Seventh Circuit Questions Probative Value of Consumer Surveys in Trademark Infringement Suits

By Joshua Fruchter, Esq

Judge Richard Posner’s propensity for dicta is criticized by some, admired by others. In his recent decision in Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store, Inc., 2013 WL 6017396 (7th Cir. Nov.  14, 2013), Judge Posner does not disappoint.  After affirming the district court’s grant of a preliminary injunction in a trademark infringement suit, he takes aim at the survey conducted by the plaintiff’s expert to demonstrate a likelihood of consumer confusion between the two trademarks at issue. Calling such surveys “prone to bias,” Judge Posner admonishes that “caution is required in the screening of proposed experts on consumer surveys.” While dicta, Judge Posner’s criticism of the conclusions drawn from the expert’s survey and discussion of alternative methodologies provides both jurists and IP litigators with food for thought on how best to objectively measure consumer confusion in trademark infringement cases.

The Facts

For more than 50 years, Kraft, the well-known manufacturer of food products, has been selling a wide variety of packaged cheeses (but no non-cheese products) under the “Cracker Barrel” brand to thousands of grocery stores.

More recently, Cracker Barrel Old Country Store (CBOCS), a chain of 620 low-price restaurants and adjoining grocery stores located primarily just off major highways, announced plans to sell a variety of food products such as ham (but not cheese) under its logo, “Cracker Barrel Old Country Store,” through a variety of channels, including grocery stores.

Included with the decision were pictures of the two labels at issue.

The reader will note, as did Judge Posner, that the words “Cracker Barrel” on CBOCS’s proposed label on the left are displayed in a larger and more distinctive font than “Old Country Store.” This prominent positioning presumably contributed to Kraft’s angst.

Shrewdly, Kraft did not contest CBOCS’ right to sell food under the “Cracker Barrel” label in CBOCS’s restaurants and adjoining stores, or by mail order or on the Web. Instead, it only narrowly objected to sales in grocery stores on the grounds that consumers would be confused by the similarity of the logos, think that CBOCS food products with the above label were manufactured by Kraft, and then blame Kraft if they were dissatisfied with a CBOCS product.

Judge Posner validated Kraft’s concern noting that if CBOCS were allowed to sell food products under a confusingly similar label in the same groceries to which Kraft sells its cheeses, and CBOCS’s products are inferior, Kraft’s own sales may decline – “for a consumer who thinks Kraft makes bad hams may think it probably makes bad cheeses as well.” Such harm might be irreparable.

To be sure, Judge Posner acknowledged the countervailing interest of providing grocery shoppers with a wider variety of products. However, the threat to competition, and ultimate harm to CBOCS was mitigated by the alternative sales channels available to CBOCS, including the Web.

Ultimately, Judge Posner agreed with the district court’s determination that the likelihood of confusion between the labels was substantial, and that the resulting risk of damage to Kraft’s goodwill was potentially significant and irreparable — thus outweighing any harm to CBOCS. Therefore, the grant of a preliminary injunction was affirmed.

Judge Posner could have stopped there. Instead, for “future reference,” he shared his reservations about surveys of consumer confusion conducted by party-hired expert witnesses, which he disparaged as “prone to bias.” Among the deficiencies Judge Posner identified:

  • due to bias in favor of the party that hired the expert, survey questions may be phrased in a way that is intended to elicit the surveyor’s desired response from the survey respondents;
  • the reactions of consumers to photographs of trademarks shown to them by an expert may differ from their reactions when they encounter these same labels while actually shopping and making purchase decisions; and
  • surveys that produce results contrary to the interest of the party that sponsored the survey may be suppressed and never become a part of the trial record.

As potential alternatives to surveys, Judge Posner proposed statistical studies, or expert testimony concerning buying habits and consumer psychology.

To be sure, it’s not clear whether Judge Posner’s criticism of consumer surveys was influenced in major part by his poor opinion of the design of the Kraft survey. In particular, he questioned whether Kraft’s survey proved that buyers of ham and other products made by CBOCS with a “Cracker Barrel” label would necessarily think those products were made by Kraft, and therefore blame Kraft for a bad experience.

It remains to be seen whether Judge Posner’s dicta in Kraft will influence other jurists. While courts have held that “survey evidence is not required to show a likelihood of confusion,” Midwestern Pet Foods, Inc. v. Societe des Produits Nestle S.A., 685 F.3d 1046, 1054 (Fed. Cir. 2012) (citing other Circuit Court decisions), many courts still find them highly persuasive.  See, e.g., Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467, 476 (3d Cir. 1990) (surveys “are the most direct method of showing the likelihood of confusion created by an infringing defendant.”); James R. Glidewell Dental Ceramics, Inc. v. Keating Dental Arts, Inc., SACV 11-1309-DOC ANX, 2013 WL 655314, at *9 (C.D. Cal. Feb. 21, 2013) (consumer surveys are “often the most persuasive evidence” of likelihood of confusion) (citations omitted). Indeed, one study produced data indicating “a modest improvement in positive outcomes” for plaintiffs who introduced survey evidence in trademark infringement cases. See Sarel & Marmorstein, The Effect of Consumer Surveys and Actual Confusion Evidence in Trademark Litigation: An Empirical Assessment, 99 Trademark Rep. 1416, 1430 (2009).

Moreover, in certain cases, “a plaintiff’s failure to conduct such a survey where it has the financial resources to do so, could lead a jury to infer that the plaintiff believes the results of the survey will be unfavorable.” Charles Jacquin, 921 F.2d at 475.See also Glidewell, 2013 WL 655314, at *9 (C.D. Cal. Feb. 21, 2013).

Nevertheless, at least one commentator has cautioned that “no survey at all is better than a survey obtained ‘on the cheap,’” which might actually detract from an otherwise strong case of infringement. 6 McCarthy on Trademarks and Unfair Competition § 32:196 (4th ed.) (December 2013).

In sum, the best that can be said is that surveys are likely here to stay in trademark litigation, but that court may cast an increasingly critical eye on surveys that are not scientifically sound.

Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store, Inc.

Please share your thoughts. Do you agree with Judge Posner’s criticisms? What has been your experience with other trial and appellate judges? What considerations do you weigh when deciding whether or not to recommend a consumer survey to a client in a trademark infringement suit?

Joshua Fruchter, Esq

Joshua Fruchter, Esq

An NYU School of Law graduate, Joshua has been practicing as a litigator for over twenty five years. Joshua has published regularly on legal marketing topics in numerous law-related periodicals, and presented on legal marketing technologies to various bar and legal marketing associations.   Mr. Fruchter is a recognized voice in litigation commentary, who has discussed issues ranging from Daubert analyses and inventor testimony in patent litigation, to predictive coding in document reviews.

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