Update (January 15, 2015): When plaintiff and defendant both move for summary judgment and both motions fail, who’s the actual loser? As between the parties, that question cannot be answered as a general matter. But, at the risk of being cynical, it’s clear who the bigger winners are as between the litigants and the lawyers, if the lawyers are billing by the hour. Motions for summary judgment (and responding to them) can be expensive for clients (and rewarding for hourly-billing lawyers).
Minnesota mattress monster, Select Comfort Corporation, has a hefty legal budget because it brings quite a lot of lawsuits to protect its trademarks and to maintain its strong position in the customizable mattress-firmness niche. They took a hard run at defendants seeking summary judgment in the linked lawsuit. U.S. District Court Judge Donovan W. Frank (D. Minn.) essentially held that this dispute must either be settled or will be decided by a jury (followed by an appeal?).
In this battle that, for now, is a draw, is there actually a winner or loser in the summary judgment decision? Here’s what someone with deep trademark litigation experience and expertise, Stephen Baird of Winthrop & Weinstine, has to say on that:
A summary judgment motion, properly employed, can be a useful tool in Lanham Act cases, and if the motion is well-grounded and well-received, it can result in “sudden death,” saving the prevailing party great expense in avoiding the need for trial. When the chances of prevailing on summary judgment are not strong, however, other reasons for justifying the motion might exist to warrant the added expense. For example, even if a complete win is unlikely, there can be value in knocking out certain claims or defenses to narrow the issues for trial, reducing overall costs of the lawsuit and radically changing the leverage of the respective parties. Or, even if most issues are left to be decided by a jury at trial, there may be value in probing and assessing the strength of an opponent’s various positions, especially if the judge is inclined to telegraph how he or she sees certain issues in the case playing out, or if he or she provides a road map for the resolution of any remaining issues for trial. And, after a court’s decision on cross motions for summary judgment, there is often a good opportunity for each side to reassess their positions and examine settlement again more closely. Having said all that, losing a summary judgment motion can be a huge disappointment, especially if a client’s expectations haven’t been managed well by counsel. When the summary judgment decision ends up punting all issues to a trial and the decision looks like a draw between the parties, the bigger loser at that point is probably the one that did the worst job of managing client expectations.
In the Select Comfort case decided by Judge Frank, most of the issues were found not appropriate for summary judgment, so the value of the exercise certainly can be questioned and second-guessed. Moreover, it didn’t seem like Judge Frank telegraphed a whole lot in this decision. So, in determining advantage at this stage of the case, it is worth noting that the Defendants were seeking “sudden death” and complete dismissal of Select Comfort’s claims, but they only succeeded in knocking out the unjust enrichment claim. Select Comfort, on the other hand, appeared to recognize that most issues should go to trial, and they were vindicated on this point — they only cross-moved on summary judgment for some modest clarification and narrowing of issues. Given that posture, I’d probably give the nod or advantage to Select Comfort in surviving the Defendant’s unsuccessful “sudden death” attempt. Defendants most significant achievement in bringing the motion was probably obtaining Judge Frank’s ruling that “initial interest confusion” doesn’t apply in this case, instead the court confirmed that Select Comfort’s trademark infringement claim will require it “to establish a likelihood of actual confusion at the time of purchase.” Even though most likelihood of confusion factors were left for the jury at trial, eliminating Select Comfort’s “initial interest confusion” theory, had the added benefit of triggering the court to weigh the “type of products at issue, the costs and conditions of purchase, and the degree of care that consumers are expected to exercise” factor against finding a likelihood of confusion. Yet, even there, Select Comfort will probably be emboldened by this concluding statement from Judge Frank: “While a likelihood of customer confusion could be the conclusion reached by a reasonable jury, that conclusion is not foregone.”
Original post (September 14, 2015)(under the headline A Protracted Trademark Fight By and Against a Bedhemoth): Imagine how infuriating it would be to grow a business into a billion dollar business and then have a cottage industry grow up around your business plucking customers by misleading them into thinking they’re buying your product when they’re buying someone else’s. (That’s how Select Comfort, maker of the “Sleep Number”™ bed seems to feel.)
On the flipside, imagine you are an energetic marketer and entrepreneur and a billion dollar bedhemoth boxes you out of its business with legions of lawyers claiming the bedhemoth owns certain words that you cannot use. (That’s how many little bed sellers feel.)
One interesting aspect of Select Comfort v. Baxter, et al., is the issue of internet “key word” advertising. If I identify my competition in the community to include Jones Law Firm, Smith Law Firm, and Roberts Law Firm, can I use those words as “search terms” that will bring my advertisements in front of potential clients for my firm?
To clarify that for those of you who don’t have experience with on-line search engine advertising, a person might run a search through Google or Bing for “Smith Law Firm,” and there will be “organic” (non-paid) search results related to that “search string” and there will be “paid” search results — i.e., the advertising that is triggered by “key words” in the search. Someone could run a search “Smith Law Firm Minneapolis” and there could be all kinds of information about Smith Law Firm and an ad for my law firm in the right-hand margin.)
Are we all cool with that?
I would certainly hope so. It seems to me that this is particularly important where a huge market presence is concerned. If a business wants to compete against Apple’s iPhone, how could it be unfair or unlawful for a company to say something like, “If you think you’re interested in an iPhone, you really need to have a look first at the ***PhOne!” And if it can do this in an ad, why can’t it run an ad along side “organic” search results based on the key term, “iPhone”? It’s kind of the same thing, isn’t it?
But I think we can all agree that things get considerably more complicated or difficult if you call your product the iFone, iPhono, iPhony, etc. (and if I call my competing law firm “Smith Law Firm Ltd.” in an effort to trick consumers into thinking they’re hiring a firm that they are not, then that’s outright fraud, it seems to me).
In any event, if you have any interest in trademark law, I expect you might find the two linked briefs (here and here) of great interest. They are thoroughly researched and well-written. We’ll see how U.S. District Court Judge Donovan W. Frank (D. Minn.) deals with this bed battle and beyond.