Court of Appeal re-emphasises test for consumer evidence to be of real value

Practical Law UK Legal Update 8-525-6609 (Approx. 6 pages)

Court of Appeal re-emphasises test for consumer evidence to be of real value

by PLC IPIT & Communications

Facts

The claimants (together, Interflora) operated a flower delivery network under trade mark registrations for INTERFLORA. The defendant, Marks & Spencer plc (M&S), was a large retailer which sold goods online, including flowers, which it delivered in competition with Interflora. M&S bought several Google keywords containing the mark INTERFLORA and close variations of it. Searching against these keywords generated a sponsored link to M&S's online flower delivery service. Interflora brought proceedings against M&S, alleging trade mark infringement based on double identity and likelihood of confusion.

In September 2011, the ECJ ruled on a number of questions referred to it in the proceedings (see Legal update, ECJ judgment on Interflora v Marks & Spencer advertising keywords reference). The ECJ repeated guidance already issued by it in Google France SARL v Louis Vuitton Malletier SA [2010] ECR I-2417 to the effect that double-identity infringement would be made out only if there was an adverse effect on one of the functions of the trade mark. In relation to the UK action, the ECJ pointed out that if the facts showed that M&S's advertisements led reasonably well-informed and reasonably observant internet users to believe that M&S's flower delivery services were part of Interflora's commercial network, because they did not allow the users to determine whether M&S was economically linked with Interflora, then this would mean that the origin function of Interflora's mark would have been adversely affected.

Earlier Court of Appeal ruling

In November 2012, the Court of Appeal allowed M&S's appeal against the High Court's permission to adduce certain survey evidence (see Legal update, Court of Appeal lays down new guidelines on survey evidence in Interflora v M&S case). The court held that in determining whether to give permission, the court must evaluate the results of whatever material was placed before it and should only give permission if it was satisfied that the evidence was likely to be of real value and that the value justified the cost. The court also said that different considerations might come into play where evidence was called consisting of the spontaneous reactions of members of the relevant public to the allegedly infringing sign or advertisement; if there was evidence of consumers who had been confused in the real world, there could be no objection to calling it. However, it would usually 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 undertaking to produce a selection that demonstrated the full range of answers to the questions; that placed the burden on M&S to disprove the validity of the selection, rather than on the claimant to validate it.

Present application

In the present application, Interflora applied to put in the evidence of 13 witnesses whom it claimed were consumers who had been confused. They had gathered the evidence from a list they had compiled of over 100,000 people who had either bought flowers through their website or who had participated in a previous survey. Of those, 56 people indicated that they would be willing to be witnesses. These were interviewed again by Interflora's solicitors (following a set script) and witness statements were subsequently obtained from 13 of them. The three most relevant questions were:

"What did you think when you saw M&S when you entered the search term "Interflora"?"

"Why do you say that?"

"From your memory of these search results, what, if anything, do you think this tells you about any relationship between Interflora and M&S?"

Of the other 43 people, 24 said they did not think there was any relationship between the parties.

Referring to the approach of the Court of Appeal and allowing the application, Arnold J concluded that the evidence was likely to be of some value in assisting the court to answer the substantive legal question as to whether M&S's advertisement would enable a reasonably well-informed and reasonably observant internet user to grasp, without undue difficulty, that Interflora and M&S were independent. The judge did not think it was likely to be decisive, but it did not appear to be of little or no value. How much weight to give it would be a matter for evaluation after the witnesses had been cross-examined and once it had been put in the context of all the other evidence available at trial. On the question of cost, Arnold J noted that M&S had already spent the major part of the money needed to deal with the evidence. For more information, see Legal update, High Court allows Interflora's evidence from consumers in keywords dispute against M&S.

Decision

The Court of Appeal allowed the appeal. It concluded that Arnold J had exercised his discretion to allow the application on a flawed basis. The Court of Appeal therefore exercised the discretion afresh and refused the application. The reasons for the decision are summarised below.

Lewison LJ noted that the witness statements painted a different picture to that given by the raw answers to the questions. The statements did not distinguish between the answers to the first two questions, which might be described as the witnesses' spontaneous real world reactions, and the answer to the third question, which could not. It was plain from the actual answers that many of the witnesses were led by the third question into speculating about something they had not thought about before. The fact that this question was to be asked if the witness failed to give a real world response made it clear that it was an attempt to elicit an answer by an artificial stimulus. Further, the statements eliminated much of the witnesses' hesitancy and uncertainty.

Lewison LJ held that the witness statements were not a fair reflection of the raw data. It was therefore necessary to concentrate on the raw data rather than the witness statements. On that analysis, Lewison LJ considered that only four witnesses (out of a pool of 100,000) could be said to have had difficulty grasping that M&S was independent from Interflora, leaving 24 interviewees that had no difficulty in separating them. This demonstrated no more than that some users might have had that difficulty, which, according to the ECJ, was an insufficient basis for finding that the origin function had been adversely affected.

Arnold J had been misled by the impression created by the witness statements when compared to the raw data. He had mischaracterised the evidence by labelling it evidence of actual confusion (assuming that by this he meant confusion in the real world).

Lewison LJ also explained that the 13 witness statements were unrepresentative of the range of responses to the questions. He criticised Arnold J's rejection of M&S's complaint that Interflora had not obtained statements from the 24 witnesses who said they did not think there was any relationship between the parties and his suggestion that it was up to M&S to obtain their own evidence if they wished to. By leaving M&S to amplify the range of the responses to the questionnaire, Arnold J had imposed on M&S the burden of disproving the validity of the selection, contrary to the Court of Appeal's earlier ruling, which required the claimant to validate it at the "gatekeeping" case management stage of the proceedings. The short time between the outcome of the application and the trial date only increased the burden on M&S. Moreover, Arnold J had failed to take into account the potential cost of adducing this additional evidence.

Lewison LJ also criticised Arnold J's suggestion that he was being asked to impose higher standards for the admission of consumer evidence in trade mark cases. It was not a question of higher standards, but of ensuring that the relevant standards were complied with, such as the need for a witness statement to be in the witness's own words (see paragraph 18.1 of Practice Direction 32 of the Civil Procedure Rules (CPR)). In addition, if the evidence relied on was the consumers' spontaneous reaction to an allegedly infringing sign, it was all the more important to eliminate answers to leading questions which almost by definition did not produce spontaneous responses (the heart of guideline (iv) of the "Whitford guidelines" (laid down in Imperial Group plc v Philip Morris Ltd [1984] RPC 293), which the Court of Appeal had highlighted in its earlier decision).

In conclusion, by permitting evidence which was of "some" value, Arnold J had framed the Court of Appeal's test in a negative way with the result that evidence which was not of real value would be admitted in a case concerning the provision of ordinary consumer services. Lewison LJ therefore reflected that he had not made his ruling sufficiently clear in the earlier Court of Appeal decision and said:

"Let me say it again, but more loudly. A judge should not let in evidence of this kind unless the party seeking to call that evidence satisfies him (a) that it is likely to be of REAL value; and (b) that the likely value of the evidence justifies the cost."

He added that in the light of the recasting of the overriding objective of the CPR so that since 1 April 2013 it also referred to dealing with cases at proportionate cost, it was all the more important for judges to exercise their power to limit or exclude technically admissible evidence that was not of real value.

Sir Robin Jacob added that while at first glance the appeal appeared to represent a case management issue with which the court should not interfere, the focus on the witness statements at issue made it clear that there was no value in the proposed evidence. However, he commented that this did not mean that the days of survey evidence were over, although if all they did was to scratch around for something and produce as little as the survey in this case had, there was every reason for excluding it along with the resultant witnesses.

Comment

The decision is an emphatic rebuke of Arnold J's approach in allowing in consumer evidence that was merely of some value and apparently leaving it to the trial judge to decide what weight, if any, they should apportion to it. The correct test that had been clearly stated previously by the Court of Appeal was whether the evidence was likely to be of real value and whether that value justified the cost. This is the case even if the evidence is of the spontaneous kind, which might be more probative of confusion. There is now considerably more pressure on case management judges in trade mark and passing off cases to act as robust gatekeepers of consumer evidence where ordinary goods and services are involved. The facts of the case illustrate that the spontaneous reactions of a handful of witnesses out of many thousands which might suggest that they were confused as to the origin of goods or services will not amount to evidence of real value and cannot be expected to be admitted. Further, litigants seeking to rely on survey evidence will need to ensure that, by the time of trial, the witness statements they derive from it reflect the full range of the responses to the questionnaire, at least where a segment of the responses support the other side's case (or undermine their own).

Case

Interflora Inc and another v Marks & Spencer plc [2013] EWCA Civ 319, 5 April 2013 (Longmore and Lewison LJJ and Sir Robin Jacob; Geoffrey Hobbs QC and Emma Himsworth QC (instructed by Osborne Clarke) for the appellant, and Michael Silverleaf QC and Simon Malynicz (instructed by Pinsent Masons LLP) for the respondents).

Court of Appeal re-emphasises test for consumer evidence to be of real value | Practical Law