(CN) — The Minnesota company that makes the Sleep Number mattress urged an Eighth Circuit panel Wednesday to resurrect a key legal question it raised in a lawsuit accusing a Florida mattress seller of trademark infringement and false advertising online.
A federal jury in Minneapolis returned a verdict in 2017 that defendant Personal Comfort Beds did not infringe on Sleep Number’s trademarks or engage in unfair competition but that it was liable for seven false statements under federal and state deceptive trade practices laws.
Prior to trial, the district judge dismissed on summary judgment Sleep Number’s claim that Personal Comfort’s internet advertising placed with Google search results creates confusion among consumers at the presale stage of mattress purchases. Instead, the trial judge required that Sleep Number “establish a likelihood of actual confusion at the time of purchase.”
The issue of presale confusion was the primary focus of Wednesday’s oral argument. A three-judge panel of the St. Louis-based appeals court seemed interested in how a ruling for Sleep Number might affect the case proceedings.
The panel was comprised of three George W. Bush appointees – Chief U.S. Circuit Judge Lavenski Smith and U.S. Circuit Judges Michael Melloy and Bobby Shepherd.
“Assume we agree that presale confusion is actionable,” Melloy asked Sleep Number’s attorney, Andrew Hansen of Fox Rothschild in Minneapolis: “What does that do to your case? Does it go back to the district court and start over?”
“We should be able to present that to a jury,” Hansen said.
Personal Comfort attorney Jennifer Robbins of Madel PA in Minneapolis told the judges that it is not enough to argue that that Sleep Number is damaged at the presale point, when consumers might be confused at the “initial click” on the internet following a Google search.
“That is not enough,” she said. “That is not the law.”
Robbins argued that consumers shopping for mattresses online that cost thousands of dollars – “for many of us, a purchase made once a decade – the likelihood of confusion is much less.”
Hansen declined a request for comment from Courthouse News, and Robbins did not immediately return a message seeking comment after the hearing.
Michael Risch, vice dean and professor of law at Villanova University’s Charles Widger School of Law, who specializes in internet law with an emphasis on patents and trade secrets, told Courthouse News that “the initial-interest confusion in a Google ad continues to be a hot area of dispute.”
“The interesting legal question is how to treat initial-interest confusion,” he said. “This theory has fallen out of favor in recent years, and the Eighth Circuit seems to be consistent with that. This case follows the latest law, which primarily says that it’s not enough to just say ‘people went to a different website,’ but instead must show that in the totality of the circumstances consumers were likely to be confused.”
He added: “Sleep Number wants to say that so long as there’s enough similarity that people might look at the competitor, it should win. But the court held, and my instinct is that the Eighth Circuit will affirm, that the plaintiff needed more than that – it needed to show that even after looking into the competitor, the trademark confusion was such that it was confused about who actually made the bed.”
Sleep Number filed its trademark lawsuit in November 2012 in the U.S. District Court for the District of Minnesota.
In a related Minnesota case involving the same parties, Hennepin County District Judge Ronald Abrams on Wednesday issued a 27-page ruling granting in part and dismissing in part Sleep Number’s motion to dismiss Dires LLC dba Personal Comfort Bed’s antitrust claims against it.
Personal Comfort alleged that Sleep Number sought to sabotage its competitor’s online advertising, in violation of Minnesota antitrust and trade-practices law.
The judge denied Sleep Number’s motion to dismiss Personal Comfort’s claim of violation of Minnesota antitrust law while granting its motions to dismiss four other claims with prejudice, meaning those claims cannot be raised again.
Lawyers for both parties put Wednesday’s cases in a positive light.
Speaking on behalf of its client, Personal Comfort, Christopher Madel said, “we are very pleased with how the Eighth Circuit oral arguments went today, and we are equally pleased with the Hennepin County District Court's ruling today permitting our antitrust-monopolization claim to proceed against Sleep Number. In sum, a great day for our client!”
Sleep Number’s attorney, Hansen, said: “We are confident in our arguments presented to the Eighth Circuit and believe the court will take into account the evidence of actual customer confusion caused by appellees’ advertisements.”
Regarding the state court ruling, he said the judge “dismissed with prejudice four out of five of Dires’ claims and significantly narrowed the scope of Dires’ antitrust claim, even after taking all of Dires’ allegations as true at this motion to dismiss stage. Once we are able to present the facts, we are confident that the portion of Dires’ remaining claim will fail as well.”
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