IP Law Daily Jury’s split decision in false advertising/trademark infringement case involving beds upheld
Thursday, December 13, 2018

Jury’s split decision in false advertising/trademark infringement case involving beds upheld

By Robert B. Barnett Jr., J.D.

After a split jury verdict in which plaintiff Select Comfort won on its false advertising claims but lost to defendant Personal Touch Beds on its trademark infringement and trademark dilution claims, the federal district court in St. Paul, Minnesota, upheld the jury’s verdict and rejected both sides’ efforts to amend the verdict or obtain a new trial. The court also rejected both parties’ efforts to obtain attorney fees and costs under the Lanham Act as the "prevailing" party, ruling that each party won, at least in part, and should therefore be responsible for its own fees and costs (Select Comfort Corp. v. Baxter, December 12, 2018, Frank, D.).

Background. Select Comfort, which has trademarks in SLEEP NUMBER and SELECT COMFORT beds, sells its products primarily through its own stores. Personal Touch Beds and Personal Comfort Beds primarily sell their beds online. At some point, Select Comfort discovered statements on Personal Touch’s website that Select Comfort believed were false, including the following: (1) Personal Touch is preferred 6 to 1 over Sleep Number, (2) Personal Touch sold patents to Sleep Number, and (3) Sleep Number bed parts are not replaceable. Outraged by the allegedly false claims, Select Comfort sued Personal Touch in Minnesota federal court for trademark infringement, trademark dilution, false advertising, unfair competition, and related state law claims.

After a lengthy trial, the jury returned the following verdict: (1) Personal Touch did not infringe Select Comfort’s trademark rights, (2) although the SLEEP NUMBER mark is famous, Personal Touch did not dilute it, (3) Select Comfort did not have a trademark in NUMBER BED (4) thus, Personal Touch’s use of NUMBER BED did not constitute unfair competition, (5) seven of the 14 statements alleged by Select Comfort to be false were deemed to be false, and (6) three of the seven false statements (all three statements mentioned above) were made with an intent to deceive consumers. As a result of the intentionally false statements, the jury awarded damages to Select Comfort in the amount of $155,721 (which was less than 1% of what it sought). The verdict spawned numerous post-trial motions, including Select Comfort’s motions for judgment as a matter of law, to amend the verdict, for a new trial, to increase the damage fee award, and for a determination of entitlement to attorneys’ fees and costs. Personal Touch filed motions for a judgment as a matter of law, for a new trial, and a determination of entitlement to attorney fees and costs.

False advertising. The false advertising claims were brought under both the Lanham Act and the Minnesota Deceptive Trade Practices Act. Select Comfort argued that the jury erred in finding only three statements were made with intent to deceive, given that Personal Touch’s employee admitted that five of the statements were false. Select Comfort also argued that four statements found not to be false should have been found false, including statements that (1) Personal Comfort is preferred over Sleep Number and (2) Personal Comfort beds are an upgrade over Sleep Number. Personal Touch argued, on the other hand, that Select Comfort failed to offer evidence that the statements actually deceived a significant portion of the consumers. As for the statements admitted to be false, Personal Touch argued that they could be understood as conveying different messages than the ones that Select Comfort contended they conveyed. In any event, Personal Touch argued, Select Comfort never proved materiality, that the statements influenced the buying decisions. Personal Touch also argued that Select Comfort never proved causation. And, finally, Personal Touch argued that Select Comfort never offered evidence that Personal Touch ever willfully intended to engage in false advertising. After considering the arguments, the court found ample evidence to support the jury’s conclusions on the false advertising claims.

Damage award. Select Comfort also asked the court to increase the amount the jury awarded for the false advertising claims. It argued that the award was inadequate because it was based only on a small percentage of Personal Touch’s sales and did not account for all of Personal Touch’s profits, as the Lanham Act requires. Furthermore, Select Comfort contended that the award failed to account for all of the false statements, which were made not only through the website but also through email and live chats. Personal Touch argued, on the other hand. that the verdict was justified by the fact that the jury found for Personal Touch on all counts except the few false advertisements. The court ruled once again that sufficient evidence existed for the jury’s damage award.

Trademark infringement. Select Comfort argued that the court erred by disallowing it to pursue an initial interest claim (that is, that it was sufficient to establish consumer confusion at the initial point the consumer saw the false advertisements rather than at the point of sale). The court, however, rejected that argument, stating that it never prevented such a claim. What it did prevent Select Comfort from doing was to prove trademark infringement solely on the basis of confusion at initial interest, which the court contended was the correct interpretation of the law. The court, therefore, found no error in its jury instructions.

Select Comfort next argued that the court erred by allowing Personal Touch to conduct an in-court demonstration in front of the jury because the demonstration was not disclosed in discovery and the beds were not the models at issue in this case. The court, however, also rejected that argument, noting that it has broad discretion to permit demonstrative evidence and that the background information provided by the demonstration helped the jury.

Finally, the court also rejected Select Comfort’s argument that the jury’s verdict for Personal Touch was against the great weight of the evidence. The court concluded that the jury could have reasonably found no trademark infringement on the ground that the Select Comfort trademarks were weak and that confusion was minimized because the parties sold their products through different channels.

Trademark dilution. As for trademark dilution, the jury found that SLEEP MARK was famous but that the false statements did not dilute the mark. The court ruled that both conclusions were supported by the evidence. As a result, the court denied Select Comfort’s motions as they related to trademark dilution.

NUMBER BED. Personal Touch had counterclaimed that NUMBER BED was a generic description that could not function as a trademark, and the jury agreed. Although Select Comfort had no trademark rights in NUMBER BED, it argued that it should be treated as such through the public’s shorthand adaptation from the term SLEEP NUMBER. The court concluded, however, that ample evidence existed for a jury to conclude that Select Comfort had no trademark rights in NUMBER BED.

Unfair competition. The unfair competition claim rested on Personal Touch’s use of the term NUMBER BED. Thus, the claim was undercut by the jury’s finding that Select Comfort had no trademark rights in NUMBER BED. For the same reasons that the court concluded that the jury did not err in finding no trademark rights in NUMBER BED, it found no error in the jury’s rejection of the unfair competition claim.

Attorney fees. Both parties sought attorney fees from the other, as the "winning" party. Although such fees are permitted under the Lanham Act, the court noted, they are generally awarded only in "exceptional cases" (15 U.S.C. §1117(a)). This was not an exceptional case, in that it was not groundlessly filed or was pursued in bad faith. In the end, the court could not definitively determine which party was the prevailing party. As a result, it concluded that both parties won, at least in part, and it ordered the two parties to pay their own fees and costs.

Personal Touch’s motions. The court also rejected Personal Touch’s motions on the jury’s verdict on the false advertising claims. A reasonable jury could have found for Select Comfort, the court concluded. Sufficient evidence existed for it to conclude that the statements were false or misleading and were likely to cause harm. As a result, the court denied Personal Touch’s motions.

The court, therefore, denied all post-trial motions filed by both Select Comfort and by Personal Touch.

This case is No. 0:12-cv-02899-DWF-SER.

Attorneys: Andrew S. Hansen (Fox Rothschild LLP) for Select Comfort Corp. and Select Comfort SC Corp. Barbara P. Berens (Berens & Miller, PA) for John Baxter.

Companies: Select Comfort Corp.; Select Comfort SC Corp.

MainStory: TopStory Trademark MinnesotaNews

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