Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Monday, April 10, 2017

Clipso/Clipsal confusion causes cancellation

By David Hunt, Lawyer

It's lights out for Clipso Electrical after the Federal Court determined that registration of its CLIPSO trade mark should be cancelled.

The Court reached its decision on the basis that the CLIPSO mark was deceptively similar to Clipsal Australia's CLIPSAL mark and had been registered in bad faith. The Court also found that, through use of the CLIPSO mark, Clipso had infringed Clipsal's mark, engaged in misleading and deceptive conduct and was liable in passing off.

However, in a small victory for Clipso, it was found that it had not infringed Clipsal's 'famous' Dolly Switch shape mark; a decision that further illuminates the difficulties of successfully prosecuting infringements of shape marks.

Facts


Clipsal's Dolly Switch shape mark
Both Clipsal, the applicant, and Clipso, the respondent, were in the business of selling a vast range of electrical accessories and components. However, while Clipsal is able to trace its origins back to the revolutionary development of an adjustable, clip-on metal conduit fitting that 'clips all sizes' of conduit in the 1920s, Clipso's origins are somewhat murkier (i.e. the electrical component importation business was set up by an ex-car salesman who claimed he innocently chose the name 'Clipso' after searching the Trade Marks Register).

Unsurprisingly, Clipsal was not impressed when Clipso's cheaper light switches and other accessories started appearing on shelves in Australia, prompting Clipsal to commence proceedings for trade mark infringement and for the cancellation of Clipso's mark, amongst other things.

Infringement?


The first question considered by the Court was whether Clipso had infringed Clipsal's shape mark by selling switches admitted to be 'essentially indistinguishable' from those produced by Clipsal. This question turned on whether Clipso had been using the shape of its switches as a trade mark as, if it hadn't, there could be no infringement.

The Court noted that where the shape of a product is dictated by its function, use of that shape is unlikely to be considered use as a trade mark. Conversely, use of a shape simply to make a product more aesthetically pleasing, is much more likely to involve use of that shape as a trade mark.

While the Court accepted that the shape of light switches is not purely functional, in light of evidence that Clipso's switches were sold wrapped in plastic, inside a cardboard box and branded with the CLIPSO mark, the Court took the view that it was the word CLIPSO that was being used as the trade mark here rather than the shape of the switch.

Such a conclusion highlights the difficulty in establishing that a shape is being used as a trade mark; a difficulty that has been similarly demonstrated in a number of earlier decisions, including Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 and Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd (2008) 75 IPR 102.

On the other hand, the Court decided that the CLIPSO word mark was deceptively similar to the CLIPSAL mark due to the obvious aural and visual similarities between the marks. As a result, the Court found that Clipso had infringed Clipsal's mark. However, Clipso sought to rely on the fact that it was merely exercising its right to use its own registered mark, which is a defence to infringement. Consequently, in order to succeed in its action for infringement, Clipsal had to establish that Clipso's mark should be cancelled.

Cancellation


Clipsal advanced three grounds on which cancellation should occur, all of which were established.

The first ground for cancellation advanced by Clipsal was that the CLIPSO mark was substantially identical with, or deceptively similar to, the CLIPSAL mark. While the Court decided that the two marks were not substantially identical, as described above the Court did find that they were deceptively similar. This ground was therefore established.

The second ground for cancellation advanced by Clipsal was that the CLIPSAL mark had acquired a reputation in Australia and, as a result, the CLIPSO mark would be likely to deceive or cause confusion. The Court, and both parties, accepted that the CLIPSAL mark had a significant reputation in Australia. Consequently, given the Court's conclusion that the two marks were deceptively similar, the Court was quick to conclude that this ground was also established.

Finally, Clipsal argued that registration of the CLIPSO mark should be cancelled on the basis that it was registered in bad faith. Abdul Kader, a director of Clipso, set out in great detail the circumstances in which he had innocently invented the name 'Clipso'. However, due to a number of glaring inconsistencies in Mr Kader's evidence, the Court took the view that his version of events was, amongst other things, unbelievable, unreliable, inconceivable and literally incredible. Instead, the Court preferred the view that Mr Kader chose the name 'Clipso' intending to trade off of Clipsal's reputation in order to sell his goods.

Having decided that each of the above grounds for cancellation had been established, the Court was prepared to exercise its discretion to cancel Clipso's mark.

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