Serta filed suit against Casper on 9/29/17
This lawsuit centers around Serta’s claims that Casper violated 3 of their patents when they constructed and released the Casper Wave in August of 2017.
Am I late to the party with this post, sure, but it is because I didn’t deconstruct my Casper Wave until this week (more on that later). I’m not a lawyer so I can’t opine on these claims, but I can take you inside the Casper wave and give you the information you may need to speculate on the outcome of this case. When I say inside, I mean INSIDE the Casper wave.
If you start with the silky smooth top blue layer and count down 4 layers you will start to see some squares/rectangles cut out of the Casper Wave. This is what Serta claims that their US Patents (number 7424,763 and number 7,036,173 and number 8,918,935) are being violated by the Casper Wave. For simplicity, references to those patents will be shortened to their last three digits, 173 & 763, & 935. as Serta did when they filed their claim:
Read the Full Serta Vs. Casper Lawsuit: 360271417-serta-v-casper
Case #: 1:17-cv-07468
When reading the document above, you can see that Serta is making claims that the “channel-cut” areas are covered by their patent and that the insertion of the polymer sections in the channels is also covered by their patent. Of course, the whole document reads like stereo instructions to those of us who aren’t lawyers. So, I’ll do my best to summarize the issues.
Serta is seeking an end to the production and sale of the Casper Wave, a monetary award, or a royalty from sales of the Casper Wave.
I have had the Casper Wave since 8/24/17 so I have had ample time to sleep test it (well attempt to sleep on it, but that’s a different story). After the sleep test I let it marinate in storage for a few weeks, then I pulled it out this weekend with the arrival of the Casper Essential. I wanted to compare the two new Casper products. In that process, I took my favorite 3 pieces of the Casper Wave, the cover the top blue layer and the 2nd latex layer and slapped them on top of the Casper Essential to create what I call the Casper Dream. As horrible as that may sound, I actually slept better on the Casper Dream than I did on the Casper Wave. How is that possible?
What’s behind the Serta Vs. Casper lawsuit is the entire reason why the Casper Wave just didn’t work for me. The channels that were cut out of the Casper Wave near the feet and those near the shoulders allow those parts of the body to sink more into the mattress. My problem was that the polymer layers which were inserted/glued to the channels in the middle pushed my middle section too far upwards. So, while Casper was aiming to provide “more support to the curves of your back and hips” in my case I was given too much support. Imagine being an inverted camel on your back, or better yet a bow (without the arrow).
Inside the Casper Wave after the first 2 layers were stripped off
After deconstructing the Casper Wave I’m left with 3 layers. The support layer and the transition layer which have the channel-cut sections that Serta believes are covered by their patents 173 & 763 & 935.
Above is a cut out of the channel-cut section of the Casper Wave. This is from the top or bottom of the mattress where the channels are not filled with polymer. Below you will see a picture of the channel-cut section in the middle of the Wave. Those are filled with glued in polymer sections.
Off topic, but I found two more ways to repurpose your Casper Wave if you can’t sleep on it. First, we have the new Casper DreamPillow. I need to find a nice cover for it and I’m going to sell it on my Casperdream.com page. Interesting side note here, this new pillow doesn’t fall under Serta’s patents 173 & 763 & 935. This pillow does not fit the page 13 preamble, because this pillow is clearly not a mattress. So I don’t think Serta is going to file another lawsuit over this pillow using the same patents.
The other product is a bit less practical, but if you cut a section of your wave out you can repurpose that cut as a nice cup holder.
You can see the three sections that I’m left with in this short video. This is a teaser intro to get things kicked off. The video after this is the one you are probably looking for.
Cutting into the channel-cut sections of the Casper Wave
This is what you have been waiting for. Let’s get inside the Casper Wave to see what this channel cut/polymer layer looks like. This is the heart of Serta’s claims against Casper. Ever wonder what a turkey carving knife can do to a mattress?
Who will be declared the victor by the court?
I’m not going to opine, but once a verdict is handed down I’ll update this post. If a settlement is reached then I’m sure I won’t know anything about it so I’ll update this post with something along the lines of it is settled and I have no idea what those terms are.
As expected the law moves slowly. So far most of the filing is just so that lawyers from different states can participate (pro hac Vice). However, Casper’s response should come up in the next few days (11/17). Then Serta will get a few days to respond and then on 11/27/17 they are scheduled to start their oral argument. Right now it may seem boring, but the fireworks should start soon.
Oral arguments were held on 11/27/17, they haven’t released much information on it yet but they do include this gem:
Final Pretrial Conference set for 7/5/2018 at 02:30 PM in Courtroom 14D, 500 Pearl Street, New York, NY 10007 before Judge Alvin K. Hellerstein., Jury Trial set for 7/9/2018 at 10:00 AM in Courtroom 14D, 500 Pearl Street, New York, NY 10007 before Judge Alvin K. Hellerstein
The wheels of justice turn ever so slowly, as we are looking at after July 4th of next year.
After oral arguments were held Casper and Serta filed the following documents in support or against a preliminary injunction:
Both sides have wonderful lawyers who each make convincing arguments. If you choose to read through each one individually you will see that they both make some valid points.
My Views on Casper’s Response:
A large part of the defense made by Casper on pages 13-14 is that the channels in the Wave are in the middle and the patent 763 says that the channels are on the top or bottom.
Page 23-24: Casper pours the polymer (the section that kept me from sleeping comfortably) into the channels. Their argument is that they didn’t affix it. When I deconstructed the Wave I thought these sections were glued in. However, after reading their argument it seems reasonable that they are affixed to the channel by heat rather than glue. I think they are on to something here.
Page 25: Casper claims that their process of forming channels is different from the patent.
Page 48: Casper states that the Serta patents are not broad enough to cover the Wave, or that they are too broad and are unenforceable. Smart move by the Casper defense. If the patents aren’t broad enough to cover the differences in the construction of the Wave, then Casper probably wins. If they are too broad then Serta would have patent claims against many other companies, so many that they probably couldn’t enforce the claims.
Page 49: Casper claims that Dreamwell inappropriately obtained their patent. No opinion there, I have no desire to become a patent lawyer.
Page 51: Casper claims that Serta hasn’t been damaged by sales of the Wave. I HAVE to agree here. The Casper Wave is by far the worst mattress I have tested in 2017. As an owner of the Casper Wave, I actually disassembled mine and strapped the top two layers onto a Casper Essential. As horrible as that sounds, it was ACTUALLY a huge improvement in sleep quality over the Wave. I would argue that sales of the Wave have to be extremely low, as it just isn’t a good mattress.
Page 52: Casper claims that Serta doesn’t sell the Icomfort or the Tomorrow Sleep. This argument forced Serta to declare (on pages 26-28 of the Serta Response above) that:
- The Tomorrow™-branded hybrid mattress and accessories are manufactured in a facility
under SSB’s control
- “All revenues from the sales of the Tomorrow™ branded hybrid mattresses and accessories flow directly to SSB”
Both of those disclosures are different from what the people at Tomorrow sleep tell the public. Generally, the Tomorrow sleep people say that they are backed by Serta. They don’t say that they are just another division of Serta Simmons Bedding. This declaration should harm Tomorrow Sleep’s sales, as they represent themselves as independent from SSB. Another smart move by the Casper defense team.
Page 54: “Indeed, all of the alleged harms Plaintiffs identify assume that iComfort and Tomorrow mattresses will lose sales to the Casper Wave, but there is not a shred of evidence to show that such losses have occurred or are likely ever to occur.” I agree with Casper on this one as well, the Tomorrow Sleep is so drastically different from the Casper Wave. Firstly, it is priced at about half that of the Wave. Second, it has coils surrounded by foam, whereas the Wave is entirely foam. Most importantly if you have the chance to test a Tomorrow Sleep or a Wave, you will know right away that the Wave is the inferior product (well at least in my case). I find it hard to believe that the same hypothetical shopper is looking at a sub $1,000 hybrid mattress is the same shopper for a $1,850 all foam mattress that hasn’t tested well by any review site other than one owned by Casper (sleepopolis…).
Page 54 continued: “Indeed, all of the alleged harms Plaintiffs identify assume that iComfort and Tomorrow mattresses will lose sales to the Casper Wave, but there is not a shred of evidence to show that such losses have occurred or are likely ever to occur.” Again I strongly agree, as much as I hate the experience that I have had with the Wave, I just don’t see it as remotely similar to the Tomorrow Sleep.
Page 55 (Same Argument): “There, Mr. Morgan—the person at Plaintiff Serta Simmons responsible for “defining and quantifying market segments”—testified that, in reality, “the Casper Wave and the Tomorrow mattress are targeting different consumer segments,””
Page 61: Casper argues that an injunction isn’t proper as the claims (if true) could be settled with cash. This feels like a slippery slope. They argue that they shouldn’t have an injunction forcing Wave sales to stop, as the worst case scenario is that were Casper to lose they could just write a check for damages. This makes me think that Casper is actually selling enough Wave’s that they fear losing those sales. Perhaps it isn’t about Wave sales, rather it is about perception in the market. No not the mattress market, “The Market” the one on wall street. If Casper plans to IPO at over $1 Billion, a stain like an injunction probably wouldn’t help their IPO price. Whereas, if Casper gets an influx of cash from an IPO, and subsequently loses this case they could just use a small portion of those funds to pay for this suit.
Page 63: I love this defense by Casper. They state that SSB has been silent on the issue of; have they licensed their patents to other mattress manufacturers? If they have then, SSB has a calculation (a comparable sale kind of) for how much money they would accept to have someone else using their patent. This means that if SSB has licensed this patent, we would know how much people pay for it. Then at the conclusion of this case if Serta prevails, you could use that patent “comp” and multiply it by the sales of all Casper Waves. The result would be “the damages”. Casper then would write a check and the suit would be finished. Except for that pesky issue of negotiating further Casper Wave sales. At that point Casper would need to obtain a license from Serta to continue sales, and you would guess that Serta wouldn’t be willing to issue one after this process.
Pages 68-70: Casper is a small fish in a large pool of mattress suppliers. It’s a nice argument, but let’s face it; the flagship Casper is the one that drives the profits at Casper. The Wave and the Essential are both inferior to the original Casper. Customers know this, losing the Wave will not take down Casper. Here is the quote:
“An injunction against the Wave, Casper’s most significant undertaking since the company launched, and the highest-priced mattress of only three total mattresses, would likely cause severe financial hardship to the company. An injunction also would likely irreparably damage Casper’s reputation and thus its commercial
relationships and access to capital”
I don’t think Casper really has a claim that losing the Wave will harm their sales and profitability, my guess is that the Casper Wave is a commercial flop. HOWEVER, the real issue is the damage to Casper’s reputation and ACCESS TO CAPITAL! They are worried that this suit will damage their IPO prospects.
Pages 70-71: Casper argues that the Wave is in the public interest. Casper needs to get real on this one, the world would be fine without the Casper Wave. Personally, I would have an extra $1,750 in my bank account if the Wave didn’t exist. (They gave me $100 off of the $1,850 price…so “thanks” Casper). It is nice to argue for competition, I just don’t think that the Wave is the argument that should be brought to the table.
It feels like Casper has to defend itself from an injunction so that the IPO process can go as planned. Having that loss on their record could be worth hundreds of millions of dollars in a potential IPO. That issue alone forces Casper to defend, what I believe is their worst preforming mattress of their mattress trio. Had Casper not had aspirations for an IPO, I’m willing to bet that they would either pull the product, or pay out royalties through a licensing agreement.
Let’s move on to my thoughts on the Serta Response
Page 8: Are the polymer sections “inserts”? Again no desire to become a patent attorney, too much argument over the definition of words.
Page 10: Can you remove the polymer sections or are they attached? My video above “What’s inside the Serta Vs. Casper Lawsuit” shows that removing the polymer isn’t very easy. Here are the questions asked at the oral argument:
“Q. Do you know why it is not possible to remove the gel polymer from the channels of the high resiliency foam layer without a destructive effect?
A. Yes. Well, there’s two reasons. One is mechanical, and one is chemical. The mechanical is that the HR layer, being an open cell foam, is porous, and so as liquid polymer is poured into that foam, there is a degree, I’ll call it, of mechanical engagement. It soaks into, if you will, the foam layer. Also in discussions with FXI, the manufacturer of both the HR layer and of the polymer—well, they don’t manufacture the polymer but they pour the polymer into the HR foam. I understand there are some additives, chemical additives to the elastomer recipe that improve its bonding properties. So I believe there are two mechanisms in play.”
I like the word destructive effect, again go watch my video above to see how I destroyed the Casper Wave.
Page 13: Polymer is affixed. I’m reminded of the Clinton Lewinsky thing here. Let’s define affixed. Does that mean glued? Could it mean being poured while in liquid state and then bonding to foam while cooled? Another reason why I’m not an attorney, arguing over definitions of words can’t possibly be fun.
Page 27: Serta chooses to acknowledge that IComfort is owned and controlled by SSB:
“All iComfort®-branded mattresses and accessories sold in NBC’s territories (including New York) are sold by SSB, not NBC. Richmond Decl. ¶¶ 17-19. All revenues from those sales are realized directly by SSB. Id. And all such mattresses are manufactured in facilities under SSB’s control. Id. Accordingly, SSB directly experiences the loss of sales, loss of prospective customers, and loss of market share associated with the Casper Wave’s wrongful competition against iComfort®-brand mattresses”
Page 27: Serta chooses to acknowledge that Beautyrest is owned and controlled by SSB:
Similarly, all Beautyrest®-branded hybrid mattresses and accessories are sold by SSB. Richmond Decl. ¶¶ 32-33. All revenues from those sales are realized directly by SSB. Id. And all such mattresses are manufactured in facilities under SSB’s control. Id. Accordingly, SSB directly experiences the loss of sales, loss of prospective customers, and loss of market share associated with the Casper Wave’s wrongful competition against Beautyrest®-branded hybrid mattresses
Page 28: Serta chooses to acknowledge that Tomorrow Sleep is owned and controlled by SSB:
SSB is also harmed by sales of Tomorrow™-branded hybrid mattresses lost to the Casper Wave. The Tomorrow™-branded hybrid mattress and accessories are manufactured in a facility under SSB’s control. Richmond Decl. ¶ 25. All revenues from the sales of the Tomorrow™ branded hybrid mattresses and accessories flow directly to SSB. Id. ¶ 26. Although the Tomorrow™ brand mattress does not compete in the same primary market segment as the Casper Wave, it does compete in the direct-to-consumer market with all Casper products.
This one kind of stings me a bit. The people at Tomorrow sleep have really led me to believe that they are “backed” by Serta, but otherwise independent. After reading the declaration from Kenneth Morgan, it’s pretty clear that Tomorrow Sleep is just another division of Serta Simmons Bedding. It makes me wonder how trustworthy the people running the tomorrow sleep division are.
More importantly the last sentence is the most striking (which is why it is in bold). It is an acknowledgment that the Tomorrow Sleep competes with other Casper products. This can only refer to the traditional Casper which is priced at about the same level as the tomorrow sleep. If you put the tomorrow sleep next to the Casper and ask me to choose, I would need to think about it for a few minutes before making my decision. At the same price I would pick the Tomorrow Sleep, but I would still strongly consider the original Casper as I think it is a great mattress. If a hypothetical buyer were in a mattress store testing out a Tomorrow Sleep and it were next to a Casper they would likely weigh the pros and cons of each mattress before making their selection. This is in contrast to the wave. If the Wave were next to the Tomorrow Sleep or the original Casper the hypothetical buyer would likely not even consider the Wave as the price is so drastically different. I would argue that the Wave is shooting for a different customer.
Page 29: Serta argues that many of their products compete with the Casper Wave:
“Serta Simmons has put forth strong circumstantial evidence of lost sales and market share, demonstrating the likelihood that a Casper Wave customer would otherwise buy a Serta Simmons product.31 Casper argues that Mr. Morgan testified that there are over 1,000 competitors in the mattress market as a whole and over 100 in the direct-to-consumer market segment. But these numbers, as offered by Casper, are misleading. Mr. Morgan clarified that the primary market segment that the Casper Wave is targeting is not the direct-to-consumer market segment,32 but rather the market segment containing “the consumer who is experiencing sleep issues related to—potentially related to a health problem” and that the “primary and most prominent” competitors in that segment are the iComfort®, Beautyrest® hybrid, Tempur-Pedic, Sleep Number, Sealy Optimum, and Sealy Hybrid”
This supports their claim (which I believe is credible) that a purchaser of the Casper Wave could very well purchase another SSB product were the Wave not on the marketplace.
Page 30: Serta argues for the snowball effect: Were they to lose out on customers today, perhaps they would lose out on others in the future. I’m torn by this argument. If the experience you have as a consumer is good you are probably more likely to buy from that brand in the future. I don’t think there is any doubt about that, but what if your experience is miserable? My dislike for the 2 weeks of limited sleep while testing the Casper Wave is well known. It is so easy to tell people about something that you don’t like, it is much more difficult to tell people about how much you love something. There is a Geico commercial about if your food tastes bad you ask other people to try it to confirm your belief. I’m not saying Casper would take this argument, but they could say that people who try the wave are much less likely to ever buy another Casper product, so they would likely end up buying a Serta (since SSB owns around 40% of the market share in the us).
Page 31: They redacted the R&D expenses that SSB spends every year. I really wanted to see those numbers, I wonder if they are in the 10Ks (damn now I’m going to go and try to find those).
Pages 32-33: Money is not enough to compensate for SSB losses. I think if it can be proved that SSB has licensed their patents in the past then money will be enough and can be easily calculated (I’ll give them a reference to an appraiser if they want one).
Page 38: Shows that SSB believes that Casper will survive an injunction against the Wave. They can still fall back on their original mattress, the essential, their pillows, sheets, adjustable bed, dog bed, lounger, partnership with Target and potential IPO money. That’s not why I love page 38. No it is the footnote that just makes me laugh. Get ready here it comes:
Casper is not the David to Serta Simmons’ Goliath that it portrays itself to be in its opposition. In fact, Casper has sued three separate online mattress review websites simply because they gave Casper bad reviews. When one of the websites did not immediately agree to settle (and take down the unfavorable reviews), Casper financed an acquisition of the website. The unfavorable reviews of Casper no longer appear on any of the three websites
I have written extensively about how Casper provided the funding to purchase sleepopolis.com so that the bad reviews of Casper would disappear and nothing but good things would appear. Well it worked, except for the fact that a few people noticed… You can read about Casper’s entanglement with Sleepopolis here.
Page 39: competition is good, just not when a patent is violated. SSB makes a nice point that we are only talking about mattresses, not life saving drugs. If both Serta and Casper ceased to exist, consumers would still be able to sleep on something. Of course, prices would rise as their competitors scale up their businesses to overcome the loss of these two companies.
Casper’s assertion that the world needs the Wave is the second most laughable thing I found in the documents. The first being the Sleepopolis fiasco that Casper engineered.
Well, what do you think? Who is going to prevail in this temporary injunction motion?
Update 12/7/17 Casper wins Round 1
The temporary injunction against Casper was denied. Injunction Denied Casper Vs. Serta
Page 1: The court found that the damages (if any) could be compensated by money if Serta prevails in the case. The court ruled that Serta failed part 2 of the four factor test for preliminary injuction:
“is likely to suffer irreparable harm in the absence of preliminary relief”
Page 2: “otherwise capable of being remedied by monetary damages. To the extent Plaintiff loses sales, customers, or market share to Defendant, monetary damages will make Plaintiff whole. Defendant’s continued marketing and sale of the allegedly infringing product will increase the recovery eventually available to Plaintiff if and when it prevails. Similarly, any “reputational harm” to Plaintiff is either speculative or can otherwise be neutralized if Plaintiff prevails at trial and establishes itself as the true “innovator” it claims to be. ”
The court agreed with Casper’s argument on page 61 of their motion, above. If Serta were to win the suit, Casper would know how many Waves that they sold and the court could decide a royalty/damage for each sale and Casper could write a check. Also, the court argues that worst case is that check is larger when the dust settles then it other wise would be. I think it’s a logical conclusion for the court to take, and it shows that the court didn’t feel that Serta’s argument; that their reputation is being damaged along the way, was valid.
Trial is still set for 7/9/17, which is a long way away. Will we see some kind of royalty agreement or settlement before trial, now that Casper won round 1?
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