Marketing Expert Witness' Survey Estimating the Likelihood of Consumer Confusion Held to be Reliable

Marketing Expert Witness’ Survey Estimating the Likelihood of Consumer Confusion Held to be Reliable

Maker’s Mark entered into a Licensing Agreement with Spalding Group gransting an exclusive license to use its trademarks to create and sell cigars seasoned with its bourbon (the “Licensed Cigars”). After renewing the agreement a few times, in 2013, Maker’s Mark notified Spalding that it was terminating the license effective December 31, 2015. Spalding Group had until June 28, 2016, to dispose of its remaining inventory of Licensed Cigars.

Following the termination of the license, Spalding Group began selling a cigar also seasoned with Maker’s Mark bourbon (the “Bourbon Cigar”). Maker’s Mark alleged the packaging of the Bourbon Cigar was intentionally designed to “evoke an association by customers between [t]he Bourbon Cigar on the one hand and Maker’s Mark and the prior Licensed Cigars on the other.”

Maker’s Mark further claimed Spalding Group advertised the Bourbon Cigar in a variety of ways to associate it with Maker’s Mark and the Licensed Cigars, despite Maker’s Mark’s demand that Spalding Group cease and desist.

Maker’s Mark brought this action against Defendants, asserting claims of trademark infringement; false designations, descriptions, and representations; and trademark dilution in violation of the Lanham Act.

It also brought breach of contract, trademark infringement, and false designation and unfair competition claims under Kentucky common law.

Defendants filed a counterclaim alleging various state law claims related to the licensing agreement and seeking to cancel some of Maker’s Mark’s trademark registrations.

To support its trademark infringement claims, Maker’s Mark retained Ran Kivetz (“Dr. Kivetz”), a professor at Columbia University Business School with experience in consumer psychology and surveys. Dr. Kivetz conducted a survey to estimate the likelihood that consumers would mistake the Bourbon Cigars for a Maker’s Mark product.

To rebut Maker’s Mark’s trademark dilution claims, Defendants retained Hal Poret (“Poret”), a public opinion researcher with a master’s degree in mathematics and a law degree from Harvard Law School. Poret conducted surveys to evaluate whether the words “Marker’s Mark” and the red wax design are famous. Defendants later asked Poret to review Kivetz’s likelihood-of-confusion survey and conduct his own.

Neither party challenged the qualifications of the other’s expert; they each argued that the opposing party’s expert’s likelihood-of-confusion surveys were unreliable. Because the challenges were similar, the Court addressed both Daubert challenges together.

Maker’s Mark also retained Michael A. Einhorn (“Dr. Einhorn”) to calculate Defendants’ profits that may be recoverable under 15 U.S.C. § 1117(a). Defendants moved to exclude Einhorn’s testimony regarding the deductions and resulting net profits calculation; they did not challenge his gross profits or royalties calculations, contending that Einhorn was unqualified to calculate Defendants’ deductions and that his testimony was unreliable.

Survey Research Expert Witness

Hal Poret (“Poret”) is a public opinion researcher with a master’s degree in mathematics and a law degree from Harvard Law School. Since 2004, Poret has personally designed, supervised, and implemented over 350 consumer surveys concerning consumer perception, opinion, and behavior, including surveys relating to false advertising, claim substantiation, and trademark/trade dress matters. He has personally designed numerous studies that have been admitted as evidence in legal proceedings and has testified as an expert in over 50 proceedings before U.S. District Courts, the Trademark Trial and Appeal Board, and NAD.

Marketing Expert Witness

Ran Kivetz is the Philip H. Geier Professor of Marketing at Columbia University Business School. He earned a Ph.D. in Business from Stanford University, Graduate School of Business; a Master’s degree in Psychology from the Stanford University Psychology Department; and a Bachelor’s degree from Tel Aviv University with majors in Economics and Psychology. His field of expertise encompasses consumer psychology and behavior; survey methods; marketing management; behavioral economics; human judgment, perception, and decision making; consumer and sales incentives; and branding. Professor Kivetz’s research has won many prestigious awards, including multiple “Best Paper” awards, being a recipient of the New York Times annual “Best Idea” award, and being ranked as the third most prolific scholar in his field during 1982–2006. 

Economic Damages Expert Witness

Michael A. Einhorn has a Bachelor of Arts in Economics from Dartmouth College (summa cum laude) and a Ph.D. in Economics from Yale University. Since receiving his Ph.D. in 1981, he has worked as a Member of Technical Staff at Bell Telephone Laboratories, an economist at the United States Department of Justice (Antitrust Division), and a staff economist at Broadcast Music Inc., a collection agency that licenses performance rights in music to major broadcasters, including television networks, local stations, cable companies, and radio stations. He has worked as a testifying expert since 2001. He is also a former professor of economics at Rutgers University (Newark), where he taught courses on macroeconomics, microeconomics, industrial organization, and corporate finance. He is the author of Media, Technology and Copyright: Integrating Law and Economics (2004), which applies economic reasoning to a number of issues in American copyright law with regard to media, entertainment, and technology. 

Discussion by the Court

With regard to Defendants’ motion to exclude certain testimony and opinions of Ran Kivetz, the Court analysed Kivetz’s likelihood-of-confusion survey in depth.

Kivetz’s survey was divided into a test group and a control group. The test group participants saw three-dimensional, 360-degree viewable graphics of Defendants’ Bourbon Cigars, first the box, then an individual cigar. The control group participants saw three-dimensional, 360-degree viewable graphics of the box, then an individual cigar, all with the words “Seasoned with Maker’s Mark” on the cigar band replaced with “Seasoned with Bourbon” and the red wax-dipped caps replaced with red plastic caps. Participants could manipulate the images until they were ready, then they proceeded to answer question sets about the product’s source, affiliation, and sponsorship. The first question set was on the product’s source and was open-ended, with participants instructed to write what company they think made the product in a text box below the question (the “source question”), followed by other open-ended questions asking participants to explain their answers. At the beginning of the survey, participants read instructions not to guess and that “don’t know” was an acceptable answer that they could select or type. The other questions asked participants to name companies, products, or brands that the participants thought were affiliated with or sponsored the cigars.  Each of those questions had an explicit “don’t know” option, except the open-ended questions asking participants to explain their answers if they provided one. Throughout the survey, an image of the single cigar, either the test or control version depending on the group, remained on the page for participants to view. This image was of the front of the cigar, was not rotatable, and displayed only half of the cigar band, with the test group cigar displaying the words “Seasoned” and “Maker’s,” while “with” and “Mark” on the band and the “ted’s” on the red seal were cut off. Poret conducted likelihood-of-confusion surveys intended to rebut Kivetz’s survey, and it replicated it in all but three ways. First, the participants could view the images, which Poret took from Kivetz’s report, from several angles of the side, top, and bottom, but not a 360-degree view.  Second, Poret removed the image of the single cigar from the question pages. Third, Poret provided an express “don’t know” option to the otherwise open-ended source question.

Both the parties filed motions to exclude based on how the opposing party’s expert used images in his likelihood-of-confusion survey and whether it accurately simulated marketplace conditions.

Defendants argued that repeatedly showing participants the single cigar turned Kivetz’s survey into a “reading test,” where they would answer based on the words “Seasoned” and “Maker’s” visible in the repeated image instead of the Ted’s Cigars branding they saw on the cigar box or the branding that was not visible on the single cigar because of the angle. Kivetz’s survey was accused of creating demand effects, or suggesting a “correct” answer to the participants, by leaving an image of the single cigar for participants to view as they answered questions.

Maker’s Mark responded that Poret’s first likelihood-of-confusion survey was an unreliable “memory test” where participants were not continually exposed to the product while they evaluated it like they would have been in the marketplace. Maker’s Mark demanded exclusion of Poret’s survey since the memory test was based on blurry images from limited angles that did not show “Maker’s Mark.”

The Court held that such challenges amounted to little more than professional disagreement about methodology, which concerned the weight and not the admissibility of the surveys considering neither Maker’s Mark nor Defendants cited any authority suggesting either method was uniformly unreliable and instead each cited articles supporting its expert’s method, which indicated that the disagreement existed within the field and the choice was within the expert’s discretion.

Further, the parties’ more specific concerns about the images appeared unfounded. Defendants argued that 33% of Kivetz’s respondents wrote that “Seasoned Maker’s” produced the cigar because it was all that was visible on the individual cigar image, which showed that Kivetz’s survey inflated the level of confusion. Kivetz, however, did not include the “Seasoned Maker’s” responses as evidence of confusion in his calculations. Maker’s Mark argued that because Poret’s survey did not use 360-degree viewable images, participants could not see the words “Maker’s Mark,” but participants could rotate the individual cigar and see “Maker’s” in one image then “er’s Mark” in the next. Defendants similarly asserted that Kivetz’s survey was flawed because no Ted’s Cigars branding was visible in the single cigar image which remained on the page during the survey, but Maker’s Mark’s name was not visible on the cigar either, only “Seasoned” and “Maker’s”. Moreover, before entering the question portion, participants examined the cigar box and single cigar from 360 degrees for at least 30 seconds each until indicating that they could clearly see the images. Respondents who could not clearly see the image were removed from the survey. Accordingly, the Court found that none of these concerns warranted exclusion and the parties were allowed to explain to the factfinder how each expert used images and whether, in their views, those images accurately replicated marketplace conditions and produced accurate results.

One of the other reasons the parties moved to exclude the other’s likelihood-of-confusion surveys was whether or not the initial source question included a “don’t know” answer option. Defendants insisted on the unreliability of Kivetz’s survey because it did not include a “don’t know” answer option for the source question like it did for the other questions. Maker’s Mark conversely argued that an explicit “don’t know” option was inappropriate for an open-ended question, so Poret’s survey, which had an explicit “don’t know” option, artificially increased the number of participants who selected it, thus erroneously reducing the net confusion rate.

The Court noted that Diamond’s article appeared to be discussing a “don’t know” option in the context of closed-ended questions, so Poret’s survey may have been less accurate, but his choice did not mean the entire survey was so informally designed and conducted that it failed key tests of professionalism and reliability. Henceforth, the Court refused to exclude not only Kivetz’s likelihood-of-confusion survey but also Poret’s rebuttal survey.

Poret conducted a second likelihood-of-confusion survey that tested whether the red wax seal itself and not the “Seasoned with Maker’s Mark” label on the Bourbon Cigars was likely to cause confusion. The second survey again replicated the Kivetz Survey with some exceptions: the images were viewable from several angles but not 360 degrees, and the control cigars and the test cigars kept the “Seasoned with Maker’s Mark” band instead of a “Seasoned with Bourbon” band. Maker’s Mark contended that the survey should be excluded because controls must not be infringing and because the survey results could not explain whether participants were confused by the band or the wax seal. The purpose of avoiding infringing or allegedly infringing controls was to be able to tell whether any reported confusion was the result of actual confusion or the flawed control and the fact that the parties highly disputed whether the use of “Maker’s Mark” on the cigar band was likely to cause confusion made it all the more crucial. Defendants did not adequately respond to this concern with Poret’s survey, noting that “Maker’s Mark” on the cigar band may have been non-infringing or a fair use, actively ignoring the fact that even an allegedly infringing element was problematic in the process besides waiving the fair use defense. They cited only Poret’s explanation that his purpose was to isolate the red wax element. The Court noted that Defendants did not carry their burden to prove that Poret’s wax confusion survey was reliable.

Coming to Defendants’ motion to exclude certain opinions and testimony of Michael A. Einhorn, it was noted that Einhorn submitted a report and two supplemental reports in which he calculated Defendants’ gross revenue and deducted Defendants’ costs to arrive at their net profits from the sale of the Bourbon Cigar, besides calculating what royalties would have been due under the licensing agreement. Defendants targeted Einhorn’s testimony regarding the deductions and resulting net profits calculation instead of his gross profits or royalties calculations. Defendants stated that Einhorn was no expert in cost accounting and highlighted his lack of relevant experience in accounting.

The Court, citing Mannino v. Int’l Mfg. Co., 650 F.2d 846, 851 (6th Cir. 1981), held that Einhorn met the minimal qualifications requirement based on his Ph.D. in economics from Yale University as well as decades of experience calculating damages in intellectual property cases. Even though much of his experience has been related to copyright, trademark damages estimations were well-represented on his resume.

When Defendant argued that Einhorn was not qualified to perform the specific calculations in this case, which involved determining which of Defendants’ costs should be deducted from the gross profits to reach the net profits, the Court noted that Einhorn has been admitted to testify regarding essentially the same calculation in copyright cases. The Court deemed Einhorn qualified to express opinions regarding Defendants’ net profits.

Defendants objected to Einhorn’s use of the “incremental approach” in his calculations as opposed to their expert’s use of the “full absorption” approach. The incremental approach subtracts only direct production costs from a Defendant’s gross profits, while the full absorption approach also subtracts the proportion of overhead costs attributable to the product.

While some courts have adopted one method or the other, the Sixth Circuit appears to have not. In a patent case, the Sixth Circuit declined to adopt a uniform rule about whether overhead costs should be deducted from profits because it depends on the facts of each case. The Court observed that trademark remedies authority suggested that the incremental approach is an acceptable method. The Court declined Defendant’s request to exclude Einhorn’s testimony on that basis.

Defendants moved to seal their motion to exclude Einhorn and the attached Exhibits 1-5, 8, and Maker’s Mark moved to seal its response to the motion and Exhibit 1, which included Einhorn’s report and supplemental reports. The documents contained Defendants’ profit margins, sales data, and other financial information. The Court denied the motions filed by both parties.


The Court issued the following rulings:

1. Defendants’ motion to exclude certain testimony and opinions of Ran Kivetz was denied.

2. Plaintiff’s motion to exclude certain expert testimony of Hal Poret was granted in part and denied in part.

3. Defendants’ motion to exclude certain opinions and testimony of Michael A. Einhorn was denied.

4. Defendants’ motion for leave to file under seal was denied.

5. Plaintiff’s motion for leave to file under seal was denied.

The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

Key Takeaways:

The Court emphasized that challenges to expert testimony often revolve around methodological differences rather than the admissibility of the evidence itself. Disagreements within the field are common and do not necessarily render expert testimony unreliable.

Regarding the use of images in likelihood-of-confusion surveys, concerns about methodology and the simulation of marketplace conditions were raised by both parties. However, the Court determined that these concerns did not warrant exclusion of the surveys, allowing the parties to present their arguments about the validity of the methodology to the factfinder.

The absence of a “don’t know” option in certain survey questions was debated, with one party arguing that its inclusion artificially affected the results. The Court noted that the survey in question did not fail key tests of professionalism and reliability and refused to exclude the surveys based solely on this issue.

Expert qualifications were also scrutinized, particularly regarding calculations of net profits. Despite challenges to the expert’s qualifications and methodology, the Court deemed the expert sufficiently qualified based on relevant experience and education.

Differences in calculation methods, such as the incremental approach versus the full absorption approach, were considered by the Court. While some courts may have preferences for certain methods, the Court in this case declined to adopt a uniform rule, emphasizing that the appropriateness of a method depends on the specific circumstances of each case.

Case Details:

Case Caption:Maker’s Mark Distillery, Pbc V. Spalding Group, Inc. Et Al
Docket Number:3:19cv14
Court:United States District Court, Kentucky Western
Citation:2024 U.S. Dist. LEXIS 38185
Order Date:March 05, 2024