The indifferent but confused consumer: Perspectives on consumer psychology and its implications

In the (brand) name of "Caesar"!

Ceramiche Caesar ("CC"), an Italian manufacturer of porcelain stoneware tiles, squared off against Caesarstone, an Israeli manufacturer of stone surface products for various applications (including tiles). CC opposed Caesarstone's application to register the trade mark:

based on CC's own prior registered trade mark:

in respect of similar goods in Class 19 including non-metallic building materials like tiles and cladding.

The Trade Marks Registry laid the foundation in CC's favour by rejecting Caesarstone's application. Tiled into a corner, Caesarstone appealed to the High Court which allowed the appeal. Leaving no stone unturned, CC appealed to the Court of Appeal.

Consumer indifference and likelihood of confusion

CC argued that consumers of Class 19 goods focused more on the price and attributes of such goods (e.g., water/scratch resistance, colour, finishing and style) rather than their trade mark. In other words, the consumer's indifference towards the mark used in relation to the goods led to a higher likelihood of confusion.

The High Court Judge felt that this argument "missed the point", for if the consumer paid no attention to what trade mark was attached to the goods, there could be no confusion as to their trade origin. Intuitively attractive as this might sound, the Court of Appeal, on a deeper analysis, disagreed.

Citing research on consumer psychology, the Court of Appeal considered it an over-simplification to say that greater care always reduced confusion. A consumer could be fastidious and exercise great care in making a purchase; yet the focus of the consumer's concern could well be on factors other than the differences between the marks. In such a case, the sophisticated consumer may not ultimately be less likely to suffer source confusion. In the ultimate analysis, "likelihood of confusion" turned on the ability or inability to differentiate between trade origins. It followed that the consumer who was indifferent towards the mark used in relation to the relevant goods would pay less attention to the differences between the competing marks, which thus pointed towards, rather than away from, a likelihood of confusion.

Commentary

The psychology of "confusion"

This decision illustrates the importance of understanding the factors that influence the consumer's purchasing decision. It is interesting to note the Court's exploration of consumer psychology and its interaction with the legal framework for analysing "likelihood of confusion".

At the 2015 Marques trade mark conference in Vienna, neuropsychologist Christian Scheier delivered a keynote speech on how the human brain perceives "diagnostic cues". For example, according to Dr Scheier, shapes and colours are far more effective as diagnostic cues than letters and words¹. The question is whether this finding could possibly challenge the hitherto established assumption that consumers tend to distinguish marks based on their word elements rather than their stylistic elements.

Insofar as Dr Scheier's "diagnostic cues" may trigger only initial perceptions, they may not necessarily translate to "confusion" in a legal sense in Singapore given that our courts have expressly rejected the doctrine of "initial interest confusion" (which provides that there can be trade mark infringement if the consumer was confused at the time of interest in a product or service, even if that initial confusion is corrected by the time of purchase).

Therefore, it must be remembered that consumer psychology, while important, is not the be all and end all of the enquiry and it is equally important to fit what we understand of the consumer's perceptions and decision making process into the legal framework.

How indifferent is "indifference"?

One interpretation of "indifference" is that the consumer merely regards the trade mark of the goods as a secondary matter because his focus is on other primary concerns such as the attributes of the goods in question. Yet even in this scenario, one could argue that the consumer would surely give at least some considered attention to the trade mark used in relation to those goods, since it is precisely the fundamental function of a trade mark to be a "guarantee of quality" – an assurance that goods held out under a particular mark conform to certain consistent attributes. It seems artificial and unhelpful to split hairs over whether a consumer's preoccupation is with the trade mark on the one hand, or with the attributes of the goods on the other. There is necessarily an intrinsic link between the two since the former serves as a guarantee of the latter.

Therefore, in the writers' opinion, the fundamental question harks back to how much care a consumer pays when purchasing goods or services in a particular category. Notwithstanding a consumer's indifference towards the marks, his exercise of a high general degree of diligence and care in his purchasing process could still be sufficient, in the overall analysis, to point away, rather than towards, a likelihood of confusion.

Implications for luxury brand/well known mark owners

Another implication of the Court of Appeal's decision is its possible impact on owners of luxury brands, and on a broader level, perhaps well known marks in general.

In making its point on the link between a consumer's indifference and the likelihood of confusion, the Court compared its present situation with the converse situation where consumers may be "especially sensitive" towards the mark used in relation to the relevant goods or services – and in that context, the Court expressly cited the example of "luxury goods", concluding that in such cases the consumer's sensitivity to the marks would likely point away from a likelihood of confusion as consumers would pay more attention to the differences between the marks (at this point, all luxury brand owners cringe at being named in a judgment which didn't really involve them in the first place).

The Court of Appeal's decision comes on the back of a spate of recent decisions in which the Trade Mark Registry and High Court concluded that notwithstanding the similarity between the competing marks and the respective goods claimed, the repute of the prior mark and the high level of recognition amongst consumers effectively dispelled any real likelihood of confusion.

The trajectory of these cases spells bad news for owners of well known trade marks or luxury brands, who may now find their fame working against them.

What then, can such trade mark owners do? One possibility is to explore possible causes of action that do not require a likelihood of confusion. For example:

• Remedies based on the concept of bad faith would apply regardless of the issue of confusion.
• The doctrines of unfair dilution and unfair advantage similarly apply in the absence of consumer confusion albeit only to marks which are "well-known to the public at large" in Singapore, which is "the preserve of a rare and privileged few", to borrow the words of the Court of Appeal in an earlier case³.

It will be interesting to see how this decision will be applied in future cases seeing as the psychology behind the consumer's purchase decision may not always be clear-cut. If this is to be an important factor in deciding the question of confusion, it may well mean that we shall soon see evidence on market surveys on consumer psychology behind the purchase decision being tendered in trade mark infringement cases. Watch this space for updates!

1. "Neuropsychology v trademarks: challenging established legal principles", Trevor Little, World Trademark Review, 16 September 2015 (available here).
2. In the Matter of a Trade Mark Application by Choice Fortune Holdings Limited and Opposition thereto by Seiko Holdings Kabushiki Kaisha (Trading as Seiko Holdings Corporation) [2014] SGIPOS 8; In the Matter of a Trade Mark Application by Southern Rubber Works Sdn Bhd and Opposition thereto by Converse Inc [2015] SGIPOS 11; Han’s (F&B) Pte Ltd v Gusttimo World Pte Ltd [2015] 2 SLR 825.
3. Some examples of marks that were found to be satisfy this requirement in recent years are "CLINIQUE", "NUTELLA" and "SEIKO", while "ANGRY BIRDS" did not pass muster.