Petition for Writ of Certiorari — Dires, LLC, dba Personal Touch Beds and Personal Comfort Beds, et al., Petitioners v. Select Comfort Corporation, et al.
Supreme Court briefAug 11, 2021
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TABLE OF APPENDICES
Appendix A
Opinion, United States Court of Appeals for
the Eighth Circuit, Select Comfort Corporation;
Select Comfort SC Corporation v. John Baxter;
Dires, LLC, doing business as Personal Touch
Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing
business as Personal Touch Beds; Scott Stenzel;
Craig Miller, Nos. 19-1077, 19-1113, 19-1178
(May 11, 2021)………………………………….A-1
Appendix B
Judgment, United States Court of Appeals for
the Eighth Circuit; Select Comfort Corporation;
Select Comfort SC Corporation v. John Baxter;
Dires, LLC, doing business as Personal Touch
Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing
business as Personal Touch Beds; Scott Stenzel;
Craig Miller, Nos. 19-1077, 19-1113, 19-1178
(May 11, 2021)………………………………...A-31
Appendix C
Memorandum Opinion and Order, United
States District Court District of Minnesota,
Select Comfort Corporation; Select Comfort SC
Corporation v. John Baxter; Dires, LLC d/b/a
Personal Touch Beds and Personal Comfort
Beds; Digi Craft Agency, LLC; Direct
Commerce, LLC d/b/a Personal Touch Beds;
Scott Stenzel; and Craig Miller, No. 12-cv-2899
(DWF/SER) (Jan. 13, 2016)…………………A-34
Appendix D
Order, United States Court of Appeals for the
Eighth Circuit, Select Comfort Corporation;
Select Comfort SC Corporation v. John Baxter;
Dires, LLC, doing business as Personal Touch
Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing
business as Personal Touch Beds; Scott Stenzel;
Craig Miller, Nos. 19-1077, 19-1113, 19-1178
(May 11, 2021)………………………………...A-80
Appendix E
Memorandum Opinion and Order, United
States District Court District of Minnesota,
Select Comfort Corporation; Select Comfort SC
Corporation v. John Baxter; Dires, LLC d/b/a
Personal Touch Beds and Personal Comfort
Beds; Digi Craft Agency, LLC; Direct
Commerce, LLC d/b/a Personal Touch Beds;
Scott Stenzel; and Craig Miller, No. 12-cv-2899
(DWF/SER)…………………………………….A-83
Appendix F
Relevant Constitutional and Statutory
Provisions…………………………...…………A-125
U.S. Const. art. III, §§1-2……………………A-125
15 U.S.C § 1125(a), The Lanham Act..……A-126
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Appendix A
UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
_______________
No: 19-1077
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellants,
v.
John Baxter; Dires, LLC, doing business as Personal
Touch Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing business
as Personal Touch Beds; Scott Stenzel; Craig Miller
Defendants – Appellees.
_______________
No: 19-1113
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds
Defendant – Appellant.
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Digi Craft Agency, LLC; Direct Commerce, LLC,
doing business as Personal Touch Beds
Defendants.
Scott Stenzel; Craig Miller
Defendants – Appellants.
_______________
No: 19-1178
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant – Appellant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds; Digi Craft Agency, LLC;
Direct Commerce, LLC, doing business as Personal
Touch Beds; Scott Stenzel; Craig Miller
Defendants.
_______________
Submitted: May 13, 2020
Filed May 11, 2021
Rehearing and Rehearing En Banc
Denied June 16, 2021
_______________
Before: Lavenski R. Smith, Michael Joseph Melloy,
and Bobby E. Shepherd, Circuit Judges
_______________
OPINION
_______________
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MELLOY, Circuit Judge:
Plaintiffs and Defendants sell competing
adjustable air mattresses and related products.
Plaintiffs' registered trademarks include “SLEEP
NUMBER”, “WHAT'S YOUR SLEEP NUMBER”,
“SELECT COMFORT”, and “COMFORTAIRE”.
Plaintiffs allege Defendants used similar and
identical marks in several different capacities online
to sell competing products. Plaintiffs also allege
Defendants compounded internet-related confusion
by making fraudulent misrepresentations and failing
to dispel confusion when consumers contacted
Defendants' call centers. At summary judgment the
district court rejected as a matter of law an
infringement theory based on presale or initialinterest confusion. 4 J. McCarthy, Trademarks and
Unfair Competition, § 23:6 (4th Ed. 2010) (hereinafter
McCarthy) (initial-interest confusion is “confusion
that creates initial customer interest, even though no
actual sale is finally completed as a result of the
confusion”). The case proceeded to a trial on
trademark infringement and dilution claims and on
unfair competition and false advertising claims.
Consistent with the summary judgment ruling, the
district court instructed the jury that infringement
liability depended on a showing of a likelihood of
confusion at the time of purchase. The trial resulted
in a mixed verdict.
Both sides appeal. Plaintiffs raise nine issues.
Defendants contest all nine issues, raise one
additional issue in a cross- appeal, and raise a second
issue in a “conditional cross-appeal.” Because we
conclude the district court erred by finding as a
matter of law that the relevant consumers were
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sophisticated and that a theory of initial-interest
confusion could not apply, we reverse. As a result,
certain issues fall away. Several additional issues
remain, however, and we address them below.
I. Background
Plaintiffs are the owners of the heavily
advertised Select Comfort and Sleep Number brands
of adjustable air mattresses sold online, over the
phone, and (primarily) through hundreds of companyowned stores nationwide. Defendant Dires, LLC, and
its principals and predecessor or affiliated companies,
actually made adjustable air beds at an earlier date.
Defendants have evolved into an online retailer
(“personalcomfortbed.com”) that utilizes internet
advertising and a call-center-based sales model to sell
their own brand of lower-priced adjustable air beds.
The individual defendants are executives or owners of
Dires or related companies, all of whom had input
into marketing strategy and advertising design.
Defendants are a distant second to Plaintiffs in
adjustable-bed sales volume.
Plaintiffs and Defendants have somewhat of a
shared history in that Defendant-Appellee Craig
Miller had at one point (from 2006 to 2011) worked as
a consultant for Plaintiffs. Also, Defendant-Appellees
Baxter and Stenzel had worked for Plaintiff
Comfortaire, another air bed company, and Plaintiff
Select Comfort SC Corporation later purchased
Comfortaire. In fact, Stenzel and Baxter developed
their advertising and sales techniques when working
for Comfortaire.
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Plaintiffs' overall theory of the case alleges
Defendants employed words or phrases identical or
confusingly similar to Plaintiffs trademarks in
various online advertising formats including: website
urls; search inquiry paid terms; embedded links in
third-party sites; and general use of identical or
similar phrases in text advertisements or combined
graphic- and-text advertisements that could be
viewed by users or detected organically by search
engines. According to Plaintiffs, Defendants used
these means to divert customers to their own website
and phone lines where Defendants (1) failed to dispel
consumer confusion or made statements that caused
further source confusion and (2) made false
representations about their own products and
Plaintiffs' products in order to promote their own
products. In this way, Plaintiffs assert trademark
infringement, trademark dilution, and falseadvertising theories that rely upon common facts.
As relevant to claims on appeal, Plaintiffs
asserted federal trademark infringement and dilution
claims based on their registered trademarks, federal
unfair competition and false advertising claims, and a
state law deceptive trade practices claim. In a
declaratory judgment counterclaim, Defendants
argued Plaintiffs had no trademark rights in the
unregistered phrase “NUMBER BED” because the
phrase was either generic or merely descriptive but
lacking secondary meaning. Defendants sought a
summary judgment ruling on their “NUMBER BED”
counterclaim and also argued the incontestable,
registered trademark “SLEEP NUMBER” had
become generic and was no longer protectable.
Defendants also argued Plaintiffs could not maintain
an infringement claim based on presale or initial-
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interest confusion. Both parties sought summary
judgment.
In summary judgment rulings, the district
court found outstanding questions of fact as to
whether “SLEEP NUMBER” had become generic and
as to whether “NUMBER BED” had acquired
secondary meaning and gained status as a
protectable
trademark.
Regarding
trademark
infringement, the district court found generally that
outstanding questions of fact precluded summary
judgment. Regarding the specific question of
trademark infringement in the form of initial-interest
confusion, the district court first noted that Plaintiffs
expressly disavowed any theory of trademark
infringement that relied exclusively on Defendants'
use of Plaintiffs' trademarks as paid search terms
with search engine providers such as Google. Rather,
Plaintiffs alleged infringement based on that use
coupled with Defendants' several and varied other
uses of similar and identical trademarks in multiple
forms of online advertising. The district court then
relied on our case, Sensient Techs. Corp. v.
SensoryEffects Flavor Co., 613 F.3d 754 (8th Cir.
2010), noting that the Eighth Circuit had neither
expressly adopted nor rejected a theory of initialinterest confusion as a general matter, but had
refused to apply the theory in a case where
consumers were sophisticated.
The District Court next held as a matter of law
that retail purchasers of mattresses were
sophisticated consumers because mattresses are
expensive. As a result, the District Court held as a
matter of law that a claim alleging initial- interest
confusion could not proceed and Plaintiffs would have
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to show a likelihood of confusion at the time of
purchase. The district court ruled as to several other
issues, notably denying Plaintiffs' motion for
summary judgment regarding a false advertising
claim in which Plaintiffs argued that Defendants'
Rule 30(b)(6) witness admitted the literal falsity of
certain statements. The district court held that the
statements, in context, were equivocal, presented a
factual question, and did not support summary
judgment.
At trial, Plaintiffs presented evidence which
showed Defendants had used Plaintiffs' actual
trademarks as paid search terms and as identical
phrases in their own web- based advertising in text
pages, combined text and graphical pages, as terms
embedded in linked internet address urls, and in
other fashions. Examples included website links that
presented Plaintiffs' trademarks as identical phrases
(e.g.
personalcomfortbed.com/vSleepNumber
or
www.personalcomfortbed.com/cComfortaire).
In
addition, Defendants used phrases similar to
Plaintiffs' trademarks, often with words broken up in
a grammatically non-sensical fashion. Examples
included the use of terms such as “Sleep 55% Off
Number Beds” and “Comfort Air Beds on Sale” in
online
advertisements.
Survey
evidence
demonstrated actual consumer confusion, although
the parties disputed the relevancy and value of the
survey evidence based on percentages of participants
who were confused, whether the survey participants
were actual or potential consumers, and how the
questions were presented. Evidence also included
instances of actual confusion, often from transcripts
of call-center interactions, messages from customers,
or messages from call-center employees. The
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transcripts and recordings of call-center interactions
appeared to show that Defendants' call-center
employees at times attempted to promote confusion
and at other times attempted to dispel confusion.
Finally,
evidence
included
statements
from
Defendants' principals in which they described
confusion as between Plaintiffs' and Defendants'
brands as a “good thing” and, in response to reports of
confusion, indicated that their advertisements were
“working.”
At the end of the day, the district court
submitted the case to the jury. Based on the
summary judgment ruling, the district court
instructed the jury that a likelihood of confusion
must exist at the time of purchase to support a
trademark infringement claim. The court also
submitted fifteen alleged false advertising claims to
the jury. Over Defendants' objection, the district
court instructed the jury as to false advertising using
an instruction that allowed a presumption as to the
element of materiality if the jury concluded a
statement was literally false.
The jury rejected the trademark infringement
claims as to the registered trademarks based on the
jury instruction that limited the possibility of a
likelihood of confusion to the time of purchase. In
addition, the jury found that Plaintiffs held no
trademark rights in the phrase “NUMBER BED” and
that Defendants' use of the phrase “NUMBER BED”
was not unfair competition. Regarding dilution, the
jury found the mark “SLEEP NUMBER” famous,
indicating it was a strong and well-known mark, but
the jury also found Defendants had not diluted the
mark. Finally, the jury found for Plaintiffs on seven
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of the false advertising claims and for Defendants on
the remaining eight. The jury awarded a total of
approximately $160,000 in damages on the seven
false advertising claims based on a wrongful benefit
received by Defendants. The jury awarded no
damages on the false advertising claims based on
Plaintiffs' alleged lost profits. The district court
denied several post-trial motions, and the parties
appeal.
II. Discussion
A. Initial-Interest Confusion
The primary issue in this appeal is the
availability of a theory of initial-interest confusion on
the trademark infringement claim and the resulting
limitation in the instruction requiring any likelihood
of confusion to exist at the time of purchase. As
noted, initial-interest confusion is “confusion that
creates initial customer interest, even though no
actual sale is finally completed as a result of the
confusion.” 4 McCarthy § 23:6. Most circuits that
have addressed the question “recognize the initial
interest confusion theory as a form of likelihood of
confusion which can trigger a finding of
infringement.” Id. (collecting cases). In general, the
theory of initial-interest confusion recognizes that a
senior user's goodwill holds value at all times, not
merely at the moment of purchase. The theory
protects against the threat of a competitor “receiving
a ‘free ride on the goodwill’ of [an] established mark.”
Checkpoint Systems, Inc. v. Check Point Software
Technologies, Inc., 269 F.3d 270, 295 (3d Cir. 2001)
(quoting Mobil Oil Corp. v. Pegasus Petroleum Corp.,
818 F.2d 254, 260 (2d Cir. 1987)). This free ride may
result in the consumer falsely inferring an affiliation
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between the junior and senior users, provide the
junior user with an opportunity it otherwise would
not have achieved, or deprive the senior user of an
actual opportunity. Id. at 293–95. At least one circuit
has “equated initial interest confusion to a ‘bait and
switch scheme.’ ” Id. at 294 (quoting Dorr-Oliver, Inc.
v. Fluid Quip, Inc., 94 F.3d 376, 382 (7th Cir. 1996)).
In the present case, the parties dispute as a
general matter whether a theory of initial-interest
confusion is a viable theory of infringement in our
circuit. They also dispute whether the relevant
consumers—consumers investigating mattresses and
online shoppers in general—are so sophisticated that
the issue of consumer sophistication could properly be
removed from the jury. To address these questions, it
is necessary first to review more generally the test for
confusion and what our Court has said about when
confusion must exist.
The Lanham Act provides several forms of
protection for commercial goodwill. Trademarks are
protected against infringement, that is, the use of
similar marks on similar or related products or
services if such use creates a likelihood of confusion.
15 U.S.C. § 1125(a)(1)(A); see also 15 U.S.C. §
1114(1)(a). If a trademark is deemed “famous” it may
be protected against dilution in the form of
“tarnishing” or “blurring.” Id. § 1125(c)(2)(C) (the
“tarnishing” of a famous mark is a general damaging
of the goodwill associated with a mark due to a
“similarity between a mark or trade name and a
famous mark that harms the reputation of the
famous mark”); id. § 1125(c)(2)(B) (the “blurring” of a
famous mark is the “impair[ment] [of] the
distinctiveness of the famous mark” “arising from the
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similarity between a mark or trade name and a
famous mark”). The prohibition of dilution “protects
the holder of a famous trademark from
misappropriation of its investment in the mark”
regardless of confusion. Everest Capital Ltd. v.
Everest Funds Mgmt., 393 F.3d 755, 762 (8th Cir.
2005). Finally, the Lanham Act also protects more
generally
against
false
advertising,
false
representations, and unfair competition. 15 U.S.C. §
1125(a) (1)(B).1
To assess the likelihood of confusion as
required for a showing of infringement, our circuit
employs a list of nonexclusive factors for addressing a
core inquiry: whether the relevant average
consumers for a product or service are likely to be
confused as to the source of a product or service or as
to an affiliation between sources based on a
defendant's use. See Anheuser–Busch, Inc. v. Balducci
Publ'ns, 28 F.3d 769, 774 (8th Cir. 1994) (noting that
protection extends “ ‘against use of [plaintiff's] mark
on any product or service which would reasonably be
thought by the buying public to come from the same
source, or thought to be affiliated with, connected
with, or sponsored by, the trademark owner’ ”
(quoting McCarthy § 24.03 (3d. 1992) (alteration in
original))). The factors we consider come from
SquirtCo v. Seven–Up Co., 628 F.2d 1086, 1091 (8th
Cir. 1980), and include: (1) the strength of the
owner's mark; (2) the similarity of the owner's mark
1 The parties do not meaningfully challenge the judgment
below as to the dilution claims and we do not vacate that portion
of the judgment in which the jury rejected the dilution claim but
held Plaintiffs' “SLEEP NUMBER” mark to be famous (strong,
well-known, and heavily advertised).
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and the alleged infringer's mark; (3) the degree to
which the products compete with each other; (4) the
alleged infringer's intent to “pass off” its goods as
those of the trademark owner; (5) incidents of actual
confusion; and (6) the type of product, its costs and
conditions of purchase.
We have repeatedly emphasized that no one
factor is controlling and different factors will carry
more weight in different settings. SquirtCo, 628 F.2d
at 1091 (“[R]esolution of this issue does not hinge on
a single factor but requires a consideration of
numerous factors to determine whether under all the
circumstances there is a likelihood of confusion.”);
Lovely Skin, Inc. v. Ishtar Skin Care Prods., LLC, 745
F.3d 877, 887 (8th Cir. 2014) (“[T]he relative weight
of the factors depends on the facts of the individual
case.” (quoting First Nat. Bank in Sioux Falls v. First
Nat. Bank, South Dakota, 153 F.3d 885, 888 (8th Cir.
1998))); Frosty Treats, Inc. v. Sony Comput. Ent. Am.,
Inc., 426 F.3d 1001, 1008 (8th Cir. 2005) (“factors do
not operate in a mathematically precise formula”
(citation omitted)). We have also noted that the
factors are not truly independent—depending on the
context, a strong showing as to one factor may serve
to make a different factor more or less important. See
Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d 1049,
1054 (8th Cir. 2005) (“[T]he factors are not entirely
separable. For example, it is inappropriate to conduct
a side- by-side comparison of the elements of two
products' trade dress ... without reference to the
senior mark's strength or the market conditions
under which likely consumers would see the marks.”);
see also ConAgra, Inc. v. George A. Hormel & Co., 990
F.2d 368, 371 (8th Cir. 1993) (“[W]hen ‘products are
closely related, less similarity in trademarks is
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necessary to support a finding of infringement.’ ”
(quoting SquirtCo., 628 F.2d at 1091)). Ultimately,
application of the factors is a highly fact-intensive
inquiry both as to the assessment of the evidence
concerning each factor and as to the overall synthesis
of factors and the evidence.
This flexible, context-specific, and relativerather-than- mechanical approach makes sense
because the general function of the likelihood-ofconfusion factors is to guide the finder of fact towards
considerations generally thought to be material to the
consuming public's understanding of product source
or affiliation. Common sense is inherent in the
factors, and the factors, properly applied, should try
to capture a holistic view of the normal experiences
for any given industry, product, or service. The
consumer experience differs by products (buying a
toothbrush vs. buying a car vs. professional buyers
obtaining input goods for a factory), and the relative
importance of any given factor is influenced greatly
by how the other factors might apply. As a result, we
review the likelihood of confusion determination as a
finding of fact. See Everest Capital, 393 F.3d at 760.2
On appeal, the parties frame the primary issues in
dramatically different ways. Plaintiffs argue the district court
erred in a summary judgment ruling and carried that error
forward to the jury instructions, effectively limiting the theories
presented to the jury. Plaintiffs characterize jury findings
relating to these issues as tainted by underlying legal error and
not meriting deference. Defendants argue Plaintiffs' appeal is
better characterized as an instructional issue reviewed merely
for abuse of discretion. Defendants also rely heavily on those
portions of the jury verdict in their favor to argue that our
review should be limited to the sufficiency of the evidence and
that certain trial results are effectively shielded by the jury's
interpretation of the evidence. Essentially, the parties dispute
2
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Although our test for a likelihood of confusion
is well-developed, some uncertainty remains as to
when confusion must exist in order to support a
trademark infringement claim. Sensient, 613 F.3d at
766. Although not addressing initial-interest
confusion specifically, our Court has clearly
established that claims of infringement are not
limited solely to a likelihood of confusion at the time
of purchase. See Insty*Bit, Inc. v. Poly-Tech Indus.,
95 F.3d 663, 671–72 (8th Cir. 1996). In Insty*Bit, our
Court recognized that a 1962 amendment to the
Lanham Act eliminated reference to “purchasers”
when describing actionable confusion. Id. (quoting
Pub. L. No. 87–772, 76 Stat. 769, 773 (1962)). We
interpreted this statutory amendment as permitting
claims
for
post-sale
confusion
among
nonpurchasers—generally
“consumers”—
who
3
witnessed a confusingly marked product. Id.
the manner in which we must view the evidence when
conducting our review. Because we ultimately conclude a
summary judgment ruling and subsequent instructions
erroneously limited the theories presented to the jury, our
review of the evidence speaks largely to the question of harmless
error or prejudice and not to the question of sufficiency. As such,
we discuss the evidence generally in terms of what the parties
presented to the jury rather than limiting our discussion to what
the jury found. As a practical matter, the ability to determine
the inferences the jury drew from the evidence is substantially
clouded by (1) the interrelated nature of the infringement,
dilution, and misrepresentation claims in this case, (2) the
mixed verdict, and (3) our conclusion that summary judgment
and instructional error occurred.
Our Court stated: “Post-sale confusion” refers to the
association consumers might make between the allegedly
infringing item and the familiar product, thereby influencing
their purchasing decisions. The Lanham Act's protection of postsale confusion stems from the 1962 amendment to § 32 of the
Act, 15 U.S.C. § 1114(1), which provides remedies for the
3
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Fourteen years later, however, our Court
indicated that it was unclear as a general matter
whether initial-interest or presale confusion was
actionable. See Sensient Tech., 613 F.3d at 766.
There, over a dissent, our circuit identified the
theory, but neither rejected nor adopted it for general
application. Instead, we held that the theory did not
apply on the facts of the case because the consumers
at issue were sophisticated commercial purchasers of
inputs for industrial food production who purchased
goods with a high degree of care “after a collaborative
process.” Id. at 769.
The general question of whether presale,
initial-interest confusion is actionable, therefore,
seemingly pits two opposing views of trademark law
against one another. On the one hand, through our
application and review of the likelihood of confusion
factors, we recognize the varied landscape of
commercial transactions and leave the jury to sort
through the details. Our factors provide guidance but
do not draw bright lines that might constrain the
general test for confusion. Similarly, the Court in
Insty*Bit refused to place firm constraints on the
question of when confusion must exist. On the other
hand, in Sensient, our Court acknowledged the
possibility of cabining the likelihood-of-confusion test
infringement of [a] registered trademark. Pub. L. No. 87–772, 76
Stat. 769, 773 (1962). The 1962 amendment included confusion
of nonpurchasers as well as direct purchasers by eliminating
language in § 32 which had restricted the scope of trademark
infringement to confusion of “purchasers as to the source of
origin of such goods or services.” 76 Stat. at 773. Thus, an action
for trademark infringement may be based on confusion of
consumers other than direct purchasers, including observers of
an allegedly infringing product in use by a direct purchaser.
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to a particular moment in time, at least under certain
circumstances.
We now address the issue left open in Sensient
and hold that a theory of initial-interest confusion
may apply in our circuit.4 We are, of course, bound by
Sensient.5 But, when the particular conditions of
Sensient are not present, i.e., when a jury question
exists as to the issue of consumer sophistication, a
plaintiff should not be barred from proving presale,
initial-interest confusion. In reaching this conclusion
we find the Lanham Act itself and amendments to its
language as cited in Insty*Bit particularly
compelling. Other courts addressing the question of
initial-interest confusion have relied on this
language. Checkpoint, 269 F.3d at 295 (noting that as
originally enacted, “the Lanham Act only applied
where the use of similar marks was ‘likely to cause
confusion or mistake or to deceive purchasers as to
the source of origin of such goods or services’ ”
(quoting 1946 Lanham Act) (accord Esercizio v.
Roberts, 944 F.2d 1235, 1244 (6th Cir. 1991))); see
generally, 4 McCarthy § 23:7 (collecting cases) (noting
that several courts have interpreted this amendment
as expanding trademark protection beyond point-of4 In so holding, we make no comment as to the impact that
such a showing might have on the availability of various
remedies or any measurement of damages—entirely separate
questions dependent on the proof in a given case.
5 Because Sensient did not address post-sale confusion, it is
not inconsistent with Insty*Bit in a way that would preclude it
from having precedential value. See Mader v. United States, 654
F.3d 794, 800 (8th Cir. 2011) (en banc) (“when faced with
conflicting panel opinions, the earliest opinion must be followed
as it should have controlled the subsequent panels that created
the conflict.” (cleaned up)).
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sale confusion to reach presale confusion (including
initial- interest confusion) and post-sale confusion).
And, in general, adoption of the theory is
consistent with the overall practice of recognizing the
varied nature of commercial interactions and the
importance of not cabining the jury's analysis of the
likelihood of confusion factors. If we do not generally
impose strict constraints on the jury's nuanced
assessment of how or whether the consuming public
might be confused, it would be odd to presume that
all commercial interactions are alike or that, in all
settings, trademarks are worthy of protection only in
the few moments before the consummation of a
transaction.
Of course, as per Sensient, the theory of initialinterest confusion cannot apply in our Circuit where
the relevant average consumers are sophisticated at
the level of the careful professional purchasers who
were at issue in Sensient. In this regard, however, we
find several comments by the dissent in Sensient
compelling, and we note that a finding of customer
sophistication typically will rest with the jury.
In reaching its conclusion, the Court in
Sensient relied upon Checkpoint Systems for the
proposition that “courts look to factors such as
product relatedness and the level of care exercised by
customers to determine whether initial interest
confusion exists.” Sensient, 613 F.3d at 766. Sensient
was an appeal from a grant of summary judgment,
and on the summary judgment record, our Court
indicated that the parties agreed the relevant
consumers were sophisticated. The dissent in
Sensient accurately noted, however, that in
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Checkpoint Systems, the Third Circuit had been
reviewing the issue after trial, not making a
determination as to consumer sophistication as a
matter of law (or making any likelihood of confusion
determinations) at the summary judgment stage. Id.
at 773 (Colloton, J, dissenting). The dissent described
the theory of initial-interest confusion and
emphasized that, even if customers are sophisticated,
that fact alone should not automatically defeat the
theory. In advocating for this no- blanket-rule point,
the dissent cited a Second Circuit case involving
professional buyers in a lawsuit between Mobil Oil
and an entity that was marketing products under the
name “Pegasus Petroleum.” The dissent noted that
“[w]hether or not a sophisticated customer eventually
would sort out the difference, the doctrine of initial
interest confusion prevents an infringer from using
another's mark to gain ‘crucial credibility during the
initial phases of a deal.’ ” Id. at 773 (quoting Mobil
Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254,
258 (2d Cir. 1987)). And, the dissent also emphasized
that the Third Circuit in Checkpoint specifically
disclaimed any categorical rule, stating instead that
the “significance [of customer sophistication] will
vary, and must be determined on a case-by-case
basis.” Sensient, 613 F.3d at 773 (quoting Checkpoint,
269 F.3d at 297).
Regardless of the relative merits of the
positions reflected in Sensient, our general adoption
of the theory of initial-interest confusion forecloses
summary judgment where a question of fact exists as
to the level of consumer sophistication. Here, the
parties dispute the issue of consumer sophistication
both in reference to shopping for mattresses and
shopping online. They also dispute whether consumer
A-19
sophistication should be measured at the “point of
click” for an online shopper, at the point of sale upon
final purchase, or at points in between. For the
reasons previously discussed, we do not believe it is
appropriate to cabin the analysis to any one point in
time. And, in any event, authority is mixed as to
whether mattress shoppers and online shoppers
should be deemed careful, sophisticated consumers.
On the one hand, mattresses are relatively
expensive among most consumers' purchases. See
Sleepmaster Prods. Co. v. Am. Auto-Felt Corp., 241
F.2d 738, 741 (C.C.P.A. 1957) (“[T]he average
purchaser will exercise such care in the selection of a
mattress as to minimize the possibility of confusion
as to the origin of the goods.”). On the other hand,
most people buy mattresses infrequently, so they
enter the marketplace uneducated and susceptible to
fast-talking sales people and brand confusion. See
Friedman v. Sealy, Inc., 274 F.2d 255, 261–62 (10th
Cir. 1959) (“[S]ince a mattress or box spring requires
an investment ..., the degree of care which a customer
might be expected to exercise is somewhat greater
than if he were buying 5-cent candies. [But] the
construction of sleep equipment is not a matter of
common knowledge and the consumer buys
infrequently. He is thus forced to rely on his memory,
more than his inspection, for the recall of names,
guarantees, and endorsements. Under such
circumstances, confusion can easily arise.”).
Authority is also mixed as to the level of
sophistication web- based shoppers bring to the table
and how this potentially separate question should
influence the general assessment of sophistication.
Compare Coca-Cola Co. v. Purdy, No. 02-1782
A-20
ADM/JGL, 2005 WL 212797, at *4 (D. Minn. Jan. 28,
2005) (“[T]he quick and effortless nature of ‘surfing’
the Internet makes it unlikely that consumers can
avoid confusion through the exercise of due care.”)
and GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199,
1209 (9th Cir. 2000) (“Navigating amongst web sites
involves practically no effort whatsoever, and
arguments that Web users exercise a great deal of
care before clicking on hyperlinks are unconvincing.”)
with Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610
F.3d 1171, 1179 (9th Cir. 2010) (“[I]n the age of [the
internet], reasonable, prudent and experienced
internet consumers are accustomed to such
exploration by trial and error. They skip from site to
site, ready to hit the back button whenever they're
not satisfied with a site's contents. They fully expect
to find some sites that aren't what they imagine
based on a glance at the domain name or search
engine summary.”). See also Network Automation,
Inc. v. Advanced Systems Concepts, Inc., 638 F.3d
1137, 1152 (9th Cir. 2011) (noting that although “
‘there is generally a low degree of care exercised by
Internet consumers’ ... the degree of care analysis
cannot begin and end at the marketing channel. We
still must consider the nature and cost of the goods,
and whether ‘the products being sold are marketed
primarily to expert buyers.’ ” (quoting Brookfield
Comm'ns, Inc. v. West Coast Ent. Corp., 174 F.3d
1036, 1060 (9th Cir. 1999))).
At the end of the day, this mix of authority
regarding consumer confusion in the context of
internet
shopping
and
mattress
purchases
demonstrates well why a jury rather than a judge
should assess the level of consumer sophistication.
This point is particularly strong in a case which, like
A-21
the present case, enjoys a full record including highly
detailed descriptions of Plaintiffs' and Defendants'
customers' experience and ample evidence of (1)
actual confusion including transcripts of potential
customers who called Defendants' call centers and
believed they were calling Plaintiffs, and (2)
statements by Defendants' principals describing the
actual confusion as evidence that their own
advertising was working. See Kemp, 398 F.3d at 1058
(evidence of actual confusion, while not required, is
strong evidence of a likelihood of confusion);
SquirtCo, 628 F.2d at 1091 (“Likewise, actual
confusion is not essential to a finding of trademark
infringement, although it is positive proof of
likelihood of confusion.”).
Against this backdrop, we conclude a jury
question existed as to the issue of consumer
sophistication and summary judgment on the theory
of initial-interest confusion was error. For the same
reasons, and based on Insty*Bit, we conclude that
limiting the infringement instruction to require
confusion at the time of purchase was error. Finally,
given the strength of the Plaintiffs' evidence on the
issue of confusion, we cannot conclude that the
summary judgment and instructional errors were
harmless. See Fed. R. Civ. P. 61. In so ruling, we
make no comment as to how a finding of confusion at
times other than the moment of purchase might
affect the analysis of remedies and the determination
of damages.
B. False Advertising
Plaintiffs moved for judgment as a matter of
law on the false advertising claims as to certain
statements for which Plaintiffs argued Defendant
A-22
Craig Miller admitted literal falsity. The district
court denied the motion. On appeal, Plaintiffs renew
their arguments. In addition, in the conditional cross
appeal, Defendants acting as conditional cross
appellants challenge the formulation of the jury
instructions. Defendants argue the district court
improperly shifted the burden of proof by applying an
erroneous presumption as to the elements of the false
advertising claims.
On de novo review, we find no error in the
district court's denial of Plaintiffs' motion for
judgment as a matter of law and submission of the
issue of falsity to the jury. Pittari v. Am. Eagle
Airlines, Inc., 468 F.3d 1056, 1061 (8th Cir. 2006)
(standard of review). The test for literal falsity is
“rigorous,” statements must be analyzed in their
broader context, and there are any number of reasons
why the jury might have chosen to discount Miller's
testimony. Buetow v. A.L.S. Enters., Inc., 650 F.3d
1178, 1185 (8th Cir. 2011) (reversing a summary
ruling as to a finding of literal falsity). We agree with
the district court's prudent choice to place the
factually complex question in the hands of the jury.
Regarding the conditional cross appeal,
Defendants ask the court to reverse and remand
based on the false advertising jury instructions if the
court “remands the case for any reason in Select
Comfort's nine-issue appeal.” Because we reverse and
remand as to the infringement claim, we address the
conditional cross appeal. See Murphy v. FedEx Nat'l
LTL, Inc., 618 F.3d 893, 901 (8th Cir. 2010)
(addressing conditional cross appeal due to remand
on other issues).
A-23
“We review a district court's formulation of
jury instructions for an abuse of discretion and its
interpretation of law de novo.” United States v.
Farah, 899 F.3d 608, 614 (8th Cir. 2018). The
instructions for the false advertising claim identified
the elements as: (1) a false statement about
Defendants, Defendants' products, Plaintiffs, or
Plaintiffs' products in an advertisement; (2) such
statement deceived or tended to deceive a substantial
portion of its audience; (3) the statement was
material in that it was likely to influence a
purchasing decision; and (4) Plaintiffs were or are
likely to be injured as a result. The instructions also
provided, over Defendants' objection, that the jury
could presume materiality (element 3) if the
Defendants made: (1) a literally false statement; (2) a
false statement relating to the inherent quality or
characteristic of a product; or (3) a deliberately false
or misleading statement that was comparative or
implicated a competitor or its product.
In their opening brief as cross-appellants,
Defendants do not take issue with the second or third
“triggers” for the presumption. Rather, Defendants
challenge the presumption of materiality based on
the first trigger: a finding that a statement was
literally false. By limiting their challenge,
Defendants appear to recognize that the second two
triggers are essentially definitions for materiality
that describe types of statements reasonable persons
would recognize as likely to influence a purchasing
decision. In fact, other circuits have reached this
conclusion in the context of false advertising claims.
See, e.g., Cashmere & Camel Hair Mfrs. Inst. v. Saks
Fifth Ave., 284 F.3d 302, 312 n.10 (1st Cir. 2002)
(labeling a statement as material because it was
A-24
related to an inherent quality or characteristic of the
product); Nat'l Basketball Ass'n v. Motorola, Inc., 105
F.3d 841, 855 (2d Cir. 1997) (stating that a
requirement that a misrepresentation address an
“inherent quality or characteristic of the product ... is
essentially one of materiality, a term explicitly used
in other circuits.” (cleaned up)).
A finding that a statement is literally false, in
contrast, does not appear to suggest in any direct
manner that the statement is material. A literally
false statement could address any number of topics.
As such, a finding of literal falsity, standing alone,
does not necessarily make a statement more or less
likely to influence a purchasing decision. Of course,
depending on the nature of the falsehood and the
topic it addresses, a jury might conclude a false
statement is material. But the reasoning leading to
such a conclusion depends on additional facts beyond
mere falsity. In any event, an inference of a
statement's materiality based merely upon its falsity
is neither so clear nor direct that it might support a
burden-shifting presumption in a plaintiff's favor.
In defense of the instruction, Plaintiffs (as
cross-appellees) point to our case in Porous Media
Corp. v. Pall Corp., 110 F.3d 1329 (8th Cir. 1997). In
Porous Media, we identified the elements of a claim
for false advertising as:
(1) a misrepresentation as to “the nature,
characteristics or qualities” of a defendant's products
“alone or in comparison with” a plaintiff's products;
(2) actual deception or a tendency to deceive “a
substantial segment of their audience”; (3)
materiality, meaning the misrepresentations were
“likely to influence buying decisions”; (4) an
A-25
interstate commerce nexus; and (5) injury in the form
of a “direct diversion of sales” or a “lessening of
[plaintiff's] goodwill.” Id. at 1332. We then approved a
rebuttable presumption of deception (element 2) and
damages (element 5) upon a showing that: (1) such a
misrepresentation about products was made
deliberately (with knowledge of its falsity); and (2)
the statement was made “as an important part of its
marketing efforts.” Id. at 1332–33.
Porous Media, standing alone, does not support
the proposition that a jury may presume materiality.
Rather, Porous Media involved presumptions under
different circumstances and as to different elements.
The court in Porous Media was not asked to address,
and did not address, a question regarding a
presumption of materiality. District courts in our
circuit have examined Porous Media to assess the
availability of presumptions as to different elements
of a false-advertising claim and concluded Porous
Media does not support an inference of materiality.
See 3M Innovative Props. Co. v. Dupont Dow
Elastomers, LLC, 361 F. Supp. 2d 958, 971 (D. Minn.
2005) (“[T]he Eighth Circuit's opinion in Porous
Media, which upheld the use in a false advertising
case of some presumptions upon proof of intentional
conduct, referred only to the deception element and
not to materiality.”); see also, Aviva Sports, Inc. v.
Fingerhut Direct Mrkt'g, Inc., 829 F. Supp. 2d 802,
813 (D. Minn. 2011) (“Even where literal falsity is
established, materiality is not presumed.”). At least
two circuit courts have reached the same conclusion.
See Johnson & Johnson Vision Care, Inc. v. 1–800
Contacts, Inc., 299 F.3d 1242, 1250 (11th Cir. 2002)
(rejecting a presumption of materiality based on a
finding of literal falsity and stating, “The materiality
A-26
requirement is based on the premise that not all
deceptions affect consumer decisions.”); Cashmere &
Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d
302, 312 n. 10 (1st Cir. 2002) (“[M]ateriality focuses
on whether the false or misleading statement is likely
to make a difference to purchasers. Thus, even when
a statement is literally false or has been made with
the intent to deceive, materiality must be
demonstrated in order to show that the
misrepresentation had some influence on consumers.”
(citing McCarthy § 27:35 (4th ed. 2001))).
At least one circuit arguably disagrees and
appears to permit an inference of materiality. See,
e.g., Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227
F.3d 489, 497 (5th Cir. 2000) (citing Am. Council of
Cert'd Podiatric Phys. & Surgeons v. Am. Bd. of
Podiatric Surgery, Inc., 185 F.3d 606, 614 (6th
Cir.1999) and Avila v. Rubin, 84 F.3d 222, 227 (7th
Cir.1996)). The Fifth Circuit's discussion of
materiality, however, is not clear and does not
provide an explanation as to why a finding of literal
falsity implies materiality. Further, the cases from
other circuits as cited in Pizza Hut do not clearly
address a presumption of materiality. Rather, they
appear to focus on the element of consumer
deception. In fact, we agree with the Eleventh Circuit
which noted that the Fifth Circuit appeared to
“conflate[ ] the element of consumer deception with
the element of materiality” thus “blurr[ing] the
boundary between the two elements.” Johnson &
Johnson, 299 F.3d at 1250–51 (criticizing the Fifth
Circuit's approach in Pizza Hut, 227 F.3d at 497).
Ultimately, we conclude it was error to instruct
the jury in a manner that shifted the burden of proof
A-27
on the materiality element based on a finding of
literal falsity. And, based on the specific jury forms
returned in this case, we do not find the error to be
harmless as to those claims where Plaintiffs
prevailed.6 Accordingly, we reverse and remand for a
new trial on the seven false advertising claims on
which Plaintiffs prevailed.
C. Other Issues
Several additional issues merit mention. First,
after the close of discovery and after the summary
judgment rulings, Defendants withdrew their
counterclaim alleging that “SLEEP NUMBER” had
become generic and had been abandoned. Defendants
then moved to amend their pleadings to add a
counterclaim alleging “SLEEP NUMBER” was void
because it was generic ab initio, not merely that it
had become generic over time as urged at summary
judgment. The district court denied the motion to
amend noting: the issue of whether a mark was void
ab initio depended on evidence predating or at the
time that Plaintiffs began using the mark; the parties
had not made such evidence a focus of discovery;
Defendants had not provided adequate notice that
such a theory was being pursued in their
counterclaim; discovery had specifically focused on a
different period of time; and discovery had closed.
Defendants challenge this ruling on appeal as an
abuse of discretion. Plaintiffs disagree and also argue
6 The only appeal taken on the eight claims the jury found
for Defendants is on the issue of the directed verdict. As
discussed above, we reject that appeal, and therefore the
judgment as to those eight claims remains unaffected by this
opinion.
A-28
an ab initio genericness defense is not available to
attack a registered, incontestible mark. We need not
address the legal question of which defenses the
Lanham Act permits as against incontestible marks.
Instead, we find no abuse of the district court's
substantial discretion in refusing to permit
amendment of the counterclaim after the close of
discovery and on the eve of trial. See Kozlov v. Ass'd
Wholesale Grocers, Inc., 818 F.3d 380, 394–95 (8th
Cir. 2016). Here, the proposed amendment would
have required additional discovery even though the
moving party had participated in discovery, without
objection, in a manner that did not address the issue.
See Thompson-El v. Jones, 876 F.2d 66, 67–68 (8th
Cir. 1989).
Second, during trial, Plaintiffs objected to
Defendants' expert's testimony when the expert's
testimony regarding survey evidence strayed from
commentary as to the survey results and instead
purported to describe for the jury what is meant by
“the essence of confusion.” According to Plaintiffs,
this testimony amounted to impermissible expert
testimony describing a legal standard. Because we
are reversing as to the infringement claims, we need
not address this question in depth. We merely note
that an expert's testimony as to the structure and
meaning of survey evidence or other factual matters
generally should not usurp the court's role in defining
the law for the jury. See Peterson v. City of Plymouth,
60 F.3d 469, 475 (8th Cir. 1995) (holding that it was
an abuse of discretion to allow testimony that “was
not a fact-based opinion, but a statement of legal
conclusion” because the “legal conclusions were for
the court to make”). Of course, slight deviations from
this general rule are unlikely to result in harmful
A-29
error if identified and explained for the jury, but a
factual expert should not opine as to meaning of a
legal standard. Fed. R. Civ. P. 61.
Third, Plaintiffs also objected to the Defendants
use of an exhibit at trial—an adjustable air bed that
was not from the production years at issue in the
case. The district court allowed the exhibit for the
purpose of educating the jury generally as to the
parties' products and the nature of adjustable air
beds. We find no abuse of the district court's
substantial discretion in admission of the
demonstration bed. Bradshaw v. FEE Transp. Servs.,
715 F.3d 1104, 1108–09 (8th Cir. 2013) (visual aids
permissible). Any infirmities as to the demonstration
go to the weight rather than the admissibility of the
evidence.
Fourth, regarding jury instructions, Plaintiffs
argue the district court misapplied the burden of
proof on Defendant-Appellees' cross claim seeking a
declaration that Plaintiffs held no trademark rights
in “NUMBER BED”. In particular, Plaintiffs argue
the district court erroneously placed the burden on
Plaintiffs (as the cross-claim defendants) to prove
that they possessed enforceable trademark rights in
the phrase “NUMBER BED.” We reject Plaintiffs'
argument. Although a declaratory judgment plaintiff
in most contexts bears the burden of proof,
declaratory judgment plays a somewhat different role
in trademark and patent disputes. The filing of a
declaratory judgment action in a trademark or patent
suit may meaningfully affect venue, but the burden to
prove the existence of enforceable intellectual
property rights stays with the alleged owner of the
rights, whether that party is the declaratory
A-30
judgment plaintiff or defendant. See Medtronic, Inc.
v. Mirowski Family Ventures, LLC, 571 U.S. 191, 194,
134 S.Ct. 843, 187 L.Ed.2d 703 (2014) (holding that,
in a patent infringement declaratory judgment action
filed by an alleged infringer, the defendant patent
holder bears the burden of proving infringement); see
also, e.g., KP Permanent Make-Up, Inc. v. Lasting
Impression I, Inc., 543 U.S. 111, 117–18, 125 S.Ct.
542, 160 L.Ed.2d 440 (2004) (describing a trademark
declaratory judgment defendant as the plaintiff in an
analysis of burdens of proof concerning likelihood of
confusion and fair use); Cross Commerce Media, Inc.
v. Collective, Inc., 841 F.3d 155, 166 (2d Cir. 2016)
(purported rights owner, though declaratory
judgment defendant, bears the burden of proving
protected rights in a mark).
Other issues the parties raise on appeal amount to
alleged trial errors we need not address in light of our
remand.
III.
Conclusion
We reverse and vacate the judgment as to the
infringement and false advertising claims. We leave
undisturbed those portions of the judgment dealing
with the dilution claims and the alleged “NUMBER
BED” trademark. We otherwise remand for further
proceedings consistent with this opinion.
A-31
Appendix B
UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
_______________
No: 19-1077
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellants,
v.
John Baxter; Dires, LLC, doing business as Personal
Touch Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing business
as Personal Touch Beds; Scott Stenzel; Craig Miller
Defendants – Appellees.
_______________
No: 19-1113
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds
Defendant – Appellant.
A-32
Digi Craft Agency, LLC; Direct Commerce, LLC,
doing business as Personal Touch Beds
Defendants.
Scott Stenzel; Craig Miller
Defendants – Appellants.
_______________
No: 19-1178
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant – Appellant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds; Digi Craft Agency, LLC;
Direct Commerce, LLC, doing business as Personal
Touch Beds; Scott Stenzel; Craig Miller
Defendants.
_______________
Appeal from U.S. District Court for the District of
Minnesota
(0:12-cv-02899-DWF)
(0:12-cv-02899-DWF)
(0:12-cv-02899-DWF)
_______________
JUDGMENT
_______________
A-33
Before SMITH, Chief Judge, MELLOY, and
SHEPHERD, Circuit Court Judges.
This appeal from the United States District
Court was submitted on the record of the district
court, briefs of the parties and was argued by counsel.
After consideration, it is hereby ordered and
adjudged that the judgment of the district court in
this cause is affirmed in part, reversed in part, and
remanded to the district court for proceedings
consistent with the opinion of this court.
May 11, 2021
Order Entered in Accordance with Opinion:
Clerk, U.S. Court of Appeals, Eighth Circuit.
______________________________________
/s/ Michael E. Gans
A-34
Appendix C
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
_______________
No: Civil 12-cv-2899 (DWF/SER)
_______________
Select Comfort Corporation; Select Comfort SC
Corporation,
v.
Plaintiffs,
John BAXTER; Dires, LLC d/b/a Personal Touch
Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC d/b/a
Personal Touch Beds; Scott Stenzel;
and Craig Miller,
Defendants.
_______________
Signed January 13, 2016
_______________
Synopsis
Background: Adjustable air bed manufacturer
brought action against competitor, marketing
companies, and individuals who prepared marketing
asserting various unfair competition and trademark
infringement claims under Lanham Act and state
law.
Defendants
filed
counterclaim
seeking
declaration that plaintiff did not have trademark
rights in phrase “Number Bed.” Parties filed cross-
A-35
motions for summary judgment.
Holdings: The District Court, Donovan W. Frank, J.,
held that:
•
fact issues remained as to appropriate
classification of manufacturer’s “Sleep Number”
and “Number Bed” marks;
•
summary judgment was not
defendants’ fair use defense;
•
fact issues remained as to whether consumers
were likely to be confused as to source of
competitor’s products;
•
initial interest confusion doctrine did not apply;
•
summary judgment was not warranted on
manufacturer’s Lanham Act false advertising
claim;
•
summary judgment was not warranted on
manufacturer’s Lanham Act trademark dilution
claim; and
•
competitor’s
purchase
of
manufacturer’s
trademarks as keywords for internet searches did
not infringe manufacturer’s trademark rights.
warranted
on
Motions granted in part and denied in part.
Attorneys and Law Firms
Andrew S. Hansen, Esq., Cynthia S. Topel,
Esq., Dennis E. Hansen, Esq., Elizabeth A. Patton,
Esq., and Samuel R. Hellfeld, Esq., Fox Rothschild
A-36
LLP, counsel for Plaintiffs.
Barbara P. Berens, Esq., Carrie L. Zochert,
Esq., and Erin K. Fogarty Lisle, Esq., Berens &
Miller, PA, counsel for Defendant John Baxter.
David T. Schultz, Esq., Joseph P. Ceronsky,
Esq., and Michael C. McCarthy, Esq., Maslon LLP,
counsel for Defendants Dires, LLC, d/b/a Personal
Touch Beds and Personal Comfort Beds, Scott
Stenzel, and Craig Miller.
Defendant Digi Craft Agency, LLC, pro se.
Defendant Direct Commerce,
Personal Touch Beds, pro se.
LLC,
d/b/a
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK, United States District Judge
INTRODUCTION
This matter is before the Court on a Motion for
Summary Judgment brought by Defendant Dires,
LLC (“Dires” or “Personal Comfort”), Craig Miller
(“Miller”), and Scott Stenzel (“Stenzel”) (together,
“Dires Defendants”) (Doc. No. 221); a Motion for
Summary Judgment brought by Defendant John
Baxter (“Baxter”) (Doc. No. 226); and a Motion for
Partial Summary Judgment brought by Plaintiffs
Select Comfort Corporation (“Select Comfort”) and
Select Comfort SC Corporation (“Comfortaire”)
(together, “Plaintiffs”) (Doc. No. 233). For the reasons
set forth below, the Court grants in part and denies
in part the motions.
BACKGROUND
A-37
Plaintiffs
design,
manufacture,
and
market
1
adjustable air beds and related products. (Doc. No.
239 (“Somers Aff.”) ¶ 2.) Select Comfort markets its
products under the “Sleep Number” brand. (Id. ¶ 3.)
Sleep Number products are sold in over 450 Sleep
Number branded stores, online, and over the phone.
(Id.) Select Comfort is the leading manufacturer of
adjustable air beds with a market share over 90%.
(Doc. No. 224 (“McCarthy Decl.”) ¶ 2, Ex. A (“Marino
Report”) ¶ 15.) Select Comfort owns registered
trademarks for “Sleep Number,” “Select Comfort,”
and “What’s Your Sleep Number.” (Doc. No. 53
(Second Amend. Compl. (“SAC”)) ¶¶ 14-16, Exs. A-C.)
Comfortaire also markets and sells adjustable air
beds, marketed under the “Comfortaire” mark. (Doc.
No. 237 (“Karr Aff.”) ¶ 2.) Comfortaire is the second
largest seller of adjustable air beds, and it sells its
products through over 200 retailers, online, and over
the phone. (Id.) Comfortaire owns the registered
trademark for “Comfortaire.” (SAC ¶ 17, Ex. D.)
Select SC Corporation acquired Comfortaire in
January 2013 via a merger. (Id. ¶ 37.) Prior to the
merger, Comfortaire sold a line of adjustable air beds
that competed with Select SC Corporation’s products.
Select SC Corporation sued Comfortaire for
trademark infringement, and the parties eventually
settled. (Id. ¶¶ 38-41.)
Direct Commerce, LLC (“Direct Commerce”) did
business from approximately July 2011 to August
2012 and is now in forfeited status. (Doc. No. 236
(“Hansen Aff.”) ¶ 1, Ex. 1 at Answer 2.) Direct
An adjustable air bed is one that may be made firmer or less
firm by changing the number on a remote control.
1
A-38
Commerce was owned by Digi Craft Agency (“DCA”),
whose members were Defendants Stenzel and Baxter,
as well as Marc Barriger (who is not a defendant).
(Id.; Hansen Aff. ¶ 3, Ex. 2 (“Stenzel Dep.”) at 26, 4849; Hansen Aff. ¶ 4, Ex. 3 (“Baxter Dep.”) at 162-63;
Hansen Aff. ¶ 5, Ex. 4 (“Barriger Dep.”) at 33.) Direct
Commerce sold beds under the “Personal Touch” and
“Personal Comfort” brands. (Stenzel Dep. at 138;
Baxter Dep. at 30, 190.) Baxter and Stenzel were
involved in advertising and website design at Direct
Commerce. (Baxter Dep. at 13-14, 32; Stenzel Dep. at
51-53.) DCA dissolved in February 2013. (Hansen
Aff. ¶ 1, Ex. 1 at Answer 2.) Defendants submit
evidence that while Direct Commerce and Dires had
some common employees, the two companies are
separate corporate entities. (Doc. No. 225 (“Cernosky
Decl.”) ¶ 3, Ex. 4 at Answer 2.)
Dires is a limited liability company that was formed
by Sizewise Rentals, LLC (“Sizewise”), Stenzel,
Miller, and Baxter. (Id.) Baxter is the former Director
of Marketing for Dires and was in charge of internet
marketing and advertising. (Hansen Aff. ¶ 2, Ex. 7 at
Answer 5; Hansen Aff. ¶ 9, Ex. 8 (“Dires 30(b)(6)
Dep.”) at 77-78; Hansen Aff. ¶ 7, Ex. 6 (“Baxter Dep.
II”) at 15-16; Baxter Dep. at 22, 27, 190).) Baxter also
trained salespersons. (Id.) Stenzel was the Director of
Operations at Dires and is now the Director of
Marketing and Advertising. (Hansen Aff. ¶ 2, Ex. 7 at
Answer 5; Stenzel Dep. at 24-25.) Stenzel has
responsibility over the website and advertising.
(Baxter Dep. II at 15-16, 68; Hansen Aff. ¶ 2, Ex. 7 at
Answer 5.) Miller is a managing member at Dires and
since the filing of this lawsuit has had input into
advertising. (Hansen Aff. ¶ 10, Ex. 9 (“Miller Dep.”)
at 105-06, 166-70; Baxter Dep. II at 15-16.) Miller is
A-39
also the Chief Manufacturing Officer for Sizewize.
(Miller Dep. at 30-33.)
Baxter was an employee of Comfortaire’s parent
company prior to the merger with Select SC
Corporation, and was responsible for developing
Comfortaire’s online advertising. (Doc. No. 231
(“Zochert Aff.”) ¶ 4, Ex. 3 (“Karr Dep.”) at 65.) In July
1998, Baxter participated in and completed Google’s
AdWords training program. (Baxter Dep. at 44-47.)2
Comfortaire used Select Comfort’s trademarks as
search terms in Google’s AdWords program. (Baxter
Dep. at 82-89.) Comfortaire also used “Number Bed”
as a search term. (Karr Dep. at 199.) As a result,
when a consumer entered a key word search, like
“Sleep Number” or “Number Bed,” Comfortaire’s ads
would appear in the “ads” section of the internet
search results, next to Select Comfort’s ads.
(Cernosky Decl. ¶ 2, Ex. 8 (“Kent Report”) ¶¶ 49-51.)3
Defendants market and sell beds online and over the
phone. (Stenzel Dep. at 75.) None of the Defendants
have been authorized retailers, distributors, or sellers
of Sleep Number or Comfortaire. (Somers Aff. ¶ 4;
Karr Aff. ¶ 3.)
The AdWords program teaches participants about Google’s
advertising guidelines and methods to optimize advertising
results. (Baxter Dep. at 44-47.) Google suggests that advertisers
choose specific “keywords that are most relevant to your product
or service ... to increase the chances that your ad is showing to
people who are most interested in your product or service.” See
https://support.google.com/adwords/answer/2497976.
2
Whether other competitors’ ads would appear would depend on
the cost-per-click (“CPC”) keywords that the competitors bid on
and the prices competitors were willing to pay. (Kent Report ¶¶
49-51.)
3
A-40
On November 16, 2012, Select Comfort sued Dires
and Baxter. (Doc. No. 1.) On November 8, 2013,
Select Comfort filed a Second Amended Complaint
adding Comfortaire as a plaintiff and Miller, Stenzel,
Direct Commerce, and DCA as defendants. (Doc. No.
53.)4 The following causes of action remain: (1)
Federal Trademark Infringement (Count I); (2)
Federal Unfair Competition (Count II); (3) Federal
Dilution of Trademark (Count III); (4) False
Advertising (Count IV); (5) Deceptive Trade Practices
(Count V); and (6) Unjust Enrichment (Count
IX.)5 (SAC.)
Defendants deny any unlawful or actionable conduct
and assert three counterclaims. Relevant to the
present motions, in Counterclaim I, Defendants seek
a declaration that the phrase “Number Bed” is
descriptive and is incapable of acquiring secondary
meaning or functioning as a trademark. In
Counterclaim II, Defendants also seek a declaration
that the use of “Select Comfort,” “Sleep Number,” and
“Comfortaire” as keywords does not infringe
Plaintiffs’ trademark rights. In Counterclaim III,
Defendants seek to cancel two of Select Comfort’s
trademark registrations because the phrase “Sleep
Number” is generic. In addition, Defendants assert
several affirmative defenses, including unclean
hands.
The parties have filed cross-motions for summary
judgment. Plaintiffs seek summary judgment on their
Direct Commerce and DCA did not answer the Second
Amended Complaint and are in default. (Doc. No. 82.)
4
Plaintiffs originally asserted ten causes of action, four of which
have been dismissed. (Doc. No. 135.)
5
A-41
trademark infringement, unfair competition, and
related state-law claims; on particular elements of its
false advertising and related state-law claims; on
Defendants’ Counterclaims asserting that “Sleep
Number” is generic and that “Number Bed” cannot
function as a trademark; and on Defendants’
“Number Bed” and unclean hands affirmative
defenses. Baxter moves for summary judgment on
Plaintiffs’ trademark infringement and dilution
claims, unjust enrichment claim, and any claim
founded on successor liability, as well as summary
judgment on Counterclaims I and II. The Dires
Defendants move for summary judgment on all six of
Plaintiffs’ claims, as well as any possible claim that
one or more of the Dires Defendants may be liable for
the conduct of DCA and Direct Commerce. The Dires
Defendants also move for summary judgment on
Counterclaim I.
DISCUSSION
I. Legal Standard
Summary judgment is appropriate if the “movant
shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). Courts must
view the evidence and all reasonable inferences in the
light most favorable to the nonmoving party. Weitz
Co. v. Lloyd’s of London, 574 F.3d 885, 892 (8th
Cir.2009). However, “[s]ummary judgment procedure
is properly regarded not as a disfavored procedural
shortcut, but rather as an integral part of the Federal
Rules as a whole, which are designed ‘to secure the
just, speedy and inexpensive determination of every
action.’ ” Celotex Corp. v. Catrett, 477 U.S. 317, 327,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.
A-42
R. Civ. P. 1).
The moving party bears the burden of showing that
there is no genuine issue of material fact and that it
is entitled to judgment as a matter of law. Enter.
Bank v. Magna Bank of Mo., 92 F.3d 743, 747 (8th
Cir.1996). The nonmoving party must demonstrate
the existence of specific facts in the record that create
a genuine issue for trial. Krenik v. Cty. of Le Sueur,
47 F.3d 953, 957 (8th Cir.1995). A party opposing a
properly supported motion for summary judgment
“must set forth specific facts showing that there is a
genuine issue for trial.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986).
II. Internet
Advertising
and
Search
Engine
Keyword
Because much of this case involves internet and keyword based advertising as used in internet search
engines, the Court will provide a brief summary of
how this type of advertising works and the
background of Defendants’ advertising to which
Plaintiffs object.
A. General Overview
Online advertising consists of Pay-Per-Click (“PPC”),
organic search, and display. (Doc. No. 238 (“O’Hanlon
Aff.”) ¶ 4.) When a consumer performs a search
engine inquiry on the internet, the search engine,
such as Google, returns both “organic” results and
paid advertising results. (Kent Report ¶¶ 18-24; see
also J. Thomas McCarthy, McCarthy on Trademarks
& Unfair Competition (“McCarthy on Trademarks”) §
25A:4 at 26-27 (4th ed. 2015).) PPC ads appear in
A-43
search engines in response to certain search terms—
“keywords”—for which advertisers have bid to have
their advertisements appear. (O’Hanlon Aff. ¶ 5; see
also McCarthy on Trademarks § 25A:4 at 26; Kent
Report ¶¶ 49-52).) These advertisements often appear
at the top or on the right-hand side of the results
page. (O’Hanlon Aff. ¶ 5.) On Google, the paid search
results are labeled with “Ad” (highlighted in yellow),
and the web address of the company sponsoring the
advertisements is displayed under the ad text. (Kent
Report ¶ 29.) Advertisers are charged for these ads
only when a consumer clicks on the advertisement.
(O’Hanlon Aff. ¶ 5.) The ads are displayed based on
who purchased the keywords and on a “quality score”
that rates the likely relevance to the consumer of the
company’s ad and webpage linked to from the ad.
(Cernosky Decl. ¶ 2, Ex. 9.) Using specific keywords
that describe a company’s products or services will
improve the success of the ad. (Id. ¶ 2, Ex. 10.) Google
sells both generic words (such as “bed”), but also
keywords that contain competitors’ trademarks, so
that an ad will appear in the ad section of search
results when a consumer searches for a competitor’s
trademark. (Kent Report ¶¶ 51-54.)
Organic advertising consists of free listings generated
by the search engine that it views as relevant for the
keyword entered. (O’Hanlon Aff. ¶ 6.) Advertisers can
engage in search engine optimization (“SEO”) efforts
to try to increase their organic rating. (Id.) One SEO
method involves implementing various attributes on
a company’s own website, such as title tag lines for
each webpage and by using certain words or phrases
in meta information. (Id.) Search engines use this
data to inform how a page will rank. (Id.) Another
method is ensuring that third-party websites contain
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links to the company’s website. In general, more and
higher-quality links pointing to a website will
increase that website’s rankings in organic results.
This is referred to as “link-building” or “backlinking.” (Id.) Display advertisements consist of
banners placed on third-party websites. (Id. ¶ 7.)
Advertisers pay publishers, ad exchanges, and/or ad
networks to appear on particular websites. (Id.)
Banner advertisements are clickable and look like
signs or images. (Id.)
B. Defendants’ Advertising
Personal Comfort relies almost entirely on keyword
advertising and nearly 80% of its advertising budget
goes towards PPC ads. (Cernosky Decl. ¶ 2, Ex. 6 at
160-61.) Personal Comfort buys keywords such as
“Number Bed,” “Select Comfort,” and “Sleep
Number.” (Answer and Countercl. ¶¶ 55-56.)
Plaintiffs do not object to Personal Comfort’s use of
Plaintiffs’ marks as keywords for internet searches.
Instead, Plaintiffs object to Personal Comfort’s use of
the keywords in conjunction with what they contend
to be infringing advertisements.
When a consumer clicks on a Personal Comfort ad
link, they are taken to Personal Comfort’s website, on
which Personal Comfort compares its products to
Sleep Number products. A screen shot of the Personal
Comfort website that their keyword ads link to
appears in part as follows:
A-45
(Ceronsky Decl. ¶ 2, Ex. 1.) On this page, Personal
Comfort’s logo is displayed at the top of the page,
beneath which smaller text reads “Compare Us to
Sleep Number Bed®.” (Id.) Below that, it says
“PREFERRED OVER SLEEP NUMBER® BED.” (Id.)
On the menu on the left side of the page under the
bold “Compare” heading, it reads “vs. Sleep
A-46
Number’s®.” (Id.) There is another bold heading that
reads “The Sleep Number® Bed versus Personal
Comfort® Bed Comparison.” (Id.) And lower on the
page (not depicted), there is another link to “Compare
to Sleep Number®,” and the following: “We invite you
to do your homework and check out the competition.”
(Id. at 2.) At the very bottom of the webpage, the
following disclaimer appears:
No affiliation exists between Personal Comfort® or
Sleep Number Bed®. No product belonging to Select
Comfort® or Sleep Number Bed® is sold on this site
and any reference is for comparison purposes only.
Select Comfort® and Sleep Number Bed® are
registered trademarks of Select Comfort®
Corporation
you
can
visit
them
at
www.sleepnumberbed.com
(Id.)
In the record, there are numerous additional
advertisements to which Plaintiffs object. For
example, Plaintiffs submit evidence of Defendants’
use of various “billboards” that appear in the
resulting
advertisements
displayed
in
PPC
advertising. These “billboards” include, for example:
“Sleep 55% Off Number Beds”; “Number Bed
Sleep Sale 60% -Closeout Sale”; “Comfort Air Beds
On Sale”; “50% Off Sleep Number Beds”; “50% Off
Queen Number Beds... PersonalComfortBed.
Com/SleepNumber”; “Select 55%Off Comfort Bed
PersonalComfortBed.Com/SelectNumber.” (Hansen
Aff. ¶¶ 39-41, 49, 50, Exs. 38-40, 48, 49 (emphasis in
original).)
In addition, Plaintiffs object to certain display/banner
advertisements that Defendants place on third-party
A-47
websites, such as:
A-48
(Hansen Aff. ¶¶ 66-67, Exs. 65-66.)
Plaintiffs also argue that for SEO purposes,
Defendants use Plaintiffs’ marks (in phrases such as
“Sleep Number bed” and “Sleep Number Beds on
sale”) in hyperlinks on third-party websites that
when clicked on lead to Personal Comfort’s website.
(Dires 30(b)(6) Dep. at 362; Hanson Aff. ¶ 60, Ex. 59
(“Kent Dep.”) at 74; Hanson Aff. ¶¶ 53-54, 56-58, Exs.
52-53, 55-56.)
Plaintiffs also object to Defendants’ use of Plaintiffs’
marks on the Personal Comfort website, including,
for example, the use of “Sleep Number Bed” in the
title tag of the Internet Explorer tab (Hanson Aff. ¶
73; Barriger Dep. at 131-40; Kent Dep. at 57-58, 63-
A-49
64); the use of meta-tags on Defendants’ websites
(i.e., Doc. No. 247 (“Hansen Aff. II”) ¶ 3, Ex. 156
(“50% OFF Sleep Number bed”)); and the use of
“WHAT’S YOUR NUMBER?”
In addition, “Number Bed” appears in the Personal
Comfort logo:
(Hansen Ex. ¶ 71, Ex. 70.)
Plaintiffs also take issue with Defendants’ use of a
“lead generating” website, Mattress Quote. The
Mattress Quote website was created by Baxter and
Stenzel, and it allows consumers to obtain quotes on
a number of brands, including Sleep Number and
Comfortaire products. (Hansen Aff. ¶ 77, Ex. 74.)
Despite being billed as an independent website,
Plaintiffs submit evidence that when consumers
select either Sleep Number or Comfortaire, they
receive a quote from Defendants. (Hansen Aff. ¶¶ 7881, Exs. 75-78.) Moreover, Plaintiffs submit evidence
that, in responding to a direct inquiry from the
Mattress Quote website, Defendants responded
purporting to be “Sleep Number.” (Id. ¶ 78, Ex. 75.)
Finally, Plaintiffs have submitted evidence that when
consumers visit Defendants’ website, call Defendants’
phone number, or participate in a “live chat,”
Defendants have made allegedly false statements to
the callers. (See generally Doc. No. 235 at 8-9.)
A-50
III. Protectability of the Relevant Marks
As an initial matter, the Court analyzes the parties’
arguments with respect to the protectability of the
relevant trademarks. Plaintiffs have trademark
registrations for Sleep Number, Select Comfort,
What’s Your Sleep Number, and Comfortaire. These
registrations are prima facie evidence of the validity
of the marks. 15 U.S.C. § 1057(b). These marks are
also incontestable. (SAC ¶¶ 14-17, Exs. A-D.)
Incontestability provides conclusive evidence of the
mark’s validity, its registration, the registrant’s
ownership of the mark, and the registrant’s exclusive
right to use the mark in commerce. 15 U.S.C. §
1115(b). A defendant contesting an alleged
incontestable mark must prove actual genericness,
proof of descriptiveness is not enough. Woodroast
Sys., Inc. v. Rests. Unltd., Inc., 793 F.Supp. 906, 912
(8th Cir.1992). Plaintiffs also assert trademark rights
in “Number Bed,” an unregistered trademark. A
party asserting unregistered trademark rights bears
the burden of establishing those rights. Ale House
Mgmt., Inc. v. Raleigh Ale House Inc., 205 F.3d 137,
140 (4th Cir.2000).
A trademark answers the question, “Who are you?”
(i.e., what is your source), while the name of a
product answers, “What are you?” See McCarthy on
Trademarks § 12:1. In trademark law, words are
classified in the following categories, from the least
protectable to the most: generic, descriptive,
suggestive, and arbitrary. See Frosty Treats, Inc. v.
Sony Computer Entm’t Am., Inc., 426 F.3d 1001, 1005
(8th Cir.2005). A generic term refers to the name for
the nature of an article and is not entitled to
trademark protection. Id.
A-51
Genericness can be demonstrated “from any
competent source.” In re Merrill Lynch, Pierce,
Fenner, & Smith, Inc., 828 F.2d 1567, 1570
(Fed.Cir.1987). These sources may include a
plaintiff’s generic use, competitors’ uses, third-party
use in trademark registrations, and other
publications. See Nartron Corp. v. STMicroelecs., Inc.,
305 F.3d 397, 406–07 (6th Cir.2002). If a mark is
found to be generic, no amount of secondary meaning
may resurrect it, and no party may be found to
infringe it. Retail Servs. Inc. v. Freebies Publ’g, 364
F.3d 535, 547 (4th Cir.2004).
A mark is generic “when it has become the name of a
product (e.g. ‘sandwich’ for meat between slices of
bread) or a class of products.” TE–TA–Ma Truth
Found.—Family of URI, Inc. v. World Church of
Creator, 297 F.3d 662, 666 (7th Cir.2002). The test for
genericness centers on public perception. Anheuser–
Busch Inc. v. Stroh Brewery Co., 750 F.2d 631, 638
(8th Cir.1984) (“What do the buyers understand by
the word for whose use the parties are contending?”
(citation omitted)). If the primary significance to
consumers is a particular brand, then it is not
generic. A consumer survey is the most definitive
evidence of genericness, but absent such a survey, a
court may consider indirect evidence, such as use by
defendants, the trademark owner, or a third-party.
See McCarthy on Trademarks § 12:14.6
Where the “proponent of trademark status itself uses the term
as a generic name, [it] is strong evidence of genericness.”
McCarthy on Trademarks § 12:13. “A kind of estoppel arise
when the proponent of trademark use is proven to have itself
used the term before the public as a generic name, yet now
claims that the public perceives it as a trademark.” Id.
6
A-52
A term is descriptive if it conveys an “immediate idea
of the ingredients, qualities or characteristics of the
goods that it sells.” Frosty Treats, 426 F.3d at 1005
(determining that, at best, the mark “Frosty Treats”
is descriptive because “Frosty Treats is in the
business of selling frozen desserts ... [and] ‘Frosty
Treats’ conveys an immediate idea of the qualities
and characteristics of the goods that it sells”).
Suggestive marks require imagination to reach a
conclusion as to the product’s nature. Id. at 1005.
Arbitrary marks are words, symbols, or pictures with
common linguistic use but which, when used with the
goods or services in issue, neither suggest nor
describe any ingredient, quality, or characteristic of
those goods or services. See McCarthy on Trademarks
§ 11.11.
In this action, Defendants contest the protectability
of “Sleep Number” and “Number Bed.” The Court
considers each in turn.
A. Sleep Number
In Counterclaim III, Defendants argue that they are
entitled to a declaration that Sleep Number is generic
when used in connection with Select Comfort’s
adjustable air bed mattress products, and that the
“Sleep Number” mark was abandoned through Select
Comfort’s own course of conduct causing the mark to
become generic. Defendants also seek the cancellation
of the trademark registrations associated with “Sleep
Number.”7
7
Plaintiffs have characterized Defendants’ counterclaim on
genericness as one based on an abandonment theory, which
Defendants must demonstrate via clear and convincing
evidence. Defendants acknowledge that they have asserted
A-53
Defendants contend that Select Comfort has used
“Sleep Number” generically for years, pointing to
evidence that Select Comfort introduced the phrase
“Sleep Number” as a desirable product feature, and
has spent more than fourteen years and millions of
dollars to educate the buying public about what a
sleep number is, how someone determines his or her
sleep number, and why the public should purchase a
bed with a sleep number feature. Defendants submit
that Plaintiffs used and advertised the term “Sleep
Number” as a numerical firmness setting for years
and, not until 2008, did Select Comfort begin using it
as a brand (by adding the word “setting,” “bed,” or
“store” to modify “sleep number”). Defendants also
submit that a survey commissioned by Select Comfort
in June 2012 establishes the genericness of the “Sleep
Number” mark. (Doc. No. 255 (“Cernosky II Decl.”) ¶
2, Ex. 58 (“Rappeport Survey”) at 9-10.) In addition,
Defendants point to evidence that Select Comfort
used the mark generically in public filings and
marketing campaigns by, for example, describing the
sleep number feature as a firmness setting and
feature. Further, Defendants submit evidence that
the public uses “Sleep Number” generically.
(Cernosky Decl. II ¶ 2, Ex. 7 (“Widmaier Report”) at
105-25.)
Plaintiffs, on the other hand, contend that the “Sleep
Number” mark is not generic as a matter of law and,
therefore that they are entitled to summary judgment
on this counterclaim. In support, Plaintiffs point to
survey evidence that they claim definitively
demonstrates that “Sleep Number” is a brand.
alternative theories in support of their counterclaim, but
maintain that Sleep Number is generic ab initio.
A-54
(Hansen Aff. ¶ 156, Ex. 153 (“Poret Aff.), Ex. A
(“Poret Survey”) at 65.)8 In particular, in the Poret
Survey, 83.5% responded that they view “Sleep
Number” as a brand name. (Id.)9 Plaintiffs also
submit evidence that secondary meaning studies
have similarly shown that “Sleep Number” is a brand.
(Id. at 67.) For example, a survey conducted by
Robert Reitter indicated that 62% of consumers
associate “Sleep Number” with the mattresses of one
company. (Id.)
Plaintiffs also point out that Defendants did not
produce a survey of their own to demonstrate that
“Sleep Number” is generic, and they contend that
Defendants’ own use of “Sleep Number” demonstrates
that the mark is not generic. For example, Plaintiffs
point to instances where Defendants use “Sleep
Number” as a brand on its website homepage:
“Compare Us to Sleep Number Bed®”; “The Sleep
Number® Bed versus Personal Comfort® Bed
Comparison.” In addition, Plaintiffs point to
numerous incidents where Defendants identify “Sleep
Number” as a brand in both internal and consumer
communications and to evidence that instead of using
“Sleep Number” to describe or identify their products,
Defendants use alternative terms, such as
“adjustable air beds.” Plaintiffs also contend that the
corporate representative of Dires admitted that
8
Plaintiffs argue that they did not introduce a product that
differed from an established class in a significant, functional
characteristic (because the genus of adjustable air beds existed),
but it merely introduced a brand name.
9
Defendants question the reliability of the Poret report, which
was conducted in 2014, two years after the Rappeport Survey,
which Defendants submit demonstrates the genericness of the
phrase “Sleep Number.”
A-55
“Sleep Number” was a brand. Finally, Plaintiffs
argue that any limited alleged misuse of the “Sleep
Number” mark does not render the mark generic,
evidenced by surveys demonstrating that consumers
view “Sleep Number” as a brand.
The classification of a given mark is a factual issue.
Ford Motor Co. v. Summit Motor Prods., Inc., 930
F.2d 277, 292 n. 18 (3d Cir.1991). Here, the Court
concludes that there are significant and material
factual issues that preclude the Court from ruling on
the appropriate classification of the “Sleep Number”
mark on summary judgment. The jury will have to
resolve the factual issues relevant to the
classification of the marks to determine if “Sleep
Number” is generic. In addition, to the extent it
becomes necessary, the jury will have to weigh the
evidence to determine if “Sleep Number” is
descriptive or suggestive for purposes of determining
the mark’s conceptual strength.
B. Number Bed
Defendants also assert a counterclaim seeking a
declaration that Plaintiffs do not have trademark
rights in the phrase “Number Bed.” Defendants and
Plaintiffs both move for summary judgment on this
counterclaim. In support of their counterclaim,
Defendants assert that Plaintiffs have never used
“Number Bed” as a trademark. In the alternative,
Defendants claim the term is generic, or at best
descriptive, and that Plaintiffs are unable to
demonstrate secondary meaning. Plaintiffs, on the
other hand, argue that “Number Bed” is suggestive,
or in the alternative, descriptive with established
secondary meaning.
A-56
There is no dispute that “Number Bed” is not a
registered trademark. Therefore, Plaintiffs bear the
burden of establishing their rights in “Number Bed.”
As with the “Sleep Number” mark, the Court
concludes that there are fact issues with respect to
the correct classification of the “Number Bed” mark,
and it is therefore within the province of the jury. In
addition, should the jury determine that “Number
Bed” is descriptive, the issue of secondary meaning
will come into play. Co–Rect Prods. v. Marvy! Advert.
Photography, Inc., 780 F.2d 1324, 1330 (8th Cir.1985)
(explaining that with respect to an unregistered
descriptive mark, the user must show acquired
secondary meaning).
“To establish secondary meaning, the user must show
that the mark or symbol by long and exclusive use
and advertising in the sale of the user’s goods has
become so associated in the public mind with such
goods that it serves to identify them and distinguish
them from the goods of others.” Id. at 1330 (citations
and quotation marks omitted). Secondary meaning is
an association formed in the minds of the consumers
between the mark and the source or origin of the
product. See Truck Equip. Serv. Co. v. Fruehauf
Corp., 536 F.2d 1210, 1219–20 (8th Cir.1976). The
ultimate inquiry is whether in the consumer’s mind
the mark denotes a “single thing coming from a single
source.” Sec. Ctr., Ltd. v. First Nat’l Sec. Ctrs., 750
F.2d 1295, 1301 (5th Cir.1985) (quotation marks
omitted).
Plaintiffs argue that they have acquired trademark
rights in “Number Bed” because it has acquired
secondary meaning in the minds of consumers. In
support, Plaintiffs point to the Butler Survey, which
A-57
Plaintiffs submit demonstrates that approximately
half of all respondents believe “Number Bed” is
associated with one company. (Hansen Aff. ¶ 157, Ex.
154 ¶ 2, Ex. A (“Butler Survey”) at 9, 12.) Plaintiffs
argue that these results are persuasive evidence that
“Number Bed” has secondary meaning, and thus
trademark status. In addition, Plaintiffs submit
evidence of the long-term use of the mark, extensive
advertising, sales and number of consumers,
established place in the market, and proof of actual
copying, to demonstrate secondary meaning.
Defendants argue that, as a matter of law, Plaintiffs
cannot establish secondary meaning. In particular,
Defendants argue that the Butler Survey fails
because it was conducted after Plaintiffs allege that
Defendants began using the mark. Defendants
further argue that Plaintiffs cannot establish
secondary meaning because they have not used
“Number Bed” by itself to promote their products.
The Court concludes that there are fact issues that
preclude summary judgment on the issue of
secondary meaning.
IV. Trademark Infringement
In Counts I and II, Plaintiffs assert claims for
trademark infringement and unfair competition.
Plaintiffs and Defendants both move for summary
judgment on Plaintiffs’ trademark infringement
claims. To establish a claim for trademark
infringement, a plaintiff must show that it owns a
valid protectable trademark and that a defendant’s
unauthorized use of the trademark creates a
likelihood of confusion. Cmty. of Christ Copyright
A-58
Corp. v. Devon Park Restoration Branch of Jesus
Christ’s Church, 634 F.3d 1005, 1009 (8th Cir.2011).
Plaintiffs assert infringement of “Number Bed,”
“Sleep Number,” “Select Comfort,” “What’s Your
Sleep Number?” and “Comfortaire.” As discussed
above, the jury will decide whether the “Number Bed”
and “Sleep Number” marks are protectable. Plaintiffs
own the trademark registrations of the remaining
asserted marks--“Select Comfort,” “What’s Your Sleep
Number?” and “Comfortaire.” These registrations are
prima facie evidence of ownership of the marks. 15
U.S.C. § 1057(b).
A. Fair Use
Defendants argue that their use of Plaintiffs’ marks
constitutes fair use. The burden rests on the
defendant to establish the applicability of the “fair
use” defense. See DowBrands, L.P. v. Helene Curtis,
Inc., 863 F.Supp. 963, 967 (D.Minn.1994). There are
two types of “fair use” of a trademark: “classic fair
use” and “nominative fair use.” See generally
McCarthy on Trademarks § 23.11. Both are types of
legal, non-infringing use. Id. “Classic fair use” is a
defense to infringement when a junior user argues
that it is not using a phrase or word in a trademark
sense, but only to describe the junior user’s goods or
services. Id. “Nominative fair use” is the use of
another’s trademark to identify the trademark
owner’s goods and services in order to “name” the real
owner of the mark. Id.
Defendants argue that Personal Comfort’s use of
“Number Bed” is classic fair use, and therefore
Defendants cannot infringe either “Sleep Number” or
“Number Bed.” To satisfy the fair use test,
A-59
Defendants must demonstrate that: (1) the use of
Plaintiffs’ marks is to indicate the category of goods
Defendants sell, not the origin of the goods; (2)
Plaintiffs’ marks (i.e., “Number Bed”) are descriptive
of Defendants’ products; and (3) the use of Plaintiffs’
marks is in good faith only to describe its own goods
to consumers. See, e.g., Woodroast Sys., Inc., 793
F.Supp. at 913–14 (denying summary judgment on
issue of fair use); DowBrands, 863 F.Supp. at 969–70
(same; explaining intent must often be established
through circumstantial evidence and an assessment
of credibility). In the present action, material issues
of fact exist with respect to Defendants’ assertion
that its advertisements constitute “classic fair use.”
In particular, the jury will have to weigh the evidence
and decide whether Defendants’ use of Plaintiffs’
marks was made in good faith and only to describe its
own products, or whether the use was intended to
improperly infer a connection between Defendants’
products and Plaintiffs’ brand.
Defendants also argue that Personal Comfort’s use of
Plaintiffs’ marks on its website is “nominative fair
use.” Three elements are required to satisfy the
“nominative fair use” analysis: (1) the product or
service in question must not be readily identifiable
without use of the trademark; (2) only so much of the
trademark may be used as is reasonably necessary to
identify the product or service; and (3) the user must
do nothing, in conjunction with the mark, to suggest
sponsorship or endorsement by the trademark owner.
See New Kids on the Block v. News Am. Publ’g, Inc.,
971 F.2d 302, 308–09 (9th Cir.1992.) Defendants
argue that they engage in comparative advertising
and that they use Plaintiffs’ marks to distinguish
Defendants’ products from (as opposed to affiliate
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with) Plaintiffs’ products or brand. Again, the Court
concludes that material issues of fact exist with
respect
to
Defendants’
assertion
that
its
advertisements constitute “nominative fair use.” In
particular, the jury will have to weigh the evidence
and decide whether Defendants’ use meets the
elements of “nominative fair use,” or whether the use
of Plaintiffs’ marks suggests sponsorship or
endorsement by Plaintiffs. Accordingly, summary
judgment on this defense is denied.
B. Likelihood of Confusion
The Court now turns to whether either Defendants or
Plaintiffs are entitled to summary judgment on the
issue of likelihood of confusion. At issue are various
advertisements and marketing tactics used by
Defendants. For example, Plaintiffs object to
Defendants’ use of Plaintiffs’ marks exactly or in
similar permutations: (1) as keywords that lead to
display advertisements (such as, “Sleep 55% Off
Number Beds”; “Number Bed Sleep Sale 60% Closeout Sale”; “Comfort Air Beds On Sale”); (2) in
display/banner advertisements (such as “Number Bed
Closeout Sale”); (3) for SEO purposes, by placing
hyperlinks (such as “Sleep Number bed” and “Sleep
Number Beds on sale”) on third-party websites that,
when clicked on, lead to Personal Comfort’s website;
and (4) on its own website. The parties disagree over
whether the factors weigh in favor or against of a
likelihood of confusion.
1. Initial Interest Confusion
As an initial matter, Plaintiffs argue that there is
substantial evidence of both initial interest and point
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of sale confusion. Under the Lanham Act, there are at
least two distinct types of actionable customer
confusion: (1) confusion existing at the time of
purchase; and (2) initial interest confusion. Initial
interest confusion is based on confusion that creates
initial customer interest, even though no actual sale
is finally completed as a result of the confusion. See
McCarthy on Trademarks § 23:6.
The parties dispute whether initial interest confusion
can be a basis for liability in the Eighth Circuit.
Plaintiffs point out that the majority of circuits that
have considered the issue have adopted initial
interest confusion as a basis for liability. Id. § 23:6 at
n.2 (collecting cases). However, in Sensient Techs.
Corp. v. SensoryEffects Flavor Co., 613 F.3d 754 (8th
Cir.2010), the Eighth Circuit “decline[d] [plaintiff’s]
invitation to adopt the ‘initial interest confusion’
doctrine in this case,” which involved flavor delivery
systems that are sold to sophisticated consumers
after a collaborative process. Id. at 766, 769
(emphasis added). In Sensient, the Eighth Circuit
explained that “even if the doctrine applied generally
in this circuit, it would not apply” where, “although
the products are similar, ... the customers are
sophisticated and exercise a relatively high degree of
care in making their purchasing decisions.” Id.
Plaintiffs submit that the Eighth Circuit Court of
Appeals, in Sensient, acknowledged the doctrine but
has not yet had the facts fitting it.
The Court notes that the Eighth Circuit in Sensient
neither rejected nor adopted the initial interest
confusion doctrine. Rather, it declined to formally
adopt the doctrine because it would not apply to the
facts of that case. Similarly, even if the initial
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interest confusion doctrine is recognized in the
Eighth Circuit after Sensient, this is not an
appropriate case for its application. Not only are
Personal Comfort and Select Comfort beds expensive
(the average Select Comfort bed costs between $1,600
and $2,300) (see Marino Report ¶¶ 26, 53-54), they
are specialty mattresses, and they are purchased
online. These factors lead to the conclusion that
consumers would exercise a high degree of care in
purchasing such a mattress. See, e.g., Lovely Skin,
Inc. v. Ishtar Skin Care Prods., LLC, 745 F.3d 877,
889 (8th Cir.2014) (applying the principle that
consumer care when purchasing more expensive
goods is higher; online cosmetics purchases averaging
$100); Clam Corp. v. Innovative Outdoor Sols., Inc.,
Civ. No. 08–5895, 2008 WL 5244845, at *3 (D.Minn.
Dec. 15, 2008) (finding that $200-$700 ice fishing
shelters weigh against likelihood of confusion).
Therefore, Plaintiffs’ trademark infringement claim
will require Plaintiffs to establish a likelihood of
actual confusion at the time of purchase.
2. Likelihood of Confusion Factors
In determining whether there is a likelihood of
confusion, the court considers six factors: (1) the
strength of the plaintiff’s mark; (2) the similarity
between the plaintiff’s mark and the allegedly
infringing mark; (3) the degree to which the allegedly
infringing product competes with the plaintiff’s goods;
(4) the alleged infringer’s intent to confuse the public;
(5) the degree of care reasonably expected of potential
customers (or the type of product, its cost, and
conditions of purchase); and (6) evidence of actual
confusion. Sensient, 613 F.3d at 763. “These factors
do not operate in a mathematically precise formula;
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rather, [the court] use[s] them at a summary
judgment stage as a guide to determine whether a
reasonable jury could find a likelihood of confusion.”
Frosty Treats, 426 F.3d at 1008. No one factor
controls. Sensient, 613 F.3d at 763.
a. Strength of Marks
“A strong and distinctive trademark is entitled to
greater protection than a weak or commonplace one.”
Frosty Treats, 426 F.3d at 1008. A trademark’s
strength is measured by both the mark’s conceptual
and commercial strength. Lovely Skin, Inc., 745 F.3d
at 888. Plaintiff asserts that each of its asserted
trademarks is suggestive and thus inherently
distinctive and entitled to protection. As discussed
above with respect to the protectability of “Sleep
Number” and “Number Bed,” the Court considered
the issues surrounding the classification (and
therefore, conceptual strength) of the “Sleep Number”
and “Number Bed” marks. The Court concluded that
appropriate classification of those marks is for the
jury to decide. Similarly, the issue of the appropriate
classification of the remaining asserted marks for
purposes of evaluating their conceptual strength will
be within the province of the jury.
A mark’s commercial value, or marketplace
recognition, also factors into the strength of the mark
analysis. In the likelihood of confusion context,
commercial strength is based on the public
recognition and renown of a mark as shown by the
amount of advertising, sales volume, features and
reviews in publications, and survey evidence. See
Lovely Skin, Inc., 745 F.3d at 888. Here, Plaintiffs
have submitted evidence demonstrating the
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commercial strength of its marks via continuous and
long-term commercial use and extensive advertising
and marketing. Because the jury will determine the
conceptual strength of the marks, the jury will have
to consider that strength along with the mark’s
commercial strength and determine how this factor
weighs in the likelihood of confusion analysis.
b. Similarity of the Marks
The second step considers the similarity between the
mark and Defendants’ use of the marks and similar
permutations. Frosty Treats, 426 F.3d at 1008. This
analysis should not be completed in a vacuum;
rather, the Court “must attempt to recreate the
conditions in which buying decisions are made, and ...
what a reasonable purchaser in market conditions
would do.” Calvin Klein Cosmetics Corp. v. Lenox
Labs., 815 F.2d 500, 504 (8th Cir.1987).
Here, there is significant evidence showing that
Defendants use words and phrases that are the same
or nearly the same as Plaintiffs’ asserted marks.
There is no dispute that Defendants use “Sleep
Number,” “Select Comfort,” “Comfortaire,” and
“Number Bed” in their advertising, sometimes with
minor variations. While the phrases themselves are
not always identical to an asserted mark, the slight
differences do not vary greatly from Plaintiffs’ marks.
Therefore, this factor weighs in favor of a likelihood
of confusion.
c. Competitive proximity
With respect to the third factor, the Court considers
the degree of competition between the companies’
products. Confusion is more likely where the products
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are closely related. Sensient, 613 F.3d at 766.
Plaintiffs and Defendants both market and sell
adjustable air mattresses via overlapping commercial
channels, in particular, internet-based sales.
However, there is also evidence in the record
demonstrating that while nearly all of Defendants’
sales occur on-line, the majority of Select Comfort’s
sales occur in physical stores. In addition, there is
evidence of dissimilarities between the parties’
channels of advertising. Because of these factual
issues, it will be up to the jury to weigh the evidence
and determine whether the factor of competitive
proximity weighs in favor or against a finding of
infringement.
d. Intent
The fourth factor analyzes whether the alleged
infringer intended to pass off its goods as the
trademark owner’s goods. Id. at 766. Although proof
of misleading intent is not required for success in an
infringement claim, “the absence of such intent is a
factor to be considered.” Id.
Plaintiffs assert that there is voluminous and clear
evidence of Defendants’ intent to confuse. First,
Plaintiffs point to evidence that they assert
demonstrates that Baxter specifically articulated an
intent to infringe and that Stenzel and Baxter
discussed the creation of “Tricky Marketing.”
Plaintiffs also point to the numerous examples of
grammatically awkward advertisements, such as
“Number Bed Sleep Sale 60%” and “Sleep Sale 55%
Off Number Bed,” as evidence that Defendants
intended to confuse consumers as to the affiliation of
the brands.
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Defendants dispute Plaintiffs’ evidence of intent. For
example, Defendants assert that certain testimony
that Plaintiffs rely on was taken out of context.
Defendants also submit that the challenged on-line
advertisements are clearly labeled as “ads,” are set
apart from the organic search results in another part
of the screen, and specifically display Defendants’
websites below each ad. Defendants maintain that
the ads contain comparative language and invite
comparison shopping, which is permitted by the
Lanham Act. Finally, Defendants argue that the
awkward wording of their ads does not show an
intent to confuse, but rather conforms to Google’s
AdWords Program.
The Court concludes that there are fact issues with
respect to the issue of intent. It will be up to a jury to
weigh the evidence and determine whether the issue
of intent weighs in favor or against a finding of
infringement.
e. Type of Product at Issue
In evaluating this factor, the Court considers the type
of products at issue, the costs and conditions of
purchase, and the degree of care that consumers are
expected to exercise. Id. at 768. “In considering this
factor, we must stand in the shoes of the ordinary
purchaser, buying under the normally prevalent
conditions of the market and giving the attention
such purchasers usually give in buying that class of
goods.” Id. (quotation omitted). Where the products
have a high price point, consumers are likely to
exercise a greater degree of care in making
purchases, thereby reducing the likelihood of
confusion. See Lovely Skin, Inc., 745 F.3d at 889.
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As discussed above with respect to the discussion of
initial interest confusion, the Court finds that this
factor reduces the likelihood of confusion.
f. Evidence of Actual Confusion
Evidence of actual confusion may be presented in the
form of testimony about incidents of confusion or
survey evidence. See Frosty Treats, 426 F.3d at 1009.
Here, Plaintiffs contend that the record is replete
with evidence of actual confusion, which includes
Defendants’ admissions of actual confusion, customer
communications demonstrating actual confusion, and
consumer survey evidence demonstrating customer
confusion. Some specific examples include: (1)
internal communications discussing customers who
were confused; (2) customer communications
expressing confusion over whether Defendants sell
“Sleep Number” or “Comfortaire” products; and (3)
surveys that Plaintiffs contend show high levels of
confusion. With respect to the survey evidence,
Plaintiffs rely on the Poret Survey, which shows that
23-35% of customers are confused as to the source of
the use of “Number Bed” and “Comfort Air” in
Defendants’ ads. (Poret Survey at 35.)
Defendants take issue with Plaintiffs’ evidence of
actual confusion. First, Defendants contend that the
vast majority of instances where consumers are
confused involve post-sale communications. After
accounting for the examples of post-sale confusion,
Defendants contend that Plaintiffs have only a
“handful” of examples of what could be point-of-sale
confusion. Second, Defendants assert that Poret’s
likelihood of confusion survey is flawed in a manner
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that greatly exaggerates that likelihood. Specifically,
Defendants argue that the question in Poret’s survey
that produces the “vast majority” of positive
responses did not test for source confusion. Without
this allegedly faulty question, Defendants submit
that Poret’s survey showed very low net confusion
rates. In addition, Defendants submit survey
evidence that they contend demonstrates only 1.5%
confusion regarding the source or affiliation of
Defendants’ ads. (Zochert Aff. ¶ 19, Ex. 19 (“Fong
Survey”)).
Because of the conflicting evidence, the Court
concludes that a jury will have to weigh the evidence
of actual confusion and related survey evidence to
determine whether this factor weighs in favor or
against a likelihood of confusion.
g. Weighing All Factors
In sum, there remain numerous material factual
disputes relevant to the analysis of likelihood of
confusion so as to require that the issue be submitted
to a jury. While a likelihood of customer confusion
could be the conclusion reached by a reasonable jury,
that conclusion is not foregone. Therefore, neither
Plaintiffs nor Defendants are entitled to summary
judgment on Plaintiffs’ trademark infringement
claim.
V. False Advertising
In Count IV, Plaintiffs assert a claim for false
advertising. Plaintiffs assert that they are entitled to
summary judgment on certain elements of their false
advertising claim: falsity, use in commerce, and
materiality. In particular, Plaintiffs assert that they
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have demonstrated, as a matter of law, that certain of
Defendants’ advertisements were “literally false,”
that some customers purchased beds from
Defendants after hearing false statements, and that
the statements factored into customers’ decisions to
buy Defendants’ products. Defendants oppose
Plaintiffs’ motion, and the Dires Defendants move
separately on this claim. The Dires Defendants argue
that Plaintiffs have failed to establish standing to
bring a false advertising claim, and even if they did
establish standing, the false advertising claims fail as
a matter of law.
As a threshold matter, the Court concludes that
Plaintiffs have standing to assert this claim. In
Lexmark Int’l, Inc. v. Static Control Components, Inc.,
––– U.S. ––––, 134 S.Ct. 1377, 188 L.Ed.2d 392
(2014), the Supreme Court resolved a circuit split on
the issue as to what is required for a plaintiff to have
standing to sue for false advertising under the
Lanham Act and held that a plaintiff must: (1) be
within the “zone of interest” protected by the statute;
and (2) show “proximate causation” between the
plaintiff’s injury and the alleged violation. Id. at
1390. In the false advertising context, a plaintiff must
allege an injury to a “commercial interest in
reputation or sales.” Id. Here, Plaintiffs have
submitted evidence that Defendants have made false
statements to customers while comparing their
products to Plaintiffs’ products. Plaintiffs have also
pointed to evidence that they contend shows that
customers have purchased products from Defendants
after hearing these false statements. The Court
therefore holds that the harm alleged by Plaintiffs
has a sufficiently close connection to the asserted
false advertising to confer standing on Plaintiffs.
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To establish a claim for false advertising, a plaintiff
must establish the following: (1) a false statement of
fact in a commercial advertisement about its own or
another’s product; (2) the statement actually deceived
or has the tendency to deceive a substantial segment
of its audience; (3) the deception is material (likely to
influence the purchasing decision); (4) the defendant
caused its false statement to enter interstate
commerce; and (5) the plaintiff has been, or is likely
to be, injured as a result of the advertising. United
Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th
Cir.1998); 15 U.S.C. § 1125(a)(1)(B) (prohibiting false
statements
in
“commercial
advertising
and
promotion”).
The false statement necessary to establish a Lanham
Act violation generally falls into one of two
categories: (1) commercial claims that are literally
false as a factual matter; and (2) claims that may be
literally true or ambiguous but which implicitly
convey a false impression, are misleading in context,
or likely to deceive consumers. United Indus. Corp.,
140 F.3d at 1180. Claims might also fall into a third
category, generally known as “puffery,” which is
“exaggerated advertising, blustering, and boasting
upon which no reasonable buyer would rely and is not
actionable.” Id. (citation omitted). “Nonactionable
puffery
includes
representations
of
product
superiority that are vague or highly subjective.” Id.
However, false descriptions of specific or absolute
characteristics of a product and specific, measurable
claims of product superiority based on product testing
are not puffery and are actionable. See id.
Plaintiffs point to evidence that when consumers visit
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Defendants’
Personal
Comfort
website,
call
Defendants’ phone number, or engage in a “live chat,”
Defendants have made numerous false statements.
These statements include: “Personal Comfort is
‘Preferred 6 to 1’ over Sleep Number”; “Personal
Comfort designed Sleep Number’s M-Series beds”;
“Personal Comfort is FDA regulated”; “Personal
Comfort offers FDA registered mattresses”; “Personal
Comfort Bed has been making mattresses since the
1970s”; “In the 1990s Personal Comfort sold patents
to Sleep Number and had a non-compete with them”;
“Personal Comfort has been around for 12 years
longer than Sleep Number”; “Personal Comfort beds
are ‘identical’ to Sleep Number beds”; “Personal
comfort is the only mattress in the industry with
touch screen technology”; “The air chambers on Sleep
Number beds are not replaceable”; “The foam on
Sleep Number beds is not replaceable”; “The foam
used in Personal Comfort beds is ‘medical grade’ ”;
“The air chambers used in Personal Comfort beds are
‘medical grade.’ ” (See generally Doc. No. 235 at 8-9
and related citations.)
In their very brief analysis of their false advertising
claim, Plaintiffs attempt to establish falsity as a
matter of law based on excerpts of testimony of
various witnesses regarding the truthfulness of
certain statements. Defendants, however, contest the
factual basis for the alleged falsity of some of the
contested statements and, as to the remaining
statements, submit that they are not literally false
when explained in a broader context. Moreover,
Defendants move separately on several asserted
statements that they contend do not constitute
commercial advertising or are puffery.
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Here, there are numerous factual issues that
preclude summary judgment for either party on
Plaintiffs’ false advertising claims. Instead, these
factual issues must be resolved by a jury as to the
elements of Plaintiffs’ false advertising claim, and in
particular with respect to the falsity element of the
claim.
Therefore,
summary
judgment
is
inappropriate.
VI. Trademark Dilution
In Count III, Plaintiffs assert a claim for trademark
dilution. Defendants move for summary judgment on
this claim on the grounds that the marks are not
famous as a matter of law. Plaintiffs have since
indicated that they do not intend to pursue dilution
claims with respect to the “Select Comfort” and
“Comfortaire” marks. Instead, Plaintiffs’ dilution
claim pertains only to the Sleep Number marks
(“Sleep Number” and “What’s Your Sleep Number?”).
As to these marks, Plaintiffs claim that fact issues
preclude summary judgment on their dilution claims.
To prevail on a dilution claim, a trademark owner
must demonstrate that the use of a trademark is
likely to cause dilution by blurring or by tarnishing a
famous mark, regardless of the presence or absence of
actual likely confusion, of competition, or of actual
economic injury. 15 U.S.C. § 1125(c). “[A] mark is
famous if it is widely recognized by the general
consuming public of the United States as a
designation of the source of the goods or services of
the mark’s owner.” Id. § 1125(c)(2)(A).
The judicial consensus is that “famous” is a rigorous
standard. Everest Capital Ltd. v. Everest Funds
Mgmt., LLC, 393 F.3d 755, 763 (8th Cir.2005).
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“Dilution is a cause of action invented and reserved
for a select class of marks—those marks with such
powerful consumer associations that even noncompeting uses can impinge their value.” Id. (citing
Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 875
(9th Cir.1999).) Courts may consider eight nonexclusive factors in determining whether a mark is
famous, including: (1) duration, extent, and
geographical reach of advertising and publicity; (2)
amount, volume, and geographical extent of sales; (3)
extent of actual recognition; and (4) registration on
the principal register. See McCarthy on Trademarks §
24:106.
Plaintiff has submitted the following evidence in
support of its dilution claim. First, Plaintiffs submit
that they have spent over $150 million in 2014 and
over $1 billion since 2010 in marketing, advertising,
and promoting their Sleep Number products. (Somers
Aff. ¶ 5.) These efforts include advertising in many
mediums, including online advertisements, radio and
television
spots,
newspaper
and
magazine
advertisements, and direct mail. (Id. ¶ 6 & Ex. 1.) In
addition, Plaintiffs submit evidence of heavy publicity
of the “Sleep Number” brand, including rankings in
industry magazines, positive reviews in Consumer
Reports, celebrity endorsements, and numerous
mentions in magazines, newspapers, online,
television programs, and comics. (Id. ¶ 9 & Exs. 3-4.)
In addition, Plaintiffs submit evidence of numerous
pop-culture references about “Sleep Number” beds.
(Id. ¶ 9 & Ex. 4.) Plaintiffs assert that they have
achieved over $10 billion in sales since 2010. (Id. ¶ 5.)
Plaintiffs also submit survey evidence that they
assert demonstrates fame, and in particular that in
2012, “Sleep Number” achieved 21% unaided brand
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awareness and 75% total awareness. (Hansen Aff. ¶
112, Ex. 109.)
Defendants dispute that Plaintiffs’ Sleep Number
marks are famous, focusing primarily on Plaintiffs’
survey evidence. Defendants submit that in order to
qualify as famous, a survey should reveal brand
recognition in the range of 75%. Defendants also
contend that the survey reveals that brand
awareness for the “Sleep Number” mark achieved
under 20% awareness from 2001 to 2011, and reached
a high point of 21% in 2012. Defendants also argue
that in the face of undisputed direct evidence that the
unaided recognition of the “Sleep Number” mark
hovered around 12-13% from 2007-2009, indirect
evidence of famousness does not create a fact issue as
to the marks’ famousness.
The Court concludes that there are material fact
issues that preclude summary judgment on Plaintiffs’
dilution claim. While the parties dispute the
relevance of the various items of survey evidence, and
whether the awareness of the “Sleep Number” mark
is high enough to demonstrate famousness, the jury
must weigh the competing evidence, including the
indirect evidence that could support the marks’ fame,
and determine if the marks are famous. Therefore,
Plaintiffs’ trademark dilution claim will be resolved
at trial.
VII. Unjust Enrichment
In Count IX, Plaintiffs assert a claim for unjust
enrichment. To prevail on a claim of unjust
enrichment, a plaintiff must show that a defendant
knowingly received something of value that it was not
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entitled to, and that it would be unjust for the
defendant to keep those benefits. Guinness Import
Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 613 (8th
Cir.1998). However, unjust enrichment is an
equitable remedy, and “[a] party may not have
equitable relief where there is an adequate remedy at
law available.” United States v. Bame, 721 F.3d 1025,
1030 (8th Cir.2013) (citing ServiceMaster of St. Cloud
v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 305
(Minn.1996)).
Here, Defendants argue summarily that Plaintiffs
may not seek equitable relief because there is an
adequate remedy at law under the Lanham Act.
Plaintiffs contend that their unjust enrichment claim
is not duplicative of a Lanham Act claim, but offer no
further explanation as to why their unjust
enrichment claim is not duplicative of other claims.
Because it appears that Plaintiffs have an adequate
remedy at law, the Court grants Defendants’ motion
for summary judgment as to Plaintiffs’ unjust
enrichment claim.
VIII. Minnesota Deceptive Trade Practices Act
(“MDTPA”)
Defendants assert that Plaintiffs’ MDTPA claim is
coextensive with the Lanham Act claims for
trademark infringement, unfair competition, and
false advertising. Plaintiffs assert that the claims
under the Lanham Act and MDTPA are not wholly
coextensive and that the MDTPA provides a more
liberal standard for awarding attorney fees than the
Lanham Act. Plaintiffs therefore assert that the
MDTPA claim may lie separately for the purpose of
calculating damages. The Court agrees with
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Plaintiffs. Therefore, summary judgment is not
appropriate on this claim.
IX. Counterclaim II
In Counterclaim II, Defendants seek a declaration
that the purchase of Plaintiffs’ trademarks as
keywords does not infringe Plaintiffs’ trademark
rights. Baxter moves for summary judgment on this
claim, arguing that Plaintiffs have acknowledged that
the purchase of competitive trademarks as keywords
by itself does not constitute infringement or unfair
competition. Baxter points out that Plaintiffs
themselves purchase competitive trademarks as
keywords. Baxter asserts, therefore, that they are
entitled to summary judgment on this declaratory
request. Plaintiffs counter that there is no actual
controversy on this issue because they have never
contended that Defendants’ mere purchase of
competitor trademarks is wrongful. What Plaintiffs
do contend is that Defendants’ purchase of the
keywords in conjunction with the resulting
advertisements is wrongful.
The Court agrees that there is no controversy as
Plaintiffs do not claim that the purchase of
competitor trademarks as keywords alone is
wrongful. Thus, Plaintiffs are entitled to summary
judgment on Counterclaim II.
X. Unclean Hands
Defendants assert a defense of unclean hands. In
particular, Defendants submit that Plaintiffs have
purchased its competitors’ keywords while suing
Defendants for the same. Defendants assert that
given the fact that Plaintiffs allege that Defendants’
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purchase of Plaintiffs’ keywords was wrongful,
Defendants are entitled to assert an unclean hands
defense based on Plaintiffs’ same conduct. As
explained above, Plaintiffs do not claim keyword
purchasing alone is wrongful. Thus, there is no basis
for Defendants’ unclean hands defense on these
grounds. Therefore, Plaintiffs’ motion for summary
judgment on Defendants’ unclean hands defense is
granted to the extent that it is based on Plaintiffs’
alleged purchase of competitors’ keywords.
However, Defendants also base their unclean hands
defense on the allegation that Plaintiffs have engaged
in advertising that is similar to some of Defendants’
advertising that Plaintiffs allege constitutes false
advertising. To the extent that Defendants’ unclean
hands defense is based on such advertising, the Court
denies Plaintiffs’ motion.
XI. Individual & Successor Liability
Plaintiffs seek to hold Baxter, Stenzel, and Miller
personally liable for Direct Commerce’s, DCA’s, and
Dires’ conduct based on their participation in
wrongful conduct. Defendants move for summary
judgment, arguing that there is no basis for
individual liability here.
Natural persons may be liable for trademark
infringement. Zerorez Franchising Sys., Inc. v.
Distinctive Cleaning, Inc., 103 F.Supp.3d 1032, 1046
(D.Minn.2015) (citation omitted). “A corporate officer
is personally liable for the corporation’s trademark
infringement if the officer participates in that
infringement.” Id. (citing Microsoft Corp. v. Ion Techs.
Corp., Civ. No. 01–1769, 2003 WL 21356084, at *5
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(D.Minn. May 30, 2003)). In Zerorez, the Court found
the corporate defendant’s owner/manager personally
liable for trademark infringement where there was
evidence that she had written the Google AdWords
content and actively participated in the infringement
by managing the advertising budget. Id.
Plaintiffs point to evidence that Miller manages
Dires’ marketing and advertising budget, and after
the initiation of the lawsuit, has reviewed advertising
for approval. At Dires, Stenzel has participated in
and had responsibility for certain forms of
advertising and since March 2013, has been primarily
in charge of the Personal Comfort website and
advertising. Stenzel also consults with Miller
regarding Dires’ marketing and advertising budget.
Also at Dires, Baxter designed the Personal Comfort
website, developed advertising, and trained
salepersons.
The Court concludes that there is sufficient evidence
to submit the issue of individual liability to the jury.
There are genuine issues of fact as to these
individuals’ involvement in the allegedly infringing
activities and, therefore, whether they can be held
personally liable. However, the Court grants
Defendants’ summary judgment as to Plaintiffs’ claim
of successor liability because Plaintiffs did not plead
such a claim.
ORDER
Based on the files, record, and proceedings herein, IT
IS HEREBY ORDERED that:
1. Plaintiffs’ Motion for Partial Summary Judgment
(Doc. No. [233] ) is GRANTED IN PART and
DENIED IN PART as follows:
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a. Plaintiffs are entitled to summary judgment on
Counterclaim II.
b. Plaintiffs are entitled to summary judgment on
Defendants’ unclean hands defense to the extent
that it is based on Plaintiffs’ alleged purchase of
competitors’ keywords.
c. Plaintiffs’ motion is denied in all other respects.
2. Dires Defendants Motion for Summary Judgment
(Doc. No. [221] ) is GRANTED IN PART and
DENIED IN PART as follows:
a. Dires Defendants are entitled to summary
judgment on Plaintiff’s unjust enrichment claim
(Count IX).
b. Dires Defendants are entitled to summary
judgment on Plaintiffs’ claim of successor liability.
c. Dires Defendants’ motion is denied in all other
respects.
3. Baxter’s Motion for Summary Judgment (Doc.
No. [226] ) is GRANTED IN PART and DENIED
IN PART as follows:
a. Baxter is entitled to summary judgment on
Plaintiff’s unjust enrichment claim (Count IX).
b. Baxter is entitled to summary judgment on
Plaintiffs’ claim of successor liability.
c. Baxter’s motion is denied in all other respects.
End of Document.
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Appendix D
UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
_______________
No: 19-1077
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellants,
v.
John Baxter; Dires, LLC, doing business as Personal
Touch Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC, doing business
as Personal Touch Beds; Scott Stenzel; Craig Miller
Defendants – Appellees.
_______________
No: 19-1113
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds
Defendant – Appellant.
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Digi Craft Agency, LLC; Direct Commerce, LLC,
doing business as Personal Touch Beds
Defendants.
Scott Stenzel; Craig Miller
Defendants – Appellants.
_______________
No: 19-1178
_______________
Select Comfort Corporation; Select Comfort SC
Corporation
Plaintiffs – Appellees,
v.
John Baxter
Defendant – Appellant,
Dires, LLC, doing business as Personal Touch Beds
and Personal Comfort Beds; Digi Craft Agency, LLC;
Direct Commerce, LLC, doing business as Personal
Touch Beds; Scott Stenzel; Craig Miller
Defendants.
_______________
Appeal from U.S. District Court
for the District of Minnesota
(0:12-cv-02899-DWF
_______________
ORDER
_______________
The petitions for rehearing en banc filed by
Appellees/Cross Appellants Dires, LLC, Mr. Scott
Stenzel, Mr. Craig Miller, and Mr. John Baxter are
denied. The petitions for rehearing by the panel are
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also denied.
Judge Benton and Judge Kelly did not participate in
the consideration or decision of this matter.
June 16, 2021
Order Entered at the Direction of the Court:
Clerk, U.S. Court of Appeals, Eighth Circuit
s/ Michael E. Gans
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Appendix E
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
_______________
No: Civil 12-cv-2899 (DWF/SER)
_______________
Select Comfort Corporation; Select Comfort SC
Corporation,
v.
Plaintiffs,
John BAXTER; Dires, LLC d/b/a Personal Touch
Beds and Personal Comfort Beds; Digi Craft
Agency, LLC; Direct Commerce, LLC d/b/a
Personal Touch Beds; Scott Stenzel;
and Craig Miller,
Defendants.
_______________
Signed 12/12/2018
_______________
Attorneys and Law Firms
Andrew S. Hansen, Esq., Elizabeth A. Patton, Esq.,
and Heidi O. Fisher, Esq., Fox Rothschild LLP,
counsel for Plaintiffs.
Barbara P. Berens, Esq., Carrie L. Zochert, Esq., and
Erin K. Fogarty Lisle, Esq., Berens & Miller, PA,
counsel for Defendant John Baxter.
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Cassandra B. Merrick, Esq., Christopher W. Madel,
Esq., Jennifer M. Robbins, Esq., Madel PA, counsel
for Defendants Dires, LLC, d/b/a Personal Touch
Beds and Personal Comfort Beds, Scott Stenzel, and
Craig Miller.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK, United States District Judge
INTRODUCTION
This matter is before the Court on numerous posttrial motions. These motions include Plaintiffs Select
Comfort Corporation and Select Comfort SC
Corporation’s
(“Select
Comfort”)
Motion
for
Determination of Entitlement to Attorneys’ Fees and
Non-Taxable Expenses (Doc. No. 640), Motion for
Renewed Judgment as a Matter of Law, to Amend the
Verdict, and/or for a New Trial (Doc. No. 643), Motion
to Increase the Damages Award (Doc. No. 654), and
Motion for Permanent Injunction (Doc. No. 668); as
well Defendants Dires, LLC, Craig Miller, Scott
Stenzel, and John Baxter’s Motion for Determination
of Entitlement to Attorneys’ Fees and Costs (Doc. No.
655) and Amended Renewed Motion for Judgment as
a Matter of Law and For a New Trial (Doc. No. 644).1
BACKGROUND
The factual and procedural background of this
litigation is extensively set forth in prior orders and
will not be repeated here. In summary, Select
Comfort brought multiple claims against Defendants,
1
Defendants’ motions at Doc. Nos. 617 and 632 are moot in light
of the present motions.
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including claims for trademark infringement,
trademark dilution, false advertising, unfair
competition, and related state-law claims. After trial,
the jury returned a verdict, making the following
relevant findings:
Trademark Infringement: Defendants did not
infringe Select Comfort’s trademark rights in SLEEP
NUMBER, WHAT’S YOUR SLEEP NUMBER?,
SELECT COMFORT, or COMFORTAIRE. (Doc. No.
575 (“Special Verdict”) at 2-3.)
Trademark Dilution: Select Comfort’s SLEEP
NUMBER mark is famous, but Defendants’
advertising did not dilute the mark. (Id. at 6.)
Unfair Competition: Defendants’ use of NUMBER
BED did not constitute unfair competition. (Id. at 8.)
False Advertising: At trial, Select Comfort alleged
Defendants made 14 false statements. The jury found
in favor of Select Comfort on the following
statements:2
1. Personal Touch is Preferred 6 to 1 Over Sleep
Number;3
2. Personal Comfort, or we, sold patents to Sleep
Number (or Sleep Number purchased patents
from Personal Comfort, or us);
3. Sleep Number bed parts are not replaceable or
changeable (e.g. Sleep Number bed chambers or
2
The jury found in favor of Defendants (no liability) on the
remaining statements.
3
This statement was made by DigiCraft Agency, LLC and/or
Direct Commerce, LLC d/b/a Personal Touch Beds.
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foam are not replaceable or changeable).
4. Sleep Number paid Personal Comfort not to
compete or to manufacture mattresses.
5. Personal Comfort is FDA regulated/certified/
approved or Personal Comfort sells FDA
registered mattresses.
6. Personal Comfort is owned and operated by a
FDA registered medical device manufacturing
company.
7. Personal Comfort beds come with “no sales tax”
or are “tax free.”
(Id. at 13-56.) The jury found that statements 1, 2,
and 3 were made with an intent to deceive
consumers. (Id. at 14, 24, 31.) The jury found that the
remaining false statements were made with no intent
to deceive customers.
Counterclaim:
In
considering
Defendants’
Counterclaim, the jury determined that Select
Comfort does not have trademark rights in NUMBER
BED. (Id. at 66.)
Damages: The jury found that Select Comfort did
not suffer lost profits as a result of Defendants’
conduct, but did find that Defendants obtained a
wrongful benefit in the amount of $155,721. (Id. at 65
($120,812 attributed to Dires and $34,909 attributed
to Direct Commerce).)
The matter is now before the Court on the parties’
post-trial motions.
DISCUSSION
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I. Select Comfort’s Renewed Motion for
Judgment as a Matter of law, to Amend the
Verdict, and/or for a New Trial
Select Comfort moves for judgment as a matter of
law, to alter or amend the verdict, and/or to grant a
new trial. In support, Select Comfort argues that the
Court
committed
several
prejudicial
errors.
Defendants oppose the motion, arguing that the
Court did not commit any legal error and, even if it
did, any such error did not prejudice Select Comfort.
A. Legal Standards
A court may render judgment as a matter of law
when “a party has been fully heard on an issue
during a jury trial and the court finds that a
reasonable jury would not have a legally sufficient
evidentiary basis to find for that party on that issue.”
Fed. R. Civ. P. 50(a). Under Rule 50, judgment as a
matter of law is appropriate only if no reasonable
jury could have returned a verdict for the nonmoving
party. Weber v. Strippit, Inc., 186 F.3d 907, 912 (8th
Cir. 1999). In analyzing a Rule 50 motion, a court
must consider the evidence in the light most
favorable to the non-moving party, resolve all factual
conflicts in the non-moving party’s favor, and give the
non-movant the benefit of all reasonable inferences.
Id. “Judgment as a matter of law is proper when the
record contains no proof beyond speculation to
support the verdict.” Heating & Air Specialists, Inc. v.
Jones, 180 F.3d 923, 932-33 (8th Cir. 1999). “A jury
verdict will not be set aside unless there is a complete
absence of probative facts to support a verdict.”
Walsh v. Nat’l Computer Sys., Inc., 332 F.3d 1150,
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1158 (8th Cir. 2003) (quotation omitted).
Under Rule 59, a “court may, on motion, grant a new
trial on all or some of the issues--and to any party ...
after a jury trial, for any reason for which a new trial
has heretofore been granted in an action at law in
federal court.” Fed. R. Civ. P. 59(a). The standard for
granting a new trial is whether the verdict is against
“the great weight of the evidence.” Butler v. French,
83 F.3d 942, 944 (8th Cir. 1996). The Eighth Circuit
explained that:
[A] trial court may not grant a new trial simply
because the trial court would have found a verdict
different from the one the jury found. This is
certainly a necessary condition to granting a motion
for new trial, but it is not a sufficient one. Rather,
the trial court must believe, as we have already
said, that the verdict was so contrary to the
evidence as to amount to a miscarriage of justice.
Id. A new trial is also appropriate where legal errors
at trial result in a miscarriage of justice. Gray v.
Bicknell, 86 F.3d 1472, 1480-81 (8th Cir. 1996).
Evidentiary errors warrant a new trial only when
“the cumulative effect of the errors is to substantially
influence the jury’s verdict.” Williams v. City of Kan.
City, Mo., 223 F.3d 749, 755 (8th Cir. 2000). A new
trial also may be ordered if the Court erred in
instructing the jury on the applicable law. T.H.S.
Northstar Assocs. v. W.R. Grace & Co.-Conn., 860 F.
Supp. 640, 650 (D. Minn. 1994), vacated on other
grounds, 66 F.3d 173 (8th Cir. 1995). The Court,
however, has broad discretion in framing instructions
and need not give every proposed instruction
provided that the court adequately presents the law
and the issues to the jury. Fleming v. Harris, 39 F.3d
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905, 907 (8th Cir. 1994). Moreover, the instructions
are to be considered in their entirety to determine
whether, when read as a whole, the charge fairly and
adequately submits the issues to the jury. Id. “A
single erroneous instruction will not necessarily
require reversal.” Id. The harmless error rule applies
to jury instructions. Laubach v. Otis Elevator Co., 37
F.3d 427, 429 (8th Cir. 1994).
“[D]istrict courts enjoy broad discretion in choosing
whether to grant a new trial.” Pulla v. Amoco Oil Co.,
72 F.3d 648, 656 (8th Cir. 1995). A district court
reviewing a motion for a new trial is “not free to
reweigh the evidence and set aside the jury verdict
merely because the jury could have drawn different
inferences or conclusions or because [the court] feel[s]
that other results are more reasonable.” Fireman’s
Fund Ins. Co. v. Aalco Wrecking Co., Inc., 466 F.2d
179, 186 (8th Cir. 1972) (citation omitted).
A motion to amend under Federal Rule of Civil
Procedure 59(e) serves the “limited function of
correcting manifest errors of law or fact or to present
newly discovered evidence.” United States v. Metro.
St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir.
2006) (internal quotation marks omitted). A Rule
59(e) motion is not a vehicle to introduce new
evidence, tender new legal theories, or raise
arguments that could have been offered or raised
before the Court entered judgment. Id.
B. Trademark Infringement
Select Comfort argues that the Court made the
following prejudicial errors that require amending
the verdict or granting a new trial on its trademark
infringement claims: (1) disallowing Select Comfort
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from pursuing an initial interest claim; (2) applying
the wrong standards and burdens under the Lanham
Act in jury instructions; and (3) allowing Defendants’
bed demonstration. In addition, Select Comfort
argues that despite these errors, it offered
overwhelming evidence that Defendants used Select
Comfort’s marks (or similar words/phrases) in a
manner likely to cause customer confusion as to the
source of sponsorship of the goods and, therefore, that
the jury’s verdict on the trademark infringement
claims was contrary to this evidence.
1) Initial Interest Confusion Doctrine
Select Comfort first argues that the Court erred by
not allowing it to pursue an initial interest claim.
Select Comfort argues that it should have been
allowed to pursue the theory that significant
confusion at the initial point that consumers viewed
on-line advertisements is all that was required to
establish liability under the Lanham Act, and that it
was error to instruct the jury that a showing of a
likelihood of confusion at the time of purchase was
required. Defendants argue that the Court’s rulings
on the initial interest doctrine were correct.
In its order granting in part and denying in part the
parties’ motions for summary judgment, the Court
held that Select Comfort’s trademark infringement
claim requires a showing of a likelihood of confusion
at the time of purchase. In so holding, the Court
explained that in Sensient Techs. Corp. v.
SensoryEffects Flavor Co., 613 F.3d 754, 766 (8th Cir.
2010), the Eighth Circuit declined to formally adopt
the “initial interest confusion” doctrine and explained
that “even if the doctrine applied generally in this
circuit, it would not apply” where, “although the
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products are similar, ... the customers are
sophisticated and exercise a relatively high degree of
care in making their purchasing decisions.” Id. As
explained previously, the initial interest doctrine
would not apply to the facts of this case because the
beds at issue were purchased on-line and are
expensive, suggesting that consumers would exercise
a high degree of care in making any such purchase.
The Court discerns no error in its ruling on initial
interest confusion. Importantly, the Court notes that
it did not hold that initial interest confusion was
irrelevant to the issue of whether there was a
likelihood of confusion (or that the jury could not
consider evidence of such confusion), but only that
such confusion alone would not result in liability.
Moreover, Select Comfort’s theory of liability in this
case centers on the contention that Defendants
capitalize on consumers being confused initially at
the point-of-click on-line, thus diverting the
consumers to Defendants’ website and then fostering
that confusion and/or replacing it with false claims.
Select Comfort was free to submit evidence of pointof-click confusion to support a showing of likelihood of
confusion between the purchasing alternatives at the
time of purchase. In addition, Select Comfort
separately asserted false advertising claims, some of
which were successful at trial.
2) Jury Instructions
Similarly, based on its arguments regarding the
initial interest confusion doctrine, Select Comfort
argues that the Court applied the wrong standards
and burdens under the Lanham Act in its jury
instructions. Specifically, Select Comfort argues that:
the jury instructions improperly restricted the jury to
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determining whether there was a likelihood of
confusion at the time of purchase; without a
definition of “time of purchase,” the jury understood
that consumers must actually purchase Defendants’
products while confused; the Court should have
instructed the jury that confusion occurring at other
points in the sale and service process is relevant to
whether confusion is likely to occur at the time of
purchase; the Court should have indicated that
actionable confusion includes confusion as to where
consumers can purchase a product; and because
Defendants’ survey expert indicated that the
“essence” of confusion is source confusion, without a
corrective instruction, the jury was left believing that
actionable confusion is limited to source confusion.
Further, with respect to the issue of abatement,
Select Comfort argues that if at any point it showed a
likelihood of confusion (including initial interest
confusion), the burden shifted to Defendants to show
by clear and convincing evidence that efforts to abate
confusion were successful. Finally, Select Comfort
contends that the Court erred by not instructing the
jury on “actionable” confusion or providing a
definition of “appreciable.”
In relevant part, the Court offered the following
instructions to the jury:
PLAINTIFFS’
CLAIM
INFRINGEMENT
OF
TRADEMARK
Plaintiffs claim that Defendants’ advertising
constitutes trademark infringement. Plaintiffs have
the burden of proving infringement by a
preponderance of the evidence.
The Lanham Act recognizes a cause of action for
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infringement of a federally registered mark where
use of a mark is likely to cause confusion, mistake, or
deception. To establish trademark infringement, the
owner of a trademark must demonstrate that the
defendant’s alleged infringing was likely to cause
confusion among consumers regarding the origin,
sponsorship, affiliation or approval of the defendant’s
product.
For their claims that Defendants infringed their
trademarks,
Plaintiffs
must
prove
by
a
preponderance of the evidence that Defendants used
Plaintiffs’ trademarks or a similar word or phrase in
connection with a product and that use is likely to
cause confusion as to the origin, sponsorship,
affiliation or approval of the product. The core
element of trademark infringement is whether
Defendants’ use of a term creates a likelihood that
the consuming public will be confused. Plaintiffs
must prove that a likelihood of confusion is probable,
not merely possible.
LIKELIHOOD OF CONFUSION FACTORS
In determining whether there is a likelihood of
confusion at the time of purchase, you may consider
the following six factors:
1. the strength of the trademark:
2. the similarity between Plaintiffs’ trademark
and the allegedly infringing term or terms;
3. the degree to which the allegedly infringing
product competes with Plaintiff’s products;
4. whether Defendants intended to confuse the
public;
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5. the degree of care reasonably expected of
potential customers and the type of product, its
cost, and conditions of purchase; and
6. evidence, if any, of actual confusion.
However, no one factor should control the outcome of
your analysis. The factors guide the analysis, but the
ultimate determination of whether confusion at the
time of purchase is likely is not to be mechanically
determined through rigid application of the factors.
The ultimate inquiry always is whether, considering
all of the circumstances, a likelihood exists that
consumers, at the time they are purchasing
Defendants’ product, will be confused. The factors are
useful only to the extent they answer the ultimate
question. The question to be answered is whether an
appreciable number of relevant consumers are likely
to be confused.
Plaintiffs must prove a likelihood of confusion at the
time of purchase. Your analysis of whether Plaintiffs
have established likelihood of confusion at the time
of purchase must occur in a context that recognizes
how consumers encounter the products and how
carefully consumers are likely to scrutinize the
words at issue.
If you find by a preponderance of the evidence that
Plaintiffs have proved a likelihood of confusion at the
time of purchase, then and only then may you find
Defendants liable for trademark infringement. You
will then consider the question of damages under
separate instructions. (Doc. No. 568 (“Jury
Instructions”) at 14-16 (emphasis added).)
The jury was not instructed that a showing of a
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likelihood of confusion at the “time of purchase”
required proof that customers actually purchased
beds while confused. The instruction specifically
stated that Select Comfort was required to prove a
likelihood of confusion at the time of purchase. The
Court did not preclude Select Comfort from offering
evidence of confusion at any stage of interest up to
the point of sale and arguing that any early confusion
persisted. As explained above, the Court ruled that
initial interest confusion, in this case, was not enough
alone to prevail. Select Comfort was free to, and
indeed did, argue that confusion at an earlier point of
the process was relevant to whether consumers were
likely to be confused at the time of purchase.
Moreover, the record contains testimony at trial
discussing
different
“points-of-sale,”
including
Defendants’ call centers and website. Further,
because the Court determined that Select Comfort
must demonstrate a likelihood of confusion at the
time of purchase, an abatement instruction would
have been inconsistent.
As to Select Comfort’s argument that the Court’s
failure to issue an instruction stating that actionable
confusion includes confusion as to where a consumer
can purchase a product, the Court points to the
following language of the jury instructions:
For their claims that Defendants infringed their
trademarks,
Plaintiffs
must
prove
by
a
preponderance of the evidence that Defendants
used Plaintiffs’ trademarks or a similar word or
phrase in connection with a product and that use is
likely to cause confusion as to the origin,
sponsorship, affiliation or approval of the product.
The core element of trademark infringement is
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whether Defendants’ use of a term creates a
likelihood that the consuming public will be
confused.
This is a correct statement of the law on confusion
and does not limit “actionable confusion” to source
confusion. Finally, the Court rejects Select Comfort’s
argument that the jury could not know the meaning
of “appreciable” without a specific instruction.
For the above reasons, the Court discerns no errors in
its instructions that would warrant the relief sought
by Select Comfort. And if there was an error, there
has been no showing that such an error was
prejudicial, particularly when the instructions are
read as a whole.
3) Bed Demonstration
During trial, the Court allowed Craig Miller,
Manager of Dires, LLC, to put together 2017 models
of a Personal Comfort A8 bed and a Sleep Number i8
bed for demonstrative purposes. Select Comfort
contends that the Court erred in allowing the use of
these demonstratives because the testimony was
undisclosed in discovery, the testimony was the
equivalent of expert testimony, and the bed models
used were not the those at issue in this case, making
Miller’s testimony irrelevant, prejudicial, and
inadmissible.
The Court disagrees. First, the Court has broad
discretion to permit the use of demonstrative
evidence at trial. Here, the use of the bed models was
for demonstrative purposes only. The beds were not
admitted into evidence and the jury did not have the
opportunity to inspect them. Miller’s testimony
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regarding the bed models was lay, not expert,
testimony. The Court indicated it would not allow
expert testimony and Miller did not offer any
ultimate opinions regarding the beds or their quality.
In addition, the Court gave a limiting instruction
both before the testimony and in the final
instructions. Specifically, at trial, the Court
instructed the jury as follows:
Before I begin I’m actually going to give you a short
instruction that actually was part of my opening
instructions. There’s certain demonstrative exhibits
in trials that may be shown to you in order to help
explain the case. And demonstrative exhibits are
used for your convenience and for the parties. In this
case, even though these beds are not the actual
beds—and the lawyers will discuss any similarities
and differences—from the relevant timeframe, and
they are not themselves evidence or proof of any
facts. So if they do not correctly reflect the facts
shown by evidence in the case, you should disregard
these demonstrative exhibits and determine the facts
from the underlying evidence. However, as a
demonstrative exhibit they are used for convenience
in order to help explain aspects of the case.
(Trial Tr. Vol. VII at 1719-20; see also Jury
Instructions at 4.) Miller also testified that the
demonstrative beds were 2017 models and, while
recognizing that the relevant damages period in this
case was September 2012 through December 2014,
Miller also explained the differences between prior
models and the 2017 model. This testimony provided
background information that was helpful to the jury.
The Court concludes that there was no error allowing
Miller’s testimony and the use of demonstratives.
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4) Jury’s Trademark Infringement Verdict
At the end of trial, the jury returned a verdict for
Defendants on every one of Select Comfort’s
trademark infringement claims. Select Comfort
argues that this verdict was contrary to the evidence
because Select Comfort offered overwhelming
evidence that Defendants used Select Comfort’s
marks—or similar words/phrases—in a manner likely
to cause customer confusion as to the source or
sponsorship of goods.
Specifically, Select Comfort argues that it presented
significant evidence of: (1) actual customer confusion,
including dozens of examples of confusion at the time
customers purchased Defendants’ products and
consumer survey evidence that Defendants’ use of
Select Comfort’s trademarks in their pay-per-click
ads confused a significant percentage of customers;
(2) Defendants’ intent to confuse (thus raising an
inference of likelihood of confusion); (3) similarity
between the marks; (4) strength of their own marks;
(5) direct competition between the parties’ products;
and (6) the degree of care used by customers (namely
a lack of evidence that online bed shoppers utilize
enhanced care when purchasing).
Defendants argue that the evidence offered at trial
supported the jury’s verdict on trademark
infringement. In particular, Defendants submit that
the evidence presented to the jury established that:
(1) Select Comfort’s marks are weak; (2) Defendants
do not use Select Comfort’s marks as they are
registered, thus showing a lack of similarity; (3) there
is a substantial difference between the selling
channels of the parties; (4) there was a lack of
evidence of intent to deceive; (5) Select Comfort failed
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to show a likelihood of confusion at the time of
purchase by a legally cognizable number of
consumers; and (6) Select Comfort failed to show that
they were damaged by Defendants’ conduct.
Defendants argue that the above evidence undercuts
any likelihood of confusion.
Having carefully reviewed the record in this case, and
considering the evidence in the light most favorable
to Defendants, the Court concludes that Select
Comfort is not entitled to judgment as a matter of law
on the issue of trademark infringement. Instead,
based on the evidence in the record, a reasonable jury
could conclude that Select Comfort failed to
demonstrate a likelihood of confusion. Indeed, the
evidence at trial could have reasonably led the jury to
conclude, among other things, that Select Comfort’s
trademarks are weak; that the selling channels used
by the parties are substantially different—with Select
Comfort selling their bed primarily in stores and
using their website primarily to drive consumers to
their stores, while Defendants sell exclusively online
or over the phone; and that the evidence at trial
failed to show a likelihood of confusion at the time of
purchase by a legally cognizable number of
consumers.
Based on the above, the Court concludes that there is
a sufficient evidentiary basis for the jury’s verdict on
trademark infringement. Therefore, Select Comfort’s
motion for judgment as a matter of law is properly
denied. Moreover, none of the alleged errors of law
that Select Comfort argues occurred at trial warrant
a new trial on the issue of trademark infringement.
In addition, Select Comfort has failed to show that a
new trial is required to avoid a miscarriage of justice.
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Instead, the verdict is supported by substantial
evidence, and Select Comfort’s motion is respectfully
denied.
C. Trademark Dilution
As to Select Comfort’s trademark dilution claim, the
jury found that the SLEEP NUMBER mark is
famous, but that Defendants’ advertising did not
dilute the mark. (Special Verdict at 6.) Select Comfort
moves to amend the verdict or for a new trial on its
trademark dilution claim, arguing that the jury
appropriately found the Sleep Number mark to be
famous, but erred by finding no liability for dilution
despite evidence of blurring and tarnishing. In
addition, Select Comfort argues that the Court gave
an inaccurate jury instruction that Defendants’
counsel prejudicially referred to during closing
argument.
The Court concludes that the jury’s determinations
that SLEEP NUMBER is famous and that
Defendants did not dilute the mark are both
supported by the evidence, and therefore the verdict
is not against the “great weight of evidence” so as to
amount to a miscarriage of justice. Accordingly,
Select Comfort’s motion for a new trial and to amend
the verdict on the trademark dilution claim is denied.
Select Comfort also argues that the Court erred in a
jury instruction that references “free-riding” and that
Defendants prejudicially referred to the instruction
during the closing statement. The portion of the jury
instruction that Select Comfort refers to reads as
follows:
Whether the user of the similar terms intended to
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create an association with the famous trademark.
Evidence of Defendants’ intent could be probative of
the fact that such an association exists. However,
such evidence does not create a presumption or
admission of actual association. There must also be
injury to the famous trademark. Anti-dilution law
does not prohibit free-riding.
(Jury Instructions at 40.) Importantly, the full text of
the Jury Instructions on dilution, blurring, and
tarnishing clearly places the burden on Select
Comfort to establish “injury to the famous
trademark.” In addition, the Court fully instructed
the jury on both “blurring” and “tarnishing.” (Id. at
40, 41.) These instructions are proper. And as to
Defendants’ reference to “free-riding” at closing, the
Court notes that Select Comfort did not object at the
time and, therefore, has waived the objection. See
Vang v. Prataya, Civ. No. 12-1847, 2017 WL 3732106,
at *2 (D. Minn. Aug. 29, 2017). Even so, in light of the
full instructions on dilution, there was no prejudice.
D. Defendants’ Counterclaim
At trial, the jury also considered Defendants’
counterclaim that NUMBER BED is generic or
descriptive and not capable of functioning as a
trademark. The jury determined that Select Comfort
does not have trademark rights in NUMBER BED.
(Special Verdict at 66.) Because the jury made this
finding, it did not answer the questions of whether
NUMBER BED was generic or descriptive, or
whether the mark has secondary meaning. (Id.)
Select Comfort argues that the Court erred by failing
to place the burden of proof on Defendants to
establish that NUMBER BED is generic or
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descriptive and by refusing to issue Select Comfort’s
requested jury instruction that trademark rights can
be created through the public’s use of a shorthand of
a mark. In addition, Select Comfort argues that the
jury’s verdict on Defendants’ counterclaim was
contrary to the evidence because the evidence at trial
confirmed that NUMBER BED is associated with a
single source—Sleep Number. Specifically, Select
Comfort points to the evidence of a secondary
meaning survey demonstrating that nearly half of
respondents associated NUMBER BED with a single
company, that a substantial number of respondents
identified that company as Sleep Number or Select
Comfort, and that of those stating an opinion, 84%
identified NUMBER BED as associated with a single
company. Select Comfort also points to expert
testimony explaining that the above results are
indicative of secondary meaning. Select Comfort
argues that the evidence at trial demonstrates that
NUMBER BED is not a category and that the phrase
did not exist until Select Comfort coined and heavily
marketed Sleep Number. Select Comfort maintains
that Defendants, their manufacturer, and customers
refer to the category of products as “air beds,”
“adjustable air beds,” or “air mattresses,” and not
“number beds.” In light of the above, Select Comfort
requests that the Court grant judgment as a matter
of law, amend the verdict, or grant a new trial on
Defendants’ counterclaim.
Defendants argue that the jury instructions
regarding their counterclaim correctly outlined the
burden of proof and that the jury’s verdict that Select
Comfort does not have trademark rights in NUMBER
BED was supported by the evidence at trial.
Defendants cite to: evidence that Select Comfort
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never sought to register “number bed”; testimony
that Select Comfort did not use “number bed”
standing alone to promote its products; and evidence
that Select Comfort’s advertising agency did not
monitor use of “number bed” for trademark
violations. Defendants also cast doubt on Select
Comfort’s secondary meaning survey, pointing out
that: the survey showed that the majority of relevant
consumers (52%) did not associate “number bed” with
any one company; the survey participants who did
associate the phrase with one company were not
asked to identify that company; Select Comfort’s Vice
President of Media testified that a different internal
survey showed the number of people that recognized
the phrase “number bed” was less than 1%. Moreover,
Defendants point to evidence that many competitors
of Select Comfort used the phrase “number bed” in
commerce and advertisements.
The Court instructed the jury on “Obtaining a
Trademark” as follows:
A person acquires the right to exclude others from
using a trademark by being the first to use the
trademark in the marketplace. Rights in a
trademark are obtained through commercial use of
the trademark. In order to obtain rights in a
trademark, the person must use the term, device, or
symbol to identify the source or origin of their goods.
(Jury Instructions at 12 (emphasis added).) Based on
the jury’s determination that Select Comfort did not
have any trademark rights in NUMBER BED, it
never reached the issue of whether the mark was
generic or descriptive. The Court discerns no error
regarding its explanation of the acquisition of
trademark rights. Defendants are correct in noting
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that “use as a trademark is essential and is a
gateway requirement ... [and i]f a designation is not
used as a mark, then it cannot possibly achieve a
secondary meaning and trademark status.” J.
Thomas McCarthy, McCarthy on Trademarks &
Unfair Competition § 3.4 (4th ed. 2015).)
Considering the evidence in the light most favorable
to Defendants, and resolving any factual conflicts in
their favor, the Court concludes that there was ample
evidence to support a reasonable finding by the jury
that Select Comfort has no trademark rights in
NUMBER BED and the finding was not against the
great weight of evidence. Accordingly, the Court
respectfully denies Select Comfort’s motion as to the
jury’s finding on Defendants’ counterclaim.
E. Select Comfort’s Unfair Competition Claim
The jury found in favor of Defendants on Select
Comfort’s unfair competition claims regarding
Defendants’ use of NUMBER BED. (Special Verdict
at 8.) Select Comfort argues that it proved that
Defendants’ use of NUMBER BED constitutes unfair
competition because regardless of whether NUMBER
BED is registered, or registerable, there was
substantial evidence that the mark has acquired
secondary meaning, consumers associated it with one
source, and Defendants’ use causes customer
confusion. Accordingly, Select Comfort maintains
that it is entitled to an amended verdict in its favor
on this claim or a new trial.
Defendants argue that Select Comfort’s unfair
competition claim was properly rejected by the jury
for the same reasons with respect to Defendants’
counterclaim above. The Court agrees. The jury’s
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verdict on the unfair competition claims stands for
the same reasons stated above with respect to
Defendants’ counterclaim, namely that there is
sufficient evidence to support the jury’s verdict that
Select Comfort does not have trademark rights in
NUMBER BED.
F. Select Comfort’s
MDTPA Claims
False
Advertising
&
To prevail on a claim under the false or deceptive
advertising prong of the Lanham Act, a plaintiff must
show:
(1) a false statement of fact by the defendant in a
commercial advertisement about its own or
another’s product; (2) the statement actually
deceived or has the tendency to deceive a
substantial segment of its audience; (3) the
deception is material, in that it is likely to influence
the purchasing decision; (4) the defendant caused
its false statement to enter interstate commerce;
and (5) the plaintiff has been or is likely to be
injured as a result of the false statement, either by
direct diversion of sales from itself to defendant or
by a loss of goodwill associated with its products.
United Indus. Corp. v. Clorox Co., 140 F.3d 1175,
1180 (8th Cir. 1998). A false statement falls into two
categories: “(1) commercial claims that are literally
false as a factual matter; and (2) claims that may be
literally true or ambiguous but which implicitly
convey a false impression, are misleading in context,
or likely to deceive consumers.” Id. “The standard for
proving literal falsity is rigorous” and “only an
unambiguous message can be literally false.” Buetow
v. A.L.S. Enters., 650 F.3d 1178, 1185 (8th Cir. 2011)
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(citation omitted) (emphasis in original). A literal
falsity argument fails when an advertisement can
reasonably be understood as conveying different
messages. Id. If a statement is literally false, no
extrinsic evidence of consumer deception is required.
Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d
144, 158 (2d Cir. 2007). When a claim is not literally
false, but misleading, proof that the advertising
actually conveyed the implied message and deceived
a significant portion of the recipients is critical, and
the success of such a claim normally turns on
consumer survey evidence. United Indus. Corp., 140
F.3d at 1182-83.
Select Comfort asserts that certain aspects of the
jury’s verdict on the false advertising claims are
contrary to the evidence. For example, as to the
statements that the jury found no liability, Select
Comfort argues there is evidence that the statements
were literally false or that they were misleading.4
Specifically, Select Comfort asserts that Craig Miller,
Manager of Dires, LLC, admitted that the statements
are “false” or “literally false.” These five statements
are: (1) “Personal Comfort is Preferred 6 to 1 over
Sleep Number” (the jury found that this statement
was not disseminated in commercial advertising); (2)
Personal Comfort was, or we were, involved in
designing or developing Sleep Number beds; (3)
Personal Comfort has, or we have, been in the
business since the 1970’s and/or longer than Sleep
Number; (4) Personal Comfort beds are “medical
grade”; and (5) Personal Comfort beds are Made in
the USA. Select Comfort argues that because Miller
4
The same arguments and evidence pertain to Select Comfort’s
MDTPA claim.
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admitted that the above five statements are literally
false, the jury should have found as much and
applied the presumptions that go along with such a
finding.
In addition, Select Comfort takes issue with four
additional statements for which the jury did not find
liability. Select Comfort argues that: (1) the claim
that “Personal Comfort is preferred over Sleep
Number” is false because there is no substantiation
for that claim; (2) it is false or misleading to say that
Personal Comfort beds are an
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