Lessons from Clipsal’s trade mark battle for the cancellation of CLIPSO

In Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60, the Applicant, Clipsal, successfully brought action against Clipso Electrical Pty Ltd for the cancellation of its CLIPSO trade mark registration. Whilst it also succeeded in one of its two trade mark infringement claims and related causes of action, it failed to show infringement of its shape trade mark registration.

The CLIPSAL trade mark registration for electrical goods in Class 9 had been registered since 1989, with use dating back to the 1920s. In 2008, the Respondent applied to register the trade mark CLIPSO for electrical goods in Class 9. The Respondent’s application was accepted without the earlier CLIPSAL registration being raised as a prior conflicting mark and in the absence of opposition, proceeded to registration.

Clipsal brought action against the Respondent for cancellation of the CLIPSO registration as well as for trade mark infringement, breaches of the Australian Consumer Law and passing off. The court found each of the three grounds upon which the cancellation action had been brought, were made out. Not only was CLIPSO considered deceptively similar to CLIPSAL, the CLIPSO application was held to have been made in bad faith. In this regard, the court gave significant consideration to the facts leading to the Respondent’s adoption of the trade mark, many of which were inconsistent and led the court to determine that the Respondent simply lied.

Clipsal’s trade mark infringement claims were based on the CLIPSAL registrations and also a ‘Dolly Switch’ shape trade mark. Infringement was established with respect to the CLIPSAL trade mark with the defence under section 122(1)(a) of the Trade Marks Act 1995 unavailable to the Respondent because they had not acted in good faith. However, Clipsal’s infringement case based on the shape registration was unsuccessful because the court found that the Respondent’s use of the shape was not trade mark use. Clipsal’s proposition that its Dolly Switch shape functioned as a badge of origin with a significant reputation was rejected.

In addressing Clipsal’s remaining claims, the court gave particular consideration to the evidence regarding the market and the relevant customers for the parties’ goods and ultimately found that ordinary and reasonable consumers (not electrical contractors) would have been misled by the Respondent’s conduct.

Key practical points for trade mark owners

  • Consider having watches in place, particularly for significant house marks. If Clipsal had been alerted to the acceptance of the CLIPSO mark as a result of a watch service, it could have opposed the application prior to registration.
  • Shape trade mark registrations can be difficult to enforce. Using shape trade marks with other distinctive trade marks can dilute the perception of use of the shape ‘as a trade mark’ and diminish any ‘trade mark’ reputation in the shape itself.
  • The existence of a registered trade mark is not a defence to breaches of the Australian Consumer Law or an allegation of passing off. Trade mark owners should undertake common law searching, and their own market research, prior to adopting and using new trade marks in Australia.