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Goliath, meet David
Mattress Firm, the largest mattress retailer in the United States, with 3,500 stores in 49 states, is a highly recognizable brand. Its distinctive red-and-yellow logo appears on each of its storefronts and is featured in its extensive advertising efforts, which it claims cost $300 million to support in 2017.
With online competition on the rise, Mattress Firm began to pay attention to Tuft & Needle, the second-largest “bed-in-a-box company in the United States, and noticed what it calls a nefarious campaign by Tuft & Needle to undermine its market.
In a lawsuit filed in October 2017, Mattress Firm called out Tuft & Needle for allegedly making numerous false statements in ads about the retailer’s product pricing, product quality and overall honesty. At first glance, these would seem to be the charges you’d expect in a run-of-the-mill false advertising suit. But what adds interest to Mattress Firm’s claims was the underlying technology it claimed was used by its competitor to direct the ads.
Mattress Firm accused Tuft & Needle of buying up Google “AdWords.” AdWords are phrases that when searched for by a Google user yield results that drive the user to particular links. In this case, Mattress Firm alleges, Tuft & Needle purchased phrases like “mattress firm outlet” and “mattress firm reviews.” So far, Mattress Firm admitted in the complaint, so good – buying the words was not unlawful on its own.
But the links themselves featured messaging that Mattress Firm took exception to, including links tagged “Mattress Stores Are Greedy,” for instance, that then sent the user on to Tuft & Needle’s website.
The bed trick
Furthermore, Mattress Firm alleged, Tuft & Needle used the well-known Mattress Firm logo and color scheme in ads that refigured the retailer as “Mattress Goliath” and presented Tuft & Needle as a scrappy up-and-comer.
Once the consumers arrived on Tuft & Needle’s site, they were hit with messaging that Mattress Firm considers problematic, containing claims that Mattress Firm “engages in dishonest and wrongful pricing practices,” including unfair markups, misrepresented pricing and false advertising about the price structure of Mattress Firm products. According to the retailer, the bed-in-a-box upstart even attacked its materials, calling them outdated, and said that the company’s return policy penalties locked customers into a “death spiral.”
Mattress Firm’s suit hits Tuft & Needle with false advertising and federal trademark dilution charges under the Lanham Act, trademark dilution and unfair competition charges under Texas state law, and defamation and business disparagement. The retailer is demanding damages in the form of Tuft & Needle’s profits and the cost of the action and seeks a permanent injunction against “the false, unfair, dilutive, and disparaging advertising practices of Tuft & Needle.”
The court awaits the bed-in-a-box company’s reply.
This case illustrates that care must be taken when using competitor’s marks and in comparative advertising. A brand can expect its competitors to closely scrutinize this type of advertising and, if it crosses the line of what the law permits, to bring self-regulatory or legal claims.