Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Ky.: Court puts competitor’s video disparaging Tempur Sealy mattress to sleep, (Apr 5, 2016)

By Michael Menzhuber, J.D., LL.M.

A motion to enjoin WonderGel, LLC d/b/a Purple from running an online video which made derogatory statements about a Tempur Sealy mattress product was granted by the federal district court in Lexington, Kentucky. The court determined that it had personal jurisdiction and, therefore, denied the defendants’ motion to dismiss (Tempur Sealy International, Inc. v. WonderGel, LLC, April 1, 2016, Hood, J.).

Purple purportedly markets and sells its mattress products exclusively online. In December of 2015, it created an online commercial (Goldilocks video) in which it made derogatory statements and expressions about a “hard mattress,” identified as the Tempur-Contour mattress manufactured by Tempur Sealy. The Goldilocks video was viewed over 3 million times on YouTube.com and 14 million times on Purple’s Facebook page. It was also shared over 53,000 times and appeared on Purple’s commercial website.

After receiving a cease and desist letter from Tempur Sealy demanding the removal of all false and misleading statements regarding it products from its advertising, the defendants filed a district court action in Utah to “protect its interests.” Tempur Sealy subsequently filed a district court action in Kentucky against the defendants for trademark infringement, followed by a motion for a temporary restraining order/preliminary injunction. The defendants responded by filing a motion to dismiss based on lack of personal jurisdiction or, alternatively, to transfer or stay the matter under the first-to-file rule.

The court declined to apply the first-to-file rule in the context of Tempur Sealy’s coercive action filed subsequent to the defendants’ anticipatory suit filed in Utah, which was essentially an action for a declaratory judgment.

The court determined that it had personal jurisdiction, and, therefore, denied the defendants’ motion to dismiss. It found that Kentucky’s long arm statute was satisfied because the defendants’ Internet sales constituted transacting business in Kentucky. It also found that, with respect to federal due process concerns, personal jurisdiction existed because: (1) the defendants availed themselves of Kentucky’s laws by marketing and selling its products on a website available to consumers in Kentucky; (2) Tempur Sealy’s claims arose from the defendants’ contacts, through the Goldilocks Video on its website, with Kentucky; and (3) Kentucky’s legitimate interest in protecting the interests of its businesses and residents outweighed the defendants’ burden of defending a lawsuit in Kentucky.

The court granted Tempur Sealy’s motion for injunctive relief because: (1) the derogatory statements made in the Goldilocks video regarding the “hard mattress” were likely false or misleading under the Lanham Act and viewers of the video would recognize the “hard mattress” as Tempur Sealy’s product; (2) Tempur Sealy would suffer irreparable harm based on the millions of views of the Goldilocks video, which contained false and misleading statements regarding Tempur Sealy’s product; (3) the defendants’ business would not be significantly affected, and consumers would still have access to its products, if injunctive relief was granted; and (4) it was in the public interest to remove false advertisements from the public’s view.

The case is No. 5:16-cv-83-JMH.

Attorneys: Amy S. Cahill (Cahill IP, PLLC) for Tempur Sealy International, Inc., Tempur-Pedic International, Inc. and Tempur-Pedic Management, LLC. Judd R. Uhl (Lewis Brisbois Bisgaard & Smith LLP) for WonderGel, LLC and EdiZone, LLC.

Companies: Tempur Sealy International, Inc.; Tempur-Pedic International, Inc.; Tempur-Pedic Management, LLC; WonderGel, LLC; EdiZone, LLC

Cases: Advertising KentuckyNews