Initial Confusion? Relax, Eighth Circuit Has Your Number
Addressing a novel issue regarding when confusion must occur for it to be actionable, the US Court of Appeals for the Eighth Circuit concluded that initial-interest confusion was a viable infringement theory. Select Comfort Corp. v. Baxter, Case No. 19-1113 (8th Cir. May 11, 2021) (Melloy, J.)
Select Comfort owns registered trademarks, including “SELECT COMFORT,” “SLEEP NUMBER” and “WHAT’S YOUR SLEEP NUMBER,” for adjustable air mattresses, which it sells online and in stores across the United States. Baxter sells competing air mattresses online and through a call center. Select Comfort brought a suit asserting trademark infringement, trademark dilution and false advertising theories against Baxter. Select Comfort alleged that Baxter used Select Comfort’s registered trademarks in an identical or confusingly similar manner to advertise Baxter’s mattresses and divert consumers to its website and phone lines instead of Select Comfort’s. Select Comfort also alleged that Baxter made false representations about its products and failed to dispel consumer confusion about the products. At trial, Select Comfort pointed to similar terms in Baxter’s online advertising text, graphics and domain addresses, in addition to examples of actual confusion about the products in Baxter’s call-center transcripts.
Earlier in the case, in connection with summary judgment, the district court found that the relevant consumers were sophisticated as a matter of law, and, citing Eight Circuit precedent, rejected application of a theory of initial-interest confusion. The district court instead instructed the jury that in order to prevail on its trademark infringement claim, Select Comfort had to prove likelihood of confusion at the time of purchase. Based on this limiting instruction, the jury rejected Select Comfort’s trademark infringement claims. Select Comfort appealed.
The Eighth Circuit reversed. The Court explained that the district court erred on the availability of an initial-interest confusion as an infringement theory. For trademark infringement claims, the likelihood of confusion test is a fact-intensive inquiry with many factors. However, circuit courts have not definitively agreed on when confusion must exist. Must confusion occur only at the time of ultimate purchase, or can it also exist during pre-sale? The theory of initial-interest confusion involves the latter scenario, namely, when confusion about a product’s ownership causes a customer to have initial interest in the product, even if there is no actual sale at the time of the confusion. Actionable initial infringement protects competitors from getting a free ride on the goodwill of an established mark if a consumer falsely infers an affiliation between the companies.
In the precedential 2010 Eighth Circuit case Sensient Techs. v. Sensory Effects Flavor, the Court neither rejected nor adopted the initial-interest/pre-sale confusion theory. Instead, it merely found that the theory did not apply where consumers were sophisticated (i.e., where they exercise a high degree of care in purchasing products, a factor weighing against likelihood of confusion). Here, influenced by Lanham Act amendments and other circuit courts, the Court addressed the issue previously left open: whether the initial-interest confusion may be actionable in the Eighth Circuit in cases where the jury is left to determine the issue of consumer sophistication.
In this case, the parties did dispute the issue of consumer sophistication. Therefore, the second issue for the Court was whether the relevant consumers—online shoppers, and specifically those shopping for mattresses—were sophisticated. In cases regarding mattresses, there is a degree of disagreement regarding the sophistication of consumers (mattresses are a relatively expensive investment but are bought infrequently, so consumers are likely uneducated and susceptible) and online shoppers in general (users quickly and effortless surf the internet and click links without much effort or care, but users are also accustomed to diligently comparing all possibilities across websites if they are not satisfied). Thus, the Court concluded that the issue of consumer sophistication should be left for the jury, and because the initial-interest confusion theory was actionable, summary judgment barring the theory was error.
The Eighth Circuit found no error in the district court’s dismissal of Select Comfort’s false advertising claims. On appeal, Select Comfort renewed its motion for judgment as a matter of law regarding certain literally false statements made by Baxter. The Court found no error in the lower court’s denial of the motion and submission of the issue of falsity to the jury: “The test for literal falsity is ‘rigorous,’ statements must be analyzed in their broader context, and there are any number of reasons why the jury might have chosen to discount [certain literal falsity] testimony.”
The Eighth Circuit also addressed Baxter’s conditional cross-appeal on one of the false advertising instructions. Baxter challenged the lower court’s instruction of presuming materiality if the jury concluded a statement was “literally false.” Considering other circuit decisions, the Court concluded it was error to instruct the jury in a manner that shifted the burden of proof on the materiality element. Because the error was not harmless, the Court reversed and remanded the seven false advertising claims on which Select Comfort prevailed.