Chapter 6, Chapter 6, Part 1Part 1

Lesson: Behavioral/Social Knowledge Can Aid in the

Resolution of Factual Disputes

This is the 3rd reason why behavioral/social factual knowledge is used in legal decision-making

We use symbols all the We use symbols all the time in Society…time in Society…

•Symbols help us communicate information.

•Symbols are also important for businesses.

Trademark Trademark InfringementInfringement

• Trademark: A word, phrase, logo or other symbol used by a company to distinguish its products from those of other companies

–Case: Volkswagen and Audi v. Uptown Motors

–Court: U. S. District Court for the Southern District of New York

Example: Trademark Infringement

The Factual Dispute In This Case

•VOLKSWAGEN®, VW®, and Audi® are registered trademark in the United States

•Uptown Motors used the logos in its ads without VW’s permission

VW’s Claim

• VW claims that Uptown’s actions infringed its trademark rights

• VW argues that the consumers are confused by Uptown’s use of the VW trademark

Uptown’s Claim

• Uptown argues the opposite of VW

These opposing beliefs constituteThese opposing beliefs constitute a FACTUAL DISPUTEa FACTUAL DISPUTE

Importance of Resolving the Factual Dispute

• If VW proves that consumers are likely to be confused by Uptown’s business practice then VW wins its case and is entitled to:

Stop Uptown’s

use of VW’s logo

Importance of Resolving the Factual Dispute

• But if VW proves that consumers were actually confused by Uptown’s business practice then VW wins its case and is entitled to:

Stop Uptown’s use of VW’s logo

Uptown’s profits VW’s financial damages

Cost’s of litigation Up to 3x the amount of actual damages

Proving VW’s Claim • To prevail, VW had to show that:

– an appreciable number

– of ordinarily prudent purchasers

– are likely to be misled or confused •and/or were actually misled or confused

– as to the source of the services provided by Uptown (i.e., was Uptown an authorized VW service center)

Proving Likelihood of Confusion

1. Strength of VW's trademark:

Years of Advertising

Billions of Sales

Fanciful = Distinctive and Strong

Proving Likelihood of Confusion

2. Degree of Similarity Between VW's and Uptown's marks

Uptown used VW’s mark

3. Proximity of the Products or Services

Both Uptown and VW services and repairs automobiles

Proving Likelihood of Confusion

4. Consumer Sophistication

Sophisticated = Unlikely to be confused

Unsophisticated = Easily confused

Proving Likelihood of Confusion

5. Quality of Services

VW: high quality of service work

Proving Likelihood of Confusion

vs. Uptown , which: Did not know its employees’ background

or prior training

Had no formal training program

Did not give VW any control over the quality of the work done at Uptown

Could not guarantee the quality of its work in the future

Proving Likelihood of Confusion 6. ‘Good Faith’ in using VW's trademark

VW’s logo = trademark

VW vigorously enforced its trademark rights

Uptown was not authorized to use VW’s logo (mark)

Uptown received 4 letters from VW demanding that it cease and desist from using the VW logo

Proving Likelihood of & Actual Confusion

7. Evidence of likelihood of confusion can come from a social science survey

8. Courts accept such surveys to prove actual confusion

Social scientists can help resolve factual disputes

They are experts at:

Designing, Conducting, Analyzing, and Interpreting

the results of research (e.g., surveys)

• Asked the same question of 2 groups

– Treatment Group:

– Control Group:

VOLKSWAGEN

VOLKSWAGEN

• Study 1: “Look at this advertisement and tell

me if the repair shop is an authorized VW service center.”

–Might the question asked in the survey lead to biased responding?

• Study 1 was conducted using people who were getting services at 3 NYC VW dealers

–Might the type of respondents surveyed

affect the results?

• Study 2:

“Is the dealer authorized or independent, in your judgment?”

To answer these questions, a follow-up survey was conducted using undergraduates at the social scientist’s university in Canada

Study I: • Treatment Group:

45% believed the ad to be from an authorized service center

• Control Group: 28% believed the ad to be from an authorized service center

• Difference Between Groups (i.e., the Logo Effect): 17%

Study II• Treatment Group:

21% believed the ad to be from an authorized service center

• Control Group: 5% believed the ad to be from an authorized service center

• Difference Between Groups (i.e., the Logo Effect): 16%

The logo effect was almost identical in the two studies

–Type of surveyand type of respondent

did not compromise the validity of study 1

Did VW Prove its Claim ?

• Using the results of the surveys, VW was able to show that:

– an appreciable number

– of ordinarily prudent purchasers

– are were actually misled or confused

as to the source of the services provided by Uptown

16.5%

Based onSurvey Sample

Believed Uptown to be an Authorized VW service center

Court’s Conclusion

There was significant actual confusion

VW Wins!