Flicking the Switch on Trademarks Designed to Mislead and Exploit Reputation

To the untrained eye, a light switch may not seem like a distinctive object that you would give a second thought, however, the recent case of Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [201] FCA 60 has shed some light on the Court’s approach to dealing with deceptively similar trade marks, specifically in this instance, trade marks relating to light switches.

For nearly a century, the Applicant, Clipsal Australia Pty Ltd has been a manufacturer of light switches and various electrical goods and has established itself as a market leader in Australia in its industry. Clipsal first registered the word mark “CLIPSAL” for its light switches and various electrical goods in 1945 and has since also registered the shape mark of their “switch dolly”, which for those that are unaware, is the shape that is the appearance of a light switch.

In 2009, Clipso Electrical Pty Ltd, under the effective control of Director, Mr Abdul Kadar, registered the trade mark CLIPSO for electrical goods similar to those sold by Clipsal. Not surprisingly, Clipsal opposed Clipso’s use of the CLIPSO word mark and commenced proceedings against Clipso for trade mark infringement and the cancellation of the CLIPSO registration. Clipsal also filed similar claims relating to Clipso’s use of the trade marked “dolly switch”, however, although the Court found that the switches were similar, the Applicant’s case was not made out and the Court held that the Clipso product was clearly “an ordinary light switch, which is a very familiar object in everyday life”.

The Applicants were unsuccessful in its claim that the CLIPSO mark amounted to a trade mark infringement of CLIPSAL. This was due to the fact that Clipso had been successful in registering the CLIPSO trade mark which pursuant to the Trade Marks Act meant that Clipso had a defence to the infringement claim.

Although Clipso was successful in defending the claim of trademark infringement, the Court ultimately found in favour of Clipsal for the cancellation of the CLIPSO mark on the basis that the CLIPSO mark was substantially identical or deceptively similar to the CLIPSAL mark, that the consumers were likely to be deceived or confused by the CLIPSO products given the noteworthy reputation associated with the CLIPSAL word mark and that the application for registration of the CLIPSO trade mark was made in bad faith.

Clipso was unsuccessful in arguing that because the Clipsal and Clipso goods needed to be installed by licensed electricians, no one would reasonably confuse the CLIPSAL mark with CLIPSO because the market consumers for Clipsal’s goods were experienced and informed licensed electricians. In dismissing Clipso’s argument, the Court found that because the goods were available for purchase by the general public on Clipso’s website and via other means, the non-professional consumers would, in most cases, be unfamiliar with the CLIPSAL brand and deceived by the similarity of the brands.

The Court also considered the significant reputation of CLIPSAL before the CLIPSO mark was registered and found that, together with the similarities of the root phrase “CLIPS”, there was an increased likelihood that the general public would confuse the two marks. The reputation of the CLIPSAL brand was also relevant in determining whether Clipso had applied to register the mark in bad faith. Due to some blatant inconsistencies with the evidence presented by Mr Kadar, the Court did not believe the story told of the creation of the CLIPSO name, stating that it was “literally incredible” that Mr Kadar was not aware of the CLIPSAL brand before the application and held that he had applied to register the mark in bad faith.

In the end, the Court flicked the switch and ordered the cancellation of the Clipso mark. Interestingly and unusually, the Court also found Mr Kadar to be personally liable for the infringements by Clipso because of his inherent involvement and dishonest conduct. This case serves as a notice to applicants when applying for a trade mark registration to investigate whether the trade mark is likely to mislead or deceive consumers. It is important to remember that a successful application for a trade mark registration does not necessarily provide a full defence if the trade mark is similar to another eminent brand and the applicant may still be at risk of their registration being cancelled.

If you have any queries in relation to trade marks, please contact Renze Verheyen of our office.