Interflora v M&S: Court of Appeal surveys surveys

In the cut-throat market for flower
delivery, competitors resort
to increasingly daring ploys ...

"This is another case about Google AdWords and registered trade marks". That was the opening sentence of Mr Justice Arnold's judgment in Interflora, Inc. Interflora British Unit v Marks and Spencer PLC Flowers Direct Online Limited [2009] EWHC 1095 (Ch). an application for an interim  injunction which he heard, sitting as a judge in the Intellectual Property Community Trade Mark Court. That application led to a reference to the Court of Justice of the European Union (CJEU) in Case C-323/09, noted by the IPKat here, then came back for trial before Arnold J in June of this year at [2012] EWHC 1722 (Ch). when the judge gave permission to Interflora to run one of two pilot surveys which it wished to conduct. M&S thought this should have been nought out of two and appealed. This in turn led to today's ruling of the Court of Appeal, England and Wales, not yet published online but hosted by the IPKat as case [2012] EWCA Civ 1501. 

In today's ruling the court (Lords Justices Lewison -- who is a former Patents Court judge -- Etherton and Hughes) allowed M&S's appeal.  The judgment is a lengthy one (161 paragraphs) and contains a survey of case law on the admissibility and efficacy of consumer surveys [says Merpel, both the broad scope of the survey of the law of surveys and the copious quantity of cut-and-pasted quotes were worthy of the trial judge himself ...].  

What was the dispute originally about?

To remind readers what the dispute was originally about: Interflora, which ran the largest flower delivery network in the world and held a bouquet of trade marks to match every occasion, applied for an interim injunction to stop Marks and Spencer (M & S) and others using the word 'Interflora' as a sponsored Google keyword search term, as well as the misspellings 'Intaflora' and 'Inter-flora': the ground on which injunctive relief was sought was trade mark infringement.  M&S, which operated an international chain of retail stores, was running its own highly successful flower delivery service via a website upon which customers could place their orders. On keying 'interflora' or a reasonable mis-spelling of that word, online shoppers seeking that ubiquitous operation would be met with an advertisement for the competing M&S service at the top of its non-organic 'hits'.

Was today's ruling then about "Google AdWords and registered trade marks"?  No.  

So what was today's decision all about?
At this point Annsley the AmeriKat explains: this was an appeal on a point of principle never before heard before a British court: should Interflora  be allowed to call the evidence of witnesses who were identified by means of two separate witness-gathering exercises, where the proprietor of the allegedly infringed trade mark does not intend to rely on the survey or questionnaire by means of which those witnesses were identified?  Earlier this year, at [2012] EWHC 1722 (Ch), Arnold J said Interflora could call witnesses from the first exercise but not from the second exercise. At [12] and [13], explaining that the evidence of such witnesses

"... by virtue of the fact that they have been respondents to a survey is admissible and may be probative, even though the survey itself is not and cannot be relied upon and even though the questions posed in the survey were flawed".

What did M&S say in response?

M&S argued 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: it did not matter whether such evidence is technically admissible, because the court has power under the Civil Procedure Rules (CPR 32.1(2), if you were wondering) to exclude evidence that is otherwise admissible. The substantive question in the proceedings was whether the reasonably well-informed and observant internet user would -- or would not  -- understand that the M&S advertisement indicated that M&S was part of the Interflora network. Since such a person does not exist, being neither more nor less than a legal construct, the calling of some internet users to give evidence was not probative of the state of mind of the reasonably well-informed and observant internet user.  Indeed, it could only be probative if those who were called could be considered a proxy for the legal construct. This being so, unless the survey used for witness collection was itself a reliable survey, the court would have no way of knowing whether the witnesses could be considered reliable proxies. M&S added that, even if the evidence of such witnesses were admissible, it would be expensive but would be of such minimal use and would consume so much of the court's time, that the court ought to exclude it in exercise of its powers under CPR 1.4(2)(h) and CPR 32.1.

What did the Court of Appeal say?

The Court examined cases which discussed the "average consumer" whom, they explained, could not always be identified by survey evidence. These cases demanded a different test to that of the "substantial proportion of the population" test in passing off cases. In Bach and Bach Flower Remedies Trade Marks [2000] RPC 513 members of the public had been called at trial and these witnesses had been identified as a result of a survey of 9,500 people. There the judge had rejected the survey as being unreliable. On appeal, the court said that evidence of members of the public could not stand proxy for the "average consumer" because "no one individual is such a consumer or end-user and the issue cannot be resolved by counting heads" and that, "absent special circumstances it does not generally help the court to call members of the public simply to say that they would (or would not) be confused."  

Once the prerogative of the
consumer, confusion is now
a matter for the judge ...

The Court then cited cases including esure Insurance Ltd v Direct Line [2008] RPC 34, Re GE Trade Mark [1973] RPC 297 and Gut Springenheide GmbH v Oberkreisdirektor des Kreises Steinfurt (Case C-210/96) from which it was clear that the ultimate issue of confusion is one for the judge, rather than witnesses, but that a judge can reach the conclusion in the absence of evidence from consumers using his or her own common sense and experience in the world.   Although the CJEU in Gut Springenheide held that such evidence was not precluded "where the national court has particular difficult in assessing the misleading nature of the statement or description in question", it is plainly not intended that such evidence should be routine.  The results thrown up by search engines on the internet, at issue in the Interflora cases, are the types of ordinary consumer services in relation to which the judge can make up his or her own mind without the need for survey evidence.  Lewison LJ held that, in his judgment (which the other judged agreed), evidence from real internet users was not necessary to establish Interflora's case.

Lewison LJ placed particular emphasis on Arnotts Ltd v Trade Practices Commission [1990] FCA 473,  Federal Court of Australia (FCA) ruling on whether other foods were substitutable for biscuits.  One party commissioned a market survey based on interviews with 1,200 people selected at random in so far as they were the good folk in certain representative demographic regions that opened the door when the interviewer knocked.  Three interviewers were called to give evidence, but objection was taken in that it was argued that all 1200 interviewees should have been called.  The court discussed the acceptability of survey evidence and said that one possibility was to call all 1,200 respondents -- so that there was no distortion to the evidence -- but that would add substantially to the costs and duration of the trial.  The second possibility was to call evidence of a lower number of respondents but that, inevitably, those who would be called would give evidence skewed in favour of one party or the other and as such, their evidence would be of little value.  The court said:

"All that it established was that, with the expenditure of sufficient effort and money, 152 people could be found somewhere in Australia who claimed to expenditure associate the word RITZ with the plaintiff.  The 152 witnesses were not a fair sample of the general public."

The third possibility was that there would be no evidence of matters of consumer confusion and such questions would be left attitudes to the court to make its own assessment.  However, the FCA noted that "information, [being] preferable to intuition" where the state of public knowledge or attitudes to some subject is a relevant factor to the court's adjudication, it is better to admit the evidence.  Survey evidence, should, thus only be admitted if the survey complied with criteria for reliability that was akin to the Whitford Report guidelines.  In this case, Lewison LJ explained that selected witnesses are not a fair sample of

"the class of reasonably well-informed and reasonably observant internet users, with the consequence that there is no ground for any extrapolation on a statistical basis, or on the basis of any mathematical or logical probability, of the views of the selected witnesses as representing the effect of the M&S advertisement on the hypothetical reasonably well-informed and reasonably observant internet user.  If evidence of this kind cannot form the basis for extrapolation on the basis of any mathematical or logical probability leading to a conclusion about the effect of M&S's advertisement on they hypothetical reasonably well-informed and reasonably observant internet user, then in the absence of special circumstances it cannot be useful.  And if it cannot be useful, it should not be allowed to distract the focus on the trial even if it is technically admissible".

This is all very well, but what did the Court of Appeal actually decide?

The Court was tasked ['tasked' being a popular long form of 'asked', notes Merpel] with three questions to answer.  These questions were set out in the very first paragraph as follows:

1. Is there a rule of law which lays down a principle that such evidence is (a) always admissible or (b) always inadmissible? 

2. If it is admissible, should it nevertheless generally be excluded in the exercise of the court's powers under CPR Part 32.1(2)? 

3. Should the particular means by which the witnesses were identified in this particular case lead the court to exclude the evidence of those witnesses?

The Kat was hoping that there might be some neat little paragraph somewhere in which three concise little answers were given.  Indeed, there may be one lurking somewhere in the body of the text.  What the astute reader will however find is the Court of Appeal's Answer to Everything, at [149 et seq]:

(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; 

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

If permission is sought to carry out a survey, the Court of Appeal directed that 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; 

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

If  permission is sought to call witnesses who have responded to a survey or other experiment, the Court of Appeal directed that the applicant will need to: 

(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 respondents to the survey; 

(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.

Who is happy with this decision?

Lots of people: firms that conduct market surveys will be pleased, since the courts in England and Wales only usually mention them in order to warn against using them or to say how bad they are. People who don't like surveys will be happy too, since they now have an extra incentive to attack their methodology and show that they have either no probative value at all or not as much as the party commissioning them had hoped.  Shareholders in M&S will probably be quite pleased too. Also chuffed, the Kats suspect, is Theo Savvides, the Intellectual Property partner at Osborne Clarke who led for M&S and who must have put a fair bit of effort into all of this. We leave the final word to him:

“Today’s important interim judgment will have significant implications for future trade mark cases as it provides clarity on the distinction between the test for confusion in trade mark infringement and passing off cases, the use of survey evidence in trade mark infringement cases, and the guidelines to be followed in adducing survey evidence. In particular, the use of survey evidence in trade mark cases is likely to be limited requiring the party seeking to rely on survey evidence to show ‘that the evidence is likely to be of real value’”.