Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 1 of 55 Page ID #:356
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`
`
`BLECHER COLLINS & PEPPERMAN, P.C.
`Maxwell M. Blecher (State Bar No. 26202)
` mblecher@blechercollins.com
`Donald R. Pepperman (State Bar No. 109809)
` dpepperman@blechercollins.com
`515 South Figueroa Street, Suite 1750
`Los Angeles, California 90071-3334
`Telephone: (213) 622-4222
`Facsimile: (213) 622-1656
`
`
`Attorneys for Plaintiffs
`
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION
` Case No. 5:16-CV-00582 GHK (JCx)
`
`
`FIRST AMENDED CIVIL
`ANTITRUST COMPLAINT FOR
`DAMAGES AND INJUNCTIVE
`RELIEF FOR VIOLATIONS OF
`SECTION 2 OF THE SHERMAN
`ACT
`
`[DEMAND FOR JURY TRIAL]
`
`
`
`
`Complaint Filed: March 30, 2016
`
`Plaintiffs,
`
`AMERICAN NATIONAL
`MANUFACTURING INC., a
`California corporation; and DIRES,
`LLC d/b/a PERSONAL COMFORT
`BED, a Delaware limited liability
`company,
`
`
`vs.
`
`SELECT COMFORT
`CORPORATION, a Minnesota
`corporation; and SELECT COMFORT
`SC CORPORATION, a Minnesota
`corporation,
`
`
`
`
`Defendants.
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`Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 2 of 55 Page ID #:357
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`Plaintiffs American National Manufacturing Inc. (“ANMI”) and Dires, LLC,
`d/b/a Personal Comfort Bed (“Dires”) file this First Amended Complaint (“FAC”)
`against defendants Select Comfort Corporation and Select Comfort SC Corporation
`(collectively “Select Comfort”) to secure damages and injunctive relief, and
`demanding trial by jury, claim and allege as follows:
`I.
`SUMMARY OF CASE
`This antitrust lawsuit centers on Select Comfort’s deliberate and
`1.
`continuing attempt to monopolize, and its actual monopolization of, the consumer
`adjustable firmness air mattress bed system market in the United States.1 Select
`Comfort is engaged in an overall scheme to abuse its monopoly power to raise
`barriers to market entry by and through a pattern of predatory and abusive litigation,
`designed to suppress and disrupt competition in the market and to injure competitors
`rather than to legitimately enforce protectable intellectual property rights or to
`obtain legitimate judicial relief. Select Comfort’s widespread abuse of the process,
`includes: (1) the initiation and maintenance of various International Trade
`Commission bad faith patent infringement proceedings asserting
`invalid/unenforceable patents which plaintiffs do not infringe; (2) a pattern of
`threats of litigation against plaintiffs, competitors, and customers based on
`exaggerated and baseless trademark claims aimed at intimidating its competitors’
`and to interfere with its competitors’ businesses; (3) wrongfully interfering with
`plaintiffs’ advertising business relationships with Google and Yahoo/Bing; and (4)
`filing repeated and systematic oppositions to competitors’ trademark registrations
`asserting positions beyond its lawful trademark rights. Select Comfort’s synergistic
`anticompetitive actions constitute violations of the federal antitrust laws as plausibly
`alleged herein.
`
`1 This distinct segment of the market is generally and commonly referred to as the
`“number bed” market.
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`Select Comfort conceived and implemented a multi-faceted
`2.
`anticompetitive scheme to drain and exclude plaintiffs from this growing and
`lucrative market. Plaintiffs have developed, manufactured, and sold a line of
`competing, innovative, and appreciably lower-priced consumer adjustable firmness
`air mattress bed products. To thwart and eliminate plaintiffs’ competition, Select
`Comfort has engaged in a focused campaign of anticompetitive and monopolistic
`acts directed at maintaining and increasing its stranglehold over the market.
`As a consequence of defendants’ exclusionary conduct, competition in
`3.
`this product market has been suppressed and virtually eliminated, and consumers in
`this market have suffered a loss of choice and have been required to pay higher,
`supracompetitive prices for consumer adjustable firmness air mattress beds to Select
`Comfort than would otherwise be the case in a properly functioning and competitive
`market. Plaintiffs, the competitive market, and consumers have suffered antitrust
`injury by reason of Select Comfort’s unlawful, exclusionary, and predatory conduct.
`II.
`JURISDICTION AND VENUE
`This First Amended Complaint is filed and this civil antitrust action is
`4.
`instituted under Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15, 26) to
`recover the damages caused by, and to secure injunctive relief against, Select
`Comfort for its past and continuing violations of Section 2 of the Sherman Act (15
`U.S.C. § 2), as alleged herein.
`This Court has original and exclusive jurisdiction over the subject
`5.
`matter of this civil action under 15 U.S.C. § 15 and 28 U.S.C. §§ 1331, 1332, and
`1337. Select Comfort maintains stores and transacts business on a systematic and
`continuous basis within this District and may be found here within the meaning of
`15 U.S.C. §§ 15, 22 and 28 U.S.C. § 1391. Further, a significant portion of the
`unlawful acts alleged herein were performed and occurred in material part within
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`this District. The amount in controversy exceeds the sum or value of $75,000,
`exclusive of interest and costs.
`
`III.
`INTERSTATE COMMERCE
`The actions complained of here in this FAC have, and will, restrain and
`6.
`adversely affect interstate commerce in that Select Comfort sells its products and
`services across state lines. Further, Select Comfort purchases goods and supplies in
`interstate commerce. Select Comfort’s anticompetitive activities are within the flow
`of and have had a proximate, direct, substantial and reasonably foreseeable affect on
`interstate commerce.
`
`IV.
`PARTIES
`Plaintiff American National Manufacturing Inc., is a California
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`corporation with its principal place of business located in Corona, California.
`ANMI manufactures several lines of adjustable firmness air mattress beds, some of
`which are sold to consumers through retailers and which compete directly with
`Select Comfort’s products. ANMI also manufactures and sells other highly
`specialized different products that are sold to medical customers pursuant to FDA
`clearance.
`Plaintiff Dires, LLC, d/b/a Personal Comfort Bed is a Delaware limited
`8.
`liability company, registered in Florida, with its principal place of business located
`in Florida. Dires sells, in competition with Select Comfort’s products, consumer
`adjustable firmness air beds under the trade name “Personal Comfort Bed.” Dires’
`sales of these products which compete directly with Select Comfort’s products, are
`almost exclusively made online through its own website at personalcomfortbed.com
`and on Amazon.com.
`Defendant Select Comfort Corporation is a Minnesota corporation with
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`its principal place of business in Plymouth, Minnesota. Select Comfort was founded
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`Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 5 of 55 Page ID #:360
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`in 1987. Currently, Select Comfort has approximately 500 retail stores in the U.S.
`which are the exclusive distributors of its bedding products. Over 50 of these
`vertically integrated stores are located in California. In 2015, Select Comfort’s net
`sales exceeded $1.4 billion. In its filings with the U.S. Securities and Exchange
`Commission, Select Comfort acknowledges that its “adjustable firmness air beds”
`compete directly with other similar product offerings “in the adjustable firmness air
`bed segment” of the market. Select Comfort also acknowledges that it “designs,
`manufactures and markets unique air bed products.”
`10. Defendant Select Comfort SC Corporation is a Minnesota corporation
`with its principal place of business in Minnesota. Select Comfort SC Corporation is
`a wholly-owned subsidiary of Select Comfort, and, consists of the business
`operations of Select Comfort’s former competitor, Comfortaire Corporation
`(“Comfortaire”), which Select Comfort acquired in January 2013.
`V.
`FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS FOR RELIEF
`A. The History and Growth of the Consumer Adjustable Firmness Air
`Mattress Bed Market
`11. Consumer adjustable firmness air mattress beds are a separate and
`distinct line of commerce within the broader mattress industry. These beds are a
`unique and differentiated product and comprise a “submarket” in the broader
`bedding mattress industry. These beds consist of air-filled mattresses (no
`innersprings) containing internal-air chambers that may be adjusted for firmness by
`changing the numerical setting on a control. Although this unique and distinctive
`product is described by several generic names, such as “number bed,” this category
`of consumer product is often referred to, and will be, referred shorthand to herein as
`“adjustable firmness air beds.”
`12. Consumer adjustable firmness air beds enjoy a hard core and dedicated
`population of users. Select Comfort claims that 92% of bed owners would
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`recommend Select Comfort air beds. The industry recognizes this specialized type
`of bed system as a distinct market, or submarket, and many retail outlets, including
`Select Comfort, exclusively distribute and sell adjustable firmness air beds.
`13. The first manufactured adjustable firmness air beds began to appear in
`the 1980’s, with Comfortaire, an adjustable air bed manufacturer in South Carolina,
`claiming to have manufactured the “original” adjustable air bed in 1981. At the
`time, the words “air bed” evoked images of cheap, inflatable plastic sleeping pads
`used at the beach or on camping trips.
`14. Reportedly, Comfortaire spent several years refining air bed
`technology, improving mattress performance, lowering supply and production costs,
`and investing in marketing before it was able to economically produce quality
`mattresses. Comfortaire’s parent company, Park Place, reportedly backed
`Comfortaire financially during this initial period.
`15. Craig Miller, Sr. as President of American National Watermattress
`Corporation, introduced the first adjustable firmness air beds with number settings
`on a remote control to the market in 1987. Today, Craig Miller, Jr. is the President
`of plaintiff ANMI (name was changed in 1993).
`16. Plaintiff ANMI produces the consumer adjustable firmness air mattress
`beds that plaintiff Dires sells through online distribution channels. Among other
`things, ANMI also manufactures highly specialized adjustable firmness air beds that
`are sold to hospitals and other medical facilities, containing additional technology
`and other features specific to a medical setting which require clearance from the
`FDA to manufacture and sell beds in those settings.
`B. Adjustable Firmness Air Mattress Bed’s Unique Product Features
`and Customer Preferences
`17. Consumer adjustable firmness air mattress bed systems constitute a
`relevant product market, or submarket, for antitrust purposes. Adjustable firmness
`air beds are distinguished from other types of beds in the broader mattress market by
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`strong customer preference, primarily driven by the adjustability of mattress
`firmness by number, a key product attribute. A resting user can easily adjust the
`firmness of an adjustable air bed by changing a numerical setting on a remote
`control. This product feature makes adjustable firmness air beds uniquely attractive
`to certain customers, for whom an adjustable air bed is the only realistic and
`preferred choice.
`18. Adjustable firmness air beds utilize air chambers as the firmness
`support within the mattress rather than metal springs or foam. Due to their
`component structure, adjustable air beds are lightweight in construction and can be
`readily shipped disassembled to a residence and are relatively easy to assemble.
`19. Conventional mattresses do not contain replaceable parts and must be
`discarded when worn or damaged. The zippered covers on adjustable air beds,
`however, allow an owner to gain access to the air chamber and foam filling material
`in the mattress top, facilitating a replacement of the air chamber or a change of
`certain foam material over time should it become worn or compressed. The air bed
`is in essence renewable by simply replacing the worn-out portion, while a
`conventional mattress would need to be replaced in its entirety. Further, this
`renewability feature allows a user to upgrade some of the foam layers in an air bed
`rather than be required to replace the whole mattress if they want to experience
`some of the newly-introduced high technology foams, such as the cooling gel
`infused visco elastic foam filler products.
`20. There is no reasonable and economically viable alternative or substitute
`for a consumer adjustable firmness air mattress bed, nor to using a numerical value
`to describe the desired pressure setting of the air chamber in an adjustable firmness
`air bed. This unique and functional feature, originally created by plaintiff ANMI’s
`predecessor company, has resulted in common usage of the phrase “number bed” to
`describe adjustable firmness air beds. The firmness level of traditional innerspring
`or foam mattresses is stationary and cannot be adjusted. The firmness of an
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`adjustable air bed can be adjusted at any time according to the user’s current
`preference. This function is not possible on a conventional innerspring or foam
`mattress.
`21. For some queen and king size adjustable air beds, the firmness of the
`mattress can be adjusted differently on either side of the mattress at any time. For
`example, one sleeper could be at a “firm” setting and the second sleeper could be set
`at a “soft” setting. The firmness control system also has memory settings for each
`side of the bed to memorize a sleeper’s favorite settings and make it easier to change
`a setting and then to return to a preferred setting. Traditional mattresses do not have
`these features or capabilities.
`22. Select Comfort advertises the “unique” features of consumer adjustable
`firmness air mattress beds, including that they can be easily adjusted to an
`individual’s preference, comfort, and firmness. Select Comfort frequently claims
`that studies have shown that adjustable firmness air beds relieve back pain and
`improve sleep quality. Select Comfort also publicly claims that its consumer air
`beds deliver “an unparalleled sleep experience” and last “twice as long as an
`innerspring mattress.”
`23. Consumer preferences for adjustable firmness air mattress beds would
`sustain product sales in the face of a small but significant non-transitory increase in
`price. Adjustable firmness air beds are generally sold at a higher price point than
`traditional innerspring beds, indicating that customer preference supports higher
`prices for adjustable air mattresses as compared to traditional innerspring
`mattresses. Some of Select Comfort’s adjustable firmness air mattress bed systems
`are offered for sale at close to $10,000. Select Comfort also characterizes its air bed
`products as “luxury items.”
`24. Select Comfort’s adjustable firmness air beds are sold exclusively
`through its own network of retail stores/outlets across the United States. No non-air
`beds are displayed or sold at Select Comfort’s stores.
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`25. Trade journals and other publications categorize mattresses by the
`materials from which they are constructed; beds with air-filled adjustable firmness
`mattresses are viewed as separate and distinct products from one another in these
`publications.
`Significant Barriers to Market Entry and Expansion Exist
`C.
`26. Significant entry and expansion barriers exist in the consumer
`adjustable firmness air mattress bed market. Entry requires substantial investment
`in resources and time to build manufacturing facilities or contract for manufacturing
`services, hire and train employees, and establish national marketing and sales
`strategies and procedures.
`27. The manufacture of adjustable air beds is also subject to governmental
`regulation including federal and state consumer protection laws as well as federal
`fire retardant standards developed by the U.S. Consumer Product Safety
`Commission.
`28. A firm wishing to enter and meaningfully compete in the consumer
`adjustable firmness air mattress bed market must make substantial investments in
`developing the technology necessary to economically produce an adjustable air bed.
`The firm must procure or produce electric air pumps, internal-air chambers, mattress
`materials, and other product components, and then assemble them in a factory.
`29. The air chambers for adjustable firmness air mattress beds are
`manufactured in either a vulcanized rubber material or a thermoplastic material.
`The thermoplastic type air chambers use a unique manufacturing process, called
`radio-frequency welding, a process by which electro-magnetic energy is used to
`permanently bond thermoplastic materials together. This manufacturing process is
`unique to adjustable firmness air beds in the mattress and bed industry and requires
`significant investment in equipment, supplies, and personnel training before a firm
`may successfully introduce an air mattress bed product into the market. The
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`vulcanized rubber air chambers use hand glued seals, is very labor intensive and
`only produced by a few companies in the world.
`30. A would-be market entrant must also have one or more retail channels.
`A growing segment of adjustable air mattress bed sales – reflecting broader
`economic trends – comes from online sales. Select Comfort’s entrenched position
`as a monopolist with purported intellectual property rights also acts as a barrier.
`In January 2013, Tempur-Pedic International, Inc. introduced an
`31.
`adjustable air bed utilizing a non-numerical adjustment system, called “Tempur-
`Choice.” The Tempur-Choice product experienced significantly lower sales than
`expected because consumers were confused by and reluctant to purchase an
`adjustable air bed with a non-numerical adjustment system. Consequently, Tempur-
`Pedic exited the adjustable firmness air bed market.
`32. Defendant Select Comfort (the largest manufacturer and supplier of
`adjustable air beds) acquired Comfortaire (the second largest), for $15.5 million on
`January 17, 2013. The acquisition took place shortly after the settlement of a multi-
`claim lawsuit Select Comfort had filed against Comfortaire.
`33. Comfortaire was the second largest adjustable firmness air bed
`company at the time it was purchased by Select Comfort in January 2013, and Select
`Comfort was, and remains, the largest competitor in that market. The market is
`highly concentrated and dominated by Select Comfort.
`34. Select Comfort’s post-acquisition market share is in excess of 90% in a
`highly concentrated market leaving only approximately 10% or less of the market to
`be contested by its rivals, including plaintiffs. Select Comfort’s acquisition of
`Comfortaire had the effect of substantially lessening competition in the consumer
`adjustable air bed market and tending to allow Select Comfort to maintain and
`extend its already entrenched monopoly power.
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`35. Since the acquisition, no new significant competitors have successfully
`entered or penetrated the relevant market and such entry is unlikely in the
`foreseeable future.
`Select Comfort’s Dominance and Control Over the Consumer
`D.
`Adjustable Firmness Air Mattress Bed Market
`36. Select Comfort began selling adjustable firmness air mattress beds in
`1988. Select Comfort exclusively sells adjustable firmness air beds through its own
`retail stores and online to purchasers throughout the United States under the trade
`name “Sleep Number®.” Select Comfort has federal trademark registrations for
`“Sleep Number®,” “Select Comfort®,” and “What’s Your Sleep Number?®.”
`37. Select Comfort dominates and controls the consumer adjustable
`firmness air bed market. It is, by far, the largest manufacturer and seller of
`adjustable firmness air beds, accounting for more than 90% of the sales in the U.S.
`of consumer adjustable firmness air beds.
`38. Select Comfort has never attempted to register the term “number bed”
`as a trademark. Select Comfort has never used the term “number bed,” standing
`alone, in its marketing and sale of its number beds. The only time the term “number
`bed” appears in Select Comfort’s marketing is when “bed” is used as a generic term
`following Select Comfort’s trademark, “Sleep Number®.” For example, “the Sleep
`Number® bed.”
`39. Select Comfort has no patent or other protectable right that allows it to
`prevent competitors from selling beds that can be adjusted by changing the number
`setting on a remote control.
`40. Because the consumer adjustable firmness air mattress bed market is
`almost entirely occupied by Select Comfort, its dominance creates significant
`barriers for new and small market entrants, requiring significant time and monetary
`investments to establish relationships with key suppliers and develop marketing and
`promotional channels and activity to effectively reach consumers.
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`41. Select Comfort has not been cleared by the FDA to manufacture or sell
`beds for use in hospitals.
`42. Select Comfort has the power to control prices or exclude competition
`in the relevant market, or submarket, for consumer adjustable firmness air beds and
`has exercised that power. Select Comfort exercises price leadership control over the
`consumer adjustable air bed market.
`Select Comfort Has Engaged In Predatory and Abusive Conduct
`E.
`To Monopolize And Exclude Competitors From The Consumer
`Adjustable Firmness Air Mattress Bed Market
`43. Select Comfort has engaged in an overall coordinated multi-level
`scheme to monopolize the market for consumer adjustable firmness air mattress
`beds through a variety of anticompetitive and exclusionary acts, including without
`limitation, predatory enforcement of its purported intellectual property rights
`(trademark and patent) through threats and litigation designed to prevent and
`suppress lawful competition and harm competitors and their customers/distributors.
`44. Despite the fact that the percentage of sales within the broader mattress
`market that are attributable to adjustable firmness air beds has increased steadily
`since 2004, Select Comfort has doggedly prevented market entry by would-be
`competitors through its predatory behavior. A June 2006 article in BedTimes listed
`six firms, in addition to Select Comfort, as players in the adjustable firmness air bed
`market: Comfortaire, Foamco Industries, Boyd Specialty Sleep, American National
`Manufacturing (plaintiff herein), InnoMax, and Natura. Select Comfort has either
`sued, or threatened to sue, each of these competing adjustable firmness air bed
`producers.
`45. Select Comfort has attempted to achieve, and has actually achieved, a
`monopoly by and through the following abusive and exclusionary acts:
`(a) initiated and maintained a first bad faith patent litigation against plaintiffs
`before the International Trade Commission (“ITC”) in which Select Comfort
`claimed infringement by plaintiffs of one patent that Select Comfort knew was not
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`Sleep Number Corp.
`EXHIBIT 2002
`IPR2019-00514
`Page 12
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`

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`Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 13 of 55 Page ID #:368
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`infringed and that had obtained through fraud on the U.S. Patent and Trademark
`Office (“USPTO”) and of another patent notwithstanding Select Comfort’s
`knowledge that the patent was clearly invalid and not infringed. Select Comfort’s
`litigation on both patents is objectively baseless and brought in bad faith as it could
`not reasonably expect success on the merits of either infringement case;
`(b) initiated in April 2016 and maintained, into November 2016, a second bad
`faith patent litigation against plaintiffs before the ITC in which Select Comfort
`claimed infringement by plaintiffs on the basis of the same patent Select Comfort
`already knew was invalid and that had been obtained fraudulently, and on the basis
`of the parent to this patent, which is very clearly directed to “air at the top” mattress
`structures not utilized by plaintiffs or the other Respondents in that second ITC
`Litigation. Indeed, Select Comfort’s own prior art mattress known to it at the time
`of filing the second ITC Litigation, described in detail below, leads to no other
`plausible conclusion than the patent is invalid or cannot be infringed.2
`(c) initiated and maintained a pattern of abusive and/or baseless and repetitive
`claims regarding its trademark rights to intimidate and scare essential distributors
`and customers away from doing business with competitors in an effort to raise
`barriers to market entry and increase its competitors’ costs;
`(d) initiated and maintained a pattern of abusive and expensive trademark and
`false advertising litigation against plaintiffs and competitors designed to injure and
`financially drain competitors rather than for the legitimate purpose of obtaining
`judicial relief;
`(e) wrongfully interfered with plaintiff Dires’ search engine advertising
`business relationships with Google and Yahoo/Bing; and
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`2 Other prior art available to Select Comfort, which is directed to the actual and
`proper scope of the claims of the asserted patents, simply invalidates these patents
`while the prior art, which is just like the accused products legally demands the
`inescapable alternate conclusions that either the accused products do not infringe or
`the patents are invalid.
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`-12-
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`Sleep Number Corp.
`EXHIBIT 2002
`IPR2019-00514
`Page 13
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`

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`Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 14 of 55 Page ID #:369
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`(f) although Select Comfort has no right to use the term “number”
`exclusively, it persistently seeks to prevent any competitor from registering a federal
`trademark incorporating the word “number” or using “number” in any way in the
`sale of adjustable firmness air beds despite the fact that “number” describes and
`suggests the key product characteristic.
`46. Because Select Comfort has engaged in an overall scheme to
`monopolize the market for consumer adjustable firmness air mattress beds and to
`otherwise foreclose competition and harm competitors, its conduct should be viewed
`as a whole rather than considering each aspect in isolation.3 Accordingly, this Court
`need not analyze whether each facet of this abusive and predatory scheme
`constitutes a separate antitrust violation or parse each wrongful act into its
`component parts to determine if Select Comfort’s actions are immune from antitrust
`liability.
`1.
`
`Select Comfort Has Caused to Be Initiated and Maintained
`Multiple Bad Faith Predatory and/or Baseless Patent Infringement
`Proceedings Against Plaintiffs
`47. On October 16, 2015, Select Comfort instituted its first wave of legal
`proceedings in the ITC against plaintiffs, based on alleged infringement of two
`patents described below.
`48. This ITC proceeding is known as the “971 ITC Litigation”, a reference
`to its ITC investigation number, 337 TA 971. The patents at issue in the 971 ITC
`Litigation are known as the “’172 Patent” and the “’554 Patent.” While the 971 ITC
`Litigation was in an active pre-trial stage, Select Comfort filed a second
`investigation against plaintiffs. This case is known as the “999 ITC Litigation.” In
`the 999 ITC Litigation, Select Comfort reasserted some, but not all the claims4 from
`
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`3 See Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 698-99
`(1962).
`4 Select Comfort asserted new dependent claims, which incorporate previously
`asserted independent claims.
`
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`-13-
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`Sleep Number Corp.
`EXHIBIT 2002
`IPR2019-00514
`Page 14
`
`

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`Case 5:16-cv-00582-R-JC Document 27 Filed 11/14/16 Page 15 of 55 Page ID #:370
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`the 971 ITC Litigation regarding the ’554 Patent and Select Comfort asserted claims
`regarding another patent, the ’848 Patent. Plaintiffs have defended the 971 ITC
`Litigation through an evidentiary hearing and the 971 ITC Litigation is pending a
`decision by the ITC’s Chief Administrative Law Judge. Plaintiffs’ proof at the
`hearing demonstrated that Select Comfort’s claims of purported patent infringement
`by plaintiffs were objectively baseless and were asserted in bad faith with specific
`intent to interfere directly with plaintiffs’ business relationships. Additionally, the
`infringement positions taken by Select Comfort are objectively baseless as
`demonstrated by their own supporting documentation to the 971 ITC Litigation
`Complaint.
`49. The 971 ITC Litigation threatens to cause disruption in plaintiffs’
`import of components necessary in the production of its adjustable firmness air
`beds, which would result in substantial harm to plaintiffs’ business and property,
`including without limitation, interference with plaintiffs’ contracts and prospective
`contractual relationships with their customers, suppliers and vendors.
`In connection with these ITC proceedings, Select Comfort claimed that
`50.
`it could supply ANMI’s customers in the hospital industry with adjustable firmness
`air beds if ANMI was unable to do so due to the stoppage in its supply chain. This
`material representation was false and objectively baseless because Select Comfort is
`not registered by the FDA to manufacture and sell adjustable firmness air