ENTERPRISE, PROPORTIONALITY, WITNESS STATEMENTS AND UNNECESSARY COSTS: OBSERVATIONS FROM THE HIGH COURT
In Enterprise Holdings, Inc -v- Europcar Group UK Ltd  EWHC 17 (Ch) Mr Justice Arnold made some telling remarks which bear on proportionality, witness evidence and costs.
The dispute related to the use of a “e” logo by competitors in the field of vehicle renting services.
THE MAIN POINTS
- The case was run as a “state trial” with a large number of bundles and voluminous documentation.
- There were problems in putting “opinion” evidence in witness statements.
- The use of the procedure to obtain survey evidence had led to a two day hearing; £215,000 in costs; no saving of costs at trial and the need for the court to consider criticism of the surveys twice.
THE JUDGE’S OBSERVATIONS AS TO THE WAY THE CASE WAS RUN
- As is regrettably increasingly common with trade mark disputes between large companies, the parties have treated this dispute as if it were a state trial. A considerable number of issues were raised, although it is fair to note that both sides reduced the number of issues shortly before trial, Enterprise by abandoning an allegation that Europcar had intended to take advantage of the distinctive character and reputation of the Trade Marks and Europcar by abandoning a claim for revocation of two of Enterprise’s UK Trade Marks for non-use, and that some points were abandoned during the course of the trial. A large volume of evidence and documentation has been put before the court. There were 34 trial bundles, not including a number of “reserve” trial bundles available in court in case they were needed, of which five were in the event used. Enterprise called 14 witnesses and Europcar called 10 witnesses. Enterprise’s skeleton argument ran to 155 paragraphs and Europcar’s skeleton argument ran to 201 paragraphs. Enterprise’s written closing submissions ran to 204 paragraphs and Europcar’s written closing submissions ran to 100 paragraphs plus a 23 page annex.
- As is also regrettably increasingly common in such cases, there have been a number of satellite disputes, in particular over survey evidence and the admissibility of evidence. I shall consider these matters below.
DISPUTES ABOUT THE ADMISSIBILITY OF EVIDENCE
Parts of the evidence of the witnesses were objected to on the grounds that the were “opinion” evidence.
Admissibility of evidence
- In counsel for Europcar’s skeleton argument, Europcar objected to the admissibility of (a) four specific paragraphs in the witness statements of Mr Lawson, Ms Wilson and Mr King and (b) unspecified portions of the witness statements of the Enterprise branch managers on the grounds that (i) these passages constituted opinion evidence from non-experts and (ii) there was no scope for opinion evidence, whether from experts or non-experts, on questions of likelihood of confusion and dilution in cases involving ordinary, everyday consumer goods and services.
- Enterprise did not accept the validity of this objection. Furthermore, Enterprise pointed out that the objection had not been taken by Europcar at the proper time, namely within 28 days of the service of the witness statement (see Appendix 9 paragraph 4 in the Chancery Guide) and that a proposed Pre-Trial Review had been cancelled because the parties had agreed that there were no issues to consider.
- In those circumstances, it was agreed between the parties that the evidence in question would be received and cross-examined upon without waiver of objection and the court would be invited to rule upon the admissibility of the evidence in its substantive judgment. Although I expressed concern that it was rather a backwards way of proceeding, I acquiesced in this. In the event, however, counsel for Europcar sought in his cross-examination of the Enterprise witnesses positively to elicit their opinions with regard to a question concerning likelihood of confusion. Counsel for Enterprise did not object to this, nor did I intervene. After all the witnesses had been called, however, I asked counsel for Europcar to consider whether Europcar wished to maintain their objections to the admissibility of such evidence. At the conclusion of the evidence, counsel for Europcar informed me that Europcar had decided to withdraw their objections to the admissibility of Enterprise’s evidence.
- It follows that I do not have to rule upon the issue. Nevertheless I wish to say a few words about it. In my view the two categories of evidence identified in paragraph 28 above stood in different positions. So far as category (a) was concerned, it seems to me that Europcar’s objection was probably well founded. So far as category (b) is concerned, however, it seems to me that Europcar’s objection was probably not well founded.
- Counsel for Enterprise described this evidence as “trade evidence”. I would prefer to reserve that label for evidence from witnesses in the relevant trade who are independent of the parties. Such witnesses are often retailers: they may be retailers of the claimant’s goods or the defendant’s goods or sometimes both. Such witnesses can give factual evidence as to the circumstances in which the relevant goods are sold, the characteristics of the consumers who purchase them and any instances of apparent confusion the witnesses (or their staff) have experienced. There is a controversial and difficult question as to whether such witnesses can go further and express opinions as to the likely reactions of customers to a particular sign, which involves consideration both of whether such evidence is expert evidence subject to CPR Part 35 and whether, even if it is not expert evidence, it can properly be admitted or given any weight in cases involving ordinary consumer goods and services: see the judgment of Birss J in Fenty v Arcadia Group Brands Ltd  EWHC 1945 (Ch),  FSR 37, an appeal from which has been argued before the Court of Appeal but not yet determined.
- Although I would prefer not to describe Enterprise’s evidence as “trade evidence”, similar questions potentially arise. As discussed below, the Enterprise branch managers gave evidence as to incidents of confusion which they and their staff had experienced. They also gave evidence as to the reasons which consumers had expressed to them for being confused. In my view such evidence is proper evidence of fact. It is fair to say that a few passages in the witness statements were drafted in a way which shaded into expressions of opinion, but it would have been easy enough for the court to ignore those.
Weight of evidence
- Although Europcar abandoned its objection to the admissibility of Enterprise’s evidence, counsel for Europcar made two points with regard to the weight to be attached to the evidence of the branch managers. First, he pointed out that some of the evidence consisted of hearsay statements attributed to consumers and that, as such, it fell to be assessed in accordance with the criteria specified in section 4 of the Civil Evidence Act 1995. I accept that. Secondly, he pointed out that the branch managers generally did not know what information the consumers in question had (in particular, the extent to which the consumers had been exposed to either Enterprise’s current ‘e’ logo or Europcar’s e-moving logo) or what the consumers’ thought processes had been. Again, I accept this. It follows that the evidence of the branch managers regarding alleged instances of confusion they had experienced must be approached with some caution: see My Kinda Town Ltd v Soll  RPC 407 at 418 (Lawton LJ) and 424-426 and 431 (Oliver LJ) (although it should be appreciated that there were complicating factors present in that case which are not present in this case).
- In accordance with the guidance given by the Court of Appeal in Interflora Inc v Marks and Spencer plc  EWCA Civ 1501,  FSR 21(“Interflora (CA I)“) at , the agreed order for directions in this case required the court’s permission to be sought for any survey other than a pilot survey to be conducted or adduced in evidence.
- On 28 February 2014 Enterprise applied for permission to adduce three surveys in evidence and for permission to carry out a further survey and adduce it in evidence, all for the purposes of establishing Enterprise’s pleaded case that the Trade Marks have an enhanced distinctive character and/or reputation and/or goodwill attached to them. The four surveys were as follows:
i) a pilot survey which had been carried out for the purposes of the OHIM opposition proceedings between the parties (“the Pilot OHIM Survey”);
ii) a full survey which had been carried out for the purposes of the OHIM opposition proceedings between the parties (“the Main OHIM Survey”);
iii) a pilot survey which had been carried out for the purposes of these proceedings (“the Pilot Court Survey”);
iv) a full survey which Enterprise proposed to carry out for the purposes of these proceedings (“the Main Court Survey”).
- The application came on for hearing before Morgan J on 20 June and 1 July 2014. For the purposes of that hearing, the parties served written evidence from Mr Malivoire and Mr Phillips.
- In his judgment dated 22 July 2014 ( EWHC 2498 (Ch)) Morgan J directed himself in accordance with the guidance given by the Court of Appeal in Interflora (CA I), Interflora Inc v Marks and Spencer plc  EWCA Civ 319,  FSR 26 (“Interflora (CA II)“) and Zee Entertainment Enterprises Ltd v Zeebox Ltd  EWCA Civ 82,  FSR 26. As Lewison LJ stated in Interflora (CA II) at :
“Mr Hobbs QC rightly said that [Interflora (CA I)] was intended to send the general message that evidence from consumers in this kind of case (i.e. trade mark infringement involving ordinary consumer goods or services) should only be admitted if it is of real value; and even then only if the value justifies the cost; and that judges should be robust gatekeepers in that respect.”
- As Morgan J noted in his judgment, Europcar contended that none of the actual or proposed surveys was of real evidential value for nine reasons:
i) the samples were too narrow;
ii) the samples were too wide;
iii) there was a demographic bias;
iv) the questions had a biasing or leading effect;
v) the questions invited speculation;
vi) the coding of the answers was inappropriate;
vii) there was no control survey;
viii) the results of the English pilot were less impressive from Enterprise’s point of view than the results of the OHIM survey; and
ix) the dates of the surveys were after the relevant date for assessing distinctiveness, reputation or goodwill.
- Morgan J considered each of these criticisms in turn at -, and concluded that none of them was likely to deprive the surveys of real value. Accordingly, his overall conclusion at  was that it was likely that the surveys would be of real value at trial. He then considered whether the likely value of the surveys justified the cost. In that regard, he noted that the costs which had been incurred by the parties on the application were about the same as the estimated costs of carrying out the Court Surveys and responding to the survey evidence. In particular, Europcar’s costs of resisting the application were greater than its estimated costs of responding to the evidence. Taking this into account, he concluded at  that the cost was justified by the likely value of the evidence. Accordingly, he granted Enterprise permission to adduce the results of the OHIM Surveys and the Pilot Court Survey and to carry out and adduce the results of the Main Court Survey. He also gave both parties permission to adduce expert evidence in relation to the surveys.
- Pursuant to the permission granted by Morgan J, Enterprise duly carried out the Main Court Survey. Furthermore, both parties served experts’ reports from their respective experts. As counsel for Enterprise pointed out, all that has really changed since the hearing before Morgan J is that the results of the Main Court Survey are now available. Although Mr Malivoire was cross-examined on his report, unsurprisingly he maintained his opinions. As noted above, Europcar did not in the end call Mr Phillips. Nevertheless, Europcar maintain most of the criticisms which they advanced before Morgan J.
- It can therefore be seen that the result of the procedure prescribed in Interflora (CA I) and Interflora (CA II) has been to put the parties in the present case to the cost (amounting to some £215,000) of a two-day hearing in advance of trial which has not saved any costs at trial and to require the court to consider Europcar’s criticisms of the surveys twice.