OPINION & ORDER
SHIRA A. SCHEINDLIN, District Judge.
District courts are tasked with the "special
In cases arising under the Lanham Act, the Court's gatekeeper function is of heightened importance because the "pivotal legal question . . . virtually demands [expert] survey research . . . on [issues such as] consumer perception. . . ."
While errors in a survey's methodology usually go to the weight accorded to the
As evident from the Report and Recommendation ("R & R") issued by Professor Daniel J. Capra of Fordham University School of Law and Professor Barton Beebe of Cardozo School of Law (collectively, the "Special Masters"), much of the expert testimony proffered by the parties here warrants exclusion. The Special Masters acknowledged that their recommendation to exclude the majority of the expert testimony may seem "drastic."
Although the parties might regard the R & R to be severe in the scope of its recommended exclusions, the Second Circuit Court of Appeals and the lower courts within this Circuit provide support for the exclusion of survey evidence primarily under Rule 403 but also under Rule 702 where flaws are deemed to cumulatively undermine its relevance and reliability.
Upon review of the R & R, it is beyond cavil that the Special Masters discharged their duty with careful consideration and thoughtful analysis of the parties' opposing positions, the factual details of the expert reports and testimony at issue, the relevant evidentiary rules, and the, case law. The Special Masters considered each expert's survey on its own terms and while the number of exclusions may seem large, that is more properly attributed to the number of experts proffered by the parties than to over-exclusion by the Special Masters. Subject only to the modifications set forth in this Opinion, the Special Masters' R & R is adopted and will be published as the Memorandum and Order of the Court.
On March 16, 2007, defendant Dooney Burke, Inc. ("Dooney & Burke") filed motions in limine to exclude the testimony and reports of plaintiff Louis Vuitton Malletier's ("Louis Vuitton" or "LV") experts: Drs. Richard A. Holub, Eugene Ericksen, Jacob Jacoby, and Mr. West Anson. On March 19, 2007, Louis Vuitton filed motions in limine to exclude the testimony and reports of Dooney & Burke's experts: Drs. Robert N. Reitter and Bradford Cornell.
In light of the volume of the submissions on these motions, the Court appointed the Special Masters pursuant to Federal Rule of Civil Procedure 53(a)(1)(A) and (a)(1)(C) and by Order dated May 18, 2007 (the "May 18 Order").
On July 5, 2007, Louis Vuitton objected to the R & R on the ground that the Special Masters had erred in excluding in their entirety the testimony and reports of its three survey experts.
Pursuant to Rule 53(g)(1), "in acting on a [special] master's order, the court must afford an opportunity [for the parties] to be heard and may receive evidence, and may: adopt or affirm; modify; wholly or partly reject or reverse; or resubmit to the master with instructions."
The proponent of expert evidence must establish admissibility under Rule 104(a) of the Federal Rules of Evidence by a "preponderance of proof."
Under Rule 702 and Daubert, the trial judge must determine whether the proposed testimony "both rests on a reliable foundation and is relevant to the task at hand."
Expert testimony may not usurp the role of the court in determining the applicable law.
In addition, Rule 403 states that relevant evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury.
As an initial matter, I address Louis Vuitton's argument that Special Master Beebe's previously undisclosed interactions with a former Dooney & Bourke attorney, Jeremy Sheff — who continues to practice with counsel for defendant but is no longer involved with the instant litigation — warrants his disqualification and the "disregard[] in its entirety"
Dooney & Bourke acknowledges that Special Master Beebe and Sheff made contact, but disputes the existence of any "relationship" that might warrant disqualification or the wholesale disregard of the R & R.
By letter dated July 11, 2007, Special Master Beebe informed the Court that in August 2006, at Sheff's initiative, the two had briefly corresponded regarding Sheff's legal article on issues of trademark law as well as the legal market for professorships.
Under Rule 53(a)(2), a special master "must not have a relationship to the parties, counsel, action, or court that would require disqualification of a judge under 28 U.S.C. § 455 ("section 455") unless the parties consent with the court's approval to appointment . . . after disclosure of any potential grounds for disqualification."
Section 455 neither requires the disqualification of Special Master Beebe nor the disregard of the R & R. The Court's review of the correspondence between Special Master Beebe and Sheff confirms that their "connection" was isolated, brief, and limited to the discussion of Sheff's draft article and the legal market for professorships. The fact that the article's subject matter is also trademark law and
Indeed, courts in this circuit have held that section 455 does not require disqualification or recusal in far closer cases.
Dr. Eugene Ericksen "conducted a hybrid consumer confusion and trademark dilution survey for Louis Vuitton between December 6, 2006 and December 31, 2006 ( [the] `Ericksen Survey')."
Finding no clear error in the Special Masters' factual findings and reviewing their legal conclusions de novo, I adopt the Special Masters' recommendation that Dr. Ericksen's report and testimony be excluded in their entirety under Rules 702 and 403. The cumulative effect of the flaws outlined in the R & R render the report and testimony unreliable, and any probative value is substantially outweighed by the danger of unfair prejudice and misleading the jury.
Dr. Jacob Jacoby was "retained by Louis Vuitton to conduct a trademark confusion survey (the "Jacoby Confusion Survey") and a dilution survey (the "Jacoby Dilution Survey"), both of which have been discussed by this Court in a prior opinion.
In addition, the Special Masters found numerous, fundamental deficiencies in the Jacoby Dilution Study such as a lack of fit between the survey's questions and the law of dilution,
Finding no clear error in the Special Masters' factual findings and reviewing their legal conclusions de novo, I adopt the Special Masters' recommendation that Dr. Jacoby's report and testimony be excluded
Dr. Richard Holub was retained by Louis Vuitton "to study and compare the use of color in the multicolor handbags of Dooney & Bourke and Louis Vuitton."
With respect to the first purpose, the Special Masters concluded that Dr. Holub's highly technical report and testimony on the similarity of colors between the parties' handbags would not be helpful to the jury because the jury members can observe for themselves whether Dooney & Bourke's mark is confusingly similar to Louis Vuitton's Multicolore Monogram mark.
With respect to Dr. Holub's report and testimony offered for the purpose of proving intent to copy, the Special Masters noted that this presented a closer question
Ultimately, however, the Special Masters concluded the risk is too great that the jury may be influenced by Dr. Holub's testimony and improperly use it toward resolving the likelihood of confusion issue, even if instructed by the Court to consider it only for the issue of intent.
There is no clear error in the Special Masters' factual findings. Reviewing their legal conclusions de novo, however, I hold that Dr. Holub's testimony and report are admissible for the purpose of proving intent. Dr. Holub, however, may only testify to the extent of the overlapping use of colors in the Dooney & Bourke and Louis Vuitton multicolored monogram handbags.
Although I recognize that there is a risk that the jury "may take [Dr. Holub's] testimony [on the intent issue] as an instruction on how to decide the question of likelihood of confusion,"
The probative value of Dr. Holub's report and testimony, limited to the overlap of colors between the Louis Vuitton and Dooney & Bourke marks, is not substantially outweighed by the dangers of unfair prejudice or confusing the jury. As a result, I will allow limited testimony by. Dr. Holub.
Mr. Weston Anson was retained by Louis Vuitton to review financial documents and accounting information produced by Dooney & Bourke during the course of discovery and "to prove the amount of net profit that Dooney & Bourke derived from its assumed infringement on the Louis Vuitton Multicolore [Monogram] mark; and [] to prove that Louis Vuitton suffered dilution of its Multicolore Monogram mark as a result of Dooney & Bourke's infringement."
Mr. Anson's method of calculating net profits deducted only those costs directly incurred in the production of the allegedly infringing Dooney & Bourke handbags, but did not deduct a proportionate amount of general expenses such as overhead.
The Special Masters found that Mr. Anson's dilution study does not "fit" with the substantive law of dilution because he "does not purport to connect a loss of sales [by Louis Vuitton] in the United States to a loss of reputation on the part of Louis Vuitton."
Finding no clear error in the Special Masters' factual findings and reviewing their legal conclusions de novo, I adopt the Special Masters' recommendation that Mr. Anson's report and testimony be admitted in part and excluded in part, as set forth above, under Rules 702 and 403. In light of the number of serious flaws that plague Mr. Anson's report and testimony, specifically on the issue of dilution, the probative value is substantially outweighed by the prejudicial effect and the serious potential to mislead the jury.
I find no clear error in the Special Masters' factual findings with respect to Dr. Bradford Cornell's testimony and report on the issue of Louis Vuitton's damages and Dooney & Bourke's profits, and come to the same legal conclusions upon a de novo review. For those reasons and because neither party objects to the adoption of the R & R with respect to Dr. Cornell,
Dr. Robert N. Reitter was retained by Dooney & Bourke to conduct a trademark confusion survey and trademark recognition survey in 2004.
Dooney & Bourke "does not challenge the Special Masters' recommendation with respect to the 2004 [trademark confusion survey] or with the efforts to revive it"
Although the Special Masters primarily regarded the 2006 confusion survey as a response to the Court's criticisms of the 2004 survey, the Special Masters did conduct a careful analysis of the 2006 confusion survey, independent of the 2004 survey. In doing so, the Special Masters identified a number of flaws in the methodology of the 2006 confusion survey and explicitly noted that the 2006 survey "suffers from some of the same methodological flaws that beset the 2004 survey."
While the Special Masters remarked that each methodological flaw, standing alone, may not mandate exclusion, each flaw diminished the 2006 confusion survey's reliability and probative value.
With respect to Dr. Reitter's dilution study conducted in 2006, the Special Masters recommended that it be excluded in its entirety because "as designed, it could provide no reliable indication of whether the [Louis Vuitton] Multicolore mark was diluted."
Taken cumulatively, the methodological flaws identified by the Special Masters and the "fundamentally flawed reasoning"
For the reasons stated above, plaintiff's motions are granted in part and denied in part, and defendant's motions are denied. The Clerk of the Court is directed to close the following motions: [Docket Entry Nos. 188, 194, 199, 204, 206]. A teleconference is scheduled for December 21, 2007, at 11:45 a.m.
SO ORDERED.
Professors BARTON BEEBE and DANIEL CAPRA, Special Masters.
I. Legal Standards for Determining Admissibility of Expert Testimony .................579
A. Rule 702 and Daubert ..........................................................579
B. Rule 403 ......................................................................580
C. Survey Evidence ...............................................................580
D. Daubert Hearings ..............................................................581
II. The Survey Experts ................................................................582
A. Dr. Eugene Ericksen ...........................................................582
1. Facts .....................................................................583
a. The Ericksen Survey Universe ..........................................583
b. The Ericksen Survey Stimuli ...........................................584
c. The Ericksen Survey Questions .........................................587
d. Dr. Ericksen's Confusion Analysis .....................................587
e. Dr. Ericksen's Blurring Analysis ......................................589
2. Discussion ................................................................591
a. Dr. Ericksen Used an Improper Stimulus ................................591
b. Dr. Ericksen's Control Was Flawed .....................................595
c. Dr. Ericksen's Confusion Analysis Is Flawed ...........................596
d. Dr. Ericksen's Blurring Analysis Is Flawed ............................598
3. Summary on Admissibility of Testimony, Survey, and Expert Report
of Dr. Ericksen .........................................................599
B. Dr. Jacob Jacoby ..............................................................600
1. The Jacoby Confusion Survey ...............................................601
2. The Jacoby Dilution Survey ................................................605
a. Facts .................................................................605
i. The Jacoby Dilution Survey Universe .............................605
ii. The Jacoby Dilution Survey Stimuli ..............................606
iii. The Jacoby Dilution Survey Questions ............................606
iv. The Jacoby Dilution Survey Dilution Analysis ....................607
v. The Jacoby Dilution Survey Pilot Survey .........................609
b. Discussion ............................................................609
i. The Jacoby Dilution Survey is Not Relevant to the Issue of
Dilution ......................................................609
ii. The Flaws in the Jacoby Dilution Survey's Categorization of
Results .......................................................610
iii. The Objectivity of the Jacoby Dilution Survey ...................612
C. Robert N. Reitter .............................................................612
1. Facts .....................................................................615
a. The 2004 Reitter Confusion Survey .....................................616
i. The 2004 Reitter Confusion Survey Universe and Sample ...........616
ii. The 2004 Reitter Confusion Survey Stimuli .......................617
iii. The 2004 Reitter Confusion Survey Questions .....................618
iv. The 2004 Reitter Confusion Survey Confusion Analysis ............619
b. The 2006 Reitter Confusion Survey .....................................621
i. The 2006 Reitter' Confusion Survey Universe and Sample ..........621
ii. The 2006 Reitter Confusion Survey Stimuli .......................622
iii. The 2006 Reitter' Confusion Survey Questions ....................623
iv. The 2006 Reitter Confusion Survey Confusion Analysis ............623
c. The 2006 Reitter Dilution Survey ......................................625
i. The 2006 Reitter Dilution Survey Universe and Sample ............625
ii. The 2006 Reitter Dilution Survey Stimuli ........................625
iii. The 2006 Reitter Dilution Survey Questions .......................626
iv. The 2006 Reitter Dilution Survey Dilution Analysis ..............626
Louis Vuitton Malletier ("Louis Vuitton") brings this action against Dooney & Bourke, Inc. ("Dooney & Bourke") alleging trademark infringement, trademark dilution, and unfair competition under the Lanham Act, 15 U.S.C. §§ 1051 et seq., and Section 301 of New York General Business Law. In her opinion dated August 27, 2004, Louis Vuitton Malletier v. Dooney & Bourke, Inc., 340 F.Supp.2d 415 (S.D.N.Y.2004) ("Vuitton I"), Judge Shira A. Scheindlin denied Louis Vuitton's motion for a preliminary injunction. In its opinion dated June 30, 2006, Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108 (2d Cir.2006) ("Vuitton II"), the Second Circuit affirmed in part and vacated and remanded in part Judge Scheindlin's ruling in light of the Second Circuit's opinion in Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir.2005). In anticipation now of a jury trial, the parties have fully submitted five motions in limine seeking to exclude the reports and testimony of six proposed experts. By Order dated May 18, 2007, Judge Scheindlin appointed the undersigned as Special Masters in, this case and directed us to submit a collaborative Report and Recommendation to aid the Court in resolving these motions in limine.
For, the reasons given below, we respectfully recommend that (1) Dooney & Bourke's Motion in Limine to Exclude the Reports, Testimony, and Opinions of Dr. Eugene Ericksen' and Dr. Jacob Jacoby be granted in its entirety, (2) Louis Vuitton's Motion in Limine to Exclude Dooney & Bourke's Proposed Expert Opinions, Testimony, and Surveys of Dr. Robert N. Reitter be granted in its entirety; (3) Dooney & Bourke's Motion in Limine to Exclude the Report, Testimony, and Opinions of Richard A. Holub be granted in its entirety (4) Dooney & Bourke's Motion in Limine to, Preclude the Report, Testimony, and Opinions of Mr. Weston Anson be granted in part and denied in part, and (5) Louis Vuitton's Motion to Exclude Defendant Dooney & Bourke's Proposed Expert Testimony of Dr. Bradford Cornell be granted in part and denied in part.
The underlying facts of this case are set forth in Vuitton I, 340 F.Supp.2d at 424-428, and Vuitton II, 454 F.3d at 112-13, familiarity with which is assumed. In what follows, we use the term "Louis Vuitton Monogram Multicolore Mark" to denote the Louis Vuitton mark consisting of "(1) the interlocking initials ["L" and "V"] interspersed in a repeating pattern with
We proceed by setting forth the basic legal standards applicable to the admissibility of expert testimony in general and survey evidence in particular. We then move to the motions in limine for each expert. The law governing trademark infringement and dilution claims is interspersed throughout the discussion of the expert testimony.
The admissibility of expert testimony is governed by the Federal Rules of Evidence. Federal Rule of Evidence 702 requires that a challenged expert must be qualified to testify on the basis of scientific, technical or other specialized knowledge, on a subject matter that "will assist the jury to understand the evidence or determine a fact in issue." Thus, expert testimony is excluded under Rule 702 if it addresses "lay matters which the jury is capable of understanding and deciding without the expert's help." United States v. Lumpkin, 192 F.3d 280, 289 (2d Cir. 1999). As amended in 2000, Rule 702 further requires that the expert's testimony must be (1) based on sufficient facts or data, (2) the product of reliable principles and methods, (3) reliably applied to the facts of the case. These three reliability-based requirements are intended to codify Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and its progeny. See Advisory Committee Note to the 2000 Amendment to Evidence Rule 702. Under Daubert, a court is required to ensure that challenged expert testimony "is not only relevant, but reliable." 509 U.S. at 589, 113 S.Ct. 2786. The Court in Daubert charged trial judges with the responsibility of acting as gatekeepers to exclude unreliable expert testimony. Subsequently the Court in Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), made clear that the gatekeeping function applies not just to scientific expert testimony as discussed in Daubert, but also to testimony based on technical or other specialized knowledge.
Daubert set forth a non-exclusive list of factors for trial courts to use in assessing the reliability of scientific expert testimony. The specific factors explicated by the Daubert Court are (1) whether the expert's technique or theory can be or has been tested — that is, whether the expert's theory can be challenged in some objective sense, or whether it is instead simply a subjective, conclusory approach that cannot reasonably be assessed for reliability; (2) whether the technique or theory has been subject to peer review and publication; (3) the known or potential rate of error of the technique or theory when applied and the existence and maintenance of standards and controls that govern the application of the expert's process; and (4) whether the technique or theory has been generally accepted in the relevant community of experts. 509 U.S. at 592-94, 113 S.Ct. 2786.
The proponent of the expert testimony must prove by a preponderance of the evidence that it is reliable. Daubert, 509 U.S. at 590, 113 S.Ct. 2786. Admissibility does not depend on whether the judge agrees with the expert's conclusion; the focus is instead on the expert's methodology. Id at 595, 113 S.Ct. 2786. Yet as the Court has recognized, "conclusions and methodology are not entirely distinct from one another." General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). When an expert purports to apply principles and methods in accordance with professional standards, and yet reaches a conclusion that other experts in the field would not reach, "the trial court may fairly suspect that the principles and methods have not been faithfully applied." Committee Note to 2000 Amendment to Rule 702 (citing Lust v. Merrell Dow Pharmaceuticals, Inc., 89 F.3d 594, 598 (9th Cir.1996)).
Rule 403 provides another source for excluding expert testimony. Under Rule 403, evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." The Court in Daubert emphasized that expert testimony "can be both powerful and quite misleading because of the difficulty of evaluating it." 509 U.S. at 595, 113 S.Ct. 2786 (quotation omitted). Accordingly, the judge in applying Rule 403 must exercise "more control over experts than over lay witnesses." Id
Several of the experts challenged in this case are relying on surveys of potential purchasers of the handbags at issue. Survey evidence is generally admissible in cases alleging trademark infringement under the Lanham Act. See Schering Corp. v. Pfizer Inc., 189 F.3d 218, 227-28 (2d Cir.1999) (endorsing the "modem view" that evidence of the state of mind of persons surveyed is not inadmissible as hearsay). To assess the admissibility of survey evidence, the court should consider a number of criteria, including whether:
Courts often hold pretrial evidentiary hearings — known as Daubert hearings — to determine whether challenged expert testimony is reliable under Rule 702 and admissible under Rule 403. Whether to hold a Daubert hearing is within the discretion of the court. See Committee Note to 2000 Amendment to Rule 702 (noting that the Rule "makes no attempt to set forth procedural requirements for exercising the trial court's gatekeeping function over expert testimony"). The failure to hold a Daubert hearing may be an abuse of discretion when the admissibility ruling is tantamount to a ruling on summary judgment and there are substantial disputed issues of fact that are pertinent to the reliability inquiry. See, e.g., Padillas v. Stork-Gamco, Inc., 186 F.3d 412, 418 (3d Cir.1999). But see Oddi v. Ford Motor Co., 234 F.3d 136, 154 (3d Cir.2000) (no error in failing to hold Daubert, hearing before excluding evidence and granting summary judgment; distinguishing Padillas as a case involving a thin record under which the court could not have evaluated the expert's methods).
A Daubert hearing is unnecessary when the evidentiary record pertinent to the expert opinions is already well-developed. For example, in Miller v. Baker Implement Co., 439 F.3d 407 (8th Cir.2006), the court found that the trial judge did not abuse discretion in excluding the plaintiff's expert testimony without a Daubert hearing. It noted that the plaintiff submitted affidavits, a detailed explanation of the proposed expert testimony and a legal memorandum addressing the expert evidence issues. The court noted that while Daubert hearings "may be necessary in
In this case, the parties have extensively briefed the issues pertinent to each expert's testimony. Each of the challenged experts has been subject to a lengthy deposition. Each of the expert's reports (as well as each of the reports of experts challenging the reliability of some of those reports) has been submitted to, the court. It is difficult to think of anything missing from the presentation by the parties that could be pertinent to these in limine motions. Accordingly, we find that a Daubert hearing is unnecessary.
Dr. Eugene Ericksen conducted a hybrid consumer confusion and trademark dilution survey for Louis Vuitton between December 6, 2006 and December 31, 2006 ("Ericksen Survey").
We find that the Ericksen Survey used a severely flawed methodology and is unreliable; as such its probative value is substantially outweighed by its prejudicial effect and potential to mislead the jury. Thus it is inadmissible under Rules 403 and 702. We therefore recommend that the Ericksen Survey be excluded in its entirety. We first describe the facts of the
Dr. Ericksen is a Professor of Sociology and Statistics at Temple University. He holds a Ph.D. in Sociology and an M.A. in Mathematical Statistics from the University of Michigan. Dr. Ericksen has published numerous articles on statistical sampling methods and census-taking, among other topics, and has submitted written testimony on the reliability of methods used in the United States Census before United States Senate and House of Representative Committees.
In his report, Dr. Ericksen states that he designed the Ericksen Survey to test for initial interest and post-sale confusion and for dilution by blurring,
Upon being qualified for the survey, the survey respondent was taken into an interviewing room and seated three to five feet away from a 19- or 20-inch, standard-definition (i.e., non-high-definition) television screen. The respondent was then randomly assigned the number 1, 2, or 3. Each of these numbers was assigned to respondents at each of the five malls.
In Video # 1, the woman was carrying a Dooney & Bourke It-Bag bearing the Dooney & Bourke Multicolor Monogram Mark imprinted on a white background.
The parties dispute whether Dr. Ericksen could have used a different Coach bag, if not a different bag altogether as a control. Dooney & Bourke has submitted into evidence numerous images of handbags produced by third-parties featuring a repeating monogram pattern,
Another issue in dispute is what could be seen by respondents in the videos. We separately viewed each of Videos # 1, # 2 and # 3 repeatedly — one of us on a 20-inch standard-definition television and the other on a 20-inch computer screen — and independently found on each viewing, that, in Videos # 1 and # 2, the details of the Dooney & Bourke bags were blurred beyond comprehension. Specifically, the "D" and "B" are illegible, as is the writing on the pink enameled heart. In fact, it is not clear in Videos # 1 and # 2 what, if any, written design is imprinted on the Dooney & Bourke bags. Instead, all that is perceptible in Videos # 1 and # 2 is a pattern of vaguely-defined colored shapes rendered on a white or black background. It is therefore not surprising that a number
In this connection, it is particularly noteworthy that Dr. Ericksen made a variety of videos prior to choosing the three videos actually used, and that the rejected alternatives included a set of videos, labeled "Close," that featured close-ups of the bags.
As for Video # 3, showing the Coach Patchwork Bag, the stylized "C" is legible on those patches on which it was imprinted. In the final frames of the video, as the woman walks to the left, the "C" is especially visible and legible. Any writing on the hangtag is not legible. Numerous survey respondents stated that they could read the "C" on the bag.
After viewing the videos, the respondents were asked a series of questions. The most relevant questions consisted of the following, which, for ease of reference, are numbered here as they were numbered on Dr. Ericksen's questionnaire:
At no time was the respondent told not to guess or explicitly offered the option to answer "I don't know."
We review here Dr. Ericksen's coding decisions with respect to consumer confusion in some detail because the parties strenuously dispute whether his coding decisions were proper. With respect to Video # 1, of the 104 respondents who viewed the video, Dr. Ericksen classified twenty-one as "confused," i.e., as incorrectly believing that the bag shown in the video was made by Louis Vuitton. Specifically, six respondents volunteered in response to Question 2 that they saw a Louis Vuitton bag — though one of these respondents expressed uncertainty.
With respect to Video # 2, of the 103 respondents who viewed the video, Dr. Ericksen classified twenty-three as confused. Specifically, eight respondents volunteered in response to Question 2 that they saw a Louis Vuitton bag — none expressed uncertainty. An additional twelve respondents answered Louis Vuitton to Question 3 — one expressed uncertainty.
With respect to Video # 3, of the 101 respondents who viewed the video, one respondent speculated that the Coach Patchwork Bag shown "could be anywhere from Dolce & Gabbana to Louis Vuitton."
Thus, with no control respondents registering confusion, Dr. Ericksen determined that the level of consumer confusion with respect to the bag shown in Video # 1 was 20.2 percent and the level of consumer confusion with respect to the bag shown in Video # 2 was 22.3 percent.
As above with his confusion analysis and for the same reason, we review Dr. Ericksen's coding decisions and reasoning with respect to his blurring analysis in detail. With respect to Video # 1 and the 104 respondents who viewed that video, Dr. Ericksen counted the twenty-one respondents he classified as confused as also demonstrating blurring. He reasoned that "a respondent who was confused by the appearance of the Dooney & Bourke handbag demonstrates that there was a blurring of the distinctiveness of the Louis Vuitton trademarks."
With respect to Video # 2 and the 108 respondents who viewed that video, Dr. Ericksen counted the twenty-three respondents he classified as confused as also demonstrating blurring. He did so for the same reasoning given above with respect to Video # 1. Dr. Ericksen classified an additional, two respondents as demonstrating blurring — but not confusion — because they named Louis Vuitton in response to Question 3 but otherwise volunteered that they thought the bag shown in the video was a "fake"
It is not surprising that so many respondents who viewed Videos # 1 and # 2 referred to similarities in "look" or "style." As Dr. Ericksen explained in his deposition testimony in answer to a question posed to him by Louis Vuitton's counsel, the blurring component of his study "measured whether or not the look of the Dooney & Bourke handbags called to mind some other brand." When Louis Vuitton's counsel then asked what he meant by look, he answered: "Its design. Its style." When Louis Vuitton's counsel invited a narrow answer by asking Dr. Ericksen "[a]re you referring to the Louis Vuitton trademark pattern on the bag when you refer to look?", Dr. Ericksen responded more broadly: "Well, I am simply referring to the overall look of the bag."
With respect to the 101 respondents who that the Coach Patchwork Bag called to mind Louis Vuitton. Dr. Ericksen explained in his report that "[i]t seems reasonable that some respondents thought that the bag they saw was some expensive brand, and when asked what brand came to mind simply named a `high end' brand they knew."
Dooney & Bourke argues that the Erickson surveys, and any testimony about those surveys, is unreliable and not probative because of a number of methodological flaws including:
We turn to each of these contentions, and add a number of other concerns during the course of our analysis.
"[A] survey must use the proper stimulus, one that tests for confusion by replicating marketplace conditions." Conopco, Inc. v. Cosmair, Inc., 49 F.Supp.2d 242, 253 (S.D.N.Y.1999). A survey that uses a stimulus that makes no attempt to replicate how the marks are viewed by consumers in real life may be excluded on that ground alone. See American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 661 n. 4 (2d Cir.1979) (survey that failed even to come close to replicating "actual marketing conditions" was properly rejected by district court). A flaw in the choice of stimulus may not on itself warrant exclusion, but it certainly diminishes the reliability and the probative value of the survey and increases the risk of
In evaluating the propriety of the Ericksen Survey's stimulus, "it is useful to be aware of the contours and limits of what [Louis] Vuitton asserts as its trademark." Vuitton II, 454 F.3d at 115. Fortunately, Judge Scheindlin and the Second Circuit have repeatedly and clearly — and quite emphatically — defined these contours and limits. The Louis Vuitton Monogram Multicolore Mark consists of "a design plus color, that is, the traditional Vuitton Toile pattern design — entwined LV initials with the three already described motifs — displayed in the 33 Murakami colors and printed on a white or black background." Vuitton II, 454 F.3d at 115. See also id. at 116 (describing the mark at issue as "consisting of styled shapes and letters — the traditional Toile mark combined with the 33 Murakami colors"). Louis Vuitton may not claim exclusive trademark rights in "all uses of a multicolored logo against a white or black background because the use of multiple colors, when divorced from the geometric shapes and `LV monogram, lack secondary meaning." Vuitton I, 340 F.Supp.2d at 440 (emphasis added); id. at 421 n. 6 ("There is no proof whatsoever that anyone believes that all colorful, monogrammed bags emanate from Louis Vuitton." (emphasis added)); id. at 439. Louis Vuitton "has made numerous statements that this is not a trade dress case," id. at 438 n. 118, and may not claim protection in a "look," id. at 421. See also Vuitton II, 454 F.3d at 115 ("Notably, plaintiff does not claim a separate trademark in the colors alone. If it were to claim such a trademark, it would be required to show that the multicolors, set on a white or black background, create a separate and distinct commercial impression, apart from the monogram motif design, and that the colors serve to indicate Vuitton as the source.") This issue of what is protected — the multicolor logo and not the look — has been fully ventilated in this litigation.
In essence, then, Louis Vuitton may not claim trademark rights in all designs-pluscolors combination as applied to handbags, but only in its particular "traditional Vuitton Toile" plus Murakami colors combination. A competitor is free to develop its own particular combination of initials and/or designs imprinted in various colors, as Dooney & Bourke and many others have, so long as its particular combination is not so similar to Louis Vuitton's (in both designs and colors) as to mislead consumers as to the true source of the competitor's goods. Indeed, because Louis Vuitton does not and cannot claim trademark rights in the Murakami colors alone, a competitor is free to use precisely those colors so long as it displays those colors in imprinted initials and/or designs sufficiently dissimilar to the traditional Vuitton Toile as not to cause consumer confusion. Cf. J. Thomas McCarthy, 4 McCarthy on
The stimulus Dr. Ericksen used in his survey is improper because he did not, in Videos # 1 and # 2, expose the survey respondents both to the colors Dooney & Bourke used to imprint its designs on its It-Bags and to the imprinted designs themselves. See Dreyfus Fund, Inc. v. Royal Bank of Canada, 525 F.Supp. 1108, 1117 (S.D.N.Y.1981) ("It is the impression which the mark as a whole creates on the average reasonably prudent buyer and not the parts thereof which is important"). Instead, Videos # 1 and # 2 show the bag so far away that the interlocking "D" and "B" initials cannot be seen, in a way that appears "blatantly designed to skew the survey's results." Conopco, 49 F.Supp.2d at 255. As noted, several respondents complained of the blurriness of Video # 1 in particular. Dr. Ericksen could have used the "Close" set of videos, which featured legible images of the "D" and "B" initials, but declined to do so, despite some precedent for the use of close-ups in video stimuli. See Lois Sportswear, U.S.A. v. Levi Strauss & Co., 799 F.2d 867, 873 (2d Cir.1986) (admitting but ultimately giving "limited weight" to a survey in which "[t]he videotape [stimulus] allowed one of the back pockets to be seen at a distance of about six feet and was then followed by a zoom shot of the pocket.") Ultimately, as Dr. Ericksen admitted in describing the purpose of his hybrid confusion-dilution survey, Videos # 1 and # 2 tested, if anything; the degree to which the "overall look" of the Dooney & Bourke It-Bags was perceived as similar to the overall look of the Louis Vuitton Murakami bags. But the record in this case could not be clearer: Louis Vuitton may not claim trademark rights in a "look." This is why it is peculiar that in defending Dr. Ericksen's choice of stimulus, Louis Vuitton cites to Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir.2005), in which the Second Circuit explained that, in comparing trademarks, "it is the general overall impression that counts." Id. at 538 (quoting Harold F. Ritchie, Inc. v. Chesebrough-Pond's, Inc., 281 F.2d 755, 762 (2d Cir.1960)). Yet the respondents to Videos # 1 and # 2 could not perceive a "general overall impression" of the Dooney & Bourke Multicolor Monogram Mark because they could not distinguish the initials that form a critical element of that mark — an element that was likely to have disabused the respondents of whatever confusion they may have experienced. See, e.g., Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 46 (2d Cir.2000) (defendant's "prominent use of its well-known house brand therefore significantly reduces, if not altogether eliminates, the likelihood that consumers will be confused as to the source of the parties' products"). Louis Vuitton then cites to Burlington's statement that:
Burlington, 426 F.3d at 538 n. 3. But in Burlington, Louis Vuitton was claiming trade dress infringement in addition to trademark infringement, id. at 536, with the result that the Burlington Opinion references both forms of infringement throughout. See, e.g., id. at 538 (quoting Fun-Damental Too, Ltd. v. Gemmy Indus.
Louis Vuitton falls back on the theories of initial interest and post-sale confusion to defend the lack of visibility of the logos in Videos # 1 and # 2, and Dr. Ericksen writes in his report that he did not intend to test for point-of-sale confusion. Louis Vuitton argues that, from some distance, consumers will not be able to distinguish the "D" and "B" initials, but will instead perceive a blur of colors and outlined designs, and thus, that from that distance, consumers may believe that a Dooney & Bourke It-Bag was made by Louis Vuitton. To be sure, there is some tension between, on the one hand, the "precision," Vuitton I, 340 F.Supp.2d at 438, with which the record has defined the trademark at issue and, on the other, Louis Vuitton's claims of initial interest and post-sale confusion. But Louis Vuitton seeks to take advantage of the theories underlying initial interest and post-sale confusion indirectly to assert rights in a "look." To the extent that Louis Vuitton asserts that consumers are confused initially or in the post-sale context by the look of a multicolored bag from a distance (when the initials or designs on the bag are obscured), this confusion is being caused by the look of the bag, in which, again, Louis Vuitton has disavowed any trademark rights. Accepting Louis Vuitton's argument would lead to the absurd premise that its Multicolore Monogram trademark would be infringed by any bag with relatively the same color and shape of the Louis Vuitton handbag when viewed from a few blocks away — even a bag without any monograms at all. That is obviously an unacceptable result, making it critical to remember that Louis Vuitton may not in this action claim trademark rights in a "look."
Louis Vuitton also defends Dr. Ericksen's choice of stimulus on the ground that if Dr. Ericksen had used a legible close-up of the Dooney & Bourke Multicolor Monogram Mark, then his survey "would not be a real world test. Rather, it would have been merely an irrelevant reading test of the type previously rejected by this Court"
A control stimulus is used in trademark surveys to "sufficiently account for factors legally irrelevant to the requisite confusion," Cumberland Packing Corp. v. Monsanto Co., 32 F.Supp.2d 561, 574-75 (E.D.N.Y.1999), such as the "background noise," id. at 574, generated by the "[b]efuddlement" that "is part of the human condition." Reed-Union Corp. v. Turtle Wax, Inc., 77 F.3d 909, 912 (7th Cir.1996) ("No matter how clear the markings, no matter how different the names, no matter how distinctive the bottles, some confusion is inevitable."). "Many courts have required control questions in order to filter out" this background confusion. Ironclad, L.P. v. Poly America, Inc., No. 3:98 Civ. 2600, 2000 WL 1400762 at *8 (N.D.Tex. July 28, 2000). "A control product is one that is a non-infringing product which is similar to the products at issue." Nabisco v. Warner-Lambert Co., 32 F.Supp.2d 690, 700 (S.D.N.Y.1999) (citation omitted); Shari Seidman Diamond, Reference Guide on Survey Research, in REFERENCE MANUAL ON SCIENTIFIC EVIDENCE at 258 (Federal Judicial Center 2000) ("In designing a control group study, the expert should select a stimulus for the control group that shares as many characteristics with the experimental stimulus as possible, with the key exception of the characteristic whose influence is being assessed."). The use of an improper control may produce "an artificially low estimate of the normal degree of confusion affecting the purchase of products" bearing the mark at issue. Reed-Union, 77 F.3d at 912. See also Cumberland, 32 F.Supp.2d at 575 ("Given the inadequacy of the controls, one cannot determine from the data the extent of the relevant type of confusion by indirectly approximating the background noise.").
Despite the availability of numerous handbags produced by third-parties featuring a repeating monogram pattern, some of them multicolored, Dr. Ericksen chose as his control stimulus a bag quite dissimilar in shape and pattern to the bags shown in Videos # 1 and # 2. A control stimulus closer in design to the Louis Vuitton Monogram Multicolore Mark would have gone far towards isolating the amount of confusion attributable to the similarities in Dooney & Bourke's and Louis Vuitton's marks, rather than to the similarities in the "look" of their bags. Instead, Dr. Ericksen chose a control stimulus that had little in common with the bags at issue in this case and what it did have in common quite likely resulted in the underreporting of background "noise." While the Coach Patchwork Bag was multicolored in nature, it did not feature a multicolored logo pattern covering the bag. Instead, certain patches on the Coach Patchwork Bag, one of which was clearly
The flawed choice of control bag is probably not on its own dispositive of the admissibility of the survey. The Coach bag was not a very good "noise" reducer, but it seems to have been better than no control at all. See Shari Seidman Diamond, Reference Guide on Survey Research, in MANUAL ON SCIENTIFIC EVIDENCE 2d at 258 (Federal Judicial Center 2000) ("[A] survey with an imperfect control group generally provides better information than a survey with no control group at all, but the choice of the specific control group requires some care and should influence the weight that a survey receives").
However, while the poor choice of control is not dispositive of inadmissibility, both Rule 702 and 403 require the court to look at the cumulative effect of all of the flaws in a survey. See Mastercard Int'l Inc. v. First Nat'l Bank of Omaha, Inc., No. 02 Civ. 3691, 2004 WL 326708, at *10, 2004 U.S. Dist. Lexis 2485, at *30 (S.D.N.Y. Feb 23, 2004) (assessing the cumulative impact of flaws in survey methodology and concluding that the "flaws in the Survey diminish its relevance in predicting actual confusion . . . such that the potential for the Survey's results to prejudice unfairly, to confuse, and to mislead the jury substantially outweighs any limited relevance"). Thus the poor choice of bag is an important factor cutting toward exclusion of the 2004 survey — especially when added to the problematic stimulus, which made no attempt to allow respondents to view the lettering on the Dooney & Bourke bag.
"In order to prove actual confusion, the confusion must stem from the mark in question," General Motors Corp. v. Lanard Toys, Inc. 468 F.3d 405, 414 (6th Cir.2006), in this case, the Dooney & Bourke Multicolor Monogram Mark. Confusion caused by stimuli irrelevant to the trademark at issue should be disregarded. See Malaco Leaf, AB v. Promotion In Motion, Inc., 287 F.Supp.2d 355, 375 (S.D.N.Y.2003) (criticizing plaintiffs survey for attributing "the balance of the reported confusion (8%) to other indicia of confusion which are irrelevant to this Court's trade dress analysis, including, inter alia, consumers' belief that both products are the `same type of candy.'"); Cumberland Packing Corp. v. Monsanto Co., 32 F.Supp.2d 561, 573-75 (E.D.N.Y.1999) (determining that numerous survey respondents' verbatim responses showed that these respondents' confusion was caused by factors not relevant to the trade dress at issue). Furthermore, consumer confusion surveys should be designed to discourage guessing. See Conopco, Inc. v. Cosmair, Inc., 49 F.Supp.2d 242, 255 (criticizing survey that "was designed to exacerbate confusion by encouraging participants to guess"); Cumberland, 32 F.Supp.2d at 575 (surveys flawed for not discouraging guessing); Jacob Jacoby, A Critique of Rappeport's "Litigation Surveys — Social `Science' As Evidence," 92 Trademark Rep. 1480, 1486 (2002) ("[H]ighly, credible and substantiated empirical evidence exists to reveal that the absence of an explicit ["Don't Know"] response category can substantially affect survey findings, often in the order of 20 percentage points or more."). Cf. Schieffelin & Co. v. Jack Co. of Boca, Inc., 850 F.Supp. 232, 240 (S.D.N.Y.1994) ("Also excluded from the 47 percent figure were an
Dr. Ericksen failed to limit his confusion analysis to the confusion, if any, that was caused specifically by the Dooney & Bourke Multicolor Monogram Mark — despite the clear record in this case that Louis Vuitton may not claim trademark rights in the "look" of the Murakami bags. With respect to Video # 1, of the 21 respondents whom Dr. Ericksen classified as confused, at least eight explained that they named Louis Vuitton in response to Questions 3a or 7 because of similarities in design, colors, or overall look. With respect to Video # 2, of the twenty-three respondents classified as confused, at least eight referred to similarities in design, colors, or overall kook.
Furthermore, Dr. Ericksen classified as confused respondents who named Louis Vuitton in answer to Question 7. Specifically, Dr. Ericksen classified four respondents exposed to Video # 1 as confused on this basis, and three exposed to Video # 2. Yet, as Judge Scheindlin has already noted in this case, questions akin to those asked in Questions 6, 7, and 8 have been "rejected by courts because they improperly ask respondents for a legal conclusion." Vuitton I, 340 F.Supp.2d at 445. Regarding a survey conducted by Dr. Jacob Jacoby, Judge Scheindlin determined that the respondent's answers to a "needed to get permission" question "carry little weight." Id.
Finally, the Ericksen Survey respondents were not explicitly instructed against guessing. This is particularly disturbing in light of the number of respondents who expressed uncertainty in, their verbatim answers to certain of the survey questions and in light of the degree to which the lettering of the Dooney & Bourke Monogram Multicolor Mark could not be seen in Videos # 1 and # 2. Because the Ericksen Survey did not instruct against guessing, we have no way of knowing how many respondents named Louis Vuitton because, as one respondent put it, this was the "only flashy brand that I could think of off hand."
Though we recommend that Dr. Ericksen's confusion analysis be rejected in its entirety, we note that if the Court chooses (1) to disregard respondents who were classified as confused even though they made reference only to the general style of the bag and (2) to disregard respondents who were classified as confused solely because of their response to Question 7, then Dr. Ericksen's survey would show nine respondents confused in response to Video # 1 (for a confusion rate of 9/104 or 8.7 percent) and twelve respondents confused in response to Video # 2 (for a confusion rate of 12/103 or 11.7 percent).
As with his confusion analysis, Dr. Ericksen's blurring analysis is based on the use of an improper stimulus and flawed control. Moreover, Dr. Ericksen failed to limit his blurring analysis to blurring caused specifically by the Dooney & Bourke Multicolor Monogram Mark, rather than by the overall "look" of the Dooney & Bourke bags shown in Videos # 1 and # 2. For example, considering the videos together, Dr. Ericksen counted three respondents as demonstrating blurring because, in Dr. Ericksen's words, "they thought the bags were similar." Dr. Ericksen counted a further thirteen respondents as demonstrating blurring when these respondents made no reference to the Dooney & Bourke Multicolor Monogram Mark, but instead spoke of the style, shape, color, look, or design of the bags shown to them. As with his confusion analysis, Dr. Ericksen also failed to instruct against guessing. For these reasons alone, we find Dr. Ericksen's blurring analysis to be fatally flawed.
But beyond these previously-discussed substantial flaws in methodology in determining confusion, Dr. Ericksen made a further critical error by counting "confused" respondents as also demonstrating blurring. Dr. Ericksen's blurring analysis proceeds from a fundamental misunderstanding of the theory of dilution by blurring. It is axiomatic in trademark doctrine that a consumer — or, as here, a survey respondent — who is confused as to source cannot also demonstrate blurring. Consumer confusion occurs when consumers perceive two similar marks as referring to the same source. Trademark dilution by blurring occurs when consumers perceive two identical (or very similar) marks as referring to different sources. In blurring, the harm to the senior mark is that the link between the senior mark and the senior mark's source is "blurred" by the presence in the marketplace of the identical (or very similar) junior mark linking to the junior mark's source. See J. Thomas McCarthy, 6 McCarthy on Trademarks and Unfair Competition, § 24.69 (4th ed. 2007) ("Dilution by blurring consists of a single mark identified by consumers with two different sources. One mark: two sources. Traditional trademark infringement involves mistakenly connecting similar marks with the
McCarthy, § 24.72 (emphasis in original). See also RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 25, comment f (1995), Reporter's Note ("Although in a particular case the use of another's mark may confuse some consumers and dilute the value of the mark in the minds of other consumers, the state of mind required for confusion and dilution are distinct and inconsistent. The confused consumer believes that the actor's use of the mark is connected with the trademark owner, and thus for such consumers the use does not dilute the distinctiveness of the mark."). We recognize that dicta in the Second Circuit has confused the binary relationship between confusion and dilution. Compare Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 219 (2d Cir.1999) ("A junior use that confuses consumers as to which mark is which surely dilutes the distinctiveness of the senior mark."), with McCarthy, § 24.72 (referring to the Nabisco dictum as a "misunderstanding of the nature of `dilution' by blurring."). Nevertheless, the basic logic of the theory of dilution by blurring requires that any consumer — or survey respondent — who is confused cannot also demonstrate blurring. To the extent that the respondents whom Dr. Ericksen classified as "confused" make up a large majority of those whom, he also counted as demonstrating blurring, we find this to be an additional independent basis to reject Dr. Ericksen's survey results and testimony with respect to blurring.
We conclude that Dr. Ericksen's survey, when offered to prove confusion and especially when offered to prove dilution, is inadmissible in its entirety under Rules 702 and 403. Accordingly, Dr. Ericksen's expert report should be excluded and he
Louis Vuitton retained Dr. Jacob Jacoby
The Jacoby Dilution Survey consisted of a mall intercept survey in which ninety-six respondents were shown two It-Bags, two Murakami bags, and a control bag in the form of a Dooney & Bourke bag bearing the interlocking initials "D" and "B" imprinted in red on a red background. While being shown these bags, the respondents were asked a lengthy series of questions designed, in essence, to elicit how knowledge of the availability in the marketplace of the It-Bags influenced the respondent's perception of the Murakami bags and vice-versa. Dr. Jacoby found that twenty-three percent of the respondents "reported" "feeling one or more" of the following "aspects of dilution"
With respect to the Jacoby Confusion Study, we find that there are very serious discrepancies between that Study Report's account of the conduct of the survey and the survey that was actually conducted, as Dr. Jacoby described it in his deposition testimony — discrepancies that Judge Scheindlin has already noted. Vuitton I, 340 F.Supp.2d at 444. The Jacoby Confusion Study Report did not accurately report the data collected and moreover the Jacoby Confusion Study was not conducted in a manner to ensure objectivity. See MANUAL FOR COMPLEX LITIGATION, FOURTH § 11:493 (Federal Judicial Center 2004) (factors relevant to determining whether a survey "conform[s] to generally recognized statistical standards" include whether "the data gathered were accurately reported" and whether "the process was conducted so as to ensure objectivity."). Because of the seriousness of these discrepancies, as well as other significant methodological flaws in the survey, we will devote relatively brief attention to it. With respect to the Jacoby Dilution Survey, we find that the survey is not relevant to the issue of dilution and that it suffers from several serious methodological flaws, rendering it inadmissible under Rules 702 and 403. We therefore recommend that Dr. Jacoby's testimony be excluded in its entirety and that his reports if offered be excluded as well.
In its initial overview of the survey's "principal findings and conclusions," the Jacoby Confusion Study Report describes the survey process as follows:
The Jacoby Confusion Study Report subsequently states: "To be able to show that the effects obtained were not due to having used a single, perhaps atypical, Dooney bag, respondents were shown one of two Dooney Test bags. Approximately half the respondents were shown Dooney's large `It Bag' Wristlet; the other half was shown Dooney's `It Bag' ID/coin purse."
As Judge Scheindlin has recognized, Vuitton I, 340 F.Supp.2d at 444, the Jacoby Confusion Survey Report does not, in fact, describe the actual survey that was undertaken. As Judge Scheindlin explained:
Id. Louis Vuitton offers no explanation for why the report failed to state 1) that the survey was conducted in two phases, the first of which used four different It-Bags, or 2) that Dr. Kaplan made a "mistake" in his presentation of the survey stimuli to the survey respondents, so that in the second phase only one Dooney & Bourke bag was used — the one that happened to yield the highest confusion level in the first phase of the survey. See Shari Seidman Diamond, Reference Guide on Survey Research, in REFERENCE MANUAL ON SCIENTIFIC EVIDENCE at 270 (Federal Judicial Center 2000) ("The completeness of the survey report is one indicator of the trustworthiness of the survey and the professionalism of the expert who is presenting the details of the survey."); and id. (noting that a survey report should provide in detail all visual exhibits used and a description of special scoring).
In his deposition testimony, Dr. Jacoby offers an explanation for the disjointed nature of the survey: the survey initially took the form of an extended questionnaire that sought to test both for confusion and dilution, but after it became apparent that respondents were fatigued by the number of questions, the survey was broken into a confusion component and a dilution component. Dr. Jacoby then retained the confusion-related data he had already collected with respect to the fifty-eight respondents interviewed up to that time, and sought to
While we find that the above concerns are alone sufficient to require the exclusion of the Jacoby Confusion Survey, we note other fundamental problems with the survey that, taken together with the problems of disjointed implementation and ambiguous reports, leave no doubt that the cumulative errors render the survey inadmissible. See Mastercard Int'l Inc. v. First Nat'l Bank of Omaha, No, 02 Civ. 3691, 2004 WL 326708, at *30 (S.D.N.Y. Feb.23, 2004) (court excludes survey on the basis of cumulative errors, even if each error considered alone might be thought a question of weight). First, the survey improperly defined its universe. The Jacoby Confusion Survey Report states that "the relevant population was defined as females who were 16 years of age or older and were potential Louis Vuitton or Dooney & Bourke customers (or potential customers of both)." The report continues:
Second, the Jacoby Confusion Survey asked improper questions, and of the respondents whom the survey classified as confused, more than half were classified as confused based on their responses to these questions.
The phrase "some business relationship" is highly ambiguous. See Shari Seidman Diamond, Reference Guide on Survey Research in MANUAL ON SCIENTIFIC EVIDENCE 2d at 248 (Federal Judicial Center 2000) ("When unclear questions are included in a survey, they may threaten the validity of the survey by systematically distorting responses if respondents are misled in a particular direction, or by inflating random error if respondents guess because they do not understand the question. If the crucial question is sufficiently ambiguous or unclear, it may be the basis for rejecting the survey."). Notably, if the respondent answered yes to this question, the follow-up question did not ask about the nature of this "business relationship," but rather asked about the bag: "What, in particular, makes you think that bag number [] come from a company that is part of, or has some business relationship with, the company whose bags were shown in the ad?" Thus, the respondents' understanding of the term "business relationship" cannot be evaluated.
The survey's third main question consisted of the following:
As Judge Scheindlin has noted, this kind of question has been criticized by courts because it "improperly ask[s] respondents for a legal conclusion." Vuitton I, 340 F.Supp.2d at 445. Indeed, the question asked the respondents the very question that this litigation seeks to answer.
Finally, the Jacoby Confusion Survey classified several respondents as confused based on factors not relevant to, the marks at issue. For example, one respondent was classified as confused based on her identification of the It-Bag as "[coming] from the same company whose bag was shown in the ad." Yet when asked what made her say so, the respondent responded: "white background, it has capital letter initials."
We conclude that the cumulative effect of all the errors discussed above — errors of methodology, implementation, and reporting of results — renders the Jacoby Confusion Survey inadmissible under Rules 702 and 403.
Dr. Jacoby defined the relevant universe for his dilution study exactly as he defined it for his confusion study, as "potential Louis Vuitton or Dooney & Bourke customers (or potential customers of both) who had bought a "handbag" or "purse or wallet"
Respondents were interviewed from March 9 to March 30, 2004.
As noted above, the Jacoby Dilution Survey had three basic stimuli: the It-Bags, the Murakami bags, and the control bag. More precisely, respondents were exposed to two of four different It-Bags: the "Large Wristlet" with either a white or a black background and the "ID/Coin purse" with either a white or a black background. Similarly, respondents were exposed to two of four different Murakami bags: the "Pochette Accessoire" with either a white or a black background and the "Pochette Cles" with either a white or black background. As the names of these Dooney & Bourke and Louis Vuitton bags suggest, these bags are all relatively small in size. Finally, all respondents were exposed to a Dooney & Bourke "Small Zip Top" bag as the control.
As above with the Jacoby Confusion Survey, the Jacoby Dilution Survey had no separate control group. All respondents were shown the test bags and the control bag.
The Jacoby Dilution Survey used eight versions of the main questionnaire to rotate the order in which respondents were exposed to the bags and to rotate the order of the various questions asked of the respondents. Because the parties dispute whether the Jacoby Dilution Survey's questions were proper, we review them in some detail. We take the first version of the main questionnaire as an example and, for the sake of clarity, refer to "stages" of the interview — even though Dr. Jacoby himself does not use this term. In each stage, the respondent was asked a series of questions that required the respondent to compare each of the basic stimuli to the other two.
The first stage of the interview proceeded as follows. After being seated in the testing room and told not to guess,
The respondent was then asked essentially the same series of questions, but the interviewer began by touching the Murakami bags and asking about the It-Bags.
In the second stage of the interview, with the control bag still present in front of the respondent, the interviewer handed the Murakami bags to the respondent and asked the following question, recorded here as it was in the questionnaire's instructions to the interviewer:
The interviewer then asked a series of questions, the first of which was as follows: "Would the fact that [the control bag] was being sold in the red-on-red pattern make you feel that the bag you owned was less distinctive, was more distinctive, or would it not affect how you felt about the distinctiveness of the bag?" The respondent was not asked to explain her answer. Then the interviewer asked the same question, but referred to whether the availability in the marketplace of the control bag would make the respondent feel that the bags she was holding were "more valuable," "less valuable," or it would not affect how she "felt about the value of your bag." This process continued with a third question — "less exclusive," "more exclusive," or no affect on the "exclusiveness of your bag" — and a fourth question — "more desirable," "less desirable," or no affect on the "desirability of your bag."
This process was then repeated, but the interviewer removed the control bag from view and instead placed the It-Bags in front of the respondent. The respondent was again told to imagine that she "actually owned" the Murakami bags she was holding and was asked how knowledge that the It-Bags "were also being sold in the multi-color pattern on white or black" would make her feel about the Murakami bags.
Finally, in the third stage of the interview, the respondent was shown only the. It-Bags and asked the following, as recorded in the questionnaire:
The respondent was then shown only the control bag and asked this line of questions and then shown the Murakami bags and asked this line of questions.
In the Jacoby Dilution Survey Report, Dr. Jacoby defined dilution as follows: "Dilution was assessed as exerting an adverse impact on perceptions of the Louis Vuitton Multicolore bags, as exerting an adverse impact on the desire to buy the Louis Vuitton Multicolore bags, or as exerting a positive impact on the desire to
With respect to the questions asked in stage two of the interview, Dr. Jacoby found that, in response to the first open-ended "how would it make you feel?" question, a net of nineteen percent of the respondents said either (1) that the availability in the marketplace of the It-Bags would cause them to have, in Dr. Jacoby's words, "negative feelings" towards the Murakami bags, or (2) that the It-Bags were knock-offs of the Murakami bags, which Dr. Jacoby coded as indicating dilution. But as Dooney & Bourke points out, many of the verbatim responses that Dr. Jacoby coded as indicating dilution did no such thing. Remarkably, Dr. Jacoby coded the following verbatims as indicating dilution: "Even though they have the same color pattern and letter pattern it wouldn't make a difference."
With respect to the questions going to the "distinctiveness," "value," "exclusivity," and "desirability" of the Murakami bags, Dr. Jacoby reported that a net of fourteen percent of the respondents stated that the It-Bags made the Murakami bags "less distinctive,"
With respect to the third stage of the interview, Dr. Jacoby reports that "consumers of the sort tested in this investigation, in overwhelming proportion, are able to correctly identify the Louis Vuitton Multicolore bag as emanating from Louis Vuitton."
Finally, we note that, before initiating the Jacoby Dilution Survey, Dr. Jacoby ran a pilot survey, the results of which showed "little to no net dilution." Vuitton I, 340 F.Supp.2d at 450 n. 196. Dr. Jacoby states that he discarded the results of the pilot survey on the ground that the respondents were fatigued by the length of the interview. Louis Vuitton has produced no other evidence to support this assertion. The Jacoby Dilution Survey used essentially the same questions as the pilot survey, but with slight modifications such as the insertion of the words as "also" or the "appearance of and the addition of "in this pattern" to the question asked in stage one. Id.
Dooney & Bourke criticizes the Jacoby Dilution Survey on a variety of grounds, the most significant of which are the following:
In reviewing the Jacoby Confusion Survey, supra, we found that the universe was improperly defined and that this error diminished the reliability and probative value of the survey. This discussion is equally applicable to the Jacoby Dilution Survey. We now consider the second, third, and fourth of Dooney & Bourke's criticisms of the Jacoby Dilution Survey.
As Judge Scheindlin repeatedly pointed out in Vuitton I, the central question informing a dilution analysis in this case is the following: "does Dooney & Bourke's use of the multicolored monogram printed on the white and black backgrounds of its handbags lessen the capacity of Louis Vuitton's Monogram Multicolore trademarks to identify and distinguish goods or services?" Vuitton I, 340 F.Supp.2d at 448 (quotation omitted). See also id. at 450-51 n. 198 (criticizing a coding decision made by Dr. Jacoby on the ground that "this answer does not reflect `dilution' because it says nothing about whether It-Bags diminish the capacity of the Monogram Multicolore trademarks to identify Louis Vuitton as the source of its bags."). Both dilution by blurring and dilution by tarnishment are now clearly defined under current law. See 15 U.S.C. § 1125(c)(2)(B) ("`dilution by blurring' is association arising
Several aspects of the Jacoby Dilution Survey are irrelevant to dilution as defined above. Most obviously, a respondent's statement that she is more likely to want to buy the It-Bags in light of the availability in the marketplace of the Murakami bags does not indicate dilution by either blurring or tarnishment of the Louis Vuitton Monogram Multicolore Mark — and the Jacoby Dilution. Survey Report offers no reasoning to support this link. Specifically, an increased interests in the Dooney & Bourke bag does not show that the Dooney & Bourke Monogram Multicolor Mark has somehow impaired the ability of the Louis Vuitton Monogram Multicolore Mark to serve as a source identifier of Louis Vuitton. See Savin Corp. v. Savin Group, 391 F.3d 439, 455 (2d Cir.2004) (discussing dilution by "blurring of a mark's product identification"). It also fails to show that the Dooney & Bourke Monogram Multicolor Mark has "tarnished" the reputation of Louis Vuitton or otherwise imbued the Louis Vuitton Multicolore Monogram mark with negative associations or derogatory connotations. See Hormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497, 507 (2d Cir.1996) ("The sine qua non of tarnishment is a finding that plaintiff s mark will suffer negative associations through defendant's use."); Maureen Morrin & Jacob Jacoby, Trademark Dilution: Empirical Measures for an Elusive Concept, 19 J. Publ. Pol. & Marketing 265, 267 (2000) (tarnishment "is distinguished from blurring, however, because there generally are some derogatory connotations, and therefore it is referred to as dilution by tarnishment."). A consumer's increased willingness to buy an It-Bag on its own says nothing all about the status of Louis Vuitton's mark.
We note once again that Louis Vuitton has the burden of proving by a preponderance of the evidence that the Jacoby study is reliable and will assist the jury. Thus Louis Vuitton must make the case for why the willingness of a consumer to buy an It-Bag either, dilutes or tarnishes the Multicolore Monogram Mark. Louis Vuitton has not done so.
The same maybe said of respondents' statements that expressed the belief that the It-Bags were a knock-off of the Murakami bags. Though Dr. Jacoby does not make it clear in his report, perhaps his assumption is that a knockoff of a Murakami Bag links that bag with a product of "shoddy quality." Yet Louis Vuitton has not argued that the It-Bags are of inferior quality, nor does the Jacoby Dilution Survey Report or the respondent's verbatim answers say anything about inferior quality.
We recognize that dilution may be a "dauntingly elusive concept," Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Development, 170 F.3d 449, 451 (4th Cir.1999), but these survey questions do not test for blurring or tarnishment. Cf. Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 224 n. 6 (2d Cir.1999) ("The antidilution statutes do not prohibit all uses of a distinctive mark that the owner prefers not be made."). Because these survey questions and answers do not indicate dilution under the substantive law, there is accordingly no "fit" between Dr. Jacoby's findings with respect to them and the facts of the case.
Also troubling are the significant flaws in Dr. Jacoby's categorization of respondents as evidencing dilution. First, as Judge Scheindlin has recognized, see Vuitton I, 340 F.Supp.2d at 450-51 n. 198, Dr. Jacoby miscoded several of the respondents' verbatim responses. It is true, as we note in our discussion of the Reitter Survey, that miscoding is generally a question of weight and is subject to correction. But we also note that the miscoding of even a small number of verbatim responses could have a very significant impact on the survey's overall findings. Second, Dr. Jacoby "counted a respondent as `diluted' if she provided one answer evincing dilution, even if all of her other answers suggested a positive influence of the Dooney & Bourke bags on the perception of the Louis Vuitton bags." id. at 340 F.Supp.2d 451 n. 199 (emphases in original). Third, Dr. Jacoby claims overall that "a `net' of twenty-three percent of the respondents provided an answer indicating one or more aspects of dilution, and gave as their reason for their answer one or more elements of a monogram with multiple bright colors in a repeating pattern."
A final concern about the reliability of the Jacoby Dilution Survey is that Dr. Jacoby ran a pilot survey, the results of which showed "little to no net dilution," Vuitton I, 340 F.Supp.2d at 450 n. 196, but made no reference to this survey in the Jacoby Dilution Survey Report. As Judge Scheindlin has noted, "[i]t is legitimate to run a pilot survey for purposes of improving a study." Id. (emphasis in original). However, we agree with Judge Scheindlin that "in this case the circumstances hint at a darker purpose." Id. Louis Vuitton has not produced evidence of interviewee fatigue — the purported reason for discarding the results of the pilot survey. Moreover, Dr. Jacoby did not substantially change the questions asked of the respondents in the pilot survey, other than to add the phrase "in this pattern," which is arguably leading. See id. Dr. Jacoby's failure to report the results of the pilot survey and his decision to restart the survey suggest that the whole process may not have been conducted in a manner to ensure objectivity.
Where the results of a pilot survey are inconsistent with that of the subsequent survey, the obvious questions that are raised would ordinarily be those of weight and not admissibility. The expert witness can be cross-examined about the disparity between the surveys, much the same as any witness who has made a prior inconsistent statement can be cross-examined and impeached. Yet there are only so many questions of weight that can be tolerated; as each flaw in a survey diminishes its reliability and probative value, and correspondingly increases the risk of jury confusion and prejudice, eventually the cumulative effect of the flaws mandates exclusion. This is such a case. Given (1) the lack of fit between the survey questions and the law of dilution, (2) the methodological flaws that overstated the results, and (3) the unexplained inconsistency between the results of the pilot survey and the subsequent survey, we conclude that Dr. Jacoby should not be permitted to testify about the results of his dilution survey, and that the survey itself should be excluded if proffered at trial.
In 2004, Dooney & Bourke retained Robert N. Reitter to conduct a trademark confusion survey (the "2004 Reitter Confusion Survey"),
In Vuitton I, Judge Scheindlin determined that the 2004 Reitter Confusion Survey was "essentially a reading test" because when respondents were first shown the It-Bags, they were able to read the lettering on the heart-shaped brass name sign hanging from one of the handles of the bag or bags and bearing the words "Dooney & Bourke" (the "Dooney & Bourke Name Sign"). Vuitton I, 340 F.Supp.2d at 445. Judge Scheindlin further determined that due to "several miscoded responses" and "Reitter's poor choice of one of the control bags," the survey improperly "inflate[d] the number of responses illustrative of `noise,' which in turn erroneously deflate[d] the confusion figures." Id. at 446. Judge Scheindlin therefore accorded "little weight" to the survey's results. Id. at 442.
In an effort to address Judge Scheindlin's criticisms of the 2004 Reitter Confusion Survey, Dooney & Bourke commissioned Reitter to conduct the 2006 Reitter Confusion Survey.
The 2006 Reitter Confusion Survey consisted of three components. In the first, Reitter sought to replicate the methodology of one aspect of the 2004 Reitter Confusion Survey by showing 218 respondents one of the four It-Bags bearing the Dooney & Bourke Name Sign that had been shown the respondents to the 2004 survey (the "2006 Reitter Name Sign Survey"). In the second component, Reitter showed 222 respondents one of the same four It-Bags, but these bags did not bear the Dooney & Bourke Name Sign (the "2006 Reitter No Name Sign Survey").
Finally, the 2006 Reitter Dilution Survey took the form of a mall intercept survey in which 428 respondents were shown one of two large photographs depicting, in roughly life-size, five handbags.
With respect to the 2006 Reitter Dilution Survey, we find that as designed, it could not provide any reliable indication of whether the Multicolore Monogram mark was diluted. Thus its probative value, if any, is substantially outweighed by its prejudicial effect and potential to mislead the jury, and as such it should be excluded under Rules 702 and 403, along with any report or testimony about the survey.
We review the facts of the Reitter surveys in more detail and then explain our reasoning.
Reitter is Senior Vice-President of Guideline, formerly named Guideline Associates, a market research firm. He has testified or been deposed in connection with numerous federal trademark infringement cases. The parties do not dispute his qualifications to conduct any of the surveys discussed here. That said, his resume is rather truncated.
Nonetheless, Reitter has been conducting market research and designing surveys for almost 40 years. Extensive experience can be a sufficient basis for expert testimony on matters such as consumer surveys. See Diamond, supra at 238 ("In some cases, professional experience in conducting and publishing survey research may provide the requisite background.").
We find that Reitter meets the minimal standards for qualification as an expert under Rule 702. See Steven A. Saltzburg et al., Federal Rules of Evidence Manual at 702-12 (9th ed. 2006) ("Courts have not required a party to show that the witness is an outstanding expert, or to show that the witness is well-known or respected in the field; these are generally questions of weight."). We note, however, as we have previously in this opinion, that the degree of qualification of an expert is relevant to the reliability inquiry. That is, the more qualified the expert, the more likely that expert is using reliable methods in a reliable manner — highly qualified and respected experts don't get to be so by using unreliable methods or conducting research in an unreliable manner. See, e.g., Ambrosia v. Labarraque, 101 F.3d 129, 140 (D.C.Cir.1996) (the strength or weakness of a witness's qualifications is "circumstantial evidence as to whether the expert employed a scientifically valid methodology or mode of reasoning"); United States v. Downing, 753 F.2d 1224, 1239 (3d Cir. 1985) (Becker, J.) ("The qualifications and professional stature of expert witnesses . . . may also constitute circumstantial evidence of the reliability of the technique."). We therefore find Reitter's relatively thin qualifications as circumstantial evidence of the unreliability of his surveys.
Louis Vuitton states that Judge Scheindlin both "unequivocally rejected" the 2004 Reitter Confusion Survey and "accorded little weight to [its] conclusions."
Because Dooney & Bourke continues to proffer the 2004 Reitter Confusion Survey, and because the 2006 Reitter Confusion Survey was designed to evaluate the effect of two of the basic errors of the 2004 Reitter Confusion Survey, it is useful to review some of the specifics of that 2004 survey.
Reitter defined the relevant universe for his 2004 confusion survey as "females 13 or
After being screened and seated, the survey respondents were exposed to the following stimuli. Of the 349 respondents who were exposed to a single bag, 55 were exposed to an It-Bag with white background, 53 were exposed to an It-Bag with a black background, 51 were exposed to an It-Bag with a "bubblegum" (or pink) background, and 46 were exposed to an It-Bag with a "periwinkle" (or light blue) background.
Of the 224 respondents who were exposed to a set of four bags, 103 were exposed to a set of four It-Bags with white, black, bubblegum, and periwinkle backgrounds, respectively. Certain of these bags were different, though in insignificant ways, from the It-Bags used in the single bag study.
In the context of the 2006 Reitter Confusion Survey, the parties dispute the relevance of that study's results relating to the bubblegum and periwinkle bags. Specifically, Louis Vuitton claims in its sur-reply in support of its motion to exclude Reitter's testimony that "Louis. Vuitton's complaint did not include bubblegum, periwinkle, or any other colored bags and they have never been the subject of this litigation.
We fail to see the basis for Louis Vuitton's claim that the bubblegum and periwinkle bags "have never been the subject of this litigation." At the May 28, 2004 hearing before Judge Andrew J. Peck, which Louis Vuitton itself brings to our attention to support its claim, Judge Peck stated to Louis Vuitton: "If the scope of the sought injunction in any way, shape, or form says, well, because of the black and white infringe[ment], everything should be enjoined or everything in periwinkle should also be enjoined, then we have to have discovery on it."
Upon being shown a handbag or set of handbags, each respondent was prompted "to look at [it] as if you saw it in a store, or being carried by a woman walking near you." Respondents were further requested to "examine the outside of the bag, but please do not handle it," and to inform the interviewer when she was finished looking at the bag. The interviewer also explained that respondents should state if they did not know the answer to any question asked of them.
For interviews involving a single noncontrol bag, the interviewer was instructed then to do the following: "When respondent indicates she is finished examining the bag, place the heart shaped zipper pull so that the name Dooney & Bourke faces against the bag, and the plain shiny side faces out, and place the bag about 5 feet away from the respondent."
Respondents were then asked a series of questions, the most relevant of which are given here and numbered as they were numbered by Reitter. For respondents who viewed a set of bags, the questions were modified to include "these handbags:"
Interviewers were explicitly instructed to record verbatim all respondent answers to the' above questions with the exception of Questions 2a and 3a.
In the 2004 Reitter Confusion Survey Report, Reitter classified as confused only those respondents who gave "pattern, style, or color" reasons for naming Louis Vuitton in response to Questions 1a, 2a, or 3a.
Of the 103 respondents shown a set of It-Bags, one named Louis Vuitton in response to Question 1a and gave "pattern, style, or color" reasons for her answer,
As for the control bags, which did not carry the Dooney & Bourke Name Sign, of the 144 respondents exposed to the single brown Dooney & Bourke control bag, one named Louis Vuitton in response to Question 1a and gave "pattern, style, or color" reasons for her answer, three named Louis Vuitton in response to Question 2a and gave such reasons for their answer, and four named Louis Vuitton in response to Question 3 a and gave such reasons for their answer.
Reitter reasoned that, "[s]ubtracting the control group from the test group results," 1.2 percent of the respondents exposed to a single It — Bag incorrectly believed that the bag was made by Louis Vuitton or by a company connected with or authorized by Louis Vuitton, and that — 2.1 percent of the respondents who were shown a set of It-Bags believed the same with respect to the set of bags.
As with the 2004 Reitter Confusion Survey, Reitter defined the relevant universe for his 2006 confusion survey as "females 13 or older, who are likely to purchase, within the next year or so, a purse or handbag costing more than $100."
Finally, for the 2006 Reitter Control Survey, of the eight markets Reitter used, each had been used in 2004, and in all but one, Reitter used the same mall.
As with the 2004 Reitter Confusion Survey, Reitter does not state in his 2006 report that a mall needed to be an "upscale" mall in order to be selected.
Interviews were conducted from November 14 to November 28, 2006.
In the 2006 Reitter Name Sign Survey, of the 218 respondents surveyed, 55 were exposed to an It-Bag with a cream-colored background, 55 were exposed to an It-Bag with a black background, 56 were exposed to an It-Bag with a bubblegum background, and 52 were exposed to an It-Bag with a periwinkle background.
In the 2006 Reitter No Name Sign Survey, of the 222 respondents surveyed, 54, 58, 56, and 54 respondents were exposed to the same It-Bags as were used in the 2006 Name. Sign Survey with a cream-colored, black, bubblegum, and periwinkle background, respectively. However, the Dooney & Bourke Name Sign was removed from these bags before they were shown to respondents.
Finally, in the 2006. Control. Survey, of the 298 respondents surveyed, 147 were exposed to a Dooney & Bourke bag bearing a single-colored pattern of the inter-locking
The interview process of the 2006 Reitter Name Sign Survey exactly replicated the interview process of the single-bag component of the 2004 Reitter Confusion Survey.
In the 2006 Reitter Confusion. Survey, Reitter classifies as confused only those respondents who gave an "issue-specific" reason for naming Louis Vuitton in response to Questions la, 2a, or 3a.
In any event, according to the 2006 Reitter Confusion Survey Report, of the 218 respondents participating in the 2006 Reitter Name. Sign Survey, two, seven, and four respondents named Louis Vuitton in response to Questions la, 2a, and 3a, respectively, for "issue-specific" reasons.
Of the 222 respondents participating in the 2006 Reitter No Name Sign Survey, two, seven, and one respondent(s) named Louis Vuitton in response to Questions 1a,
Because there is no statistically significant difference between the percentage of respondents classified as confused in the 2006 Reitter Name Sign Survey and the percentage of respondents classified as confused in the 2006 Reitter No Name Sign Survey, Reitter concludes that the presence or absence of the Dooney & Bourke Name Sign "did not significantly affect the level of possible confusion" between the two surveys.
With respect to the 2006 Reitter Control Survey, of the 151 respondents shown the brown Dooney & Bourke bag, none named Louis Vuitton in response to Question la, two named Louis Vuitton in response to Question 2a for "issue-specific" reasons, and none named Louis Vuitton in response to Question 3a for "issue-specific" reasons.
From these data, Reitter concludes that the control bag used in the single-bag component of the 2004 Reitter Confusion Survey "did not increase the apparent noise level,"
Reitter defined the relevant universe for the 2006 Reitter Dilution Survey as "females 25 or older who have purchased a designer handbag costing more than $350 in the last 3 years or who are likely to purchase a designer handbag costing more than $350 in the next 12 months."
Interviews were conducted from November 29 through December 11, 2006.
As previously noted, 428 respondents were exposed to one of two large photographs depicting five handbags in roughly life-size. Specifically, 217 respondents were exposed to a photograph showing a Louis Vuitton bag bearing the Louis Vuitton Multicolore Monogram Mark on a white background, a Dooney & Bourke bag bearing a single-colored pattern of the interlocking initials "D" and "B," and three bags from third-party manufacturers.
After being seated, the respondent was shown one of the photographs and invited "to look at these 5 handbags as if you were seeing them in stores, or being carried by women walking near you."
Reitter asked both groups of respondents the same, relatively simple set of two questions. After being instructed not to guess, the respondent was asked two questions:
Respondents were not asked follow-up questions in the nature of "What makes you say so?"
Because the parties dispute whether Reitter's dilution analysis is proper, we review it here in some detail. In the 2006 Reitter Dilution Survey Report, Reitter asserts that dilution surveys "most commonly" take the form of surveys in which one group of respondents is exposed to the defendant's mark while another group is not. Both groups are then exposed to the plaintiff's mark and asked questions to measure their ability to identify the plaintiff as the sole source of goods associated with that mark. If the group exposed to the defendant's mark is significantly less able to identify the plaintiff as the sole source of goods associated with its mark, then this may constitute evidence that the defendant's mark blurs the distinctiveness of the plaintiff's mark.
We do not need to resolve the argument as to how a standard dilution survey is to be conducted, because both sides agree that a standard dilution survey, whatever it is, cannot be conducted in the circumstances of this case. Reitter explains that the standard methodology was "infeasible" in the present case, primarily because by 2006 multicolored bags produced by Dooney & Bourke as well as many other manufacturers had been on the market for several years.
In response to the problem of changed market conditions, Reitter adopted what he called "an alternative survey design."
In this connection, Reitter points to the results of the 2004 Reitter Recognition Survey, which showed that "a monochromatic Louis Vuitton monogram pattern and a Multicolore monogram pattern had equivalent abilities to indicate to consumers that Louis Vuitton was the source of the bags."
Working from this "alternative" methodology, the 2006 Reitter Dilution Survey found that 148 (or 70.1 percent) of the 211 respondents shown the photograph including a bag bearing the Louis. Vuitton Classic Pattern named Louis Vuitton in response to either Question 1a (145 respondents) or 1b (3 respondents)
As to the 2006 survey, Louis Vuitton raises a number of arguments, including:
We focus first on the problems of methodology and application that are evident in the 2004 survey. We address these problems quickly because Judge Scheindlin has already discussed the most important flaws in the methodology. Dooney & Bourke does not argue that Judge Scheindlin was incorrect in finding flaws in Reitter's methodology. Rather it argues that the 2006 study shows that those flaws had no effect on the results.
We then determine whether the 2006 survey reliably shows that the flaws in the 2004 survey had no effect on the results.
As noted above, Judge Scheindlin found that the 2004 Reitter Confusion Survey was flawed because it was nothing but a reading test, because the Dooney & Bourke nametag was readily, evident to all the respondents. We note that the respondents were not reading the Dooney & Bourke Multicolor Monogram Mark itself. Rather, they were reading a sign that stated the provenance of the bag. The survey thus could not have been more flawed if the interviewer had said, "Now, look at the Dooney & Bourke bag and tell me who you think makes that bag." The courts have, rightly we believe, held that surveys in which the respondents are able to read the name of the manufacturer on the product are not probative of consumer
Id. at 1216.
We conclude that the presence of the Dooney & Bourke nametags is a flaw so fundamental that it is enough on its own to render the 2004 Reitter Confusion Survey inadmissible — unless the 2006 Reitter Confusion Survey Report can somehow come to its rescue. We recognize that Judge Scheindlin did not find the 2004 Confusion Survey "inadmissible" because it was a reading test. But she did not have to do so under the circumstances, as the survey was offered in a preliminary injunction proceeding with the court as factfinder. It is well-established that the Daubert gatekeeping standard is applied more flexibly when the judge is the factfinder, and accordingly more rigorously when the expert testimony is to be presented to a jury. See, e.g., Deal v. Hamilton County Board of Educ., 392 F.3d 840, 852 (6th Cir.2004) ("The `gatekeeper' doctrine was designed to protect juries and is largely irrelevant in the context of a bench trial."); United States v. Brown, 415 F.3d 1257, 1269 (11th Cir.2005) ("There is less need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for himself.")
Therefore it is incumbent upon Dooney & Bourke to prove by a preponderance of the evidence that this serious flaw did not affect the outcome of the 2004 Reitter Confusion Survey. This it seeks to do through the 2006 Name Sign and 2006 No Name Sign Surveys, which are discussed below.
With respect to the 2004 Confusion Survey, Judge Scheindlin also noted that "Reitter's failure to take into account the similarity between his brown, monochrome Dooney & Bourke control bag and Louis Vuitton's traditional gold and chestnut bag decreases the probative value of his [2004] study." Louis Vuitton I, 340 F.Supp.2d at 446. This error in judgment on Reitter's part would not on its own be enough to exclude the 2004 Confusion Survey. As discussed above with respect to Dr. Ericksen's survey, the control bag chosen by Reitter was not a very good "noise" reducer, but it seems to have been better than no control at all. See Shari Seidman Diamond, Reference Guide on Survey Research in MANUAL ON SCIENTIFIC EVIDENCE 2d at 258 (2000) (quoted above).
However, while the poor choice of control bag is not dispositive of inadmissibility, we note again that both Rule 702 and 403 require the court to look at the cumulative effect of all of the flaws in a survey.
The coding errors mentioned by Judge Scheindlin in Vuitton I may have resulted in an undercounting of confusion, but as we discussed above in connection with the Ericksen and Jacoby surveys, coding errors can be corrected by a review of the underlying data, and can be inquired into on cross-examination. Nonetheless, the more serious the coding errors, the less probative and reliable is the survey because its results are overstated. While the coding errors are not dispositive of admissibility, we find they add to the cumulative effect of the methodological errors in the 2004 Reitter Confusion Survey.
As discussed above, many of the malls used by Reitter in both the 2004 and 2006 surveys were not "upscale." The parties disagree over the significance of this fact, Reitter argues that "upscale" people can be found in midscale and downscale malls — it just takes a little longer to find them. Louis Vuitton argues that the kind of upscale people who condescend to shop at midscale and downscale malls are not typical of the consumers who are relevant in this litigation, and so the "universe" for the survey was improperly skewed.
"A `universe' is that segment of the population whose perceptions and state of mind are relevant to the issues in the case." Citizens Financial Group, Inc. v. Citizens Nat. Bank of Evans City, 383 F.3d 110, 118-19 (3d Cir.2004) (quoting J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 32:159 (4th ed.2003)). "A flawed universe minimizes the probative value of a survey" and may lead to "skewed results." Conopco, Inc. v. Cosmair, Inc., 49 F.Supp.2d 242, 253 (S.D.N.Y.1999).
We find Reitter's selection of malls to be troubling, especially because his explanation — it took us longer but we got our universe — is dependent on the questions that he used to weed out potential respondents who are not representative of the consumers whose confusion would matter in this case. The screening criteria used by Dr. Reitter were mild indeed. Reitter screened for respondents who were likely to purchase "within the next year or so" a purse or handbag costing more than $100. Louis Vuitton remarks that a $100 handbag is "hardly an indicia of prestige,"
In Louis Vuitton I, .340 F.Supp.2d at 444-45, Judge Scheindlin criticized the Jacoby survey, in which respondents were asked to indicate whether "to come out with this bag," the company "needed to get permission or a license from the company whose bags were shown in the ad [Louis Vuitton]." Judge Scheindlin noted that "[s]imilar questions have been included in previous Jacoby studies and rejected by courts because they improperly ask respondents for a legal conclusion."
Reitter's 2004 Confusion Survey suffered from essentially the same flaw. Question 3c asked "what if anything can you tell me about the company that gave the maker of this handbag authorization?" and 3d asked "Why do you think that that maker of this handbag has authorization from that company?" It is true that the Reitter question does not use the word "license" but that is at best a distinction of degree and not kind.
The flaw in asking questions about permission or licensing does not infect the entirety of the survey and is unlikely to skew the results so dramatically as to be dispositive of admissibility cm its own. But once again it is a flaw that is accumulated with the other flaws in methodology that must be considered under Rules 702 and 403.
Without some major assistance from the 2006 Reitter Confusion Survey, we have no doubt that the 2004 Reitter Confusion Survey should be excluded. Dooney & Bourke has not come close to proving that Reitter employed reliable methods in a reliable manner. Indeed at least one of the flaws in methodology — the reading test — is enough on its own under the applicable case law to render the survey inadmissible. And we have noted several other problems that, when accumulated, add even more to the case for exclusion. We now proceed to consider whether the 2006 Reitter. Confusion Survey can save the
We begin by noting that the 2006 Reitter Confusion Survey suffers from some of the same methodological flaws that beset the 2004 survey. Like the 2004 survey, the 2006 survey targeted a number of malls that were admittedly not upscale and used the same low screening standard by admitting respondents who were likely to purchase in the near future a purse or handbag costing more than $100.
Another indicator of unreliability of the 2006 Reitter Confusion Survey is that the sampling method Reitter employed was far from ideal. The sampling method prevented within-location comparisons among respondents who were exposed to the control bags used in the 2006 Reitter Control Survey, respondents who were exposed to the Dooney & Bourke Name Sign, and respondents who were not exposed to the name sign. Thus, to make inferences across the various components of the overall 2006 Reitter Confusion Survey, we must assume that the malls in which the various surveys were conducted were roughly similar, or at least that the respondents in those malls were roughly similar. That assumption is not obvious. See Keystone Camera Products Corp. v. Ansco Photo-Optical Products Corp., 667 F.Supp. 1221, 1233 (N.D.Ill.1987) (including use of different stimuli in different test locations is a flaw in the methodology of a survey). Reitter's sampling method, insofar as it precludes within-location comparison, diminishes the reliability and probative value of the 2006 Confusion Survey — though it is not the kind of fundamental error that would mandate exclusion on its own.
The individual cells of the 2006 Reitter Name Sign Survey and the 2006 Reitter No Name Sign Survey contained an average of 55 respondents. In Mastercard Intern. Inc. v. First Nat. Bank of Omaha, Inc., No. 02 Civ. 3691, 2004 WL 326708, at *10 (S.D.N.Y. Feb 23, 2004), Judge Cote excluded the defendant's survey pursuant to Rules 403 and 702 of the Federal Rules of Evidence in part due to the survey's low number of respondents. Specifically, "of the 52 respondents who completed the internet survey, 27 were shown the FNBO materials (the `test cell'), and 25 were shown the Fleet materials (the `control group')". Id. at *3. In comparison, in Pilot Corp. of America v. Fisher-Price, Inc., 344 F.Supp.2d 349 (D.Conn. 2004), involving a survey conducted by Reitter, the court recognized that "the Reitter Survey suffered from a small sample size" but credited it nevertheless. Id. at 359. There, the survey consisted of 160 respondents divided evenly into a test group of 80 respondents and a control group of 80 respondents. Id. at 353. In denying the plaintiff's preliminary injunction motion, the court explained that the "small sample size only makes the results less precise, not wholly inaccurate, and . . . because the results in this case showed 0% confusion, even if that result is somewhat imprecise, it is still strong evidence of lack of confusion." Id. at 353 n. 9. Pilot Corp., however, involved a preliminary injunction motion; its reasoning is not as persuasive when applied to a survey that is intended to be used in a jury trial, where, as discussed previously, Daubert is more stringently applied.
The low number of respondents is one more factor that diminishes the reliability
Louis Vuitton asserts that Reitter should have employed a methodology involving a "`sequential presentation' or `line-up'" of stimuli, because, in the marketplace, "consumers have a reasonable likelihood of encountering the marks at issue one after the other in a store or mall."
We believe this criticism has merit, especially given the Second Circuit's instruction in this case — that likelihood of confusion may be determined in part by how the products appear to a prudent consumer "when viewed sequentially in the context of the marketplace." Louis Vuitton Malletier Dooney & Bourke, Inc., 454 F.3d 108, 117 (2d Cir.2006). Thus a survey that purports to approach market conditions pertinent to the substantive standard of likelihood of confusion should try to take account of the possibility of sequential viewing. The use of the "Eveready" method of presentation — at least its exclusive use — diminishes the reliability and probative value of the survey and correspondingly raises the risk of jury confusion and prejudice.
Louis Vuitton claims that Reitter's use of the Blue Control Bag in the 2006 Reitter Confusion Survey rendered the results just as questionable as those in 2004. Louis Vuitton argues that because the Blue Control Bag resembled at least two Louis Vuitton bags being sold at the time that Reitter conducted the 2006 Reitter Confusion Survey, respondents would be more likely to name Louis Vuitton upon seeing the Blue Control Bag, which would improperly inflate the level of "noise" detected by the 2006 Control Survey. We disagree; the Blue Control Bag marks a substantial improvement from the brown bag used in the 2004 Survey. Unlike the Brown Control Bag, the Blue Control Bag does not resemble a well-known Louis Vuitton bag, at least not one so well known as the iconic Louis Vuitton bag bearing the Louis Vuitton Classic Pattern. The Blue Control Bag also differed in important respects from the Louis Vuitton "Monogram Denim and Monogram Denim Cruise" bags. The Blue Control Bag was made of canvas, while the Louis Vuitton bags were made of denim. The Blue Control Bag was also of a different shade of blue. We reject Louis Vuitton's complaints about the Blue Control Bag.
Louis Vuitton argues that the 2006 Reitter No Name Sign Survey was as much a
Louis Vuitton further argues that because respondents were invited to view the bag placed before them at "close viewing range" for as long as they wished, Reitter failed to test for initial-interest or post-sale confusion. We have gone over this ground already in connection with the Ericksen surveys. The allegedly infringing mark is not the "look" of the It-Bags, but rather the Dooney & Bourke Multicolor Monogram Mark. To test whether consumers are confused with respect to this mark, rather than the overall "look," survey respondents must be able to see the allegedly infringing mark. Reitter's methodology did no more than meet this basic requirement. Moreover, such a methodology does approach market conditions, as it can be expected that consumers will investigate an expensive bag closely before purchasing it. It is true that close viewing does not replicate all aspects of the market that are pertinent to trademark infringement, but that flaw in the Reitter 2006 Confusion Survey is already discussed above in the context of the Eveready presentation of products.
We now assume that despite the methodological flaws referred to above, the 2006 Reitter Confusion Survey is reliable enough, standing on its own, to satisfy the strictures of Rules 702 and 403. But even given that assumption, the 2006 Confusion Survey by definition is only useful (and only offered) to shore up the substantial concerns expressed by Judge Scheindlin about the 2004 Confusion Survey. It is the 2004 Confusion Survey that would be doing the heavy lifting at trial.
The question we must address is whether the findings of the 2006 survey actually do answer the doubts about the 2004 survey. We start by addressing Louis, Vuitton's argument that the 2006 survey was a failed venture from the beginning, because its intent was just to prove Judge Scheindlin wrong, and Reitter was directed by counsel to provide that proof. This is an overstatement. First, neither Reitter nor Dooney & Bourke are arguing that Judge Scheindlin was wrong in her assessment that the 2004 survey was (1) a reading test with (2) a poor choice of control bag. Rather they argue that while Judge Scheindlin's concerns had merit, the flaws she pointed out did not, in this specific case, affect the results of the 2004 survey. Second, contrary to Louis Vuitton's assertion of a "mandate", counsel for Dooney & Bourke did not direct Reitter to prove Judge Scheindlin wrong. Rather, the direction was "let's conduct studies to determine whether the criticisms that the criticisms that the Court had were valid and to what extent they were valid.
We agree that the results of the 2006 Reitter Name Sign Surveys must be excluded for the reasons stated by Louis Vuitton. The very reason that a standard dilution test cannot be reliable when conducted after the fact — the change in the market and in consumer knowledge of the products — is also the reason that the 2006 Reitter No Name Sign Survey is by definition unreliable and of no assistance to the trier of fact. Reitter could not control for the fact that the respondents looking at the Dooney & Bourke bag without a name tag had been subject to two years of seeing those bags in advertisements in stores, on the street, at the office, etc. These were not the same type of respondents who were looking at the bag in 2004. Moreover, even if Reitter could somehow control for the change, in market conditions and consumer awareness between 2004 and 2006, he in fact made no attempt to do so. Dooney & Bourke certainly has not carried its burden of proving that the No Name Sign Survey is reliable, when it fails to account for the very confounding factor that, by Dooney & Bourke's own admission, would render a standard dilution survey unreliable.
The failure to account for the likely effect of a change of market conditions and consumer awareness on the respondents thus renders the 2006 Reitter No Name Sign Survey inadmissible; and because the No Name Sign Survey is inadmissible, the Name Sign Survey becomes meaningless and is of no probative value. Accordingly, the Name Sign Surveys are inadmissible.
We now assess the impact of the fundamental flaw in the methodology of the Name Sign Surveys. We find that it is enough to dispose of both the 2004 and 2006 Reitter Confusion Surveys, for the following reasons:
Finally, for the sake of completeness, we consider whether the 2006 Reitter Confusion Survey adequately answered the legitimate concerns about the poor choice of control bag in the 2004 survey. We find that it did. Unlike the 2006 Reitter No Name Sign Survey, we cannot think of a way in which the change in market conditions and consumer awareness would affect the use of a different (and better) control bag. So the critical flaw in the 2006 Reitter No Name Sign Survey does not infect the Control Bag Test. And while it is true that the other methodological flaws referred to above — choice of malls and small sample size — are probably pertinent to the results of the 2006 Reitter Control Survey, those flaws are not so serious on their own as to render this component of the overall 2006 Reitter Confusion Survey completely inadmissible.
But even if the 2006 Reitter Control Survey satisfies the standards of Rules 702 and 403, that provides no help to Dooney & Bourke. All it could mean is that the poor choice of control bag did not affect the results of the 2004 Reitter Confusion Survey. It provides no answer for the critical error of turning a survey into a reading test; nor does it explain away the other methodological flaws of the 2004 Reitter Confusion Survey which while not dispositive on their own, add significant weight to the case for exclusion.
Louis Vuitton challenges the admissibility of the 2006 Reitter Dilution Survey on the following grounds:
We consider each of these criticisms in turn.
With respect to Louis Vuitton's blurring claim, "the central issue [is] whether the It-Bag monogram diminishes the ability of the Monogram Multicolore marks to identify the Louis Vuitton bags." Vuitton I, 340 F.Supp.2d at 451. The results of the 2006 Reitter Dilution Survey cast no light on this "central issue." Like the dilution survey conducted by Dr. Wind and considered by Judge Scheindlin in Vuitton I, 340 F.Supp.2d at 451-52, the 2006 Reitter Dilution Survey "reveals little except that there is high consumer recognition of the Louis Vuitton Monogram Multicolore marks." Id. at 451. Dooney & Bourke argues, that because the 2006 Reitter Dilution Survey uses the recognition level of the Louis Vuitton Classic Pattern as a benchmark, the, survey does more than merely show that the Louis Vuitton Multicolore Mark is well-recognized by consumers. Dooney & Bourke reasons that because, in 2006, the recognition level of the Louis Vuitton Multicolore Mark was not lower than the recognition
Yet Dooney & Bourke's reasoning is fundamentally flawed. It assumes that the recognition level of the Louis Vuitton Monogram Multicolore Mark could not have been higher than that recorded in the 2006 Reitter Dilution Survey. In fact it is possible that the recognition level of the Louis Vuitton Multicolore Monogram Mark may have been higher but for the existence in the marketplace of Dooney & Bourke's It-Bags. The use of the Louis Vuitton Classic Pattern as a "benchmark" does nothing to control for this possibility. Dooney & Bourke argues that the 2004 Reitter Recognition Survey shows that at the time of that survey, the Louis Vuitton Classic Pattern and the Louis Vuitton Multicolore Monogram Mark "had equivalent abilities to indicate to consumers that Louis Vuitton was the source of the bags."
We also note that Reitter provides no support in the literature or in any other survey for the method he used. Reitter's attempt to solve a problem — the inability to assess dilution in 2004 from the perspective of 2006 — with an untested theory does not meet the standards of Rule 702 and Daubert. Certainly Dooney & Bourke has not met its burden of proving that Reitter's ad hoc use of a new theory of testing dilution satisfies the reliability' requirements of Rule 702 and Daubert. See, e.g., Braun v. Lorillard Inc., 84 F.3d 230, 235 (7th Cir.1996) (expert testimony properly excluded where it relied on unproven methods used after the established methodology led to an inconclusive result; if an expert "proposes to depart from the generally accepted methodology of his field and embark upon a sea of scientific uncertainty, the court may appropriately insist that he ground his departure in demonstrable and scrupulous adherence to the scientist's creed of meticulous and objective inquiry.").
We recognize that for many of the reasons Reitter himself outlined in the 2006 Reitter Dilution Survey Report, Reitter faced significant difficulties in crafting in 2006 a dilution survey that would test for whether dilution had occurred over the course of the preceding two years. But this cannot excuse the fundamental methodological flaw of failing to account for the possibility of dilution in what is supposed to be a dilution survey. Cabrera v. Cordis Corp., 134 F.3d 1418, 1422 (9th Cir.1998) (testing procedure used only by the expert was not shown to be reliable, where the relevant community did not recognize any method for resolving the problem presented, and the expert provided no explanation for why his methods were accurate).
We find this fundamental methodological flaw to be a sufficient basis to exclude the 2006 Reitter Dilution Survey under Rules 702 and 403. We nevertheless review Louis Vuitton's other criticisms of the 2006 Dilution survey. We find that these other criticisms do not identify flaws in the survey that would in themselves require exclusion, but they do diminish to some extent the reliability and probative value of the 2006 Reitter Dilution Survey.
"Although no survey can construct a perfect replica of `real world' buying paterns,
Louis Vuitton also argues that the presentation of the bags was flawed because the four bags shown in the photographs welt not on the market in 2004 when Dooney & Bourke's It-Bags allegedly began to blur the distinctiveness of the Louis Vuitton Monogram Multicolore. That criticism is a red herring. The 2006 Reitter Dilution Survey sought to test the level of recognition of the Louis Vuitton Multicolore Mark in 2006, and therefore sought to replicate marketplace conditions as they existed at that time, not as they existed in 2004.
It is well-established that trademark confusion surveys should ask follow-up questions in the nature of "What makes you say that?" See Sears, Roebuck and Co. v. Menard, Inc., No. 01 C 9843, 2003 WL 168642, at *3 (N.D.Ill.2003) (characterizing as a "major flaw" of the survey at issue its failure to ask a follow-up question); ConAgra, Inc. v. Geo. A. Hormel & Co., 784 F.Supp. 700, 725 (D.Neb.1992) ("The `[w]hat makes you say that?' question is a typical question designed to isolate, and therefore explain, the real thought processes of the respondent who evidences confusion. In other words, this type of question is designed to determine whether a person is confused for relevant trademark reasons or for some other unrelated and therefore irrelevant reason. Well-designed studies typically employ the [w]hat makes you say that?' question or some variation."); 6 McCarthy on Trademarks and Unfair Competition § 32:175 (2007) ("Often, an examination of the respondents' verbatim responses to the `why' question are the most illuminating and probative part of a survey, for they provide a window into consumer thought processes in a way that mere statistical data cannot.")
The 2006 Reitter Dilution Survey failed to ask a follow-up question seeking an explanation for why the respondent named the brand she did. It is possible, therefore, that some proportion of the respondents named Louis Vuitton because, for example, they mistakenly believed that the Kate Spade bag shown was manufactured by Louis Vuitton or because Louis Vuitton was the only brand that came to mind. Yet as Reitter explained in the 2006 Reitter Dilution Survey Report, none of the four other bags used in the photographs reported an especially high or low recognition level.
We conclude that all of the Reitter surveys should be excluded in their entirety, and also that any testimony or report on the basis of such surveys should be similarly excluded.
Dooney & Bourke moves to exclude the testimony and report of Dr. Richard Holub. Dr. Holub was retained by Louis Vuitton to study and compare the use of color in the multicolor handbags of Dooney & Bourke and Louis Vuitton. He relied on "color measurements that enable `apples-to-apples' comparisons of data gathered from the two brands such that the comparisons are independent of the manufacturing process."
Dr. Holub also conducted a "micro-analysis" which involved the following steps; (1) the samples were digitally photographed, with adjustments made to minimize glossy reflections and to "normalize the response across the camera's photodector array";
The results of the "micro-analysis" indicated to Dr. Holub that the color differences between the Dooney & Bourke bags and the Louis Vuitton bags "are remarkably small in view of all the variables at work in manufacturing the products."
To confirm his findings of similarity of color usage, Dr. Holub prepared "6-way averages" for the color permutations that were not found in the Dooney & Bourke Multicolor Monogram Mark, and, used the same procedure for the color combinations that were actually employed in the Dooney & Bourke design. The results of this procedure indicated to Dr. Holub that "permutations were chosen with the goal of favoring the representation of warm colors and flesh tones," consistent with the data obtained in the "micro-analysis."
Dooney & Bourke argues that Dr. Holub's testimony and report are inadmissible on a number of grounds, including the following:
Louis Vuitton offers Dr. Holub's report and testimony for two purposes: (1) to prove the likelihood of confusion presented by Dooney's multicolor logo; and (2) to prove Dooney's willful intent to copy the Louis Vuitton Multicolore Monogram mark. The admissibility questions depend in part on the purpose for which Dr. Holub's testimony is offered, so we divide our analysis accordingly.
Dr. Holub is sufficiently qualified to testify to issues pertaining to colorimetry. He has been, among other things, the Chief Color Scientist' at Eastman Kodak, a principal engineer in color technology, and a professor at Boston University, researching and teaching issues pertinent to vision and color. Dooney & Bourke does not seriously suggest that Dr. Holub is unqualified to testify to the scientific and technical intricacies of color. Dooney & Bourke does, however, assert that Dr. Holub is unqualified to conclude, on the basis on
Dr. Holub's expertise in colorimetry does not establish his expertise as a statistician. An expert qualified in one subject matter does not thereby become an expert for all purposes. Testimony on subject matters unrelated to the witness's area of expertise is prohibited by Rule 702. See, e.g., Seatrax, Inc., v. Sonbeck Int'l, Inc., 200 F.3d 358 (5th Cir.2000) (in an infringement action, expert on marine cranes could not testify to the defendant's profits from infringing activity). See also Eagleston v. Guido, 41 F.3d 865 (2d Cir. 1994) (sociologist was qualified to testify about effects of domestic violence, but not about whether a police department provided sufficient training to its officers responding to domestic violence reports). Louis Vuitton certainly had the opportunity to retain an expert to interpret the statistical probabilities of random or deliberate choice of similar colors, but it did not do so. See Ancho v. Pentek Corp., 157 F.3d 512, 519 (7th Cir.1998) ("Just as a qualified and board certified heart surgeon does not possess sufficient knowledge of orthopaedic medicine to render an expert opinion on spine surgery, likewise we agree with the trial court's ruling that a mechanical engineer such as Lobodzinski lacks qualifications to give expert testimony about plant reconfiguration. . . . Ancho should have retained a qualified plant engineer to testify at trial and his failure to do so was a mistake in judgment for which he has no one to blame but himself.").
Louis Vuitton argues that Dr. Holub is indeed qualified to give an expert opinion on probability, and asserts that he "used his familiarity with statistics/probability for 40 years in connection with his studies and work."
It is notable that Dr. Holub gives no explanation for why the color similarities he found are statistically significant. He simply concluded that the degree of similarity is "highly unlikely by chance alone." He gave no probability number and no standard for determining statistical significance, but rather simply concluded that the chance of an unintentional overlapping choice of colors was "very low."
Even if Dr. Holub were qualified as a statistician, his bare conclusion on probability should be excluded. The court does not fulfill its gatekeeper function if it simply accepts the ipse dixit of an expert. General Electric Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). Dr. Holub provided no explanation for why he found that the common use of colors was statistically significant, gave no indication that he employed reliable statistical methods to his findings, and, even failed to place a figure on the degree of probability that he determined. His conclusion that the copying was deliberate on the basis of probabilities is the classic ipse dixit. It certainly does not establish by a preponderance of the evidence that he, reliably applied a reliable methodology.
Finally, Dr. Holub's conclusion that Dooney & Bourke's choice of colors was unlikely to be "by chance alone" does not fit the facts of the case under Daubert. Dooney & Bourke does not contend that it chose colors out of a hat. Dr. Holub's probability analysis (such as it was) looked only at whether the choice was made at random, and therefore did not take account of a number of obvious confounding factors that are pertinent to the dispute. For example, there are many colors that could be chosen "at random" but that would on sight be found unattractive or inappropriate for a handbag logo — most obviously the colors that are too close to the background color of the handbag itself. Moreover, general fashion trends may well influence the choice of palette. A statistical analysis conducted without attempting to rule out obvious alternative causes, as here, renders the expert opinion unreliable under Daubert. Raskin v. Wyatt Co., 125 F.3d 55 (2d Cir.1997) (statistician's testimony properly excluded under Daubert when he failed to take account of other obvious causes for statistical deviation).
For these reasons, we find that Dr. Holub is qualified to testify to issues of colorimetry, but he should not be permitted to testify to the unlikelihood that Dooney & Bourke's choice of colors was by chance — nor to what amounts to the same assertion, that the choice of colors was a deliberate attempt to copy Louis Vuitton's color choices.
While Dr. Holub is qualified to testify about the colors used in the Dooney & Bourke and Louis Vuitton handbags, this does not mean that his testimony on similarity of colors will assist the jury. The jury must decide whether Dooney & Bourke's Multicolor. Monogram Mark is confusingly similar to the Louis Vuitton Multicolore Monogram Mark. "The crucial issue in an action for trademark infringement . is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question." Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978). Thus the jury must put itself in the position of an ordinarily prudent purchaser of the products. Ordinarily prudent purchasers do not come armed with digital photography, CIELAB, technical jargon and colorimeter approximation in evaluating and comparing products. Holub's sophisticated techniques and highly technical presentation therefore provide no assistance to the jury's determination of whether ordinary purchasers
The Ninth Circuit's analysis in United States v. Hanna, 293 F.3d 1080 (9th Cir. 2002) is instructive on the problem raised by Dr. Holub's testimony in this case when offered to prove confusing similarity. Hanna was charged with threatening the President, based on letters he sent to various acquaintances expressing his opinion that the President should be killed. The legal standard for conviction was whether a reasonable person could foresee that his statements would be interpreted as a serious threat by those to whom he sent the letters. The trial court allowed Secret Service agents to testify as experts on threats to the President. The agents testified that they thought the letters sent by the defendant constituted a serious threat. The court of appeals found an abuse of discretion and reversed the conviction. It stated that "[w]ithout additional assistance, the average layperson is qualified to determine what a `reasonable person' would foresee under the circumstances." 293 F.3d at 1086.
Similarly, in this case Dr. Holub is using sophisticated, hyper-sensitive methods and technical terminology to determine whether the average person would be confused by looking at the colors of the two marks. None of this would assist the jury's determination of whether an ordinarily prudent purchaser would be confused as to the source of the Dooney & Bourke Multicolor Monogram Mark. See also Price v. Fox Entm't Group, Inc., 499 F.Supp.2d 382, 389 (S.D.N.Y.) (Scheindlin, J.) (expert testimony on similarity of works would not assist the jury, which "can review the two works and decide for itself whether there are similarities that are probative of copying and how probative of copying those similarities are in light of plaintiff's proof of access").
Nor would Dr. Holub's opinion on color-blending at a distance and visual acuity assist the jury. Jurors can be given the opportunity to view the bags at a distance, and can see for themselves whether the colors blend. There is no need for an expert to tell them what they can see. Cf. Qualitex. Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 167-68, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995) (rejecting the argument that "[b]ecause lighting (morning sun, twilight mist) will affect perceptions of protected color, competitors and courts will suffer from `shade confusion' as they try to decide whether use of a similar color on a similar product does, or does not, confuse customers and thereby infringe a trademark. . . . We do not see why courts could not apply [legal] standards [relating to the similarity between word marks] to a color, replicating, if necessary, lighting conditions under which a colored product is normally sold.").
Louis Vuitton cites a handful of trade mark decisions in which experts have been permitted to testify to the similarity between the plaintiff's mark and the' defendant's product.
Louis Vuitton also relies on a number of cases involving injunctive relief in which the court and not a jury decided the issue of likelihood of confusion. For example, in Brennan's Inc. v. Brennan's Restaurant, LLC, No. 02 Civ. 9858, 2003 WL 1338681, at *2 n. 6 (S.D.N.Y.), the court allowed an expert to testify that people may truncate personal names included in a mark. But the court specifically noted that the expert was allowed to testify only for "purposes of the present motion (including the non-jury hearing)" without prejudice to defendants seeking a Daubert hearing in a subsequent proceeding before a jury.
This is not to say that expert testimony is never admissible on the question of likelihood of confusion. The use of expert testimony on survey evidence is common in cases such as this one., But unlike Dr. Holub's technical testimony on color choices, survey evidence, if reliably produced, can assist the jury's determination of what an ordinarily prudent purchaser would be likely to find confusing. If the survey is properly conducted, the jury is informed about what ordinary purchasers out in the market actually found confusing or not. Through a reliable survey, jurors receive information that is central to their task — as distinct from technical information about color choices that has no bearing on what an ordinarily prudent purchaser would be seeing or thinking.
For all these reasons, we recommend that Dr. Holub not be permitted to testify to the likelihood of confusion between the Dooney & Bourke and Louis Vuitton multicolored monograms; nor should his report be admissible when offered to show that the color choices created a likelihood of confusion.
Louis Vuitton argues that Dr. Holub should nonetheless be permitted to testify insofar as his findings indicate that Dooney & Bourke may have intentionally copied the Louis Vuitton Multicolore Monogram Mark. The question of intent is separate from that of likelihood of confusion. Dooney & Bourke's intent is potentially important in this case because, among other things, Louis Vuitton is seeking an accounting of Dooney & Bourke's profits, and such an accounting is possible only upon a finding of willful intent on Dooney & Bourke's part. Louis Vuitton Malletier v. Dooney & Bourke, Inc., 500 F.Supp.2d 276, 280 (S.D.N.Y.2007) (willful intent is a prerequisite for awarding profits). Moreover, while intent to infringe and likelihood of confusion are conceptually separate, the applicable law provides that if the infringement is unintentional, the plaintiff must prove actual consumer confusion, whereas if infringement is intentional, there is a presumption of confusion. See Louis Vuitton Malletier v. Dooney & Bourke, 500 F.Supp.2d at 279 n. 8. ("With respect to damages, it is well settled that a plaintiff will be entitled to damages upon establishing either actual consumer confusion or deception resulting from the violation, or that the defendant's actions were intentionally deceptive thus giving rise to a rebuttable presumption of consumer confusion." (quotations and citation omitted)). And while it is true that Dooney & Bourke would not be liable for using even the exact same colors as Louis Vuitton (because as discussed above, intent to copy colors is not the same as intent to infringe Louis Vuitton's mark), it is also true that evidence of copying the colors is at least probative of an intent to copy the Louis Vuitton mark itself.
Even assuming, however, that Dr. Holub would be permitted to express an opinion pertinent to Dooney & Bourke's intent to infringe on Louis Vuitton's mark, he would not be permitted to testify that his findings in fact indicated that Dooney & Bourke intentionally copied Louis Vuitton's colors. That conclusion would be based on the statistical unlikelihood of a so-called random match. For reasons expressed
We proceed to these questions.
Dooney & Bourke argues that Dr. Holub's conclusions on the overlapping use of color in the multicolor monograms is unreliable because (1) the "macro-analysis" amounted to little more than counting, and (2) his "micro-analysis" suffers from lack of testing and is unsupported by any studies or literature in the field.
We note that Dr. Holub, in a declaration dated March 29, 2007, cites a textbook and articles that support his conclusions on the phenomenon of "blended colors." But if, as we recommend, Dr. Holub will only be permitted to testify insofar as his opinions are relevant to intent to copy, then his opinion on "blended colors" cannot be part of that testimony. Any "blended colors" phenomenon is not probative of Dooney & Bourke's intent to copy the colors, because there is no basis for finding that Dooney & Bourke might have been aware of the blended colors phenomenon, and intended to exploit it, when developing its multicolored logo. The reliability question is therefore focused on Dr. Holub's methodology for determining the similar use of colors in the respective marks.
Dr. Holub's opinions on the use of colors in the respective marks (when isolated from the opinions on probability and the blended colors phenomenon) do raise some questions of reliability under Daubert. We are not persuaded, however, by Dooney & Bourke's argument that the "macroanalysis" is little more than counting. Dr. Holub used his extensive experience in colorimetry to evaluate the samples and to determine the number of color permutations and combinations presented. He explained how he reached his conclusions on the colors used in the samples. This is a sufficient showing of reliability to satisfy Daubert and Rule 702. See McCullock v. H.B. Fuller Co., 61 F.3d 1038 (2d Cir.1995) (engineer properly permitted to testify on the basis of experience, where he explained the methods and reasoning that led him to his conclusion).
Dr. Holub's "micro-analysis" is somewhat more questionable, because he admits that he does not use a colorimeter;
On balance, we find that Dr. Holub's "micro-analysis" methodology is sufficiently close to the generally accepted methods in the field as to provide a reliable means of determining the existence and mix of colors in the multicolored monograms. See Committee Note to 2000 Amendment to Rule 702 ("A review of the caselaw after Daubert shows that the rejection of expert testimony is the exception rather than the rule. Daubert did not work a "seachange over federal evidence law," and "the trial court's role as gatekeeper is not intended to serve as a replacement for the adversary system."" United States v. 14.38 Acres of Land Situated in Lefton County, Mississippi, 80 F.3d 1074, 1078 (5th Cir. 1996)). As the Court in Daubert stated: "Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." 509 U.S. at 595, 113 S.Ct. 2786. See also Ruiz-Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77, 85 (1st Cir.1998) ("Daubert neither requires nor empowers trial courts to determine which of several competing scientific theories has the best provenance. It demands only that the expert's conclusion has been arrived at in a scientifically sound and methodologically reliable fashion.").
Dr. Holub's opinion on the use of colors, as applied to the question of intent to copy, can assist the jury. The jury does not need assistance to determine the similarity of the marks, but on the question of intent it could be helpful for the jurors to know exactly how much of the pallette was used in each mark, and the exact extent to which the colors used by Dooney & Bourke overlap with the colors used by Louis Vuitton. That more technical assessment is something that not all jurors are likely to understand on their own. See generally United States v. Onumonu, 967 F.2d 782 (2d Cir.1992) (expert testimony can assist the jury if it is on a topic not likely to be within the ordinary understanding of some of the jurors); United States v. Mulder, 273 F.3d 91 (2d Cir.2001) (expert testimony on the operations and structure of a labor coalition is permissible because those matters are not widely known among the general public).
As discussed above, the Court in Daubert declared that the judge in applying Rule 403 must exercise "more control over experts than over lay witnesses." 509 U.S. at 505, 113 S.Ct. 2742. In this case, if Dr. Holub testifies about the similarity in colors ostensibly offered only to show intent, the jury is likely to be influenced on the question of likelihood of confusion. It that happens, the jury will be improperly deferring
Balanced against this risk of confusion and prejudice that is caused by usurping the jury's function is the probative value that Dr. Holub's opinion will carry on the question of intent. If Dooney & Bourke chose identical or very similar color combinations as were chosen by Louis Vuitton, that fact at least tends to prove an intent to infringe on Louis Vuitton's mark.
But the probative value of overlapping colors to show intent is severely diminished by a number of significant factors. First, the color is not itself the mark in this case. So to the extent that other aspects of the mark are different — most obviously the fact that Dooney & Bourke uses different characters in its logo — the probative value of the use of similar colors is weakened.
The probative value of Dr. Holub's testimony on intent to copy is further diminished by the fact that Louis Vuitton is not bereft of other evidence on that subject. See Louis Vuitton Malletier v. Dooney & Bourke, 340 F.Supp.2d 415, 446-47 (S.D.N.Y.2004) (noting inferences that can be derived from timing, Peter Dooney's awareness of Louis Vuitton's mark, etc.). See also United States v. Awadallah, 436 F.3d 125, 133 (2d Cir.2006) ("Probative value is also informed by the availability of alternative means to present similar evidence.").
Given the Daubert Court's mandate to exercise special control over expert testimony under Rule 403 in jury trials, we recommend that Dr. Holub's testimony be excluded even insofar as it could be offered to prove intent. The risk that Dr. Holub's opinions will usurp the jury's decisionmaking on the question of the likelihood of confusion substantially outweighs the attenuated probative value of similar color choice when offered only to prove intent to copy Louis Vuitton's mark. Awadallah, 436 F.3d at 134 (district court did not abuse discretion in excluding evidence under Rule 403, where its probative value in proving a mental state was found to be substantially outweighed by the risk that the jurors would give undue deference to the witnesses and interpret the testimony as "advice on how to determine the central issue of the case").
For the foregoing reasons, we recommend that Dr. Holub's testimony be excluded in its entirety, and that the report, if offered at trial, be found inadmissible as well.
Dooney & Bourke moves to exclude the testimony and report of Weston Anson. Anson's company, CONSOR, was retained by Louis Vuitton "to review, analyze and evaluate the trademark infringement and trademark dilution damages claimed by Louis Vuitton" and to express expert opinions on these issues.
Anson's company reviewed financial documents and accounting information produced during the litigation, as well as the basic pleadings in the case, a hearing transcript, and the websites of Louis Vuitton and Dooney & Bourke.
In his expert report, Anson states specifically that he and his company have "assumed that Dooney was found to have infringed Louis Vuitton's monogram" and that his expert report is thereby limited to (1) ascertaining and quantifying the profits retained by Dooney & Bourke; and (2) determining the extent of dilution.
Anson calculated the amount of "infringing sales" by reviewing the business records produced by Dooney & Bourke. Anson calculated a total of $100.6 million in "infringing sales" for the period between July 2003 and October 2006.
Anson's report then proceeds to determine the injury suffered by Louis Vuitton from the dilution by blurring of its Multicolore Monogram mark, due to the assumed-to-be infringing sales of Dooney & Bourke. He opines that an "empirical indication" of the asserted blurring can be found in "the dissociation of the sales progression between the United States and the international sales of the Louis Vuitton Monogram Multicolore Trademarks, a gap which increased as sales of the Dooney infringing Erie of `It' bags accumulated."
It is important to note that the regression analysis supporting Anson's conclusion of dilution was not conducted by Anson himself. Rather, it was conducted by Fernando Torres, Senior Economist employed by CONSOR. Anson did not independently review or validate Torres's statistical analysis, assuming for the sake of argument that he was qualified to do so.
Dooney & Bourke argues that Anson's testimony and report must be excluded on a number of grounds, including the following:
Louis. Vuitton offers Anson's report and testimony for two purposes: (1) to prove the amount of net profit that Dooney & Bourke derived from its assumed infringement on the Louis Vuitton Multicolore mark; and (2) to prove that Louis. Vuitton suffered dilution of its Multicolore Monogram Mark as a result of Dooney & Bourke's infringement. These two purposes differ in a number of respects, and so we will evaluate Anson's report and testimony under both purposes.
Dooney & Bourke does not seriously contest Anson's qualifications to determine the net profits of a business in a trademark matter. Anson has an M.B.A. from Harvard University, and has worked for twenty-five years on brand valuation and related financial matters. He is a member of a number of relevant associations and organizations, and lectures on a regular basis to industry and appraisal associations. The Internal Revenue Service has invited him to speak on several occasions on the subject of intellectual property royalty rates and evaluation. He has published more than 100 articles and a number of books and book chapters on corporate valuation and related matters. It is clear that Anson is sufficiently qualified under the standards of Rule 702 to testify to Dooney & Bourke's profits from the sale of its multicolor monogram handbags. Compare United States v. Majors, 196 F.3d 1206 (11th Cir.1999) (witness employed as a financial analyst and who performed such analysis in more than 50 cases was qualified to provide a financial analysis of a small business even though he was not a certified accountant and had no experience in small business management or in the preparation of financial statements).
As stated above, Anson's report begins with the stated assumption that infringement has occurred. He does not purport to be an expert on the nuances of trademark law (as opposed to the valuation of trademarks).
The above statements and similar statements in the Anson Report are improper on any number of grounds, including: (1) they are beyond his stated expertise in valuing brands and providing financial analysis; (2) even assuming Anson is qualified, these broad statements are made without any indication that any expert methodology at all has been applied; (3) many of the statements cross the border into unhelpful legal conclusions, essentially telling the jury that "there is infringement and dilution"; and (4) the statements are contradictory to, or at the very least in serious tension with, Anson's assertion that he is assuming and not deciding that infringement occurred.
Louis Vuitton insists that Anson's broad assertions on infringement and dilution are set forth "by way of background."
Alternatively, Louis Vuitton argues that Anson is in fact sufficiently qualified to testify to such matters as trademark liability, confusion and dilution — and to their existence under the facts of this case. That argument is somewhat surprising, because Anson's Report at its outset disavows any attempt to opine on those issues
Louis Vuitton's counsel could not have stated its case on the merits better than Anson has in the statements in his Report, referenced above. But an expert is not supposed to be doing the work of counsel; an expert must "bring to the jury more than the lawyers can offer in argument." Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir.1992). The statements highlighted above are fodder for a legal brief, not an expert's report. We recommend, therefore, that if Anson is permitted to testify, he should be instructed in advance to confine his opinions to the matters of Dooney & Bourke's profits and interpreting the sales data of Louis Vuitton — and that to the extent Anson's report might be admissible, statements that provide comment beyond the profits and sales data should be struck.
Dooney & Bourke complains that Anson used the wrong methodology to calculate the net profits from the sale of the allegedly infringing handbags. Specifically, Dooney & Bourke notes that Anson's profit calculations did not take account of a proportionate amount of overhead expenses, which would be deducted by an expert who used the so-called "full absorption" method of determining costs. Instead, Anson used the "incremental approach" to cost allocation, under which only those costs that were incurred as a direct result of the production of the infringing items are to be deducted from profits.
The dispute over whether the "incremental approach" or the "full absorption" method should be used to determine costs is not a question of the reliability of expert methodology but is rather a question of substantive law. Dooney & Bourke cites Warner Bros., Inc. v. Gay Toys, Inc., 598 F.Supp. 424, 428 (S.D.N.Y.1984), New Line Cinema Corp. v. Russ Berrie & Co., 161 F.Supp.2d 293, 303-04 (S.D.N.Y.2001), and W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 665 (2d Cir.1970), all for the proposition that the "full absorption" method is the methodology that is mandated, for determining costs against the profit made by infringing products. Warner v. Gay Toys, which was a contempt action brought after the infringer of a copyright violated a temporary restraining order, specifically rejects the incremental approach and states that the "full absorption" method is the law of the circuit. The New Line court relied upon Warner in a copyright infringement action, and upheld the use of the full absorption method after finding that the infringement was not willful, Specifically, the New Line court allowed the defendant to deduct from its profits the following: "direct selling, sales support, shipping, administrative (which . . . includes customer service, computer operations, invoicing), design and product development, advertising, taxes
These cases would seem to draw Anson's use of the "incremental approach" into question as a matter of substantive law. Put another way, if these cases are controlling, Anson's cost assessment, even if reliably conducted, does not "fit" the facts of the case and would be subject to exclusion under Rule 702. See, e.g., Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (8th Cir.2000) (error to admit testimony by an economics professor who used an economic model that was inconsistent with controlling facts and law; the
Both parties are correct in their positions under the substantive law, insofar as they go, In assessing the defendant's net profit from the infringing sales, courts are to use the "full absorption" method, but only if the defendant proves the connection between a general expense such as overhead and the infringing sales.
We note that Dooney & Bourke does not seriously challenge Anson's calculation of
Finally, Louis Vuitton argues that Dooney & Bourke has already failed to meet its burden of connecting its general expenses to the allegedly infringing sales, by failing to provide Anson with the necessary information to make that determination.
Dooney & Bourke contends that Anson's determination of net profits from the allegedly infringing handbags is unreliable because Anson did not attempt to determine how many of the sales were actually attributable to the alleged consumer confusion. It is clear that not all of Dooney & Bourke's multicolor handbag sales were made because of consumer confusion. Louis Vuitton's experts put the confusion level at about 20-30 percent of the possible consumers. Dooney & Bourke argues that Anson's conclusion that it owes 100 percent of its profits to Louis Vuitton must be excluded because he attributed 100 percent of the handbag sales to consumer confusion.
As with the dispute over the use of the "incremental" rather than the "full absorption" method of deducting costs from profits, Dooney & Bourke's challenge is one about the substantive law rather than evidentiary reliability. Dooney and Bourke does not at this juncture complain that Anson's figure is the result of an unreliable methodology if Louis Vuitton is entitled to 100 percent of the sales of an infringing product. The parties instead disagree about whether the plaintiff may be entitled to 100 percent of the net sales of an infringing product even if some of the sales were not attributable to confusion. Dooney & Bourke relies on Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A., 146 F.3d 66, 72 (2d Cir.1998), for its position that the plaintiff is entitled only to the proportion of sales directly attributable to consumer confusion. The lower court in Tommy Hilfiger had found infringement, but also found that the infringement was not in bad faith. It awarded the plaintiff all of the net sales of the infringing product, refusing to deduct the amount of sales attributable to the defendant's own mark. The court of appeals first found an evidentiary error and remanded
Id. at 146 F.3d at 71-72. The Hilfiger court then specifically addressed the question which the parties in this case disagree: whether the amount of profits subject to accounting should be reduced by the sales attributable to the defendant's own mark:
Id. at 146 F.3d at 72.
For its part, Louis Vuitton relies on most of the same cases cited above. Its take on those cases is that (1) assuming the defendant gets a reduction for sales not attributable to confusion, it is the defendant's burden to prove the lack of connection; and (2) in some cases a court would be within its discretion to award 100 percent of the defendant's profits from the infringing product, even if the defendant could prove that some of those sales were not connected to the infringement.
Judge Scheindlin summarized the pertinent law on recovery of profits in an opinion entered in this case on April 24, 2007. Louis Vuitton Malletier v. Dooney & Bourke, Inc., 500 F.Supp.2d 276, 279 (S.D.N.Y.2007) (footnotes and citations omitted);
Given the applicable law as summarized by Judge Scheindlin, the validity and fit of Anson's opinion — that 100 percent of net lost profits on the multicolored handbags is the measure of recovery to Louis Vuitton — is subject to two conditions: (1) Dooney & Bourke must be found in bad faith; and (2) the court must then determine that the equities weigh in favor of an award of 100 percent of Dooney & Bourke's net profits.
Assuming those conditions are met, is Anson's conclusion on 100 percent recovery of infringing profits then admissible? The answer, under the circumstances of this case, is no. If those two conditions are found, Anson's opinion that a 100 percent recovery of net profits provides the proper remedy would at that point no longer be of any assistance. The jury will only need to determine what the net profits are, not how they are to be allocated. The judge will take the jury's finding as to the amount and, exercising powers in equity, will then determine the proper allocation of profits to award to the plaintiff.
We have already recommended that Anson be permitted to testify to his opinion on what the net profits are, subject to Dooney & Bourke meeting its burden of proving more reductions than Anson has already credited. But at no point should Anson be permitted to testify that "100 percent of the profits, regardless of whether or not they were achieved as a result of the infringement, are properly recoverable as damages."
As discussed above, Anson's disquisition on the law of dilution, as well as his broad statements extolling the Louis Vuitton mark and disparaging Dooney & Bourke's
We find that Anson should not be permitted to testify on any aspect of dilution. There are a number of potential grounds for exclusion:
We take these flaws in order.
The basis of Anson's conclusion on dilution is that Louis Vuitton lost sales in the United States during the subject period. This conclusion is in substantial tension with Louis. Vuitton's own assertions in the case. Louis Vuitton has stated on any number of occasions that it does not claim lost profits. See, e.g., Objections and Response to Interrogatory No. 17, Further. Amended Response to Dooney & Bourke's Third Set of Interrogatories ("Louis Vuitton does not seek its lost profits."); Reply Memorandum in Support of Motion to Exclude Proposed Expert Testimony of Bradford Cornell at 6 ("Dr. Cornell incorrectly assumed that Louis Vuitton is seeking its own lost profits rather than Dooney's illicit profits."); Id. at 7 ("Dooney's sales likely cannot be linked to lost sales by Louis Vuitton because . . . Louis Vuitton limits its production and sold the infringed products in other markets . . . ").
And yet the basic premise of Anson's opinion is that Louis Vuitton suffered a loss of sales in the United States as a result of the marketing of the Dooney & Bourke. Multicolor Monogram handbags. We recognize that the two positions are possibly explainable as not absolutely inconsistent. Because Louis Vuitton markets a scarce product it can argue, as it has, that United States sales decreased but there was no loss of profit because Louis Vuitton could accommodate waiting lists elsewhere in the world. But even if that argument were tenable, that is not the way that Anson's report is pitched at all. Anson's report (and any testimony that matches it) would indicate to the jury that Louis Vuitton has in fact lost profits because
A good example of Louis Vuitton's mixed signals with respect to the opinion of its expert on "damages" is its argument in the motion to exclude the testimony of Dooney & Bourke's damages expert, Bradford Cornell, discussed below. Cornell spends a good deal of time critiquing the "Damages analysis of Louis Vuitton's expert."
The tension between Louis Vuitton's litigation position and Anson's dilution opinion raises the probability of a lack of "fit" between Anson's testimony on lost profits and the disputed issues in the case. See, e.g., Bogosian v. Mercedes Benz of N.A., 104 F.3d 472, 479 (1st Cir.1996) (expert testimony on a theory that contradicted the plaintiff's own assertions about her case was properly excluded: "The district court appropriately found it very odd that Bogosian would present an expert witness who would testify that [Bogosian's] own unwavering testimony was incorrect."). That discordance also raises a substantial Rule 403 issue. The probative value of Anson's testimony on dilution is likely to be substantially outweighed by the risks of jury confusion and prejudice, because the jury may assume from Anson's opinion that Louis Vuitton has lost profits when Louis Vuitton itself has decided not to present evidence of lost profits.
We note again, however, that Louis Vuitton's position is susceptible to at least a colorable explanation. Louis Vuitton might be arguing that it has lost sales and profits but does not have to prove them other than as some basis for dilution. Or it might be saying that it has lost sales in the. United States but made up for them by reducing waiting lists in the rest of the world, and that Anson did not have to elaborate on those foreign sales because he was focusing on the loss of sales in the United States. While Louis Vuitton is clearly walking a tightrope, reasonable minds can differ about whether it has fallen off and that Anson's report should be excluded solely on that ground. No matter, however, because whatever Louis Vuitton's position is on lost sales and profits, Anson's opinion does not fit the substantive law of dilution and is excludable on that ground at any rate. We turn now to that fundamental flaw in Anson's testimony.
Anson's testimony is simply not probative of dilution under the substantive
The problem with this analysis is that it is at odds with the substantive law of dilution. Courts have considered a variety of factors to determine whether a defendant's trademark has diluted or is likely to dilute a plaintiffs trademark by blurring, see, e.g., Vuitton I, 340 F.Supp.2d at 437, and the law currently identifies six such factors. See 15 U.S.C, § 1125(c)(2)(3) (i)-(vi):
Not one of these factors refers to a decline in plaintiffs sales coincident with a defendant's achieving "critical "mass" in the marketplace, which is the linchpin of Anson's dilution analysis. Nor do any of the blurring factors previously considered by courts in this circuit refer to a decline in the plaintiffs sales. See Vuitton I, 340 F.Supp.2d at 437; Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 217-22 (2d Cir.1999) (setting forth ten factors to determine dilution by blurring). See also Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418, 433, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) (rejecting the Fourth Circuit's view that "an actual loss of sales or profits" must be proved to show actual dilution). As for dilution by tarnishment, there is again no connection between the substantive law and Anson's testimony. 15 U.S.C. § 1125(c)(2) defines dilution by tarnishment as an "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." Anson does not purport to connect a loss of sales in the United States to a loss of reputation on the part of Louis Vuitton and Louis Vuitton cites no case law to support the proposition that a plaintiff's loss of sales coincident with a defendant's achieving "critical mass" in the marketplace necessarily implies a loss of reputation. Therefore, to the extent it is intended to prove blurring or tarnishment, Anson's testimony does not "fit" the law of the case and must be excluded. See, e.g., Leverette v. Louisville Ladder Co., 183 F.3d 339 (5th Cir.1999) (expert's testimony on ladder defect was properly excluded for lack of fit, because under applicable law the ladder could only be
Let us assume, for the sake of argument that during the period covered by Anson's testimony, Louis Vuitton's sales of its Multicolore Monogram Mark handbags was proportionately reduced as compared to sales of those handbags in the rest of the world, Let us even assume away the fit issues (both as to Louis Vuitton's litigation position and the substantive law). Even these assumptions would not justify admitting Anson's opinions on dilution, because the crux of his testimony is his conclusion that the proportionate downturn in Louis Vuitton United States sales was caused by the sales of Dooney & Bourke multicolor handbags. Anson bases this critical conclusion on a regression analysis conducted on the Louis Vuitton sales data. But Anson did not conduct that regression analysis. The analysis was conducted by CONSOR's senior analyst, Fernando Torres. While Mr. Torres was probably qualified to conduct a regression analysis — Dooney & Bourke does not contend otherwise — Anson was not presented as and was demonstrably unqualified to be an expert on statistical analysis.
At his deposition, Anson testified that "in simplistic terms" he knew how to conduct a regression analysis.
Because Anson is not qualified to conduct or interpret statistical analyses, the regression analysis could only be admissible if Anson is permitted to give an opinion by relying completely on Torres's opinion. It is true that experts are permitted to rely on opinions of other experts to the extent that they are of the type that would be reasonably relied upon by other experts in the field. Fed.R.Evid. 703. But in doing so, the expert witness must in the end be giving his own opinion. He cannot simply be a conduit for the opinion of an unproduced expert. This fundamental requirement was well-discussed in Dura Automotive Sys. v. CTS Corp., 285 F.3d 609 (7th Cir.2002), where the court encountered a problem similar to that presented by Anson's testimony in this case — a hydrogeologist was relying almost exclusively on the opinions of expert groundwater-flow modelers to draw a conclusion about the flow of pollutants into a town's water supply. The underlying experts were not produced to testify, just as Torres was not
Id. at 613-14.
The Dura court located its rule of exclusion of "mouthpiece" experts under Daubert:
Id.
The same problem exists with Anson's testimony about the regression analysis
We note also that the Dura, court grounded any permissible reliance on other experts on the guarantees that the op posing party can (1) depose the underlying experts in order to make sure they performed their tasks competently, and (2) ask the testifying expert whether he supervised them carefully and whether his relying on their assistance was standard practice in his field. But in this case, Torres was not listed as an expert and was not made available for deposition; and Anson in his own deposition made it plain that he exercised little if any supervision over Torres's work.
For all these reasons, we conclude that testimony from Anson about the regression analysis must be excluded under Rule 702 because it is nothing but conduit testimony from an expert on a matter outside his field of expertise. As such it is unreliable and will not assist the jury.
But there is more. If Anson were allowed to relate the findings of the regression analysis at trial, his testimony would violate the hearsay rule. Anson would be relating the out-of-court statements of Torres, and those statements would be offered for the truth of Torres's opinion. Fed.R.Evid. 801(c). Torres's regression analysis is not admissible under any hearsay exception. It is not, for example, a business record, because it was prepared for purposes of litigation. Certain Underwriters at Lloyd's, London v. Sinkovich, 232 F.3d 200 (4th Cir.2000) (expert report inadmissible as a business record because it was prepared in anticipation of litigation). It is true that under Rule 703, experts can rely on hearsay in reaching their own opinions. But a party cannot call an expert simply as a conduit for introducing hearsay under the guise that the testifying expert used the hearsay as the basis of his testimony. Under the 2000 Amendment to Rule 703, an expert is not precluded from relying on hearsay, but he is precluded from disclosing the hearsay to the jury unless its probative value in illustrating the basis of the expert's opinion substantially outweighs the prejudicial effect of having the jury hear about the otherwise inadmissible hearsay. See Committee Note to 2000 Amendment to Rule 703 ("Rule 703 has been amended to emphasize that when an expert reasonably relies on inadmissible information to form an opinion or inference, the underlying information is not admissible simply because the opinion or inference is admitted."). In this case, as Anson's testimony about the regression analysis has no probative value independent of Torres's report, it is clear that he could not disclose it to the jury as a basis for his own testimony under the stringent balancing test imposed by Rule 703.
Even if Torres and not Anson were to testify at trial, we would find that Torres's opinions could not be admitted under Rule 702 because he employed unreliable
Judge Scheindlin explained the necessity for a multiple regression analysis in Bonton v. City of New York, No. 03 Civ.2833, 2004 WL 2453603, 2004 U.S. Dist. Lexis 22105 (S.D.N.Y. Nov. 3, 2004), a case in which the plaintiff's expert conducted a regression analysis that considered discrimination as the only possible causative factor for a higher percentage of black children being remanded to foster care. Judge Scheindlin found that the expert's report was inadmissible because it would not assist the trier of fact under Rule 702 and Daubert:
In this case, Dooney & Bourke raises a number of legitimate alternative causes that should have been evaluated in a multiple regression analysis, including the possibilities of (1) disproportionate allocation of advertising; (2) relative increase in market interest in Japan given the fame of the designer, Takashi Murakami; (3) growth in new markets; (4) decrease in purchases by Japanese tourists in the United States; and (5) a greater incidence of counterfeiters in the United States. Most if not all of these factors are quantifiable and could therefore be analyzed in a regression analysis.
Louis Vuitton argues that Anson did take account of independent variables, and points to Anson's deposition testimony where he stated that "we did ask those questions and we did look at those, and there is not a discernible major variable between the United States market having Dooney & Bourke and the rest of the world."
In response to the critique of Torres's regression analysis, Louis Vuitton cites U.S. Info. Sys. v. Int'l Bhd. of Elec. Workers Local Union No. 3, AFL-CIO, 313 F.Supp.2d 213, 235, 238 (S.D.N.Y.2004) for the unremarkable proposition that the expert is not required to categorically exclude each and every possible alternative cause before singling out one possible causative factor.. We do not reject the.
Anson should be permitted to testify to the amount of net profits that Dooney & Bourke obtained from the allegedly infringing sales, subject to the condition that Dooney & Bourke cannot establish a connection between those sales and any of the general costs that Anson did not deduct. Anson's testimony on all other matters should be excluded.
Louis Vuitton moves to exclude the testimony and the expert report of Dr. Bradford Cornell. Dr. Cornell was retained by Dooney & Bourke to evaluate and determine whether Louis Vuitton "incurred any damages resulting from the alleged trademark infringement and/or `dilution' by Dooney & Bourke."
Dr. Cornell reaches the following conclusions: (1) Louis Vuitton "was not damaged as a result of the challenged activities of Dooney & Bourke" because it "did not reduce prices, miss sales forecasts, or cut production because of sales of the Dooney & Bourke products";
In coming to his conclusion that Louis Vuitton suffered no damages, Dr. Cornell cites "fundamental" economic theory, which, according to him, provides that the only way for a company to be economically damaged is to (1) miss sales forecasts, (2) reduce prices, (3) experience lower margins, or (4) cut planned production schedules.
Dr. Cornell corroborated his "fundamental conclusion" that Louis Vuitton suffered
Dr. Cornell then considered the Dooney & Bourke sales data in his regression analysis, on the ground that the "standard procedure would be to regress Louis Vuitton U.S. sales on Louis Vuitton international sales and Dooney & Bourke U.S. sales."
Dr. Cornell also provided an opinion on the amount of net profits that Dooney & Bourke obtained over the subject period. Dr. Cornell essentially used the "full absorption" method of deducting costs. Like Anson, he deducted the expenses associated with the design, production and sales of the multicolor handbags.
Finally, Dr. Cornell's report criticizes the Anson report on a number of grounds, including: (1) its analysis-free conclusion of "confusing similarity"; (2) its "fundamentally flawed" regression analysis, in which the regression model is "misspecified and misleadingly fails to take account of Dooney & Bourke's actual sales;" its failure to consider "the unique impact of Japanese sales during the relevant time period;" and its failure to rule out other alternatives such as the impact of counterfeiters.
We do not further address Dr. Cornell's critique of Anson's regression analysis. Dr. Cornell's criticisms are obviously in accordance with our recommendation to exclude Anson's opinion on dilution because (for one thing) it is unreliable. If our recommendation as to Anson's regression analysis is accepted, then there will be no need to admit Dr. Cornell's critique of it. If for some reason Anson is permitted to testify to such matters, however, we believe that Dr. Cornell's critique of. Anson's methodology is without question more than reliable enough to be admissible under Rule 702, for reasons stated in our own critique of Anson's methodology.
Louis Vuitton argues that Dr. Cornell's testimony and report must be excluded on a number of grounds, including the following:
Dr. Cornell received a Masters degree in Statistics and a doctorate in Financial Economics from Stanford.
While not going so far as to argue that Dr. Cornell is unqualified under Rule 702, Louis Vuitton lodges several complaints that appear to be directed toward his qualifications. It stresses that Dr. Cornell was unfamiliar with "the basic principles of law relating to computation of damages in trademark cases."
Louis Vuitton argues that the Cornell report is not helpful to the trier of fact "because it myopically focuses on Louis Vuitton's lost profits, which Louis Vuitton has expressly (and repeatedly) stated it
Of course the same can be — said and was, see supra — about Louis Vuitton's own professed "damages" expert, Anson. Louis Vuitton seems to want to have it both ways, i.e., to allow its own expert to testify to damages, but to exclude the defendant's rebuttal expert because. Louis Vuitton is not seeking damages.
It is difficult for us at this point, given Louis Vuitton's position, to determine whether "damages" in the classic sense will be at issue in any respect if this case goes to trial. We believe the answer should be no, given. Louis Vuitton's many statements that it is not seeking its own damages but is rather seeking an accounting of Dooney & Bourke's profits as a proxy for any damages it may have suffered but cannot or does not wish to prove.
Louis Vuitton argues that Dr. Cornell's method of determining damages is unreliable because it focuses solely on cash flow and "completely failed to analyze the impact of infringement on the goodwill of the Louis Vuitton Monogram Multicolore trademark."
Louis Vuitton's complaint about Dr. Cornell's valuation analysis is really a challenge to Cornell's application of his cash-flow theory; this is a legitimate concern under Rule 702, which requires that a reliable methodology must be reliably applied. Dr. Cornell recognized that goodwill has cash value, but admits that he did not attempt to value goodwill in determining whether Louis Vuitton suffered any damages in this case. We agree that Dr.
Yet this possible oversight does not justify exclusion of Dr. Cornell's testimony at trial. Dr. Cornell can correct this oversight before trial, by assessing the lost value from the diminution of the mark — assuming hypothetically that the mark was actually damaged by infringing conduct on the part of. Dooney & Bourke. At that time, his assessment can be challenged as Daubert envisions, by cross-examination and argument to the fact-finder (again assuming that Louis Vuitton's damages are even an issue in the case). See Ellis v. Gallatin Steel, 390 F.3d 461 (6th Cir.2004) (where expert misapplied his methodology in reaching his damage calculations before trial, this did not necessitate exclusion under Daubert, where the expert was using reliable methodology and corrected his error before trial).
Louis Vuitton argues that Dr. Cornell's statistical analysis of Louis Vuitton sales must be excluded because it "lacks scientific basis."
The question remaining is whether Dr. Cornell's statistical analysis is admissible under Rules 702 and 403 if and when Anson's testimony on the subject is excluded. Louis Vuitton contends that Dr. Cornell did not use reliable methods to justify his decision to compare United States sales with sales in Europe, as opposed to the rest of the world. Dr. Cornell's explanation for this comparison was that "the European countries have demographics and other characteristics similar to the U.S., and have mature markets for Louis Vuitton products, whereas parts of Asia do not."
But there is an additional aspect of Dr. Cornell's study that merits attention, one that goes beyond merely reworking Anson's analysis. Dr. Cornell at least attempted to assess the impact of Dooney & Bourke sales on Louis Vuitton, while Anson simply assumed Dooney & Bourke sales to be a causative factor. Dr. Cornell regressed Louis Vuitton United States sales on Louis Vuitton international sales and Dooney & Bourke United States sales. His findings indicated to him a positive correlation between Dooney & Bourke sales and Louis Vuitton sales in the United States; and this was so whether the explanatory variable is European sales or worldwide sales.
Unfortunately, Dr. Cornell has not given a good explanation of why he chose to conduct the regression the way he did. He simply states that it is "standard procedure" to do two regressions rather than one.
Under Rule 702, the proponent of the expert must prove by a preponderance of the evidence that the expert used reliable methods and applied those methods reliably. Nothing in Dooney & Bourke's submission proves that Dr. Cornell's serial regression analysis is reliable; his conclusory statement that it is standard procedure is not sufficient to justify its admission; that is simply the ipse dixit of the expert.
We recognize that Dr. Cornell is not trying to prove that Dooney & Bourke sales caused an increase in Louis Vuitton
Under the circumstances, we believe that the best result is to exclude Dr. Cornell's findings of a correlation between Dooney & Bourke and Louis Vuitton sales, for the same reason that Anson's findings should be excluded — the use of a regression with a single variable is not reliable.
Louis Vuitton argues that pages 3-7 of Dr. Cornell's report should be struck because it includes "purported factual `background' including unfounded opinions" such as an assertion about the strength of the Dooney & Bourke brand. Louis Vuitton further complains that "the entire body of the report is intertwined with over fifty footnotes carefully marshalling selected references to deposition and hearing transcripts, news articles and other materials."
We note that Louis Vuitton's own expert, Anson, goes well beyond Dr. Cornell's asserted violations in his own report. As discussed above, about half of Anson's report is nothing but unproved assertions about the strength of the Louis Vuitton mark, the lack of quality of Dooney & Bourke merchandise, exposition on trademark law, and opinions on the merits. The examples given by Louis Vuitton in Dr. Cornell's report pale in comparison to the broad and unsubstantiated statements made throughout Anson's report. Dr. Cornell's elicitation of background facts looks much more like "context" for his expert opinion than do Anson's broad assertions.
We certainly see the value of providing in an expert report a short introductory statement of the underlying facts of the case. But at trial, those facts should of course be proved by admissible evidence and not expert assertion. Thus if. Dr. Cornell testifies, he should not be permitted to summarize the background facts, as that will not assist the jury. And if Dr. Cornell's report is admitted at trial, the
Louis Vuitton contends that Dr. Cornell miscalculated Dooney & Bourke's profits, essentially by using the "full absorption" method of deducting costs. We conclude, as we did when reviewing the same issue involving Anson's testimony, that the dispute over the appropriate method of accounting for costs against profits is a question of law and not a dispute about the reliability of expert testimony. The applicable law provides that Dr. Cornell's method is appropriate so long as Dooney & Bourke proves at trial a "nexus between each expense claimed and the sales" of the multicolor handbags. Manhattan Industries, Inc. v. Sweater Bee by Banff, Ltd. 885 F.2d 1, 8 (2d Cir.1989). Contrary to Louis Vuitton's suggestion, Dooney & Bourke does not need to prove the connection at the motion in limine stage, but rather must do so at trial. Dr. Cornell is not prohibited from testifying to his opinion as to the amount of net profits, subject to Dooney & Bourke proving the necessary connection.
Louis Vuitton argues that Dr. Cornell "apparently" deducted from Dooney & Bourke's profits the attorney fees expended in this litigation.
Finally, Louis Vuitton contends that it was improper for Dr. Cornell to deduct a proportionate share of income taxes from Dooney & Bourke's profits. This again is a dispute over the applicable law and does not raise a concern about the reliability of Dr. Cornell's methodology itself. Louis Vuitton states that income taxes "generally are not a valid deduction from infringer's profits because the damages award, if any, will be deductible to the defendant and taxable to the plaintiff." We read the applicable case law to leave the deductibility of taxes from profits to the district court, exercising its discretion in equity. See, e.g., New Line Cinema Corp. v. Russ Berrie & Co., 161 F.Supp.2d 293, 304 (S.D.N.Y.2001) (exercising equitable discretion
Dr. Cornell should be permitted to testify to Louis Vuitton's lack of damages on the basis of his cash flow analysis, unless Louis Vuitton takes that issue out of the case. Dr. Cornell should also be permitted to testify to his opinion on the amount of Dooney & Bourke's net profits from the sale of the allegedly infringing handbags, the relevance of which is subject to proof by Dooney & Bourke of a nexus between the profits and the overhead costs counted by Dr. Cornell (and, with respect to taxes, subject also to the district court's equitable discretion on whether the deduction is justified). Finally, Dr. Cornell should not be permitted to testify on the basis of his statistical analysis of Louis Vuitton and Dooney & Bourke sales.
We realize that it may seem drastic to recommend exclusion of so much of the expert testimony before us: that is, all of the testimony and reports of the three survey experts, all of the testimony and the report of Dr. Holub, almost all of the testimony and the report of Anson and a good part of the testimony and report of Dr. Cornell. We know that some of the flaws we describe, if looked at individually, are properly considered as questions of weight and not admissibility. But we also know that the gatekeeper function imposed by Daubert and Rule 702 requires the proponent to prove that its expert has used reliable methods in a reliable manner; that experts are not allowed to testify on matters that are left for the jury; that an expert's testimony must fit the substantive law and the facts of the case; that experts qualified in one area are not permitted to testify on other subject matter for which they are not qualified; and that questions of weight, when sufficiently accumulated, become so serious as to require exclusion.
June 15, 2007.
We took each expert on his own merits; we believe that we applied the Daubert analysis and Rule 403 fairly to both sides. Most of our decisions presented easy
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