Opinion ID: 3013826
Heading Depth: 2
Heading Rank: 1

Heading: Exclusion of CNBEC’s Proffered

Text: company [here, CFG] uses the trademark Expert Testimony of a smaller, less powerful senior owner CFG filed a pre-trial motion to [here, CNBEC] and thereby causes likely preclude proposed expert testimony of confusion as to the source of the senior Robert Reitter on behalf of CNBEC on the user’s goods or services.” Fisons ground that his survey relied on an Horticulture, Inc. v. Vigoro Industries, “improper universe” because the survey Inc., 30 F.3d 466, 474 (3d Cir. 1994). The 9 District Court observed that “in reverse allow Reitter to conduct the survey there. confusion cases . . . the appropriate Reitter also acknowledged that he could universe is the ‘senior user’s [i.e. have conducted the survey somewhere else CNBEC’s] customer base.” Citizens Fin. in Butler County, but it would have been Group, Inc. v. Citizens Nat’l Bank of more difficult. How ever, “[t]he Evans City, No. 01-1524, slip op. at 7 geographical area surveyed cannot be (W.D. Pa. Apr. 23, 2003) (citing McCarthy based on mere sampling convenience § 32:159). rather than upon scientific or sampling grounds.” McCarthy § 32:161. The Court then considered evidence showing that CNBEC operated The Court further disagreed with sixteen branches in Butler County, no CNBEC’s argument that its “universe” branches in Beaver County, one branch in should include all of Allegheny County Armstrong County, and three branches in because it had a marketing presence northern Allegheny County near the Butler beyond Butler County in the Greater County line. The District Court stated Pittsburgh area. Specifically, the Court “[f]or the past 108 years, CNBEC and its noted that “[t]he scope, media type, predecessors in interest have offered retail volume, and frequency of [CNBEC’s] banking services in this area and not advertising and promotional efforts beyond. Thus, in this case there can be no regularly focus[ed] on Butler county, not doubt that CNBEC’s customer ‘base’ is Allegheny county,” and that “the evidence within Butler county and extreme northern indicates that CNBEC’s advertising and Allegheny county rather than Allegheny marketing efforts outside of Butler County county as a whole.” Id. The Court noted are sporadic.” Citizens Fin. Group, No. that “[t]he closest CNBEC branches are 7 01-1524, slip op. at 9.The Court and 17 miles, respectively, away from the determined that any customers that malls,” and the remaining branches were CNBEC may obtain outside of their main “further away.” Id. at 8. customer base of Butler County and Northern Allegheny county would be “spill The Court disagreed with over” which would not be a part of CNBEC’s argument that the universe at CNBEC’s customer base. Id. The Court issue consisted of potential customers of also rejected some of the methodology both parties because the universe in a used by Reitter in his survey questions as reverse confusion case should be limited to being vague, imprecise, overly inclusive, the senior user’s customer base. See or overly exclusive. Id. at 9-10. McCarthy § 32:159; 3A Callmann § 21:67. The Court noted that Reitter testified, and Exercising its role as the CNBEC acknowledged at the hearing, that “gatekeeper” regarding the proffered he and CNBEC would have preferred to expert witness testimony, the Court conduct the survey at Clearview M all in concluded that Reitter’s report was too Butler County but that mall refused to fundamentally flawed to be admissible. Id. 10 at 10. The Court therefore excluded the of which relied on a single court decision, proffered testimony under Daubert and Sterling Drug, Inc. v. Bayer AG, 14 F.3d F e d e r a l R ule of Evidence 702. 733 (2d Cir. 1994), but that Sterling did Alternatively, the Court excluded the not support the Court’s exclusion. testimony under Federal Rule of Evidence CNBEC also takes issue with the 403, concluding that the danger of unfair Court’s factual findings, contending that prejudice far outweighed the minimum shoppers at both malls have access to its probative value of Reitter’s testimony. Id. banking services, and that Reitter’s at 11. See, e.g., Trouble v. The Wet Seal, methodology and use of a “screener” Inc., 179 F. Supp. 2d 291, 306-308 question was proper. Finally, CNBEC (S.D.N.Y. 2001). The Court explained argues that the Court’s “critique” of that “[i]f the universe is skewed, then the Reitter’s methodology should affect only conclusion will similarly be skewed. If an its weight but not its admissibility. See expert, a person with special knowledge Southland Sod Farms v. Stover Seed Co., and expertise, testifies as to the skewed 108 F.3d 1134, 1143 (9th Cir. 1997), results, a jury is likely to give special United States v. 88 Cases, etc., 187 F.2d weight to the skewed conclusion.” Id. 967, 974 (3d Cir. 1951); 5 McCarthy § CNBEC argues that Reitter’s 32:162 (selection of an inappropriate survey constitutes highly probative universe generally affects the weight of evidence of likelihood of confusion and survey and not its admissibility). that the Court erred in excluding the In Sterling, 14 F.3d 733, a United evidence from consideration by the jury. States drug company sued Bayer AG, a According to CNBEC, 152 of the 213 German drug company, for infringement respondents, or 71%, exhibited “reverse of the trademark “Bayer” in Sterling’s confusion” either by identifying a CFG market. Both companies held rights in the location in response to the CNBEC trademark for historical reasons. Id. at advertisement or stating that the bank in 737. It was undisputed that Sterling was a the CNBEC advertisement was affiliated senior user of the trademark in its market. with Mellon Bank. Id. at 738. The Sterling court rejected CNBEC argues also that the Court Bayer AG, the junior user’s, argument that misinterpreted case law regarding the a consumer survey regarding likelihood of composition of an appropriate survey confusion should include Bayer AG’s universe in a reverse confusion case. customer base in the United States. Id. at Specifically, it takes issue with the Court’s 741. The Court held that under the theory conclusion that in a reverse confusion of reverse confusion, as opposed to the case, the universe is limited to the senior traditional theory of confusion, the user’s “customer base.” CNBEC argues universe was limited to the senior user’s that the Court’s conclusion was based on customer base. Id. two treatises, McCarthy and Callman, both 11 Sterling’s holding was cited with for a jury. The courts have held generally approval by the two leading treatises and that mere technical unreliability goes to the was the position adopted by the District weight accorded a survey, not its Court here, that is, the proper universe admissibility. See, e.g., Southland Sod under CNBEC’s theory of reverse Farms, 108 F.3d at 1143. The Court in confusion was limited to CNBEC’s this case concluded that Reitter’s survey customer base, not to CFG’s customer did not suffer from mere technical flaws, base. CNBEC interprets Sterling to mean but from fatal flaws. Thus, the Court that the universe should include consumers appropriately fulfilled its duty as a whose perceptions are at issue and have gatekeeper in excluding this evidence. access to the marks of both parties. Finally, CNBEC has failed to show However, in our view, Sterling does not that the Court committed plain error in its stand for such a proposition. The Sterling findings of facts as to what constituted its court stated that “[w]here, as here, the customer base. The Court cited CNBEC’s relevant issue is whether consumers own documentary evidence to make the mistakenly believe that the senior user’s determination that it had business products actually originate with the junior primarily in Butler County and in the user, it is appropriate to survey the senior northern tip of Allegheny County. user’s customers.” Id. at 741. Although CNBEC has also failed to show that the Sterling dealt with a difference between Court committed plain error regarding the junior and senior users’ customers whether its shoppers at the two malls were based on products, as opposed to different within the universe of CNBEC’s customer geographic regions, the rule is the same. base and whether Reitter’s “screener” The court should limit survey evidence in question was proper. Accordingly, we reverse confusion cases to the customers hold that CNBEC has failed to show an of the senior user. We do not believe that abuse of discretion by the District Court the District Court abused its discretion in and affirm its ruling to exclude the determining that the consumers surveyed proffered expert testimony. in this case were located outside of CNBEC’s customer base. B. Exclusion of Certain Written Evidence Purporting to Show Instances of CNBEC’s argument that any “Actual Confusion” problems of Reitter’s survey should have affected only its evidentiary weight but not its admissibility is also unpersuasive. The CNBEC also attacks the District District Court excluded the survey because Court’s establishment of guidelines to Reitter’s methodology was fundamentally insure that CNBEC’s “confusion log” flawed and because the danger of undue entries prepared by CNBEC’s employees prejudice far outweighed the limited satisfied the Federal Rules of Evidence probative value of the survey, especially before being admitted. CFG filed a 12 pretrial motion to exclude CNBEC’s In general, “actual confusion” “confusion log” entries as inadmissible evidence collected by employees of a party hearsay. CNBEC conceded that log in a trademark action must be viewed with entries were hearsay, but argued that they skepticism because it tends to be biased or fell within the present sense impression self-serving. See Checkpoint Sys., 269 exception under Fed. R. Evid. 803(1). The F.3d at 298 (“the District Court properly Court granted in part and denied in part took into account the potential bias of the CFG’s motion and established guidelines Checkpoint System’s employees who for the admissibility of CNBEC’s log testified [regarding actual confusion].”); A entries under the “present sense” & H Sportswear, Inc. v. Victoria’s Secret exception. Stores, Inc., 237 F.3d 198, 227 (3d Cir. 2000) (“The District Court, while not CNBEC does not dispute the explicitly discrediting this evidence, Court’s disposition of its argument viewed it with great skepticism, given the regarding the exceptions to the hearsay interested sources and the inability to rule. Rather, CNBEC specifically cross-examine the supposedly confused challenges the Court’s two guideline individuals.”). It was, therefore, proper for requirements: requiring log entries to (1) the District Court here to establish “specifically mention Mellon or CFG” and guidelines to ensure that the evidence met (2) “describe the specific evidence of the the standards of the Federal Rules of direct link to Mellon or CFG in either the Evidence. form of (a) ‘documentary evidence,’ such as specifically referring to a deposit slip, Witnesses for both CFG and or (b) ‘a clear and specific statement by the CNBEC acknowledged that customer customer.’” Citizens Fin. Group, No. 01- confusion between banks frequently 1524, slip. op. at 14. The guidelines also occurred, regardless of bank names. required exclusion of log entries that “Ownership of a trademark does not reflected “the thought process, conclusion, guarantee total absence of confusion in the analysis or interpretation” of the CNBEC marketplace. Selection of a mark with a employees who recorded the entries. Id. at common surname naturally entails a risk of 15. CNBEC asserts that the Court “[cited] uncertainty and the law will not assure no legal support and [articulated] no absolute protection.” Scott Paper Co. v. rationale for its heightened evidentiary Scott’s Liquid Gold, Inc., 589 F.2d 1225, requirements” and that the Court’s 1231 (3d Cir. 1978). The Court was requirements were inconsistent with the familiar with the evidence gathered during standards of admissibility under Fed. R. discovery and was in the best position to Evid. 803(1). We review the District determine the safeguards for relevance and Court’s guidelines for abuse of discretion. reliability in this case. The Court did not United States v. Saada, 212 F.3d 210, 220 abuse its discretion in requiring CNBEC’s (3d Cir. 2000). written evidence to specifically refer to 13 CFG or Mellon to ensure that the jury received only relevant evidence. Saada, CFG introduced evidence showing 212 F.3d at 220. that “Citizens” was commonly used by Likewise, the Court did not abuse banks both in Pennsylvania and throughout its discretion in requiring CNBEC’s the United States: 8 banks, in addition to evidence to exclude entries that reflected CFG, use “Citizens” in Pennsylvania; the thought process, conclusion, or banks with “Citizens” in their name interpretation of the CNBEC employees coexist in six zip codes in Pennsylvania; who recorded the entries. It was proper for more than 350 FDIC-insured banks use the Court to make such requirement under “Citizens” in their trade names throughout Fed. R. Evid. 803(1). See United States v. the United States and they operate more Guevara, 277 F.3d 111, 127 (2d Cir. 2001) than 2,400 separate branches; “Citizens” is (upholding determination that hearsay the ninth most commonly used bank name; statements did not qualify as “present and approximately 4% of FDIC-insured sense impression” under Rule 803(1) banks have Citizens in their names. because they “were conclusions based CNBEC appeals from the District Court’s upon information [the recorder] had denial of its motion in limine to exclude processed rather than contemporaneous or evidence of widespread third-party use of spontaneous statements that were Citizens-formative trademarks outside its inherently trustworthy”) reh’g denied, 298 market area. F.3d 182 (2 nd Cir. 2002); Vitek Sys., Inc. v. In this case, the jury found that Abbott Labs., 675 F.2d 190, 194 (8th Cir. CNBEC had used the mark “Citizens,” that 1 9 8 2 ) ( c o n c lu d i n g t h a t h e a r s a y the mark was very distinctive (either memorandum did not qualify as present “suggestive,” “arbitrary,” or “fanciful), sense impression because company sought and that there was a likelihood of to elicit its employee’s evaluation of the confusion between CFG’s marks and customer’s thought process). Nonetheless, CNBEC’s “Citizens” mark. Thus, the the District Court’s guidelines permitted jury found infringement by CFG, and written hearsay evidence that reflected “an CNBEC prevailed on this claim. Yet, explanation or description of the event CNBEC argues that the Court erred in rather than a narration.” The guidelines allowing evidence of widespread third conformed to the requirements of Rule party use because it “is not relevant to 803(1). We, therefore, conclude that the determining the strength of CNBEC’s Court did not abuse its discretion and did mark within its marketplace.” We need not err in setting up the guideline not tarry on this issue. First, as a general requirements. rule, widespread use of even a distinctive C. The Discussion of Evidence of mark may weaken the mark. See, e.g., Widespread Third-Party Use of the Word Petro Stopping Ctrs, L.P. v. James River “Citizens” by Other Banking Institutions Petroleum, Inc., 130 F.3d 88, 93-94 (4th 14 Cir. 1997) (explaining how evidence of the case that makes the broad third party use of a suggestive mark jury’s answers to special may be relevant to show the weakness of interrogatories consistent, the mark). Thus, we believe this evidence they must be resolved that was likely relevant. Further, any way. For a search for one conceivable error was harmless because possible view of the case the jury found in favor of CNBEC on this which will make the jury’s issue of infringement and the strength of findings inconsistent results its mark. Accordingly, we will not reverse in a collision with the the admission of this testimony. Seventh Amendment.