Tiffany v. Costco: The Perils of Not Offering Consumer Survey Evidence
In trademark and advertising disputes, one question frequently rises to the top of the discussion between counsel and client: “Do we need a consumer survey?” Because well-designed surveys can act as proxies for what is happening in the marketplace among relevant consumers, many courts and juries will often place significant stock in them. Not all juries and judges embrace surveys, mind you. Judge Richard Posner, has previously opined that consumer survey experts are hired guns that apparently are able to manipulate survey methodology and data at will. Judge Posner’s position notwithstanding, consumer surveys are commonplace in Lanham Act cases. Strictly speaking, though, there is no legal or factual imperative to have one. In fact, there are substantive and strategic reasons why you might need to proceed without survey evidence. For example, perhaps the client has limited resources and is unable (or at least, unwilling) to invest in such an endeavor. Perhaps your adversary’s consumer survey is so poorly constructed that you feel confident that your expert will be able to adequately critique it without offering his or her own study. Or, perhaps your pilot survey results were not as stellar as you had hoped, so you pulled the ripcord and are parachuting into court without one. Regardless of the reasons (sound or otherwise) a recent, high-profile dispute illustrates the pitfalls of proceeding without survey evidence in a trademark infringement matter.
In Tiffany v. Costco, the famed jeweler sued the wholesaling titan over its use of the “Tiffany” trademark to sell wedding rings. Costco defended against the claims of trademark infringement, asserting that it was using the name Tiffany merely to describe the style of ring it was selling (i.e., a “Tiffany” setting) and that consumers would not think Costco was using the Tiffany name as a source identifier. Costco also argued that the name “Tiffany” was simply a generic term for this particular style of wedding ring and Costco needed to use this term in order to fairly describe the type of ring it was selling.
In support of Tiffany’s claim of consumer confusion, it proffered a study conducted by Dr. Jacob Jacoby, an experienced yet oft’-criticized consumer survey expert. Based on his survey data, he concluded that “more than two out of five prospective purchasers of diamond engagement rings at Costco were likely confused into believing that Tiffany & Co. was the source of the rings.” Costco attacked Jacoby’s study but did not offer its own survey. The trial court found the attacks on Jacoby’s method simply went to the “weight” of his testimony. But, because there was no competing survey on the other end of the scale, Jacoby’s study went unrebutted and the court found actual confusion established by Tiffany.
On the issue of “genericism,” Tiffany attacked Costco’s affirmative defense by offering another study conducted by Dr. Jacoby. Once again, Costco did not offer a rebuttal survey, but instead opted to critique Jacoby’s method and conclusions and also offered “non-survey” evidence. The trial court was not persuaded by Costco’s proffer. The court observed that in order to prove that a mark is generic, a party must show that the primary significance of the mark is a generic term rather than a brand identifier. None of the evidence offered by Costco spoke to that key issue.
At the end of the day, the trial court entered summary judgment for Tiffany, finding Costco infringed the Tiffany mark and engaged in trademark counterfeiting.
Consumer survey evidence often plays a critical role in trademark cases, as Tiffany v. Costco remind us. There may be sound reasons for dispensing with consumer survey evidence in a given case, but it is not a decision to take casually or lightly. Careful consideration should be given to the elements of each cause of action and the respective burdens of proof. And, in the final analysis, the client needs to be apprised of the potential pitfalls of proceeding without one.