Thursday, December 08, 2011

Failure to show actual product dooms survey

Innovation Ventures, LLC v. N2G Distributing, Inc., 2011 WL 6010206 (E.D. Mich.)

N2G sought to exclude Innovation’s study and expert report by Dr. Dan Sarel. The study was offered to show likely confusion between N2G’s 6 Hour Energy Shot and Innovation’s 5-Hour Energy. Innovation already won a preliminary injunction against the 6 Hour product (based mainly on trade dress), and also won summary judgment on its copyright infringement claim. Remaining for trial were trademark and false advertising claims, as well as damages issues.

Sarel opined that almost 2/3 of respondents were confused about the relationship between the parties’ marks. “In actual shopping situations where consumers are relying on their memory only, the perceived similarity of the names, especially for new and potential buyers, could cause major confusion.” Sarel used a mall intercept study targeting potential buyers of energy shots. They saw 6 TV ads, including one for 5-Hour Energy, then shown photos of the front side of N2G’s product and of the front side of a control product called ROCK ON, and then asked if either of the two energy drinks was advertised in the television ads the participant had just watched. Sarel concluded that 63.5 percent of the participants exhibited likely confusion.

The court found Sarel’s report inadmissible for want of a reliable foundation. First, participants were shown pictures, not actual bottles as would exist in market conditions. Innovation argued that defendants destroyed the actual 6 Hour bottles, but the court noted that it had an exhibit of 10 bottles on file since 2008 and that Innovation could have asked for more. Indeed, Innovation had two bottles in its possession at the time of the survey. Though one allegedly exploded, the survey could have gone with one since it didn’t need to be conducted everywhere on the same day. Innovation’s counsel said he possessed two bottles, one of which leaked, but that wasn’t a problem: “the participants were just to look at the two bottles, not drink from them.” Failure to use actual bottles “resulted in significantly flawed and therefore unreliable methodology in conducting Dr. Sarel's survey.”

The court attributed responsibility for this failure to counsel, not Sarel, but concluded that it was the most important problem with the study. In addition, respondents were asked leading, compound questions: First, “Was this energy drink advertised in any of the TV ads you saw, or not?” Then, “Do you think the company who makes the energy drink you saw in the TV ad, also makes this one, or not?” Last, “Was the name 6 Hour ENERGY approved, licensed or sponsored by the company who makes the energy drink you saw in the TV ad, or not?” The court found that the final question combined with the first two “clearly evidences the suggestiveness” of the trio of questions, making the study less reliable. (The court didn’t make clear how many respondents had already signalled agreement with the first two, and how many waited until question three, which would seem to be a highly relevant fact. If most of the “confused” respondents said yes to question 1, that seems like a very different result than if most of them waited until question 3.) Anyway, the court found that the questions were improperly designed to favor Innovation.

Moreover, participants weren’t informed that “don’t know” was an acceptable answer, and the court found that a properly designed study would have included “don’t know” or “no opinion” responses to reduce guessing; such options can lead to a 20-25% increase in don’t know/no opinion responses. Apparently, the survey included a “No/Don't know” option, but there was no evidence that the individuals administering the survey informed the participants that “don't know” was an acceptable answer. This contributed to a flawed and unreliable foundation for the survey results.

Finally, ROCK ON was not an adequate control because it was too dissimilar to the test stimulus. Except for being a competing energy shot, the trade dress was completely different: it had a gray/black label with two red/orange figures playing guitar and the words ROCK ON appearing vertically in silver lettering. The court noted differences in color, differences in text orientation, and lack of a durational description, and concluded that ROCK ON was an inadequate control.

Taken as a whole, the survey was so unreliable that it wouldn’t assist the jury and was excluded.

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