Presented by Philip Johnson at the Colorado Bar Association Intellectual Property Section April 28, 2009 2009 – ALL RIGHTS RESERVED BY LEO J. SHAPIRO

Presented by Philip Johnson at the Colorado Bar Association Intellectual Property SectionApril 28, 2009 2009 – ALL RIGHTS RESERVED BY LEO J. SHAPIRO & ASSOCIATES, 153 W. Ohio St., Chicago IL / 312-321-8111 / [email protected]

2 2009 – ALL RIGHTS RESERVED BY LEO J. SHAPIRO & ASSOCIATES, 153 W. Ohio St., Chicago IL / 312-321-8111 / [email protected]

Overview

1. Designing a Trademark Survey

– Defining the Universe– Probability versus Non-probability studies– Selecting the Stimulus/Stimuli– Designing the Questionnaire– Method of Data Collection– Pitfalls to Avoid

2. Specific Types of Trademark Surveys

– Likelihood of Confusion– Secondary Meaning– Genericness– Dilution

› Before the Trademark Dilution Revision Act › After the Trademark Dilution Revision Act

Part I: Designing a Trademark Survey


Designing a Trademark Survey

• Defining the universe

• Probability versus non-probability studies

• Selecting the stimulus/stimuli

• Designing the questionnaire

• Method of data collection

• Pitfalls to avoid


Defining the Universe

• Representative of the target market– Neither overly broad nor overly narrow– May have more than one target market

(e.g., consumers and trade)

• In trademark litigation: – Market for Junior user’s goods or

services for Forward Confusion and Dilution

– Market for Senior user’s goods or services for Reverse Confusion

– Market for all users in product segment for Secondary Meaning


Probability v. Non-Probability Studies

• Probability studies

– Random telephone surveys– Based on statistical principles– Subject to sampling error

• Non-Probability studies

– Mall intercept and online studies– Not statistically projectable– Survey expert can take steps to

approach projectability:› Geographic distribution› Demographic quotas› Random sampling› Minimum number of

observations per cell


Selecting the Stimulus/Stimuli

• Replicate marketplace conditions– Present in context– Mock-ups should be consistent with the category

• Control is generally necessary to measure survey error or “noise”– Control exhibit should be similar to the “test” exhibit

› With the exception of the potential infringing element(s)

• Difficult to select and design


Designing the Questionnaire

• Place questions in marketplace context

• Simple and clear, non-leading questions

• Open-ended questions

• Filter questions

• Closed-ended questions should be balanced and non-leading


Data Collection Methods

Advantages Disadvantages

Telephone Survey• Projectable sample

• Relatively fast.

• Easier to reach certain specific populations (e.g., business professionals).

• More difficult to show an exhibit/stimulus.

• However, if participants can log onto the Internet, can show them an exhibit on a dedicated URL.

Mall Intercept• Can show an exhibit/stimulus.

• A true “shopping” environment

• Not statistically projectable (though well-accepted by courts.)

• Difficult to reach certain populations.

Online Survey

• Can show an exhibit/stimulus.

• Usually lower cost and faster than other methods.

• Can reach “pre-targeted” groups of hard to find consumers.

• A large proportion of consumers are not yet reached by online panels.

• Self-selection bias.

• Difficult to reach certain populations.

• Self-administered survey (difficult to control survey administration.)

• Not well-tested in court.


Pitfalls to Avoid

• Overloading a survey with extraneous questions– Instead, focus on key objectives

• Insufficient information for survey expert.

• It is important to:– Share complaint and response with expert– Identify key information objectives– Provide relevant information on target market

• Insufficient time to develop and execute a survey

• Small sample sizes

• Too much attorney influence in survey design and/or reporting

Part II: Specific Types of Trademark Surveys


Types of Trademark Surveys

• Likelihood of Confusion

• Secondary Meaning

• Genericness

• Dilution – Before the Trademark Dilution Revision Act – After the Trademark Dilution Revision Act

NOTE: This is not a formula or recommendation, but only an example of an approach one might take.

Likelihood of Confusion


Likelihood of Confusion Surveys

• Eveready Design

• 3 Key Questions– Source

› “Who or what source…”

– Other Brands/Products› “What other brands or products…”

– Relationship/Sponsorship/Association› “Related or sponsored…”


Likelihood of Confusion Case Study:McDonald’s Corp. v. McSleep Inn

• Proposed motel chain from Quality Inns

• Mall intercept study.– “Here is a photograph of a sign for a hotel you might see if you were driving

along the highway. Who or what company do you believe owns or operates this hotel?”

• 32% believed McDonald’s owned or operated McSleep Inn

• Court accepted survey and enjoined Quality Inns from using name– “The Court finds and concludes that…the name McSleep Inn is likely to cause an

appreciable number of the public to be confused by believing that McSleep Inn is sponsored, associated, connected, or endorsed by McDonald’s.”

Test Cell Control Cell


Likelihood of Confusion Case Study:Gateway, Inc. v. Companion Products, Inc.

• Gateway registered a black and white cow spots design in association with computers and computer peripherals as a trademark in 1992

• Companion Products, Inc. sells stuffed animals trademarked as “Stretch Pets,” including its top-selling black and white cow called “Cody Cow”

• Nationwide survey showed that 39% of consumers erroneously believed that Gateway manufactured or sponsored Cody Cow

• Citing the survey evidence, the District Court concluded that there was a likelihood of confusion by the consuming public and this judgment was affirmed on appeal

Cody Cow Control Cell


Alternative Likelihood of Confusion Survey Designs

• Squirt Test

• Array or Shelf Designs

• Observed Confusion– E.g., California Cooler case


Secondary Meaning


Secondary Meaning

+ =


Secondary Meaning Surveys

• Source– “Who or what company…”

• Anonymous Source– “One company only OR more than one company?”


“If you were on a job site and you saw a power tool that was yellow and black, would you have a belief as to who or what company makes or manufactures it?”

+

Secondary Meaning Survey Case Study:Black & Decker Inc. v. Pro-Tech Power Inc.

=


Secondary Meaning Survey Case Study:Black & Decker Inc. v. Pro-Tech Power Inc. (cont.)

• 1990, Black & Decker introduced a line of DeWalt professional power tools with a new look to distinguish them from its consumer power tools

• Pro-Tech, a Taiwanese-owned power tool company, was inspired by the “DeWalt look” for its own competing line of power tools

• Survey showed that 85% of professional power tool users reported the belief that the source is DeWalt and/or Black & Decker

• The Court found that the DeWalt yellow and black color combination is a protectable trademark and trade dress, stating “that the DeWalt colors currently enjoy secondary meaning is also beyond debate” and Black & Decker enjoyed “a level of consumer recognition that parallels the extent to which the public associates golden arches with the McDonald’s Corporation.”


Genericness


Genericness Surveys

• Teflon Survey– Telephone survey methodology– 514 Males and 517 Females, 18 years of age and older, in 20 cities– Used to prove that TEFLON was not a generic name– A mini-course in the generic vs. trademark distinction, followed by a test

• “I’d like to read 8 names to you and get you to tell me whether you think it is a brand name or a common name; by brand name, I mean a word like Chevrolet which is made by one company; by common name, I mean a word like automobile which is made by a number of different companies. So if I were to ask you, ‘Is Chevrolet a brand name or a common name?,’ what would you say?”

• “Now, if I were to ask you, ‘Is washing machine a brand name or a common name?,’ what would you say?” (IF RESPONDENT UNDERSTANDS, CONTINUE. IF NOT UNDERSTAND, EXPLAIN AGAIN.)

• “Now, would you say ______ is a brand name or a common name?”


Genericness Case Study: Windsurfer

• “Windsurfer” company had introduced a new sport, which they called “sailboarding”

• Bic Corporation began using windsurfer descriptively to promote its brand of sailboarding

• Windsurfer company objected

• “Teflon” telephone survey of 16-40 year olds to determine whether windsurfer had become generic for the sport.– “Most products on the market have two names. The one tells us what type of product it is. For

instance, beer, or automobile or coffee. The other is its brand name, such as Budweiser, Chevrolet, or Maxwell House. I am going to read a few names to you and would you please tell me whether you think it is a name that tells the type of product or a name that tells us what brand it is?”

– “Now, please tell me what kind of products these are; for instance, aspirin is a headache remedy.”

• Court ruled that “windsurfer” had become generic – descriptive of the sport.

(50/50)

Thermos(53%)

Windsurfer(61%)

Aspirin(89%)

Generic(Type)(100%)

Brand(100%)

Jello(71%)

Coke(85%)


Dilution Before the TDRA


Dilution Before the Trademark Dilution Revision Act

• No Approved Survey Methodology

• Needed to Show Actual Dilution

• Use Likelihood of Confusion to Show Dilution Either by Blurring or Tarnishment

• Niche fame sufficient for protection


Dilution by Blurring Case Study:McDonald’s Corp. v. Arche Technologies, Inc.

“Please take a look at this. Who or what do you associate this with?”


Dilution by Blurring Case Study:McDonald’s Corp. v. Arche Technologies, Inc. (cont.)

• Arche Technologies, Inc., a personal computer manufacturer adopted a single golden arch for its logo

• McDonald’s objected based on Lanham Act confusion and state of California dilution

• Court found confusion unlikely because the products are in different markets

• A second survey showed that 89% of consumers associated a single golden arch with McDonald’s

• The court found the “Golden Arch” to be a distinctive mark and to “have acquired sufficient secondary meaning to be entitled to a broad scope of protection under California law”

• To avoid dilution of the mark, the court enjoined the Arche Technologies use


Dilution by Tarnishment Case Study:Deere & Co. v. MTD Products, Inc.

• MTD began airing a TV commercial showing a leaping deer (John Deere’s logo) being chased by an MTD yard man tractor/mower

• Deere conducted a likelihood of confusion study which showed both confusion and association of the MTD commercial with Deere

• The District Court found that using an animated version of the John Deere “deer” logo would at a minimum cause dilution by blurring

• The Court of Appeals agreed with dilution ruling and cited elements of tarnishment as well as blurring


Dilution After the TDRA


Dilution After the Trademark Dilution Revision Act

• Need to show there is an association between marks which establishes a likelihood of dilution

• Fame needs to be shown among the general consumer public – not “niche” fame

• Survey method shows likelihood of dilution

• Examples of Dilution by Blurring Using New Survey Designs– Nike v. Nikepal; Perfumebay.com v. eBay– After first measuring confusion, ask: “What, if anything, came to mind?” when

first heard the allegedly diluting mark– This approach is consistent with McCarthy’s view of the TDRA’s required

“association” between the marks, which exists if when encountering the junior user’s mark, a person thinks of the senior user’s famous mark


Dilution by Blurring Case Study:Nike, Inc. v. Nikepal International, Inc.

• Nike opposed Nikepal’s attempt to register the mark NIKEPAL in connection with glass syringes and other laboratory products and services. The TTAB denied Nike’s opposition to registration of the NIKEPAL mark on the ground that the parties’ marks were not sufficiently similar

• Nike appealed the TTAB’s decision to the U.S. District Court for the Eastern District of California

• Telephone survey, 301 cases with Nikepal’s list of current and potential customers

• The Court reversed the TTAB’s finding of no likelihood of dilution saying the survey showed that “the vast majority of the survey respondents, representing a significant segment of Nikepal’s target customer group, associate[d] Nike and/or its products and services when they encounter[ed] the mark NIKEPAL, thus perceiving the two marks as essentially the same” and noted that “over 87% of the people in Nikepal’s own customer pool associated the stimulus [NIKEPAL] with NIKE.”


Dilution by Blurring Case Study:Nike, Inc. v. Nikepal International, Inc. (cont.)

• Potential Source Confusion:“Assume for a moment that you were searching the Internet and you encountered a web site called NIKEPAL.COM. Let me spell it for you: N-I-K-E-P-A-L. Would you OR would you not have a belief as to who or what company or companies puts out or sponsors a site called NIKEPAL?”

• IF YES: “Who or what company is that? What makes you say that?”

• “And, do you OR do you not know of any products or brands that you believe come from or are associated with NIKEPAL?”

• IF YES: “What products or brands are those? What makes you say that?”

• Dilution Question:

• “What, if anything, came to your mind when I first said the word NIKEPAL?”

Net “Nike” Mentions

ALL RESPONDENTS

Total(301)100%

Net “Nike” Mentions 87%

Name Nike For Source 26Do Not Name Nike For Source, But Name Nike For Association 61


Dilution By Blurring Case Study:Perfumebay.com, Inc. v. eBay, Inc.

• eBay claimed likelihood of dilution under California law

• The District Court held that conjoined forms of “perfumebay” created a likelihood of confusion, and that the Perfumebay marks did not engender a likelihood of dilution

• The Ninth Circuit reversed the District Court’s finding of no likelihood of dilution on appeal referencing two consumer surveys:– The first survey showed that 3rd party usage of the term “bay” in connection

with a website, or as part of a website name, could result in initial interest confusion and actual confusion

– The second survey, conducted by telephone, found that 52% of a California sample and 64% of a nationwide sample responded that eBay would come to mind when they saw the term “bay” utilized by a website


Dilution By Blurring Case Study:Perfumebay.com, Inc. v. eBay, Inc. (cont.)

• Survey Questions– “Assume for a moment that you were shopping or browsing online for such

products and you encountered a website that used the word BAY (SPELL ‘BAY’ FOR RESPONDENT SLOWLY, LETTER BY LETTER: B-A-Y) as part of its name or in its Internet address. What, if anything, comes to your mind?”

– “Specifically, thinking about encountering the name BAY (SPELL ‘BAY’ FOR RESPONDENT SLOWLY, LETTER BY LETTER: B-A-Y) on the Internet, what website or company, if any, comes to mind? What makes you say that?”

– “Are there any other websites or companies that come to mind?”IF YES: “Which is that? What makes you say that?”

• The court explained that Perfumebay’s use of the marks may result in consumers no longer associating the usage of the “Bay” suffix with eBay’s unique services, and specifically, the sale of products on an Internet-based marketplace

• “The uniqueness of eBay’s mark is diluted in direct proportion to the extent consumers, particularly Internet users, disassociate the eBay mark with eBay’s services.”


Final Thoughts

Any Questions?

Appendix: About LJS and Philip Johnson


About Leo J. Shapiro & Associates

• Fifty-year-old research and consulting firm

• Rooted in principles of social science and behaviorism developed at University of Chicago

• Research professionals trained in social sciences, business and marketing

• Specialized expertise in:– Consumer behavior– Healthcare and pharmaceutical– Law

• Legal research:– Jury research and consulting– Trademark surveys


About Phil Johnson, C.E.O. of LJS

Phil Johnson is the Chief Executive Officer of Leo J. Shapiro & Associates, and has been with the firm since 1971. He has designed and administered a wide range of studies measuring consumer behavior and opinion. In recent years, he has concentrated his efforts in the areas of study design and development of research techniques, particularly in the area of intellectual property litigation. His area of expertise is in the use of survey research as a tool in litigation, including jury selection and trademark disputes.

Mr. Johnson has offered survey-based expert opinion in Federal, State, and government forums including The Federal Trade Commission, The Food and Drug Administration, the Patent and Trademark Office, and the Trademark Trial and Appeal Board. He also conducts seminars and classes on the utilization of survey methodologies in the corporate and intellectual property fields.

He holds an undergraduate degree in Psychology from Loyola University and an M.B.A. from the Graduate School of Business at the University of Chicago.

Presented by Philip Johnson at the Colorado Bar Association Intellectual Property SectionApril 28, 2009

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Presented by Philip Johnson at the Colorado Bar Association Intellectual Property Section April 28, 2009 2009 – ALL RIGHTS RESERVED BY LEO J. SHAPIRO