Last week a Manhattan jury awarded mobile game company Skillz Platforms $420 million for actual damages sustained as a result of false advertisements from competitor Papaya Games. The jury also advised the Court to award $719 million in additional profits Papaya earned from the advertisements, as well as $658 million in cost savings. Because the latter amounts are equitable remedies, the ultimate amount will be determined by the Court at a later date.
Skillz makes mobile games that allow players to compete against each other for cash prizes. Players, who play with real money, are matched against other human players, not bots. Better players earn more.
Papaya competes with Skillz by offering similar games, but in tournament format. According to the suit, Papaya tells players they can “turn their skills into dollar bills,” misleadingly suggesting that earnings are based solely on being better than other human players. In reality, Papaya pits players against bots so that no human wins too much. Or quits too soon when their earnings are down.
Though Papaya admitted to using bots, it claimed they were for other purposes. The jury didn’t buy it, finding Papaya liable for false advertising under the Lanham Act and the New York General Business Law, and awarding hefty damages. Among other things, Skillz introduced documents at trial in which Papaya executives acknowledged that its players lose to bots.
The parties are currently engaged in post-trial briefing. In the end, while the jury award and recommendations may be reduced, they could also be increased or joined by prejudgment interest and/or attorneys’ fees. Regardless, this case joins the trend of high jury awards for false advertising, reminding brands that false and misleading statements can have major ramifications.
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