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Select Comfort Corp. v. Baxter

United States District Court, D. Minnesota

December 12, 2018

Select Comfort Corporation; and Select Comfort S.C. Corporation, Plaintiffs,
v.
John Baxter; Dires, LLC d/b/a Personal Touch Beds and Personal Comfort Beds; Digi Craft Agency, LLC; Direct Commerce, LLC d/b/a Personal Touch Beds; Scott Stenzel; and Craig Miller, Defendants.

          Andrew S. Hansen, Esq., Elizabeth A. Patton, Esq., and Heidi O. Fisher, Esq., Fox Rothschild LLP, counsel for Plaintiffs.

          Barbara P. Berens, Esq., Carrie L. Zochert, Esq., and Erin K. Fogarty Lisle, Esq., Berens & Miller, PA, counsel for Defendant John Baxter.

          Cassandra B. Merrick, Esq., Christopher W. Madel, Esq., Jennifer M. Robbins, Esq., Madel PA, counsel for Defendants Dires, LLC, d/b/a Personal Touch Beds and Personal Comfort Beds, Scott Stenzel, and Craig Miller.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         This matter is before the Court on numerous post-trial motions. These motions include Plaintiffs Select Comfort Corporation and Select Comfort S.C. Corporation's (“Select Comfort”) Motion for Determination of Entitlement to Attorneys' Fees and Non-Taxable Expenses (Doc. No. 640), Motion for Renewed Judgment as a Matter of Law, to Amend the Verdict, and/or for a New Trial (Doc. No. 643), Motion to Increase the Damages Award (Doc. No. 654), and Motion for Permanent Injunction (Doc. No. 668); as well Defendants Dires, LLC, Craig Miller, Scott Stenzel, and John Baxter's Motion for Determination of Entitlement to Attorneys' Fees and Costs (Doc. No. 655) and Amended Renewed Motion for Judgment as a Matter of Law and For a New Trial (Doc. No. 644).[1]

         BACKGROUND

         The factual and procedural background of this litigation is extensively set forth in prior orders and will not be repeated here. In summary, Select Comfort brought multiple claims against Defendants, including claims for trademark infringement, trademark dilution, false advertising, unfair competition, and related state-law claims. After trial, the jury returned a verdict, making the following relevant findings:

         Trademark Infringement: Defendants did not infringe Select Comfort's trademark rights in SLEEP NUMBER, WHAT'S YOUR SLEEP NUMBER?, SELECT COMFORT, or COMFORTAIRE. (Doc. No. 575 (“Special Verdict”) at 2-3.)

         Trademark Dilution: Select Comfort's SLEEP NUMBER mark is famous, but Defendants' advertising did not dilute the mark. (Id. at 6.)

         Unfair Competition: Defendants' use of NUMBER BED did not constitute unfair competition. (Id. at 8.)

         False Advertising: At trial, Select Comfort alleged Defendants made 14 false statements. The jury found in favor of Select Comfort on the following statements:[2]

1. Personal Touch is Preferred 6 to 1 Over Sleep Number;[3]
2. Personal Comfort, or we, sold patents to Sleep Number (or Sleep Number purchased patents from Personal Comfort, or us);
3. Sleep Number bed parts are not replaceable or changeable (e.g. Sleep Number bed chambers or foam are not replaceable or changeable).
4. Sleep Number paid Personal Comfort not to compete or to manufacture mattresses.
5. Personal Comfort is FDA regulated/certified/approved or Personal Comfort sells FDA registered mattresses.
6. Personal Comfort is owned and operated by a FDA registered medical device manufacturing company.
7. Personal Comfort beds come with “no sales tax” or are “tax free.”

(Id. at 13-56.) The jury found that statements 1, 2, and 3 were made with an intent to deceive consumers. (Id. at 14, 24, 31.) The jury found that the remaining false statements were made with no intent to deceive customers.

         Counterclaim: In considering Defendants' Counterclaim, the jury determined that Select Comfort does not have trademark rights in NUMBER BED. (Id. at 66.)

         Damages: The jury found that Select Comfort did not suffer lost profits as a result of Defendants' conduct, but did find that Defendants obtained a wrongful benefit in the amount of $155, 721. (Id. at 65 ($120, 812 attributed to Dires and $34, 909 attributed to Direct Commerce).)

         The matter is now before the Court on the parties' post-trial motions.

         DISCUSSION

         I. Select Comfort's Renewed Motion for Judgment as a Matter of law, to Amend the Verdict, and/or for a New Trial

         Select Comfort moves for judgment as a matter of law, to alter or amend the verdict, and/or to grant a new trial. In support, Select Comfort argues that the Court committed several prejudicial errors. Defendants oppose the motion, arguing that the Court did not commit any legal error and, even if it did, any such error did not prejudice Select Comfort.

         A. Legal Standards

         A court may render judgment as a matter of law when “a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for that party on that issue.” Fed.R.Civ.P. 50(a). Under Rule 50, judgment as a matter of law is appropriate only if no reasonable jury could have returned a verdict for the nonmoving party. Weber v. Strippit, Inc., 186 F.3d 907, 912 (8th Cir. 1999). In analyzing a Rule 50 motion, a court must consider the evidence in the light most favorable to the non-moving party, resolve all factual conflicts in the non-moving party's favor, and give the non-movant the benefit of all reasonable inferences. Id. “Judgment as a matter of law is proper when the record contains no proof beyond speculation to support the verdict.” Heating & Air Specialists, Inc. v. Jones, 180 F.3d 923, 932-33 (8th Cir. 1999). “A jury verdict will not be set aside unless there is a complete absence of probative facts to support a verdict.” Walsh v. Nat'l Computer Sys., Inc., 332 F.3d 1150, 1158 (8th Cir. 2003) (quotation omitted).

         Under Rule 59, a “court may, on motion, grant a new trial on all or some of the issues--and to any party . . . after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a). The standard for granting a new trial is whether the verdict is against “the great weight of the evidence.” Butler v. French, 83 F.3d 942, 944 (8th Cir. 1996). The Eighth Circuit explained that:

[A] trial court may not grant a new trial simply because the trial court would have found a verdict different from the one the jury found. This is certainly a necessary condition to granting a motion for new trial, but it is not a sufficient one. Rather, the trial court must believe, as we have already said, that the verdict was so contrary to the evidence as to amount to a miscarriage of justice.

Id. A new trial is also appropriate where legal errors at trial result in a miscarriage of justice. Gray v. Bicknell, 86 F.3d 1472, 1480-81 (8th Cir. 1996). Evidentiary errors warrant a new trial only when “the cumulative effect of the errors is to substantially influence the jury's verdict.” Williams v. City of Kan. City, Mo., 223 F.3d 749, 755 (8th Cir. 2000). A new trial also may be ordered if the Court erred in instructing the jury on the applicable law. T.H.S. Northstar Assocs. v. W.R. Grace & Co.-Conn., 860 F.Supp. 640, 650 (D. Minn. 1994), vacated on other grounds, 66 F.3d 173 (8th Cir. 1995). The Court, however, has broad discretion in framing instructions and need not give every proposed instruction provided that the court adequately presents the law and the issues to the jury. Fleming v. Harris, 39 F.3d 905, 907 (8th Cir. 1994). Moreover, the instructions are to be considered in their entirety to determine whether, when read as a whole, the charge fairly and adequately submits the issues to the jury. Id. “A single erroneous instruction will not necessarily require reversal.” Id. The harmless error rule applies to jury instructions. Laubach v. Otis Elevator Co., 37 F.3d 427, 429 (8th Cir. 1994).

         “[D]istrict courts enjoy broad discretion in choosing whether to grant a new trial.” Pulla v. Amoco Oil Co., 72 F.3d 648, 656 (8th Cir. 1995). A district court reviewing a motion for a new trial is “not free to reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions or because [the court] feel[s] that other results are more reasonable.” Fireman's Fund Ins. Co. v. Aalco Wrecking Co., Inc., 466 F.2d 179, 186 (8th Cir. 1972) (citation omitted).

         A motion to amend under Federal Rule of Civil Procedure 59(e) serves the “limited function of correcting manifest errors of law or fact or to present newly discovered evidence.” United States v. Metro. St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006) (internal quotation marks omitted). A Rule 59(e) motion is not a vehicle to introduce new evidence, tender new legal theories, or raise arguments that could have been offered or raised before the Court entered judgment. Id.

         B. Trademark Infringement

         Select Comfort argues that the Court made the following prejudicial errors that require amending the verdict or granting a new trial on its trademark infringement claims: (1) disallowing Select Comfort from pursuing an initial interest claim; (2) applying the wrong standards and burdens under the Lanham Act in jury instructions; and (3) allowing Defendants' bed demonstration. In addition, Select Comfort argues that despite these errors, it offered overwhelming evidence that Defendants used Select Comfort's marks (or similar words/phrases) in a manner likely to cause customer confusion as to the source of sponsorship of the goods and, therefore, that the jury's verdict on the trademark infringement claims was contrary to this evidence.

         1) Initial Interest Confusion Doctrine

         Select Comfort first argues that the Court erred by not allowing it to pursue an initial interest claim. Select Comfort argues that it should have been allowed to pursue the theory that significant confusion at the initial point that consumers viewed on-line advertisements is all that was required to establish liability under the Lanham Act, and that it was error to instruct the jury that a showing of a likelihood of confusion at the time of purchase was required. Defendants argue that the Court's rulings on the initial interest doctrine were correct.

         In its order granting in part and denying in part the parties' motions for summary judgment, the Court held that Select Comfort's trademark infringement claim requires a showing of a likelihood of confusion at the time of purchase. In so holding, the Court explained that in Sensient Techs. Corp. v. SensoryEffects Flavor Co., 613 F.3d 754, 766 (8th Cir. 2010), the Eighth Circuit declined to formally adopt the “initial interest confusion” doctrine and explained that “even if the doctrine applied generally in this circuit, it would not apply” where, “although the products are similar, . . . the customers are sophisticated and exercise a relatively high degree of care in making their purchasing decisions.” Id. As explained previously, the initial interest doctrine would not apply to the facts of this case because the beds at issue were purchased on-line and are expensive, suggesting that consumers would exercise a high degree of care in making any such purchase. The Court discerns no error in its ruling on initial interest confusion. Importantly, the Court notes that it did not hold that initial interest confusion was irrelevant to the issue of whether there was a likelihood of confusion (or that the jury could not consider evidence of such confusion), but only that such confusion alone would not result in liability. Moreover, Select Comfort's theory of liability in this case centers on the contention that Defendants capitalize on consumers being confused initially at the point-of-click on-line, thus diverting the consumers to Defendants' website and then fostering that confusion and/or replacing it with false claims. Select Comfort was free to submit evidence of point-of-click confusion to support a showing of likelihood of confusion between the purchasing alternatives at the time of purchase. In addition, Select Comfort separately asserted false advertising claims, some of which were successful at trial.

         2) Jury Instructions

         Similarly, based on its arguments regarding the initial interest confusion doctrine, Select Comfort argues that the Court applied the wrong standards and burdens under the Lanham Act in its jury instructions. Specifically, Select Comfort argues that: the jury instructions improperly restricted the jury to determining whether there was a likelihood of confusion at the time of purchase; without a definition of “time of purchase, ” the jury understood that consumers must actually purchase Defendants' products while confused; the Court should have instructed the jury that confusion occurring at other points in the sale and service process is relevant to whether confusion is likely to occur at the time of purchase; the Court should have indicated that actionable confusion includes confusion as to where consumers can purchase a product; and because Defendants' survey expert indicated that the “essence” of confusion is source confusion, without a corrective instruction, the jury was left believing that actionable confusion is limited to source confusion. Further, with respect to the issue of abatement, Select Comfort argues that if at any point it showed a likelihood of confusion (including initial interest confusion), the burden shifted to Defendants to show by clear and convincing evidence that efforts to abate confusion were successful. Finally, Select Comfort contends that the Court erred by not instructing the jury on “actionable” confusion or providing a definition of “appreciable.”

         In relevant part, the Court offered the following instructions to the jury:

PLAINTIFFS' CLAIM OF TRADEMARK INFRINGEMENT
Plaintiffs claim that Defendants' advertising constitutes trademark infringement. Plaintiffs have the burden of proving infringement by a preponderance of the evidence.
The Lanham Act recognizes a cause of action for infringement of a federally registered mark where use of a mark is likely to cause confusion, mistake, or deception. To establish trademark infringement, the owner of a trademark must demonstrate that the defendant's alleged infringing was likely to cause confusion among consumers regarding the origin, sponsorship, affiliation or approval of the defendant's product.
For their claims that Defendants infringed their trademarks, Plaintiffs must prove by a preponderance of the evidence that Defendants used Plaintiffs' trademarks or a similar word or phrase in connection with a product and that use is likely to cause confusion as to the origin, sponsorship, affiliation or approval of the product. The core element of trademark infringement is whether Defendants' use of a term creates a likelihood that the consuming ...

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