Select Comfort Corporation v. Baxter

Background

Select Comfort Corporation and Select Comfort SC Corporation sued 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; and Craig Miller. The claims included trademark infringement, trademark dilution, false advertising, unfair competition, and related state-law claims.

The jury found that the defendants did not infringe Select Comfort’s SLEEP NUMBER, WHAT’S YOUR SLEEP NUMBER?, SELECT COMFORT, or COMFORTAIRE trademarks. It found that SLEEP NUMBER was famous but that the defendants’ advertising did not dilute it. The jury also found that the defendants’ use of NUMBER BED was not unfair competition and that Select Comfort had no trademark rights in NUMBER BED.

The jury found for Select Comfort on seven false-advertising statements: that Personal Touch was preferred six to one over Sleep Number; that Personal Comfort sold patents to Sleep Number; that Sleep Number bed parts were not replaceable or changeable; that Sleep Number paid Personal Comfort not to compete or manufacture mattresses; that Personal Comfort was regulated, certified, or approved by the Food and Drug Administration; that Personal Comfort was owned and operated by a Food and Drug Administration-registered medical-device manufacturer; and that Personal Comfort beds came with no sales tax or were tax-free. The jury found that the first three statements were made with an intent to deceive consumers, while the remaining statements were made without that intent.

The jury found no lost profits but awarded Select Comfort $155,721 in wrongful-benefit damages: $120,812 attributed to Dires and $34,909 attributed to Direct Commerce.

Select Comfort’s motions

Select Comfort moved for judgment as a matter of law, to amend the verdict, or for a new trial. Judgment as a matter of law is a ruling that no reasonable jury had enough evidence to reach its result; a new trial may be ordered when the verdict is greatly against the evidence or legal error caused a serious injustice.

The court denied Select Comfort’s motion concerning trademark infringement. It held that the jury could reasonably find no likelihood of consumer confusion at the time of purchase. The court also found no prejudicial error in requiring Select Comfort to prove confusion at the time of purchase, in the jury instructions, or in allowing Craig Miller to use 2017 bed models as demonstrative evidence. The court explained that evidence of earlier, online confusion could still be considered in deciding whether confusion was likely at purchase, but that earlier confusion alone was not enough for liability in this case.

The court denied Select Comfort’s motion concerning trademark dilution, concluding that the jury’s findings that SLEEP NUMBER was famous but was not diluted were supported by the evidence. The court also found that its instructions about dilution were proper and that Select Comfort had waived its objection to the defendants’ reference to “free-riding” during closing argument by not objecting at the time.

The court denied Select Comfort’s motion concerning the defendants’ counterclaim. Because the jury found that Select Comfort had no trademark rights in NUMBER BED, it did not decide whether the phrase was generic or descriptive or whether it had acquired a secondary meaning. The court found sufficient evidence for the jury’s decision.

The court also denied Select Comfort’s motion concerning unfair competition, reasoning that the jury’s finding was supported for the same reasons as its finding that Select Comfort had no trademark rights in NUMBER BED.

The court denied Select Comfort’s motion concerning the false-advertising and MDTPA claims. The court concluded that sufficient evidence supported the jury’s findings on both the statements for which the defendants were held liable and the statements for which they were not.

The court rejected Select Comfort’s other alleged trial errors, including challenges to evidence about search-engine optimization and keyword purchasing, the exclusion of summary exhibits from the jury room, the court’s answer to a jury question about NUMBER BED, and references during closing argument. Select Comfort’s renewed judgment-as-a-matter-of-law, verdict-amendment, and new-trial motion was therefore denied. Its motion to increase the $155,721 damages award was also denied because the court found the jury’s award reasonable and supported by the evidence.

The court denied Select Comfort’s motion for a permanent injunction. Select Comfort relied on statements made after trial rather than showing a risk that the defendants would continue making the specific statements the jury found false. Craig Miller had affirmed that those statements had stopped and would not be made in the future.

Defendants’ motions

The defendants moved for judgment as a matter of law and a new trial on the false-advertising claims on which Select Comfort prevailed. The court denied that motion as to liability, concluding that a reasonable jury could find the challenged statements false or misleading, sufficiently disseminated, deceptive, material, and likely to cause harm.

The defendants also challenged the court’s treatment of materiality, the evidence, and other issues related to claims on which they had prevailed. The court denied the motion concerning the fame of the SLEEP NUMBER mark, the strength of that mark, and causation and willfulness, while noting that the defendants had preserved those issues for a possible future appeal. The court also found no error in the jury instruction and verdict form concerning a presumption of materiality for literally false statements or deliberately misleading comparative advertising.

Attorneys’ fees and costs

Both sides sought attorneys’ fees and non-taxable expenses. The court determined that each side prevailed in part: Select Comfort prevailed on false-advertising and MDTPA claims involving seven statements, while the defendants prevailed on the trademark infringement, trademark dilution, unfair competition, counterclaim, and remaining false-advertising claims.

The court concluded that the case was not exceptional under the Lanham Act and that equitable principles also supported denying fees under the MDTPA. It denied both sides’ motions for attorneys’ fees and expenses and ruled that each side must bear its own attorneys’ fees. The court likewise ruled that no costs would be taxed against either side.

Final order

Judge Donovan W. Frank denied all motions listed in the order: the defendants’ motions for judgment as a matter of law and a new trial, the defendants’ motions for attorneys’ fees and costs, Select Comfort’s motion for fees and non-taxable expenses, Select Comfort’s renewed judgment-as-a-matter-of-law, verdict-amendment, and new-trial motion, Select Comfort’s motion to increase damages, and Select Comfort’s motion for a permanent injunction. The jury’s verdict and $155,721 damages award remained in place, and each side was left responsible for its own fees and costs.