Select Comfort Corp. v. Baxter, No. 19-1077 (8th Cir. 2021)
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Plaintiffs are the owners of the heavily advertised Select Comfort and Sleep Number brands of adjustable air mattresses and defendants are online retailers of their own brand of lower-priced adjustable beds. Plaintiffs alleged that defendants used similar and identical marks in several different capacities online to sell competing products, and that defendants compounded internet-related confusion by making fraudulent misrepresentations and failing to dispel confusion when consumers contacted defendants' call centers. After a trial resulted in a mixed verdict, both sides appealed.
The Eighth Circuit reversed and concluded that the district court erred by finding as a matter of law that the relevant consumers were sophisticated and that a theory of initial-interest confusion could not apply. Therefore, the court concluded, based on Insty*Bit, Inc. v. Poly-Tech Indus., 95 F.3d 663, 671–72 (8th Cir. 1996), that limiting the infringement instruction to require confusion at the time of purchase was error. Given the strength of plaintiffs' evidence on the issue of confusion, the court cannot conclude that the summary judgment and instructional errors were harmless.
In regard to the false advertising claim, the court concluded that the district court erred by instructing the jury in a manner that shifted the burden of proof on the materiality element based on a finding of literal falsity. Furthermore, based on the specific jury forms returned in this case, the court did not find the error to be harmless as to those claims where plaintiffs prevailed. Accordingly, the court reversed and remanded for a new trial on the seven false advertising claims on which plaintiffs prevailed. In regard to the remaining issues, the court concluded that the district court did not abuse its substantial discretion in refusing to permit amendment of the counterclaim after the close of discovery and on the eve of trial; the court noted that an expert's testimony as to the structure and meaning of survey evidence or other factual matters generally should not usurp the court's role in defining the law for the jury; the court concluded that any infirmities as to the demonstration bed go to the weight rather than the admissibility of the evidence; and the jury instructions did not impermissibly shift the burden of proof on defendants' cross claim seeking a declaration that plaintiffs held no trademark rights in the phrase "NUMBER BED."
Court Description: [Melloy, Author, with Smith, Chief Judge, and Shepherd, Circuit Judge] Civil case - Trademark. The district court erred by finding as a matter of law that the relevant consumers for the adjustable air mattresses and related products the parties sell were sophisticated and in rejecting plaintiff's trademark infringement theory based on presale or initial-interest confusion; the court holds that a theory of initial-interest confusion may apply in this circuit and when a jury issue exists as to the question of consumer sophistication, a plaintiff should not be barred from proving presale or initial-interest confusion; as a result,the district court erred in granting defendants' motion for summary judgment on the claim; additionally, limiting the jury instructions to require confusion at the time of purchase was error; the district court did not err in in denying plaintiffs' motion for judgment as a matter of law on certain false advertising claims and properly submitted the issue of falsity to the jury; it was error to instruct the jury in a manner that shifted the burden of proof on the materiality element of plaintiffs' seven false advertising claims to defendants, and the plaintiffs' judgment on those claims is reversed and remanded for a new trial; the district court did not abuse its discretion in refusing to permit amendment of defendants' counterclaim after the close of discovery and on the eve of trial; claim regarding defendants' expert's testimony regarding a survey rejected; challenge to use of a demonstration bed rejected; jury instruction did not impermissibly shift the burden of proof on defendants' cross claim seeking a declaration that plaintiffs held no trademark rights in the phrase "NUMBER BED."
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