Mastering Consumer Survey Evidence

December 7, 2012

The Court of Appeal’s ruling in Marks and Spencer v Interflora Inc [2012] EWCA Civ 1501 is yet another judgment in the long-running trade mark infringement litigation, concerning the use of Google AdWords, between Marks & Spencer and Interflora. By way of reminder, both companies provide flower delivery services. Marks & Spencer, as part of its online presence, purchased the INTERFLORA brand and other common mis-spellings of INTERFLORA as AdWords. Therefore, when consumers searched for INTERFLORA on the internet Marks & Spencer’s advertisement would pop up in the sponsored ad section of the search results.

Marks & Spencer’s advertisement did not refer to Interflora and referred solely to Marks & Spencer’s offering – as such, this is a case of ‘invisible’ use. The main point about whether Marks & Spencer’s use of the INTERFLORA brand is infringing is yet to be decided. The case has already been heard before the High Court, and referred to the Court of Justice of the European Union and is now referred back to the High Court for determination. As part of the case’s progress through the courts, Interflora has asked for permission to adduce witness evidence obtained via a ‘witness collection’ exercise or survey. Marks & Spencer resisted such application before the High Court and was partially successful.

This judgment is the Court of Appeal’s pronouncement on the appeal from the High Court survey evidence judgment. The trade mark infringement allegations are therefore yet to be heard by the High Court.

Quick recap of the applicable law

Registered trade marks can be infringed if a third party uses, in the course of trade, without the proprietor’s consent: (a) an identical sign in relation to identical goods; and/or (b) a similar or identical sign in relation to similar or identical goods and the proprietor can prove that such use carries with it a likelihood of confusion; and/or (c) in relation to marks with a reputation, use of an identical or similar sign in relation to any goods or services provided that such use causes detriment to, or takes unfair advantage of, the goodwill and/or reputation of the trade mark.

In each case, for infringement to be found, the court must find some evidence of harm to one of the functions of the trade mark. That function does not have to be the origin function unless one is relying on a likelihood of confusion argument.

In order to assess infringement, the court must adopt the persona of the ‘average consumer’ of the goods or services. Further, when dealing with AdWord type cases, the CJEU has held (Google France & Google (Intellectual property) [2010] EUECJ C-236/08 (23 March 2010)) that the definition of such a person should be further refined to the ‘reasonably well-informed and reasonably observant internet user’. That person must at least mentally link the sign with the trade mark or, preferably, be confused by the use of the sign into thinking that goods or services supplied under it originate from, or are otherwise economically connected with, the same source as those supplied under the trade mark.

The ‘average consumer’ is a legal construct and cannot be called to give evidence. Consequently parties strive to bring before the court evidence from consumers which, they say, approximates evidence from the ‘average consumer’. Such evidence is usually put forward in one or more of the following ways:

(a)    witness and documentary evidence of spontaneously confused consumers;

(b)    statistical consumer survey evidence; and

(c)    witness evidence obtained via a ‘witness collection exercise’.

Category (a) evidence does not frequently come to light when needed and can in any event be discounted by the court as unrepresentative of ‘the average reasonably informed, reasonably observant and circumspect consumer’. The rare individual who naturally lets the trade mark owner know he was confused may well have been less observant than his average counterparts, or in too much of a hurry.

Category (b) evidence has fallen out of favour with the UK courts. This is because it is notoriously difficult to frame a survey questionnaire which is not leading, or design a methodology which is not in some other way unreliable or objectionable. Trade mark owners rarely now attempt to get such statistical surveys admitted as their chances of doing so, and of such surveys being regarded as reliable, are slim. However, the cost of designing and implementing them is very high.

Category (c) evidence, however, is increasingly relied upon in infringement actions in the UK. This is not least because it tends to be a bit cheaper to obtain and previously the judges have seemed to prefer to rely on evidence from a handful of representative consumers, cross-examined before them, rather than arguments based on statistics. The judgment given on 20 November 2012 by the Court of Appeal in this Google AdWord litigation, is likely to reverse this trend.

The Court of Appeal judgment

In this case, the Court of Appeal refused to admit the witness evidence Interflora had obtained as part of a witness collection exercise. In so doing, it set down clear guidelines which detailed the very limited circumstances in which both category (b) and (c) evidence would be admitted. It noted that, of course, such evidence is technically admissible but that does not mean it should always be admitted, given the overriding objective and the court’s case management powers under the Civil Procedure Rules.

As the Court noted, ‘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.’

The clear message contained in this judgment is that ‘in a case of trade mark infringement… in relation to the provision of ordinary consumer goods or services, [such evidence will be admitted] only in a special or unusual case’. Instead the judge will simply place himself in the shoes of the ‘average consumer’ (or, as here, ‘the reasonably well-informed and reasonably observant internet user)’. From this perspective, he will then assess whether the average consumer is likely to be confused or to make the required mental link.

The Court’s approach was largely determined by its view that such evidence is very unlikely to be helpful. The average consumer test (in trade mark infringement) is conceptually different from the substantial proportion of the public test (in passing off). The average consumer is a hypothetical legal construct and therefore ‘In the absence of special circumstances, how can calling ten, twenty or thirty witnesses selected from a statistically invalid survey be extrapolated into the effect on that legal construct of the… sign in issue’.

Even on the rare occasions where the court determines that such evidence is likely to be helpful, it will still refuse permission for it to be admitted if it does not pass a costs/benefits assessment. The court will require the parties to provide detailed estimates to enable this analysis to take place at an early stage – does the likely impact of the type of evidence requested on the outcome justify the costs the other party will incur in dealing with it?

The procedure going forward

Trade mark and brand owners who, despite the court’s discouragement, still wish to rely on category (b) or (c) evidence should consider carefully the costs involved and the considerable procedural hurdles the Court of Appeal has now placed in the way of its admission. The new procedural regime has been set out in detail below.

The new procedural regime for the use of consumer surveys and witness collection exercises in the UK courts

If a party to trade mark or passing off proceedings wishes to rely on consumer survey evidence, or witness evidence obtained as a result of a witness collection exercise, he/she must follow the steps below. The Court of Appeal has made clear that the old form of words used in orders concerning survey evidence are no longer appropriate and instead states that a new form of words is needed which will cover the following three points:

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

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

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

The Court has stated that when deciding to give permission to carry out a survey the applicant ‘should’ provide the court with:

1.      The results of any pilot survey;

2.      Evidence that any further survey will comply with the Whitford guidelines; and

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

The Court will then give permission only if it is satisfied that the resulting evidence from any such survey is ‘likely to be of real value’, and that the ‘value justifies the cost’. The Court noted that ‘these criteria are likely to be satisfied only in a special or unusual case’. The Court further notes that it would expect any court considering such an application to conduct a costs/benefit analysis in order to reach a decision.

Further, if what is sought is permission to call witnesses who have responded to a survey or other ‘witness collection’ experiment, the applicant should:

1.      Provide the court with witness statements from the witnesses proposed to be called;

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

3.      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;

4.      Disclose how the proposed witnesses were selected from among the respondents to the survey; and

5.      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.

At the hearing of the application, the court should provide a definitive ruling as to admissibility of such evidence: ‘The court must evaluate the results of whatever material is placed before it [i.e. the pilot survey]. 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’.

When considering whether to make an application to adduce witness evidence garnered from a witness collection or survey exercise, it is important to remember that ‘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…’.

Lastly, it is always worth paying heed to what the Court of Appeal really thinks of this type of evidence, and at para. 64 of its judgment you have the clearest indication yet:

‘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.’

Comment : Statistics and ‘confusion’

As important as the procedural guidance given by the Court of Appeal is, the court’s view on a substantive legal grey area, which is hidden away in its judgment, may have even greater impact. This issue concerns how to predict whether the ‘average consumer’ is likely to be confused.

In Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 159, Jacob LJ noted that the ‘average consumer’ is a notional individual or legal construct whereas the substantial proportion of the relevant consumers’ test [for passing off] involves a statistical assessment. However, in the end he thought ‘they come to the same thing’, for if a ‘substantial proportion of the relevant consumers are likely be confused, so will the notional average consumer and vice versa’.

The Court of Appeal in the Interflora case disagreed with Jacob LJ’s view that they come to one and the same thing. It used the example that if 49% of the electorate vote for Candidate A and 51% vote for Candidate B, clearly Candidate B will win. Also, while a substantial proportion of the electorate voted for Candidate B, it does not necessarily follow that all Candidate B voters are average voters – how could they be when 49% voted for Candidate A? 

As the court noted: if ‘most consumers are not confused, how can it be said that the average consumer is?’. Conversely, the court would also not be ‘any closer to answering the legal question’, if when considering whether Marks & Spencer’s advertisement would enable ‘a reasonably well informed and observant internet user’ to grasp, ‘without undue difficulty’, that it was not connected with Interflora, it concluded ‘that most internet users would have grasped that but that some would not’.

The Court of Appeal’s indications on this issue have, in the context of non-specialist goods and services, made early predictions of the likely outcome very difficult. It will be the judge’s global assessment at trial that will win the day.

Alexandra Brodie is a Partner in the IP team based at Wragge & Co’s London office. Bonita Trimmer is an Associate there: