Overview: In a trademark infringement action between two credit unions, the senior user relied on consumer survey evidence and the junior user relied on expert rebuttal testimony criticizing the senior user’s survey. An appellate court confirmed the district court’s ruling that excluded the senior user’s survey and expert testimony.
Elevate Credit Union vs Elevations Credit Union
In trademark infringement cases, parties often retain consumer survey experts to conduct likelihood of confusion litigation surveys, and courts commonly accept surveys as evidence. However, to be accepted as evidence, a likelihood of confusion survey must meet certain standards. In a trademark infringement case, Elevate Credit Union v. Elevations Credit Union, 2021 BL 336473, 2021 Us Dist Lexis 168290 (D. Utah Mar. 16, 2022), Elevate retained MMR Strategy Group Senior Vice President Dr. Justin Anderson to rebut survey evidence presented by Elevations. In its decision, the court commented on each of Dr. Anderson’s criticisms as factors that contributed to its decision to exclude the Elevations survey evidence.
Elevate Credit Union is owned and operated principally in three counties in Utah and was formerly called Box Elder Credit Union. Elevate rebranded in 2019 and filed for Utah state trademarks. As part of that process, an Elevate employee performed routine research into potential conflicts, including inquiries with the National Credit Union Association and the U.S. Patent and Trademark Office.
Elevations Credit Union is owned and operated in Colorado. Upon hearing about Elevate’s rebrand, Elevations sent a cease and desist letter, arguing that consumers would be confused. By the time Elevate received the cease-and-desist letter, nearly all aspects of its rebrand were complete, including publicly announcing the name change, reminders sent to members, a website design, printed internal and advertising materials, and redesigned and printed new plastic credit and debit cards.
Elevate sought a declaratory judgment in the US District Court for the District of Utah, stating that it was not infringing the Elevations trademark. Elevations countersued for trademark infringement. Elevations retained a survey expert to measure the likelihood of consumer confusion between Elevations Credit Union and Elevate Credit Union; Elevate retained MMR Strategy Group expert Dr. Justin Anderson to rebut that survey evidence. The judge ultimately excluded the Elevations likelihood of confusion survey and the opinions of the expert who created that survey, in a decision explaining the importance of methodology and credibility in survey evidence testimony. The 10th U.S. Circuit Court of Appeals affirmed the district court’s decision and ruled that the non-MMR expert’s failure to produce search records constituted a valid reason to exclude that expert’s survey.
Standards for Likelihood of Confusion
Intellectual property litigation often relies on consumer preference or perception surveys as evidence. Consumer surveys are among the few ways to measure consumer preferences and perceptions, and the standards for how to evaluate those measurements are set by court rules and case law. Under Rule 702 of the Federal Rules of Evidence, expert witness testimony must be “the product of reliable principles and methods,” and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), permits parties to raise objections to the reliability of expert witnesses, including the reliability of a survey’s design and execution. It is the job of a survey expert to make sure that a survey meets reliability criteria, or the survey may be criticized or excluded.
Survey Design Flaws
In the Elevate v. Elevations case, Dr. Anderson’s rebuttal report outlined methodological flaws in the other expert’s survey, some of which the court noted when it excluded the other expert’s report. First, the correctness of the survey’s population was brought into question. Elevations’ survey sought to replicate Elevate’s audience in northern Utah, as in a forward confusion scenario; all 300 respondents in the survey audience were in Utah, and none were in Colorado. However, other aspects of the survey were designed as if the survey measured reverse confusion, which would have required a survey measuring the opinions of an audience in Colorado. This mismatch between the survey’s universe and the direction of the confusion it measured rendered the universe unreliable.
According to the court, the Elevations expert’s choice of a Squirt format survey, where respondents are shown both brands side by side or sequentially, along with third-party brands, was another flaw in the survey design. To rely on a Squirt survey to demonstrate a likelihood of confusion, the expert must show that there is proximity between the senior and junior users’ marks in typical “real-world” market situations.
As noted above, each credit union has a different geographic range. The survey expert attempted to show proximity on internet search engines using a keyword search in the Bing search engine and on the Apple App Store. However, the court opined that “Mr. Poret may have artificially manufactured competitive proximity, in order to use a Squirt survey, by constructing the survey under the assumption that it is reasonably common for people to select a financial institution based only on internet search results.” The court was also worried that doing this may have made the survey sample overinclusive.
In addition, the court found that the survey failed to properly measure either reverse or forward confusion. Rather, it measured the senior mark, Elevations, as if measuring reverse confusion, but asked its questions of people in Elevate’s service area. This mixes elements of forward and reverse confusion, and the court found that the survey did not reliably adhere to the standards for measuring confusion in either direction.
In its ruling, the court further pointed out that the survey failed to measure initial interest confusion–temporary confusion that is corrected before any purchase can be made–as well. Elevations argued that its survey “undoubtedly” measured initial interest confusion because “consumers were clearly confused at the initial point of commercial impression.” However, the court said that was a conclusion, not an explanation. The court found that Elevations had not explained how the survey methodology was appropriate for, or how it measured initial interest confusion.
Choosing Your Survey, and Your Survey Firm, Wisely
To avoid wasting time and money, it is best to hire an expert witness who is careful and thorough about avoiding foreseeable mistakes that could get the survey excluded. If you require a survey measuring the likelihood of confusion between marks, it’s best to perform due diligence in your choice of research firm and testifying expert. MMR Strategy Group has over forty years of experience conducting reliable research that has been accepted by federal courts and other regulatory bodies. If you are involved in an intellectual property dispute that requires a litigation survey, contact MMR Strategy Group.