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8th Circuit awakens 'Sleep Number' trademark infringement claims

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  • Sleep Number gets new chance to prove trademark infringement
  • Minnesota court wrongly rejected Sleep Number confusion theory
  • Personal Comfort Bed wins chance to escape false ad claims

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(Reuters) - Select Comfort Corp, known for selling Sleep Number beds, won its bid to revive trademark infringement claims against mattress rival Dires LLC in a mixed ruling at the 8th U.S. Circuit Court of Appeals on Tuesday.

U.S. District Judge Donovan Frank in St. Paul, Minnesota incorrectly found that Sleep Number couldn't argue for infringement based on "initial-interest confusion," a liability theory based on confusion that creates customer interest in a product but doesn't result in a sale, U.S. Circuit Judge Michael Melloy wrote for a three-judge panel.

Frank incorrectly found as a matter of law that mattress buyers were too sophisticated to be confused under the theory, when the question should have gone to a jury, Melloy said.

But the court also ordered a new trial on the jury's finding that Dires owed Sleep Number $160,000 for false advertising, and affirmed parts of the verdict finding Dires and its affiliates didn't dilute the "Sleep Number" trademark.

Sleep Number said in a statement that it was pleased with the ruling and "looks forward to presenting its claims to a jury."

Dires' attorney Jennifer Robbins of Madel PA said that "while we certainly wish this case was behind us," the opinion marks "all in all, another great day for our client."

Dires separately sued Sleep Number in 2019 accusing it of violating antitrust law by monopolizing the adjustable-firmness mattress market, in a case that is still ongoing.

Minneapolis-based Sleep Number sued Orlando-based Dires – also known as Personal Comfort Bed – in 2012, alleging Dires misused its trademarks in deceptive website URLs, search-engine ads, and other advertisements to divert customers looking for Sleep Number products to its own website and call center, where it sold competing mattresses.

Frank ruled in 2016 that Sleep Number couldn't argue at trial that Dires infringed its trademarks by causing initial-interest confusion – which is meant to protect against a competitor receiving a "free ride" on an established trademark's goodwill – because mattress buyers are sophisticated consumers who weren't likely to be confused by its alleged scheme.

He noted that the 8th Circuit had "neither expressly adopted nor rejected a theory of initial-interest confusion as a general matter, but had refused to apply the theory in a case where consumers were sophisticated."

Sleep Number was still allowed to argue that customers were likely to be confused at the time of purchase, but lost on the infringement claim at the 2017 trial.

Melloy, joined by Chief Circuit Judge Lavenski Smith and Circuit Judge Bobby Shepherd, affirmed that the circuit recognizes initial-interest confusion, but said Frank was wrong to reject the theory before trial in this case.

The question of whether mattress buyers were too sophisticated to be confused was best left to a jury, Melloy said.

"On the one hand, mattresses are relatively expensive among most consumers' purchases," Melloy said. "On the other hand, most people buy mattresses infrequently, so they enter the marketplace uneducated and susceptible to fast-talking sales people and brand confusion."

Melloy said the authority was also "mixed" as to the sophistication of web-based shoppers.

A new trial on the false advertising claims was also justified because Frank incorrectly instructed the jury that it could presume a statement was material to the claims if it was false.

"A finding that a statement is literally false" does "not appear to suggest in any direct manner that the statement is material," Melloy said.

The case is Select Comfort Corp v. Dires LLC, 8th U.S. Circuit Court of Appeals, No. 19-1077.

For Sleep Mattress: Andrew Hansen of Fox Rothschild

For Dires: Jennifer Robbins of Madel PA

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com

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