Ambit of Interflora widens - Court of Appeal says no to passing-off survey

United Kingdom

The Court of Appeal has handed down judgment in the case of Zee Entertainment Enterprises Limited v zeebox Limited ([2014] EWCA Civ 82, January 24 2014), with Lord Justice Floyd delivering the leading judgment. The appeal focused on the admissibility of survey evidence in a passing-off case, an area of the law which was not clear in the wake of the recent Interflora decisions on the admissibility of survey evidence (see here and here). The decision of Birss J was upheld for additional reasons, with the Court of Appeal refusing permission to adduce the survey evidence because the survey was obviously flawed and would not be of real value in deciding the issues in the case.

Zee Entertainment Enterprises is an Indian company which owns a number of satellite and cable television channels, including Zee TV. It claims to have built up significant reputation and goodwill in the Zee and Zee TV names in the United Kingdom. In November 2011 zeebox Limited launched a free app marketed under the name 'zeebox', which acts as a second screen companion for use while watching TV.

Zee issued proceedings against zeebox for trademark infringement and passing off in July 2012. Zee carried out a pilot survey in September 2012 and a second pilot survey in May 2013, although the questions used in each of the surveys were largely identical. Zee then sought permission to adduce survey evidence in support of its passing-off case, claiming that the surveys showed deception amongst the British Asian population in the United Kingdom.

Birss J refused permission to conduct a full survey at an interim hearing in June 2013, holding that the trial judge would be able to make his own assessment on whether a consumer would be deceived and that the survey evidence was not going to be decisive in this regard, especially given that other evidence could be adduced. The survey failed the 'real value' test as set out by Lewison LJ in the Interflora cases, namely that "a judge should not let in evidence of this kind unless the party seeking to call that evidence satisfies him (a) that it is likely to be of REAL value; and (b) that the likely value of the evidence justifies the cost".

Zee appealed to the Court of Appeal, citing five grounds of appeal:

  1. that the judge failed to differentiate, in applying the real value test, between passing-off and trademark infringement cases;
  2. that the judge failed to appreciate that the relevant public was a cultural and linguistic subsection of the UK public and not the population at large;
  3. that the judge took too strict an approach to the real value test;
  4. that the judge failed to take account of the fact that he had not found any criticism of the surveys to be proved; and
  5. that the judge made errors in the assessment of the likely costs.

Some uncertainty remained after the Interflora cases as to whether the tests set out therein could be extended to survey evidence in passing off cases given that Lewison LJ had made certain obiter comments about different considerations coming into play in relation to passing-off cases, since it was necessarily a different legal question. The Court of Appeal did not raise any issue with the judge's application of the Interflora tests to this case, accepting that the judge had been live to the legal distinction and had not applied the real value tests too strictly in relation to a passing off case.

With regard to grounds of appeal 1 and 3, the court noted that the ‘real value’ test is not intended to invite the court to evaluate the likely outcome of the case - the apparent strength of the case is not relevant. The courts must scrutinise the value of the survey as evidence. Lewison LJ made it clear that he had not intended his judgment in Interflora to invite a mini-trial of the strength of the parties cases at the stage of deciding whether to allow a survey or not. If there was a special factor about the goods or services, or their consumers, survey evidence may well be of real value but this was not the case here.

With regard to ground 2, the pilot surveys had been directed at British Asians in the United Kingdom. Zee claimed that the trial judge would likely have little familiarity with its channels or the reactions of an ethnically distinct market to which it is directed. Floyd LJ was not concerned by the fact that the trial judge may not be a watcher of Zee TV (or indeed a watcher or television at all). If the trial judge was equipped with knowledge of the extent and popularity of Zee's channels, he would be capable of assessing the susceptibility of watchers of those channels to any alleged deception when confronted with the zeebox sign. Floyd LJ did not accept that the passing-off case was concerned with matters which are not esoteric and he saw nothing which would not be readily understandable by the trial judge, since the case concerned the delivery of television services to people in the United Kingdom.  

With regard to ground 4, Zee submitted that Birss J's lack of criticism of the survey should weigh in its favour whilst zeebox argued that Birss J should have concluded that the survey was flawed and likely to be of no real value. The Court of Appeal agreed with zeebox, finding that the judge had not gone far enough in this particular case. The reliability of the survey forms an important part of the real value determination and this survey had "obvious flaws".

The use of leading questions in the pilot surveys was criticised and, in particular, the fact that survey respondents were told that zeebox is an app or website "relating to TV". The Court of Appeal found that this was unfair, given that no further information was provided as to the precise nature of zeebox's service. The design of the questions later in the surveys clearly invited respondents to speculate, but the court found that any positive answers to these questions would have been pre-conditioned by the unfair nature of the earlier questions. There was also criticism of the acontextual display of the zeebox sign in the survey, with Lewison LJ noting that, even in cases of alleged trademark infringement, the acontextual comparison of mark and sign had been abandoned. The show card depicting the zeebox sign as shown to the survey respondents did not accord with how real-world users would encounter the zeebox app.

With regard to ground 5, the costs of introducing survey evidence (in the region of £100,000) were found to be significant, especially when viewed from zeebox's perspective as a small start-up company. This was a factor that the judge could and should have properly borne in mind when making his decision.

In summary:

  • Zee's appeal was dismissed on all five grounds, upholding the decision of Birss J to refuse permission to adduce the survey evidence. 
  • The Court of Appeal found that Birss J should have gone further in deciding the value of the survey itself and felt bound to exercise his discretion afresh. The most significant factor was that the survey was flawed and any marginal value that it might have had was outweighed by the disproportionate costs of introducing such evidence.
  • Whilst there was a balance to be struck in considering that Zee would be prevented from adducing potentially relevant evidence, the Court of Appeal held that the "balance came down heavily in favour of refusing permission for the survey evidence".

The business impact of the decision is as follows:

  • It is clear that the strict tests as set out by Lewison LJ in Interflora can be applied to passing-off cases despite the legal distinction between trademark infringement and passing off.
  • Lewison LJ has once again made it clear that survey evidence is not necessary in the case of ordinary consumer goods or services and that surveys should only be admitted in special cases. The take-home message is that parties should not seek to deploy survey evidence other than in exceptional circumstances, where the goods or services are sufficiently non-mainstream that the court is likely to need assistance by way of a survey.
  • The design of a survey and its questions require careful consideration as it is clear that these factors will be scrutinised by the court in considering whether to grant permission to adduce survey evidence. Leading questions should be avoided at all costs. Whilst this was apparent from the previous Interflora decisions, the point was re-iterated in this case. If a survey is carried out, respondents to the survey should not be shown a mark and sign in circumstances devoid of context. It is important to try and minimise the artificiality which comes with most surveys and the design of the survey should take care not to introduce factors which would not be present in normal use. Passing off is a 'real world' cause of action so the circumstances of the real world should be present when carrying out the survey, insofar as this is possible.

Joel Smith, Sarah Burke and Victoria Horsey, Herbert Smith Freehills LLP, London

Herbert Smith Freehills acted for the respondent, zeebox Limited

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