Select Comfort Corporation v. Baxter
| Decision Date | 11 May 2021 |
| Docket Number | No. 19-1113,No. 19-1077, No. 19-1178,19-1077 |
| Citation | 996 F.3d 925 |
| Parties | 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 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 Digi Craft Agency, LLC; Direct Commerce, LLC, doing business as Personal Touch Beds, Defendants Scott Stenzel ; Craig Miller, Defendants - Appellants 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 |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellants/cross-appellees was Andrew Scott Hansen, of Minneapolis, MN. Also appearing on appellants/cross-appellees brief were Heidi A.O. Fisher, of Minneapolis, MN, and Elizabeth A. Patton, of Minneapolis, MN.
Counsel who presented argument on behalf of the apppellee/cross-appellant was Jennifer M. Robbins of Minneapolis, MN. The following attorney(s) appeared on the appellee brief; Barbara Podlucky Berens, of Minneapolis, MN, Christopher William Madel, of Minneapolis, MN, Erin K. Fogarty Lisle, of Minneapolis, MN, Carrie L. Zochert, of Minneapolis, MN and Cassandra B. Merrick, of Minneapolis, MN.
Before SMITH, Chief Judge, MELLOY and SHEPHERD, Circuit Judges.
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 initial-interest 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 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.
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 company-owned 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.
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 false-advertising 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-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 initial-interest 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 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 transcripts and recordings of...
To continue reading
Request your trial
- T.S.H. v. Green
-
Am. Dairy Queen Corp. v. W.B. Mason Co.
...source of a product or service or as to an 135 affiliation between sources based on a defendant's use.” Select Comfort Corp. v. Baxter, 996 F.3d 925, 933 (8th Cir. 2021) (citing Anheuser-Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769, 774 (8th Cir. 1994)). Actual confusion is not essential to......
-
H&R Block, Inc. v. Block, Inc.
...to the source of a product or service or as to an affiliation between sources based on a defendant's use.” Select Comfort Corp. v. Baxter, 996 F.3d 925, 933 (8th Cir. 2021) (citing Anheuser-Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769, 774 (8th Cir. 1994). Those factors are: “(1) the streng......
-
Hoffmann Bros. Heating & Air Conditioning v. Hoffmann Air Conditioning & Heating, LLC
...To the contrary, the undersigned took great care to ensure that the instruction aligned with the Eighth Circuit's recent decision in Select Comfort, and upon revisiting issue now, still believes that the instruction fairly and accurately described the issue for the jury. In Select Comfort, ......
-
INFRINGING INFLUENCERS: HOW TO FAIRLY PROTECT BRANDS' TRADEMARKS ON SOCIAL MEDIA.
...not recognize a cause of action for initial-interest confusion in trademark infringement until 2021. See Select Comfort Corp. v. Baxter, 996 F.3d 925, 935 (8th Cir. 2021). Unlike the most common form of confusion, which occurs at the point of sale, initial-interest confusion "creates initia......
-
Models
...of hematomas, which were neither square, nor solid, had the possibility of misleading the jury. 6 Select Comfort Corporation v. Baxter , 996 F.3d 925 (U.S.C.A., 8th Cir., Minn., 2021). An adjustable air bed manufacturer brought an action against a competitor, along with marketing companies ......