Right, that burden becomes coffeepot.com's. Supposedly they would already be doing due diligence to make sure that the dynamic DNS requests were from legitimate coffeepots that they themselves manufactured (rather than say the fraudulent activities of a botnet using their open DNS for communications). At that point they should also have enough security information to verify if they should sign a certificate presented to them by their manufactured coffeepot under their certificate authority delegation to *.coffeepot.com.

To my knowledge you can even piggy back off of ACME's protocol work from Let's Encrypt, even if the auth/validation checks are different for the different security models.