Adwords: Court of Appeal Judgment on Trade Mark Surveys

Ruling on a point of principle that has never before been argued before in UK courts, the Court of Appeal in Marks and Spencer v Interflora Inc [2012] EWCA Civ 1501 had to consider the use of surveys in establishing trade mark confusion, and the use of witnesses identified in the course of those surveys.

In a detailed judgment (159 paras), Lewison LJ considered objections from Marks and Spencer which he referred to as the ‘macro objection’ and the ‘micro objection’. He supported both objections and allowed the appeal.

The macro objection was that the court should not permit evidence to be adduced from witnesses selected as a result of a survey unless the survey itself is statistically reliable. On this argument, it does not matter whether such evidence is technically admissible, because the court has power to exclude evidence that is otherwise admissible. Since the main issue in the case is whether the reasonably well-informed and reasonably observant internet user would or would not understand the M & S advertisement (the adwords in dispute) to indicate that M & S was part of the Interflora network and ‘the reasonably well-informed and reasonably observant internet user’ is not a real person but a legal construct, simply to call some internet users to give evidence is not probative of the issue in the case. That evidence can only be probative if those who are called can be seen to stand proxy for the legal construct through whose eyes the essential question must be judged.  Unless the survey used for witness collection is itself a reliable survey, the court will have no means of knowing whether the selected witnesses can be treated as reliable proxies for this legal construct. The problem is compounded where, as in this instance, the party calling the witnesses is permitted to select those who give most support to its case.

When considering surveys generally and witness collection programmes in particular, Lewison LJ remarked tellingly (at [64]) that ‘a cynic might think that the phrase “witness collection programme” is simply a euphemism for adducing evidence from a skewed selection of witnesses identified by means of a statistically invalid and unreliable survey’.

The judgment has application in all trade mark disputes, not just those relating to adwords, and the guidance on the use of surveys is especially valuable: 

143. In the general run of cases it seems to me to place an undue and unfair burden on the other party for one party to tender in evidence witness statements from selected respondents to a questionnaire without even undertaking to produce a selection that demonstrates the full range of answers to the questions. As Mr Hobbs [counsel for M&S] said, that places the burden on the defendant to disprove the validity of the selection, rather than on the claimant to validate it. Such a burden could in my judgment only be justified if the party tendering the evidence can show that it is likely to have a real impact on the outcome of the trial. In addition the cost of undertaking even a witness collection exercise and any subsequent investigation or follow up is extremely expensive. Mr Hobbs told us (without contradiction from Mr Silverleaf [counsel for Interflora]) that the cost of the exercise in the present case would exceed £250,000.

144. The current practice, which Arnold J understandably followed, is to allow the evidence in unless the judge can be satisfied that it will be valueless. In my judgment that is the wrong way round. I consider that, even if the evidence is technically admissible, the judge should not let it in unless (a) satisfied that it would be valuable and (b) that the likely utility of the evidence justifies the costs involved.

145. It follows, in my judgment, that the approach that I took in UK Channel Management Limited v E! Entertainment Television Inc (and followed by Mann J in A & E Television Networks LLC v Discovery Communications Europe Ltd §8 (v)) should no longer be followed.

146. In the present case I do not consider that Interflora has demonstrated that the evidence it wishes to call would be of real value. To put it bluntly, Interflora starts with an unreliable dataset from which it proposes to select the witnesses most favourable to itself. I would hold, therefore that Mr Hobbs’ macro objection is well founded. I would therefore allow the appeal on that basis.

147. There was some debate before us about the procedure that should be followed. First, it is clear that the court cannot make any order without some material on which to base its decision. Thus there can be no objection to the carrying out of a true pilot survey, at the risk as to costs of the party carrying it out, before applying for permission to adduce the results of a survey. But that pilot survey will be no more than a basis for a further survey. Second, an application to admit survey evidence or evidence from respondents to a survey (or pilot survey) should be made as early as possible in the course of case management. It would not be right to leave it to the time when witness statements are exchanged. The objective of such an application is to have a definitive ruling one way or the other. It is a natural temptation for a judge who is not immersed in the case to leave questions of admissibility to trial. It is the temptation to which I succumbed in UK Channel Management Limited v E! Entertainment Television Inc. But balancing the cost of a survey (or witness collection exercise) against its likely utility, this temptation should be resisted. Third, the form of order that has evolved provides that:

“…neither party has permission to adduce survey evidence without first having obtained the leave of the Court. Any application for such leave is to include details of any questions proposed to be used in any such survey and details of the method and procedures proposed to be adopted in relation to the conduct thereof.”

148. It is, in my judgment, doubtful whether this form of order catches a witness collection exercise. After all, Interflora does not wish to rely on the survey evidence of questionnaires. It wants to rely only on the evidence of the selected witnesses. In Specsavers International Healthcare Ltd v Asda Ltd [2010] EWHC 1497 (Pat); [2010] FSR 28 Mann J held that although a witness collection exercise might not fall within the literal effect of the order, it nevertheless fell within the vices which such an order was designed to eliminate. His decision in this respect was upheld by this court: [2012] EWCA Civ 24; [2012] ETMR 17. Whether this was right as a matter of interpretation of the order does not matter. What matters is that the purpose of the order is, as Kitchin LJ put it in Specsavers:

“to avoid the spending of time and money on what is clearly irrelevant and unsatisfactory evidence.”

149. For the future, the standard form of order should be redrafted so as to make it clear that:

i) A party may conduct a true pilot survey without permission, but at his own risk as to costs;

ii) No further survey may be conducted or adduced in evidence without the court’s permission; and

iii) No party may adduce evidence from respondents to any survey without the court’s permission.

150. In deciding whether to give permission, the court must evaluate the results of whatever material is placed before it. Only if the court is satisfied that the evidence is likely to be of real value should permission be given. The reliability of the survey is likely to play an important part in that evaluation. Even then the court must be satisfied that the value justifies the cost. As Mr Hobbs said, this requires the court to conduct a cost/benefit analysis. In a case of trade mark infringement in which the issue is one of deception in relation to the provision of ordinary consumer goods or services, these criteria are likely to be satisfied only in a special or unusual case.

151. If what is sought is permission to carry out a survey, the applicant should provide the court with:

i) The results of any pilot survey;

ii) Evidence that any further survey will comply with the Whitford guidelines; and

iii) The cost of carrying out the pilot survey and the estimated cost of carrying out the further survey.

152. If what is sought is permission to call witnesses who have responded to a survey or other experiment, the applicant should:

i) Provide the court with witness statements from the witnesses proposed to be called;

ii) Demonstrate that their evidence will be of real value in deciding the issues the court has to decide;

iii) Identify the survey or other experiment and, in the case of the administration of a questionnaire disclose how many surveys have been carried out, exactly how those surveys were conducted and the totality of the number of persons involved and their answers to all questions posed;

iv) Disclose how the proposed witnesses were selected from among the respondents to the survey; and

v) Provide the court with the cost of carrying out the pilot survey and the estimated cost of carrying out any further work in relation to those witnesses.

153. It may have a material effect on the court’s decision whether (and if so to what extent) the applicant is prepared to waive privilege in so far as it attaches to the selection, interviewing and preparation of witness statements for the witnesses proposed to be called. In the absence of a waiver of privilege in this respect, a party who wishes to challenge the evidence is likely not to be able to do so effectively; and in particular would not know what questions were asked of the witness in order to prepare the witness statement. If the evidence proposed to be called cannot be effectively challenged, that may in itself reduce its potential probative value.  

In the course of his judgment, Lewison LJ expressed the view (at [59]) that the results thrown up by search engines on the Internet fall within the general description of ordinary consumer services in relation to which the judge can make up his or her own mind without the need either for expert evidence or the evidence of consumers. It followed that evidence from real internet users is not essential.