The Evolving Role of Consumer Research in Public Policy: a Judicial Perspective

Karl A. Boedecker, University of San Francisco
Fred W. Morgan, Wayne State University
William H. Volz, Wayne State University
ABSTRACT - Competently designed and executed consumer research studies, when properly offered to the court. may play an important role in the outcome of-certain litigation. In particular, lawsuits which involve allegations of unfair competition frequently turn upon the question of what consumers think and/or how they react to marketing efforts. Such cases most often involve advertising and trademark controversies and, occasionally, antitrust considerations.
[ to cite ]:
Karl A. Boedecker, Fred W. Morgan, and William H. Volz (1983) ,"The Evolving Role of Consumer Research in Public Policy: a Judicial Perspective", in NA - Advances in Consumer Research Volume 10, eds. Richard P. Bagozzi and Alice M. Tybout, Ann Abor, MI : Association for Consumer Research, Pages: 268-270.

Advances in Consumer Research Volume 10, 1983      Pages 268-270

THE EVOLVING ROLE OF CONSUMER RESEARCH IN PUBLIC POLICY: A JUDICIAL PERSPECTIVE

Karl A. Boedecker, University of San Francisco

Fred W. Morgan, Wayne State University

William H. Volz, Wayne State University

ABSTRACT -

Competently designed and executed consumer research studies, when properly offered to the court. may play an important role in the outcome of-certain litigation. In particular, lawsuits which involve allegations of unfair competition frequently turn upon the question of what consumers think and/or how they react to marketing efforts. Such cases most often involve advertising and trademark controversies and, occasionally, antitrust considerations.

INTRODUCTION

For example, a key issue in some antitrust cases is market delineation. Do two or more products compete? The answer, of course, depends upon consumers' perceptions. Likewise, an investigation of consumer responses may help to resolve questions about false and deceptive advertising. In a broader context, survey and opinion research may even prove useful in obscenity cases where a court must assess allegedly obscene materials in light of community standards. Consumer research methodology might also be employed in defamation actions, where uncertainty exists as to whether a statement or publication is capable of being understood as having a defamatory meaning.

The most frequent use of consumer research by the courts, however, occurs in trademark litigation. The critical issues involve the existence of secondary meaning for a particular mark, the likelihood of confusion on the part of consumers as to the source of a product, or whether a mark re?resents an indication of origin or is merely the generic term for a product. All of these controversies require t:lat the trier of fact makes an assessment of the mental associations of prospective purchasers (McCarthy 1973, p. 498).

Judicial recognition of the usefulness of evidence about consumer perceptions predates the modern era of consumer research. In 1921, Judge Learned Hand observed that 'the single question. . ." all these [trademark] cases is merely one of fact: What do the buyers understand by the word for whose use the parties are contending?" (Bayer v. United 1921).

A consumer researcher who hears the issue posed in the above terms would naturally presume that the court is calling for his/her investigation and judgment. Such is not always the case. At various times judges have turned to philologists, semanticists, etymologists, and even lexicographers for insights into buyers' mental associations (Haller 1989, p. 17). The modern trend, however, appears to be one o f an increasing reliance upon consumer surveys, especially in the area of trademark litigation (Gilson 1982, :8.11).

Early attempts to introduce consumer surveys into evidence often failed to overcome objections on the grounds that surveys consisted of inadmissible hearsay (Elgin v. Elgin 1921). The Federal Rules of Evidence (:703 and 803(1), (3), and (24)) now make it easier to gain admissibility for consumer survey research. Thus, a properly conducted survey will probably be admitted (Randy's v. Nissan 1976; Pittsburgh v. United 1978). On the other hand, the hearsay objection may still bar the use of an unreliable or improperly offered survey (Gilson 1982, pp. 8-91).

When admitted, consumer research will most likely. come into evidence through the testimony of an expert witness. The party which offers the research carries the burden of demonstrating that the study was conducted according to generally accepted standards for such research and that the investigators are recognized experts in the field (A. E. Staley v. Staley 1958). To this end the Federal Judicial Center (1981, p. 149) recommends that:

The offeror has the burden of establishing that a proffered poll was conducted in accordance with accepted principles of survey research, i.e., that the proper universe was examined, that a representative sample was drawn from that universe, and that the mode of questioning the interviewees was correct. He should be required to show that: the persons conducting the survey were recognized experts; the data gathered was accurately reported; and the sample design, the questionnaire and the interviewing were in accordance with generally accepted standards of objective procedure and statistics in the field of such surveys. Normally this showing will be made through the testimony of the persons responsible for the various parts of the surveys.

The use of expert testimony has, upon occasion, preempted the conduct of field research in the area of consumer reactions. In one instance, a court admitted the testimony of department store buyers as to whether typical purchasers of women's coats were likely to be confused by two similar trademarks (McGregor v. Drizzle 1979). In another case a court relied upon the testimony of five expert witnesses' perceptions of consumer reactions to the use of similar trademarks by two different firms. No consumer research came into evidence. The court relied instead upon the testimony of experts and a personal view of the articles involved to resolve the controversy over whether consumers would be likely to find the trademarks confusingly similar (La Chemise v. Alligator 1974).

Likewise, a judge has relied upon an expert's description of consumer purchase decision processes, without any primary research support for that opinion, to reach a conclusion that magazine buyers would be likely to find the name PLAYMEN confusingly similar to PLAYBOY. Among the probable types of confusion, according to the court, was that of "subliminal trademark association" (Playboy v. Chuckleberry 1980).

These cases, however, run counter to the current trend of an increasingly sophisticated attitude on the part of the courts toward the role of consumer research in litigation. Judges have shown a willingness to scrutinize consumer survey research for bias arising out of questionnaire construction and other flaws in design and execution (Sears v. Allstate 1969). Thus, judges have found fatal flaws in consumer research due to such factors as bias introduced through the cover letter which accompanied a mail survey questionnaire, the offer of an incentive prize for a prompt reply to a mail survey, improper sampling, sloppy data collection techniques, and the use of low-paid, non-professional fieldworkers (Gilson 1982. pp. 8-96).

Moreover, one court went so far as to criticize the fact that the consumer researchers collected their data in respondents' homes rather than in the actual purchase environment (American v. U.S. 1957):

If the interviewee is not in a buying mood but is just in a friendly mood answering a pollster, his degree of attention is quite different from what it would be had he his wallet in his hand. Many men do not take the same trouble to avoid confusion when they are responding to sociological investigators as when they spend their cash.

Shortcomings such as those noted above will not always preclude the introduction of consumer studies into evidence. The ultimate inquiry as to admissibility is ". . . whether the survey results can reliably be projected to predict the true state of mind of the proper universe of consumers on the issue before the court" (Gilson 1982, pp. 8-96). Rarely, if ever, could a consumer research study receive an unequivocal, affirmative endorsement-under this standard. Therefore, courts will accept into evidence such studies as they believe to have been reasonably performed, given the current state-of-the-art. Once admitted into evidence, demonstrable flaws in the research go to the weight accorded to it by the trier of fact (General v. Cadillac 1964).

Further, in the contemporary legal environment, a party's failure to offer consumer research may actually undercut its case (Mushroom v. R. G. Barry 1977). Thus, a plaintiff who asserts that the use of a similar trademark by a rival firm is likely to cause confusion among consumers ought to undertake either a survey or an investigation to establish instances of actual confusion. Likewise, the absence of a "survey of public consumer reaction to the products under actual market conditions' weighed against an unsuccessful plaintiff in a trademark infringement suit. The court found the lack of consumer research "significant" (Information v. Find 1980). In both cases the judges noted that the losing parties possessed the financial means to perform such research.

CONCLUSION

One leading commentator, in his assessment of judicial receptiveness to the use of survey evidence, has observed (McCarthy 1973, pp. 514-515):

From the cases where survey evidence was introduced, one senses that the trier of fact (from Trademark Office Examiner to Court of Appeals Judge) often views survey evidence of prospective purchasers' state of mind with something less then enthusiasm. Too often, the cases reveal an unwarranted hypercritical attitude towards surveys. The criteria set for a "proper" survey frequently appear to be impossible to meet. A skeptic would classify the survey cases into two categories: a survey is accepted and relied u?on when the judge already had his mind made up in favor of the survey results; and a survey is rejected and torn apart when the judge subjectively disagrees with the survey results. Since an estimation or the probable mental reactions and associations of the buying public is not a science, there is always the temptation to decide on the basis of a "hunch." That is, the trier of fact (or any human being) would rather extrapolate from his own subjective impressions than extrapolate from some hard evidence if the two do not jibe.

He then goes on to lay the blame for the judges' resistance to such evidence upon the parties who proffer such sloppy research efforts to the courts (McCarthy 1973, p. 516):

Probably, a part of the judicial resistance to survey evidence can be laid at the feet of parties and their attorneys who, in a desperate search for some kind of evidence, offer, with a straight face, a haphazard, self-serving "survey." It may not be surprising that many judges view such purported "scientific evidence" with distaste. They '.;now that the techniques of testing and sampling buyer reactions have been developed to a fairly high degree or accuracy. Thus, there is no real excuse for a biased survey which attempts to measure buyer reaction by means of leading questions asked in an environment far removed from the market place. The reason, of course, is that accurate and scientifically precise surveys are in the minority is that they are costly. Perhaps the best that can be said is that no survey at all is better than a survey obtained 'on the cheap." As weak arguments detract from even a strong case, a weak survey may detract from even the strongest case of trademark infringement or unfair competition.

Despite such skepticism about the usefulness of much of the consumer research which the courts encounter, the judiciary appears to have developed a genuine respect for its potential contribution to the resolution of certain legal disputes. For example, in a recent case which involved allegations of false advertising within the context of a comparative ad, the court strongly endorsed the use of consumer research to determine the mental associations of buyers (American v. Johnson 1978). This and other decisions which have utilized the results of consumer surveys indicate that judicial attitudes have evolved in accordance with advances in the state-of-the-art. Thus, the future will see an expanded role for consumer research as an aid to the formulation of public policy through the litigation process.

REFERENCES

A. E. Staley Manufacturing Co. v. Staley Milling Co., 253 F.2d 269 (7th Cir. 1958).

American Home Products v. Johnson & Johnson, 577 F.2d 160 (2d Cir. 1978).

American Luggage Works, Inc. v. U.S. Trunk Co., 158 F. Supp. 50 (D. Mass. 1957), aff'd sub nom. Hawley Products Co. v. U.S. Trunk Co., 259 F.2d 69 (1st Cir. 1958).

Bayer Co., Inc. v. United Drug Co., 272 F.2d 505 (S.D. N.Y. 1921).

Federal Judicial Center (1981), Manual for Complex Litigation, New York: Clark Boardman Company, Ltd.

Federal Rules of Evidence.

General Motors Co. v. Cadillac Marine & Boat Co., 226 F.Supp. 716 (W.D. Mich. 1964).

Gilson, Jerome (1982), Trademark Protection and Practice, New York: Matthew Bender.

Haller, Terry (1989), "Using Public Opinion Surveys," Litigation, 8 (Winter), 17-25.

Information Clearing House, Inc. v. Find Magazine, 209 U.S.P.Q. 936 (S.D. N.Y. 1980).

LaChemise LaCosce v. The Alligator Co., 374 F.Supp. 52 (D. Dela. 1974).

McCarthy, J. Thomas (1973), Trademark and Unfair Competition, New York: Lawyers Co-operative Publishing Co.

McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126 (2nd Cir. 1979).

Mushroom Makers, Inc. v. R. G. Barry Corp., 441 F.Supp. 1220, (D.C. N.Y. 1977), aff'd 580 F.2d 44 (2d Cir. 1978).

Pittsburgh Press Club v. United States, 579 F.2d 751 (3d Cir. 1978).

Playboy Enterprises, Inc. v. Chuckleberry Publishing to , 436 F.Supp. 414 (S.D. N.Y. 1980).

Randy's Studebaker Sales, Inc. v. Nissan Motor Corporation, 533 F.2d 510 (10th Cir. 1976).

Sears, Roebuck and Co. v. Allstate Driving School, 301 F.Supp. 4 (E.D. N.Y 1969).

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