Six litigation signals from October 27–November 2: Character.AI heads to auction in bankruptcy, Sunday Ticket liability returns, and the FTC sues over a $0 hardware pitch
A decision-ready briefing on six AI, technology and pharmaceutical disputes from October 27–November 2, 2026: Character.AI's Chapter 11 asset auction over state objections, a fair-use hearing in the music publishers' case against Anthropic, the FTC's fee lawsuit against Toast, the Ninth Circuit restoring the NFL Sunday Ticket liability verdict, and two generic-drug antitrust matters — one headed to trial, one settled.
The week of October 27–November 2 put a bankrupt chatbot platform up for auction, restored the NFL's Sunday Ticket liability verdict while wiping out its damages award, and brought the Federal Trade Commission into a restaurant software company's fee schedule. 123
Four of the six matters below turn on how a company priced something: a "$0" hardware plan, a bundled broadcast package, and two generic-drug settlements that purchasers say bought delay. Two are copyright fights over what a model emits.
Docket at a glance
| Sector | Parties | Docket | Current stage | Recent development | Next milestone |
|---|---|---|---|---|---|
| AI bankruptcy | Character Technologies, Inc. (Character.AI), debtor; state attorneys general and the U.S. Trustee objecting; Disney Worldwide Services as stalking-horse bidder | 26-11603 (BLS) (Bankr. D. Del.) | Bidding procedures approved October 30, 2026 | Judge Brendan Shannon cleared the auction calendar and left the Disney releases for later; 39 states and the District of Columbia had objected by October 28. 1 | Sale approval hearing expected November 30, 2026. 1 |
| AI copyright | Concord Music Group and other publishers v. Anthropic PBC | 5:24-cv-03811-EKL (N.D. Cal.) | Cross-motions for summary judgment argued October 21; no ruling | At an October 30 hearing, Judge Eumi Lee called Anthropic's fair-use position "slippery" and said she could not get clear answers on which categories of outputs were at issue. 4 | Ruling on the cross-motions; no date is public. |
| Tech consumer protection | Federal Trade Commission and eight states, California appearing through Los Angeles County and San Francisco, v. Toast, Inc. and four subsidiaries | 3:26-cv-12705 (N.D. Cal.) | Filed October 29, 2026 | The complaint runs 71 pages and targets a "$0" terminal offer, a $1,024.10 cancellation fee and a 99-cent diner fee. 5 | Toast's response to the complaint; no date is public. |
| Tech antitrust | Ninth Inning Inc. et al. v. National Football League, its 32 clubs and DirecTV | 24-5493, 24-5691 (9th Cir.), from 2:15-ml-02668-PSG-SK (C.D. Cal.) | Opinion filed October 30, 2026 | The panel reinstated the jury's liability verdict and ordered a new trial on damages. 2 | New damages trial in the Central District of California; no date is public. |
| Pharma antitrust | Direct purchasers of Niaspan v. AbbVie and Teva | 2:13-md-02460 (E.D. Pa.) | Summary judgment denied October 30, 2026 | Judge Timothy Savage found a genuine dispute over whether the 2005 settlement was an unlawful pay-for-delay agreement. 6 | Trial; no date is public. |
| Pharma antitrust | Cencora, Cardinal Health, McKesson and other direct purchasers v. Sanofi | 16-cv-12652 (D. Mass.) | Settlement in principle disclosed October 27, 2026 | The Lantus purchasers settled before a January trial; terms are confidential. 7 | Settlement papers and dismissal; no date is public. |
AI
Character.AI: a chatbot platform sold out of bankruptcy, with the chat logs in dispute
Parties: Character Technologies, Inc., the Chapter 11 debtor that runs Character.AI, against its creditors, with Disney Worldwide Services as the opening bidder and a coalition of state attorneys general objecting. 1
Docket number:
26-11603 (BLS), United States Bankruptcy Court for the District of Delaware, before Judge Brendan L. Shannon. The company filed on October 12, 2026. 1Claims: This is a Chapter 11, so the contested questions are procedural: who may bid, on what timetable, and what protections the buyer receives. The states argue that the auction as designed favored Disney and that children's chat records could change hands without safeguards. 1
Current stage: On October 30, Judge Shannon approved the bidding procedures at a hearing in Wilmington and said the company needed to move quickly to find buyers before its finances deteriorated further. 1 He did not approve the legal releases for Disney and the former Character.AI employees, and said those could still be challenged separately. 1
Recent developments: Disney set an opening bid of $20 million for a non-exclusive licence to the chatbot technology. It has said it does not plan to buy the platform or its user data, including chat history. 1 The same buyer had already hired 66 of the company's 86 employees, and expects to pay them $180 million over three years. 1 Character.AI was losing $8 million to $9 million a month on talent and computing costs. 1
By October 28, 39 states and the District of Columbia had joined an objection to the sale process. The states argue that Disney stacked the deck before the filing, hiring most of the workforce and negotiating releases that would shield it from suits over the company's conduct. 8 On October 30 the company rewrote the notice that tells creditors what the sale would do. The new version lists ten protections Disney would receive, among them a release covering claims "from the beginning of time" through the closing. 8 The Justice Department's bankruptcy watchdog also objected, and Judge Shannon said he would likely appoint a privacy ombudsman to handle the data questions. 1
Business impact: For a failed AI company, the assets that survive are a licence to the model, the team that built it, and the conversation history. Disney's $20 million licence and $180 million wage bill show where the value sat. Any buyer of the platform inherits an operating service with user data attached and the litigation that comes with it.
Precedent value: The Chapter 11 auction of a consumer chatbot platform, with its litigation tail attached, tests two mechanisms. The first is the free-and-clear sale order, which can transfer assets free of claims and enjoin suits against the buyer. 8 The second is the privacy ombudsman, the officer a bankruptcy court appoints when consumer data is about to be sold. State attorneys general have turned objections into a forum for privacy claims their own statutes might otherwise struggle to reach across state lines.
Next milestone: A sale approval hearing, which Reuters reports the company expects on November 30, 2026. 1 Objections to the revised sale notice are due November 13, 2026. 8
Concord v. Anthropic: the judge presses for a definition of the output
Parties: Concord Music Group and a group of music publishers against Anthropic PBC. 4
Docket number:
5:24-cv-03811-EKL, Northern District of California, before Judge Eumi Lee. 9Claims: Direct, vicarious and contributory copyright infringement over song lyrics, plus a claim under section 1202(b) of the Digital Millennium Copyright Act for removal of copyright management information. 9
Current stage: Both sides moved for summary judgment, and Judge Lee heard the cross-motions on October 21 without ruling. 9 A hearing on expert challenges was continued to October 30. 9
Recent developments: At the October 30 hearing, Judge Lee called Anthropic's fair-use arguments "slippery" and said she had an "overarching concern" that she could not get clear answers about the categories of AI outputs at issue. 4 She did not rule from the bench.
Business impact: The publishers' theory reaches the text a model emits, which is the part of the pipeline a company can still control. Output filters and lyric-level licences are the two costs that follow from a ruling against Anthropic.
Precedent value: Training-stage fair use has been litigated to judgment, including the Third Circuit's ruling in Thomson Reuters v. ROSS Intelligence on September 29. 9 Output-stage fair use has not. A ruling here would govern whether a model can reproduce protected text on request. It would also settle whether the user's role in prompting splits the liability.
Next milestone: A ruling on the cross-motions. No date is public.
Tech
FTC v. Toast: whether a subscription statute reaches business software
Parties: The Federal Trade Commission, joined by the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, with the People of the State of California appearing through the Los Angeles County Counsel and the San Francisco City Attorney. 3 The defendants are Toast, Inc. and four subsidiaries: Toast Processing Services, Stratex HoldCo, Strategy Execution Partners and xtraCHEF. 5
Docket number:
3:26-cv-12705, Northern District of California, San Francisco Division, filed October 29, 2026. 10Claims: Section 5(a) of the Federal Trade Commission Act and section 4 of the Restore Online Shoppers' Confidence Act, with parallel state counts under California's unfair competition and false advertising statutes, the Colorado Consumer Protection Act, the Florida Deceptive and Unfair Trade Practices Act, the Illinois Consumer Fraud and Business Practices Act, the Iowa Consumer Fraud Act, Nebraska's Uniform Deceptive Trade Practices Act, the Oklahoma Consumer Protection Act and the Utah Truth in Advertising Act. 5
Current stage: Filed October 29, with the Commission voting 2-0 to authorize it. 5 Toast said the same day that it disagrees with the allegations and will defend the case. 5
Recent developments: The 71-page complaint takes apart a sign-up flow that advertises "$0/month" equipment. It alleges that a second terminal costs extra under a disclosure six scrolls down. It also alleges that a restaurant processing little volume must return the hardware or pay $1,024.10, and that an $85 monthly inactivity fee sits in small print at checkout. 5
The complaint also alleges that restaurants cancelling after 120 days owe $150 for every month left on the term. That term sits at section 8.4 of a 25-page merchant agreement. 5 One owner was charged $5,318.87 after cancelling. 3 Another was invoiced $17,030.74 before any equipment shipped. 5
The diner fee reaches further. From 2021 until late July 2023, the complaint says, Toast charged patrons 99 cents on online orders above $10 and kept the money, while restaurants could not opt out. 5 The complaint also alleges Toast advertised "24/7/365" support while its cancellation line and some support teams kept weekday business hours. 5
Business impact: Restaurant point-of-sale contracts are usually signed online, renew automatically and are hard to exit. If the Commission's theory holds, the disclosure, consent and cancellation rules that already govern consumer subscriptions extend to software sold to small businesses, with per-violation remedies behind them.
Precedent value: The contested legal question is the reach of the Restore Online Shoppers' Confidence Act, which Congress wrote around consumer transactions. 5 A ruling that the statute covers business buyers would change how vendors draft auto-renewal terms for every small-business product. The diner fee adds a separate question: who is liable when the platform, rather than the merchant, adds a charge to a customer's bill.
Next milestone: Toast's response, whether an answer or a motion to dismiss. No date is public.
NFL Sunday Ticket: liability restored, damages reopened
Parties: Ninth Inning Inc. (The Mucky Duck), 1465 3rd Ave. Rest. Corp. (Gael Pub), Robert Gary Lippincott Jr. and Jonathan Frantz, for the residential and commercial subscriber classes, against the National Football League, NFL Enterprises, the 32 member clubs, and the DirecTV entities. 2
Docket number: Nos.
24-5493 and 24-5691 in the Ninth Circuit, on appeal from 2:15-ml-02668-PSG-SK in the Central District of California, where Judge Philip S. Gutierrez presided. 2Claims: Sections 1 and 2 of the Sherman Act. The subscribers argued that the league and its clubs pooled the rights to out-of-market Sunday afternoon games into a single package, which let them charge above competitive prices. 2
Current stage: The panel reversed the district court's judgment as a matter of law for the NFL and affirmed its order granting a new trial on damages. The case returns to Los Angeles with instructions to reinstate the jury's liability verdict and hold a new damages trial. 2
Recent developments: The opinion, filed October 30 and argued March 9, was written by Judge Anthony D. Johnstone for a panel with Judge Holly A. Thomas and Judge Joan H. Lefkow, who sits in the Northern District of Illinois. 2
The court split the appeal in two. It held that Judge Gutierrez abused his discretion by excluding the plaintiffs' damages experts, economists Daniel Rascher and Douglas Zona. His reasoning that their models were speculative went too far. "This is how yardsticks work," the panel wrote, because such models rely on outcomes from a comparable market to predict a but-for world. 11 It also held that expert opinions are neither unfounded nor unreliable merely because they can be impeached. 2
It then affirmed the other half. The jury subtracted the average price subscribers actually paid, $102.74, from the $294 list price, and called the $191.26 difference an overcharge. That treated a discount as injury. 11 That made the 2024 award of $4.6 billion to residential subscribers and $97 million to commercial establishments unsupported by the evidence. 11 A concurrently filed memorandum disposition handled the remaining issues, including whether the expiration of the DirecTV contract moots the claims for injunctive relief. 2
Business impact: The league's liability now stands as an adjudicated fact and only the amount is open. The award could land anywhere between zero and the trebled $14.1 billion the original verdict implied, and the exposure gives both sides a reason to settle before a second trial. 11
Precedent value: The useful holding for other antitrust defendants is procedural. A district judge may not exclude a damages expert because the model rests on an imperfect comparison; the adversary gets to attack it on cross-examination. The panel kept the deferential standard for new-trial orders once the verdict's arithmetic departs from the evidence. Both halves will be cited in bundled-content and platform-pricing cases.
Next milestone: A new damages trial in the Central District of California. No date is public.
Pharma
Niaspan: a reverse-payment case reaches a jury
Parties: Direct purchasers of Niaspan, certified as a class on August 14, 2019, against AbbVie, which acquired Kos Pharmaceuticals, and Teva, which acquired Barr Pharmaceuticals. 12
Docket number:
2:13-md-02460, Eastern District of Pennsylvania, before Judge Timothy J. Savage. 12Claims: A Sherman Act section 1 challenge to a 2005 settlement between Kos, the brand manufacturer of extended-release niacin, and Barr, the generic applicant. The purchasers allege that the deal paid Barr to stay off the market. Generic Niaspan would otherwise have launched years before Teva's September 2013 entry. 12
Current stage: On October 30, Judge Savage found a genuine dispute over whether the agreement was a pay-for-delay settlement that violated the antitrust laws, which sends the case to trial. 6
Recent developments: The same day, Judge Savage ruled on the defendants' motion to exclude testimony from the purchasers' expert John R. Thomas. He may not tell the jury that the defendants violated antitrust or patent law. Nor may he offer the view that companies who "choose to bypass or subvert the legislative framework" engage in behavior that defeats the goals of the Hatch-Waxman Act. 13
Business impact: The economics of a brand-generic settlement are decided at the negotiating table, and this case tests what a plaintiff must show to unwind one. A verdict for the purchasers would put a price on delay that manufacturers can weigh against the settlement payment. Damages in a certified direct-purchaser class run on the class's overcharge, which grows with every year of delayed entry.
Precedent value: A jury will now decide what the purchasers must prove to unwind a brand-generic settlement, a question the Supreme Court left open in FTC v. Actavis in 2013. The Third Circuit revived the state-law claims in this litigation in 2023. 12 A verdict would give the next reverse-payment case a record on how much evidence of an unjustified payment counts as proof of an anticompetitive bargain.
Next milestone: Trial. No date is public.
Lantus: the Orange Book listing case settles before trial
Parties: Cencora, Cardinal Health and McKesson, the three largest drug wholesalers, with FWK Holdings, Meijer and other direct purchasers, against Sanofi. 14
Docket number:
16-cv-12652, United States District Court for the District of Massachusetts, in Boston. 14Claims: The purchasers alleged that Sanofi abused the patent-listing process for its insulin glargine product, Lantus SoloStar pens. Under the Hatch-Waxman Act, a listed patent lets the brand company sue a generic applicant and triggers a 30-month bar on approval. 14
Current stage: The lawyers told the judge in Boston in a filing on October 27 that the parties had reached an agreement in principle. Trial had been set for January. 14
Recent developments: Sanofi confirmed the deal on October 28 and said the terms are confidential. The company also said it settled without conceding liability and still maintains that claims its conduct delayed competition for Lantus pens are without merit. 14
Business impact: The allegation targets the listing itself. The patent on insulin glargine expired in 2014, and the purchasers say that without the later listings generics could have sought approval as early as 2015, with competition delayed until at least 2020. 14 The same theory reaches any brand product whose market exclusivity rests on a late-listed patent.
Precedent value: The claim treats a patent listing as conduct that can violate the antitrust laws even after the underlying patent has lapsed. The case settled before any appellate ruling, which leaves the theory intact and untested in this circuit.
Next milestone: Settlement papers and dismissal. No date is public.
Cases to watch
- Florida's action against an image generator: Attorney General James Uthmeier sued Rengstorff Consulting, the Nevada owner of the A2E image tool, in Sarasota County Circuit Court on October 28, alleging deceptive and unconscionable practices under Florida's consumer-protection statute for allowing users to produce sexual images of children. 15 The 26-page complaint is the state's theory that the software is the manufacturing point, whatever the user supplied. 16 A2E says it has been cooperating with law enforcement on child sexual abuse material detection. 15
- Amicus wave in the OpenAI copyright MDL: On October 29, Authors Alliance asked for leave to file a brief in the consolidated OpenAI copyright litigation, and the Wikimedia Foundation filed one on October 30. Both urge the court to treat training, the acquisition of copyrighted material and generated answers as separate acts. 171718 Cross-motions for summary judgment in the consolidated case were filed in September, so the court can rule on any of the three stages without reaching the others. 18
- Suno's request to pause the labels' second suit: On October 30, Suno asked a Massachusetts federal judge to stay the second copyright action brought by Sony Music Entertainment and Universal Music Group while the litigation already under way proceeds. 19 Duplicative suits against the same model are a cost question for every AI music company, and the ruling on the stay will set the pattern.
References
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- 9Concord Music Group v. Anthropic, No. 5:24-cv-03811-EKL (N.D. Cal.)
ailawsuittracker.com
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- 12In re Niaspan Antitrust Litigation, No. 2:13-md-02460 (E.D. Pa.)
bergermontague.com
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- 17The Wikimedia Foundation files to protect open knowledge
wikimediafoundation.org
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