CLIPSO CLIPSAL-ed

You may not be surprised to read that Perram J has found that CLIPSO is deceptively similar to CLIPSAL for electrical goods in class 9. This had the consequence that Clipso’s registration for “CLIPSO” was expunged from the Register and CLIPSO itself was found to infringe prospectively. Clipsal’s trade mark registration for the shape of its ‘dolly switch’, however, was not infringed by Clipso’s products.

A significant issue in the case was whether Clipso’s principal, a Mr Kader, was to be believed about how he came up with the mark. Perram J found he was not. Perhaps the most interesting feature of the case, however, is the market by which the issues fell to be assessed.

Some background facts

Clipsal has registered CLIPSAL as a trade mark in respect of all goods in class 9. While it and its predecessors claim to have been using the mark since the 1920s, the registration it relied on in this proceeding dates from 1989. It currently markets some 14,668 electrical products under the trade mark and, in 2011, its annual sales exceeded $500 million. Clipsal had some 77% of the market; its nearest competitors having only 11% each. Clipsal also has a shape mark registered for the shape of its dolly switch:

Clipsal’s Dolly Switch trade mark

in respect of ‘electrical wiring accessories which incorporate a rocker switch … including dimmer switches….’

Mr Kader had been importing electrical accessories since about 2005. The CLIPSO mark came into use, however, in 2008 and Clipso achieved its registration in respect of a range of class 9 goods, principally electrical switches and the like, from October 2008.

The market by which deceptive similarity assessed

Many of Clipsal’s products, and most if not all Clipso’s, are what is known in the trade as ‘Bakelite’. These are (generally) plastic products such as switches, power points and other electrical products. A significant feature of these products is that by law they can be installed only by licensed electricians. Thus, a key plank of Clipso’s defence was the nature of its goods which, it said, were essentially bought by electrical wholesalers and electrical tradies, who were not confused by the two trade marks. CLIPSAL, it was argued, was so famous that no reasonable tradie would mistake CLIPSO for it.

Perram J began by noting trade mark authority had held that an infringer’s conduct fell to be assessed in light of its effect on ordinary purchasers of the products in suit. His Honour noted that misleading or deceptive conduct under the ACL fell to be assessed by reference to the ordinary and reasonable consumer.[1] Acknowledging that other cases may lead to different conclusions, however, in the context of this case Perram J considered that Clipso’s conduct fell to be assessed under all heads according to its impact on the ordinary and reasonable consumer.

Perram J accepted that a large part of the market for Clipsal’s products were electrical wholesalers and electrical installers. For many people having a home or office built, the issue was whether there were light switches, their positioning and number. The actual purchasing decision was left to the builder or contractor. However, Perram J found that there was a (relatively small) but not insignificant section of the general public who were interested in such matters and did take into account the trade source of the products that were being installed in their building and so specified the products they wanted their contractors to install, non-purchasing end-consumers.[2]

A key factor in his Honour’s conclusion on this point was the extent and length of Clipsal’s marketing efforts directed to the general public, not just the trade. In addition to the usual forms of advertising, this included a software program, Cipspec, which Clipsal installed in showrooms and its consultants used to work through with customers the placement and appearance of various CLIPSAL products. At [122] and [123] of his Honour’s reasons, Perram J accepted:

However, the evidence of these witnesses (the marketing director, Mr Quinn, a store manager of an electrical wholesaler, Mr Kalimnios and the electrical wholesaler, Mr Micholos) nevertheless persuades me that the applicants’ efforts in bringing end-consumers into the process as part of its supply chain strategy are likely to have had some success. The evidence of Mr Kalimnios and Mr Micholos (referred to later in these reasons) was attacked on the basis that the firm for which they worked, P&R Electrical, was not independent of the applicants. It is not surprising that an electrical wholesaler might have a substantive commercial relationship with the market leader in electrical accessories, but I would not describe such a relationship as lacking independence. In any event, I do not think that the evidence of either man was adversely affected by this matter.

One is left in the situation then that the only evidence of the success of the strategy of seeking to increase demand at the consumer end of the market is the existence of the strategy itself. Although I am prepared to accept that some end-consumers do indeed purchase switches and sockets themselves, I do not accept that generally these are the same people who are involved in, or the targets of, Mr Quinn’s supply chain strategy. As best I can surmise, they are instead a small group of people who decide to buy Bakelite products to have an electrician install them, or possibly even a smaller group of unlawful renegades who buy Bakelite products to install themselves.

His Honour was unable to quantify how significant the involvement of such end-users in the market was, but at [129] considered it was not de minimis:

… one is still left with little compelling evidence that any of the end-consumers targeted by the strategy exist beyond the strategy itself and the amount spent on it. I have no particular difficulty describing the strategy as plausible. One can well see that there are likely to be some people who care very much about what the light switches and sockets installed in their homes are to be, whilst there will be others who are benignly indifferent. Amongst the first class, it requires no great mental athleticism to see that their fascinations are likely to be with the Bakelite products at the premium end of the market. Can I infer from these observations that such a class exists and in numbers which are significant? I believe that I can and I do. The widespread fascination with home renovations in some quarters is reflected in the programming that appears on popular television every week. I do not believe that Mr Quinn’s strategy of creating demand and driving it back up the supply chain is some quixotic venture which is pointless. To the contrary, I am prepared to infer that a significant portion of persons building a new house or renovating an existing dwelling do care about which Bakelite products are used.

It was not necessary that these end-users be the people who actually bought the goods in question; it was sufficient that they gave instructions for them to be purchased such as through their contractors. The size of this segment of the market was sufficient to qualify as ‘substantial’. The relevant market, therefore, was a segmented one consisting of electrical contractors, electrical wholesalers and ‘non-purchasing’ end-consumers.

One consequence of this conclusion was that Perram J considered the parts of the market consisting of electrical contractors and wholesalers was a specialised market which would require expert evidence about the conduct and purchasing habits of people in those trade channels. That was not be the case for that part of the market comprised of end-users.

For that part of the market, Perram J went on to hold that CLIPSO was deceptively similar to CLIPSAL. Perram J considered that the two words shared the same root and had very similar pronunciation – the primary stress would fall on the first syllable and the final syllable of both words would be unstressed. There was also expert evidence that some people might perceive CLIPSO as an hypocristic” for CLIPSAL.[3]

As noted above, Clipso argued that CLIPSAL was so well-known in the trade that there would be no confusion. Perram J rejected this on several grounds. First, in the context of s 44 resort could not be had to reputation except where the mark was so well-known as to be ubiquitous and, notwithstanding its market penetration, Perram J was not prepared to find CLIPSAL fell into that exceptional category.[4] Secondly, as his Honour had already held, the market was not limited to those in the trade but also included ordinary (non-purchasing) consumers. Thirdly, there was in any event evidence from people in the trade (well, at least one) that, while they were not necessarily confused, they were caused to wonder whether there was some connection between the two trade marks.[5] Consequently, CLIPSO was deceptively similar to CLIPSAL even for the segments of the market comprised of those in the trade.

Cancellation

These findings together with Perram J’s rejection of Mr Kader’s claims about how he chose the name CLIPSO meant that the CLIPSO registration was cancelled pursuant to s 44, s 60 and s62A.

Mr Kader had claimed that he chose the name while leafing through the list of goods in class 9 in the International Classification and noticing some references to “clips”. He also claimed that he knew very little if anything about CLIPSAL when he applied to register CLIPSO. Perram J found Mr Kader was lying about this based on a number of factors including the strength of Clipsal’s position in the market, Mr Kader’s involvement in the market for at least 3 years and, amongst other things, the fact that each day his trip to work involved passing a very large CLIPSAL hoarding.

Infringement

As s 122(1)(e) provides a defence to trade mark infringement when the sign used is itself a registered trade mark and is being used in respect of the goods for which it is registered, Clipso could not in fact infringe until Perram J’s orders cancelling the registration of CLIPSO were effected on the Register. Therefore, injunctions only would be available.

However, Perram J did go on to find that Clipso’s use of CLIPSO also contravened the prohibitions on misleading or deceptive conduct under the ACL and passing off, but only insofar as the public consisted of (non-purchasing) end-consumers. As Perram J considered those actually engaged in the trade would not be misled or deceived, but only caused to wonder if there was a connection, there was no contravention in respect of those segments of the market.

Use of a shape trade mark

Perram J found that Clipso’s dolly switch very closely resembled Clipsal’s dolly switch which was depicted in its registered trade mark. Nonetheless, his Honour considered Clipso did not use its dolly switch as a trade mark. Perram J accepted that there were many shapes a dolly switch could take so that Clipso’s dolly switch was not dictated by function. Nonetheless, it was not used as a trade mark. At [154], his Honour explained:

Be that as it may, I still 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.

Perram J was not prepared to find that the shape of the dolly switch itself conveyed an association with Clipsal based on the sheer volume of sales of the product. This was so even though Clipsal’s packaging often included a statement that “The shape of this dolly switch is a trade mark of [Clipsal]”.

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60


  1. Perram J noted that there could be subtle differences also between passing off and the ACL, but it was sufficient to proceed in this case on the basis that the same test applied for both actions notwithstanding their different bases.  ?
  2. There were also end-consumers who actually bought the products themselves, but they were considered too small a segment to qualify as ‘substantial’.  ?
  3. Apparently, this refers to the practice, particularly prevalent amongst Australians, of modifying words colloquially to suggest familiarity such as “kiddo” for “kid”.  ?
  4. Bridling at [179] – [180] against even that scope for reputation permitted by Henscke.  ?
  5. Relying on the Full Court in Vivo v Tivo.  ?

Mediaquest v Registrar

It turns out that the Registrar does have power to undo an assignment of a registered trade mark that has been registered wrongly.

A Mr Brailsford was the registered owner of the Peel Away trade mark for paint stripping preparations, TM No. 741047. He died in 2008.

On 23 Setember 2010, trade mark attorney McInnes filed an application to register an assignment of the trade mark to Mediaquest.

On 8 October 2010, the Registrar registered the assignment and Mediaquest became the owner of TM No. 741047.

On 12 November 2010, trade mark attorney Wilson wrote to the Registrar complaining about the registration of the assignment without notification to him and challenging it. Mr Wilson was acting for Mr Brailsford’s heirs and had been the address for service entered in the Register when the application to register the assignment was lodged.[1]

On 22 November 2010, the Registrar wrote to Mr McInness stating that the documentation relied on to establish the assignment was inadequate and so the Registrar intended to cancel the registration of assignment pursuant to s 81. Mediaquest objected to this and pointed out, amongst other things, that it had withdrawn a pending non-use action once the assignement was registered.

Further correspondence took place and, in due course, a hearing at which the delegate concluded Mediaquest had not established its entitlement to be registered as the assignee. Mediaquest appealed.

On appeal, Emmett J held that:

1 Mediaquest was not entitled to an assignment; and
2 the Registrar did have power to cancel the registration of the assignment.

Ownership

Mediaquest claimed it had an assignment from CRT. Mr Brailsford was the president and a director of CRT. Mediaquest sought to argue that his registration of TM No 741047 in Australia was in breach of his duties to CRT as a director and consequently the trade mark belonged in equity to CRT and, as a result of an assignment from CRT to Mediaquest, to it.

It seems Mr Brailsford may well have coined the mark and used it in the USA. At one point, the US mark was owned by another of Mr Brailsford’s companies, Pilgrim. In November 1992, Pilgrim assigned all its rights to Mr Brailsford and, in August 1993, Mr Brailsford assigned all his (US)[2] rights to CRT. It was after this, in 1997, that Mr Brailsford applied to register what became TM No. 741047 in Australia in his own name. In 1998, CRT applied to register a patent in the UK, identifying Mr Brailsford as the inventor and claiming entitlement through agreement with him.[3]

Emmett J found Mr Brailsford was entitled to register TM No. 741047 in his own name:

  • CRT was clearly the owner of the US trade marks;
  • both Pilgrim and CRT were creatures of Mr Bailsford;
  • while CRT was incorporated in Jersey in the Channel Islands, there was no evidence that it had ever traded anywhere other than in the USA or the UK.

At [34]:

The contention advanced on behalf of Mediaquest is that Mr Brailsford acquired the opportunity to register the Peel Away Mark in Australia by reason of his being a director of CRT. However, that can only be an inference. The circumstance that Mr Brailsford had dealings with the Peel Away mark before CRT was incorporated gives rise to a contrary inference. That is to say, it does not necessarily follow that the opportunity of registering the Peel Away mark in Australia was one that came to Mr Brailsford by reason of his being a director of CRT. Rather, an inference is at least available, and may perhaps be more easily drawn, that CRT acquired whatever opportunity it had to exploit the Peel Away Mark, and associated technology and knowhow, because Mr Brailsford chose to make it available to CRT. (emphasis supplied)

In these circumstances, his Honour concluded at [36] that the opportunity to register the trade mark in Australia did not come Mr Brailsford’s way because of his role in CRT and so CRT was not entitled to the trade mark in equity.

Power to cancel

Section [88(2)(e)] provides a power to rectify the Register on the basis that an entry in the Register “was made, or has previously been amended, as a result of fraud, false suggestion or misrepresentation.” This power, however, is conferred on the Court, not the Registrar.

Emmett J noted that under s 109 and s 110 the Registrar only had power to register an assignment of a trade mark. Whether there had been a valid assignment was a jurisdictional fact and, if there had not been a valid assignment, there was no power to register the assignment. In such a case, therefore, the Registrar had power to cancel the erroneous entry. As a result at [54]:

There was no actual assignment of the Registered Mark to Mediaquest, either from Mr Brailsford or from his executors. Accordingly, the Registrar’s decision of 8 October 2010 to record the assignment in the Register was tainted by jurisdictional error and was no decision at all. It was therefore open to the Registrar to reconsider whether the duty imposed by s 110 had been enlivened, by revisiting the question of whether there was an actual assignment or transmission of the Registered Mark to Mediaquest. Having determined that there was no actual assignment or transmission, it was open to the Registrar to take steps to cancel the earlier action. There is nothing in the Act to indicate that a decision of the Registrar under Part 10 that was affected by jurisdictional error should continue to have legal effect. Indeed the considerations outlined above suggest the contrary.

In answer to Mediaquest’s concerns about the uncertainty this would give rise, Emmett J pointed out at [56] that:

the scheme of the Act is not proprietorship by registration but registration of proprietorship. Registration under the Act is only prima facie evidence of ownership, as is provided by s 210. The registered owner is always susceptible to action being taken under Part 8 to revoke a trade mark that should never have been registered, or to substitute the true owner of the trade mark for that of a wrongful claimant. True ownership of a trade mark is a defence to infringement proceedings brought under the Act.

That is, registration was only prima facie evidence of ownership. Accordingly, all registrations were subject to an inherent level of uncertainty.

One interesting aspect of his Honour’s approach is that it does not appear to be based on the power conferred by s 81. Rather, it seems to have a much more fundamental underpinning in “jurisdictional error”.

No doubt, there is a sense here that the Court is not interested in technicalities that would force all of these types of disputes to be brought before it rather than knocked on the head in the Office. One might wonder, however, why the Registrar does not require documentation signed by the assignor as well as the assignee in the first place. This may well become more of an issue with the recordal of security interests as the Registrar’s practice is apparently to allow an interest to be recorded by the person claiming to have taken out a security interest alone.

Mediaquest Communications LLC v Registrar of Trade Marks [2012] FCA 768


  1. At the moment, as a result of Emmett J’s decision, Mr Brailsford is shown as the owner, but (presumably) Mr McInnes’ firm is shown as the address for service.  ?
  2. It is not clear from the judgment whether the agreement was in terms limited expressly to the US rights or this is an inference from the limited rights then existing.  ?
  3. The nature of the agreement is not specified in the judgment.  ?