The problem with shape trade marks in Australia: Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60 (3 February 2017)

On 3 February 2017, the lengthy court battle between Clipsal Australia Pty Ld and Clipso Electrical Pty Ltd, along with its director Abdul Kader (Mr Kader), resulted in a favourable outcome for the applicant.

The CLIPSAL Marks

Originally used for an adjustable one-size metal conduit fitting, the CLIPSAL word mark has an established reputation in Australia after being used extensively for a wide range of electrical accessories. The mark’s registration dates as far back as 27 February 1945, but the proceedings here were primarily concerned TM no. 506651, which was registered on 13 March 1989 in class 9 goods in relation to telephone apparatus and equipment and other “accessories therefore included in this class.”

The mark had two features that were relevant to the proceedings:

  1. The mark was affixed on the applicants’ products in various ways and
  2. the target market was mainly wholesalers, as many of the products is not something that the average consumer will purchase due to their installation requiring a licensed technician.

Aside from the CLIPSAL mark, the applicants also claimed infringement in relation to its Bakelite brand of electrical goods (which includes switches, power points, mechanisms, and accessories) with reference to a shape mark no. 982758 in class 9

The CLIPSO Mark

Mr Kader was initially running a business importing electrical accessories from China into the Australian market, including Bakelite power points. Mr Kader originally filed a registration for the CLIPSO name in 2008. Mr Kader’s explanation for choosing the mark was because he thought “clip” and “clips” were common words, and added the “O” at the end to imply familiarity (although not discussed, Australians often apply a linguistic diminution to words of adding an “o” as a suffix, as in “Freo” for the port town of Fremantle and “Rotto” for the island holiday destination Rottnest)

In evidence, Mr Kader said that after conducting a search of the Australian trade mark registry and not finding any registration for “CLIPSO” in relation to class 9 goods, Mr Kader created an appropriate logo and thereafter registered the mark.

Mr Kader said that he was aware of CLIPSAL, but prior experience with rejected trade mark applications gave Mr Kader the impression that there would be no problems if the Australian trade mark registry, housed within IP Australia, did not reject his application. After securing the registration, Mr Kader went ahead and used the mark on packages, catalogues, and a website. The respondents’ market is similar to the applicant’s market, because the respondents’  products also require a licensed technician for installation.

Shape Trade Marks

Perram J notes that:

10.The applicants’ principal case concerned the CLIPSAL word mark no. 506651, but it had a second case on infringement based on a registered shape mark as well. This mark was registered trade mark no. 982758. It was registered in class 9 in respect of ‘Electrical wiring accessories which incorporate a rocker switch; electric switches including dimmer switches; and switched power outlets’. The endorsement on the registration reads:

“The Trade Mark consists of the 3-dimensional shape of the switch dolly as shown in the accompanying representations of the mark attached to the application form; the portion of the cover plate shown in dotted lines and from which the switch dolly protrudes, forms no part of the Trade Mark.”

…It was the applicants’ case in relation to the Dolly Switch mark that the respondents had infringed it by, amongst other things, offering for sale switches and sockets with a very nearly identical shape.

Perram J then included an image of the trade mark, which within the judgment he calls “the Dolly Switch” mark:

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd "dolly switches"

Cases to do with shape trade marks are fairly unusual in Australia.

  1. In Eclipse Sleep Products Inc. v Registrar of Trade Marks (1957) 99 CLR 300 (Eclipse), a stylised drawing of an inner spring was held not to be a “distinctive” device under the now-repealed 1955 Act.
  2. In Kenman Kandy Australia v Registrar of Trade Marks (2002) 56 IPR 30, a shape may lack inherent adaptability if a trade competitor would be likely to want to use the mark because it was part of the function or nature of the product itself.
  3. In Philips v Remington (2002) 56 IPR 452 (“Philips” ) the triple round head of an electric razor was found by the court to be part of its function and therefore incapable of distinguishing the applicants’ goods.
  4. In Mayne Industries v Advanced Engineering Group (2008) 166 FLR 312; an “S” shaped fence design was not permitted to registration as a trade mark.
  5. In Global Brand Marketing Inc. v YD Pty Ltd, the shape of a shoe with a distinctive pattern on the sole was capable of registration.
  6. The court said in Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891 (“Guylian”), that “the fact that the declarants associate these features with the Applicant does not on its own demonstrate the capacity of the Claimed Mark to distinguish one trader’s goods from those of another trader .It is necessary to establish that the association is because of the use of the Claimed Mark as a trade mark.”
  7. The delegate of the Trade Mark Registrar in Re Van Ruth Pty Ltd [2016] ATMO 68 applied Guylian.

Unreliable Witness

In any event, Perram J did not accept Mr Kader’s explanation for the origin of the CLIP name. Perram J found that the respondents had full awareness of the applicant’s products, and that Mr Kader lied in evidence with regard to the certification of his products. Perram J found that Mr Kader’s main motivation for selecting the CLIPSO name was due to its similarity to CLIPSAL, with an intention to make consumers and the industry think that there is a relation between the two. The court said:

It is, I think, inconceivable that in the three years that Mr Abdul Kader was importing Bakelite products into Australia, he could have remained as ignorant of the clear market leader, Clipsal, as he endeavoured to suggest. Mr Abdul Kader’s evidence that he regarded HPM as the only large brand in the electrical accessories market just cannot be correct. Mr Abdul Kader was involved in the conduct of a large importation and distribution business in the very same market for over three years”.

It is, as the judge notes, unusual for the credit of a witness to be successfully challenged in respect of the spark of inception of a brand.

Nature of the Market

Perram J addressed the respondents’ submission that their market only consisted of electrical contractors and wholesalers which would have consisted mostly of people or entities that are familiar with brand names and products. As a specialist market, these technicians were less susceptible to being deceived or confused by similarities between brands and names,  particularly due to the fact that the CLIPSO mark was also being used on the respondent’s website, which is available to the general public. The market, Perram J noted, also includes end consumers who select the Bakelite product of their choice but whose purchases are made by proxy.

Grounds for Cancellation

Otherwise, it was established that the CLIPSAL and CLIPSO marks were both aurally and visually similar. Since Perram J has already found that the CLIPSAL-branded goods include goods that did not require a licensed technician to install (and that obviously also included the Bakelite products), it was not necessary to establish whether the CLIPSAL mark was famous in the electrical trade to the point that consumers would be confused.

In addition, given the applicant’s reputation in Australia and its earlier priority date, coupled with the successful deceptive similarity grounds, the likelihood of confusion or deception under s 60 of the Trade Marks Act 1990 was also established.

Further, Perram J found that Mr Kader had prior knowledge of the CLIPSAL trade mark and the applicant’s products, and had the intention of trading on its reputation. Perram J found that the respondents had acted in bad faith.

No Success with the Shape Trade Mark

In respect of the Dolly Switch Mark, this was the only aspect of the case in which Perram J found in favor of the respondents. The court said that the respondents did not use the dolly switch as a trade mark in their Bakelite products. The court also noted that the applicants had no reputation with regard to the Dolly Switch mark, as consumers are more likely to rely on the CLIPSAL name than the shape of the light switch when identifying their products.

I…  do not think that the first respondent was using the switch as a trade mark. Generally speaking,  Clipso  products were packaged in plastic sleeves emblazoned with the  Clipso  logo, and then placed in a cardboard box also emblazoned with the  Clipso  logo. There is no doubt that the word  CLIPSO  was being used as a badge of origin, which rather detracts from the idea that the switch located within the packaging could also have been operating as a badge of origin.

Although the cases were not expressly noted in the judgment, the principles in both Philips and Guylian are evident here. Shape trade marks need to be used as trade marks, rather than as functional expressions. It is again and again a difficult hurdle to jump.