united states court of appeals for the eighth circuit · 2020-05-13 · case nos. 19-1077, 19-1113,...

Case Nos. 19-1077, 19-1113, and 19-1178

United States Court of Appeals For the Eighth Circuit

Select Comfort Corporation; Select Comfort SC Corporation

Plaintiffs – Appellants/Cross-Appellees

v.

John Baxter

Defendant – Appellee/Cross-Appellant

Dires, LLC, doing business as Personal Touch Beds and Personal Comfort Beds

Defendant – Appellee/Cross-Appellant

Digi Craft Agency, LLC; Direct Commerce, LLC, doing business as Personal Touch Beds

Defendants

Scott Stenzel; Craig Miller

Defendants – Appellees/Cross-Appellants

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA

APPELLANTS’ BRIEF

FOX ROTHSCHILD LLP Andrew S. Hansen, MN Atty. ID No. 285894 Heidi A.O. Fisher , MN Atty. ID No. 320638 Elizabeth A. Patton, MN Atty. ID No. 391431 222 South Ninth Street, Suite 2000 Minneapolis, Minnesota 55402

Attorneys for Appellants

Appellate Case: 19-1077 Page: 1 Date Filed: 03/19/2019 Entry ID: 4768023

i

SUMMARY OF THE CASE

Appellants brought this lawsuit because Appellees orchestrated an intentional,

illegal scheme of trademark infringement, false advertising, and unfair competition

that mislead consumers and stole sales from Appellants. This appeal follows a final

judgment of the United States District Court for the District of Minnesota.

On summary judgment, the district court improperly held that pre-sale

confusion did not exist as a matter of law, disregarding the 1962 amendments to the

Lanham Act, relevant case law, and overwhelming evidence of pre-sale confusion

hurting consumers and Appellants. Violating the established Eighth Circuit

precedent, the court failed to apply the six Squirt Co. likelihood-of-confusion factors

and improperly found a single factor to be dispositive. It also incongruously found

that Appellees’ ads did not cause pre-sale confusion as a matter of law but could

cause confusion at the point of sale. This decision was at odds with other courts and

has far-reaching, negative implications for consumers and trademark owners. By

rejecting pre-sale confusion and holding only point-of-sale confusion actionable, the

court improperly approved Appellees’ “bait-and-switch” tactics of deceiving

consumers prior to their ultimate purchase.

Appellants request thirty minutes of oral argument because this case involves

multiple claims/issues, an extensive factual record, and an important interpretation

of the Lanham Act.


ii

CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 28(a)(1), Appellant Sleep

Number Corporation f/k/a Select Comfort Corporation discloses that it has no parent

corporation and no publicly held corporation owns ten percent or more of its stock.

Appellant Select Comfort SC Corporation’s parent corporation is Sleep Number

Corporation, which is a publicly held corporation.


iii

TABLE OF CONTENTS

SUMMARY OF THE CASE .................................................................................. i CORPORATE DISCLOSURE STATEMENT ...................................................... ii TABLE OF CONTENTS ...................................................................................... iii TABLE OF AUTHORITIES ................................................................................ vi JURISDICTIONAL STATEMENT ....................................................................... 1 STATEMENT OF ISSUES.................................................................................... 2 STATEMENT OF THE CASE .............................................................................. 5 I. The Parties. .................................................................................................. 5 II. Procedural History. ...................................................................................... 8 ARGUMENT....................................................................................................... 10 I. Appellees’ Conduct is Designed to Confuse Consumers and Usurp Sleep

Number’s Good Will.................................................................................. 10 II. The District Court Improperly Granted Summary Judgment to Appellees

on Sleep Number’s Pre-Sale Trademark Infringement Claim. .................... 14 A. Pre-Sale Confusion Is Actionable Under the Lanham Act. ............... 15 B. The Evidence Establishes Each Likelihood of Confusion Factor

Supporting a Finding of Trademark Infringement. ........................... 22 1. Factor #6: Evidence of Actual Confusion.............................. 23

a. Consumer Survey Evidence. ........................................ 24 b. Customer Communications. ......................................... 25

2. Factor #5: Degree of Care. ..................................................... 28 a. Degree of Care Is Measured at the Point of Click,

Where Consumers Are Not Sophisticated. ................... 29


iv

b. Pre-Sale Confusion Applies to “Expensive” Purchases Including Mattresses.................................... 31

c. The Evidence of Actual Confusion Demonstrates a Low Degree of Care. .................................................... 31

3. Factor #4: Appellees’ Intent to Confuse. ................................ 32 a. Acknowledging and Celebrating the “Routine”

Customer Confusion. ................................................... 32 b. Abating Confusion with False Statements. ................... 34 c. Appellees’ PPC Ads. .................................................... 35 d. Appellees’ Display Ads. .............................................. 38 e. Appellees’ SEO. .......................................................... 38 f. Mattress Quote. ............................................................ 40 g. Baxter’s and Stenzel’s Prior Work for

Comfortaire.................................................................. 41 h. Cease and Desist Letters. ............................................. 42

4. Factor #3: Competition Between the Parties. ........................ 43 5. Factor #2: Similarity Between Appellants’ Marks and

Appellees’ Use. ...................................................................... 43 6. Factor #1: Strength of Appellants’ Marks. ............................ 44

III. The District Court Improperly Allowed Appellees’ Expert Witness to Testify Regarding the Essence of Confusion. ............................................. 49

IV. The District Court Improperly Refused to Apply the Burden of Proof to Appellees on the Issue of Abatement of Confusion. ................................... 50

V. The District Court Improperly Admitted Appellees’ Irrelevant and Prejudicial Bed Demonstration. ................................................................. 53


v

VI. The District Court Improperly Denied Appellants’ Motion for Judgment as a Matter of Law on Appellants’ False Advertising Claims for Which Craig Miller Admitted Falsity. ................................................................... 56 A. Appellees Made False Statements. ................................................... 56 B. The Statements Were Sufficiently Disseminated. ............................. 58 C. The Statements Are Likely to Deceive. ............................................ 59 D. The Statements Are Material............................................................ 59 E. The Statements Are Likely to Cause Harm. ..................................... 61

VII. The District Court Improperly Refused to Apply the Burden of Proof to Appellees on Their Number Bed Counterclaim. ......................................... 61

VIII. The District Court Improperly Denied Appellants’ Motion for Judgment as a Matter of Law on Appellees’ Number Bed Counterclaim. .................. 62

IX. No Reasonable Jury Could Have Reached the Jury’s Verdict. ................... 65 X. The District Court Improperly Denied Appellants’ Post-Trial Motions. ..... 66 CONCLUSION ................................................................................................... 66 CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMIT,

TYPEFACE REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS..................................................................................... 68

CERTIFICATE OF SERVICE ............................................................................. 69


vi

TABLE OF AUTHORITIES

Page(s)

Cases

3M Co. v. Mohan, No. CIV. 09-1413 ADM/FLN, 2010 WL 5095676 (D. Minn. Nov. 24, 2010) .......................................................................................................... 48

Alzheimer’s Disease & Related Disorders Ass’n, Inc. v. Alzheimer’s Foundation of America, Inc., 307 F. Supp. 3d 260 (S.D.N.Y. 2018) .................................................. 17, 29, 30

Anheuser-Busch, Inc. v. Balducci Publications, 28 F.3d 769 (8th Cir. 1994) .............................................................................. 25

Anheuser-Busch, Inc. v. John Labatt Ltd., 89 F.3d 1339 (8th Cir. 1996) ........................................................................ 3, 62

Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006) ................................................................. passim

Aveda Corp. v. Evita Marketing, Inc., 706 F. Supp. 1419 (D. Minn. 1989) ........................................................... 36, 37

Basile, S.p.A. v. Basile, 899 F.2d 35 (D.C. Cir. 1990) ........................................................................... 52

Bellagio Jewelry, Inc. v. Croton Watch Co., No. CV 06-6672 ODW, 2008 WL 3905895 (C.D. Cal. Aug. 20, 2008) ............................................................................................................... 44

Blaw-Knox Co. v. Siegerist, 300 F. Supp. 507 (E.D. Mo. 1968), aff’d and modified, 414 F.2d 375 (8th Cir. 1969) ............................................................ 2, 16, 18, 20

Board of Regents of the University of Houston System v. Houston College of Law, Inc., 214 F. Supp. 3d 573 (S.D. Tex. 2016) ........................................................ 19, 31

Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) .............................................................. 17, 20, 29


vii

Buetow v. A.L.S. Enterprises, Inc., 650 F.3d 1178 (8th Cir. 2011) .......................................................................... 57

Calvin Klein Cosmetics Corp. v. Lenox Laboratories, Inc., 815 F.2d 500 (8th Cir. 1987) ............................................................................ 14

Cashmere & Camel Hair Manufacturers Institute v. Saks Fifth Avenue, 284 F.3d 302 (1st Cir. 2002) ............................................................................ 60

Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270 (3d Cir. 2001) ................................................................. 15, 20, 25

Cheval International v. Smartpak Equine, LLC, No. CIV 14-5010, 2016 WL 1064496 (D.S.D. Mar. 15, 2016) ......................... 21

Clam Corp. v. Innovative Outdoor Solutions, Inc., No. 08-5895, 2008 WL 5244845 (D. Minn. Dec. 15, 2008) ............................. 29

Clinique Laboratories, Inc. v. Dep Corp., 945 F. Supp. 547 (S.D.N.Y. 1996) ............................................................... 2, 51

Coachella Music Festival, LLC v. Simms, No. 217-CV-06059-RGK-GJS, 2017 WL 6888499 (C.D. Cal. Dec. 13, 2017) .......................................................................................................... 18

Coca-Cola Co. v. Purdy, No. 02-1782 ADM/JGL, 2005 WL 212797 (D. Minn. Jan. 28, 2005) ............................................................................................................... 30

Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ’s Church, 634 F.3d 1005 (8th Cir. 2011) .......................................................................... 22

Craig Outdoor Advertising, Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001 (8th Cir. 2008) .......................................................................... 66

David Sherman Corp. v. Heublein, Inc., 340 F.2d 377 (8th Cir. 1965) ............................................................................ 44

Davis v. Walt Disney Co., 430 F.3d 901 (8th Cir. 2005) ............................................................................ 22


viii

Duluth News-Tribune v. Mesabi Publishing Co., 84 F.3d 1093 (8th Cir. 1996) ............................................................................ 14

Dunkin’ Donuts Inc. v. Northern Queens Bakery, Inc., 216 F. Supp. 2d 31 (E.D.N.Y. 2001) ................................................................ 45

Eastman Chemical Co. v. PlastiPure, Inc., 969 F. Supp. 2d 756 (W.D. Tex. 2013) ............................................................ 59

Edible Arrangements, LLC v. Provide Commerce, Inc., No. 3:14-CV-00250 (VLB), 2016 WL 4074121 (D. Conn. July 29, 2016) ............................................................................................................... 30

Edina Realty, Inc. v. TheMLSonline.com, No. CIV. 04-4371JRTFLN, 2006 WL 737064 (D. Minn. Mar. 20, 2006) ............................................................................................................... 21

EFCO Corp. v. Symons Corp., 219 F.3d 734 (8th Cir. 2000) ............................................................................ 60

Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456 (7th Cir. 2000) ............................................................................ 40

Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998) ...................................................................... 16, 20

Eniva Corp. v. Global Water Solutions, Inc., 440 F. Supp. 2d 1042 (D. Minn. 2006) ............................................................. 14

Exxon Mobil Corp. v. Future Group LLC, No. 1:12CV0456 AWI DLB, 2012 WL 2553560 (E.D. Cal. June 29, 2012) .......................................................................................................... 43

Faegre & Benson, LLP v. Purdy, 447 F. Supp. 2d 1008 (D. Minn. 2006) ....................................................... 20, 31

Faegre & Benson, LLP v. Purdy, No. CIV. 03-6472(MJD/JGL), 2004 WL 167570 (D. Minn. Jan. 5, 2004), aff’d & remanded, 129 F. App’x 323 (8th Cir. 2005) ............................ 20

Ferrari S.P.A. v. Roberts, 944 F.2d 1235 (6th Cir. 1991) .......................................................................... 15


ix

First National Bank in Sioux Falls v. First National Bank South Dakota, 679 F.3d 763 (8th Cir. 2012) ...................................................................... 23, 25

First National Bank in Sioux Falls v. First National Bank South Dakota, No. CIV 06-4101, 2010 WL 3607494 (D.S.D. Sept. 9, 2010) .......................... 52

Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149 (9th Cir. 1963) ............................................................................ 32

Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277 (3d Cir. 1991) ............................................................................. 28

Fotomat Corp. v. Cochran, 437 F. Supp. 1231 (D. Kan. 1977) ................................................................... 28

Friedman v. Sealy, Inc., 274 F.2d 255 (10th Cir. 1959) .......................................................................... 31

Garment v. Zoeller, 35 F. App’x 22 (2d Cir. 2002) .................................................................... 51, 62

Gateway, Inc. v. Companion Products, Inc., 384 F.3d 503 (8th Cir. 2004) ........................................................................ 3, 63

Genderm Corp. v. Biozone Laboratories, No. 92 C 2533, 1992 WL 220638 (N.D. Ill. Sept. 3, 1992) .............................. 60

General Mills, Inc. v. Fage Dairy Processing Industry S.A., 100 U.S.P.Q.2d 1584 (T.T.A.B. 2011), judgment set aside, opinion not vacated, 110 U.S.P.Q.2d 1679 (T.T.A.B. 2014) ......................................... 28

General Motors Corp. v. Keystone Automotive Industries, Inc., 453 F.3d 351 (6th Cir. 2006) ............................................................................ 29

George & Co., LLC v. Xavier Enterprises, Inc., No. CIV 09-2973 DWF/RLE, 2009 WL 4730331 (D. Minn. Dec. 4, 2009) ............................................................................................................ 44

Gianni Versace, S.p.A., v. Versace 19.69 Abbigliamento Sportivo SRL, 328 F. Supp. 3d 1007 (N.D. Cal. 2018) ...................................................... 31, 32


x

GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199 (9th Cir. 2000) .......................................................................... 30

Grage v. Northern States Power Co.-Minnesota, 813 F.3d 1051 (8th Cir. 2015) .................................................................... 51, 62

Groeneveld Transport Efficiency, Inc. v. Lubecore International, Inc., 730 F.3d 494 (6th Cir. 2013) ............................................................................ 18

Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons, 523 F.2d 1331 (2d Cir. 1975) ............................................................... 15, 18, 19

Guthrie Healthcare System v. ContextMedia, Inc., No. 12 CIV. 7992 KBF, 2014 WL 185222 (S.D.N.Y. Jan. 16, 2014) ............................................................................................................... 15

H-D U.S.A., LLC v. SunFrog, LLC, No. 17-CV-711-JPS, 2017 WL 3261709 (E.D. Wis. July 31, 2017) ................. 21

Hale v. Firestone Tire & Rubber Co., 756 F.2d 1322 (8th Cir. 1985) ................................................................ 3, 54, 56

Harley-Davidson Motor Co. v. Iron Eagle of Central Florida, Inc., 973 F. Supp. 1421 (M.D. Fla. 1997) ................................................................ 52

Healey v. I-Flow, LLC, 853 F. Supp. 2d 868 (D. Minn. 2012)............................................................... 52

Hearts on Fire Co., LLC v. Blue Nile, Inc., 603 F. Supp. 2d 274 (D. Mass. 2009) ................................................... 16, 19, 21

Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311 (2d Cir. 1987) ........................................................................... 52

Home Builders Ass’n of Greater St. Louis v. L&L Exhibition Management, Inc., 226 F.3d 944 (8th Cir. 2000) ............................................................................ 67

Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598 (8th Cir. 1999) ............................................................................ 24

Humble Oil & Refining Co. v. American Oil Co., 405 F.2d 803 (8th Cir. 1969) ............................................................................ 25


xi

Idaho Golf Partners, Inc. v. TimberStone Management, LLC, No. 1:14-cv-00233-BLW, 2016 WL 5340302 (D. Idaho Sept. 21, 2016) ............................................................................................................... 21

Insty*Bit, Inc. v. Poly-Tech Industries, Inc., 95 F.3d 663 (8th Cir. 1996) .......................................................................... 2, 50

Jalin Realty Capital Advisors, LLC v. A Better Wireless, NISP, LLC, 917 F. Supp. 2d 927 (D. Minn. 2013)............................................................... 21

Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242 (11th Cir. 2002) ........................................................................ 60

Johnson & Johnson Vision Care, Inc. v. Ciba Vision Corp., 348 F. Supp. 2d 165 (S.D.N.Y. 2004) .............................................................. 60

Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d 1049 (8th Cir. 2005) .......................................................................... 32

Koppers Co. v. Krupp-Koppers GmbH, 517 F. Supp. 836 (W.D. Pa. 1981) ................................................................... 16

Kos Pharmaceuticals, Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004) ............................................................................. 25

L. & J.G. Stickley, Inc. v. Cosser, 255 F. App’x 541 (2d Cir. 2007) ...................................................................... 60

Lincoln Diagnostics, Inc. v. Panatrex, Inc., No. 07-CV-2077, 2009 WL 3010840 (C.D. Ill. Sept. 16, 2009) ....................... 61

LNV Corp. v. Outsource Services Management, LLC, 869 F.3d 662 (8th Cir. 2017) ............................................................................ 15

Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447 (5th Cir. 2001) ............................................................................ 61

Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC, 745 F.3d 877 (8th Cir. 2014) ............................................................................ 29

Lowe v. E.I. DuPont de Nemours & Co., 802 F.2d 310 (8th Cir. 1986) ............................................................................ 67


xii

Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir. 2005) ............................................................................. 20

McCoy v. Augusta Fiberglass Coatings, Inc., 593 F.3d 737 (8th Cir. 2010) ............................................................................ 51

McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 511 F.3d 350 (3d Cir. 2007) ............................................................................. 20

Meridian Mutual Insurance Co. v. Meridian Insurance Group, Inc., 128 F.3d 1111 (7th Cir. 1997) ...................................................................... 2, 51

Metric & Multistandard Components Corp. v. Metric’s, Inc., 635 F.2d 710 (8th Cir. 1980) ............................................................................ 67

Mid-State Aftermarket Body Parts, Inc. v. MQVP, Inc., 466 F.3d 630 (8th Cir. 2006) ............................................................................ 18

Midas Life Settlements, LLC v. BNC National Bank, No. CIV. 11-841 ADM/AJB, 2011 WL 5008009 (D. Minn. Oct. 20, 2011) ...................................................................................................... 3, 63

Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir. 1987) ................................................................. 15, 19, 20

Monsieur Henri Wines, Ltd. v. Duran, 204 U.S.P.Q. 601 (T.T.A.B. 1979) ................................................................... 64

Morningware, Inc. v. Hearthware Home Products, Inc., No. 09 C 4348, 2012 WL 3721350 (N.D. Ill. Aug. 27, 2012)..................... 21, 29

Mountain Marketing Group, LLC v. Heimerl & Lammers, LLC, No. 14-CV-846 SRN/BRT, 2015 WL 5602805 (D. Minn. Sept. 23, 2015) ............................................................................................................... 20

Multi-Tech Systems, Inc. v. Hayes Microcomputer Products, Inc., 800 F. Supp. 825 (D. Minn. 1992) ................................................................... 52

Mutual of Omaha v. Novak, 836 F.2d 397 (8th Cir. 1987) ............................................................................ 25


xiii

National Council of the United States Society of St. Vincent de Paul, Inc. v. St. Vincent De Paul Community Center of Portage County, Inc., No. 16-CV-423-BBC, 2018 WL 4232926 (W.D. Wis. Sept. 5, 2018) ......................................................................................................... 31, 50

Nespresso USA, Inc. v. Africa America Coffee Trading Co., No. 15CV5553-LTS, 2016 WL 3162118 (S.D.N.Y. June 2, 2016) .................. 21

Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011) .......................................................................... 30

Nichols v. American National Insurance Co., 154 F.3d 875 (8th Cir. 1998) ........................................................................ 3, 56

Northern PCS Services, LLC v. Sprint Nextel Corp., No. CIV. 05-2744, 2007 WL 951546 (D. Minn. Mar. 27, 2007) ...................... 45

Northland Insurance Co. v. Blaylock, 115 F. Supp. 2d 1108 (D. Minn. 2000) ....................................................... 21, 28

Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190 (2d Cir. 1971) ........................................................................... 28

Ott v. Target Corp., 153 F. Supp. 2d 1055 (D. Minn. 2001) ....................................................... 60, 62

PACCAR Inc. v. TeleScan Technologies, L.L.C., 319 F.3d 243 (6th Cir. 2003), abrogated on other grounds by KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004) ................................................................................................. 20, 31

Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165 (9th Cir. 2007) .......................................................................... 20

Pittari v. American Eagle Airlines, Inc., 468 F.3d 1056 (8th Cir. 2006) .................................................................... 57, 63

Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004) .................................................................... 17, 20


xiv

POM Wonderful LLC v. Purely Juice, Inc., No. CV-07-02633CAS(JWJX), 2008 WL 4222045 (C.D. Cal. July 17, 2008), aff’d, 362 F. App’x 577 (9th Cir. 2009)........................................... 61

Porous Media Corp. v. Pall Corp., 110 F.3d 1329 (8th Cir. 1997) .......................................................... 3, 57, 60, 62

Porous Media Corp. v. Pall Corp., 173 F.3d 1109 (8th Cir. 1999) .......................................................................... 59

Promatek Industries, Ltd. v. Equitrac Corp., 300 F.3d 808 (7th Cir. 2002), as amended (Oct. 18, 2002)............... 2, 16, 20, 29

Roederer v. J. Garcia Carrion, S.A., 732 F. Supp. 2d 836 (D. Minn. 2010)................................................... 45, 46, 48

SanMedica International, LLC v. Amazon.com, Inc., No. 2:13-cv-00169-DN, 2016 WL 527055 (D. Utah Jan. 20, 2016) ................. 21

Schick Manufacturing, Inc. v. Gillette Co., 372 F. Supp. 2d 273 (D. Conn. 2005)............................................................... 58

Security Alarm Financing Enterprises, L.P. v. Alder Holdings, LLC, No. 3:13-cv-00102-SLG, 2017 WL 5188061 (D. Alaska Feb. 27, 2017) ............................................................................................................... 21

Select Comfort Corp. v. Tempur Sealy International, Inc., No. CV 13-2451, 2016 WL 5496340 (D. Minn. Sept. 28, 2016) ...................... 62

Sensient Technologies Corp. v. SensoryEffects Flavor Co., 613 F.3d 754 (8th Cir. 2010) ...................................................................... 19, 28

SharkNinja Operating LLC v. Dyson Inc., 200 F. Supp. 3d 281 (D. Mass. 2016) ............................................................... 57

Smart Vent Products, Inc. v. Crawl Space Door System, Inc., No. CV 13-5691, 2016 WL 4408818 (D.N.J. Aug. 16, 2016) .......................... 21

Solutech, Inc., v. Solutech Consulting Services, Inc., 153 F. Supp. 2d 1082 (E.D. Mo. 2000) ............................................................ 45

Solvay Pharmaceuticals, Inc. v. Global Pharmaceuticals, 419 F. Supp. 2d 1133 (D. Minn. 2006) ....................................................... 60, 62


xv

Soo Line Railroad Co. v. Werner Enterprises, 825 F.3d 413 (8th Cir. 2016) ............................................................................ 15

Southwest Recreational Industries, Inc. v. FieldTurf, Inc., No. 01-50073, 2002 WL 32783971 (5th Cir. Aug. 13, 2002) ........................... 20

SquirtCo v. Seven-Up Co., 628 F.2d 1086 (8th Cir. 1980) ........................................................ 22, 28, 32, 44

Storus Corp. v. Aroa Marketing, Inc., No. C-06-2454 MMC, 2008 WL 449835 (N.D. Cal. Feb. 15, 2008) ................ 21

Synoptek, LLC v. Synaptek Corp., 309 F. Supp. 3d 825 (C.D. Cal. 2018) ........................................................ 19, 29

Syntex Laboratories, Inc. v. Norwich Pharmacal Co., 437 F.2d 566 (2nd Cir. 1971) ........................................................................... 16

Tdata Inc. v. Aircraft Technical Publishers, 411 F. Supp. 2d 901 (S.D. Ohio 2006) ............................................................. 40

Tempur-Pedic North America, LLC v. Mattress Firm, Inc., No. CV H-17-1068, 2017 WL 2957912 (S.D. Tex. July 11, 2017) ............. 21, 31

Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007) ............................................................................. 57

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011) ...................................................................... 52, 53

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) ......................................................................................... 46

US Salt, Inc. v. Broken Arrow, Inc., 563 F.3d 687 (8th Cir. 2009) ............................................................................ 51

VBS Distribution, Inc. v. Nutrivita Laboratories, Inc., 697 F. App’x 543 (9th Cir. 2017) ................................................................. 3, 57

Vision Information Technologies, Inc. v. Vision IT Services USA, Inc., 156 F. Supp. 3d 870 (E.D. Mich. 2016) ........................................................... 21


xvi

Warner Brothers Entertainment v. Global Asylum, Inc., No. CV 12-9547 PSG, 2012 WL 6951315 (C.D. Cal. Dec. 10, 2012), aff’d, 544 F. App’x 683 (9th Cir. 2013) ................................................ 64

Wildlife Research Center, Inc. v. Robinson Outdoors, Inc., No. 02-2773(DSD/SRN), 2005 WL 2648036 (D. Minn. Sept. 13, 2005) ............................................................................................................... 60

Wingert & Associates, Inc. v. Paramount Apparel International, Inc., 458 F.3d 740 (8th Cir. 2006) ............................................................................ 67

Wolf Appliance, Inc. v. Viking Range Corp., 686 F. Supp. 2d 878 (W.D. Wisc. 2010) .......................................................... 19

World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482 (5th Cir. 1971) ............................................................................ 24

Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221 (5th Cir. 2009) ............................................................................ 15

Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983), abrogated on other grounds, 543 U.S. 111 (2004) ............................................................................................... 64

Zeneca Inc. v. Eli Lilly & Co., No. 99 CIV. 1452 (JGK), 1999 WL 509471 (S.D.N.Y. July 19, 1999) ............................................................................................................... 59

Zerorez Franchising System, Inc. v. Distinctive Cleaning, Inc., 103 F. Supp. 3d 1032 (D. Minn. 2015) ........................................... 20, 38, 43, 46

Statutes

15 U.S.C. § 1114..................................................................................... 2, 4, 15, 50

15 U.S.C. § 1125............................................................................................ passim

28 U.S.C. § 1291..................................................................................................... 1

28 U.S.C. § 1331..................................................................................................... 1

28 U.S.C. § 1367..................................................................................................... 1

Pub. L. No. 87-722, 76 Stat. 769 ........................................................................... 15


xvii

Minn. Stat. §§ 325D.44 ..................................................................................... 4, 57

Other Authorities

Fed. R. App. P. 10 ................................................................................................. 23

Fed. R. App. P. 30 ................................................................................................. 23

Fed. R. Evid. 403 .................................................................................................. 56

4 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition (5th ed. 2018) ....................................................................... passim


1

JURISDICTIONAL STATEMENT

Appellants asserted various federal and state claims against Appellees in the

district court. The basis of the district court’s jurisdiction was federal question, 28

U.S.C. § 1331, and supplemental jurisdiction, 28 U.S.C. § 1367.

The basis of the Appellate Court’s jurisdiction is 28 U.S.C. § 1291, as this is

an appeal from a final decision of the district court disposing of all claims. The

district court entered its final order on December 12, 2018 and final judgment on

December 16, 2018. Appellants filed their Notice of Appeal on January 7, 2019.


2

STATEMENT OF ISSUES

1. Whether the district court erred in granting summary judgment to

Appellees on Appellants’ pre-sale, or initial interest, trademark infringement claim.

Most Apposite Authorities: 15 U.S.C. § 1114(1)(a); Australian Gold, Inc.

v. Hatfield, 436 F.3d 1228 (10th Cir. 2006); Promatek Indus., Ltd. v. Equitrac Corp.,

300 F.3d 808 (7th Cir. 2002), as amended (Oct. 18, 2002); Blaw-Knox Co. v.

Siegerist, 300 F. Supp. 507 (E.D. Mo. 1968), aff’d and modified, 414 F.2d 375 (8th

Cir. 1969).

2. Whether the district court erred in allowing Appellees’ expert witness

to testify regarding the essence of confusion and then refusing to issue a jury

instruction regarding confusion as to where consumers can purchase a product.

Most Apposite Authorities: Insty*Bit, Inc. v. Poly-Tech Indus., Inc., 95 F.3d

663 (8th Cir. 1996).

3. Whether the district court erred in refusing to apply the burden of proof

to Appellees on the issue of abatement of confusion.

Most Apposite Authorities: Meridian Mut. Ins. Co. v. Meridian Ins. Grp.,

Inc., 128 F.3d 1111 (7th Cir. 1997); Clinique Labs., Inc. v. Dep Corp., 945 F. Supp.

547 (S.D.N.Y. 1996).

4. Whether the district court erred in admitting Appellees’ bed

demonstration at trial.


3

Most Apposite Authorities: Hale v. Firestone Tire & Rubber Co., 756 F.2d

1322 (8th Cir. 1985); Nichols v. Am. Nat’l Ins. Co., 154 F.3d 875 (8th Cir. 1998).

5. Whether the district court erred in denying Appellants’ motion and

renewed motion for judgment as a matter of law on Appellants’ false advertising

claims for which Appellee Craig Miller admitted falsity.

Most Apposite Authorities: 15 U.S.C. § 1125(a)(1); Porous Media Corp. v.

Pall Corp., 110 F.3d 1329 (8th Cir. 1997); VBS Distribution, Inc. v. Nutrivita Labs.,

Inc., 697 F. App’x 543 (9th Cir. 2017).

6. Whether the district court erred in refusing to issue a jury instruction

requiring Appellees to bear the burden of proof on their Number Bed counterclaim.

Most Apposite Authorities: Anheuser-Busch, Inc. v. John Labatt Ltd., 89

F.3d 1339 (8th Cir. 1996); Midas Life Settlements, LLC v. BNC Nat’l Bank, No. CIV.

11-841 ADM/AJB, 2011 WL 5008009 (D. Minn. Oct. 20, 2011).

7. Whether the district court erred in denying Appellants’ motion and

renewed motion for judgment as a matter of law on Appellees’ Number Bed

counterclaim.

Most Apposite Authorities: Gateway, Inc. v. Companion Prod., Inc., 384

F.3d 503 (8th Cir. 2004).

8. Whether the jury’s verdict on trademark infringement, on the false

advertising claims for which Appellee Craig Miller admitted falsity, on unfair


4

competition, and on Appellees’ Number Bed counterclaim was a verdict that no

reasonable jury could have reached.1

Most Apposite Authorities: 15 U.S.C. §§ 1114(1)(a), 1125(a)(1); Minn.

Stat. § 325D.44.

9. Whether the district court erred in denying Appellants’ motion for a

new trial and for an amended verdict on Appellants’ trademark infringement and

unfair competition claims.

Most Apposite Authorities: 15 U.S.C. §§ 1114(1)(a), 1125(a)(1).

1 For ease, related Issues #8-9 are combined.


5

STATEMENT OF THE CASE

Select Comfort Corporation n/k/a Sleep Number Corporation (“Sleep

Number”) and Select Comfort SC Corporation (“Comfortaire”) (collectively “Sleep

Number” or “Appellants”) brought this case against certain individuals and entities

(collectively “Appellees”) involved in a scheme to divert would-be customers of

Sleep Number through trademark infringement, false advertising, and unfair

competition. Specifically, Appellees use infringing online advertising to confuse

customers and, when customers eventually discern that Appellees do not sell Sleep

Number’s products, present them with a barrage of false advertisements.

I. The Parties.

Sleep Number is a leading manufacturer of adjustable air beds, marketing its

beds and related products, under the Sleep Number® brand since 2001.

(SNAppx399, 344:2-22.)2 Since that time, Sleep Number has spent billions

advertising its products, which it sells nationwide in Sleep Number® branded retail

stores, online at sleepnumber.com, and over the phone. (SNAppx400, 345:19-

346:14; SNAppx405, 367:3-5.) Sleep Number has received numerous awards and

industry praise for its unique, innovative products and exceptional customer service.

(SNAppx401, 350:15-16, 351:8-22.) As a result, Sleep Number has become a well-

2 Appellants’ Appendix citations are “SNAppx__,” Trial Exhibit Appendix citations are “TrExAppx__,” and other district court docket citations are “Dkt__.” Appellants’ Addendum contains select materials.


6

known, famous brand. (SNAppx400, 346:15-20; SNAppx262.) Sleep Number

owns trademark registrations for Sleep Number®, Select Comfort®, and What’s

Your Sleep Number?®. (SNAppx1247-1263; SNAppx465-466, 602:13-607:10.)

Select Comfort SC Corporation (“Comfortaire”) acquired the Comfortaire®

trademark and related assets in January 2013. (SNAppx587, 1091:22-1092:9;

SNAppx466, 608:2-7.) Adjustable air beds and related products have been marketed

and sold under the Comfortaire® brand for decades. (SNAppx587-588, 1093:17-

1096:12.) Comfortaire is the owner of a trademark registration for Comfortaire®.

(SNAppx588, 1096:20-1097:17; SNAppx1264-1267.)

Direct Commerce, LLC (“DC”), no longer operational, sold beds under the

brand names “Personal Touch” and “Personal Comfort.” (SNAppx900, 2338:4-12;

SNAppx902-903, 2348:5-2350:6; SNAppx905, 2358:23-2359:16; SNAppx929,

2451:24-2453:4.) Scott Stenzel and John Baxter operated Direct Commerce and

were responsible for developing advertising and website design. (SNAppx520,

825:14-20; SNAppx527, 851:13-19, SNAppx530, 866:5-6; SNAppx532, 871:4-20;

SNAppx900, 2338:4-12, SNAppx902-903, 2348:5-2352:10.) Direct Commerce was

owned by Digi Craft Agency, LLC (“DCA”), whose members included Stenzel and

Baxter. (SNAppx902-03, 2348:5-2349:11; SNAppx927, 2445:9-17; SNAppx929

2452:4-5.)


7

Dires, LLC (“Dires”) was formed in September 2012 by Sizewise Rentals,

LLC (“Sizewise”), Craig Miller, Baxter, Stenzel, and another employee.

(SNAppx905, 2358:23-2360:6; SNAppx930, 2454:10-2455:12.) Dires markets and

sells adjustable air beds to consumers under the brand name “Personal Comfort.”

(SNAppx514, 802:8-9; SNAppx635, 1285:16-19.) Dires’ products are sold online

at personalcomfortbed.com and over the phone. (SNAppx515, 804:2-10.)

Baxter was Dires’ Chief Marketing Officer until March 2013 and was a Dires

owner. (SNAppx514, 800:8-802:7; SNAppx906, 2364:8-12.) Baxter designed the

website, developed advertising, and trained salespeople. (SNAppx514, 802:10-23;

SNAppx560, 985:1-22; SNAppx819, 2014:22-24, 2015:19-2016:6.)

Stenzel has been the Director of Operations and the Director of Marketing and

Advertising at Dires. (SNAppx906, 2362:20-2363:13; SNAppx930, 2455:20-21.)

Stenzel has input and responsibility regarding Dires’ advertising and, since Baxter’s

departure, has been in charge of the website and advertising. (SNAppx514-515,

802:24-803:1; SNAppx560, 985:1-22; SNAppx819, 2014:15-2015:18; SNAppx906,

2362:20-2363:13.)

Miller is the principal manager of Dires and an owner of Sizewise, which is

the parent company and majority owner of Dires. (SNAppx635-636, 1285:16-

1286:8; SNAppx655, 1362:21-1363:12; SNAppx906, 2363:14-25.) Miller has input


8

into Dires’ advertising and website design. (SNAppx515, 803:2-22; SNAppx560,

985:1-11; SNAppx635-636, 1285:16-1286:8.)

II. Procedural History.

On November 16, 2012, Appellants filed this case asserting trademark

infringement, trademark dilution, unfair competition, false advertising, and other

claims. (SNAppx1.) On November 8, 2013, Appellants filed an amended complaint

adding parties. (SNAppx53-86.) On November 22, 2013, Appellees filed their

answer, affirmative defenses, and counterclaims. (SNAppx87-116.)3

On January 13, 2016, the district court ruled on the parties’ cross-motions for

summary judgment. (SNAppx117-158.) On Appellants’ trademark infringement

claim, the district court granted Appellees’ motion for summary judgment on pre-

sale, initial interest confusion and held that Sleep Number would be required to

“establish a likelihood of actual confusion at the time of purchase.” (SNAppx140-

142.) The court held that Appellees’ ads did not cause pre-sale confusion as a matter

of law but also inconsistently held that the exact same ads could cause confusion at

the point of sale. (SNAppx140-147.)

The case proceeded to trial in September/October 2017. (SNAppx40-42.)

Given its ruling on summary judgment, the district court instructed the jury that

3 Default judgment was entered against DC and DCA on January 17, 2014. (SNAppx6.)


9

Sleep Number was required to prove a likelihood of confusion at the time of

purchase. (SNAppx207-208.) The district court also improperly allowed Appellees

to present an irrelevant bed demonstration to the jury. (SNAppx673-677, 1434:4-

1451:20; SNAppx702-703, 1550:6-1552:25; SNAppx745-754, 1720:22-1759:11.)

The parties argued motions for judgment as a matter of law before jury deliberation,

which the district court denied. (SNAppx1063-1092, 2983:4-3100:19.)

The jury returned a verdict on October 18, 2017, finding, among other things,

that Appellees did not infringe Sleep Number’s trademarks or engage in unfair

competition but Appellees were liable for seven false statements under the Lanham

Act and Minnesota Deceptive Trade Practices Act (“MDTPA”). (SNAppx257-322.)

On May 23 and June 6, 2018, the parties filed various post-trial motions.

(SNAppx47-50.) The district court denied those motions on December 12, 2018 and

entered final judgment on December 16, 2018. (SNAppx323-361.) On January 7,

2019, Appellants timely filed their Notice of Appeal. (SNAppx51.)


10

ARGUMENT

Appellees engage in a multi-part scheme using Sleep Number’s trademarks

and goodwill to confuse customers looking for Sleep Number into instead going to

Appellees’ website. Once in contact with these deceived and confused customers,

Appellees foster the confusion or replace it with false statements about the parties’

products. Appellees’ scheme is successful because Sleep Number has spent decades

and considerable resources advertising its products and the Sleep Number brand,

which has become well-known to consumers. (Supra Statement of Case Section I.)

I. Appellees’ Conduct is Designed to Confuse Consumers and Usurp Sleep Number’s Good Will.

Appellees employ pay-per-click (“PPC”) internet ads—promoted links

generally appearing above the non-sponsored, organic search results in search

engines like Google. (SNAppx418, 418:15-21, 420:1-8; SNAppx515-516, 806:12–

807:1.) Companies bid on search terms (called “keywords”) to have their ads appear

in response to searches for those terms. (SNAppx418, 419:2-10.) By purchasing

Sleep Number’s trademarks as keywords (not wrongful itself), Appellees can run

sponsored ads for consumers searching for Sleep Number, thus driving traffic to

their own website. (SNAppx419, 421:1-15; SNAppx686, 1484:12-1485:23,

SNAppx687, 1488:18-1490:13.) For example, Appellees run this and similar ads

when a consumer searches for “Sleep Number Beds” online:


11

(SNAppx1818; see SNAppx1814-1939, SNAppx1945-2021.) Appellees know their

ads will run with the search terms bolded so that, in the example above, the consumer

will see the bolded “Sleep,” “Number,” and “Beds” in the top line and the bolded

“Sleep Number” in the second line. (SNAppx420, 427:3-15; SNAppx519, 820:10-

822:25.) Because Google will not allow Appellees to use another company’s

trademark in the top line (SNAppx618, 1216:5-8), Appellees insert words or phrases

like “55% Off” within the trademark itself to game the system even though it makes

no grammatical sense. (See, e.g., SNAppx1818, SNAppx1832, SNAppx1898.)

Consequently, the ads give the impression that Appellees sell Sleep Number beds—

and at a significant discount, no less.

Appellees also utilize display or “banner” advertising—ads appearing on

websites next to articles and other content—to give the impression that Appellees

sell Sleep Number beds. (SNAppx424, 443:21-25; SNAppx546, 929:25-930:14;

SNAppx686, 1486:6-8.) An example of one of Appellees’ self-described “tricky

marketing” display ads is depicted below:


12

(SNAppx2515; see also SNAppx2509-2513.)

Additionally, Appellees engage in search engine optimization (“SEO”)

efforts—techniques used to improve a company’s ranking in organic search results

in search engines. (SNAppx422, 434:4-435:25; SNAppx819, 2015:11–2016:6.)

Companies employ SEO efforts both on their own website and on third-party

websites. (SNAppx422, 435:13-25; SNAppx424, 442:10-19.) An example of one

of Appellees’ “off-site” SEO efforts is buying a link on a third-party website for

“Sleep number mattress” that directs consumers to Appellees’ website, not Sleep

Number’s:


13

(SNAppx2798; see also SNAppx423-424, 440:17-441:9 (discussing SNAppx2807-

2808).)

These and other tactics employed by Appellees cause consumer confusion,

driving consumers searching for Sleep Number to Appellees’ website. Once on the

website, consumers are prompted to interact with one of Appellees’ representatives

through a telephone call or live chat message. (See SNAppx2765.) Appellees’

representatives then foster the confusion they have caused or replace it with false

claims designed to convince consumers to buy Appellees’ products instead of Sleep

Number’s. (Infra Section II.B.3.a-b.) In short, Appellees divert sales by targeting

consumers looking online for Sleep Number’s products, confusing them, and then

lying to them.


14

II. The District Court Improperly Granted Summary Judgm ent to Appellees on Sleep Number’s Pre-Sale Trademark Infringement Claim.

The district court improperly granted Appellees’ motion for summary

judgment on pre-sale trademark infringement. (SNAppx140-142.) The court

assumed without support that, because beds are “expensive,” there is no likelihood

of pre-sale confusion. (Id.) It disregarded the evidence of actual pre-sale confusion

and Appellees’ bad intent, did not apply the required six-factor test for trademark

infringement, and improperly allowed one factor, the supposed sophistication of

purchasers, to overwhelm all other considerations. (Id.) See Calvin Klein Cosmetics

Corp. v. Lenox Labs., Inc., 815 F.2d 500, 504 (8th Cir. 1987) (“[W]hile no

particular factors are determinative, neither should excessive importance be placed

on any one factor to the exclusion of others.”); Eniva Corp. v. Global Water

Solutions, Inc., 440 F. Supp. 2d 1042, 1050 (D. Minn. 2006) (“[A] court must use

the factors at the summary judgment stage ‘as a guide to determine whether a

reasonable jury could find a likelihood of confusion.’”) (quoting Duluth News-

Tribune v. Mesabi Publ’g Co., 84 F.3d 1093, 1096 (8th Cir. 1996)).

Then, when analyzing the same advertising, the district court contradicted its

ruling, finding a fact issue on point-of-sale confusion. (SNAppx142-147.)

Logically, there cannot be a fact issue as to point-of-sale confusion at the same time

there is no likelihood of pre-sale confusion as a matter of law. These failures

independently require reversal.


15

The Eighth Circuit reviews this issue de novo and, because it was a dismissal

on summary judgment, reviews the evidence in the light most favorable to Sleep

Number. See Soo Line R.R. Co. v. Werner Enters., 825 F.3d 413, 418 (8th Cir.

2016); LNV Corp. v. Outsource Servs. Mgmt., LLC, 869 F.3d 662, 666 (8th Cir.

2017). Contrary to what the district court did, the fact-intensive nature of trademark

infringement claims dictates that summary judgment be rarely granted to defendants.

See Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 230 (5th Cir. 2009);

Guthrie Healthcare Sys. v. ContextMedia, Inc., No. 12 CIV. 7992 KBF, 2014 WL

185222, at *9 (S.D.N.Y. Jan. 16, 2014).

A. Pre-Sale Confusion Is Actionable Under the Lanham Act.

In 1962, Congress amended the Lanham Act to make pre-sale and post-sale

confusion actionable. Act of Oct. 9, 1962, Pub. L. No. 87-722, § 17, 76 Stat. 769,

773-74 (removing term “purchasers” to expand trademark protection to pre-sale,

point-of-sale, and post-sale confusion) (codified as amended at 15 U.S.C.

§ 1114(1)(a)). As a result of these amendments, courts recognized that trademark

infringement could be based upon a likelihood of pre-sale confusion. See

Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 269 F.3d 270, 295 (3d

Cir. 2001); Ferrari S.P.A. v. Roberts, 944 F.2d 1235, 1244-45 (6th Cir. 1991); Mobil

Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 260 (2d Cir. 1987); Grotrian,

Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons, 523 F.2d 1331, 1342


16

(2d Cir. 1975); Syntex Labs., Inc. v. Norwich Pharmacal Co., 437 F.2d 566, 568

(2nd Cir. 1971); Hearts on Fire Co., LLC v. Blue Nile, Inc., 603 F. Supp. 2d 274,

283 (D. Mass. 2009); Koppers Co. v. Krupp-Koppers GmbH, 517 F. Supp. 836, 843

(W.D. Pa. 1981); Blaw-Knox Co. v. Siegerist, 300 F. Supp. 507, 513 (E.D. Mo.

1968), aff’d and modified, 414 F.2d 375 (8th Cir. 1969).

Pre-sale confusion is actionable where a defendant uses a plaintiff’s trademark

to falsely inform or suggest it sells the plaintiff’s products to get consumers

interested in its own products. This is trademark infringement even if the defendant

does not ultimately make a sale, as explained in Blaw-Knox, affirmed by this Court:

It follows that even if customers ultimately ascertained … that [the defendant corporation] was in fact an entirely new and separate operation and that its products were not in fact Medart products, defendants are not excused. This for the reason that the very opportunity of presenting their product to prospective customers was obtained by means of their improper and unfair conduct, so that it is quite likely that much of the bar and tube machinery business in which defendants were and are engaged to their profit would otherwise have gone to plaintiff.

300 F. Supp. at 513 (emphasis added); see also Promatek Indus., Ltd. v. Equitrac

Corp., 300 F.3d 808, 812 (7th Cir. 2002), as amended (Oct. 18, 2002) (trademark

infringement “when a customer is lured to a product by the similarity of the mark,

even if the customer realizes the true source of the goods before the sale is

consummated”); Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 204 (5th Cir.

1998) (trademark infringement based upon defendant suggesting its bar was


17

associated with Elvis Presley, which “brings patrons in the door” who “may stay,

despite realizing that the bar has no relationship with [Elvis]”).

Therefore, courts find pre-sale confusion (a/k/a the initial interest doctrine)

actionable under the Lanham Act as trademark infringement. 4 J. Thomas

McCarthy, McCarthy on Trademarks & Unfair Competition § 23:6 (5th ed. 2018)

(hereinafter “McCarthy”) (“Most courts now recognize the initial interest confusion

theory as a form of likelihood of confusion which can trigger a finding of

infringement.”). No court considering competitive ads like those here has rejected

the doctrine. This makes sense. To find pre-sale confusion not actionable would

require ignoring the 1962 Lanham Act amendments and sanctioning “bait-and-

switch” advertising, despite legislation specifically enacted to prevent it. This is not

the law. See Alzheimer’s Disease & Related Disorders Ass’n, Inc. v. Alzheimer’s

Found. of Am., Inc., 307 F. Supp. 3d 260, 286-87 (S.D.N.Y. 2018) (distinguishing

between actionable bait-and-switch advertising and non-actionable comparative

advertising).

The initial interest confusion doctrine also prevents misappropriation of a

trademark holder’s goodwill—a trademark injury lasting long after initial confusion

ends. See Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1238-40 (10th Cir.

2006); Playboy Enters., Inc. v. Netscape Commc’ns Corp., 354 F.3d 1020, 1025 (9th

Cir. 2004); Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036,


18

1062 (9th Cir. 1999); Grotrian, 523 F.2d at 1342; Blaw-Knox, 300 F. Supp. at 513;

Coachella Music Festival, LLC v. Simms, No. 217-CV-06059-RGK-GJS, 2017 WL

6888499, at *9 (C.D. Cal. Dec. 13, 2017); Mid-State Aftermarket Body Parts, Inc. v.

MQVP, Inc., 466 F.3d 630, 634 (8th Cir. 2006).

“[A] deceitful creation of an initial interest is harmful to consumer interests,

brand-development incentives, and efficient allocation of capital, even if the

confusion is ultimately dissipated by the time of purchase.” Groeneveld Transport

Efficiency, Inc. v. Lubecore Int’l, Inc., 730 F.3d 494, 518 (6th Cir. 2013). Indeed,

even if the confusion caused by Appellees’ advertising is “cured” before purchase,

the harm to Sleep Number and consumers has been done, for Appellees created “an

opening or opportunity not otherwise available enabling [them] to interest

prospective customers in their own [products].” Blaw-Knox, 300 F. Supp. at 513.

(See SNAppx406, 371:11-372:20; SNAppx425, 445:21-446:7; SNAppx888-890,

2291:4-2297:3.) Appellees perpetuate this harm by seizing on the initial confusion

they create to falsely advertise to consumers about Appellees’ products and Sleep

Number’s products. (See id.; infra Section II.B.3.b.) Their conduct also drives up

the cost-per-click Sleep Number must pay to advertise its own brand when

consumers click on Sleep Number’s PPC ads. (SNAppx420, 427:21-428:13.)

Notwithstanding, the district court held that pre-sale confusion does not exist

as a matter of law if the relevant product is “expensive,” (SNAppx140-142), basing


19

its decision on Sensient Techs. Corp. v. SensoryEffects Flavor Co., 613 F.3d 754

(8th Cir. 2010). Sensient, however, does not support this ruling. Sensient found the

facts of that case did not fit the initial interest doctrine because there was no

likelihood of pre-sale confusion with the commercial-grade products at issue. Id. at

764, 766. Sensient is far from a consumer-product infringement case; it involved

commercial products, which took months to negotiate through an arms’ length

transaction between experienced, sophisticated commercial companies. Id.

Moreover, there was no evidence that any actual pre-sale confusion occurred. Id.

Thus, Sensient stands in sharp contrast to this case, which has a factual record replete

with consumer-based, pre-sale confusion that Appellees deliberately perpetrated.

(Infra Section II.B.1.)

Contrary to the district court’s view, pre-sale confusion applies even to

“expensive” purchases. See Mobil Oil, 818 F.2d at 260 (sophisticated purchasers in

oil trading market); Grotrian, 523 F.2d at 1339, 1341-42 (pianos costing between

$5,000 and $13,000); Synoptek, LLC v. Synaptek Corp., 309 F. Supp. 3d 825, 840-

41 (C.D. Cal. 2018) (IT consulting services); Bd. of Regents of the Univ. of Houston

Sys. v. Houston College of Law, Inc., 214 F. Supp. 3d 573, 597-98 (S.D. Tex. 2016)

(law school); Wolf Appliance, Inc. v. Viking Range Corp., 686 F. Supp. 2d 878, 891-

92 (W.D. Wisc. 2010) (high-end kitchen stoves); Hearts on Fire, 603 F. Supp. 2d at

287-88 (diamonds).


20

Additionally, the majority of other circuit courts have followed the Lanham

Act’s plain language to find pre-sale confusion actionable. See Malletier v.

Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 n.2 (2d Cir. 2005);

Mobil Oil, 818 F.2d at 260; Checkpoint, 269 F.3d at 295; McNeil Nutritionals, LLC

v. Heartland Sweeteners, LLC, 511 F.3d 350, 358 (3d Cir. 2007); Sw. Recreational

Indus., Inc. v. FieldTurf, Inc., No. 01-50073, 2002 WL 32783971, at *7 (5th Cir.

Aug. 13, 2002); Elvis Presley, 141 F.3d at 204; PACCAR Inc. v. TeleScan Techs.,

L.L.C., 319 F.3d 243, 253 (6th Cir. 2003), abrogated on other grounds by KP

Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004);

Promatek Indus., 300 F.3d at 812; Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165,

1176 (9th Cir. 2007); Playboy, 354 F.3d at 1025; Brookfield, 174 F.3d at 1062;

Australian Gold, 436 F.3d at 1238-39.

District courts in this circuit have also correctly recognized and applied initial

interest confusion. See Blaw-Knox, 300 F. Supp. at 513 (affirmed by this Court);

Faegre & Benson, LLP v. Purdy, No. CIV. 03-6472(MJD/JGL), 2004 WL 167570,

at *2 (D. Minn. Jan. 5, 2004), aff’d & remanded, 129 F. App’x 323 (8th Cir. 2005);

Faegre & Benson, LLP v. Purdy, 447 F. Supp. 2d 1008, 1017 (D. Minn. 2006);

Mountain Mktg. Grp., LLC v. Heimerl & Lammers, LLC, No. 14-CV-846 SRN/BRT,

2015 WL 5602805, at *13-14 (D. Minn. Sept. 23, 2015); Zerorez Franchising Sys.,

Inc. v. Distinctive Cleaning, Inc., 103 F. Supp. 3d 1032, 1043-44 (D. Minn. 2015);


21

Edina Realty, Inc. v. TheMLSonline.com, No. CIV. 04-4371JRTFLN, 2006 WL

737064, at *4 (D. Minn. Mar. 20, 2006); Northland Ins. Co. v. Blaylock, 115 F. Supp.

2d 1108, 1119-21 (D. Minn. 2000); Jalin Realty Capital Advisors, LLC v. A Better

Wireless, NISP, LLC, 917 F. Supp. 2d 927, 938 n.14 (D. Minn. 2013); Cheval Int’l

v. Smartpak Equine, LLC, No. CIV 14-5010, 2016 WL 1064496, at *7-10 (D.S.D.

Mar. 15, 2016).4

Further, no court has found pre-sale confusion does not exist as a matter of

law while also finding, in analyzing the same advertising, a likelihood of confusion

at the point of sale. But that is what the district court did—forcing Sleep Number to

satisfy the high burden of proving that pre-sale confusion caused by Appellees’

4 Many other district court cases, particularly those applying initial interest to online advertising, are also persuasive. See Hearts on Fire, 603 F. Supp. 2d at 283-88; Nespresso USA, Inc. v. Afr. Am. Coffee Trading Co., No. 15CV5553-LTS, 2016 WL 3162118, at *6 n.6 (S.D.N.Y. June 2, 2016); Smart Vent Prods., Inc. v. Crawl Space Door Sys., Inc., No. CV 13-5691 (JBS/KMW), 2016 WL 4408818, at *8-10 (D.N.J. Aug. 16, 2016); Tempur-Pedic N. Am., LLC v. Mattress Firm, Inc., No. CV H-17-1068, 2017 WL 2957912, at *7 (S.D. Tex. July 11, 2017); Vision Info. Techs., Inc. v. Vision IT Servs. USA, Inc., 156 F. Supp. 3d 870, 882 (E.D. Mich. 2016); H-D U.S.A., LLC v. SunFrog, LLC, No. 17-CV-711-JPS, 2017 WL 3261709, at *4-5 (E.D. Wis. July 31, 2017); Morningware, Inc. v. Hearthware Home Prods., Inc., No. 09 C 4348, 2012 WL 3721350, at *9-11 (N.D. Ill. Aug. 27, 2012); Storus Corp. v. Aroa Mktg., Inc., No. C-06-2454 MMC, 2008 WL 449835, at *3 (N.D. Cal. Feb. 15, 2008); Idaho Golf Partners, Inc. v. TimberStone Mgmt., LLC, No. 1:14-cv-00233-BLW, 2016 WL 5340302, at *5-6 (D. Idaho Sept. 21, 2016); Sec. Alarm Fin. Enters., L.P. v. Alder Holdings, LLC, No. 3:13-cv-00102-SLG, 2017 WL 5188061, at *7-8 (D. Alaska Feb. 27, 2017); SanMedica Int’l, LLC v. Amazon.com, Inc., No. 2:13-cv-00169-DN, 2016 WL 527055, at *5-9 (D. Utah Jan. 20, 2016).


22

advertising carried all the way through purchase, and thereby sanctioning Appellees’

“bait-and-switch” tactics and the harm they cause consumers and Sleep Number.

Addressed below, had the district court properly weighed the pre-sale infringement

evidence at summary judgment, it would have found a likelihood of pre-sale

confusion, or, at a minimum, a fact issue.

B. The Evidence Establishes Each Likelihood of Confusion Factor Supporting a Finding of Trademark Infringement.

This case involves four of Sleep Number’s trademarks: Sleep Number®,

Select Comfort®, Comfortaire®, and What’s Your Sleep Number?®.

(SNAppx1247-1267.) Infringement occurred if Appellees used Sleep Number’s

marks—or similar words/phrases—in a manner likely to cause customer confusion

as to the source or sponsorship of the goods. See Cmty. of Christ Copyright Corp.

v. Devon Park Restoration Branch of Jesus Christ’s Church, 634 F.3d 1005, 1009

(8th Cir. 2011); SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980).

The Eighth Circuit weighs six factors in analyzing likelihood of confusion:

1) the strength of the plaintiff’s mark; 2) the similarity between the plaintiff’s and defendant’s marks; 3) the degree to which the allegedly infringing product competes with the plaintiff’s goods; 4) the [defendant’s] intent to confuse the public; 5) the degree of care reasonably expected of potential customers; and 6) evidence of actual confusion.

Davis v. Walt Disney Co., 430 F.3d 901, 903 (8th Cir. 2005) (citing SquirtCo, 628

F.2d at 1091).


23

The district court erred by not applying the six-factor test to the pre-sale

confusion caused by Appellees’ advertising and instead relying on a single factor

(degree of care) to find no likelihood of pre-sale confusion as a matter of law.

(SNAppx140-142.) This was despite the significant evidence supporting each factor

that Sleep Number presented at summary judgment. (See Dkt235 at 15-40; Dkt246

at 6-18, 32-37; Dkt258 at 7-12 (summary judgment briefing5).) The court itself then

contradicted its pre-sale ruling by finding fact issues when applying the six-factor

test to point-of-sale confusion based upon the same advertising. (SNAppx142-147.)

Upon its de novo review and finding all inferences in favor of Sleep Number, the

Eighth Circuit should find that the likelihood-of-confusion factors, addressed in

reverse order below, weigh strongly in favor of infringement. At a minimum, the

district court’s grant of summary judgment should be overturned. The evidence

entered at trial only further supports this conclusion.

1. Factor #6: Evidence of Actual Confusion.

“Any evidence of actual confusion is strong proof of the fact of a likelihood

of confusion.” McCarthy § 23:13; see First Nat’l Bank in Sioux Falls v. First Nat’l

5 (citing Dkt236, Hansen Aff. ¶¶ 73, 75, Exs. 1-6, 8, 16, 19, 22-24, 28-30, 38-138, 146, 153; Dkt247, Second Hansen Aff. Exs. 156, 158-170, 209-222, 273; Dkt259, Third Hansen Aff. Exs. 277-289, 304 at DIR0000634, 647, 661; Dkt239, Somers Aff. ¶¶ 3, 5, 7-10, Exs. 2-4; Dkt250, Second Somers Aff. ¶¶ 3-4, 12, Exs. 5-15; Karr Aff ¶¶ 2, 4-5, 7, Ex. 1; Dkt252, Reckard Aff. ¶¶ 4-5, Ex. A). The Court may consider the foregoing under Fed. R. App. P. 10(a)(1) and 30(a)(2).


24

Bank S.D., 679 F.3d 763, 770 (8th Cir. 2012); Hubbard Feeds, Inc. v. Animal Feed

Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999); World Carpets, Inc. v. Dick

Littrell’s New World Carpets, 438 F.2d 482, 489 (5th Cir. 1971).

a. Consumer Survey Evidence.

Sleep Number’s expert, Hal Poret, conducted a survey on three of Appellees’

PPC ads. (SNAppx1830; SNAppx1818; SNAppx1921; SNAppx837-841, 2087:1-

2102:18; SNAppx858, 2171:23-2172:13.) That survey revealed that Appellees’ use

of Sleep Number’s trademarks, or similar variations, confuses a significant

percentage of consumers:

Advertisement Percent Confused

35.5%

23.0%

22.0%


25

(SNAppx2022-2036; SNAppx841-842, 2102:19-2107:2; SNAppx859, 2176:4-17.6)

Poret testified his survey would apply to “whatever other ads are similar or

comparable” to those tested. (SNAppx842, 2106:18-21; SNAppx859-860, 2176:23-

2178:10.) Conversely, Appellees’ survey expert, Dr. Geoffrey Fong, testified his

survey could not help a jury in the same way. (SNAppx882, 2266:11-2267:10.)

Poret’s survey percentages of 35.5%, 23.0%, and 22.0% are sufficient to

demonstrate likelihood of confusion as a matter of law. See First Nat’l Bank, 679

F.3d at 770-71 (19%); Anheuser-Busch, Inc. v. Balducci Publ’ns, 28 F.3d 769, 775

(8th Cir. 1994) (6%); Mutual of Omaha v. Novak, 836 F.2d 397, 400 (8th Cir. 1987)

(10%); Humble Oil & Refining Co. v. Am. Oil Co., 405 F.2d 803, 817 (8th Cir. 1969)

(11%).

b. Customer Communications.

Unlike in many other cases, the evidence of actual confusion here is rampant.

See Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 720 (3d Cir. 2004) (recognizing

actual confusion evidence “‘is difficult to find’” and “[t]he rarity of such evidence

makes even a few incidents ‘highly probative of the likelihood of confusion’”)

(quoting Checkpoint, 269 F.3d at 291). This confusion is documented in Appellees’

emails with customers (see SNAppx1268-1532), Appellees’ live chats with

6 See Dkt236, Hansen Aff. Ex. 153.


26

customers (see SNAppx1533-1737), Appellees’ internal Skype chats discussing

customers (see SNAppx1738-1813), Appellees’ phone calls with customers (see

SNAppx24577), and other evidence, too voluminous to fully list.8

7 SNAppx2457 is a summary of Defendants’ 6,248 customer phone calls. The calls exist in both written transcript format and audio electronic format at TrExAppx14212-34784. Electronic exhibits are located on CDs.

8 Summary Judgment Exhibits: See Dkt236, Hansen Aff. Exs. 16, 19, 22-24, 28-30, 89-90, 111-138, 146; Dkt247, Second Hansen Aff. Exs. 158-169, 205-208; Dkt259, Third Hansen Aff. Exs. 277-289, 304 at DIR000000634, 647, 661.

Trial Testimony & Selected Exhibits: See SNAppx566-68, 1008:4-1017:3; SNAppx569-579, 1019:12-1062:9; SNAppx580-581, 1065:10-1067:5; SNAppx665-666, 1405:3-1406:6; SNAppx666-670, 1409:2-1422:18; SNAppx691-699, 1507:17-1537:25; SNAppx703-705, 1553:14-1561:3; SNAppx768, 1815:7-23; SNAppx771, 1824:5-1826:17; SNAppx772-775, 1829:20-1841:1; SNAppx775-786, 1843:8-1884:21; SNAppx793-797, 1912:8-1930:14; SNAppx798-799, 1935:19-1936:12; SNAppx799-800, 1938:8-1940:2; SNAppx907-909, 2365:4-2375:4; SNAppx909-916, 2376:24-2402:8; SNAppx917-919, 2408:5-2414:15; SNAppx1191-1201, 21:10-52:22; see, e.g., SNAppx2037-2042; SNAppx2043-2052; SNAppx2053-2058; SNAppx2059-2067; SNAppx2068-2075; SNAppx2076-2079; SNAppx2080-2088; SNAppx2091-2093; SNAppx2094-2095; SNAppx2096-2108; SNAppx2118-2119; SNAppx2128-2133; SNAppx2136-2141; SNAppx2146-2148; SNAppx2149; SNAppx2150-2151; SNAppx2159-2165; SNAppx2166-2178; SNAppx2191-2196; SNAppx2201-2206; SN2216-2224; SNAppx2225; SNAppx2233-2236; SNAppx2237-2244; SNAppx2252-2256; SNAppx2259-2273; SNAppx2274; SNAppx2275-2308; SNAppx2309-2325; SNAppx2326-2335; SNAppx2336-2339; SNAppx2340-2341; SNAppx2342-2362; SNAppx2363-2366; SNAppx2368-2371; SNAppx2372-2378; SNAppx2383-2386; SNAppx2393-2400; SNAppx2401-2406; SNAppx2411-2412; SNAppx2413-2414; SNAppx2429-2439; SNAppx2440-2449; SNAppx2458-2460; SNAppx2461; SNAppx2462-2463; SNAppx2464; SNAppx2465-2466; SNappx2467-2468; SNAppx2469-2470; SNAppx2457.


27

For example, based on Appellees’ limited production of customer phone calls

(TrExAppx14212-34784), 16.4% of the total calls involved confused customers,

22.2% of the sales calls involved confused customers, and 38.4% of the sales calls

referencing Sleep Number involved confused customers. (SNAppx453-454,

554:17-560:2; see SNAppx2457.) In these calls, customers purchased (or attempted

to purchase) Appellees’ product dozens of times believing it was Sleep Number’s

product. (SNAppx454-455, 561:3-564:8; see SNAppx2457.)

As shown in customers’/Appellees’ own words, the confusion Appellees’

cause is extensive and exists at all stages of the sales process:

• “I would like to purchase a queen sleep number bed…” (SNAppx1276.)

• “We are interested in a sleep number bed.” (SNAppx1358.)

• “I called about the Sleep number bed as advertised on tv 3 times.” (SNAppx1457.)

• “[C]an you give me a price on a sleep # queen for a rv.” (SNAppx1544.)

• “I am interested in purchasing a c4 queen sleep number bed…” (SNAppx1551.)

• Referring to product purchased from Appellees, “I messed up and thought your company was sleep number.” (SNAppx1688.)

• “[S]o I thought it was a Sleep Number Bed that I had ordered.” (SNAppx2202.)

• Referring to a customer’s purchase from Appellees, “She said she thought she bought a sleep number bed.” (SNAppx2465.)


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• Referring to a customer’s purchase from Appellees, “I think she thought we were sleep number.” (SNAppx2469.)

• “We have a sleep number bed. What is the best number for lower back pain?” (SNAppx1269.)

• “I have a queen Sleep number Series P5, can’t find remote, how much to replace?” (SNAppx1705.)

Notably, Appellees even trained their salespeople on how to handle confused

customers and posited confusion as the first salesperson interview question:

1. Sales Call – New Caller Says, “I am looking at buying a Sleep Number bed and came across your site and saw that you can save me money, I went to the store and tried out the p5 bed do you have one of those?”

(SNAppx2471; see SNAppx2473-2474; SNAppx2475; SNAppx2476;

SNAppx2477; SNAppx2478; SNAppx2479; SNAppx2480; SNAppx2481;

SNAppx2484; SNAppx2485; SNAppx2486-2489; SNAppx2490-2491.)

2. Factor #5: Degree of Care.

Degree of care is based on the ordinary consumer. Sensient, 613 F.3d at 769.

It often involves an analysis of the consumer’s sophistication9 and the price of the

product. SquirtCo, 628 F.2d at 1091; Northland, 115 F. Supp. 2d at 1122. In

9 Trademark law protects even the least sophisticated consumer. Gen. Mills, Inc.

v. Fage Dairy Processing Indus. S.A., 100 U.S.P.Q.2d 1584, at *13 (T.T.A.B. 2011), judgment set aside, opinion not vacated, 110 U.S.P.Q.2d 1679 (T.T.A.B. 2014); Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190, 1195 (2d Cir. 1971); Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 293 (3d Cir. 1991); Fotomat Corp. v. Cochran, 437 F. Supp. 1231, 1244 (D. Kan. 1977); McCarthy § 23:93, 23:100 (gathering cases).


29

granting summary judgment to Appellees on pre-sale trademark infringement, the

district court focused exclusively on the point of sale and held, without any

evidentiary support, that consumers who purchase “expensive” products like

mattresses are likely to exercise a greater degree of care and are less likely to be

confused. (SNAppx140-142.)10 This holding was wrong for multiple reasons.

a. Degree of Care Is Measured at the Point of Click, Where Consumers Are Not Sophisticated.

First, when analyzing pre-sale confusion, the degree of care analysis focuses

on potential consumers. Brookfield, 174 F.3d at 1062-63; Alzheimer’s, 307 F. Supp.

3d at 286; Synoptek, 309 F. Supp. 3d at 840-41.11 As such, the “relevant focus” is

not what care consumers use at the time of purchase but “the degree of care

consumers use when deciding on which link to click after the search results are

displayed on the webpage, as that is the point at which consumer confusion can

occur.” Morningware, 2012 WL 3721350, at *10 (emphasis added) (citing

Promatek, 300 F.3d at 812); see also Alzheimer’s, 307 F. Supp. 3d at 291-92 (“[T]he

proper comparison is between the ads themselves and not their destinations,” as

10 The district court relied upon two inapposite cases involving specialized niche markets. (SNAppx141-142 (citing Lovely Skin, Inc. v. Ishtar Skin Care Prods., LLC, 745 F.3d 877, 889 (8th Cir. 2014); Clam Corp. v. Innovative Outdoor Sols., Inc., No. 08-5895, 2008 WL 5244845, at *3 (D. Minn. Dec. 15, 2008).) In contrast, everyone purchases beds.

11 Degree of care amongst actual consumers only applies to point-of-sale confusion. Gen. Motors Corp. v. Keystone Auto. Inds., Inc., 453 F.3d 351, 357 (6th Cir. 2006).


30

“[t]his is how consumer confusion would manifest itself.”); Network Automation,

Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1149 (9th Cir. 2011)

(recognizing heightened risk of confusion posed by similar sponsored links where

user enters distinctive term looking for specific product).

When searching online, consumers exercise a low degree of care and are

therefore likely to get confused easily. Coca-Cola Co. v. Purdy, No. 02-1782

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.”); 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.”); Alzheimer’s, 307 F. Supp.

3d at 298-99 (finding average consumers searching online “not particularly

sophisticated”); Edible Arrangements, LLC v. Provide Commerce, Inc., No. 3:14-

CV-00250 (VLB), 2016 WL 4074121, at *10-13 (D. Conn. July 29, 2016) (finding

internet purchasing fast-paced, rapidly evolving, and often made impulsively on

small screens or apps such that consumers may not know they clicked on

competitor’s link until already on competitor’s website or later).12

12 See also PACCAR, 319 F.3d at 254 (noting that initial interest confusion afflicts both sophisticated and unsophisticated internet users); Nat’l Council of the United States Soc’y of St. Vincent de Paul, Inc. v. St. Vincent De Paul Cmty. Ctr. of Portage


31

b. Pre-Sale Confusion Applies to “Expensive” Purchases Including Mattresses.

Second, the district court disregarded that pre-sale confusion applies even to

expensive purchases. (Supra Section II.A.) The simple truth is everyone buys

mattresses and there is nothing inherently sophisticated about it. In fact, mattresses

are a type of purchase lending itself to customer confusion. See Friedman v. Sealy,

Inc., 274 F.2d 255, 261-62 (10th Cir. 1959) (noting the infrequency of mattress

purchase increases chances of confusion during purchase process); Tempur-Pedic,

2017 WL 2957912, at *7 (mattress seller’s use on its website of mattress

manufacturer’s marks created actionable initial-interest confusion); see also

Houston College of Law, 214 F. Supp. 3d at 598 (observing that, at outset of product

search, consumer likely has limited knowledge of product market and “is particularly

susceptible to confusion”).

c. The Evidence of Actual Confusion Demonstrates a Low Degree of Care.

Finally, the voluminous evidence in this case of actual confusion at the pre-

sale, post-sale, and point-of-sale stages (supra Section II.B.1.b.) establishes that the

Cty., Inc., No. 16-CV-423-BBC, 2018 WL 4232926, at *5 (W.D. Wis. Sept. 5, 2018) (finding consumers not exercising sufficient degree of care to avoid initial interest confusion, even though they may expend additional care at point of sale); Gianni Versace, S.p.A., v. Versace 19.69 Abbigliamento Sportivo SRL, 328 F. Supp. 3d 1007, 1018 (N.D. Cal. 2018) (finding consumer may have sophisticated taste yet still be confused); Faegre & Benson, 447 F. Supp. 2d at 1016 (“[I]t takes little effort to enter a website, usually one click from a search engine’s list.”).


32

degree of care actually exercised by Appellees’ customers is not high enough to

dispel the confusion generated by Appellees’ advertisements. See McCarthy § 23:95

(“[W]hen there is a strong likelihood of confusion created by other factors, even a

high level of care exercised by an ordinary purchaser in a certain setting will not be

sufficient to tip the scales in the other direction.”); Kemp v. Bumble Bee Seafoods,

Inc., 398 F.3d 1049, 1058 (8th Cir. 2005) (holding proof of actual confusion among

sophisticated buyers supports finding of confusion); Gianni Versace, 328 F. Supp.

3d at 1018.

3. Factor #4: Appellees’ Intent to Confuse.

Appellees’ pervasive and obvious intent “to pass off its goods as the product

of another raises an inference of likelihood of confusion.” SquirtCo, 628 F.2d at

1091 (citing Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 157-

58 (9th Cir. 1963)); see also McCarthy § 23:110-111.

a. Acknowledging and Celebrating the “Routine” Customer Confusion.

Directly to customers, Appellees readily admit the extent of the confusion,

stating, “Customers routinely get us confused with Sleep Number” and “[W]e get

that all the time. People ... click on our link thinking it’s Sleep Number, but it’s

really Personal Comfort Bed.” (SNAppx1280 (emphasis added); SNAppx2176-

2177 (emphasis added).) In their internal communications, Appellees acknowledge

and celebrate this confusion:


33

• Baxter (prior head of marketing) stating, “[L]ots of customer confusion, thinking we are Sleep Number.” (SNAppx1743.)

• Stenzel (head of marketing) stating in response to confused customer calls, “[That’s] a good thing.” (SNAppx1804.)

• Sales manager referring to customer confusion, “[A]dvertising works.” (SNAppx1772.)

• Customer service representative referring to customer confusion, “Maybe the new ads are working better than we thought.” (SNAppx1773.)

(See also SNAppx1744; SNAppx1747-1749; SNAppx1751-1754; SNAppx1757-

1767; SNAppx1770-1771; SNAppx1774-1784; SNAppx1786-1803; SNAppx1805-

1810.)

Additionally, Appellees foster the confusion their ads cause. In all the calls

containing customer confusion, Appellees only used language to abate that

confusion 18.1% of the time. (SNAppx453, 554:17-556:14; see SNAppx2457.)

Appellees frequently do not even attempt to correct confused customers or have

falsely told customers—in express terms—that they do sell Sleep Number’s

products:

Customer: Hi, I have a few questions about this is the Sleep Number Bed right?

[Salesperson]: Yes, Sir.

(SNAppx2326; see SNAppx2038; SNAppx2053; SNAppx2059; SNAppx2091;




34

SNAppx2415; SNAppx2424; SNAppx2450; SNAppx567-568, 1014:3-1017:3;

SNAppx575, 1045:15-1046:25; SNAppx576-577, 1050:18-1051:25; SNAppx580-

581, 1065:10-1067:5; SNAppx773, 1833:6-1834:3; SNAppx773-774, 1835:18-

1836:10; SNAppx782, 1868:18-1871:7; SNAppx910-911, 2378:5-2382:19;

SNAppx912, 2385:4-25; SNAppx915-916, 2400:2-2401:16.)

b. Abating Confusion with False Statements.

When Appellees do correct confused consumers, they often replace the

confusion with false statements designed to convince consumers to purchase their

products over Sleep Number’s. For example, in the total calls where Appellees

addressed the customer confusion, Appellees went on to make false claims 74.7%

of the time. (SNAppx453, 554:17-557:23; see SNAppx2457.) The jury found

Appellees liable for seven false statements, three of which were made “deliberately”

and “with the intent to deceive consumers,” including:

• Personal Touch is preferred 6 to 1 over Sleep Number.

• Personal Comfort sold patents to Sleep Number.

• Sleep Number paid Personal Comfort not to compete.

• Sleep Number bed parts are not replaceable/changeable.

• Personal Comfort is FDA regulated/certified/approved.

• Personal Comfort beds are tax free/have no sales tax.

(SNAppx266-320.) Miller, head of Dires, admitted that these and numerous other

false statements made to consumers were “false” or “literally false.” (See generally


35

SNAppx642-670, 1311:5-1425:14; SNAppx678-698, 1453:3-1534:4; SNAppx760-

765, 1783:1-1802:13.)

c. Appellees’ PPC Ads.

Appellees’ PPC ads extensively use Sleep Number’s exact marks and similar

variations. For example, in response to consumers searching for “Sleep Number,”

“Select Comfort,” and “Comfortaire,” Appellees display ads using iterations of those

exact trademarks, knowing Google will bold the search terms to attract customers’

eyes:

Customer’s Search Appellees’ Ad

Sleep Number Bed

sleep number

Sleep Number Bed

“Select Comfort”


36

Comfortaire

(SNAppx1818; SNAppx1830; SNAppx1832; SNAppx1898; SNAppx1921;

SNAppx519, 820:10-822:25.) Appellees’ choice in these terms is intentional. See

Aveda Corp. v. Evita Mktg., Inc., 706 F. Supp. 1419, 1429 (D. Minn. 1989) (“An

inference of an intent to trade upon the plaintiff’s good will arises if the defendants,

with knowledge of plaintiff’s mark, chose a mark similar to that mark from the

infinite number of possible marks.”). Tellingly, Appellees choose not to run these

ads using Sleep Number’s trademarks when consumers search for their brand,

“Personal Comfort”:

(SNAppx1943.)


37

Appellees have run thousands of iterations of ads prominently featuring Sleep

Number’s exact trademarks or similar variations in the top line—e.g., “Sleep 55%

Off Number,” “Select 55% Off Comfort,” “Number Bed,” “Number Mattress,”

“Number Sale,” and “Number Store.” (See generally, e.g., SNAppx1814-1939;

SNAppx1945-1993; SNAppx1994-1998; SNAppx1999-2020; SNAppx2021;

SNAppx687-688, 1490:18-1492:6; SNAppx758, 1775:9-22; see also, e.g.,

TrExAppx7126; TrExAppx7399-7513; TrExAppx7514; TrExAppx7541;

TrExAppx7606; TrExAppx7610.) Many ads resort to grammatical nonsense,

conveying muddled messages suggesting an affiliation with Sleep Number. (See id.)

Others use the exact Sleep Number mark in the display URL, e.g.

“PersonalComfortBed.Com/SleepNumber.” (See, e.g., SNAppx1945-1993;

SNAppx1999-2020; SNAppx2021.) Attempting to hide ads from Sleep Number,

Appellees turned them off in Minneapolis and Greenville because of Sleep

Number’s corporate presence there. (See SNAppx1945-1993 (depicting “Negative

Locations”); Dkt236, Hansen Aff. Ex. 3, 233:4-234:24.)

Appellees know their infringing ads drive customers to their website—almost

90% of Appellees’ website visitors arrive this way—and ultimately generate sales.

(See supra n.8; SNAppx996, 2720:3-13.) See Zerorez, 103 F. Supp. 3d at 1043-44

(infringement where defendant was aware its use of plaintiff’s trademark in PPC ads

drove business). Baxter described these and other infringing advertising methods as


38

“turnkey solutions” that would save Appellees “millions” in “up-front costs.”

(SNAppx2508; SNAppx564, 1000:13-1001:7; SNAppx678-679, 1454:4-1456:1.)

d. Appellees’ Display Ads.

At Personal Touch, and later Personal Comfort, Stenzel and Baxter developed

self-described “tricky marketing” ads, designed to trick customers into calling and

ultimately purchasing their products:

(SNAppx2509-2513; SNAppx2514; SNAppx2515-2517; SNAppx546, 929:1-

931:6; SNAppx686, 1486:6-23; SNAppx903, 2350:9-2352:10.) Because consumers

associate “Number Bed” with the famous Sleep Number brand (infra Section VIII;

SNAppx262), these ads featuring “Number Bed” demonstrate Appellees’ self-

described “tricky” intent.

e. Appellees’ SEO.

Appellees strategically target the Sleep Number mark for SEO purposes,

knowing searches for “Sleep Number”/“Sleep Number Bed” drive consumers to


39

Appellees’ website. (SNAppx2524; SNAppx2525-2530; SNAppx2531-2539;

SNAppx2540-2664; SNAppx2665-2751; SNAppx686, 1485:2-25; SNAppx687,

1488:18-1489:14.) Appellees use Sleep Number’s marks throughout their website,

including using “Sleep Number Bed” in the title tag. (SNAppx2756-2768;

SNAppx821, 2024:22-2025:9; SNAppx822-823, 2028:15-2030:5.) Appellees also

repeat Sleep Number’s trademarks no fewer than 50 times in the meta-information

of their website. (SNAppx2769-2797; SNAppx423, 437:5-19; SNAppx820-823,

2020:10-2030:23.) This supports infringement. See Australian Gold, 436 F.3d at

1239; Eli Lilly & Co. v. Nat. Answers, Inc., 233 F.3d 456, 465 (7th Cir. 2000); Tdata

Inc. v. Aircraft Tech. Publishers, 411 F. Supp. 2d 901, 907 (S.D. Ohio 2006).

Indeed, Appellees refer to these very tactics as “infringement” on their own website.

(SNAppx2762.)

Unabashedly, to advertise to potential customers and convince search engines

to increase Appellees’ organic search rankings, Appellees pay to place hyperlinks

on third-party websites using Sleep Number’s exact marks to link to Appellees’ own

website:


40

(SNAppx2798; SNAppx2802; see SNAppx2807; SNAppx2837; SNAppx2839;

SNAppx2843-2857; SNAppx2858-2888; SNAppx423-424, 440:21-441:9;

SNAppx690-691, 1503:11-1507:3; SNAppx916, 2403:19-2404:25; SNAppx1211-

1221, 54:25-155:13.)

f. Mattress Quote.

Appellees also used Sleep Number’s name and logo, admittedly without

permission, on their Mattress Quote website, which purported to be an independent

site for obtaining quotes on Sleep Number’s products but which actually sent quotes

for Appellees’ products. (SNAppx2889-2890; SNAppx2891-2894; SNAppx2231-

2232; SNAppx520, 825:2-24; SNAppx547, 933:1-934:17; SNAppx564, 1001:13-

1002:19; SNAppx825-826, 2041:2-2044:5.) Demonstrating their intentional

deception, Appellees even pretended to be “Sleep Number” in responding to


41

consumers seeking quotes from Mattress Quote. (SNAppx1350-1351;

SNAppx2895; SNAppx548-550, 935:6-943:12; SNAppx826-827, 2044:6-2046:19.)

g. Baxter’s and Stenzel’s Prior Work for Comfortaire.

Before Sleep Number acquired Comfortaire, Baxter (with Stenzel’s

assistance) designed and implemented Comfortaire’s advertising. (SNAppx517,

811:18-22; SNAppx589-591, 1102:6-1107:18; SNAppx900, 2337:12-2338:8.) That

advertising was nearly identical to what Baxter and Stenzel later ran for Personal

Touch and Personal Comfort. (Compare SNAppx2896-2906 (Comfortaire ads)

with, e.g., SNAppx1994-1998 (Personal Touch ads), SNAppx1999-2020 (Personal

Comfort ads); SNAppx527, 851:4-25.) Using ads to target Sleep Number’s

customers is the common theme. (SNAppx2518; SNAppx2519; SNAppx2520;

SNAppx2521; SNAppx527, 850:24-851:25; SNAppx527-528, 853:2-855:21.)

While at Comfortaire, Baxter described that same advertising as “misleading

and deceptive” (in an email first reviewed by Stenzel). (SNAppx2907-2910;

SNAppx522-523, 831:23-835:23; SNAppx591, 1107:19-23; SNAppx902, 2346:14-

2347:8.) Baxter even claimed a competitor infringed Comfortaire’s trademarks by

advertising “comfort air mattress” (SNAppx2911; SNAppx518, 815:3-818:18),

which Baxter admitted was similar to Personal Comfort’s “Comfort Air Beds on

Sale” ad (SNAppx1921; SNAppx518, 818:4-18; SNAppx920, 2418:7-14).


42

After Sleep Number asserted its rights regarding Comfortaire’s advertising

and Comfortaire’s President requested Baxter cease such advertising, Baxter

remained undeterred, boasting he was willing to get his “wrist slapped a few

times.” (SNAppx2912; SNAppx528, 856:13-25; SNAppx591, 1107:24-1110:4;

SNAppx599-560, 1142:2-1143:10.) Baxter, with Stenzel, thereafter operated

Personal Touch and Personal Comfort with the same self-described “misleading and

deceptive” ads.

h. Cease and Desist Letters.

While operating Personal Touch and Personal Comfort, Appellees exchanged

cease and desist letters with Sleep Number related to their advertising, yet chose to

continue their conduct because they had “liability protection.” (SNAppx2914;

SNAppx2915-2950; SNAppx467-468, 611:25-617:14; SNAppx905, 2357:15-

2358:1.) At trial, Appellees admitted that, when responding to the letters, they used

aliases, discussed fabricating evidence, and even outright lied about their

involvement with Personal Comfort. (SNAppx1745; SNAppx2922-2924;

SNAppx2925; SNAppx2937; SNAppx2938; SNAppx2939; SNAppx2947-2949;


2353:3-2354:13; SNAppx906, 2362:8-15.) Appellees’ disregard of Sleep Number’s

letters and their admittedly-dishonest responses demonstrate intent. See Zerorez,

103 F. Supp. 3d at 1049; Exxon Mobil Corp. v. Future Grp. LLC, No. 1:12CV0456


43

AWI DLB, 2012 WL 2553560, at *3 (E.D. Cal. June 29, 2012); Bellagio Jewelry,

Inc. v. Croton Watch Co., No. CV 06-6672 ODW (RZx), 2008 WL 3905895, at *10

(C.D. Cal. Aug. 20, 2008).

4. Factor #3: Competition Between the Parties.

Appellees concede they compete with Sleep Number, including telling

consumers they are Sleep Number’s biggest/leading competitor. (See, e.g.,

SNAppx1780; SNAppx2757; SNAppx2766-2768; SNAppx2089; SNAppx2109;

SNAppx2161; SNAppx2172; SNAppx2233; SNAppx2263; SNAppx735, 1682:9-

23; SNAppx799, 1937:16-1938:7; SNAppx811, 1984:11-19.) Both Sleep Number

and Appellees operate in the same channels—selling air beds online and over the

phone—throughout the United States. (SNAppx400, 345:17-23; SNAppx515,

804:6-10; SNAppx683, 1475:9-16.) Appellees’ website also directly compares

Appellees’ products to Sleep Number’s. (SNAppx2766-2768.) See George & Co.,

LLC v. Xavier Enters., Inc., No. CIV 09-2973 DWF/RLE, 2009 WL 4730331, at *4

(D. Minn. Dec. 4, 2009) (display of parties’ products on same webpage and in close

proximity weighed in favor of infringement).

5. Factor #2: Similarity Between Appellants’ Marks and Appellees’ Use.

“Where the products are closely related, less similarity in the trademarks is

necessary to support a finding of infringement.” SquirtCo, 628 F.2d at 1091; David

Sherman Corp. v. Heublein, Inc., 340 F.2d 377, 382 (8th Cir. 1965). When a


44

company uses a trademark owner’s exact marks on competitive goods, the

infringement is clear, the case is “open and shut,” and likelihood of confusion is

presumed. Dunkin’ Donuts Inc. v. N. Queens Bakery, Inc., 216 F. Supp. 2d 31, 44

(E.D.N.Y. 2001); N. PCS Servs., LLC v. Sprint Nextel Corp., No. CIV. 05-2744

(RHK/RLE), 2007 WL 951546, at *10 (D. Minn. Mar. 27, 2007); Solutech, Inc., v.

Solutech Consulting Servs., Inc., 153 F. Supp. 2d 1082, 1088 (E.D. Mo. 2000).

Here, Appellees’ use of Sleep Number’s exact marks, and confusingly similar

variations, is pervasive and wide-ranging. (Supra Section II.B.3.) This is an open

and shut infringement case.

6. Factor #1: Strength of Appellants’ Marks.

The strength of a trademark depends on its conceptual and commercial

strength. Roederer v. J. Garcia Carrion, S.A., 732 F. Supp. 2d 836, 864 (D. Minn.

2010). Conceptual strength is based on classification in four categories: generic,

descriptive, suggestive, or arbitrary/fanciful. Id. Commercial strength is “based on

the ‘public recognition and renown’ of the mark as evidenced by the extent of

advertising, sales volume, features and reviews in publications and survey

evidence.” Id. at 866-67.

Sleep Number’s trademarks are conceptually strong because they do not

describe the products or services for which the marks are used, do not directly refer

to beds, bedding products, retail services, or stores, and do not specifically describe


45

the product’s features, such as adjustability or being an air bed. Instead, the marks

require “some measure of imagination” of how the marks may relate to the products

and, accordingly, are suggestive, inherently distinctive, and entitled to protection.

See Roederer, 732 F. Supp. 2d at 865; Zerorez, 103 F. Supp. 3d at 1041-42; Two

Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992).

Sleep Number’s trademarks are also commercially strong:

• The Sleep Number brand was coined in 2001 and has been used in all of Sleep Number’s marketing since then. (SNAppx399, 344:8-16.)

• The Select Comfort trademarks have been registered on the principal register since 1990, 1996, and 2004; the Sleep Number trademarks have been registered on the principal register since 2002 and 2003; and the Comfortaire trademark has been registered on the principal register since 1984. (SNAppx1247-1267.)

• There are numerous goods sold in various sales channels under the Sleep Number mark, including beds, bedding, sleep solutions, temperature layers, sleep tracking technology, and pillows. (SNAppx399, 344:2-22; SNAppx885-886, 2279:18-2281:8.)

• Select Comfort operated over 550 Sleep Number branded retail stores in all fifty states at the time of trial, and Sleep Number has been a nationwide advertiser of Sleep Number products nationwide in all major media categories—including TV, print, radio, and online—for years. (SNAppx400, 348:12-24; SNAppx886, 2281:15-22.)

• Sleep Number commercials have run during the Super Bowl and Sleep Number was featured in a GEICO Insurance commercial at GEICO’s request, which GEICO ran for approximately five years. (SNAppx401, 349:14-350:2, 351:14-22 (discussing TrExAppx1230-1231).)

• Sleep Number spent approximately $1.8 billion in advertising Sleep Number products since 2001, including over $100 million in advertising Sleep Number products in 2012 alone, and achieved over $1 billion in sales of Sleep Number products in 2012. (SNAppx405,


46

367:3-368:9 (discussing TrExAppx1277); SNAppx890, 2297:4-9; see also TrExAppx1280, TrExAppx1282.)

• Millions of people have purchased and slept on a Sleep Number bed. (SNAppx406, 371:4-10; see also TrExAppx1275, TrExAppx1309.)

• Sleep Number advertisements received approximately 7 billion television impressions in 2011 and 2012, 1.2 billion radio impressions in 2011 and 2012, 2 billion magazine impressions from 2009 to 2012, and 5 billion newspaper impressions from 2009 to 2012. (SNAppx402-403, 354:23-359:1 (discussing TrExAppx1267-1273); see also TrExAppx1259-1266.)

• Sleep Number had 417 million media mention impressions in 2011 and 396 million media mention impressions in 2012. (SNAppx977-978, 2644:2-2646:6 (discussing TrExAppx5364-5368); see also TrExAppx5374-5971.)

• Sleep Number had 398 million social media impressions in 2011 and 788 million social media impressions in 2012, with 141,000 Facebook and Twitter followers by the end of 2012. (SNAppx978, 2647:19-2649:6 (discussing TrExAppx5369-5373).)

• Millions of people search online for iterations of Sleep Number or Select Comfort each year and visit www.sleepnumber.com (previously www.selectcomfort.com) each year. (SNAppx420-421, 428:14-429:18; SNAppx424-445, 444:7-445:20 (discussing TrExAppx1312, TrExAppx1319).)

• Sleep Number has received numerous awards and recognition from reputable sources like Consumer Reports, Furniture Today, Good Housekeeping, J.D. Power, and the Consumer Electronics Show, as well as extensive media and pop culture references in comics, newspaper articles, and on popular television shows like Ellen, 30 Rock, Duck Dynasty, The Tonight Show with Jay Leno, Late Night with Jimmy Fallon, The Colbert Report, and Jeopardy!. (SNAppx890-891, 2299:6-2301:19; SNAppx974, 2630:1-2631:21; SNAppx976, 2638:19-2639:12; SNAppx977, 2642:22-2644:1; SNAppx978, 2646:7-2647:18; SNAppx978-981, 2649:10-2658:8 (discussing TrExAppx5121-5132, TrExAppx5333-5344, TrExAppx5351-5363).)


47

• Sleep Number has achieved high customer satisfaction and recommendations from customers as compared to its competitors. (SNAppx405-406, 368:10-370:23 (discussing TrExAppx1587-1607).)

• In late 2012, Sleep Number had achieved 21% unaided awareness and 73% aided awareness. (SNAppx404, 362:9-20 (discussing TrExAppx1680-1638).) A 2011 survey by Comfortaire revealed 87% awareness. (SNAppx589, 1099:19-1100:20 (discussing TrExAppx6060-6089).) A 2015 survey by Appellees’ survey expert revealed over 90% awareness. (SNAppx879, 2253:7-2256:13.)

• Miller testified Sleep Number is the most well-known brand in the adjustable air bed market. (SNAppx637, 1292:11-13.)

• Before it changed its name, Select Comfort was recognized in industry publications and was known as the maker of Sleep Number and Comfortaire products. (SNAppx399, 343:23-344:10; SNAppx410, 387:8-388:3; SNAppx464-466, 601:11-608:14; SNAppx588, 1095:4-10; see also TrExAppx5137-5334.)

• The Comfortaire mark has been used for over three decades and has been backed through significant advertising efforts, including over $7 million since 2008. (SNAppx588, 1097:1-22.)

• Comfortaire sold adjustable air beds and related products under the Comfortaire brand for decades, and products bearing the Comfortaire mark were available in over 400 storefronts nationwide. (SNAppx466, 607:20-609:17; SNAppx587-588, 1093:17-1096:12.)

• Since 2008, Comfortaire achieved almost $80 million in sales. (SNAppx588, 1097:18-19.)

• The jury found the Sleep Number® mark famous. (SNAppx262.)

See Roederer, 732 F. Supp. 2d at 866-68 (finding high commercial strength where

mark “achieved significant recognition by the general public over the past two

decades”); 3M Co. v. Mohan, No. CIV. 09-1413 ADM/FLN, 2010 WL 5095676, at


48

*17 (D. Minn. Nov. 24, 2010) (finding marks commercially strong when over $5

million in sales per year).

***

By granting summary judgment to Appellees on pre-sale confusion, the

district court erroneously instructed the jury that Sleep Number was required to

prove a likelihood of confusion at the time of purchase (SNAppx207-208)—a much

higher standard than that imposed on trademark owners by other courts.

Compounding the issue, the court failed to issue jury instructions (1) indicating that

confusion and degree of care should be measured at the point of click; (2) defining

time of purchase to include Appellees’ website/call center; (3) indicating that other

types of confusion are relevant to a finding of time-of-purchase confusion; (4)

defining an “appreciable” number of confused consumers. (SNAppx1094, 3105:19-

3107:15; SNAppx1096, 3114:6-3115:2; compare Dkt448 at 42-43, 69-70, 71 with

SNAppx193-256.) Addressed below, the court also committed other errors

prejudicing Sleep Number’s trademark infringement case. (Infra Section III-IV.)

The district court’s ruling allowed Appellees not only to continue their bait-

and-switch operation, but to replace the confusion with outright lies to generate sales

at Sleep Number’s expense and damage Sleep Number’s reputation. In other words,

Appellees received a court-approved “free pass” to confuse consumers and damage

Sleep Number pre-sale unless and until Sleep Number proved the confusion


49

remained through the time of purchase. The Eighth Circuit should reverse the

district court’s summary judgment holding and, at a minimum, order a new trial on

infringement.

III. The District Court Improperly Allowed Appellees’ Expert Witness to Testify Regarding the Essence of Confusion.

The district court allowed Fong to testify, over objection, that the essence of

confusion is not confusion as to where consumers can buy a product, but is instead

only source confusion. (SNAppx864-866, 2193:24-2203:8; SNAppx876, 2241:10-

21.) The district court allowed such testimony only because it would “instruct the

jury on the essence of confusion,” but it later failed to do so. (SNAppx873, 2230:12-

2231:6; SNAppx876, 2241:10-21; SNAppx1093, 3104:15-22; SNAppx1096,

3113:10-24; see SNAppx206-208.) This left the jury to improperly consider Fong’s

opinion as a correct statement of law and to believe that actionable confusion is

restricted to source confusion, which is plainly wrong. See 15 U.S.C. §§ 1114, 1125;

see also Insty*Bit, Inc. v. Poly-Tech Indus., Inc., 95 F.3d 663, 671-72 (8th Cir. 1996)

(noting well-settled principle that association in minds of consumers, not merely

source confusion, is sufficient); Nat’l Council, 2018 WL 4232926, at *5 (“[G]iven

the strong similarities between the parties’ marks, products and services, there is a

significant risk that consumers are relying on a mistaken belief that defendant’s

organization is associated with plaintiff.”).


50

The standard of review on this issue is abuse of discretion. US Salt, Inc. v.

Broken Arrow, Inc., 563 F.3d 687, 689 (8th Cir. 2009); McCoy v. Augusta Fiberglass

Coatings, Inc., 593 F.3d 737, 744 (8th Cir. 2010). The district court abused its

discretion: first, by allowing Fong to incorrectly construe the Lanham Act; and

second, by refusing to issue a jury instruction explaining that actionable confusion

includes confusion as to where consumers can buy a product, not merely confusion

as to the source of the product.

IV. The District Court Improperly Refused to Apply the Burden of Proof to Appellees on the Issue of Abatement of Confusion.

Because the district court improperly ruled that pre-sale confusion is not

actionable, Appellees heavily relied on a defense that any confusion caused by their

advertising was abated by the time of purchase. The district court incorrectly refused

to shift the burden to Appellees on abatement, the standard of review on which is de

novo. See Grage v. N. States Power Co.-Minnesota, 813 F.3d 1051, 1054 (8th Cir.

2015); Garment v. Zoeller, 35 F. App’x 22, 26 (2d Cir. 2002).

After a trademark infringement plaintiff has shown likelihood of confusion at

any point, the burden shifts to the infringing party who must satisfy a heavy burden

that its abatement efforts were successful. See Meridian Mut. Ins. Co. v. Meridian

Ins. Grp., Inc., 128 F.3d 1111, 1119 (7th Cir. 1997) (“overwhelming proof” needed

to refute evidence of actual confusion); Clinique Labs., Inc. v. Dep Corp., 945 F.

Supp. 547, 556 (S.D.N.Y. 1996) (defendant “bears a heavy burden to show that its


51

disclaimer or comparative advertisement will significantly reduce a likelihood of

confusion” and “has an affirmative duty to come forward with evidence sufficient to

demonstrate” reduction of such confusion); Harley-Davidson Motor Co. v. Iron

Eagle of Cent. Fla., Inc., 973 F. Supp. 1421, 1425 (M.D. Fla. 1997) (defendant’s act

of explaining to customers it was not affiliated with plaintiff, when asked, was

insufficient to alleviate the likelihood of confusion); First Nat’l Bank in Sioux Falls

v. First Nat’l Bank S. Dakota, No. CIV 06-4101, 2010 WL 3607494, at *2 (D.S.D.

Sept. 9, 2010) (defendant “did not meet its burden of showing an attempt to avoid a

substantial likelihood of consumer confusion by adding a disclaimer”); Home Box

Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311, 1315-17 (2d Cir.

1987); Basile, S.p.A. v. Basile, 899 F.2d 35, 38 (D.C. Cir. 1990); see also

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 828-29 (9th Cir. 2011).13

Following the district court’s order on pre-sale confusion, Sleep Number

requested a jury instruction stating it was Appellees’ burden by clear and convincing

evidence to show that Appellees abated the confusion caused by their advertising.

(SNAppx1107, 3158:10-3160:9; see also Dkt448 at 42-43.) The district court

initially included an abatement instruction but, minutes before closing arguments,

13 A “heavy burden” is equated with a clear and convincing evidence standard. See Healey v. I-Flow, LLC, 853 F. Supp. 2d 868, 875 (D. Minn. 2012); Multi-Tech Sys., Inc. v. Hayes Microcomputer Prods., Inc., 800 F. Supp. 825, 833 (D. Minn. 1992).


52

removed the instruction despite indicating it was not “conceding [the already-drafted

instruction] would be an erroneous statement of law.” (SNAppx1120-1121,

3208:22-3213:13; SNAppx1123, 3219:23-3220:16.) The district court found Sleep

Number’s abatement burden argument was “appropriate argument,” yet refused to

issue the instruction because of the erroneous belief that “the overall instructions

make it crystal clear what happens if [the confusion] is unabated, with or without

that instruction.” (Id.) But none of the other instructions imposed any abatement

burden on Appellees or addressed confusion prior to purchase. (See SNAppx193-

256.) Compounding the court’s error, Appellees’ counsel emphasized that

Appellees bore no burden and Appellees’ conduct did not matter because customers

were ultimately happy with their beds. (SNAppx1140, 3287:2-13; SNAppx1140-

1141, 3289:21-3290:11.)

The district court’s refusal was even more prejudicial because, if Sleep

Number could have pursued a pre-sale confusion claim, liability would have been

established regardless of any abatement effort. See Australian Gold, 436 F.3d at

1240 (rejecting defendant’s attempt to abate any actual consumer confusion by way

of website disclaimers, which “cannot prevent the damage of initial interest

confusion”). The district court’s rulings improperly required Sleep Number to

prove: (1) likelihood of confusion existed; (2) Appellees did not abate it; and (3)

confusion continued through the time of purchase. This is inconsistent with the


53

Lanham Act and case law. (Supra Section II.A.) Therefore, despite the voluminous

evidence of Appellees’ confusing advertising (supra Section II.B.), Appellees

received another court-approved free pass to confuse customers and trade on Sleep

Number’s goodwill.

V. The District Court Improperly Admitted Appellees’ I rrelevant and Prejudicial Bed Demonstration.

Despite the discovery and damages period ending in 2014, the district court

permitted Miller (head of Dires) to conduct a lengthy physical demonstration of the

supposed ways the 2017 Personal Comfort A8 bed is superior to the 2017 Sleep

Number i8 bed. (SNAppx702-703, 1550:3-1552:25; SNAppx745-754, 1720:22-

1759:12.) This is reviewed for abuse of discretion. Hale v. Firestone Tire & Rubber

Co., 756 F.2d 1322, 1332-33 (8th Cir. 1985).

Miller’s demonstration was wholly irrelevant to the claims and defenses at

trial and severely prejudiced Sleep Number, particularly considering discovery and

damages for this case ended in 2014, yet the beds shown were 2017 models. This

was a trial concerning claims for federal trademark infringement and false

advertising—not a focus group presentation about whose 2017 beds were superior.

Yet, the district court let Appellees present the jury with what might otherwise

amount to a live infomercial for Personal Comfort beds. This allowed Appellees to

argue that, even if consumers were confused or deceived by Appellees’ conduct,

Appellees’ “preferred” bed meant there was no harm, no foul. (SNAppx1137,


54

3274:1-3275:5; SNAppx1138, 3279:12-13; SNAppx1140-1141, 3289:21-3290:11;

SNAppx1147, 3314:16-17.)

By Appellees’ own account, Miller’s lengthy sales pitch made a significant

impression on the jury. See TheSleepStudies.com, Sleep Number Competition: Our

Top 3 Picks from Personal Comfort Beds (2018), https://thesleepstudies.com/sleep-

number-competition/ (Miller reporting jurors approached him after trial to say

Personal Comfort beds “w[ere] clearly better”); PRNewswire, Personal Comfort

Again Defeats Serial Litigant Sleep Number in $17 Million Lawsuit (Personal

Comfort Press Release) (Nov. 1, 2017), https://www.prnewswire.com/news-

releases/personal-comfort-again-defeats-serial-litigant-sleep-number-in-17-

million-lawsuit-300547558.html (same; stating after Miller’s bed demonstration

testimony, “jury rejected Sleep Number’s false advertising claims”); Finsmes.com,

Sleep Number Losses [sic] $17 Million to Personal Comforts Bed in Lawsuit (Blog)

(Feb. 14, 2018), http://www.finsmes.com/2018/02/sleep-number-losses-17-million-

to-personal-comforts-bed-in-lawsuit.html (referring to bed model comparison,

stating, “This little show made it possible for the jury to analyze and reject ... Sleep

Number’s false-promoting claims” and was the “prime reason” for the judgment).

After the trial, Appellees advertised the jury’s verdict as a referendum on the

quality of their beds, declaring in a promotional video advertisement that “12 out of

12 jurors agreed, the A8 is a superior product to the Sleep Number i8.” (Dkt657 at


55

23-24 (post-trial brief describing Appellees’ video).) Appellees’ counsel informed

the district court that this advertisement was supported by post-verdict juror

comments and a juror email. (SNAppx1244-1246, 94:25-96:2.) This reflects

Appellees’ own acknowledgement of the outsized impact Miller’s unwarranted and

irrelevant presentation had on the jury.

The jury was not asked to consider which party’s bed models (particularly

whose 2017 bed models) were “better” or “superior.” Rather, the jury was tasked

with deciding whether, from 2012-2014, Appellees made false claims to consumers

and infringed Sleep Number’s trademarks. (SNAppx257-322.) Miller’s

presentation confused and distracted the jury from properly considering these issues

and was plainly inadmissible. See Fed. R. Evid. 403; Hale v. Firestone Tire &

Rubber Co., 756 F.2d 1322, 1332-33 (8th Cir. 1985) (abuse of discretion given

differing product models). Further, as Appellees promoted, the demonstration had

a substantial influence on the jury’s verdict. See Nichols v. Am. Nat’l Ins. Co., 154

F.3d 875, 889-90 (8th Cir. 1998). The cumulative effect of the testimony prejudiced

Sleep Number’s ability to have its case fairly considered on the merits, resulted in a

lack of confidence in the trial outcome, and warrants reversal or, at least, a new trial.

Id.


56

VI. The District Court Improperly Denied Appellants’ Mo tion for Judgment as a Matter of Law on Appellants’ False Advertising Claims for Which Craig Miller Admitted Falsity.

Both pre-verdict and post-verdict, Sleep Number moved for judgment as a

matter of law on the false advertising claims for which Miller (head of Dires)

admitted falsity, which the district court improperly denied. (SNAppx1082-1083,

3059:10-3064:2; SNAppx1085-1086, 3072:1-3075:16; SNAppx1087-1088, 3080:3-

3081:10; SNAppx1092, 3100:2-9; SNAppx342-346.) The evidence at trial

established liability for false advertising under the Lanham Act (and MDTPA). See

15 U.S.C. § 1125(a)(1); Minn. Stat. § 325D.44; Porous Media Corp. v. Pall Corp.,

110 F.3d 1329, 1332 (8th Cir. 1997); Buetow v. A.L.S. Enters., Inc., 650 F.3d 1178,

1182-83 (8th Cir. 2011). This is reviewed de novo. Pittari v. Am. Eagle Airlines,

Inc., 468 F.3d 1056, 1061 (8th Cir. 2006).

A. Appellees Made False Statements.

When a defendant admits to a statement’s falsity, the analysis of the

false/misleading element ends. See VBS Distribution, Inc. v. Nutrivita Labs., Inc.,

697 F. App’x 543, 544-45 (9th Cir. 2017) (reversing denial of preliminary

injunction; relying on admission by defendant’s CEO); Time Warner Cable, Inc. v.

DIRECTV, Inc., 497 F.3d 144, 153-54 (2d Cir. 2007) (affirming preliminary

injunction where DIRECTV admitted claim would be a misrepresentation);

SharkNinja Operating LLC v. Dyson Inc., 200 F. Supp. 3d 281, 288 (D. Mass. 2016)


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(holding advertisement literally false based on admission); Schick Mfg., Inc. v.

Gillette Co., 372 F. Supp. 2d 273, 285–86 (D. Conn. 2005) (same).

At trial, Miller repeatedly admitted the following five statements (for which

the jury did not find liability) are false or literally false:

• Personal Comfort is Preferred 6 to 1 over Sleep Number. (SNAppx660, 1383:21-1384:5.)

• Personal Comfort was, or we were, involved in designing or developing Sleep Number beds (or any specific model of Sleep Number beds). (SNAppx642, 1311:23-1313:10; SNAppx643-648, 1337:16-22; SNAppx650-51, 1345:25-1346:16; SNAppx650, 1347:4-17; SNAppx661, 1387:16-21; SNAppx664, 1398:17-1399:19; SNAppx664-665, 1401:22-1402:9; SNAppx665, 1404:1-19; SNAppx666, 1406:16-18; SNAppx669, 1421:1-9; SNAppx760, 1783:18-1784:22.)

• Personal Comfort has, or we have, been in the business since the 1970s and/or longer than Sleep Number. (SNAppx642, 1313:11-16; SNAppx643, 1315:4-10; SNAppx647, 1332:3-1333:1; SNAppx653, 1354:17-1355:1; SNAppx655, 1362:3-12; SNAppx660-61, 1385:18-1386:1; SNAppx661, 1388:3-9; SNAppx662, 1391:3-1392:4, 1392:23-1393:2; SNAppx663, 1394:9-15, 1395:12-25, 1397:2-17; SNAppx665-666, 1405:3-1406:15; SNAppx666, 1409:2-23; SNAppx667, 1410:17-1411:10, 1412:21-14:13:17; SNAppx669, 1419:12-23; SNAppx669-670, 1421:22-1423:9; SNAppx737, 1690:9-12; SNAppx761, 1784:23-1785:2, 1785:23-1786:3; SNAppx761-762, 1787:11-1788:1.)

• Personal Comfort beds are “medical grade” (or certain components are “medical grade”— e.g. foam, chambers). (SNAppx657-658, 1372:19-1374:5; SNAppx658, 1375:22-1376:12; SNAppx661, 1388:10-1389:14; SNAppx663, 1396:7-16; SNAppx667-668, 1414:10-1415:20.)

• Personal Comfort beds are Made in the USA. (SNAppx643, 1315:11-19; SNAppx656, 1369:17-20; SNAppx658-669, 1376:22-1379:24; SNAppx661, 1387:1-11; SNAppx661-662, 1389:24-1390:4; SNAppx662-663, 1393:20-1394:8; SNAppx667, 1412:3-16; SNAppx667-668,


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1413:24-1414:6; SNAppx670, 1424:13-1425:10; SNAppx761, 1786:4-13.)

Accordingly, each statement was proven to be literally false.

B. The Statements Were Sufficiently Disseminated.

Miller admitted Appellees communicated these false statements to customers,

including in calls resulting in sales. (SNAppx650, 1342:23-1343:13; SNAppx650-

651, 1345:18-1347:17; SNAppx654-655, 1361:18-1362:12; SNAppx656, 1367:5-

1369:20; SNAppx657-658, 1372:19-1374:5; SNAppx658, 1375:22-1376:12;

SNAppx658-669, 1376:22-1379:24; SNAppx660-663, 1383:12-1395:25;

SNAppx664, 1398:6-1400:1; SNAppx665, 1401:10-1402:19; SNAppx665-666,

1405:3-1406:15; SNAppx666-668, 1409:2-1417:8; SNAppx669-670, 1419:12-

1425:14; SNAppx678, 1453:3-20.)

In their customer calls, Appellees made false statements pervasively, in over

50% of the 3,750 sales calls. (SNAppx456, 566:1-567:23; see SNAppx2457.)

Appellees also disseminated false statements on their website and in customer emails

and live chats. (SNAppx2758; SNAppx2760; SNAppx2767; see generally

SNAppx1268-1532; SNAppx1533-1737.) This evidence establishes dissemination.

See Porous Media Corp. v. Pall Corp., 173 F.3d 1109, 1121 (8th Cir. 1999);

Eastman Chem. Co. v. PlastiPure, Inc., 969 F. Supp. 2d 756, 763 (W.D. Tex. 2013);

Zeneca Inc. v. Eli Lilly & Co., No. 99 CIV. 1452 (JGK), 1999 WL 509471, at *31

(S.D.N.Y. July 19, 1999).


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C. The Statements Are Likely to Deceive.

Because the statements are admittedly literally false and/or deliberately

deceptive statements made in comparative advertising, deception is presumed. See

EFCO Corp. v. Symons Corp., 219 F.3d 734, 740 (8th Cir. 2000); Porous Media,

110 F.3d at 1333; Solvay Pharm., Inc. v. Glob. Pharm., 419 F. Supp. 2d 1133, 1144

(D. Minn. 2006); Ott v. Target Corp., 153 F. Supp. 2d 1055, 1072 (D. Minn. 2001).

Further, the evidence shows Appellees’ statements are likely to deceive. Customers

have purchased products from Appellees after hearing these false statements (see

SNAppx2457) and have confirmed their belief in them (see SNAppx2951-2957).

D. The Statements Are Material.

Because the statements are admittedly literally false, were deliberately made

in a comparative advertisement, and/or misrepresent a product’s inherent quality or

characteristic, materiality is presumed. Wildlife Research Ctr., Inc. v. Robinson

Outdoors, Inc., No. 02-2773(DSD/SRN), 2005 WL 2648036 (D. Minn. Sept. 13,

2005) (Jury Instruction No. 22); Johnson & Johnson Vision Care, Inc. v. Ciba Vision

Corp., 348 F. Supp. 2d 165, 180 (S.D.N.Y. 2004); Genderm Corp. v. Biozone Labs.,

No. 92 C 2533, 1992 WL 220638, at *2 (N.D. Ill. Sept. 3, 1992); L. & J.G. Stickley,

Inc. v. Cosser, 255 F. App’x 541, 543 (2d Cir. 2007); Cashmere & Camel Hair Mfrs.

Inst. v. Saks Fifth Ave., 284 F.3d 302, 311-12 (1st Cir. 2002); Johnson & Johnson

Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1250 (11th Cir. 2002);


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Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 462 (5th Cir.

2001).

Further, the evidence shows Appellees’ false statements are material.

Appellees trained salespersons to make them, admitted they were effective selling

points and meant to convince customers to purchase, and/or received inquiries or

comments from customers about them. (See, e.g., SNAppx1397; SNAppx1432;

SNAppx1492-1493; SNAppx1648; SNAppx1671; SNAppx1699; SNAppx1708;

SNAppx1721; SNAppx2062; SNAppx2089; SNAppx2120-2127; SNAppx2131;

SNAppx2172-2174; SNAppx2189; SNAppx2407; SNAppx2479; SNAppx2482-

2483; SNAppx2493-2498; SNAppx2958; SNAppx2959-2960; SNAppx2961-2962;

SNAppx2963; SNAppx2964-2965; SNAppx2966; SNAppx2968-2975;

SNAppx2976-2977; SNAppx2978; SNAppx2980-2981; SNAppx2982;

SNAppx771-772, 1826:18-1828:7; SNAppx983, 2669:20; SNAppx1199-1201,

47:16-52:22.) This evidence establishes materiality. See Lincoln Diagnostics, Inc.

v. Panatrex, Inc., No. 07-CV-2077, 2009 WL 3010840, at *2, 8 (C.D. Ill. Sept. 16,

2009); POM Wonderful LLC v. Purely Juice, Inc., No. CV-07-02633CAS(JWJX),

2008 WL 4222045, at *11-12 (C.D. Cal. July 17, 2008), aff'd, 362 F. App’x 577 (9th

Cir. 2009).


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E. The Statements Are Likely to Cause Harm.

Because the statements are admittedly literally false and/or deliberately

deceptive statements made in comparative advertisements, harm is presumed. See

Solvay Pharm., 419 F. Supp. 2d at 1144; Porous Media, 110 F.3d at 1333-36; Ott,

153 F. Supp. 2d at 1072-73; Select Comfort Corp. v. Tempur Sealy Int’l, Inc., No.

CV 13-2451 (DWF/SER), 2016 WL 5496340, at *3 (D. Minn. Sept. 28, 2016).

Further, since customers have purchased products from Appellees after hearing these

statements (see SNAppx2457), Sleep Number has been and is likely to be harmed.

Because the evidence established the foregoing elements, the district court

should have granted judgment as a matter of law to Sleep Number.

VII. The District Court Improperly Refused to Apply the Burden of Proof to Appellees on Their Number Bed Counterclaim.

Appellees asserted a declaratory judgment counterclaim that Number Bed is

generic or descriptive, incapable of acquiring secondary meaning, and non-

infringing. (SNAppx107-109, ¶¶ 9-19; SNAppx367, 215:19-21.) The district court

refused to apply the burden of proof to Appellees on this counterclaim.

(SNAppx135; compare Dkt448 at 13-14, 143 with SNAppx193-256.)

The standard of review on a burden of proof is de novo. Grage, 813 F.3d at

1054; Garment, 35 F. App’x at 26. The district court erred in refusing to apply the

burden to Appellees who affirmatively asserted through their counterclaim that

Number Bed is generic or descriptive. See Anheuser-Busch, Inc. v. John Labatt Ltd.,


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89 F.3d 1339, 1344-45 (8th Cir. 1996); Midas Life Settlements, LLC v. BNC Nat’l

Bank, No. CIV. 11-841 ADM/AJB, 2011 WL 5008009, at *7 (D. Minn. Oct. 20,

2011).

VIII. The District Court Improperly Denied Appellants’ Mo tion for Judgment as a Matter of Law on Appellees’ Number Bed Counterclaim.

Even if Sleep Number bore the burden of proof on Appellees’ Number Bed

counterclaim, it should have prevailed on the claim. Both pre-verdict and post-

verdict, Sleep Number moved for judgment as a matter of law, which the district

court improperly denied. (SNAppx1083-1084, 3064:10-3067:4; SNAppx1086-

1087, 3075:17-3078:9; SNAppx1088, 3081:12-3083:5; SNAppx1091, 3094:8-21;

SNAppx338-341.) This denial is reviewed de novo. Pittari, 468 F.3d at 1061.

A party obtains trademark rights in a phrase when it acquires distinctiveness

or secondary meaning (i.e. is associated with a single source) in the minds of

consumers. Gateway, Inc. v. Companion Prod., Inc., 384 F.3d 503, 508 (8th Cir.

2004); McCarthy § 15:1. The evidence at trial established that Number Bed

possesses secondary meaning. See id.

First, an expert survey conducted by Sarah Butler confirmed that nearly half

of respondents associated “Number Bed” with one company,14 that a substantial

14 It does not matter whether a consumer knows the name of the single source with which it associates the mark. McCarthy § 15:8.


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number identified Sleep Number/Select Comfort as that company, and that, for those

who stated an opinion, 84.7% identified “Number Bed” as associated with one

company. (SNAppx947, 2522:19-2523:22; SNAppx949, 2530:2-2533:10.) These

results show secondary meaning. (SNAppx949, 2533:11-22.)15

Second, Poret’s survey, confirming Appellees’ “Number Bed” ads confuse

customers searching for Sleep Number (SNAppx841, 2102:19-2105:6), supports

secondary meaning. McCarthy § 15:37.

Third, consumers themselves use the phrase “Number Bed” to refer to Sleep

Number, and Appellees understand them to mean Sleep Number. (See, e.g.,




SNAppx2453; SNAppx576, 1047:23-1048:20; SNAppx640-642, 1305:6-1311:1;

SNAppx784-785, 1878:13-1880:2.)

Fourth, Appellees and competitors use “Number Bed” to refer to Sleep

Number. (See SNAppx2986; SNAppx2989; SNAppx535-536, 886:24-887:2;

15 See Warner Bros. Entm’t v. Global Asylum, Inc., No. CV 12-9547 PSG (CWx), 2012 WL 6951315, at *4 (C.D. Cal. Dec. 10, 2012), aff’d, 544 F. App’x 683 (9th Cir. 2013) (47.75%); Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 795 (5th Cir. 1983) (23% and 28%), abrogated on other grounds, 543 U.S. 111 (2004); Monsieur Henri Wines, Ltd. v. Duran, 204 U.S.P.Q. 601, 605 (T.T.A.B. 1979) (37%).


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1497:6-21.)16 Indeed, no one used the phrase until Sleep Number coined and

marketed its Sleep Number beds. (See SNAppx399, 344:8-16; SNAppx594, 1119:4-

8; SNAppx636-637, 1287:2-1293:25.)

Fifth, Appellees acknowledge in all forms of marketing and communication

that the generic product category is not Number Beds, but is instead “airbeds,”

“adjustable air beds,” “air mattresses”:

(SNAppx2758 (Personal Comfort website); see SNAppx1268-1532, SNAppx1533-

16 The only evidence Appellees offered was a video clip of a tour bus designer referring to a Personal Comfort bed as a Number Bed and Stenzel’s testimony that he has seen other competitors use Number Bed in search engine advertising—any of which may have been references to Sleep Number, therefore supporting secondary meaning. (SNAppx933, 2469:1-14; SNAppx938, 2487:15-20; SNAppx945, 2516:14-2517:9.)


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1737, & SNAppx2037-2456 (customer communications); SNAppx2891 &

SNAppx2893 (Mattress Quote website); SNAppx1941 (Google organic results);

SNAppx3008 (owner’s manual); SNAppx3022-3052, SNAppx3053-3079,

SNAppx3104, SNAppx3105-3108, & SNAppx3118 (Dires’ manufacturer’s

website/materials); SNAppx3123 (Miller email); SNAppx3125-3126 (Baxter

articles).)

Indeed, the entire industry refers to the category as adjustable air beds, not

Number Beds. (SNAppx593-94, 1118:14-1119:8 (Furniture Today uses “air beds”

and industry uses “air beds or adjustable air beds or air-supported sleep”); see also

SNAppx3127-3138 (Consumer Reports).)

In light of this evidence, the district court should have granted judgment as a

matter of law to Sleep Number.

IX. No Reasonable Jury Could Have Reached the Jury’s Verdict.

The Eighth Circuit may set aside the jury verdict if no reasonable jury could

have reached the same verdict based on the evidence submitted. Craig Outdoor

Advert., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1009 (8th Cir. 2008). Given

the evidence, no reasonable jury could find Appellees not liable for trademark

infringement, false advertising for the five claims Miller admitted falsity, and unfair


66

competition17 or a prevailing party on their Number Bed counterclaim. (Supra

Sections II.B., VI, VIII.)

X. The District Court Improperly Denied Appellants’ Post-Trial Motions.

The standard of review on a denial of a motion for a new trial or for an

amended verdict is abuse of discretion. See Wingert & Assocs., Inc. v. Paramount

Apparel Int’l, Inc., 458 F.3d 740, 743 (8th Cir. 2006); Lowe v. E.I. DuPont de

Nemours & Co., 802 F.2d 310, 310-11 (8th Cir. 1986). Given the evidence, the

district court abused its discretion in denying these motions on Appellants’

trademark infringement and unfair competition claims. (Supra Sections II.B., VIII.)

CONCLUSION

For the foregoing reasons, Appellants respectfully request that the Eighth

Circuit reverse the district court on each of the issues addressed herein.

17 Unfair competition exists regardless of whether Number Bed is registered or even registerable. See 15 U.S.C. § 1125(a)(1); Metric & Multistandard Components Corp. v. Metric’s, Inc., 635 F.2d 710, 714 (8th Cir. 1980); Home Builders Ass’n of Greater St. Louis v. L&L Exhibition Mgmt., Inc., 226 F.3d 944, 950 (8th Cir. 2000).


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Date: March 18, 2019 FOX ROTHSCHILD LLP

By: /s/ Andrew S. Hansen Andrew S. Hansen (#285894) Heidi A.O. Fisher (#320638) Elizabeth A. Patton (#391431)

Campbell Mithun Tower – Suite 2000 222 South Ninth Street Minneapolis, Minnesota 55402-3338 Telephone: (612) 607-7000 Facsimile: (612) 607-7100 Email: [email protected] [email protected] [email protected]

ATTORNEYS FOR APPELLANTS


68

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMIT, TYPEFACE REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS

Pursuant to Fed. R. App. P. 32(a)(7)(C), I certify the following:

This Brief complies with the type-volume limitation of Fed. R. App. P.

32(a)(7)(B) because this brief contains 12,998 words, excluding the parts of the Brief

exempted by Fed. R. App. P. 32(f).

This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5)

and the type-style requirements of Fed. R. App. P. 32(a)(6) because this brief has

been prepared in a proportionally spaced typeface using the 2016 version of

Microsoft Word in 14 point Times New Roman font.

This brief complies with the electronic filing requirements of Local Rule

28A(h) because the text of this electronic brief is identical to the text of the paper

copies, and the Carbon Black Defense, Version 3.0.2.2 has been run on the file

containing the electronic version of this brief and no viruses have been detected.

Dated: March 18, 2019

/s/ Andrew S. Hansen Andrew S. Hansen Attorney for Appellants


69

CERTIFICATE OF SERVICE

I hereby certify that on March 18, 2019, I electronically filed the foregoing

with the Clerk of the Court for the United States Court of Appeals for the Eighth

Circuit by using the CM/ECF system. I certify that all participants in the case are

registered CM/ECF users and that service will be accomplished by the CM/ECF

system.

/s/ Andrew S. Hansen Andrew S. Hansen Attorney for Appellants


united states court of appeals for the eighth circuit · 2020-05-13 · case nos. 19-1077, 19-1113,...

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