• 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.

• it’s in the Western District of Texas, not the more typical N.D. Ill.
• it’s a copyright claim rather than the more typical trademark claim
• it’s against a single defendant, not dozens or hundreds of defendants
• it’s filed by the Valley & Summit Law firm, a relatively new firm (formed 2024) I haven’t encountered before. The firm’s principal says in her bio: “Ms. Ouyang started her IP practice by helping cross-border e-commerce stores defend draconian IP lawsuits. Over the years, Ms. Ouyang accumulated abundant experience in the fun area of IP litigation.” Switching sides and bringing SAD Scheme lawsuits is my idea of “fun” too.
• it’s in front of a new judge, Judge Andrew Bray Davis, who just took the bench in April. I’ve previously suggested that recent judges tend to be more skeptical of SAD Scheme cases than judges who have rubber-stamped them for years, though I’m not sure this opinion supports that hypothesis.

Add all of these differences up, and the resulting decision reads a little differently than other SAD Scheme opinions I’ve seen.

TRO Against Infringement

The plaintiff has copyright registrations for “two-dimensional artistic works entitled ‘Bohemian Printing.'” Here is the registered work (left) and an allegedly infringing product (right):

The defendant’s version look similar or identical to the plaintiff’s version except that it omits the outer ring. Judge Davis says “a side-by-side comparison of Plaintiff’s designs and Defendant’s wares reveals little—if any—in the way of differences between the two designs.”

Judge Davis says the alleged infringement could cause irreparable harm because “damages fail to address loss of control—as well as damage to reputation and goodwill.” It’s troubling to see a copyright injunction predicated on concerns about the plaintiff’s goodwill, which normally should be the province of trademark law. Even the reputation concern is dubious. The judge further conflates this copyright case with trademark law when considering the public interest, saying the “public also has a clear interest in not being deceived or confused as to the origin, source, or sponsorship of copyrighted products.” Copyright law generally has little to say about products’ origin, source, or sponsorship.

Asset Restraint

The plaintiff requested an order restraining the defendant’s assets to preserve money to cover damages. Judge Davis rejects the request because “Plaintiff seeks to freeze all of Defendant’s assets without either showing that they are all profits or offering a way to separate the profits from the damages.” Citing Grupo Mexicano, Judge Davis says that asset restraints can only preserve “the availability of equitable relief in a final judgment.” In copyright cases, profit disgorgement is an equitable remedy, but actual damages are not. Here, the pleadings don’t make an adequate distinction between the two: “Plaintiff offers no evidence of even the rough proportion of Defendant’s assets attributable to infringement, and without it the Court cannot tether an asset freeze to the ultimate equitable relief Plaintiff seeks—the infringer’s ‘additional profits.'”

But…the judge has no visibility into how the online marketplaces like Amazon will process the infringement-based TRO. If Amazon suspends the account based on the TRO, the assets will be frozen despite the court’s legal distinction.

In a subsequent ruling (on July 16), the court orders the asset freeze anyway based on the following report the plaintiff obtained from Amazon (through expedited discovery):

Defendant has grossed $641,077.99 from 15,136 individual unit sales of 11 different allegedly infringing products over an unspecified time period. Defendant’s U.S. Amazon account held a balance of $1,092.69 when Plaintiff submitted her most recent motion to the Court

Sealing Request

Judge Davis temporarily accepted the sealing request. It was lifted on July 27, 2026, only after the plaintiff voluntarily dismissed the defendant. This is what the sealed complaint looked like:

The post-dismissal unsealing is likely why I learned about the opinion only now.

Service Via Email

The Second and Seventh Circuits have limited email service to Chinese defendants. Nevertheless, based on Fifth Circuit precedent, Judge Davis says that email service is in his discretion, and he orders it. Sounds like a circuit split needs resolution?

It is unclear if/when service was ever effectuated. My guess is that the defendant learned of the lawsuit from Amazon’s asset freeze, and that triggered an extrajudicial settlement regardless of service.

Request for Expedited Discovery

Judge Davis grants that request too.

Bond

The judge approves a $5k bond, which seems quite low based on what the judge knew at the time. I’ve lamented before about the lack of guidelines for bond-setting in ex parte cases.

The “Addendum”

The opinion includes this unusual passage:

Cases like this one requesting ex parte restraint and expedited discovery under seal—often against numerous defendants listed on a “Schedule A”—are being filed at pace throughout the federal courts. See Eric Goldman, A Sad Scheme of Abusive Intellectual Property Litigation, 123 COLUM. L. REV. 183, 193–202 (2023) (dissecting the proliferation of Schedule A cases and their legal shortcomings). For good reason, some courts have found many of these requests to fall short of the clear letter of the law. See, e.g., Price v. Individuals, P’ships, & Unincorporated Ass’ns Identified on Schedule A., 821 F. Supp. 3d 1315 (M.D. Fla. 2026) (Mizelle, J.).

Because this specific case involves only a single defendant, it appears to avoid many of the pitfalls present in Schedule A cases. But it is difficult to be sure. “The whole point of our adversarial legal system is that the robust exchange of competing views helps ensure the discovery of truth and avoid error.” United States v. Quintanilla-Matamoros, 164 F.4th 366, 375 (5th Cir. 2026) (Ho, J., concurring) (cleaned up). Yet Plaintiff in this case, like the plaintiffs in the Schedule A cases, not only demands emergency relief outside of the adversarial process, but likely anticipates seeking a default judgment that is also outside the adversarial process. In these circumstances, it is imperative for courts not only to be vigilant that any relief awarded is lawful, but to be willing to reconsider—sua sponte if necessary—relief already awarded if that relief should not have been granted in the first place.

But what if the TRO causes the case to “settle” before the judge gets another crack at it to fix any past errors? The case settled on July 27, 11 days after the court approved the Amazon asset freeze.

I wasn’t quite sure what to make of this addendum. Was the judge issuing a warning to the plaintiff? Leaving a note to himself? Something else?

Also, the judge says courts must be “vigilant that any relief awarded is lawful” in ex parte proceedings. Does this opinion adequately demonstrate such vigilance?

Implications

Given the plaintiff and defendant are both in China, I didn’t see any clear reason why the case was filed in W.D. Tex. instead of alternative venues, such as California (where the plaintiff’s lawyers are based) or Illinois (where most SAD Scheme cases are litigated). This looks like forum-shopping, but why W.D.Tex.?

This is another SAD Scheme case between Chinese plaintiffs and defendants, taking place in US courts. The Chinese plaintiffs prefer the SAD Scheme because US courts will disregard the rule of law even more than Chinese courts would.

Given that this lawsuit was against a single defendant and was not a high volume operation like a typical SAD Scheme, I didn’t see any legitimate reason why the plaintiff chose the SAD Scheme template over the standard copyright infringement playbook. To me, it’s another datapoint illustrating how the SAD Scheme is functionally displacing all IP litigation. This is because plaintiffs get better outcomes via the SAD Scheme than than they would get from the standard package of rights actually conferred to them via IP and civil procedure law. As the maxim goes, plaintiffs will keep doing it so long as it works. In this case, despite the judge’s quirky addendum, the plaintiff got essentially everything they asked for. So why wouldn’t plaintiffs keep the good times rolling?

Reflecting the case’s novelty, at least to him, Judge Davis goes through most of the plaintiff’s arguments in greater-than-average detail. Yet, as is typical with ex parte proceedings, he ultimately sides with the plaintiff on most questions. Judge Davis correctly spotted some of the weak spots of the SAD Scheme, and yet arguably the scheme sucked him in anyway.

Case Citation: Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi, 2026 WL 2294410 (W.D. Tex. June 26, 2026).

Prior Blog Posts on the SAD Scheme

• 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 Every SAD Scheme Opinion Is Weird In Its Own Way–Cai v. Chaozhoushi Yitong Dianzi Shangwu Youxiangongsi appeared first on Technology & Marketing Law Blog.

Is “Battery Tender” Generic?

The court says that the term “battery tender” isn’t inherently generic because (1) the USPTO registered the term, and “registration puts a heavy thumb on the scale against genericness,” (2) it’s better characterized as a descriptive term because “tend is more a metaphorical than literal description of what a battery tender does,” and it has achieved secondary meaning over 30+ years, and (3) the plaintiff’s principal coined the term.

Keyword Advertising

Keyword bidding doesn’t constitute trademark infringement for a simple reason: It’s not “likely to cause consumer confusion with the plaintiff’s mark.” And it’s unlikely to cause consumer confusion with the plaintiff’s mark for an equally straightforward reason: The use of the plaintiff’s mark for keyword-bidding purposes occurs “behind the scenes,” so to speak. Consumers don’t—indeed, can’t—see the plaintiff’s mark—all that’s visible here is a NOCO ad….A consumer who sees a NOCO-sponsored ad, whether or not driven by keyword bidding, may well recognize the promoted NOCO product as an alternative to consider, but he’s unlikely for that reason alone to mistake it for Deltona’s own offering. Accordingly, confusion here depends on whether Deltona’s mark is visible in NOCO’s ad, not whether an ad that does not display or otherwise reference Deltona’s mark might have been (invisibly) triggered by the mark’s behind-thescenes use as a keyword.

The court acknowledges that keyword ads may distract consumers. However, “so long as NOCO’s ads don’t hold that company out as selling “battery tenders,” consumers aren’t likely to be confused—just potentially overwhelmed by the presence of alternative products.”

The court summarizes: “In holding that keyword bidding can’t constitute trademark infringement, we join the unanimous consensus of our sister circuits.” For this reason, the jury’s damages award needs to be reduced to the extent it was predicated on keyword ads.

Trademark Usage in Amazon Ad Text

This is wheelhouse trademark infringement; NOCO’s conduct was likely to mislead consumers into thinking that it sold “battery tenders.” NOCO insists that its ads weren’t confusing because Amazon marked them as “sponsored” and customers would therefore recognize them as ads. Even so, the sponsored ads’ content effectively stated that NOCO sold battery tenders, which it doesn’t—only Deltona does.

Usage in Amazon Product Description Text

Product descriptions are “below the line,” so to speak, and in smaller print—they are meant to inform a diligent customer rather than grab his attention. As a result, consumers are probably less likely to focus on them in the way they do the ads.

[Citation clearly needed for the last point. The panel appears to be making up hypotheses about consumer behavior.]

The court nevertheless ratifies the jury finding: “We think it clear that a reasonable jury could find that the product descriptions were part of an effort to misappropriate Deltona’s goodwill and confuse consumers.”

NOCO argued that the “battery tender” references in the product descriptions should be excused like keyword advertising. The court distinguishes product listings from keyword ads:

• “Even if less conspicuous or prominent than the ad’s main text, it isn’t entirely invisible to the consumer’s eye in the way that a behind-the-scenes keyword is.”
• The ad’s “sponsored” label would alert consumers of the differences between the companies. [This also seems like a dubious empirical claim.]

The court summarizes:

Even if consumers didn’t actually read NOCO’s product descriptions, NOCO impermissibly held itself out in those descriptions as a seller of battery tenders, rather than a provider of alternatives to battery tenders, as it did, for instance, when using a keyword-bidding strategy to drive traffic to its own products. The inclusion of “battery tender” in the description automatically not only affected Amazon search results but also drove shoppers searching for Deltona’s battery tenders to NOCO chargers without alerting them in any way—through a “sponsored” tag or otherwise—that they weren’t really looking at battery tenders.

[To be fair, NOCO’s attempts to equate keyword ads with product listings seems like it was never destined for success. NOCO had an appellate team of 7 Biglaw lawyers, apparently led by Jones Day and supported by Goodwin Proctor and Troutman Pepper. That’s a lot of very expensive lawyers who signed off on seemingly dubious positions. FWIW, Deltona’s appellate team was 3 lawyers from Shutts & Bowen.]

Other Marketing References

“The evidence supports the conclusion that, from the top down, NOCO actively tried to sow confusion about what a battery tender is.”

Injunction

Among other things, the lower court enjoined NOCO’s use of the term “tender,” even though Deltona’s trademark is “battery tender” and not just “tender.” The appellate court circles one of NOCO’s Amazon ads: “More Than Just A Tender. The Ultimate Charger.” To me, that sounds like comparative advertising or free use of a dictionary word that isn’t covered by a trademark registration, but the appellate court calls that a “loophole.” As a result, the appellate court upholds the injunction.

Implications

NOCO get a new trial to recompute actual damages, stripped of the keyword ads and some other pieces the appellate court reversed. I imagine the parties will settle rather than do a retrial because trial prep would likely cost more than any adjustments to the damages amount.

You can see what happens when a descriptive term (“battery tender”) gets weaponized. A competitor thought they could freely use the term, went too far, and will pay a high price for their error.

Despite the mostly-bad news for NOCO, the ruling does have a major bright spot: the court’s declaration that the 11th Circuit permits competitive keyword advertising, at least so long as the resulting ads don’t include the trademark in the text. This outcome isn’t surprising given how the 2nd and 9th Circuits have emphatically shut down keyword advertising cases. Still, extending that principle to a new geographic region is welcome news.

Emoji Discussion!

The court includes the following transcript of NOCO’s “virtual brainstorming session”:

The opinion shows its emojis! Yay! However, FN 2 says:

The documents in the record converted the emojis to their shortcodes (e.g., :joy: or :rolling on the floor laughing:). For clarity, we have replaced the shortcodes with the actual emojis to reflect the exchange as it presumably appeared between the NOCO employees.

There are a couple of problems here:

• The parties didn’t properly prepare the evidence, so the emojis weren’t properly recorded in the record.
• The judge can’t accurately recreate the emojis this way. First, each platform depicts the shortcodes differently, and the judge doesn’t explain how he picked these particular depictions. The images he picked may not accurately reflect how the emojis were actually depicted. Plus, because emoji depictions evolve over time, shortcodes today may produce a different depiction than the shortcodes did at the relevant time period. Further, emojis may differ in how the sender and recipient see them. As I say in my judicial trainings on emojis, emoji depictions should come in pairs. The judge assumed a canonical depiction, but that is typically a fallacy.

Case Citation: Deltona Transformer Corporation v. NOCO Company, 2026 WL 2236806 (11th Cir. Aug. 4, 2026)

* * *

More Posts About Keyword Advertising

* Another Reminder: Lawsuits Over Competitive Keyword Ads Are Stupid
* Post-Mortem of a Misguided Logo Trademark Lawsuit–LegalForce v. Internet Brands
* The Initial Interest Confusion Doctrine Refuses to Die
* Court Rejects Initial Interest Confusion Claims for Competitive Keyword Ads–Regalo v. Aborder
* Lawsuits Over Competitive Keyword Advertising Are Still Stupid–NRRM v. American Dream Auto Protect
* NJ Supreme Court Blesses Lawyers’ Competitive Keyword Ads (With a Baffling Caveat)
* Ninth Circuit Tells Trademark Owners to Stop Suing Over Competitive Keyword Ads–Lerner & Rowe v. Brown Engstrand
* Second Circuit Tells Trademark Owners to Stop Suing Over Competitive Keyword Advertising
* Catching Up on Two Keyword Ad Cases
* Competitor Isn’t Responsible for Google Knowledge Panel’s Contents–International Star Registry v. RGIFTS
* TIL: “Texas Tamale” Is an Enforceable Trademark–Texas Tamale v. CPUSA2
* Internal Search Results Aren’t Trademark Infringing–PEM v. Peninsula
* When Do Inbound Call Logs Show Consumer Confusion?–Adler v McNeil
* Court Denies Injunction in Competitive Keyword Ad Lawsuit–Nursing CE Central v. Colibri
* Competitive Keyword Ad Lawsuit Fails…Despite 236 Potentially Confused Customers–Lerner & Rowe v. Brown Engstrand
* More on Law Firms and Competitive Keyword Ads–Nicolet Law v. Bye, Goff
* Yet More Evidence That Keyword Advertising Lawsuits Are Stupid–Porta-Fab v. Allied Modular
* Griper’s Keyword Ads May Constitute False Advertising (Huh?)–LoanStreet v. Troia
* Trademark Owner Fucks Around With Keyword Ad Case & Finds Out–Las Vegas Skydiving v. Groupon
* 1-800 Contacts Loses YET ANOTHER Trademark Lawsuit Over Competitive Keyword Ads–1-800 Contacts v. Warby Parker
* Court Dismisses Trademark Claims Over Internal Search Results–Las Vegas Skydiving v. Groupon
* Georgia Supreme Court Blesses Google’s Keyword Ad Sales–Edible IP v. Google
* Competitive Keyword Advertising Claim Fails–Reflex Media v. Luxy
* Think Keyword Metatags Are Dead? They Are (Except in Court)–Reflex v. Luxy
* Fifth Circuit Says Keyword Ads Could Contribute to Initial Interest Confusion (UGH)–Adler v. McNeil
* Google’s Search Disambiguation Doesn’t Create Initial Interest Confusion–Aliign v. lululemon
* Ohio Bans Competitive Keyword Advertising by Lawyers
* Want to Engage in Anti-Competitive Trademark Bullying? Second Circuit Says: Great, Have a Nice Day!–1-800 Contacts v. FTC
* Selling Keyword Ads Isn’t Theft or Conversion–Edible IP v. Google
* Competitive Keyword Advertising Still Isn’t Trademark Infringement, Unless…. –Adler v. Reyes & Adler v. McNeil
* Three Keyword Advertising Decisions in a Week, and the Trademark Owners Lost Them All
* Competitor Gets Pyrrhic Victory in False Advertising Suit Over Search Ads–Harbor Breeze v. Newport Fishing
* IP/Internet/Antitrust Professor Amicus Brief in 1-800 Contacts v. FTC
* New Jersey Attorney Ethics Opinion Blesses Competitive Keyword Advertising (…or Does It?)
* Another Competitive Keyword Advertising Lawsuit Fails–Dr. Greenberg v. Perfect Body Image
* The Florida Bar Regulates, But Doesn’t Ban, Competitive Keyword Ads
* Rounding Up Three Recent Keyword Advertising Cases–Comphy v. Amazon & More
* Do Adjacent Organic Search Results Constitute Trademark Infringement? Of Course Not…But…–America CAN! v. CDF
* The Ongoing Saga of the Florida Bar’s Angst About Competitive Keyword Advertising
* Your Periodic Reminder That Keyword Ad Lawsuits Are Stupid–Passport Health v. Avance
* Restricting Competitive Keyword Ads Is Anti-Competitive–FTC v. 1-800 Contacts
* Another Failed Trademark Suit Over Competitive Keyword Advertising–JIVE v. Wine Racks America
* Negative Keywords Help Defeat Preliminary Injunction–DealDash v. ContextLogic
* The Florida Bar and Competitive Keyword Advertising: A Tragicomedy (in 3 Parts)
* Another Court Says Competitive Keyword Advertising Doesn’t Cause Confusion
* Competitive Keyword Advertising Doesn’t Show Bad Intent–ONEpul v. BagSpot
* Brief Roundup of Three Keyword Advertising Lawsuit Developments
* Interesting Tidbits From FTC’s Antitrust Win Against 1-800 Contacts’ Keyword Ad Restrictions
* 1-800 Contacts Charges Higher Prices Than Its Online Competitors, But They Are OK With That–FTC v. 1-800 Contacts
* FTC Explains Why It Thinks 1-800 Contacts’ Keyword Ad Settlements Were Anti-Competitive–FTC v. 1-800 Contacts
* Amazon Defeats Lawsuit Over Its Keyword Ad Purchases–Lasoff v. Amazon
* More Evidence Why Keyword Advertising Litigation Is Waning
* Court Dumps Crappy Trademark & Keyword Ad Case–ONEPul v. BagSpot
* AdWords Buys Using Geographic Terms Support Personal Jurisdiction–Rilley v. MoneyMutual
* FTC Sues 1-800 Contacts For Restricting Competitive Keyword Advertising
* Competitive Keyword Advertising Lawsuit Will Go To A Jury–Edible Arrangements v. Provide Commerce
* Texas Ethics Opinion Approves Competitive Keyword Ads By Lawyers
* Court Beats Down Another Competitive Keyword Advertising Lawsuit–Beast Sports v. BPI
* Another Murky Opinion on Lawyers Buying Keyword Ads on Other Lawyers’ Names–In re Naert
* Keyword Ad Lawsuit Isn’t Covered By California’s Anti-SLAPP Law
* Confusion From Competitive Keyword Advertising? Fuhgeddaboudit
* Competitive Keyword Advertising Permitted As Nominative Use–ElitePay Global v. CardPaymentOptions
* Google And Yahoo Defeat Last Remaining Lawsuit Over Competitive Keyword Advertising
* Mixed Ruling in Competitive Keyword Advertising Case–Goldline v. Regal
* Another Competitive Keyword Advertising Lawsuit Fails–Infogroup v. DatabaseLLC
* Damages from Competitive Keyword Advertising Are “Vanishingly Small”
* More Defendants Win Keyword Advertising Lawsuits
* Another Keyword Advertising Lawsuit Fails Badly
* Duplicitous Competitive Keyword Advertising Lawsuits–Fareportal v. LBF (& Vice-Versa)
* Trademark Owners Just Can’t Win Keyword Advertising Cases–EarthCam v. OxBlue
* Want To Know Amazon’s Confidential Settlement Terms For A Keyword Advertising Lawsuit? Merry Christmas!
* Florida Allows Competitive Keyword Advertising By Lawyers
* Another Keyword Advertising Lawsuit Unceremoniously Dismissed–Infostream v. Avid
* Another Keyword Advertising Lawsuit Fails–Allied Interstate v. Kimmel & Silverman
* More Evidence That Competitive Keyword Advertising Benefits Trademark Owners
* Suing Over Keyword Advertising Is A Bad Business Decision For Trademark Owners
* Florida Proposes to Ban Competitive Keyword Advertising by Lawyers
* More Confirmation That Google Has Won the AdWords Trademark Battles Worldwide
* Google’s Search Suggestions Don’t Violate Wisconsin Publicity Rights Law
* Amazon’s Merchandising of Its Search Results Doesn’t Violate Trademark Law
* Buying Keyword Ads on People’s Names Doesn’t Violate Their Publicity Rights
* With Its Australian Court Victory, Google Moves Closer to Legitimizing Keyword Advertising Globally
* Yet Another Ruling That Competitive Keyword Ad Lawsuits Are Stupid–Louisiana Pacific v. James Hardie
* Another Google AdWords Advertiser Defeats Trademark Infringement Lawsuit
* With Rosetta Stone Settlement, Google Gets Closer to Legitimizing Billions of AdWords Revenue
* Google Defeats Trademark Challenge to Its AdWords Service
* Newly Released Consumer Survey Indicates that Legal Concerns About Competitive Keyword Advertising Are Overblown

The post 11th Circuit Rejects Keyword Advertising Liability–Deltona v. NOCO appeared first on Technology & Marketing Law Blog.

In short, California enacted the “Yelp Law” to restrict businesses from trying to stop their consumers from posting online reviews. The statute is divided into two main operative parts. (a)(1) targets TOS provisions that restrict consumer reviews. (a)(2) targets businesses’ efforts to enforce those TOS provisions. A small team of plaintiff lawyers have been cruising the Internet, looking for TOS provisions that they claim are consumer review restrictions, and then asserting (a)(1) violations for those TOS provisions hoping for payoffs. In these enforcements, no consumer has actually been stifled in their remarks (that would support an (a)(2) violation). Worse, the plaintiffs’ lawyers often fail to display basic reading comprehension because their claims target generic and standard TOS provisions that have nothing to do with consumer reviews.

[In this case, the offending TOS provisions said that consumers “agree not to submit content to the website “‘intended to cause commercial harm’” to Peet’s or to use Peet’s trademarks “‘in any manner … that would disparage’ Peet[’s] products or brands.” These are ill-advised TOS provisions that should be rewritten, but they are also clearly not meant to restrict consumers’ abilities to post reviews.]

The Moss decision rejected similar claims because the court concluded (a)(1) had no private right of action. However, that decision was non-precedential. Now, a week later, a different California Appeals Court panel reaches the same conclusion in a precedential opinion, Arterberry v. Peet’s. The end of the Yelp Law drive-by enforcements is getting closer.

The Arterberry opinion summarizes its question and answer:

May a consumer seek monetary penalties against a company for including a contractual provision made illegal under section 1670.8 as part of the terms and conditions on its website, even if the company never threatened to enforce that provision or take any action against the consumer? We hold section 1670.8 outlaws non-disparagement clauses in consumer contracts, but it unambiguously allows a consumer to bring a suit for monetary penalties only when a seller attempts to enforce such a provision or otherwise seeks to penalize a consumer.

The Arterberry opinion itself doesn’t mention the Moss opinion (which was non-precedential, and the opinions were likely drafted in parallel with each other), and the Arterberry opinion claims it is addressing a matter of “first impression” (with acknowledgements of the Shofet and Anderson federal district court opinions, neither of which bind the court, but no acknowledgement of Moss). Despite the parallel rulings, Arterberry follows the same basic logic as the Moss opinion.

The Arterberry opinion engages in a little more depth with the legislative history. The court concludes:

Section 1670.8 applies to everyone, be it a Fortune 500 company or a small family business. If, as the plaintiffs allege, the use of a nondisparagement clause created a cause of action with respect to each California resident who visited a website, with a civil penalty of up to $2,500 for each such resident, then a relatively small business with 10,000 online California customers would face up to $25,000,000 in penalties for using insufficiently precise content moderation and trademark enforcement language in the terms and conditions of its website. The same business would face no more than $5,000 in penalties for actually threatening or seeking to penalize a consumer for posting a negative review. In the more than 400 pages of legislative history that the plaintiffs submitted for our review, we see nothing to suggest the Legislature intended the statute to work this way.

(To be fair, a $5k financial deterrent against suppressing consumer reviews may be too light, just as a $25M penalty for poor TOS drafting would be way too heavy. But the Yelp Law doesn’t rely solely on a private right of action; the AG’s office can enforce it too).

As I mentioned in my prior post, the mere presence of anti-consumer review clauses in TOSes could potentially chill consumers from posting reviews, even if the business never affirmatively asserts that clause. Other laws may redress that concern. And either way, the current batch of (a)(1) enforcements are not the right solution.

I wonder if the unsuccessful plaintiffs’ lawyers will ask the legislature to “fix” the statutory drafting, claiming that the courts have left consumers vulnerable to businesses’ anti-review efforts. It’s the kind of story that some legislators would be sympathetic to–if they don’t do their homework about the abuses already taking place. Even without a legitimate private right of action, plaintiffs’ lawyers have used (a)(1) to cause chaos in court and extract undeserved concessions. We need less of that, not more.

Case Citation: Arterberry v. Peet’s Coffee, Inc., 2026 WL 2185136 (Cal. App. Ct. July 29, 2026)

BONUS: A Pennsylvania court dismissed a class action lawsuit against Ikea based on the Arterberry precedent. Hinton v. Ikea North American Services LLC, 2026 WL 2984984 (Table) (Pa. Superior Ct. Oct. 5, 2026)

Selected Blog Posts Regarding 1670.8

• Appeals Court Shuts Down Bogus Private Enforcements of the ‘Yelp Law’–Moss v. GoDaddy
• Catching Up on the Bogus “Yelp Law” Litigation Campaign–Tao v. Uniqlo
• Amazon Must Defend “Yelp Law” Claim–Ramos v. Amazon
• Courts Are Rejecting Attempts to Weaponize Laws That Protect Consumer Reviews
• Businesses Cannot Contractually Ban “Abusive” Consumer Reviews
• California Tells Businesses: Stop Trying To Ban Consumer Reviews (Forbes Cross-Post)

The post Another Court Shuts the Door on “Yelp Law” Drive-By Lawsuits–Arterberry v. Peet’s appeared first on Technology & Marketing Law Blog.