IP Law Daily, TRADEMARK—D. Minn.: Antitrust claims against Sleep Number put to rest, (Jan 23, 2023)

By Wendy Biddle, J.D.

Sleep Number immune from antitrust allegations because of existing, valid trademark lawsuit.

Sleep Number Corp. was granted summary judgment of antitrust claims filed by competitor Dires LLC, holding that Sleep Number’s suit alleging Dires infringed its trademarks did not violate antitrust law. There remains an open question in a long-ongoing case as to whether Dires’ use of the term ‘Number Bed’ in advertising was likely to cause confusion with the Sleep Number trademark and is a question for the jury. Because of this, Sleep Number’s suit against Dires was not baseless and therefore Sleep Number was immune from any antitrust litigation by Dires. The court granted Sleep Number’s motion to dismiss the antitrust allegations based on the Noerr-Pennington doctrine, and denied Dires’ motion to amend its complaint to add antitrust allegations for the same reason (Dires, LLC v. Sleep Number Corp., January 18, 2023, Frank, D.).

Background. Sleep Number alleged that competing mattress company Dires LLC had used the Sleep Number trademark and the confusingly similar mark, Number Bed, in advertising. Sleep Number argued that Dires, which does business as Personal Touch Beds, caused confusion that created initial customer interest, even if the customer didn’t end up purchasing the competing product. The court had barred Sleep Number from using the “initial interest” theory but that ruling was overturned by the Court of Appeals. The Court of Appeals also vacated the jury verdict, which awarded Sleep Number $160,000 for its false advertising claim, but rejected Sleep Number’s trademark infringement, dilution, and unfair competition claims. The appeals court remanded the judgment as to the infringement and false advertising claims but affirmed the dilution and ‘Number Bed’ trademark claims.

Both parties then moved for summary judgment. Sleep Number moved for summary judgment on its claim for trademark infringement based on Dires’ use of the phrase ‘Number Bed’ in its advertising. Dires moved for summary judgment on Sleep Number’s trademark infringement and unfair competition claims and argued that the court should. The court held that factual issues remain, and those questions should be left to a jury and denied both parties motions for summary judgment.

Additionally, in 2016, Dires brought a separate antitrust case against Sleep Number in California federal court. That case was dismissed under the Noerr-Pennington doctrine. Sleep number then moved to dismiss the current antitrust claim under the same doctrine. Dires opposed and moved to amend the complaint.

Dires alleged that Sleep Number violated antitrust laws by continuing to assert rights to ‘Number Bed’ after the jury decided it did not have trademark claims over the phrase, which prevented Dires from advertising using that phrase. Sleep Number moved to dismiss that claim, under the Noerr-Pennington doctrine. Under Noerr-Pennington, the act of filing a lawsuit is immune from antitrust or tort liability unless the lawsuit is determined to be a mere sham.

The court noted that although the Court of Appeals affirmed the jury’s verdict finding that Sleep Number does not have trademark rights to ‘Number Bed’, a separate issue exists as to whether using that phrase in advertising infringes on Sleep Number’s trademark rights to ‘Sleep Number’ and that issue should be left for the jury to decide.

Therefore, the court found that Sleep Number’s actions after the verdict of enforcing its trademark rights were not baseless. The court therefore found that Dires failed to state a claim for relief and the court dismissed the antitrust action with prejudice.

Motion to amend complaint. Before the court were a motion by Dires to amend its complaint and add Lanham Act violations, a claim for business disparagement, and an antitrust claim under the Sherman Act; and a motion by Sleep Number to dismiss. The motion is based on the allegations that Sleep Number attempts to claim trademark rights on the ‘Number Bed’ phrase. However, the court concluded that the communications that Sleep Number had with the Patent and Trademark Office, Google, and other third parties, demonstrated that Sleep Number was asserting that certain uses of the phrase ‘Number Bed’ cause confusion with Sleep Number’s trademarks. These efforts reflect Sleep Number’s attempt to protect its rights to its ‘Sleep Number’ trademark. The issue of whether the ‘Number Bed’ advertising is likely to cause confusion with the Sleep Number mark is an open question for the jury and is immune from liability under the Noerr-Pennington doctrine. The court denied the motion to amend and granted Sleep Number’s motion to dismiss.

The Case is No. 22-1550 (DWF/TNL).

Attorneys: Cassandra B. Merrick (Madel PA) for Dires, LLC d/b/a Personal Comfort Bed. Andrew S. Hansen (Fox Rothschild LLP) for Sleep Number Corp.

Companies: Dires, LLC d/b/a Personal Comfort Bed; Sleep Number Corp.

Cases: Trademark MinnesotaNews