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Case Note: Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3)

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60  is a recent Federal Court of Australia that sends a clear message to businesses: trade mark protection is essential to protect your business’ brand and products from being ripped off.

In Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) two types of trade marks were accused of being infringed. These were word trade marks (usually a company’s name or logo) and also shape trade marks (usually in relation to the shape of a product).

This article deals with the infringement of the word trade mark, as well as accusations of Misleading or Deceptive Conduct under the Australian Consumer Law and the tort of Passing Off under the common law.

Facts of the Case

This case concerned allegations of infringement on the trade mark CLIPSAL, a trade mark applied by the Applicants, Clipsal Australia Pty Ltd (“Clipsal”), to light switches and other electrical accessories. While this trade mark had been registered and used as far back as 1945, Clipsal brought proceedings in relation to the March 1989 registered trade mark. Clipsal is one of Australia’s leading suppliers of electrical accessories and light switches, accepted as controlling 77% of the market in 2013 to 2014.

The respondents in this matter, Clipso Electrical Pty Ltd (first respondent) and its director Mr Abdul Kader (second respondent), had registered and used the name CLIPSO, applying it to light switches and other electrical accessories as well. Mr Kader claimed that he had created the name on his own accord and had little knowledge of the brand Clipssal. As such, Mr Kader denied that he had deliberately registered a trade mark in bad faith to mislead consumers into thinking his products were related to Clipsal’s.

Issues

When a person infringes on a trade mark, there are generally three actions the original trade mark owner can take:

  • An action for trade mark infringement under the Trade Marks Act;
  • An action for Misleading or Deceptive Conduct under section 18 of the Australian Consumer Law (“ACL”); and/ or
  • Passing off under the common law.

The issues in relation to the CLIPSO trade mark were whether Mr Kader were based on the above actions and can be articulated as:

  • Did the respondents register the CLIPSO trade mark in bad faith and was the CLIPSO trade mark substantially similar to the CLIPSAL trade mark? If so, should the CLIPSO trade mark registration be cancelled?
  • Did the respondents infringe on the CLIPSAL trade mark under section 120(1) and (2) of the Act?
  • Was the CLIPSO trade mark misleading or deceptive within the meaning of the ACL?
  • Had the respondents engaged in passing off within the meaning of the common law?

The answering of these issues came down to whether his Honour accepted Mr Kader’s evidence or not.

Held

Under the Trade Mark Act

His honour Perrum J held that registration of the CLIPSO word trade mark be cancelled on the basis that the mark was deceptively similar to the CLIPSAL trade mark under section 44(1) of the Trade Marks Act; that the CLIPSO mark is likely to confuse or mislead as the CLIPSAL mark enjoyed a reputation in respect of electrical goods under section 60 and that the registration of the trade mark under section 62A was made in bad faith.

Under the ACL – section 18 and 29

His Honour held that the respondents had breached sections 18 and 29 of the ACL in respect of Misleading or Deceptive Conduct and also in respect of False or Misleading Representations about Goods or Services.

Tort of Passing Off

His Honour held that the first respondent was liable to the applicant for passing off.

Reasons

His Honour acknowledged that to reject Mr Kader’s submissions would be to severely attack Mr Kader’s character. In noting this, however, his Honour rejected close to all of Mr Kader’s story as to how he came up with the CLIPSO name without hearing about CLIPSAL. Instead it was inferred that Mr Kader had deliberately chosen the name CLIPSO because he wished to exploit the CLIPSAL reputation.

Amongst the reasons for this were:

  • Mr Kader had been importing electrical accessories into the market for three years when he registered the CLIPSO trade mark, making it impossible to not have heard about the brand CLIPSAL;
  • CLIPSAL owned close to 77% of the market;
  • Mr Kader claimed that the CLIPSAL brand was so famous that wholesalers could not be misled to confuse CLIPSO with CLIPSAL. In another argument, however, Mr Kader claimed to have never heard of CLIPSAL himself. His Honour found this an “unbelievable” story;
  • In 2008 Mr Kader would have driven down Canterbury Road between his home and his work. On Canterbury Road was the CLIPSAL warehouse, which bore a large sign out the front promoting the brand.

These points of evidence, amongst many others, led his Honour to reject Mr Kader’s version of events.

Lessons

Trade mark protection is essential to preserve your business’ brand and to protect it against others who may wish to exploit your business’ reputation. With trade mark protection lasting for 20 years, the protection is in an investment which may save your business in significant losses in the future.

To read more about Intellectual Property Law, click here.