do so, or as the 2023 Reactivation Screen denotes, “the button.”

Normally, “the” connotes a singular reference. Here, the court reads it to connote plural references.  ¯\_(ツ)_/¯

In a footnote, the court says: “I do agree with Blackburn that the 2019 Checkout Screen’s language (“By clicking the Redeem now button, I agree to the Offer Terms and Terms of Use . . .”) is curious because it leaves out whether a user who chooses to pay using G Pay is likewise bound. But a reasonable Internet user would likely understand that payment using either method would bind the user to the visibly hyperlinked Terms of Use and it is clear that Blackburn manifested assent via the 2019 Sign Up Screen and 2023 Reactivation Screen in any event.”

Implications

I view the Chabolla and Godun opinions as companion cases. They came out just a couple of months apart, and they both took highly skeptical approaches to online TOS formation. Remarkably, this court doesn’t cite Godun even once. That is a conspicuous omission.

To me, this ruling is another reminder of how TOS formation analysis has descended into Calvinball. As Judge Bybee warned in dissent in the 9th Circuit Chabolla case: “minor differences between websites will yield opposite results….That sows great uncertainty in this area.” Here, comparing this lawsuit to Chabolla, we have the exact same defendant and similar formation processes from around the same historical time period, yet Classpass gets TOS formation when the Ninth Circuit denied it last year. The outcome appears to flip based on tiny differences.

I will also note how many of the court’s assessments turn fundamentally on consumer expectations, except the court doesn’t cite a shred of empirical evidence about what consumers think. The missing empiricism plays a major role in the Calvinball phenomenon.

If the court had been inclined to do so, it could have picked apart each screen and found deficiencies in each. After all, that’s what the Ninth Circuit did in its Chabolla case. Some examples:

• In the 2019 Signup Screen, the TOS offer language refers to “sign up with Facebook” and the button says “continue with Facebook.” Plus, there is a second “sign up” button lower on the screen that the court ignores even though it matches the TOS offer language. All of this may sound ticky-tack, but…in the Chabolla case, the court rejected a screen where the TOS offer said “I agree to” and the button said “redeem now,” and in the Godun case, one of the screens failed because the TOS offer said “I agree” and the button said “connect now.”
• In the 2019 Checkout Screen, the TOS offer language is stacked below a large paragraph of offer terms, and it appears to be a slightly smaller or lighter font than those. The court could say that reasonable consumers would spot it anyway, but that’s an empirical question without empirical support. Many other courts would have treated the text block as so monolithic that no sentence stood out.
• The 2023 Reactivation Confirmation Screen had the text block problem plus (as the court discussed) the imprecision of a reference to “the” button when there were two button options.

To be fair, I don’t necessarily support courts doing this degree of ticky-tack pixel policing. However, that level of exactitude drove the Chabolla and Godun decisions.

The screenshots at issue all predate the Chabolla and Godun decisions. Today, there’s no excuse for weak sign-in-wraps like this. I expect you to do better. The courts will expect that too.

As Judge Bybee said in dissent in Chabolla, “Our decision today will drive websites to the only safe harbors available to them, the clickwrap or scrollwrap agreements.” Want to opt-out of the TOS formation Calvinball? Take the certainty of clickwraps over the chaos of sign-in-wraps.

Case Citation: Blackburn v. Classpass USA Inc., 2026 WL 962734 (N.D. Cal. April 9, 2026)

The post Remember When the Ninth Circuit Rejected Classpass’ TOS Formation? About That…–Blackburn v. Classpass appeared first on Technology & Marketing Law Blog.

If this were a framed original of the trading card, the First Sale doctrine should apply. If it were a counterfeit version of the trading card, it would be an obvious legal violation. But this appears to be a photo of the trading card that’s printed. No reasonable buyer would believe this is the original trading card.

Upper Deck nevertheless seeks to enforce its IP rights in the print, both in the Michael Jordan imagery (it received via a license) and its hologram mark (the black shape in the upper left of the print–see the outline from the trademark registration). I believe the original card has actual holographic imagery in the mark’s location to reinforce the original’s authenticity. (Holograms are harder and more expensive to mimic, so they are routinely used as an anti-counterfeiting or security device). So when the reproduction lacks the holographic component of the mark, what does that signify? To me, it’s a strong signal to consumers that the copy isn’t being presented as authentic. Does that demonstrated lack of authenticity have any relevance to the trademark considerations? Unfortunately, the court doesn’t address that issue.

Trademark Dilution

The court says the hologram trademark isn’t sufficiently famous to qualify for dilution protection.

Trademark Infringement

• Mark strength. Even though the hologram mark isn’t famous, it’s a strong mark.
• Proximity of goods. Both offer sports memorabilia.
• Mark similarity. Identical.
• Actual confusion. The court presumes actual confusion from the mark’s identicality, with a bonus gratuitous shoutout to initial interest confusion because why not?
• Marketing channels. Both sell on the Internet.
• Purchaser care. An authentic Michael Jordan trading card depicted in the image above would sell for upwards of $1M. Pixels sells the reprint for $70. Purchasers will note the differences.
• Intent. “the mere existence of [Pixels’] notice-and-takedown policy does not indicate that Pixels has knowledge about the infringing use of the Upper Deck Hologram Mark in particular….Upper Deck has not indicated it attempted to take advantage of Pixels’ notice-and-takedown procedure to notify Pixels’ DMCA agent as to Pixels’ infringing use of the Upper Deck Hologram Mark.” How hard would it have been for Upper Deck to send takedown notices?
• Product line expansion. No evidence.

The court summarizes that 5 factors favor Upper Deck, 2 favor Pixels, and one is neutral. That’s enough to defeat Pixels’ summary judgment motion.

False Advertising

The opinion shifts to Upper Deck’s licensed interests in Michael Jordan’s depiction.

Standing. “a reasonable jury could find that Pixels’ use of Jordan’s likeness in its own similar products could result in a loss of sales of Upper Deck’s products and threatens Upper Deck’s commercial interests.”

False Advertising. I guess Pixels’ advertising claim is that Pixels has the right to market Michael Jordan trading cards when Upper Deck has the exclusive rights? The court says Upper Deck showed enough to survive summary judgment.

False Association. The false association analysis triggers a new round of Sleekcraft factor review, this time focused on Michael Jordan’s trademarks. The result is even more favorable to Upper Deck, so it again defeats Pixels’ summary judgment motion.

Publicity Rights

Pixels challenged Upper Deck’s exclusive right to the Michael Jordan personality. The court says the evidence provided by Upper Deck survives the summary judgment motion.

First Amendment Defense

A Rogers defense goes nowhere. Upper Deck presented “evidence that Pixels used Jordan’s Marks and/or the Upper Deck Hologram Mark in Pixels’ products featuring pictures and photographs displaying Jordan’s likeness. The pictures and photographs of Jordan displayed in Pixels’ products at issue in this action are source-identifying insofar as they contain Jordan’s Marks.”

Section 230

Pixels sought to clean up some of the state law IP and unfair competition law claims per Section 230.

In a footnote, the court acknowledges that Section 230’s IP exception applies to the federal Lanham Act claims but doesn’t apply to state IP claims.

The court summarizes: “while advertising and curating content on websites constitute publishing conduct that can be immunized under Subsection (c)(1), the sale and distribution of physical products does not.” Thus:

Pixels is entitled to Section 230 immunity where Upper Deck seeks to hold it accountable for the advertisement of allegedly infringing goods, or for creating website tools that allow users to search and view allegedly infringing goods based on images uploaded by third parties. However, Pixels is not entitled to Section 230 immunity to Upper Deck’s California state law claims where Upper Deck seeks to hold Pixels accountable for manufacturing and selling the allegedly infringing products listed for sale on its website (e.g., contracting with vendors to manufacture and ship illicit products)

As applied: “Pixels does not create the illicit images of products uploaded and displayed on its site, and Pixels’ website search engine and content filtering tools do not contribute to the creation of those products.” However, Section 230 doesn’t apply to “Pixels’ involvement in offline manufacturing or selling physical prints containing infringing images (e.g., hiring and coordinating with print and shipping vendors, facilitating product returns, offering a money-back guarantee).” It seems pretty straightforward that Section 230 wouldn’t apply to offline activities, no?

* * *

This case raises many complex issues. In addition to the hologram mark issue, this case raises questions about the scope of merchandising rights, the permissibility of displaying historical items such as old sports trading cards, print-on-demand manufacturers’ liability for vendor uploads, and more. The court mostly sidesteps all of these legal complexities. Instead, the opinion narrowly focuses on more technical aspects, such as whether the hologram mark’s shape could be infringed even when it’s being accurately displayed in historical context.

The court’s rejection of most of Pixels.com’s summary judgment motion seems to position Upper Deck’s claims for a trial, unless the parties can figure out a settlement beforehand.

Case Citation: The Upper Deck Co. v. Pixels.com LLC, 2026 WL 776227 (S.D. Cal. March 19, 2026). This is an amended version of the opinion issued on March 6. As the court explains in the first footnote, the prior opinion had errors that the court needed to correct.

Related posts

* DMCA 512(c) Helps Redbubble Defeats Copyright Lawsuit–Wallshoppe v. Redbubble
* Print-on-Demand Service Defeats Fish Illustrator’s Copyright Claim–Tomelleri v. Sunfrog
* Print-on-Demand Services Face More Legal Woes–Canvasfish v. Pixels
* Atari’s Lawsuit Against a Print-on-Demand Service Fizzles Out–Atari v. Printify
* Ninth Circuit Highlights the Messy Law of Contributory Trademark Infringement Online–YYGM v. RedBubble
* RedBubble Gets Another Favorable Ruling–YZ Productions v. RedBubble
* IP Lawsuits Against Print-on-Demand Vendors Continue to Vex the Courts–OSU v. Redbubble & More
* Another Tough Ruling for Print-on-Demand Vendors–Sid Avery v. Pixels
* Print-on-Demand Vendor Doesn’t Qualify for DMCA Safe Harbor–Feingold v. RageOn
* CreateSpace Isn’t Liable for Publishing Allegedly Infringing Uploaded Book–King v. Amazon
* More Evidence That Print-on-Demand Vendors May Be Doomed–Greg Young Publishing v. Zazzle
* Section 230 Doesn’t Protect Print-on-Demand Vendor–Atari v. Sunfrog
* Online Marketplace Defeats Trademark Suit Because It’s Not the “Seller”–OSU v. Redbubble
* Zazzle Loses Copyright Jury Verdict, and That’s Bad News for Print-on-Demand Publishers–Greg Young Publishing v. Zazzle
* Trademark Injunction Issued Against Print-on-Demand Website–Harley Davidson v. SunFrog
* DMCA Safe Harbor Doesn’t Protect Zazzle’s Printing of Physical Items–Greg Young Publishing v. Zazzle
* CafePress May Not Qualify For 512 Safe Harbor – Gardner v. CafePress
* Cafepress Suffers Potentially Significant Trademark Loss for Users’ Uploaded Designs
* Life May Be “Rad,” But This Trademark Lawsuit Isn’t–Williams v. CafePress.com
* Print-on-Demand “Publisher” Isn’t Liable for Book Contents–Sandler v. Calcagni
* Griper Selling Anti-Walmart Items Through CafePress Doesn’t Infringe or Dilute–Smith v. Wal-Mart
* CaféPress Denied 230 Motion to Dismiss–Curran v. Amazon

The post What Does a Hologram Trademark Signify When the Hologram Isn’t There?–Upper Deck v. Pixels appeared first on Technology & Marketing Law Blog.

In 2024, Photobucket emailed its legacy users, asking if they wanted Photobucket to keep or delete their accounts. Users who clicked on the email’s links–included to delete their accounts–were presented with a new TOS formation process that included a consent to use the photos to derive users’ biometric information for AI purposes. “If users did not opt out of the Biometric Policy within 45 days of July 22, 2024, Photobucket claims the right to sell, lease, trade, or otherwise profit from the users’ biometric information.” (Photobucket claims it hasn’t actually pursued this AI option). The new TOS also contained an arbitration provision that wasn’t in some prior TOS versions. Photobucket invokes the arbitration clause against the plaintiffs’ lawsuit.

Article III Standing. The court says the plaintiffs only have Article III standing for equitable relief, not damages. This narrows the case substantially.

Pierce

Pierce agreed to Photobucket’s 2008 TOS and last logged into Photobucket in 2014. The 2008 TOS informed Pierce that his “continued use” of Photobucket would constitute acceptance to any TOS modifications. Since he didn’t use the site after 2014, he didn’t assent-by-use to the 2024 TOS:

a reasonable person would not understand his failure to take his photos off of
Photobucket, after not logging in for nearly ten years, to constitute “continued use” and thus acceptance of any revised terms.

In other words, a user’s maintenance of a legacy account isn’t “continued use” of the service.

Ms. Hughes

Ms. Hughes agreed to Photobucket’s 2006 TOS and last logged into Photobucket no later than 2011. The 2006 TOS said:

By using the Services you agree to the Terms of Service set forth below as they may be updated from time to time by Photobucket.com, Inc. (“Photobucket.com”). Photobucket.com may modify or terminate the Services from time to time, for any reason, and without notice, including the right to terminate with or without notice, without liability to you, any other user or any third party, provided that when Photobucket.com does so, it will update these Terms of Service. You are advised to periodically check the website for changes in the Terms of Service.

The court says this TOS “told Ms. Hughes that she was “advised to periodically check the website for changes in the Terms of Service.” The 2006 Terms “necessarily inform[ ] how a reasonably prudent user would interact” with Photobucket’s website.”

But…the TOS applicable to Pierce said “It is therefore important that you review this Agreement regularly to ensure you are updated as to any changes.” The court disregarded that language for Pierce. Can you find a difference between the disclosures to Pierce and Hughes? Beyond the (seemingly immaterial) language differences, the court’s different conclusions might be explained by (1) Pierce was governed by Colorado law, Hughes by CA law; or (2) Hughes admitted getting emails telling her about the coming changes, though she didn’t pay attention to them. I don’t find those distinctions persuasive, so I can’t meaningfully distinguish Pierce’s situation from Ms. Hughes’.

The court says Hughes is bound to the 2024 TOS:

the 2006 Terms told Ms. Hughes that she had an obligation to periodically check Photobucket’s website for updates to the Terms. The 2024 Terms and arbitration provision constitute an update to the Terms that Ms. Hughes had an obligation to stay apprised of. Ms. Hughes assented to the 2024 Terms because they informed her that failure to opt out within 45 days of the effective date would constitute acceptance, and Ms. Hughes did not opt out

Whoa. The court is saying that even though Hughes functionally abandoned Photobucket in 2011, a “reasonably prudent user” would have kept checking Photobucket’s TOS 13 years later just in case the terms had changed. Wild.

Because Ms. Hughes “agreed” to the 2024 TOS, she also “agreed” to its jury trial waiver.

However, the arbitration clause excludes IP claims. The plaintiffs alleged 1202(b) claims, which the court says are IP claims and thus not covered by the arbitration provision. This claim stays in court.

Cumming

The parties can’t agree when Cumming created her Photobucket account or when she last used it, but everyone agrees that she agreed to the 2013 TOS and didn’t use the site later than 2013. That TOS version said “so long as you’ve used the Site after the change, regardless of any separate notice, you agree to the current posted version of the Terms.” Similar to the court’s discussion of Pierce, the court says “a reasonable person in Ms. Cumming’s position would not understand her failure to take photos off of Photobucket to mean that she “used” Photobucket after 2010 or 2013 and thus assented to the 2024 Terms.”

Mr. Hughes

He didn’t have a Photobucket account, but Ms. Hughes uploaded photos of him. The court says he’s not a third-party beneficiary of any TOS and not bound by the arbitration clause.

Court Stay

The court stays the litigation until after the arbitration, even though the court held that 3 of the 4 named plaintiffs were not bound by the arbitration and the fourth plaintiff had a claim not subject to arbitration. Because the court will not be bound by the arbitrator’s decisions for the non-arbitrated plaintiffs and claims, I didn’t understand why the court held everything else up. A slightly lucky break for Photobucket, because it avoids the cost of defending the litigation and arbitration simultaneously.

Implications

Here’s where things stand when the dust settled:

• damages are out of the case
• part of one plaintiff’s case is sent to arbitration
• when that’s complete, the court will address the remainder of that plaintiff’s case plus the other three plaintiffs’ cases

A messy outcome…perhaps messy enough to motivate the parties to settle? Without the availability of damages, this case became less interesting to the plaintiffs. Alternatively, I could also see the plaintiffs appealing this ruling.

Though Photobucket nominally got the outcome it wanted (the case sent to arbitration), it does not come out of this ruling looking very good. Some of the lowlights:

• its inital TOS amendment provisions sucked. It had various versions of “you need to come back to the site to check for possibly amended terms,” which has rarely fared well in court. Frankly, it’s shocking to see the judge find this “keep checking the TOS 13 years later” provision worked against Ms. Hughes. I don’t think that’s what a reasonable consumer would do. (As usual, the court cited no empirical basis for its assessment of what a reasonable consumer would do or think).
• the fact that Photobucket’s TOS amendment language kept changing over time. The language differences ensure more litigation work when it’s challenged.
• the fact that Photobucket kept changing its governing law clause. Another decision that increased its defense costs and the risk of inconsistent outcomes.
• the fact that Photobucket couldn’t definitively establish the dates of the users’ account creation or usage.
• its 2017 implosion. How did it misjudge the market so badly?
• its 2024 pivot to potentially engage in AI mining. I guess if you’ve already killed your business, why not try to salvage what’s left of the carcass?
• the attempt to bind legacy users via a TOS that users had to click through even if they wanted to exit Photobucket. Gauche.
• the arbitration provision’s exclusion for IP. Plaintiffs are weaponizing 1202, so IP carveouts have become dangerous. Reminder: every part of the arbitration provision should be carefully vetted for potential plaintiff weaponization.

The result was a messy outcome with different plaintiffs for getting different outcomes. Not what Photobucket was aiming for.

The obvious question: was there a better way for Photobucket to force all legacy users onto its new AI-friendly terms? This judge seemed to believe that the right incantation would let Photobucket put the onus on users to check for TOS amendments, but most judges won’t permit this. Could Photobucket have forced users to the new terms through its emailed notifications? The Ninth Circuit just permitted this, so maybe? The reality is that it’s difficult or impossible to universally bind all legacy users to new terms if they aren’t coming back to the website. I don’t have any clever hacks or tricks to work around this.

Case Citation: Pierce v. Photobucket Inc., 2026 WL 672764 (D. Colo. March 10, 2026). CourtListener page.

Other posts about Photobucket

• Photobucket Qualifies for the 512(c) Safe Harbor (Again)–Wolk v. Kodak
• Photo Hosting Site Gets DMCA 512 Safe Harbor–Wolk v. Photobucket

The post Photobucket’s Attempted TOS Amendment Mostly Fails–Pierce v. Photobucket appeared first on Technology & Marketing Law Blog.

However, the defendants challenged the copyright registrations, saying they incorporated third-party works. The plaintiff claimed it had the copyright owner’s permission to include those images in its works [though I didn’t see any indication that it was an exclusive license required to enforce them…? this was unclear], but the defendants claimed that the plaintiff’s evidence and timeline didn’t cohere. The court initially sided with the plaintiff, but the plaintiff later voluntarily dismissed the case entirely.

The defendants sought damages out of the bond supporting the TRO. The court says “Langmi does not dispute that Defendants were wrongfully enjoined or restrained, nor does it identify any reasons for requiring Langmi not to pay in this case,” which seems pretty dispositive.

Nevertheless, the court becomes a stickler about the defendants’ arguments on various procedural grounds, so the judge makes a series of judgment calls against the defendant and concludes that the plaintiff did not litigate in bad faith. As a result, the court limits the defendants to the $10k bond–even though the defendants showed $47k of lost profits while the TRO was in effect. Raising more procedural objections, the court also rejected the defendants’ requests for attorneys’ fees due to the plaintiff’s litigation misconduct. I imagine the defendants could request a 505 attorneys’ fee shift, but I’m skeptical this judge would grant that either given its discretionary nature.

This case highlights some common aspects of SAD Scheme cases:

• Although the SAD Scheme is pitched as a tool against Chinese defendants, increasingly we are seeing Chinese plaintiffs embrace the SAD Scheme. I guess the Chinese are learning all of the wrong lessons about how the US legal system works.
• This court set too low a bond. I’m not aware of scientific guidance about how courts should set appropriate bond levels, so this could be an area that would benefit from more academic rigor. But because the court didn’t properly structure the bond initially, it left the defendants with uncompensated damages.
• SAD Scheme plaintiffs often back down when defendants fight back. The plaintiff dropped from 36 to 8 defendants, and then, when challenged further, the plaintiff dropped the case entirely. This plaintiff pliability is often a sign that the plaintiff assumed they would get away with doing inadequate homework (as this defendant did, getting the TRO initially) because judges won’t spot all of the holes in the plaintiffs’ cases.
• Judges all too often hold defendants to stricter procedural standards than they hold plaintiffs. It seems like SAD Scheme plaintiffs can say whatever they want to get a TRO and some judges shrug their shoulders about the multitudinous corner-cutting along the way. But when defendants ask a judge to hold the SAD Scheme plaintiff accountable, all of the sudden the rule of law barrier reappers and judges repeatedly make all inferences against the defendants.

All told, the plaintiff got a TRO it almost certainly didn’t deserve, caused tens of thousands of dollars of damages to the defendants, and is only liable for paying out of its inadequate bond. Grr.

Case Citation: Shenzhen Langmi Technology Co., Ltd. v. Schedule A Defendants, 2026 WL 569072 (N.D. Ill. Feb. 26, 2026)

BONUS: In a non-precedential opinion, the Seventh Circuit rejects SAD Scheme personal jurisdiction merely based on the defendant’s product being available in Illinois, without the plaintiff doing a test buy or providing other evidence of the defendant’s sales in Illinois:

In the context of Schedule A litigation, the defendant’s operation of an online store accessible in the forum state, combined with sales in the forum state, has been found sufficient to subject that defendant to personal jurisdiction….

there’s no evidence in the record of Illinois purchases. The evidence upon which the district court relied shows only that it was possible to order the defendants’ products and have them shipped to Illinois, not that such sales took place. Those records consist of screenshots of Walmart’s website showing the checkout page with the infringing product, a Chicago shipping address, and the estimated total, but not a completed purchase….

Therefore, the district court clearly erred in finding that the defendants sold products to Illinois customers. Nor was that error harmless. Without those sales, the court’s basis for personal jurisdiction is merely that the defendants operated a website accessible in the United States. And, as we explained in Curry, more is required to establish personal jurisdiction

Liu v. Monthly, No. 25-2074 (7th Cir. March 9, 2026)

BONUS 2: Liu v. Schedule A Defendants, No. 4:25-cv-01220, 2026 BL 78756 (E.D. Tex. Mar. 09, 2026): “Federal courts thus lack authority to freeze defendants’ assets for future satisfaction of a potential judgment awarding damages for utility-patent infringement.”

The post SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

I’m a little confused by this lawsuit, because I thought Emojico had retrenched its usage of the SAD Scheme after it suffered a bad loss. I guess they are back? This time, they have a different law firm representing them (Marijan Stephan Hucke of Hucke & Sanker PLLC instead of Hughes Socol Piers Resnick & Dym).

In this case, Emojico sued 125 defendants using the SAD Scheme template. The court credits Emojico’s trademark registrations but questions Emojico’s explanation of the likelihood of consumer confusion. Emojico deployed its IP Privilege Card, saying it called the defendants “counterfeiters,” so why would it need to say more than that to establish consumer confusion? The court says…yes, you do need to say more than that…

Plaintiff makes no effort through argument or evidence to show that the products to which it affixes its trademark as a source of origin or sponsorship are substantially identical to or competitive with Defendants’ products, the sale of which Plaintiff seeks to restrain. Aside from a few conclusory lines in its memorandum in support of the temporary restraining order, it does not address the Polaroid factors at all. Plaintiff thus has not shown that it is entitled to a temporary restraining order against any of the Defendants

I’m always fascinated when rightsowners blow a shot on an open net in the form of losing a TRO request EX PARTE. It’s a bit like losing an election while running unopposed.

The court also questions joinder of the 125 defendants: “Plaintiff shall show cause by no later than March 11, 2026, why all Defendants except for the first-named one should not be dismissed from this action for misjoinder.” I have a hunch Emojico’s joinder explanations will not be any more persuasive than its other arguments.

Case Citation: Emoji Co. GmbH v. Schedule A Defendants, 2026 WL 594186 (S.D.N.Y. March 3, 2026)

The post A “But They’re ‘Counterfeiters’!” Argument Doesn’t Clinch a SAD Scheme TRO–Emojico v. Schedule A Defendants appeared first on Technology & Marketing Law Blog.

The plaintiffs claim that bad actors misused Tile’s tracking devices to stalk them. The plaintiffs (as a class action) sued Tile for how it designed and sold the trackers. Tile invoked the arbitration clause in its TOS. This sets up a complicated analysis of TOS amendment–though the panel never directly acknowledges that this is an amendment case, not a case about formation in the first instance.

Two plaintiffs agreed to Tile’s TOS in 2021 and early 2023, respectively. Those versions of the TOS contained arbitration clauses that proved ineffective. In October 2023, Tile changed the arbitration provisions to include new language. To step up its existing users to the October 2023 arbitration provisions:

In October 2023, Tile sent to all accountholders the Oct. 2023 Notice—an email with the heading “Updated Terms of Service and Privacy Policy”—advising that Tile was updating its Terms. Sent to the email address provided by accountholders during registration, the Oct. 2023 Notice contained a blue-text and bolded hyperlink to the Oct. 2023 Terms. The email told accountholders that “[i]f you continue to use any of [Life360 and Tile’s] apps, or access our websites (other than to read the new terms) on or after November 26, 2023, you are agreeing to the [Oct. 2023 Terms].”

One plaintiff said the notification email went into the spam folder, but they saw it months later when they went affirmatively looking for it. The other plaintiff said they never saw the email. Both used the Tile service after the purported TOS amendment date. The district court held that neither plaintiff was bound by the October 2023 arbitration provisions, and the arbitration provisions in the earlier TOS versions partially failed due to unconscionability. Tile appealed that ruling, hoping to send these plaintiffs to arbitration.

The Ninth Circuit holds that Tile’s email put both plaintiffs on inquiry notice of the TOS amendment.

Transaction Context. “As Tile users, each Appellee provided an email address during account registration, and should have expected to receive relevant updates there while the account was active.” This is a pretty wild claim. Many services request email addresses during account registration, and yet the initial TOS formation fails. Also, just because I provide an email address during registration doesn’t mean that I assume TOS amendments will be sent via email. That may depend on how the TOS describes the amendment process–an angle this panel remarkably ignores completely.

Reasonable Disclosure. The court says the email disclosures were good enough:

The design and content of the Oct. 2023 Notice provided reasonably conspicuous notice of the Oct. 2023 Terms because the email’s design was “clear and legible,” and it provided the updated Terms through a link with “customary design elements denoting the existence of a hyperlink.” The subject line clearly stated that Tile was updating its Terms. And the body contained a hyperlink to the Oct. 2023 Terms in bold, blue text which contrasted against the white background. Although the email did not say specifically that the arbitration agreement would be updated, reasonable notice does not require the email to discuss every revision.

“Lack of other notices.” The court says “Tile could have done more to ensure that all its users were on inquiry notice of the Oct. 2023 Terms. Tile could, for example, have interrupted users’ next visit to the Tile App with a clickwrap pop-up notice.” The court says the absence of these other notices weighs against inquiry notice.

So, did the TOS amendment work? The court makes a remarkable doctrinal move, something I don’t recall seeing before. The court treats inquiry notice as a multi-factor test and says two factors weigh in favor of notice (transaction context and reasonable disclosures) and one weighs against (lack of other notices). In other words, the two pro-formation factors prevail over the anti-formation factor. But…when did the inquiry notice standards become a multi-factor test with these three factors? This methodology is novel (and dubious). The court might have said that even if other notification procedures would have been more efficacious, the email notice was good enough. This would have reached the same outcome without this weird doctrinal move.

[Hedging its bets, the court says “we do not hold that notice by mass email establishes inquiry notice in every case”].

Manifestations of Assent

Doe unambiguously manifested assent to the Oct. 2023 Terms by downloading the Tile App in March 2024 and using the Scan and Secure feature in attempting to locate her alleged stalker’s Tile Tracker….

Broad also unambiguously manifested assent to the Oct. 2023 Terms by using the Tile App in January 2024 and periodically opening the Tile App to check location-sharing settings—including, according to Tile’s records, in April 2024.

The court treats these users’ actions as occurring after the users had “inquiry notice.” Thus, the October 2023 TOS controls, and the court sends the case to arbitration.

* * *

Consider some of the wackiest aspects of this opinion:

• the court doesn’t distinguish between TOS formation and TOS amendment.
• the court doesn’t address what Tile’s TOS said about how the TOS could be amended. Did the TOS even authorize email amendment? The TOS terms would have substantial bearing on what a reasonable consumer might have thought. [Note: The court discusses the prior TOS’s arbitration language that said Tile couldn’t materially change the arbitration provisions “unless you expressly agree to them” but treats the October 2023 as sufficient “express agreement.”]
• the court doesn’t engage many of the precedents involving attempts to form TOSes by email, especially post-transaction emails (like this one).
• the court assumes that providing an email address during account registration means that the users should assume they will be getting TOS amendment notifications via email.
• the court didn’t address the many reasons why a TOS amendment email might never reach a user, such as the user’s email address having gone defunct or server-level blocking. If the user never received the email, does the court still think they are on inquiry notice? The court also doesn’t address the implications of the email going into a folder other than the user’s primary inbox, such as showing up in the spam folder. Are users on inquiry notice for everything in their spam folder? I wonder how often the judges carefully check their spam folder…
• the court created and applied a weird multi-factor test for inquiry notice.

FWIW, the court does acknowledge that some of the underlying issues are empirical questions, but it dodges those questions by citing Sellers, which said “there is very little empirical evidence regarding” Internet users’ expectations. If the data is hard to get, I guess we don’t need it?

So, what should we make of this opinion? Is this an example of the characteristically wild-‘n’-wooly jurisprudence in the Ninth Circuit’s non-precedential cases? Or perhaps an indicator the Ninth Circuit’s TOS formation jurisprudence is a mess and there is no logical or defensible through line from case to case?

Case Citation: Ireland-Gordy v. Tile, Inc., No. 25-403 (9th Cir. March 3, 2026). The CourtListener page.

The post Ninth Circuit Allows TOS Amendment by Email–Ireland-Gordy v. Tile appeared first on Technology & Marketing Law Blog.

Here is a chart of the various TOS formation timings and modalities:

The court starts by establishing what evidence it can consider.

2015 TOS Formation Evidence. Paypal apparently doesn’t have a copy. It pointed to the Wayback Machine version but didn’t submit a screenshot of that. Arbitration denied.

2019 TOS Formation Evidence. Paypal only has a screenshot of the email TOS formation from Wayback Machine, but none of the plaintiffs apparently signed up via email. Arbitration denied.

2021 & 2022 TOS Formation Evidence. More Wayback Machine screenshots. “The screenshot does not show any language notifying users about terms of service or show what users would have seen after selecting the button for how they would like to join….The Court cannot consider whether notice of any terms was reasonably conspicuous, let alone legible, without knowing what the website looked like.” Arbitration denied.

2016–2018, 2020, and 2023–2024 TOS Formation Evidence. The court says Paypal provided sufficient Wayback Machine screenshots for all but one of the plaintiffs in these periods. (The other plaintiff used the browser extension and may not have created an account). The court accepts the Wayback Machine screenshots because “plaintiffs’ failure to provide competent evidence directly rebutting defendants’ evidence fails to create a genuine issue as to the sign-up process that was presented to those plaintiffs when they created their accounts.”

* * *

Having identified the competent evidence, the court then discusses the screenshots (but it only shows one; the rest it describes textually):

2016-18 TOS Formation Process.

• “The text stating “By joining, I agree to Honey’s TOS & Privacy Policy” was of a size sufficiently smaller than the text on the rest of the screen that many users would likely have had to squint to read it.” Squinting is bad, but I always say that the offer language should never be the smallest font on the screen.
• “The small font size was exacerbated by the color of the text, which was light gray against a white background and in contrast to the two large and colorful buttons on the screen.”
• “the sign-up page told users that by joining, they agreed to Honey’s “TOS.”…the Court cannot conclude that a reasonable user in 2016 or 2017 would have known what TOS meant….Even if a reasonable user might have understood TOS to mean terms of service, Honey’s use of the acronym required an extra mental step for a user moving quickly through the sign-up page.”
• “the very small and faded nature of the text did not render the hyperlinks “readily apparent.””

Arbitration denied.

2020 TOS Formation Process.

Defendants’ declaration states, “The Wayback Machine reflects that in 2020, a user would affirmatively check a box to agree to the Terms of Service.” Nowhere does the declaration aver that a user had to check the box to continue signing up for Honey. Defendants ask the Court to recognize that it is “self-evident” that a user would have had to check the box. But where the Court must draw all inferences in favor of the non-moving party, it cannot conclude that a user was required to check the box and indicate their agreement to Honey’s terms rather than that it was merely optional for a user to do so. This is particularly true given that the box next to the second statement, through which users could choose to “[r]eceive news and offers from Honey by email,” was most likely optional. Nothing in the text of the page states that checking one of the boxes is mandatory while checking the other is not, and in the absence of evidence specifically establishing that users were required to check the first box, the Court cannot conclude that defendants have satisfied their burden to produce evidence of Cruz’s unambiguous assent to Honey’s terms of service.

Ugh. A great reminder that a screenshot doesn’t capture any animation or kinetic elements. So avoidable. A video of the UI, showing that the checkbox was mandatory, would have made this obvious.

Arbitration denied.

2023-24 TOS Formation Process.

Finally, the court shows a screenshot, which the court labels a “clickwrap agreement”:

The court explains why this works:

First, the notice was placed above the button to sign up and in the “user’s natural flow.” Second, although the text was relatively small and gray against a white background, the surrounding text was not much larger and was the same gray or black. The pages thus did not distract or draw the user’s eye away from the notice. Third, the hyperlinks are in a slightly different color than the rest of the notice and are underlined to indicate their presence to a reasonable user. Although the terms of service are mentioned in the fourth line of the notice, its placement is not fatal to its otherwise conspicuous disclosure; the first line of the notice indicates that users “agree to the following terms,” and the button to complete sign-up says, “Agree.”

Note that the Godun case might actually reject this process, despite its clarity, because the checkbox lacks an if/then grammar that links the offer language to the button. The court responds: “the button to complete sign-up itself indicated that the user “Agree[d]” to the text above.” But is that clear? Could the user just be agreeing to the sentence to right of the checkbox? The court responds: “the first line of the notice states that users agree to the “following terms,” signaling that multiple terms are included in the notice and correspond to the checkbox. And even if a user might not have understood that the checkbox referred to all of the terms within the notice, the “Agree” in the text of the button provided a further backstop.”

Arbitration granted for these two plaintiffs.

Implications

Courts are being stricter about TOS formation. I continue to believe that Chabolla and Godun were a substantial break with prior TOS formation law, so courts are being much pickier and the bar for TOS formation has gone way up. Here, the court rejects TOS formation for 10 of the 12 named plaintiffs (and for the other two, I believe the court disregarded the Godun precedent). This is the new math of TOS formation.

Watch out for jargon. It was interesting seeing the court reject the TOS term as unclear to consumers at the relevant time. Perhaps that’s true, though with the proper offer language, it shouldn’t matter so long as consumers otherwise understood that terms applied.

(The court dodges the nature of Honey’s relationship with consumers, even though it seems pretty obvious to me that consumers would expect a long-term relationship with Honey and that terms would apply to Honey’s software. If so, Ninth Circuit law might say that consumers were likely to presume that terms applied somewhere).

Similarly, it’s interesting how the court didn’t assume the TOS checkbox was mandatory, but textual references to its mandatory nature (or maybe a red asterisk?) would have helped. I saw this as a cautionary indicator that a screenshot may not be enough to establish a clickwrap, in which case either testimony from an engineer or a video will be required to establish the checkbox’s mandatory nature.

It’s the lawyer’s job to keep the right evidence. I wince every time I see a TOS formation case where the website operator (usually the defendant) relies on Wayback Machine evidence. The Wayback Machine is awesome and I love it, but it’s often not a complete rendering of the page, it doesn’t capture app interfaces, it doesn’t capture screens behind registration walls or paywalls, and it usually doesn’t capture animation or kinetic elements. In other words, submitting Wayback Machine evidence should be your last-ditch failsafe, not your Plan A. You can see how the judge was repeatedly underwhelmed with the Wayback Machine screenshots–almost certainly snatching defeat from the jaws of victory, as least for some of the plaintiffs in this case. The solution is simple: when you’re updating your TOS terms or your TOS interface, capture screenshots and videos to show how the pages look and work.

What’s next? The court’s split decision is a bummer for both sides, because it multiplies the litigation into parallel court and arbitration proceedings. Simultaneous litigation efforts jack up the costs and increase the risk of inconsistent outcomes. As an outsider to the litigation, the Solomonic approach would be to stay the arbitration for now, proceed with the in-court litigation, and then revisit the arbitration piece after the court decisions. That would allow the bulk of the case to proceed, save the duplicative costs, and avoid the risk of inconsistent outcomes. Indeed, it’s entirely possible the parties will know how to settle the arbitrated cases after getting the in-court results, in which case arbitration may never be needed. But Paypal could try to negotiate around this result, weaponizing the threat of litigation multiplication and the associated costs to goad the plaintiffs into arbitration first. An interesting game theory scenario.

Case Citation: White v. Paypal Holdings Inc., 2026 WL 496712 (N.D. Cal. Feb. 23, 2026)

The post If You Don’t Keep Good Records, Don’t Be Surprised if Your TOS Formation Fails in Court–White v. PayPal appeared first on Technology & Marketing Law Blog.