Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3)  FCA 60 (3 February 2017)
Successful action by Clipsal Australia alleging trademark infringement, misleading or deceptive conduct and passing off by Clipso Electrical through its use of the trade mark CLIPSO.
Clipsal Australia also alleged infringement of its trade mark registration for the shape of a dolly switch, but that failed.
The Clipsal business dates back to 1920 with the development of an adjustable one-size metal conduit fitting and subsequent expansion into switches and other electrical accessories. CLIPSAL was first registered as a trade mark in 1945, but reliance was placed on a later registration for CLIPSAL dating from 13 March 1989 covering all goods in class 9. The evidence disclosed the CLIPSAL brand was a market leader in the Australian electrical switches and sockets market.
Mr Abdul Kader was effectively the controlling mind of Clipso Electrical and, in 2008, obtained trademark registration of CLIPSO for a broad range of goods in class 9, including switches. He subsequently commenced marketing of various electrical accessories under the CLIPSO brand. These products were primarily sold to electrical contractors and electrical wholesalers, but the evidence also pointed to these products being available for purchase more generally via a website.
Reliability of Mr Kader as a witness for Clipso Electrical
Mr Kader did not deny he was aware of the CLIPSAL brand at the time of adopting the CLIPSO trade mark, but contended that he knew very little, if anything about it.
Perram J regarded Mr Kader as an unreliable witness and did not accept his evidence, except where this was uncontroversial or corroborated by documents or independent testimony. His Honour considered Mr Kader sought to conceal his true position and that there was other available evidence which could reasonably form the basis of an inference that he selected the CLIPSO mark to exploit Clipsal Australia’s reputation. This evidence derived from his Honour’s finding that Mr Kader was well aware of the CLIPSAL brand and that his CLIPSO mark has a resemblance to CLIPSAL. His Honour considered he was entitled to treat Mr Kader’s dishonest evidence as to how he selected the CLIPSO name as corroborative of this inference and found as a fact that Mr Kader selected CLIPSO because it resembled CLIPSAL.
Nature of relevant market
There was considerable discussion concerning the nature of the electrical accessories market. His Honour did not agree that the relevant market consists solely of electrical contractors and wholesalers. Rather, it also includes a significant class of end-consumers who are involved in the selection of the relevant fittings to be installed by a qualified electrician. There is also a small group of end-consumers who purchase these goods directly. Hence, the relevant market is a segmented one consisting of electrical contractors, electrical wholesalers and non-purchasing end-consumers. His Honour also concluded that, in view of this rather unusual market, parts of it are specialised and parts of it are not. For the specialist part of this market, there needs to be evidence from industry participants as to the likelihood of confusion.
No infringement of shape trademark registration
The allegation of infringement of Clipsal Australia’s shape trade mark registration was quickly dismissed. Perram J did not consider Clipso Electrical was using the shape of its switches in a trade mark sense. These products were packaged in plastic sleeves emblazoned with the CLIPSO mark and then placed in a cardboard box also emblazoned with the CLIPSO mark. While the word CLIPSO was clearly being used as a badge of origin, this detracted from the shape of the switch itself within the packaging also operating as a trade mark. His Honour also went on to find that the shape of Clipso Electrical’s dolly switch did not suggest a connection with Clipso Australia and that Clipsal Australia had not established that it had acquired a reputation with the public or in the trade in the switch itself independently of the CLIPSAL word mark.
Cancellation of CLIPSO trademark registration
Since the CLIPSO trade mark was registered, Clipso Electrical had a defence to infringement unless Clipsal Australia could first cancel that registration. Cancellation can be based on any ground of opposition available to Clipsal Australia at the time the CLIPSO mark was registered in 2008. Perram J found in favour of Clipsal Australia on three grounds, namely its earlier registrations for the CLIPSAL mark (s44), the reputation of the CLIPSAL mark as at 2008 (s60) and the application for CLIPSO being made in bad faith (s62A).
Under the s44 cancellation ground, Perram J considered CLIPSO was deceptively similar to CLIPSAL without resorting to the fact that Mr Kader set out to trade off the reputation of the CLIPSAL mark. Clipso Electrical argued that, given the position of CLIPSAL in the market, no one in the electrical trade could mistake CLIPSO for CLIPSAL. His Honour did not need to resolve this contention because of his earlier finding that the relevant market is broader and includes members of the general public. Nonetheless, by way of obiter dicta, his Honour did express the opinion that he would not have thought the CLIPSAL trade mark is so famous that no deceptive similarity can arise.
Under the s60 cancellation ground, Clipso Electrical admitted the CLIPSAL mark had acquired a significant reputation as at the 2008 relevant date. Although it is not necessary for the respective trade marks to be deceptively similar, Perram’s J earlier findings on this aspect meant that his Honour had little hesitation in finding that use of CLIPSO would be likely to deceive or cause confusion.
Under the s62A cancellation ground, Perram J had already found that the subjective element of bad faith was established by Mr Kader knowing of the CLIPSAL mark and intending to trade off its reputation. His Honour also had little difficulty in finding the objective element was also established. Mr Kader’s conduct clearly fell short of acceptable commercial standards.
A further ground of cancellation under s88(2)(c) exists where, because of circumstances applying at the time of Clipsal Australia filing the rectification application on 13 December 2013, the use of the CLIPSO trade mark would be likely to deceive or cause confusion. This ground clearly requires an assessment of Clipso Electrical’s use of the CLIPSO mark. It is unclear whether it also involves an assessment of the way in which the CLIPSAL mark has been used. Neither party made submissions on this point, but Perram J was prepared to assume that the way the CLIPSAL mark was used was relevant. While both marks were used in a stylised manner, this did not diminish the likelihood of confusion. The fact that the CLIPSO products were less expensive makes no difference. Hence, Perram J also found this ground of cancellation had been established.
The power to order cancellation is discretionary and Clipso Electrical bears the onus of proving that its CLIPSO mark should not be removed from the Register. Perram J found there was no reason to not order removal.
Infringement of CLIPSAL trademark
Clipso Electrical had a defence to infringement until the order removing the CLIPSO mark from the Register is made. There may be a debate as to whether the power to remove a trade mark can be utilised with retrospective effect, but Clipsal Australia did not seek retrospective removal. Hence, the infringement issue was confined to the availability of injunctive relief from the legal moment the CLIPSO trade mark is removed from the Register. Given, the earlier findings, Perram J found infringement from this point in time. Clipso Electrical sought to rely on the ‘own name’ defence to infringement, but this defence was not available because the good faith requirement could not be met.
Misleading or deceptive conduct and passing off
Perram J found that Clipso Electrical had not made any misleading or deceptive representation regarding use of the dolly switch shape. While Clipsal Australia has a considerable goodwill in the name CLIPSAL, that does not attach to the dolly switch shape.
With regard to the use of the word CLIPSO by itself and in combination with the dolly switch, Perram J considered Clipso Electrical’s conduct in relation to ordinary consumers involved misleading or deceptive conduct and passing off, but this was not the case for electrical contractors.
Liability of Mr Kader
Perram J also found Mr Kader to be personally liable for trade mark infringement and passing off as a joint tortfeasor, as well as being personally liable for misleading or deceptive conduct as a person involved in the contravention of the Australian Consumer Law. Mr Kader had the requisite close personal involvement in the acts of Clipso Electrical.