Remember when Elon Musk told advertisers to “go fuck” themselves and then sued them for the crime of taking his advice? A federal judge has now dismissed that lawsuit — with prejudice — confirming what anyone with a passing familiarity with antitrust law already knew: companies deciding they don’t want their brands plastered next to extremist content aren’t engaged in an illegal conspiracy. They’re just making basic (probably pretty smart) business decisions.
When X Corp filed this case back in August of 2024, we walked through in great detail why the legal theory was fundamentally broken. Not broken in a “they pleaded it badly” kind of way, but broken in a “this theory does not describe an antitrust violation no matter how many drugs you’re taking or how convinced you are that the world owes you advertising dollars” kind of way. Judge Jane Boyle of the Northern District of Texas has now agreed, and the key section of her ruling is worth reading in full, because it says what we said at the outset: X has not suffered antitrust injury.
The court laid out the standard, quoting the Fifth Circuit, channeling the Supreme Court, on what counts as an antitrust injury:
The Supreme Court has distilled antitrust injury as being “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” … “The antitrust laws … were enacted for ‘the protection of competition not competitors.'” … “Typical” antitrust injury thus “include[s] increased prices and decreased output.” … “This circuit has narrowly interpreted the meaning of antitrust injury, excluding from it the threat of decreased competition.” … “Loss from competition itself—that is, loss in the form of customers[] choosing the competitor’s goods and services over the plaintiff’s—does not constitute an antitrust injury.” … In short, the question underlying antitrust injury is whether consumers—not competitors—have been harmed.
Antitrust law protects competition, not competitors. X’s entire argument boiled down to: “advertisers chose to spend their money somewhere other than our platform, and that hurt us.” But that’s just… the market. That’s how markets work. Customers choosing not to buy from you because they don’t like what you’re selling has never been an antitrust violation, and the court made short work of explaining why.
Amusingly, the GOP — whose campaigns Musk has bankrolled extensively — spent decades pushing for exactly this narrow definition of antitrust injury, precisely to make cases like this harder to bring. Perhaps one of those politicians could have mentioned that before Elon filed.
But this case was never actually about winning an antitrust case. It was a warning shot at advertisers: give Elon your money or we’ll drag you through an expensive court process. A shakedown dressed up in legal filings. Indeed, after the lawsuit was filed, it was reported that part of X’s “sales” process was to threaten companies that they’d be added to the lawsuit if they didn’t advertise on the platform.
The court examined X’s theory from two different angles, and it failed both times. First, if the conspiracy was supposed to benefit competing social media platforms (like Pinterest, one of the defendants), X hadn’t alleged that any competitor was actually behind the boycott or pressuring advertisers to exclude X so the competitor could corner the market:
X has not alleged that the advertisers chose to do business with Pinterest—or any other social media company—as part of an agreement not to do business with X. Unlike the large hospital in Doctor’s Hospital, Pinterest is not alleged to be X’s competitor that wanted to exclude X from the market so that it could charge higher prices. In turn, unlike the network in Doctor’s Hospital, the advertisers did not decide to boycott X at Pinterest’s—or any other X competitor’s—behest to secure the competitor’s business. Instead, X alleges a conspiracy driven by advertisers not to further X-competitor social media companies’ interests but to pursue their own collective interests as to where they place their advertisements.
Second, if the conspiracy was supposed to eliminate competition at the advertiser level, the court found that GARM wasn’t acting as some kind of gatekeeper blocking X from accessing customers. It was just… advertisers deciding for themselves:
GARM is not an economic intermediary like the retailers in Eastern States. GARM did not buy advertising space from X to sell to advertisers nor did it, in such an arrangement, tell X not to sell directly to GARM’s customers. Rather, GARM was organized by advertisers and reflected their “avowed commitment to furthering [their] economic interests . . . as a group.” … Thus, if GARM is the obstacle to X reaching its advertiser-customers directly, then it is the equivalent of the advertiser-customers themselves deciding not to deal.
That’s the ballgame. Advertisers collectively deciding they don’t want to spend money on your platform — especially after you’ve told them to go fuck themselves and your platform has become a haven for content that damages their brands — just doesn’t state an antitrust claim. Imagine being so entitled that when the marketplace rejects your offering, you insist that it must be an antitrust attack on your rights to their money?
The court was so confident in this conclusion that it dismissed the case with prejudice and denied X the opportunity to replead, noting that the 165-paragraph complaint was already plenty detailed:
The 165-paragraph Second Amended Complaint contains no dearth of detail: if facts existed that GARM operated at an X competitor’s behest to put X out of business or that GARM advertisers sought to unfairly exclude competing advertisers from doing business, X would have pleaded those facts. The very nature of the alleged conspiracy does not state an antitrust claim, and the Court therefore has no qualm dismissing with prejudice.
When a court tells you the nature of your theory doesn’t work, that’s about as definitive a loss as you can get.
As we noted when the case was filed, the evidence X submitted in its own complaint actually undermined the case. One of X’s own exhibits showed GARM’s lead, Rob Rakowitz, explicitly telling an advertiser that GARM doesn’t make recommendations and that advertising decisions are “completely within the sphere of each member and subject to their own discretion.” Another email showed Rakowitz telling an advertiser asking about Twitter that “you may want to connect with Twitter directly to understand their progress on brand safety and make your own decisions.” This is the supposedly nefarious conspiracy that X spent years and untold legal fees litigating.
Separately, I have to mention the blatant forum shopping: X filed this case in the Wichita Falls Division of the Northern District of Texas, which was widely understood as a transparent attempt to land in front of Judge Reed O’Connor, known for partisan rulings and already presiding over Elon’s SLAPP suit against Media Matters. That didn’t work out — O’Connor recused himself, not because of his ownership of Tesla stock, but rather his ownership of some advertising firms who were defendants. The case got reassigned to Judge Boyle, and X still lost. In an ironic twist, X then tried to transfer the case to the Southern District of New York, only to have the court deny that motion because X couldn’t even prove they did business in that specific district. So X handpicked a forum, lost its judge, and then couldn’t escape to a different one. Great lawyering.
But the legal dismissal, satisfying as it is, doesn’t capture the most important part of what actually happened here. Because while the court correctly found that X suffered no antitrust injury, GARM itself suffered a very real injury: it was killed.
GARM shut down within days of the lawsuit being filed, following Rep. Jim Jordan’s misleading congressional investigation that painted the organization as some kind of anti-conservative censorship machine. Jordan’s pressure campaign, combined with the threat of expensive litigation from the world’s richest man, made it untenable for GARM to continue operating. The organization that existed to help advertisers make informed decisions about brand safety — a fundamentally expressive activity, protected by the First Amendment — was destroyed through government jawboning and litigation threats.
There was only one attack on free speech involved here and it came from Jim Jordan and Elon Musk, not GARM or its advertiser members.
X filed this lawsuit wrapped in the language of free speech. Former X CEO Linda Yaccarino literally wore a necklace that said “free speech” while announcing the case, claiming that advertisers not giving X money was somehow an attack on users’ ability to express themselves. The actual speech suppression ran the other direction entirely. A private organization exercising its speech rights to help its members make informed business decisions was bullied out of existence through a combination of congressional intimidation and frivolous litigation.
Jordan celebrated GARM’s dissolution as a victory for free speech — par for the course for the censorial MAGA GOP. A congressman used the weight of his office to pressure a private organization into shutting down, and called that free speech. Meanwhile, the lawsuit that was part of that same ecosystem of intimidation has now been found to have no legal merit whatsoever.
This is what actual jawboning looks like in practice. The lawsuit didn’t need to succeed to accomplish its goal. GARM is gone. The organization that facilitated conversations among advertisers about how to protect their brands has been silenced. The chilling effect on any future organization that might want to do something similar is obvious and intentional. Any industry group that tries to coordinate around brand safety now knows that it might face a billionaire-funded lawsuit and a congressional investigation for its trouble.
The court’s ruling is a vindication of basic antitrust law. But the more important point is about what the actual free speech dynamics were in this whole saga.
X can appeal, of course, and given that this falls within the Fifth Circuit, stranger things have happened. But the fundamental problem remains what it’s always been: the theory that advertisers owe you their business because you exist, and that organizing around brand safety is a criminal conspiracy, has never been a viable legal argument. The court said so plainly. Dismissed with prejudice. Nothing to fix, because the whole premise was broken from the start.
Taking a break from attacking the First Amendment, FCC boss Brendan Carr this week engaged in a strange bit of performance art: his FCC announced that they’d be effectively adding all foreign-made routers to the agency’s “covered list,” in a bid to ban their sale in the United States.
That is unless manufacturers obtain “conditional approval” (including all appropriate application fees and favors, of course) from the Trump administration via the Department of Defense or Department of Homeland Security. In other words, the Trump administration is attempting to shake down manufacturers of all routers manufactured outside the United States (which again, is nearly all of them) under the pretense of cybersecurity.
You can probably see how this might result in some looming legal action. And who knows what other “favors” to the Trump administration might be required to get conditional approval, like the inclusion of backdoors accessible by our current authoritarian government.
A fact sheet insists this was all necessary because many foreign routers have been exploited by foreign actors:
“Recently, malicious state and non-state sponsored cyber attackers have increasingly leveraged the vulnerabilities in small and home office routers produced abroad to carry out direct attacks against American civilians in their homes.”
We’ve discussed at length that while Brendan Carr loves to pretend he’s doing important things on cybersecurity, most of his policies have made the U.S. less secure. Like his mindless deregulation of the privacy and security standards of domestic telecoms and hardware makers. Or his destruction of smart home testing programs just because they had some operations in China.
Most of the Trump administration “cybersecurity” solutions have been indistinguishable from a foreign attack. They’ve gutted numerous government cybersecurity programs (including a board investigating Salt Typhoon), and dismantled the Cyber Safety Review Board (CSRB) (responsible for investigating significant cybersecurity incidents). The administration claims to be worried about cybersecurity, but then goes out of its way to ensure domestic telecoms see no meaningful oversight whatsoever.
I’d argue Trump administration destruction of corporate oversight of domestic telecom privacy/security standards is a much bigger threat to national security and consumer safety than 90% of foreign routers, but good luck finding any news outlet that brings that up in their coverage of the FCC’s latest move.
In reality, the biggest current threat to U.S. national security is the Trump administration’s rampant, historic corruption. Absolutely any time you see the Trump administration taking steps to “improve national security,” or “address cybersecurity” you can just easily assume there’s some ulterior motive of personal benefit to the president, as we saw when the great hyperventilation over TikTok was “fixed” by offloading the app to Trump’s dodgy billionaire friends.
On the morning of Thursday, July 31, James B. Milliken was enjoying a round of golf at the remote Sand Hills club in Western Nebraska when his cellphone buzzed.
Milliken was still days away from taking the helm of the sprawling University of California system, but his new office was on the line with disturbing news: The Trump administration was freezing hundreds of millions of dollars of research funding at the University of California, Los Angeles, UC’s biggest campus. Milliken quickly packed up and made the five-hour drive to Denver to catch the next flight to California.
He landed on the front lines of one of the most confounding cultural battles waged by the Trump administration.
The grant freeze was the latest salvo in the administration’s broader campaign against elite universities, which it has pilloried as purveyors of antisemitism and “woke” indoctrination. Over the next four months, the Justice Department targeted UCLA with its full playbook for bringing colleges to heel, threatening it with multiple discrimination lawsuits, demanding more than $1 billion in fines and pressing for a raft of changes on the conservative wish list for overhauling higher education.
In the months since Milliken’s aborted golf game, much has been written about the Trump administration’s efforts to impose its will on UCLA, part of the nation’s largest and most prestigious public university system. But an investigation by ProPublica and The Chronicle of Higher Education,based on previously unreported documents and interviews with dozens of people involved, revealsthe extent to which the government violated legal and procedural norms to gin up its case against the school. It also surfaced something equally alarming: How the UC system’s deep dependence on federal money inhibited its willingness to resist the legally shaky onslaught, a vulnerability the Trump administration’s tactics brought into sharp focus.
According to former DOJ insiders, agency political appointees dispatched teams of career civil rights lawyers to California in March, pressuring them to rapidly “find” evidence backing a preordained conclusion: that the UC system and four of its campuses had illegally tolerated antisemitism, which would violate federal civil rights statutes.
The career attorneys eventually recommended a lawsuit against only UCLA, which had been rocked by pro-Palestinian protests in the spring of 2024. But even that case was weak, the lawyers acknowledged in a previously unreported internal memo we obtained. It documented the extensive steps UCLA had already taken to address antisemitism, many resulting from a Biden administration investigation based on the same incidents. The memo also noted there was no evidence that the harassing behavior that peaked during the protests was still happening.
Nonetheless, investigators sketched out a convoluted legal strategy to justify a new civil rights complaint against UCLA that several former DOJ lawyers called problematic and ethically dubious. Multiple attorneys who worked on it told us they were relieved they’d left the DOJ before they could be asked to sign it.
UCLA seemingly had every reason to push back aggressively. Yet UC system leaders have resisted calls from faculty and labor groups to file suit, fearing the many ways the government could retaliate against not only UCLA, but the entire university system, which relies on federal funds for a full one-third of its revenue. The government has opened probes into all 10 UC campuses, including at least seven that target UC Berkeley alone. “Thankfully, they’ve only fucked with UCLA at this point,” said one UC insider privy to the system’s thinking.
To tell this story, ProPublica and the Chronicle reviewed public and internal records and interviewed more than 50people, including DOJ attorneys who worked on the California investigations, UC officials and faculty, former government officials, Jewish leaders and legal experts. Some asked not to be identified, for fear the administration would retaliate or because they hadn’t been authorized to discuss the conflict. The Justice Department and its top officials did not respond to detailed questions and interview requests.
Over three decades leading public colleges, Milliken, 68, a dapper onetime Wall Street lawyer who goes by “JB,” has built a reputation as a pragmatist able to work with politicians of all stripes and navigate the culture wars. In an interview, he called the challenges facing the entirety of UC, and UCLA in particular, unparalleled in his career. “There’s nothing like this time,” he said. “This is singular. It’s the toughest.”
On Nov. 14, UC received a temporary reprieve. In response to a complaint brought by the American Association of University Professors, U.S. District Judge Rita F. Lin issued a scathing opinion finding that the Trump administration’s actions against UCLA had “flouted” legal requirements and ordered it to cease all “coercive and retaliatory conduct” against the UC system. Lin had already ordered the release of UCLA’s $584 million in frozen grant funding.
But those orders are preliminary and subject to appeal, and many people at UC fear that more attacks are coming. “Even if this holds, there will simply be another move from this administration,” said Anna Markowitz, an associate professor of education at UCLA and a leader of the campus faculty association, which is among the lawsuit’s plaintiffs. “They have not made it a secret what they wish to do.”
In interviews, UCLA researchers described the damage the school has absorbed so far. Even Jewish faculty members who endured antisemitism said they are aghast at the way the government has weaponized their complaints to justify cutting critical scientific research.
One of them is Ron Avi Astor, a professor of social welfare and education whose description of his treatment at the hands of pro-Palestinian protesters is a prominent part of the lawsuit President Donald Trump’s DOJ recommended against UCLA. But he is dismayed at the cuts to research funds. “These are things that save people’s lives. Why are we messing with that? It’s a tool that anyone who’s a scholar would abhor,” he told us. “It looks like we’re being used.”
For Trump’s Justice Department, the University of California was a juicy target from the start.
With its 10 campuses, nearly 300,000 students, six medical centers and three national labs, UC is a crown jewel of a blue state — one whose governor, Gavin Newsom, has become one of Trump’s most prominent foes.
Its scientists have won 75 Nobel Prizes, including four this year alone. But as a high-powered science hub, it’s deeply dependent on federal funding, getting some $17.3 billion a year in research grants, student financial aid and reimbursements from government health programs. UC also has nothing like the endowment wealth of the Ivy League colleges, including Columbia and Brown, from which the Trump administration has extracted penalties in the tens or hundreds of millions.
Some of Trump’s DOJ appointees arrived with UC already in their crosshairs. Harmeet K. Dhillon, Trump’s assistant attorney general for civil rights, had sued UC officials in 2017 on behalf of two conservative student groups, alleging unfair treatment of conservative speakers they wanted to bring to the Berkeley campus. (UC settled the case a year later, agreeing to modify rules for speakers at Berkeley and pay $70,000 in legal costs.) And Trump had named Leo Terrell, the bombastic former Fox News commentator, to a top DOJ civil rights post where he heads the president’s Task Force to Combat Anti-Semitism. A UCLA School of Law graduate, Terrell had publicly declared in mid-2024 that his alma mater was “a national embarrassment” over its handling of “criminal antisemitic conduct.” Dhillon and Terrell didn’t respond to requests for comment.
In early February, just two weeks after Trump took office, his new attorney general, Pam Bondi, issued a series of directives to the DOJ requiring “zealous advocacy” for Trump’s executive orders, attacks on all forms of “illegal DEI” and aggressive steps to combat antisemitism. Civil rights actions and investigations involving race and sex discrimination, historically the civil rights division’s chief focus, were largely abandoned.
On Feb. 28, Terrell’s task force announced plans to visit 10 U.S. campuses, including UCLA and UC Berkeley, that were alleged to have illegally failed to protect Jewish students and faculty members, to assess “whether remedial action is warranted.”
But by then, the new Justice leadership had already decided to investigate UC schools and already concluded that they were guilty.
In early March, Terrell declared on Fox News that students and employees in “the entire UC system” were “being harassed because of antisemitism.” The administration planned to “sue,” “bankrupt,” and “take away every single federal dollar” from such schools, he said, and the DOJ would file hate crime charges.
A team of about a dozen career DOJ lawyers had been assembled only days earlier to investigate the allegations of antisemitism against UC employees. Under the employment discrimination section of the Civil Rights Act, the occurrence of ugly antisemitic incidents or violence involving professors or staff wasn’t, by itself, enough to merit federal intervention. The legal standard was whether the university had engaged in a “pattern or practice” of tolerating antisemitism.
Before Trump took office, the civil rights division typically took more than a year to complete such a probe, according to DOJ veterans. Investigators would conduct interviews on campus, review reams of documents for compliance with various statutes and assess such complex matters as when hateful speech is protected by the First Amendment. Once a complaint was authorized, the civil rights division would seek voluntary compliance in a process that was meant to find solutions, not punish colleges.
In this case, the Justice Department’s political appointees demanded that investigators wrap things up in far less time — initially, a single month.
Career supervisors say they told their new bosses that they couldn’t, in one month, produce a case that could stand up in court. Still, “North” and “South” teams of lawyers were dispatched for multiday trips to California to dig up facts and interview officials at UC Berkeley, UC Davis, UC San Francisco and UCLA.
“We were told what the outcome will be: ‘You have one month to find evidence to justify a lawsuit and draft a complaint against the UC system,’” said Ejaz Baluch, a senior trial attorney in the civil rights division who worked on the investigation before leaving the Justice Department in May.
“The incredibly short timing of this investigation is just emblematic of the fact that the end goal was never to conduct a thorough, unbiased investigation,” Jen Swedish, who was the deputy chief of Justice’s employment litigation section until May, said in an interview. “The end goal was to file a damn complaint — or have something to threaten the university.”
Trump’s appointee as deputy assistant attorney general for civil rights was Michael Gates, formerly the city attorney in Huntington Beach, California, who assumed the DOJ post vowing to help “win this country back.” “You guys have found a hostile work environment, right?” lawyers on the UC team recall him asking, just three weeks into the investigation.
“He seemed upset we were spending so much time investigating,” Dena Robinson, a senior trial attorney, told us. “He didn’t know what the holdup was in getting back to them on which university could be sued.” In an email about six weeks in, Gates suggested there was easily enough in the public record to bring a complaint against at least one of the UC campuses — a notion that horrified the career lawyers. “Why did we even go out there if you’d already made up your mind?” another member of the UC team recalled thinking. Gates, who left the DOJ in November after just 11 months, declined an interview request and offered no comment on detailed questions from ProPublica and the Chronicle.
Lawyers on the team say it soon became apparent that there wasn’t nearly enough evidence to justify an employment discrimination case against UC Davis, UC Berkeley or UCSF, much less the entire UC system. Fearful for their jobs, they agreed on a strategy to “feed the beast,” as one attorney put it: to focus on UCLA, which had experienced the most troubling, and publicly explosive, episodes of antisemitism.
Like many colleges across the country, UCLA had seen a spike in antisemitism amid protests over Israel’s military response in Gaza following the brutal Hamas attack of Oct. 7, 2023.
The campus had experienced dozens of ugly incidents, including swastikas spray-painted on buildings and graffiti reading “Free Palestine, Fuck Jews.” Muslim and Arab students and faculty also complained of harassment and that any speech critical of Israel was being branded as antisemitic.
Starting in late April 2024, hundreds of pro-Palestinian protesters set up a barricaded encampment in the center of the campus. Reluctant to summon outside law enforcement, UCLA administrators allowed the encampment to remain for a week, disrupting classes and blocking access to certain buildings. Protesters berated and occasionally physically assaulted anyone who refused to disavow Zionism.
On the night of April 30, masked counterprotesters, armed with poles and pepper spray and shooting fireworks, stormed the encampment, triggering a three-hour melee before police were finally brought in. Dozens of people were injured. It took until 6 a.m. May 2 for Los Angeles police and sheriff’s deputies to empty the site.
Before Trump even took office, however, UCLA — and the federal government — had already taken action to combat antisemitism at the school.
Most significantly, in the waning days of the Biden administration, the UC system had reached a broad civil rights settlement with the Department of Education resolving investigations into student complaints that UC had tolerated both antisemitism and anti-Arab and anti-Muslim discrimination at UCLA and on four other campuses.
The settlement required UC to conduct more thorough investigations of alleged harassment and to submit reports on each campus’ handling of discrimination complaints. Government monitoring was to continue until UC “demonstrated compliance” with “all the terms of this agreement.”
The Trump administration disregarded all that. Even as the employee investigation was underway, it launched a new investigation of the same student complaints in early May.
On May 27 on Fox News, Terrell, the head of the antisemitism task force, once again spoke publicly as if the DOJ’s antisemitism inquiries had already been concluded. “Expect massive lawsuits against the UC system,” he declared. “Expect hate crime charges filed by the federal government. …We are going to go after them where it hurts them financially.”
At the time, the lawyers working on the UC employment investigation were still racing to complete their recommendation. They were focused solely on UCLA, having determined there wasn’t adequate evidence to pursue cases at other campuses. Many had distinctly mixed feelings even about bringing that case. “This was not something we would usually litigate,” one lawyer on the team said in an interview. “But everyone understood the front office was demanding this.”
By then, most of the remaining members of the UC team, amid a mass exodus from the civil rights division, were set to leave DOJ at the end of May after accepting the Trump administration’s deferred-resignation offer. “It was comforting to know we were not going to be the ones signing any complaint,” the lawyer said.
In the 47-page recommendation memo the UC team sent on May 29 to Dhillon, the assistant AG for civil rights, the lawyers spelled out their concerns. “We simply do not have strong evidence that the types of harassing acts that happened through spring 2024 are ongoing” — typically a legal requirement for bringing a complaint, the memo acknowledged. Some of the harassment complaints also involved protected First Amendment speech. And because, “as has been frequently noted,” the investigation had been “truncated” to three months, there hadn’t even been time to review some of the documents UC produced, the memo said.
To shore up potential weaknesses in the case, the memo suggested an unusual “hybrid complaint” strategy that would rest partly on new allegations about the ineffectiveness of the university’s complaint process (which was ongoing) and partly on three older faculty grievances.
One of the grievances cited was that of Astor, the professor of social welfare, who describes himself as both a Zionist and a “pro-peace researcher.” His academic work, much of which takes place in Israel, involves studying ways to help students from different religious and ethnic backgrounds peacefully coexist. But after he signed an open letter from Jewish faculty criticizing some pro-Palestinian protesters’ calls for violence, they accused him, in a widely circulated letter of their own, of supporting genocide. When he tried to enter the encampment to talk to students, he told us, a masked protester asked whether he was a Zionist. After he said he believed in Israel’s right to exist, he was blocked from entering or crossing through the central campus.
Astor was targeted again last November, he said, when he and an Arab-Israeli researcher he’d flown in from Hebrew University of Jerusalem tried to discuss their research on preventing school violence in class. “A bunch of students got up and showed pictures of dead babies and chanted and didn’t let us talk,” he recalled. Later heckled on his way to his car, he said he felt threatened and depressed. He lost more than 60 pounds and was granted permission to work from home, but his repeated discrimination complaints to administrators went nowhere.
Astor’s complaints, the employment-section attorneys believed, would support their proposal for a lawsuit against UCLA. Even so, they warned that their case might not hold up in court. In the memo, they recommended seeking a settlement before filing a complaint.
With that message delivered, most of the lawyers who had investigated the University of California departed the Justice Department.
On the morning of July 29, two days before Milliken’s interrupted golf game, the University of California resolved what it surely hoped was among the last of the headaches from the 2024 encampment debacle: It announced a $6.45 million settlement of an antisemitism lawsuit brought by three Jewish students and a faculty member who said protesters blocked them from accessing the library and other campus buildings, creating a “Jew exclusion zone,” and that the university did nothing to help them. UC agreed to an extensive list of new actions, and a chunk of the money went to eight organizations that combat antisemitism and support the UCLA Jewish community. The steps the university had taken, a joint statement declared, “demonstrate real progress in the fight against antisemitism.”
The Trump administration had a different view. That afternoon, it announced that it had sent UC a notice letter saying the Justice Department had found UCLA’s response to the encampment had been “deliberately indifferent to a hostile environment for Jewish and Israeli students,” in violation of Title VI of the Civil Rights Act. Bondi warned in a press release that UCLA would “pay a heavy price” for “this disgusting breach of civil rights.” The antisemitism finding had been reached less than three months after the investigation had begun.
The letter, which acknowledged that it relied significantly on “publicly available reports and information,” ignored all the previous actions meant to put the events of 2024 to rest.
“The violations they described all predate the December agreement,” said Catherine E. Lhamon, who oversaw the Office of Civil Rights at the Education Department under the Obama and Biden administrations. “They’ve made no showing for why the agreement was defective or why anything else was needed to ensure compliance going forward.”
The July 29 letter ended with an invitation to negotiate a settlement but warned that the department was prepared to file a lawsuit if there was no “reasonable certainty” of reaching an agreement.
Instead, the next day, the Trump administration began freezing UCLA’s research money from the National Institutes of Health, National Science Foundation and Defense Department. The agencies cited the campus’ handling of antisemitism as well as “illegal affirmative action” and allowing transgender women in women’s sports and bathrooms.
UCLA was one of at least nine universities to be hit with grant suspensions, but the first public institution.
David Shackelford, whose medical school lab develops personalized treatments for lung cancer, said his phone “blew up” when colleagues began receiving stop-spending orders. Three NIH grants, totaling $8 million over five years, had supported the lab’s work. “These are experiments and animal models that take years to develop,” Shackelford said. “It’s not like you can go to your computer and click save and walk away.” He scrounged together stopgap university funding and outside donations to keep the operation running “on fumes,” vowing “to go down swinging.”
Elle Rathbun is not sure she’s up for the fight. A 29-year-old sixth-year doctoral student in neuroscience, Rathbun was halfway through a three-year NIH grant to study how brains recover from strokes when she got the news: Her $160,000 award was on the long list of suspended UCLA grants.
She found substitute funding for some of her work but now has doubts about whether a career in academic science is worth the stress. Like hundreds of her colleagues, she’d gone through a monthslong competitive process to win the grant, only to have the Trump administration halt the taxpayer-funded research midstream, a move she called “incredibly disappointing and wildly wasteful.”
A group of UCLA researchers filed a lawsuit seeking to reverse the cuts and won two court orders largely restoring them. But even after those victories, the flow of new science grants had slowed to a trickle. In a July 30 email later introduced in court, the National Science Foundation’s acting chief science officer wrote that, in addition to freezing existing grants, he had been ordered to not make any further awards to UCLA.
In nearly 500 pages of personal statements to the court, some faculty members said they’re censoring their speech and changing their courses to avoid topics that might trigger even more cuts to the university. Amander Clark, a professor who heads a reproductive sciences center, no longer talks about the ways her research on infertility and the effects of hormones on human bodies could help gay and transgender people. “I am afraid that because UC is in the spotlight, 20 years of work could be dismantled at the stroke of a pen,” she wrote.
In selecting Milliken as their new system president, the UC regents had picked a veteran at managing large public university systems with vastly different political climates, ranging from the City University of New York, which he ran from 2014 to early 2018, to the University of Texas system, which he led from late 2018 until May 2025.
At UT, Milliken had championed some progressive steps, including expanding free tuition and safeguarding tenure, but he had also quickly shut down the system’s 21 offices related to diversity, equity and inclusion in response to a new Texas law. “He knows what is a winning hand and what is not,” said Richard Benson, who worked with Milliken as president of UT Dallas.
On Aug. 1, his first day on the job at UC’s system office in Oakland, Milliken issued a measured public statement that addressed the “deeply troubling” UCLA grant cuts and affirmed the critical importance of UC’s “life-saving and life-changing research.”
That same week, the Justice Department, days after Bondi’s declaration blasting UCLA for antisemitism against students, delivered a second notice letter, declaring that UCLA had illegally tolerated antisemitism against its employees and threatening to bring the “hybrid” lawsuit that the DOJ’s UC team had recommended in May.
Eager to turn up the pressure on UC, political appointees at the Justice Department had planned to issue another press release assailing UCLA for the employee-related antisemitism findings, according to former agency officials. But Kacie Candela, a well-regarded employment-section lawyer and the last survivor from the dozen who had worked on the administration’s UC investigations, warned that under federal law, it would be a criminal misdemeanor to publicly disclose details involving Equal Employment Opportunity Commission charges before filing a lawsuit. After a heated dispute, her argument prevailed and the UCLA letter went unannounced. She was terminated days later. (Candela, who is pursuing legal action to challenge her firing, declined to discuss the matter for this story. DOJ officials didn’t respond to questions from ProPublica and the Chronicle about the episode.)
After receiving the two DOJ antisemitism notice letters, Milliken quickly affirmed UC’s willingness to “engage in dialogue” with the administration. But that did nothing to forestall the next blow two days later: the Justice Department’s $1.2 billion settlement demand, which also asked for policy changes in areas where there’d been no findings of wrongdoing, including admissions practices, screening of foreign students and transgender students’ access to bathrooms. Within hours of UC’s receipt of the 27-page demand letter on Aug. 8 — which the DOJ had marked “confidential” — CNN, The New York Times and Politico had all posted stories saying they’d obtained a copy from undisclosed sources. (A DOJ spokesperson declined to comment on whether the administration had leaked the letter, which UC spent weeks battling in court to keep private.)
All this was without precedent, due process or clear legal justification, civil rights experts noted. Agreeing to the DOJ’s demands, the Aug. 8 letter said, would release UC from claims that it had violated laws banning discrimination against students, employees and women, and that its civil rights violations constituted fraud. “They were trying to overwhelm,” said Swedish, the former civil rights deputy section chief. “They were spraying the fire hose at the university.”
Strangely, Justice demanded another $172 million for employees who’d complained of antisemitism discrimination, even though only a handful had filed such grievances with the EEOC and such awards are capped at $300,000.
Former U.S. Attorney Zachary A. Cunha said a possible rationale for such unprecedented financial demands is that, under Trump, the DOJ is experimenting with using the False Claims Act in civil rights cases. This would permit triple damages and encourage complaints from whistleblowers, who would share in any financial recovery. “It’s hard to know where these large and somewhat arbitrary numbers are coming from,” Cunha said of the administration’s settlement demands. But “if there’s a pattern that’s emerged thus far, it’s that every tool in the toolbox is on the table.”
Kenneth L. Marcus, an antisemitism watchdog and a former assistant secretary of education for civil rights under Trump, acknowledged that the government has pursued “eye-catching” penalties “with a speed that suggested” normal civil rights enforcement and due-process procedures “have not been utilized.” But Marcus insisted the response was appropriate because of the “national crisis” of antisemitism. “When a situation is extraordinary and unprecedented,” he said, “the response needs to be as well.”
In media interviews, officials in the Trump administration acknowledge that its “whole-of-government” attacks on universities seek to bypass normal, slow-moving civil rights procedures by instead treating alleged discriminatory practices as contract disputes where the government is free to summarily cut off funding and demand headline-grabbing, seemingly arbitrary fines. “Having that dollar figure, it actually brings attention to the deals in ways people might not otherwise pay attention,” former White House deputy May Mailman, a key architect of the administration’s higher education strategy, told The New York Times.
This approach is “flagrantly unlawful” and “incredibly dangerous,” said Lhamon, the former assistant education secretary, who is now executive director of the Edley Center on Law and Democracy at the UC Berkeley law school. “There’s a long set of steps that are written into statute that must occur first before funds can be terminated.”
Lhamon said the Trump administration was operating “like a mob boss.”
“That is not the federal government doing civil rights work,” she said.
Milliken has found himself caught between the Trump administration’s demands and those of his new constituency in California, which vocally opposes any hint of capitulation.
Newsom, who serves on the UC Board of Regents, has threatened to sue the federal government, calling its demands “extortion” and vowing to “fight like hell” against any deal.
The advocates of direct legal combat include Erwin Chemerinsky, dean of UC Berkeley’s law school. “The university should have immediately gone to court to challenge this because what was done was so blatantly illegal and unconstitutional,” he told ProPublica and the Chronicle. “I wanted the University of California to be Harvard in fighting back and filing suit. I didn’t want them to be Columbia and Brown in capitulating.”
But Milliken, backed by the UC regents, resisted calls for confrontation, wary of provoking retaliation against the nine other system campuses also under investigation. The damage to date at UCLA is “minor in comparison to the threat that looms,” Milliken noted in a mid-September statement. “We are in uncharted waters.”
So UC has pursued settlement discussions with the government. According to a person familiar with the matter, it has retained William Levi, who served in Trump’s first administration as a special assistant to the president, counselor to the attorney general and chief of staff at the Justice Department, to lead the talks.
If UC’s leaders have preached restraint, its faculty has opted for open defiance. In addition to the suit that prompted the federal judge, Lin, to restore UCLA’s frozen research grants, a complaint filed in September by the American Association of University Professors and other faculty groups challenged the legality of the Trump administration’s entire assault on UC. At a hearing on Nov. 6, the government’s lawyer acknowledged that the administration’s “hodgepodge” of actions against the system hadn’t followed established civil rights procedures but said the administration had the right to direct funding based on the Trump administration’s “policy priorities.”
Lin didn’t buy it. A week later, in an unusually sweeping preliminary injunction, she barred all of the Trump administration’s actual and threatened moves to punish UC, including the $1.2 billion payment demand. The Trump administration’s “playbook,” she wrote, citing comments by Terrell and others, illegally used civil rights investigations and funding cuts as a way of “bringing universities to their knees and forcing them to change their ideological tune.”
Although Lin ordered the Trump administration to lift the ban on new research grants to UC, approvals were slow to resume. In public remarks before the Board of Regents on Nov. 19, Milliken said that more than 400 grants across the system remained suspended or terminated, representing “more than $230 million in research activity on hold.” He and others at UC have expressed concerns that the system’s pathway to new grants will be blocked.
In our interview, Milliken defended how UC has responded to the Trump administration, saying the university has held its ground on its governance, mission and academic freedom.
“We recognize the differing opinions on how UC should engage with the federal government,” he said. “Our efforts remain focused on solutions that keep UC strong for Californians and Americans.”
In what looks increasingly like a protection racket, Meta has agreed to pay Donald Trump $25 million to settle a lawsuit that multiple courts had already indicated was completely meritless. The settlement, which directs $22 million toward Trump’s presidential library, comes after a dinner at Mar-a-Lago where Trump reportedly told Zuckerberg this needed to be resolved before the Meta CEO could be “brought into the tent.”
And this was all being negotiated at the same time Zuckerberg made a public appearance on Joe Rogan to complain about how unfair it was that Joe Biden was mean to him. At the very same time that Trump was literally demanding money from him.
The story behind this shakedown begins four years ago, when major internet platforms banned Trump following January 6th, citing clear violations of their policies against inciting violence. Most platforms eventually reinstated him, with Meta bringing him back in 2023 as his GOP nomination became inevitable.
Rather than accept that private companies have every right to moderate their platforms, Trump responded in 2021 with what can only be described as legal performance art: suing Meta (and Mark Zuckerberg), Twitter (and Jack Dorsey), and Google (and Sundar Pichai), claiming that their moderation decisions violated the First Amendment. As we pointed out at the time, everything about the case was backwards. The First Amendment only restricts the government (which at the time of the supposed violation was run by Trump himself), not private companies.
In the lawsuit, Trump tried to blame the Biden administration (which did not exist at the time of the banning!) for stripping his rights, even though they were not the government and had nothing to do with the decisions of the private companies.
The lawsuits did not go well. After being transferred out of Florida (where Trump brought them) to California, the case against Twitter/Dorsey moved forward the fastest, where a judge absolutely trashed it as frivolous.
Plaintiffs’ main claim is that defendants have “censor[ed]” plaintiffs’ Twitter accounts in violation of their right to free speech under the First Amendment to the United States Constitution… Plaintiffs are not starting from a position of strength. Twitter is a private company, and “the First Amendment applies only to governmental abridgements of speech, and not to alleged abridgements by private companies.”
That case was appealed to the Ninth Circuit, which held oral arguments (which did not go well for Trump). But before the Ninth Circuit could rule, there was that flurry of internet content moderation cases that went to the Supreme Court last year (including Murthy and Moody), so the Ninth Circuit decided to wait until those cases were ruled on, and then asked the parties for additional briefing in light of those rulings.
As for the two other cases, against Google and Meta, those were put on hold while the Twitter appeal played out on the (reasonable) assumption that how the Ninth Circuit ruled would impact those cases.
Then came an interesting development that initially flew under the radar: just two weeks after the election, ExTwitter quietly filed a notice with the appeals court, suggesting they were about to reach a settlement.
We represent the appellants and appellees in the above-captioned appeal, in which the Court held argument on October 4, 2023. In accordance with Ninth Circuit rules, we write to advise the Court that the parties are actively discussing a potential settlement. See Ninth Cir. R. p. xix. In light of those discussions, we respectfully suggest that the Court withdraw submission and stay this appeal.
Because, of course, in the interim between the lawsuit being filed and November, Elon Musk had purchased Twitter, renamed it to X, then become a super fan of Donald Trump and his biggest political backer. So it must have been awkward that the two of them were literally suing each other (and Musk was obviously going to win if the Ninth were allowed to decide).
Now the Wall Street Journal is reporting that when Zuckerberg flew to Mar-A-Lago to have dinner with Trump right after the election, the President (who just months earlier had threatened to put Zuck in prison for life), apparently brought up the case unprompted during the dinner, and said that for Zuck to make amends and be “brought into the tent” he had to pay up:
Serious talks about the suit, which had seen little activity since the fall of 2023, began after Meta Chief Executive Mark Zuckerberg flew to Trump’s Mar-a-Lago club in Florida to dine with him in November, according to the people familiar with the discussions. The dinner was one of several efforts by Zuckerberg and Meta to soften the relationship with Trump and the incoming administration. Meta also donated $1 million to Trump’s inaugural fund. Last year, Trump warned that Zuckerberg could go to prison if he tried to rig the election against him.
Toward the end of the November dinner, Trump raised the matter of the lawsuit, the people said.The president signaled that the litigation had to be resolved before Zuckerberg could be “brought into the tent,”one of the people said.
Weeks later, in early January, Zuckerberg returned to Mar-a-Lago for a full day of mediation. Trump was present for part of the session, though he stepped out at one point to be sentenced—appearing virtually—for covering up hush money paid to a porn star, one of the people said. He also golfed, reappearing in golf clothes and talking about the round he had just played, the person said.
Let’s call this what it is: a protection racket that would make Tony Soprano proud. The playbook is classic: file a meritless lawsuit, make veiled threats (like suggesting prison time), then offer “protection” in exchange for payment. The only difference is that instead of a local restaurant owner paying to keep their windows intact, we’re watching a tech giant hand over $25 million to avoid future “problems.” The case was legally DOA – but that was never the point.
And Zuck is now using Meta’s money to fund what is effectively a $25 million gift to Trump.
President Trump has signed settlement papers that are expected to require Meta Platforms to pay roughly $25 million to resolve a 2021 lawsuit Trump brought after the company suspended his accounts following the attacks on the U.S. Capitol that year, according to people familiar with the agreement.
Of that, $22 million will go toward a fund for Trump’s presidential library, with the rest going to legal fees and the other plaintiffs who signed onto the case. Meta won’t admit wrongdoing, the people said. Trump signed the settlement agreement Wednesday in the Oval Office.
Some might draw parallels to ABC’s settlement in the Stephanopoulos case, but that comparison misses a key distinction: ABC faced at least plausible arguments about actual malice standards in defamation law. While it still does look like ABC caved to a blatant threat about a winnable case, it still would have been costly to litigate. Here, we’re talking about a case so devoid of legal merit that even Trump-appointed judges would have struggled to keep straight faces.
The cases against Meta, Twitter, and Google were losers from the start, and the courts seemed pretty clear on that. But both Meta and soon (if not already) ExTwitter will “settle” the cases funneling many millions of dollars directly to Trump.
It’s hard to see this as anything other than a pathway to corruption. Presidents can just sue media properties for not handling things the way they want, and then the companies all “settle” the cases, funneling millions of dollars to the President.
This settlement doesn’t just erode trust — it weaponizes distrust. By framing platform moderation as political favors rather than policy decisions, it undermines the very concept of content governance. The real free speech threat here isn’t the initial ban, but the creation of a system where access to digital public squares depends on paying political tribute.
The implications here are staggering. Even if you charitably view this as mere appearance of corruption rather than the real thing, we’re watching the creation of a dangerous new playbook: Presidents can now use frivolous lawsuits as leverage to extract millions from tech companies, while those companies can effectively purchase political protection through “settlements.” The next time you hear Silicon Valley leaders talk about defending democratic institutions, remember that Meta just showed exactly how much those principles are worth: $25 million, paid directly to a presidential library fund.
And for other tech companies watching this unfold? The message is clear: better start saving up for your own “settlement” fund. The protection racket is going digital.
Here we go again. Many years ago, we wrote about how one sports psychologist, Dr. Keith Bell, filed a copyright lawsuit against a college over a retweet. Specifically, the retweet included an image of a single page from Bell’s book, Winning Isn’t Normal. These suits are nonsense, of course, as a retweet is not the same as publishing infringing material, not to mention all kinds of fair use defenses that would be in play here. But that wasn’t the point of the suit. The point of it, instead, was almost certainly to extract money from Bell’s victim via a settlement to make him go away.
Well, it turns out we could have written many, many more stories about Bell. As you can go and see for yourself, Bell files lawsuits over his book at a velocity that rivals some of the most litigious companies we talk about here. Sadly, the suit that is the subject of this post hasn’t shown up on Court Listener just yet. It is similar to his other suits, except this one was already settled. Bell is now claiming that his victim violated the settlement agreement it never should have signed with him.
Here’s how we got here:
In his lawsuit, Bell argues that as the author of the copyrighted book, “Winning Isn’t Normal,” he was “the first person to string words ‘winning isn’t normal’ together” and the “first person to put the phrase in writing.” The phrase, he says, expresses his philosophy for outperforming the competition in the world of sports.
The Solon district, he alleges, violated his copyright when a district coach retweeted someone else’s tweet quoting from his book. The lawsuit against the Solon district alleges that in May 2018, Bell and the district entered into a settlement agreement to resolve the dispute related to the coach’s tweet. That agreement allegedly included a non-disparagement clause and a promise by the district to halt any further use of the copyrighted work.
Bell now claims the district violated those elements of the settlement agreement, in part by failing to remove the tweet that referenced his work, and by a November 2021 phone call in which Superintendent Davis Eidahl allegedly made defamatory statements with racial undertones.
Okay, so, where to begin? That this action moves the state of this disagreement from a settlement that never should have existed and back into a copyright lawsuit is probably actually a good thing for the Solon school district. The question as to whether a retweet of this kind could be copyright infringement is a frustratingly open one, but it shouldn’t be. Retweeting doesn’t create additional copies of content, but rather a link to the tweet itself. It may make the content more visible to more people, but that isn’t the same as creating a new copy.
As to the allegations that Eidahl’s conduct violated a non-disparagement clause in the settlement agreement, that’s even more odd. Typically non-disparagement clauses prohibit defaming or otherwise negatively portraying a subject publicly or to other parties, not to the subject themselves. But of all the things Bell alleges Eidahl did to disparage him, they appear to have been in 1 on 1 interactions between the two of them.
Included in the lawsuit are Bell’s notes of a November 2021 phone call between himself and Eidahl in which Bell claims Eidahl called him the “worst person in the world” and accused him of being a “lonely old man that has no friends, no family and spends all his days searching the internet to find innocent people to steal from.” Bell also alleges that Eidahl asked “me if I was Muslim in a way that was a slur.”
The court records include a copy of an alleged email exchange between Bell and Eidahl shortly after the phone call in which the superintendent wrote: “It’s sad that you spend all your retired time devoted to preying on well-intentioned public school educators devoted to kids. It’s unfortunate that you target public school educators and public school districts to make your living in a time when public school funding is so limited. How much money is enough for you? These educators that you prey on for your own greed are hard-working, good-intentioned individuals that devote their life to kids. I was upset during our call because you continue to target individuals that have sacrificed so much for kids. Now that I’ve given it more thought, I actually feel sorry for you. I can’t imagine the character it takes to devote (your) retirement to these actions. It’s sad.”
The Muslim question is obviously gross if true. But the rest of it is only barely related to the dispute that brought about the settlement agreement. And if this was all in 1 on 1 interactions, verbal or written, I’m struggling to see how this would violate any sane anti-disparagement clause in the settlement agreement. One which, again, never should have been entered into.
So now, in theory, this will go to court. And that’s ultimately a good thing, because we need to start seeing some precedents set as to whether retweets of this nature can constitute copyright infringement or not.
It’s no secret that Elon Musk is desperate for advertisers to return to the platform. He just recently admitted that the company is still cashflow negative and that around 50% of advertisers have left (other reports say the number is bigger). This is despite his earlier claims that the company would break even on a cashflow basis in Q2 (not to mention, despite not paying a bunch of bills).
Basically ever since he took over and lots of advertisers bailed out, directly in response to Elon’s self-created liability, the company has made a few desperate moves to lure them back. Back in February, we wrote about the company promising $250,000 in free ads if companies would spend $250,000 in ads. It didn’t seem to work.
Hell, it’s pretty obvious that the reason Elon hired Linda Yaccarino to play the role of Chief Marketing Officer (but with a shiny-if-misleading CEO title) was her strong relationships with big advertisers.
But, as the Wall Street Journal is reporting, it appears that the “carrot” approach of deeply discounted advertising isn’t working well enough on its own. Ex-Twitter is now breaking out some sticks to try to pressure companies into advertising:
X also warned advertisers that beginning Aug. 7, brands’ accounts will lose their verification—a gold check mark that indicates their account truly represents their brand—if they haven’t spent at least $1,000 on ads in the previous 30 days or $6,000 on ads in the previous 180 days, according to the email.
So, look, we know already that Elon simply cannot wrap his mind around the purpose of Twitter verification. I mean, the Twitter Blue debacle is well understood by everyone but Musk. The whole thing was so dumb, and so disastrous to trust and brand safety on the platform that it drove away plenty of companies, leading the company to make a hasty change and bring back some form of the old verification in the form of “gold checkmarks” for “some” businesses.
It seemed transparently obvious that these gold checkmarks were going to companies that Twitter wanted to appease so they would continue advertising.
And, when looked at through that lens, you can totally understand why the company is frustrated that the companies they “gifted” gold checkmarks to aren’t returning the favor by advertising. Hence this little shakedown.
“Nice gold check mark you got there. You wouldn’t want anything to, uh, happen to it, y’know?”
But, really, this seems like the kind of move likely to drive away advertisers than retain them. It’s just yet another reason not to trust the platform or Elon, who will change the terms of whatever he agrees to to benefit himself in the end.
Of course, the WSJ article also notes that Twitter is, once again, drastically discounting ad buys:
It is offering 50% off any new bookings of those ads until July 31, among other discounts. “The goal of these discounts is to help our advertisers gain reach during crucial moments on Twitter such as the Women’s World Cup,” one of the emails read.
As a separate point, I’ll just note that, back in February, they were talking about 50% off ads for $250,000 spends. Now they’re trying to cajole and coax companies into spending… $1,000.
What if we told you the Stupid Patent of the Month has a sponsor, but we don’t know who it is? That would seem shady, wouldn’t it?
This month’s stupid patent, U.S. Patent No. 9,986,435, was brought to you—to all of us, really—from the murky depths of the litigation finance industry. Originally assigned to a shell company linked to giant patent troll Intellectual Ventures, this patent was sold off and is now in the hands of Mellaconic IP LLC, a recently-created Texas shell company. Mellaconic has sued more than 40 companies over claims that a vast array of HR software infringes their patent.
Here is Mellaconic’s key patent claim:
1. A method to perform an action, comprising:
receiving, by a first device located at a first geographical location, one or more messages that indicate geographical location information of a second device located at a second geographical location, and
include a request for a first action to be performed by the first device, wherein the one or more messages are received from the second device, and wherein the geographical location information of the second device acts as authentication to allow the first action to be performed by the first device; and
autonomously performing, based at least on the received one or more messages, by the first device, the authenticated first action.
In other words: A device receives a request from a second device to take action. That action may or may not be performed, depending on the location of the second device.
Mellaconic’s lawyers say this applies to something hourly workers do every week: clock in and clock out of their jobs. Even though their patent doesn’t even discuss clocking in—and despite the fact that clocking in has happened since, well, clocks—they’ve sued a huge swathe of U.S.-based companies that market human resources and payroll software.
For instance, they sued Paychex, saying that the Paychex server is the first device, and the second device is a mobile user with the Paychex Flex app, which, like many HR apps, allows for clocking in and out of a job. Same thing for Hi Bob, a smaller HR company that Mellaconic sued in August. They’ve repeated this allegation—that clocking in (but with an app!) equals infringement of their patent, which means the companies owe money to the people behind Mellaconic.
Who’s Making Money From This Patent?
Mellaconic, like so many patent trolls, has been able to hide its true beneficiaries. Most of the 40 companies that Mellaconic sued have likely paid to settle, because their cases ended within a few months, before any significant hearings. That suggests many defendants settled for less than the hundreds of thousands (potentially even millions) of dollars that it would have cost to fight off this stupid patent.
Unusually in this case, a Delaware federal judge overseeing some of Mellaconic’s cases has insisted that the supposed owner come to testify in court. That’s what led Hau Bui, a Texas restaurateur and food-truck owner who says he owns Mellaconic, to travel to Delaware in November and testify under oath in federal court.
But Hau Bui has now said under oath (see transcript p. 87) that he hasn’t paid anything for Mellaconic’s patent, nor the other patents it hasn’t yet sued over. He hasn’t paid anything to Mellaconic’s lawyers (p. 96), or any other litigation expenses. And Bui said he only collects 5 percent of Mellaconic’s settlement money (p. 91), which has amounted to about $11,000 (p. 98).
Bui was promised this “passive income” stream by Linh Dietz, a person whose name has come up at every stage of the Delaware investigation, and is linked to IP Edge, a large-scale patent troll. Every supposed “owner” of the patent troll entities who have testified in Delaware acquired their patents, for free, by talking to Dietz and signing paperwork she provided.
Patent Trolls Have A Growing Network of Secret Funders
IP Edge is far from the only player in the vast world of patent trolling, which continues to account for the great majority of patent lawsuits against tech companies—more than 88% in 2022. Why do these lawsuits keep coming even while overall patent litigation is going down?
In part, it’s because there is nothing stopping aggressive litigation finance from paying out money to fund patent lawsuits, in the hopes that “investing” in a broad campaign of patent lawsuits will pay off a big return. Unified Patents, a company that sells patent defense services, recently estimated that about 30% of all patent lawsuits are now backed by third-party financing.
That’s one reason why EFF, along with other public interest groups, filed a brief stating that the Delaware investigation must be allowed to continue. The lawyers working for Mellaconic and related shell companies are doing everything they can to shut it down. They appealed to the Federal Circuit, twice, and were rejected both times.
The public deserves to know more about patent trolls that are using our public courts to seek rents for innovations they had nothing to do with. That’s especially true as litigation finance helps spread lawsuits over patented “inventions” like clocking in on an app.
You may have heard last week that Moderna is suing Pfizer, claiming that Pfizer’s COVID vaccine violates Moderna’s patents. You can read the legal complaint which is full of bluster about how brilliant Moderna is and how it saved the world and blah blah blah. While it does mention that Moderna teamed up with the National Institutes for Health, it leaves out that it was the US taxpayer and US government employees who were critical in helping Moderna develop its mRNA technology.
We covered this last year when Moderna was trying to block US government scientists from even being listed on its patents. The fact is, Moderna doesn’t happen without massive taxpayer funding and massive support from US government scientists. Moderna has admitted that US scientists played a “substantial role” in the development. Indeed, as a NY Times report from last year noted, initially people were referring to it as the “NIH-Moderna COVID-19 vaccine,” and then Moderna took over the marketing, and basically cut the government out.
The vaccine grew out of a four-year collaboration between Moderna and the N.I.H., the government’s biomedical research agency — a partnership that was widely hailed when the shot was found to be highly effective. A year ago this month, the government called it the “N.I.H.-Moderna Covid-19 vaccine.”
The agency says three scientists at its Vaccine Research Center — Dr. John R. Mascola, the center’s director; Dr. Barney S. Graham, who recently retired; and Dr. Kizzmekia S. Corbett, who is now at Harvard — worked with Moderna scientists to design the genetic sequence that prompts the vaccine to produce an immune response, and should be named on the “principal patent application.”
Moderna disagrees. In a July filing with the United States Patent and Trademark Office, the company said it had “reached the good-faith determination that these individuals did not co-invent” the component in question.
So, already, Moderna’s narrative about how it’s just some little guy with a great invention is pretty sketchy. And we won’t get into just how much the US taxpayer paid the company as the US government (smartly) paid for the public to get vaccinated and protected from COVID.
Of course, Moderna knows this is going to come up, so it uses some weasel words to try to pretend this lawsuit isn’t about anything publicly funded. But read carefully:
This lawsuit does not relate to any patent rights generated during Moderna and
NIH’s collaboration to combat COVID-19.
But, uh, the details above were from before COVID, when NIH scientists helped Moderna — playing a “substantial role” in crafting the underlying technology. Basically, all of the technology that was necessary to combat COVID. To say that it’s not using anything “generated during Moderna and NIH’s collaboration to combat COVID-19” cleverly cuts out all of the collaboration before 2020.
From there, Moderna insists that, really, people should view it as the good guy here, because — IN THIS COMPLAINT IN WHICH IT IS SUING OVER ITS COVID VACCINE — it notes that it promised not to sue over the COVID vaccine “during the pandemic.”
Given the unprecedented challenges of the COVID-19 pandemic, Moderna voluntarily pledged on October 8, 2020 that, “while the pandemic continues, Moderna will not enforce
our COVID-19 related patents against those making vaccines intended to combat the pandemic.”3
Moderna refrained from asserting its patents earlier so as not to distract from efforts to bring the
pandemic to an end as quickly as possible.
Guess what? Apparently the pandemic’s over. At least according to Moderna’s execs who want to start shaking down other companies for cash.
So, now Moderna has a new rule: it won’t enforce its patents… in poor countries. Everywhere else is fair game.
My guess is that Pfizer is going to do the math here and probably pay up to get Moderna to go away. After all, Pfizer has long been a terrible abuser of the patent system, using it to jack up prices and limit generic competition from the marketplace. While that does mean that the company has some very knowledgeable patent litigators on speed dial, it also likely means that it doesn’t want to fight back too hard.
And that sucks, because for once, the COVID vaccines showed how well innovation works when patents aren’t really there to block anything (initially, that is). Multiple companies all scrambling to provide solutions, information sharing that allowed for more experimentation and incremental innovation. None of it requiring locking stuff up.
But Moderna is now in “fuck that, give me my money” mode, and showing, yet again, just how broken our patent system is.
Once again, I’ll remind everyone of Jonas Salk’s comments upon people asking him who owned the patent on his polio vaccine:
“Well, the people, I would say. There is no patent. Could you patent the sun?”
No, you can’t patent the sun, but it seems that the greedy jerks at Moderna would still try to patent it if they could.
A newly formed patent troll is looking for big money from small business websites, just for using free, off-the-shelf login verification tools.
Defenders of the American Dream, LLC (DAD ), is sending out its demand letters to websites that use Google?s reCAPTCHA system, accusing them of infringing U.S. Patent No. 8,621,578. Google?s reCAPTCHA is just one form of a Captcha test, which describes a wide array of test systems that websites use to verify human users and keep out bots.
DAD?s letter tells targeted companies that DAD will take an $8,500 payment, but only if ?licensing terms are accepted immediately.? The threat escalates from there. If anyone dares to respond that DAD?s patent might be not infringed, or invalid, fees will rise to at least $17,000. If DAD?s patent gets subject to a legal challenge, DAD says they?ll increase their demand to at least $70,000. In the footnotes, DAD advises its targets that ?not-for-profit entities are eligible for a discount.?
The DAD demand letters we have reviewed are nearly identical, with the same fee structure. They mirror the one filed by the company itself (with the fee structure redacted) as part of their trademark application. This demand letter campaign is a perfect example of how the U.S. patent system fails to advance software innovation. Instead, our system enables extortionate behavior like DAD?s exploding fee structure.
DAD Didn’t Invent Image Captcha
DAD claims it invented a novel and patentable image-based Captcha system. But there?s ample evidence of image-based Captcha tests that predate DAD?s 2008 patent application.
The term ?Captcha? was coined by a group of researchers at Carnegie Mellon University in 2000. It?s an acronym, indicating a ?Completely Automated Public Turing test to tell Computers and Humans Apart.? Essentially, it blocks automated tools like bots from getting into websites. Such tests have been important since the earliest days of the Internet.
Early Captcha tests used squiggly lines or wavy text. The same group of CMU researchers who coined ?Captcha? went on to work on an image-selection version they called ESP-PIX, which they had published and made public by 2005.
By 2007, Microsoft had developed its own image-categorization Captcha, which used photos from Petfinder.com, then asked users to identify cats and dogs. At the sime time, PayPal was working on new captchas that ?might resemble simple image puzzles.? This was no secret?researchers from both companies spoke to the New York Times about their research, and Microsoft filed its own patent application, more than a year before DAD?s.
There?s also evidence of earlier image-based Captcha tests in the patent record, like this early 2008 application from a company called Binary Monkeys. Here’s an image from the Binary Monkeys Patent:
And here’s an image from DAD’s patent:
So how did DAD end up with this patent? During patent prosecution, DAD?s predecessor argued that they had a novel invention because the Binary Monkeys application asks users to select ?all images? associated with the task, as opposed to selecting ?one image,? as in DAD?s test. The patent examiner suggested adding yet another limitation: that the user still be granted access to the website if they got one ?known? image and one ?suspected? image.
Unfortunately, adding trivial tweaks to existing technology, such as small details about the needed criteria for passing a Captcha test, can and often does result in a patent being granted. This was especially true back in 2008, before patent examiners should have applied guidance from the Supreme Court?s 2014 Alice v. CLS Bank decision. That?s why we have told the patent office to vigorously uphold Supreme Court guidelines, and have defended the Alice precedent in Congress.
Where did DAD come from?
DAD?s patent was originally filed by a Portland startup called Vidoop. In 2010, Vidoop and its patent applications were purchased by a San Diego investor who re-branded it as Confident Technologies. Confident Tech offered a ?clickable, image-based CAPTCHA,? but ultimately didn?t make it as a business. In 2017 and 2018, Confident Tech sued Best Buy, Fandango Media, Live Nation, and AXS Group, claiming that the companies infringed its patent by using reCAPTCHA. Those cases all settled.
In 2020, Trevor Coddington, an attorney who worked on Confident Tech?s patent applications, created Defenders of the American Dream LLC. He transferred the patents to this new entity and started sending out demand letters.
They haven?t all gone to large companies, either. At least one of DAD?s targets has been a one-person online publishing company. Coddington?s letter complains about how Confident Tech failed in the marketplace and suggests that because of this, reCAPTCHA users should pay?well, him. The letter states:
[O]nce Google introduced its image-based reCAPTCHA for free, no less, [Confident Technologies] was unable to to maintain a financially viable business? Google?s efficient infringement forced CTI to abandon operations and any return on the millions of dollars of capital investment used to develop its patented solutions. Meanwhile, your company obtained and utilized the patented technology for free.?
Creating new and better Captcha software is an area of ongoing research and innovation. While the lawyers and investors behind DAD have turned to patent threats to make money, other developers are actively innovating and competing with reCAPTCHA. There are competing image-based Captchas like hCaptcha and visualCaptcha, as well as long lists of Captcha alternatives and companies that are trying to make Captchas obsolete.
These individuals and companies are all inventive, but they?re not relying on patent threats to make a buck. They?ve actually written code and shared it online. Unfortunately, because of their real contributions, they?re more likely to end up the victims of aggressive patent-holders like DAD.
We?ll never patent our way to a better Captcha. Looking at the history of the DAD patent?which shares no code at all?makes it clear why the patent system is such a bad fit for software.
For what it’s worth, lawsuits against Apple over emojis are not entirely unheard of. You may recall that Apple was sued by a woman who claimed it was copyright infringement for Apple to have emojis that represent more diverse communities, for instance. But for a truly fun story about Apple being sued, and winning its defense, over emojis, well, you have to go to a case between Apple and a company called Social Tech.
Social Tech sued Apple in 2018, alleging Apple’s Memoji personalized emoji feature infringed its trademark covering its app with the same name. U.S. District Judge Vince Chhabria ruled for Apple in 2019.
Indeed. And Social Tech appealed that ruling. So why did the court find for Apple in 2019? Well, because Social Tech couldn’t demonstrate that it was actually using the mark in commerce. This is where we’ll need to dig into some details.
In 2016 Social Tech filed an intent-to-use trademark application for “Memoji” for use in apps and software. The Trademark Office granted a Notice of Allowance, which essentially gives the go ahead to the applicant to put the mark in actual commerce, after which the UPSTO would approve the mark. Social Tech basically did nothing for 2 years after that, other than to ask for an extension on the Notice of Allowance. Meanwhile, another company called Lucky Bunny LLC filed its own trademark application for “Memoji” for the same class of goods. That application was suspended due to the Social Tech application status. In the summer of 2018, Apple acquired Lucky Bunny and its assets, including the suspended trademark application. In June, Apple announced the acquisition and released a public test version of its new mobile OS that included Lucky Bunny’s Memoji software.
And this is where it gets weird. When I said above that Social Tech did nothing for two years before Apple’s announcement, that’s not entirely true. Social Tech did write a business plan, fund itself internally for $100k, and write up some promotional material. What it didn’t do was write a single line of code… until Apple announced the acquisition. Then, and only then, did Social Tech’s interest in actually using the Memoji mark in commerce go into overdrive.
The appeal was decided by the court in Apple’s favor as a result of all of this, but the details laid out in the judgement are striking.
During the three weeks after Apple’s announcement, Social Tech’s co-founder and president, Samuel Bonet, exchanged a series of emails with a software developer to accelerate the timing of the application’s development. In the first of these emails on June 7, Bonet described the circumstances to be “life changing” and concluded the email with: “Time to get paid, gentlemen.” In a series of subsequent emails, Bonet regularly followed up with the developer on the application’s progress. On June 12, Bonet wrote: “the app needs to erase the background AND the body . . . Of course this may take a little work to get perfect, but as long as we can get close initially, we can start to test and put in commerce.” On the evening of June 13, Bonet wrote to the developer: “[i]n other news . . . the initial letter has been sent to Apple. The process has begun. Peace and wealth!”
Bonet continued to follow up on the application’s progress over the next several days, noting that “the editing feature [was] vital” to “satisfy the ‘editing’ requirement of the trademark.” On June 18, Bonet wrote that Social Tech would release the application for Android in the Google Play Store first, proclaiming: “We are lining up all of our information, in preparation for a nice lawsuit against Apple, Inc! We are looking REALLY good. Get your Lamborghini picked out!”
It goes on from there, but the general gist is that Social Tech was very specifically attempting to finally get its mark pushed through simply in order to file these trademark suits and “get paid.” And that, sadly for Social Tech, does not satisfy the requirement for using the mark in commerce. And, since the entire enterprise of putting a broken app in commerce was done simply to get the trademark for “Memoji” and file the lawsuit, those don’t actually count either.
As a result, the court found for Apple.
The panel held that mere adoption of a mark without bona fide use in commerce, in an attempt to reserve rights for the future, is insufficient to establish rights in the mark under the Lanham Act. Use in commerce requires use of a genuine character, in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind. Considering the totality of the circumstances, including relevant non-sales activities, the panel agreed with the district court that the evidence in the record showed that Social Tech’s use of the MEMOJI mark was not bona fide in commerce. Accordingly, Apple was entitled to cancellation of Social Tech’s trademark registration.
When it comes to intellectual property, it’s nice to see grifting not work out for the grifters once in a while.
