Introduction

The recent decision by U.S. District Judge Karen Marston in MLB Players Inc. v. DraftKings and Bet365[1] represents a pivotal development in the legal landscape surrounding name, image, and likeness (NIL) rights. The ruling explores critical intersections between publicity rights, commercial speech, First Amendment protections, and the legal boundaries of “news reporting.” The implications extend far beyond baseball, potentially affecting companies using athlete or celebrity NIL in commercial marketing across sports betting, digital advertising, and beyond.

Case Background

MLB Players Inc. (MLBPI), the group licensing subsidiary of the Major League Baseball Players Association, brought this action against DraftKings and Bet365, alleging unauthorized commercial use of player NIL in promotional campaigns. The complaint specifically cited examples where players’ images—including Yankees star Aaron Judge—were used in digital and social media promotions without proper authorization or compensation.[2]

Judge Marston’s ruling denied the defendants’ motion to dismiss claims related to right of publicity violations, misappropriation and unjust enrichment. Only one misappropriation claim was dismissed as duplicative.[3] The case now advances to discovery, where the courts will examine the factual context and intent behind the disputed content.

Defining the “News Reporting” Defense

A central question in this case concerns the scope of the “news reporting” defense under Pennsylvania law.[4] This exemption typically allows use of an individual’s identity without consent when it appears in legitimate news reporting on matters of public interest.

Judge Marston’s ruling made the following critical distinctions:

1. Content about newsworthy topics differs legally from content that constitutes actual news reporting;
2. Athlete identities cannot be used in commercial promotions under the guise of “news reporting”—even when discussing newsworthy sporting events; and
3. Pennsylvania applies a narrower interpretation of this exemption than some other jurisdictions.[5]

The court cited Abdul-Jabbar v. General Motors Corp. (1996)[6], where the Ninth Circuit found that even content comprised of factually accurate information about an athlete’s accomplishments loses protection from right of publicity claims when used primarily for commercial advertising. The decisive factor is not the truthfulness of the content, but whether the use serves a commercial purpose.

The Clear Line: Advertising vs. Journalism

The ruling provided concrete examples illustrating impermissible commercial use. In one instance, a Bet365 social media post featured Aaron Judge alongside betting odds about MLB teams winning 100+ games. Critically, the post made no substantive reference to Judge’s performance or provided any meaningful context—his image simply served to attract attention to the sportsbook’s offerings.[7]

Judge Marston emphasized that content merely resembling editorial or journalistic material, while actually serving an advertising function, cannot claim news exemptions under right of publicity statutes. This creates a clear standard: Content adopting the look and feel of news coverage while fundamentally promoting a product or service remains subject to right of publicity laws and a higher standard for legal clearance than a use of the same content for news or entertainment purposes.

First Amendment Arguments: Limited Protection for Commercial Use

The defendants’ First Amendment arguments referenced cases involving expressive works such as video games and artistic renderings.[8] However, Judge Marston distinguished those precedents, noting they involved transformed or creatively interpreted athlete images—unlike the straightforward use of player photos in this case.

The court found limited grounds for strong First Amendment protection at this stage because the promotional content relied on direct, unaltered use of athlete likenesses primarily for commercial gain. While deferring a complete First Amendment analysis until further factual development, the ruling signals that purely commercial uses face an uphill battle under free speech protections.[9]

Strategic Implications for Industry Stakeholders

This ruling carries significant implications for how NIL is used across industries—particularly in digital marketing, advertising, sports, betting, and branded content. When NIL is used for commercial promotion rather than legitimate reporting, organizations face potential liability without proper licensing.

Key Action Items:

• Conduct content audits to identify where athlete or celebrity NIL appears in marketing materials.
• Implement more rigorous legal clearances processes for NIL-related promotions.
• Review existing licensing agreements to ensure they cover intended uses.
• Develop clear internal guidelines distinguishing between news reporting and promotional content.
• Consider jurisdictional differences in right of publicity laws when planning national campaigns.

The Evolving NIL Landscape

As NIL continues to grow in commercial value, legal efforts to protect these rights are intensifying. Athletes, celebrities, and their representatives are becoming more assertive in controlling NIL usage—with courts increasingly supporting their position.

Several states are enacting or revising right of publicity laws, expanding individual NIL protections and increasing potential liabilities for unauthorized commercial use. This state-by-state evolution has amplified calls for uniform federal NIL legislation—potentially modeled after copyright protections—to prevent a fragmented legal landscape that encourages forum shopping and inconsistent outcomes.

Conclusion

The MLB Players Inc. ruling marks a significant shift in NIL jurisprudence that affects brands, platforms, advertisers, and content creators across industries. The distinction between legitimate news reporting and commercial promotion is becoming more defined—and legally consequential.

In an environment where “earned media” and “sponsored content” demand different legal approaches, organizations must adapt their NIL practices to this evolving landscape. Those who implement comprehensive compliance strategies will be best positioned to avoid liability while effectively leveraging NIL in their marketing efforts.

Need help navigating NIL compliance?
Our team offers strategic guidance to help you structure NIL deals, assess risk, and ensure that your campaigns stay on the right side of the law.

FOOTNOTES

[1] MLB Players, Inc. v. DraftKings, Inc., No. 24-4884-KSM, 2025 U.S. Dist. LEXIS 47600 (E.D. Pa. Mar. 14, 2025).

[2] Complaint, MLB Players Inc. v. DraftKings, ¶¶ 23–36.

[3] Memorandum Opinion by Judge Karen Marston, February 2025, at 12–14.

[4] 42 Pa. Cons. Stat. § 8316(e)(2)(ii).

[5] Id., see also Judge Marston’s analysis at p. 10.

[6] Abdul-Jabbar v. General Motors Corp., 85 F.3d 407 (9th Cir. 1996).

[7] Judge Marston Opinion, at 16–17.

[8] Brown v. Entertainment Merchants Ass’n, 564 U.S. 786 (2011); ETW Corp. v. Jireh Publ’g, Inc., 332 F.3d 915 (6th Cir. 2003).

[9] Judge Marston Opinion, at 21.

Introduced in response to certain digital media sellers (e.g., game publishers) revoking consumer access to purchases with little to no recourse, AB 2426 forces sellers of “digital goods,” such as movies, apps, games, books and music to clarify what a consumer is actually receiving in connection with their “purchase.” Often companies refer to the “purchase” or “sale” of digital goods, yet the associated terms of service make clear that the buyer only receives a revocable license to the such goods. In some cases, if a buyer violates the terms of service, the license is revoked and the user is denied further access to the digital goods. In other cases, a buyer may be denied access to digital goods it has “purchased” if the digital media platform shuts down.

In an attempt to remedy any misunderstanding about this, under the new law, unless the buyer is getting an unrestricted ownership interest in the item, the law prohibits a seller of a digital good from advertising or offering such item for sale using terms like “buy” or “purchase” unless it satisfies one of two conditions:

1. The seller gets an affirmative acknowledgement from the buyer confirming that it is only receiving a license to access the digital good. Such acknowledgment must also include a complete list of applicable restrictions and conditions as well as a statement that the digital good may be unilaterally revoked by the seller, if applicable; or
2. The seller must provide a “clear and conspicuous statement” that states in “plain language” that the “buying” or “purchasing” of the digital good is only a license and includes a link or other method to access the full details of such license (e.g., in the terms of service). 

The law excludes subscription-based services that advertise or offer for sale access to any digital good solely for the duration of the subscription, free digital content and other digital goods that the seller cannot revoke access to after the transaction (including by making the digital good available for permanent offline download)

The legislative history for AB 2426 is silent on non-fungible tokens (“NFTs”) and other blockchain-based digital assets, so it is unclear whether the law was intended to apply to such assets. Yet, although the purchaser of an NFT typically acquires a full ownership interest in and to the token itself, the purchaser generally receives only a limited license to any digital asset associated with such NFT, unless otherwise specified. So, to the extent that the digital asset associated with the NFT falls within the definition of a “digital good,” it arguably could fall within the purview of the law.

Often NFTs are sold via one platform (e.g., an NFT marketplace), yet the purchaser can use the associated digital asset elsewhere. Unlike most games, where players assets are managed by the game company via a centralized asset management system, with NFTs, the ownership of the token is typically managed via a decentralized blockchain. The ownership of the NFT is associated with a digital wallet belonging to the purchaser. This enables the purchaser to control the NFT and resell it, even if the first seller of the NFT ceases operation.

However, it is possible that one or more of AB 2426’s exclusions may apply to NFTs (e.g., digital goods the seller cannot revoke access to after the transaction). Whether this is true for any NFT will be fact dependent. For example, with NFTs, often the token ownership is recorded on the blockchain, but the associated digital asset is stored elsewhere. In some cases, the digital asset may be stored on a proprietary server of the seller. In such situations, the “seller cannot revoke access” exclusion may not apply. In other cases, the digital asset may be stored on a decentralized storage system (e.g., IPFS). In this case, it is unlikely the seller can revoke access and the exclusion may apply.

Interestingly, as currently written, the term “digital good” does not appear to specifically cover static images.

The law defines “digital good” to include the following:

• “Digital application or game” means any application or game that a person accesses and manipulates using a specialized electronic gaming device, computer, mobile device, tablet, or other device with a display screen, including any add-ons or other content for that application or game.
• “Digital audio work” means a work that results from the fixation of a series of musical, spoken, or other sounds that are transferred electronically, including prerecorded or live songs, music, readings of books or other written materials, speeches, ringtones, or other sound recording.
• “Digital audiovisual work” means a series of related images that, when shown in succession, impart an impression of motion, together with accompanying sounds. “Digital audiovisual work” includes motion pictures, musicals, videos, news and entertainment programs, and live events.
• “Digital book” means a work that is generally recognized in the ordinary and usual sense as a book that is transferred electronically, including a work of fiction or nonfiction.
• “Digital code” means a code that provides the person that holds the code a right to obtain an additional digital good, a digital audiovisual work, digital audio work, or digital book that may be obtained by any means, including tangible forms and electronic mail, regardless of whether the code is designated as song code, video code, or book code.
• “Digital code” includes codes used to access or obtain any specified digital goods, or any additional digital goods that have been previously purchased, and promotion cards or codes that are purchased by a retailer or other business entity for use by the retailer’s or entity’s customers.

Arguably, none of these expressly cover static digital images.

Further, the law specifically excludes the following from the definition of a digital good: a cable television service, satellite relay television service, or any other distribution of television, video, or radio service.

The law includes some details on how the disclosure must be made. For example, the requirement referenced above that the disclosure be “clear and conspicuous” requires that the disclosure be “in a manner that clearly calls attention to the language, such as in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks.”

Additionally, any affirmative acknowledgment from the purchaser or clear and conspicuous statement must be “distinct and separate from any other terms and conditions of the transaction that the purchaser acknowledges or agrees to.”

Putting it into practice: In order to avoid regulatory penalties or a claim for false advertising, sellers of digital goods should carefully evaluate how their digital goods are advertised and ensure they have proper procedures in place to comply with these new requirements before the law goes into effect on January 1, 2025. The Sheppard Mullin team is uniquely positioned to assist clients across multiple industries navigate these new compliance obligations.

Effective July 1, 2024, new California Senate Bill 478 (SB 478)[1] bans the practice of “drip pricing,” where the price for product or service is advertised without including all mandatory fees and charges that consumers must pay.[2] This law applies to nearly all businesses that sell or lease goods and services to California consumers[3], excluding only commercial transactions and certain industries that are already subject to pricing regulations. The ramifications of SB 478 are likely to significantly impact advertising and pricing practices across various industries, including businesses outside of California.

SB 478 aims to eliminate hidden fees, often referred to as “junk fees,” by making it illegal to advertise, display, or offer a price that does not reflect the full amount consumers must pay, excluding taxes and shipping costs.[4] According to the California Attorney General’s Office, the law prohibits businesses from advertising “an artificially low headline price” to attract customers, only to “reveal additional unavoidable charges later in the buying process.”[5] The law is broad in scope, applying to nearly all businesses that market and sell goods and/or services to California consumers, including companies based in other states and online platforms.[6] However, restaurants are exempt from SB 478. Under SB 1524, signed into law on June 29, 2024, restaurants are not required to factor mandatory fees into menu item prices as long as those fees are “clearly and conspicuously” disclosed, with an explanation of their purpose, on the menu or advertisement.[7] The law also does not apply to business-to-business transactions or certain other specified transactions already subject to existing pricing laws.[8]

SB 478 does not limit the types or amount of fees that a business can charge, but is instead aimed at transparency in pricing.[9] In addition, fees for optional services or features (e.g., add-ons to a purchase offered at checkout) and contingent fees (e.g., e.g., late fees for equipment rentals) do not need to be included in the advertised price.[10] Only mandatory charges must be included in the price advertised to consumers.[11] Claims alleging violations of SB 478 under the Consumer Legal Remedies Act (CLRA) may be brought on an individual or a class-wide basis.[12] Remedies available for consumers who bring claims for violation of SB 478 include actual damages (with a minimum of $1,000 in class actions), restitution, injunctive relief, and attorneys’ fees.[13]

In 2022, New York passed similar targeted legislation requiring live event ticket sellers to disclose all fees and/or surcharges prior to the ticket being selected for purchase.[14] Similar legislation has been introduced in other states and in 2023, the Federal Trade Commission (FTC) also announced a notice of proposed rulemaking designed to prohibit drip pricing, specifically citing public concerns regarding hidden fees in the live event ticket market.[15]

Whereas prior legislation addressing drip pricing focused on the need for disclosure of all fees during the purchasing process, SB 478 arguably sets a higher standard by specifically requiring that the price as advertised to consumers, before the checkout process, must be the full price consumers will be required to pay – it is not sufficient for businesses to disclose additional fees separately from the list price. Similarly, in its notice of proposed rulemaking, the FTC states that its proposed rule would require that any offer, display or advertisement of a price to a consumer must include the maximum total of all fees and/or charges (other than shipping and taxes).[16] Other state agencies have taken a similar approach.[17] If these trends continue, SB 478 may serve as a bellwether for how legislators and regulators seek to curb drip pricing in the future.

Navigating the complexities of SB 478 and other emerging regulations requires careful attention to compliance details. Here are some practical steps and guidelines to help your business adhere to the new requirements:

Review and Update Pricing Structures: Ensure that all mandatory fees are included in the advertised prices. For example, if you offer a subscription service, make sure the total monthly cost, including any mandatory fees, is clearly stated in the initial price shown to consumers.

Industry-Specific Disclosures: Different industries may have unique requirements. Tailor your pricing disclosures to fit the specific needs and practices of your industry.

Clear and Conspicuous Language: Use straightforward language to disclose fees. For subscription services, include statements like “Total monthly cost includes a $5 service fee” directly next to the advertised price.

Regular Compliance Audits: Periodically review your pricing and advertising practices to ensure they remain in line with SB 478 and other applicable regulations. This proactive approach can help you identify and correct any issues before they lead to legal challenges.

Training and Education: Educate your marketing and sales teams about the requirements of SB 478. Provide training on how to properly disclose fees and structure advertisements to comply with the law.

By implementing these practical steps, your business can effectively navigate the requirements of SB 478, avoiding potential legal pitfalls and maintaining consumer trust. Our firm is here to assist with any specific compliance questions or concerns you may have, offering tailored advice to ensure your business meets all regulatory standards.

FOOTNOTES

[1] California Civil Code Section 1770(a)(29)).

[2] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[3] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[4] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[5] https://oag.ca.gov/news/press-releases/landmark-price-transparency-law-set-go-effect-july-1-attorney-general-bonta#:~:text=SB%20478%20is%20a%20transparency,be%20included%20in%20that%20cost.

[6] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[7] California Civil Code Section 1770(a)(29)(D)).

[8] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[9] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[10] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[11] https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20%28B%29.pdf.

[12] California Civil Code Section 1780.

[13] California Civil Code Section 1780.

[14] New York Arts and Cultural Affairs Law Section 25.07.

[15] https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulationrule-commission-matter-no-r207011.

[16] https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulationrule-commission-matter-no-r207011.

[17] See, e.g., Code of Massachusetts Regulations, 940 CMR 38.00.

The Federal Trade Commission’s (“FTC”) Endorsement Guides have evolved over the past forty years from regulating celebrity endorsements and testimonial advertisements to policing social media advertising, including influencer endorsements and native advertising. On February 12, 2020, the FTC announced that it had voted 5‑0 to approve a proposed Federal Register Notice, seeking comment on whether to make changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were enacted in 1980[1] and amended in 2009,[2] as part of a systematic review of all current FTC rules and practices. The Endorsement Guides have steadfastly required transparency in advertising and, if there is a connection between an endorser and the company selling the product or services being advertised or promoted which, if disclosed, might affect the weight or credibility of the endorsement, such connection must be disclosed clearly and conspicuously.

On June 30, 2023, the FTC issued its final revisions to the Endorsement Guides,[3] a proposed new Rule on the Use of Consumer Reviews and Testimonials,[4] and updates to the key staff guidance publication on the Endorsement Guides for businesses, endorsers, and the advertising industry.[5]

Final Revised Endorsement Guides

The Revised Endorsement Guides reflect recent developments in enforcement and feedback received during the public comment period.[6] In its announcement, the FTC identified six final changes that merit special attention:

1. Articulating a new principle regarding not procuring, suppressing, organizing, upvoting, downvoting, or editing consumer reviews in ways that likely distort what consumers really think of a product;
2. Addressing incentivized reviews, reviews by employees, and fake negative reviews by competitors;
3. Adding a definition of “clear and conspicuous” and warning that a platform’s built-in disclosure tool might not be adequate;
4. Updating the definition of “endorsements” to clarify that it can include fake reviews, virtual influencers, and social media tags;
5. Providing a clearer explanation of the potential liability that advertisers, endorsers, and intermediaries face for violating the law; and
6. Emphasizing special concerns with child-directed advertising.[7]

The FTC’s Proposed New Rule on the Use of Consumer Reviews and Testimonials

The FTC also announced that it was proposing a new Rule concerning the use of consumer reviews and testimonials based upon feedback received in response to the FTC’s November 2022 Advanced Notice of Proposed Rulemaking.[8] The proposed Rule would specifically prohibit: (1) selling or obtaining fake consumer reviews and testimonials; (2) review hijacking; (3) buying positive or negative reviews; (4) insider reviews and testimonials; (5) company-controlled review websites; (6) illegal review suppression or removal; and (7) selling fake social media indicators such as fake followers or views.[9] There will be sixty days for public comment once the Federal Register Notice appears in the Federal Register.

FTC Updates Its Staff Guidance

For five years, the FTC’s “Endorsement Guides: What People Are Asking” publication has been used by businesses, endorsers, and the advertising industry as a go-to resource to help understand the “dos and don’ts” and best practices for endorsements. The new updated and revised version of the “Endorsement Guides: What People Are Asking”[10] provides a particular focus on influencers and other recent developments in FTC enforcement and guidance.

Putting it Into Practice

The long-awaited action by the FTC to update and revise the Endorsement Guides and the Staff Guidance and the proposed new Rule on the Use of Consumer Reviews and Testimonials means that the FTC’s enforcement actions regarding social media and influencers will continue to be a focus of the FTC. Care should be taken to make sure companies are in compliance with the FTC Endorsement Guides, especially in the context of social media, native advertising and when using influencers to promote your business and products. If your business utilizes positive and negative consumer reviews, scrutiny should be given to the new proposed Rule concerning the use of consumer reviews and testimonials. To fully understand how this impacts your advertising and promotion of your business, consult with your legal counsel to understand how these revisions and changes impact the advertising and marketing of your products. 

FOOTNOTES

[1] https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf; https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking.

[2] https://www.ftc.gov/news-events/press-releases/2009/10/ftc-publishes-final-guides-governing-endorsements-testimonials.

[3] Federal Trade Commission Announces Updated Advertising Guides to Combat Deceptive Reviews and Endorsements | Federal Trade Commission (ftc.gov).

[4] Federal Trade Commission Announces Proposed Rule Banning Fake Reviews and Testimonials | Federal Trade Commission (ftc.gov).

[5] FTC’s Endorsement Guides: What People Are Asking | Federal Trade Commission.

[6] Proposed text of Endorsement Guides FRN (ftc.gov)

[7] FTC and endorsements: Final revised guides, a proposed new rule, and an updated staff publication | Federal Trade Commission

[8] FTC to Explore Rulemaking to Combat Fake Reviews and Other Deceptive Endorsements | Federal Trade Commission

[9] 16 CFR Part 465: Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (ftc.gov)

[10] FTC’s Endorsement Guides: What People Are Asking | Federal Trade Commission

Two plaintiffs learned the hard way that not all environmental marketing claims are treated the same. A federal judge in Missouri recently dismissed a proposed class action by the shoppers against H&M over the company’s marketing of its “Conscious Choice” fashion line.

The suit, which brought claims under Missouri’s Merchandising Practices Act (“MMPA”) as well as common law claims for unjust enrichment, negligent misrepresentation, and fraud, took issue with H&M’s representations that its Conscious Choice garments—made from a certain percentage of organic cotton and recycled polyester—contain ‘more sustainable materials’ and that the line includes ‘its most sustainable products.’” The Complaint claimed that H&M’s advertising of the collection this way was misleading, given Plaintiffs’ allegation that clothing made from recycled polyester will likely end up in a landfill because its fibers are weakened as they are mechanically recycled from polyethylene terephthalate (PET) bottles.

H&M did not represent that its Conscious Choice products are sustainable, or more sustainable than its competitors, only that the line includes its most sustainable products, found U.S. District Court Judge Rodney W. Sippel before dismissing the case.

“No reasonable consumer would understand this representation to mean that the Conscious Choice clothing line is inherently ‘sustainable’ or that H&M’s clothing is ‘environmentally friendly’ when neither of those representations were ever made.” Instead, the “only reasonable reading of H&M’s advertisements is that the Conscious collection uses materials that are more sustainable than its regular materials,” Judge Sippel said.

Putting it into Practice:

Retailers are fighting a wave of “greenwashing” cases in recent months alleging misleading marketing surrounding a product’s sustainability. Indeed, the day after the proposed class action against H&M was dismissed, the same lawyers filed a similar lawsuit against another retailer in federal court in Missouri raising nearly identical claims. The court’s ruling in Lizama suggests that companies must take extra care in crafting language surrounding the sustainability of products so as to avoid liability for broad environmental benefits that cannot be substantiated. Here, H&M stuck to comparative claims about its own products (our most sustainable products) and did not get carried away with broader claims (our products are sustainable or the most sustainable products) it would have struggled to defend. That careful drafting of claims paid off.

On June 8, 2023, the Supreme Court in a unanimous decision held that a trademark claim concerning “a squeaky, chewable dog toy designed to look like a bottle of Jack Daniels whiskey” which, as a play on words, turns the words “Jack Daniels” into “Bad Spaniels” and the descriptive phrase “Old No. 7 Brand Tennessee Sour Mash Whiskey” into “The Old No. 2 On Your Tennessee Carpet” does not receive special First Amendment treatment where the accused infringer used the trademarks at issue to designate the source of its own goods and that, with respect to a Lanham Act dilution by tarnishment claim, “[t]he use of a mark does not count as noncommercial just because it parodies, or otherwise comments on, another’s products.”[1]

The Case In the District Court , Ninth Circuit and Oral Argument in the Supreme Court

Jack Daniels Properties, Inc. (“Jack Daniels”), which owns registered trademarks for “JACK DANIELS”, “OLD NO. 7”, the arched logo, the stylized label and distinctive bottle, sent a cease and desist letter demanding that VIP Products LLC (“VIP”) stop selling its “Bad Spaniels” chewable dog toy featuring the descriptive phrase “The Old No. 2 On Your Tennessee Carpet” referencing dog urine because it infringed and tarnished its famous trademarks. VIP brought a declaratory judgment action seeking a determination that its dog toy neither infringed nor diluted the Jack Daniels Trademarks. Jack Daniels asserted counterclaims for trademark infringement and dilution. VIP moved for summary judgment claiming that its dog toy was an “expressive work” which was protected under the First Amendment by virtue of the test set forth in Rogers v, Grimaldi,[2] which requires dismissal of an infringement claim unless the trademark owner can show that the challenged use “has no artistic relevance to the underlying work” or that it “explicitly misleads as to the source or the content of the work”[3] and that Jack Daniel’s dilution claim should be dismissed because the Bad Spaniels toy was a parody of Jack Daniels and therefore constituted “fair use” of Jack Daniels famous marks. Jack Daniels argued the look-alike dog toy could confuse consumers and that its reference to “the Old No. 2 on your Tennessee carpet” tarnishes the Jack Daniels trademark. The District Court rejected VIP’s contentions and enjoined VIP from manufacturing and selling its Bad Spaniels dog toy holding that when “another’s trademark is used for source identification,” the Rogers test does not apply and the test is whether the use is likely to cause confusion. The District Court also held that the fair use exclusion for parodies under the Lanham Act’s dilution provision did not apply where the use at issue does not serve as “a designation of source for the [alleged diluter’s] own goods.” VIP appealed to the Ninth Circuit Court of Appeals and the Ninth Circuit held that VIP’s dog toy was a communication of a humorous message and required heightened scrutiny to ensure that trademark protection for Jack Daniels did not intrude upon VIP’s First Amendment rights. With regard to dilution, the Ninth Circuit held that VIP was protected by the fair use exception for noncommercial uses. The Court of Appeals returned the case to the District Court to decide whether Jack Daniels could show pursuant to Rogers v, Grimaldi that the challenged use “has no artistic relevance to the underlying work” or that it “explicitly misleads as to the source or the content of the work.” On remand, the District Court found that Jack Daniels could not satisfy either test and granted summary judgment to VIP. Jack Daniels’ certiorari petition was granted and argument was held on March 22, 2023. 

The Supreme Court had an energetic oral argument with divergent views and questions advanced by the Justices. Justice Elena Kagan, who authored the majority opinion, suggested the Bad Spaniels dog toy was obviously a commercial product and said “[t]hat’s not a First Amendment problem.”[4] Justice Thomas asked a number of hypotheticals and questioned whether Rogers v. Grimaldi is inconsistent with traditional Lanham Act trademark protection.[5] When counsel for VIP argued that the dog toy was a parody that poked fun at a brand which “took itself too seriously,” Justice Kagan responded: “You make fun of a lot of marks: Doggie Walker, Dos Perros, Smella Arpaw, Canine Cola, Mountain Drool. Are all of these companies taking themselves too seriously?”[6] Counsel for VIP answered in the affirmative. Justice Alito, on the other hand, questioned whether any reasonable consumer would assume the Bad Spaniels toy, even with its references to dog excrement, would have anything to do with Jack Daniels.[7] Justice Brown Jackson questioned whether the Rogers v. Grimaldi test was too permissive of “expressive works” that cause confusion.[8] Counsel for Jack Daniels advocated elimination of the Rogers v. Grimaldi test. Justice Sotomayor expressed reluctance stating “I have some hesitation doing away with the Rogers test” which protects First Amendment rights.[9]

The Supreme Court’s June 8, 2023 Unanimous Decision

In its opinion, the Supreme Court stated that the Court initially needed to decide whether “the company [should] have had to satisfy the Rogers threshold test before the case could proceed to the Lanham Act’s likelihood-of-confusion inquiry” and noted that the parties either attack or defend the Second Circuit precedent.[10] The Supreme Court declined to answer the question and noted “[w]ithout deciding whether Rogers has merit in other contexts, we hold that it does not when an alleged infringer uses a trademark in the way the Lanham Act more cares about: as a designation of source for the infringer’s own goods.” The Supreme Court recounted the facts and reasoning underlying Rogers that “the titles of ‘artistic works,’ like the works themselves, have an ‘expressive element’ implicating ‘First Amendment values.’[11] The Supreme Court also noted that “[o]ver the decades, the lower courts adopting Rogers have confined it to similar cases, in which a trademark is used not to designate a work’s source, but solely to perform some other expressive function” and that “[t]he same courts, though, routinely conduct likelihood-of-confusion analysis, without mentioning Rogers when trademarks are used as trademarks – i.e., to designate source.”[12] The Supreme Court noted that Rogers was “a cabined doctrine” which “has applied only to cases involving ‘non-trademark uses’ – or otherwise said, cases in which ‘the defendant has used the mark’ at issue in a ‘non-source-identifying way.”[13]

The Supreme Court held that “the District Court correctly held that ‘VIP uses its Bad Spaniels trademark and trade dress as source identifiers of its dog toy” and that “VIP conceded that point below” by alleging in its complaint that VIP “own[s]’ and ‘use[s]’ the ‘Bad Spaniels’ trademark and trade dress for its durable rubber squeaky novelty dog toy.’”[14] While declining to apply the Rogers test, the Court noted that “a trademark’s expressive message — particularly a parodic one, as VIP asserts – may properly figure in assessing the likelihood of confusion.”[15] The Court remanded the case to the District Court to answer the question as to “whether the [use of] the Bad Spaniels marks are likely to cause confusion.”[16]

Regarding the dilution by tarnishment claim asserted by Jack Daniels, the Supreme Court held that the Ninth Circuit erred by concluding that VIP’s use is noncommercial because it parodies and “convey[s] a humorous message” about Jack Daniels.[17] The Supreme Court noted that Section 1125(c)(3)(A)(ii)’s “fair use exclusion has its own exclusion: It does not apply when the use is ‘as a designation of source for the person’s own goods or services.’ §1125(c)(3)(A). In that event, no parody, criticism, or commentary will rescue the alleged dilutor. It will be subject to liability regardless.”[18] The Court noted that “[t]he District Court had rightly concluded that because VIP used the challenged marks as source identifiers, it could not benefit from the fair-use exclusion for parody” and while the Circuit Court’s erroneous construction “negated Congress’s judgment about when – and when not – parody (and criticism and commentary) is excluded from dilution liability.”[19] The Supreme Court emphasized that its opinion was narrow and that “[o]n infringement, we hold only that Rogers does not apply when the challenged use of a mark is as a mark” and [o]n dilution, we hold only that the noncommercial exclusion does not shield parody or other commentary when its use of a mark is similarly source-identifying.”[20]

The Concurring Opinions

Justice Sotomayor concurred and was joined by Justice Alito. The concurrence was written separately “to emphasize that in the context of parodies and potentially other uses implicating First Amendment concerns, courts should treat the results of surveys with particular caution” because “[s]urvey answers may reflect a mistaken belief among some survey respondents that all parodies require permission from the owner of the parodied mark.”[21] As a result, Judge Sotomayor noted: “Courts should thus ensure surveys do not completely displace other likelihood-of-confusion factors, which may more accurately track the experiences of actual consumers in the marketplace. Courts should also be attentive to ways in which surveys may artificially prompt such confusion about the law or fail to sufficiently control for it.” This concurrence suggests that parties should not rely only upon survey evidence alone but should consider and weigh each of the likelihood of confusion factors.

Justice Gorsuch authored a separate concurrence and was joined by Justices Thomas and Barrett. The concurrence was written “only to underscore that lower courts should handle Rogers v, Grimaldi, 875 F.2d 994 (CA2 1989), with care.” The concurrence noted “it is not entirely clear where the Rogers test comes from” and “it is not obvious that Rogers is correct in all of its particulars — certainly, the Solicitor General raises serious questions about the decision.” The decision cautioned: “All this remains for resolution another day, ante, at 13, and lower courts should be attuned to that fact.”[22] As a result, three Justices have indicated serious reservations about the future of Rogers v, Grimaldi.

Summary:

The Supreme Court’s decision clearly prohibits the application of Rogers in cases where the accused infringer used the trademarks at issue to designate the source of its own goods. Regarding dilution claims under the Lanham Act, the decision makes plain that the exception under §1125(c)(3)(A) does not apply to parodies where the use is “as a designation of source for the person’s own goods or services” and “[t]he use of a mark does not count as noncommercial just because it parodies, or otherwise comments on, another’s products.”[23] The two concurrences suggest that the Supreme Court is skeptical about the use of confusion surveys in cases involving trademark parody cases and whether the Rogers test “is correct in all of its particulars.”[24] As a result, while the decision is narrow, the concurrences foreshadow other possible issues that may be addressed by the Supreme Court in future Lanham Act cases.

FOOTNOTES

[1] Jack Daniel’s Properties, Inc. v. VIP Products LLC, 599 U.S. ___ (2023) (slip op., at 2).

[2] Rogers v. Grimaldi, 875 F. 2d 994, 999 (2d Cir, 1989).

[3] Id.

[4] Transcript of Oral Argument at 82-83, Jack Daniel’s Properties, Inc., v. VIP Products LLC, 559 U.S. __ (2023) (No. 22-148).

[5] Id. at 5-7, 90-91.

[6] Id. at 66.

[7] Id. at 28-33.

[8] Id. at 64-65, 86-87.

[9] Id. at 16.

[10] 599 U.S. ___ (2023) (slip op., at 10).

[11] Id. at 11(citing Rogers v. Grimaldi, 875 F. 2d at 998).

[12] 599 U.S. ___ (2023) (slip op., at 11-12).

[13] 599 U.S. ___ (2023) (slip op., at 13) (quoting S. Dogan & M. Lemley, “Grounding Trademark Law Through Trademark Use,” 92 Iowa L. Rev. 1669, 1683-1684 n.58 (2007)).

[14] 599 U.S. ___ (2023) (slip op., at 17) (See App. to Pet. for Cert. 105a. at 3, 11.)

[15] 599 U.S. ___ (2023) (slip op., at 18).

[16] Id.

[17] VIP Prods. LLC v. Jack Daniel’s Props., Inc., 953 F. 3d, 1170, 1175-1176 (2020).

[18] 599 U.S. ___ (2023) (slip op., at 19); 15 U.S.C. §1125(c)(3)(A)(ii).

[19] 599 U.S. ___ (2023) (slip op., at 20) (See App. to Pet. for Cert. 105a at 8–9, 17–18.)

[20] 599 U.S. ___ (2023) (slip op., at 20)

[21] 599 U.S. ___ (2023) (Sotomayor, J. concurring) (slip op. concurrence., at 1).

[22] 599 U.S. ___ (2023) (Gorsuch, J. concurring) (slip op. concurrence., at 1).

[23] 599 U.S. ___ (2023) (slip op., at 2, 5).

[24] 599 U.S. ___ (2023) (Gorsuch, J. concurring) (slip op. concurrence., at 1).

On May 18, 2023, the United States Supreme Court ruled in favor of famed rock photographer Lynn Goldsmith against the Andy Warhol Foundation for the Visual Arts, Inc.’s (AWF),[1] in a long-awaited decision impacting fair use under Section 107(1) of the Copyright Act. The opinion written by Justice Sotomayor, in which Justices Thomas, Alito, Gorsuch, Kavanaugh, Barrett and Jackson joined, held that the “purpose and character” of AWF’s commercial use of Warhol’s portraits of Prince shared the same commercial purpose of the original photograph taken by Ms. Goldsmith and, as a result, did not constitute fair use.[2] The Court’s decision affirmed the ruling of the Second Circuit Court of Appeals, which held that the Warhol work was derivative of the original, and noted that “the new expression may be relevant to whether a copying use has a sufficiently distinct purpose or character” but that factor was not dispositive by itself.[3] The Court found that the Warhol Foundation’s licensing of the Orange Prince to Conde Nast did not have a sufficiently different purpose as the Goldsmith photograph because both were “portraits of Prince used in magazines to illustrate stories about Prince.”[4]

Background

The case concerns an orange silkscreen portrait of the artist formerly known as Prince created by Warhol, referred to as “Orange Prince,” which was created by Warhol from a black-and-white photograph taken by Goldsmith to illustrate an article in Newsweek. In 1984, Goldsmith gave Vanity Fair permission to use the photograph in a new commissioned purple silkscreen portrait by Warhol that appeared in the magazine’s November issue. Unbeknownst to Goldsmith, Warhol also created fifteen other works based on the photograph, including Orange Prince.

In 2016, Vanity Fair licensed Orange Prince from AWF for the cover of their commemorative issue about Prince. Goldsmith was not paid or credited for this use. When Goldsmith issued a cease and desist letter claiming copyright infringement, AWF brought a declaratory judgment action asserting that its use of Goldsmith’s photograph in Orange Prince was protected under the Copyright Act’s fair use doctrine. While the District Court ruled in favor of AWF holding that the minimal modifications to the original Goldsmith photograph were transformative, the Second Circuit reversed. The Second Circuit held that the fair use factors under Section 107 of the Copyright Act weighed in favor of Goldsmith, stating “the secondary work itself must reasonably be perceived as embodying an entirely distinct artistic purpose, one that conveys a ‘new meaning or message’ entirely separate from its source material. . . . While we cannot, nor do we attempt to, catalog all of the ways in which an artist may achieve that end, we note that the works that have done so thus far have themselves been distinct works of art that draw from numerous sources, rather than works that simply alter or recast a single work with a new aesthetic.”[5] Following the Supreme Court’s decision in 2021 in Google LLC v. Oracle America,[6] the Second Circuit withdrew its opinion and issued a slightly amended opinion. The Supreme Court granted certiorari in March 28, 2022, presenting the question of whether a work of art is “transformative” for purposes of a fair use defense under the Copyright Act (17 U.S.C. § 107), “when it conveys a different meaning or message from its source material. . . .”

How the Court’s Decision Impacts the Application of the Copyright Fair Use Defense

Fair use is a statutory defense to copyright infringement that allows one to use copyrighted materials without the permission of the rightsholder under certain limited circumstances. Section 107 of the Copyright Act provides that “fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching … scholarship, or research is not an infringement of copyright.”[7] The statute sets forth the following four factors for courts to weigh in determining whether a use of a protected work constitutes a fair use:

1. The purpose and character of the use, including whether the use is commercial in nature.
2. The nature of the copyrighted work.
3. The amount and substantiality of the portion used in relation to the copyrighted work.
4. The effect upon the potential market for or value of the copyrighted work.[8]

In the Warhol case, the Court focused only on the first factor and whether AWF’s copying of the Goldsmith photograph was of a different purpose and character of use, including whether the use was commercial in nature.

Since the Supreme Court’s decision in Campbell v. Acuff-Rose Music,[9] the test for determining the first factor is whether the new use of the original work “adds something new, with a further purpose or different character, altering the first with new expression, meaning or message” or “transforms” the original work.[10] The more transformative a work is, the more likely it is to be considered fair use.

AWF argued that its use of Orange Prince was transformative because Warhol conveyed a different meaning or message than Goldsmith’s photograph. In particular, AWF contended that Goldsmith’s photograph was intended to highlight Prince’s vulnerability, while Warhol’s piece depicted Prince as an iconic, larger-than-life character.[11]

However, the Supreme Court rejected these arguments, holding that when an original work and secondary use share the same or highly similar purposes, and the secondary use is commercial, the first fair use factor is likely to weigh against application of the fair use defense.[12] In this case, Goldsmith’s original photograph and the AWF’s allegedly infringing use shared the same purpose — both illustrate a Vanity Fair magazine story about Prince.[13] AWF’s use was commercial because AWF licensed the artwork for a fee.[14] Justice Sotomayor noted that Campbell v. Acuff-Rose Music could not be interpreted to mean that fair use defense could be applied to works so broadly as to include works that share substantially the same purpose and use, including the commercial nature. “Otherwise, ‘transformative use’ would swallow the copyright owner’s exclusive right to prepare derivative works, as many derivative works that ‘recast, transfor[m] or adap[t]’ the original, add new expression of some kind.”[15] The Court held, as a result, that this first “fair use” factor weighed in favor of Goldsmith and affirmed the Second Circuit’s ruling.[16]

In an acrimonious dissent, Justice Kagan and Chief Justice Roberts criticized the majority’s “lack of appreciation” for the way Warhol’s works differed from Goldsmith’s photograph and noted that: “In a recent [2021]decision, this Court used Warhol paintings as the perfect exemplar of a ‘copying use that adds something new and important’—of a use that is ‘transformative,’ and thus points toward a finding of fair use.”[17] The dissent further accused the seven-Justice majority of inhibiting the ability of writers and artists to draw upon prior works and warned that the decision “will stifle creativity of every sort. It will impede new art, music and literature. It will thwart the expression of new ideas and the attainment of new knowledge. It will make our world poorer.”[18]

There is no doubt that appropriation artists and content creators will need to take the Court’s decision in the Warhol case into account when assessing whether a proposed use of an existing protected work constitutes a fair use. Creators and clearance counsel will need to look beyond the question as to whether the secondary use is transformative and conveys a new meaning or message, and consider each of the fair use factors, including whether the intended use has the same or similar purpose to that of that of the original and whether such use is commercial in nature.

Still, it is important to note that the Supreme Court was careful to limit its decision to the specific context of AWF’s commercial use of “Orange Prince” by licensing it to Vanity Fair for a fee. This means that the first fair use factor is not dispositive and that creators can still argue that a work is transformative to the extent a new and creative use differs from that of the original work.

FOOTNOTES

[1] Andy Warhol Foundation for the Visual Arts, Inc., v. Goldsmith, 598 U.S. ____ (2023).

[2] Slip op. 25. 

[3] Slip op. 2.

[4] Slip op. 4.

[5] The Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 19-2420, 110 (2d Cir. 2021).

[6] 593 U. S. __.

[7] 17 U.S.C. § 107.

[8] Id.

[9] 510 U. S. 569 (1994)

[10] Id. at 579.

[11] Slip op. 28.

[12] Slip op. 20.

[13] Slip op. 21.

[14] Slip op. 24.

[15] Slip op. 5.

[16] Slip op. 25.

[17] Slip op. 2 (quoting Google LLC v. Oracle America, Inc., 593 U. S. ___, ___–___ (2021) (slip op., at 24–25)).

[18] Slip op. 36.

Retailers and service providers should take note: the Federal Trade Commission (FTC) is increasing its scrutiny of negative option marketing activity to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. The FTC issued today a notice of proposed rulemaking as part of its ongoing review of its 1973 Negative Option Rule—one of the primary guides for the FTC’s enforcement focus.

Negative option arrangements include “free trial” programs that automatically convert to paid subscriptions, and “automatic renewals” which allow sellers to unilaterally renew a consumer’s paid subscription when it expires unless the consumer affirmatively cancels by a certain date. The FTC considers these marketing practices a renewed enforcement priority.

Negative option marketing already requires special considerations, including specific disclosures of material terms, notice at specific intervals before automatic payments or renewals are initiated, prior notice of any changes to the terms of service with an opportunity to cancel, and easy and unimpeded cancellation processes under which compliant requests are timely honored. However, according to recent statements by the FTC, the current patchwork of federal laws and regulations does not provide brands with a consistent legal framework to follow. The proposed rule purports to address the gaps.

Among the several significant updates the FTC is proposing, the new rule would implement the following:

• Requirement for simple cancellation mechanisms. The proposed rule would require sellers to make it at least as easy to cancel a service as it was to start it. For example, if consumers can sign up online, they must be able to cancel on the same website, in the same number of steps.
• New requirements before making additional offers. The proposed rule would require sellers to obtain a consumer’s affirmative consent before pitching additional offers or modifications when the consumer tries to cancel. If the consumer does not consent upon request, the seller must immediately implement the cancellation process without further impediment.
• New requirements regarding reminders. The proposed rule would require sellers to provide an annual reminder before automatically renewing a service subscription.

The FTC developed a Fact Sheet summarizing the proposed changes to the Negative Option Rule and is seeking comments from the public within 60 days of publication in the Federal Register. In the meantime, retailers and service providers should take note of the proposal and review their current negative option marketing activity to position their business for compliance in this area of renewed focus by the FTC.

Environmental marketing claims often present something of a Catch-22—companies that are doing actual good for the environment deserve to reap the benefits of their efforts, and consumers deserve to know, while at the same time, heightened scrutiny from the Federal Trade Commission (FTC), the National Advertising Division (NAD), state regulators and the plaintiffs’ bar have made such claims increasingly risky.

In 2012, the FTC issued the Green Guides for the use of environmental marketing claims to protect consumers and to help advertisers avoid deceptive environmental marketing. Compliance with the Green Guides may provide a safe harbor from FTC enforcement, and from liability under state laws, such as California’s Environmental Marketing Claims Act, that incorporate the Green Guides. The FTC has started a process to revise the Green Guides, including a request for comments about the meaning of “sustainable.” In the meantime, any business considering touting the environmental attributes of its products should consider the following essential takeaways from the Green Guides in their current form:

• Substantiation: Substantiation is key! Advertisers should have a reasonable basis for their environmental claims. Substantiation is the support for a claim, which helps ensure that the claim is truthful and not misleading or deceptive. Among other things, substantiation requires documentation sufficient to verify environmental claims.
• General benefit claims: Advertisers should avoid making unqualified claims of general benefit because substantiation is required for each reasonable interpretation of the claim. The more narrowly tailored the claim, the easier it is to substantiate.
• Comparative claims: Advertisers should be careful and specific when making comparative claims. For example, a claim that states “20% more recycled content” begs the question: “compared to what?” A prior version of the same product? A competing product? Without further detail, the advertiser would be responsible for the reasonable interpretation that the product has 20% more recycled content than other brands, as well as the interpretation that the product has 20% more recycled content than the advertiser’s older products.
• General greenwashing terms: Advertisers should be very cautious when using general environmental benefit terms such as “eco-friendly,” “sustainable,” “green,” and “planet-friendly.” Those kinds of claims feature prominently in many complaints alleging greenwashing, and they should only be used where the advertiser knows and explains what the term means, and can substantiate every reasonable interpretation of the claim.

Putting it into Practice: Given the scrutiny that environmental claims tend to attract, advertisers should exercise care when making environmental benefit claims about their products and services. They should narrowly tailor their claims to the specific environmental attributes they want to promote, and perhaps most important, they should ensure they have adequate backup to substantiate their claims. While the FTC Green Guides are due for a refresh (which we will surely report on), for the time being, they will continue to serve as important guidance for advertisers seeking to inform consumers without exposing their business to FTC scrutiny or class action litigation.

On August 9, the US District Court of Georgia ruled that the FTC had provided “broad and detailed evidence” for its allegations that a tech company and its CEO engaged in deceptive advertising and unfair fee practices in violation of Section 5 of the FTC Act. The FTC’s 2019 complaint alleged the defendants made deceptive representations to customers and charged hidden, unauthorized fees in connection with the company’s “fuel card” as well as through co-branded cards, to companies in the trucking and commercial fleet industry. The FTC’s factual allegations include the following: 

• Waiting to charge fees until a few billing cycles have passed, making the fees harder to detect among a customer’s monthly bill fluctuations.
• Failing to post customer payments when they were received, leading to late fees and “high credit risk” fees.
• Not stopping unauthorized charges as promised, such that despite advertising the cards as “fuel only” cards, cardholders were able to purchase any item sold at fueling locations, including beer and snacks.
• Not providing advertised per-gallon savings to card users.
• Charging fees for set-up, transactions, and membership despite having made representations that the company does not charge such fees.
• Charging recurring fees for programs without customer authorization.

The FTC sought monetary equitable relief under 13(b) of the FTC Act. However, in April of 2021, the Supreme Court decided AMG Capital Management, LLC v. FTC, holding that the FTC does not, in fact, have the statutory authority to seek equitable monetary relief under Section 13(b) of the FTC Act (see previous blog posts here and here). The case continued, however, with the FTC focused on injunctive relief. 

In its ruling, the court found that the FTC had presented detailed evidence from a wide variety of sources demonstrating that the advertisements were deceptive and that the fee practices related to improper late fees and other unauthorized fees were “unfair practices.” Thus, the court granted the FTC’s summary judgment motion in full. The court will hold a hearing in September to determine the scope of injunctive relief to be awarded.

Putting It Into Practice: We note that while the FTC stayed the administrative proceeding mentioned above, it filed the administrative action to preserve the possibility of obtaining monetary relief. Specifically, if the FTC successfully established the respondents’ UDAP liability in the administrative action, it can then seek monetary relief in federal district court pursuant to Section 19(a)(2). Under Section 19, the FTC has to show that the challenged acts or practices were ones that a reasonable [person] would have known under the circumstances were dishonest or fraudulent. While the contours of this standard have not been clearly established in case law, we are likely to see its continued use in post-AMG FTC enforcement.