Mortimer J has dismissed Shape Shopfitters claims against Shape Australia for misleading or deceptive conduct, passing off and trade mark infringement.
Much of the focus of the decision is on the misleading or deceptive conduct claim (and will have to be the subject of a future post). This post will look at the trade mark infringement claim.
Shape Shopfitters has registered Trade Mark No. 1731525 for shopfitting, construction and advisory services relating to construction in class 37 for this trade mark:
TM No. 1731525
It alleged that Shape Australia infringed that trade mark by using these signs:
Shape Australia provided construction services, apparently on a much larger scale, but was not specifically engaged in shopfitting – sub-contracting out those parts of its jobs. Also, Shape Australia did not provide its services to the particular people who were customers of Shape Shopfitters.[1]
Mortimer J found that Shape Australia’s trade marks were not deceptively similar to Shape Shopfitters’. Her Honour considered that the imperfect recollection of the relevant public would recall not just the word SHAPE, but also its collocation with the word Shopfitters (albeit it was subsidiary) and the distinctive “bottle cap” shape of the border.
Of the four elements comprising Shape Shopfitters’ trade mark (apart from the blue colouring), Mortimer J explained:
The use of capitals for the word “SHAPE” in the applicant’s Mark is, I accept, a feature likely to be recalled. In part, it is the use of capitals which is likely to make the word “shape” stick in the memory, as well as its proportionate size in the Mark. It is also correct that the word “Shopfitters” is much smaller, as is “Est 1998”. I see no basis to find that the latter phrase would be generally recalled, however I consider the word “Shopfitters” may well be recalled in conjunction with the word “SHAPE”. There is an alliterative effect between the two words, as well the positioning of “Shopfitters” underneath the word “SHAPE”. An industry participant’s eye (to take the applicant’s wider class of people) will, in my opinion, be drawn to that word as well and what is just as likely to be recalled is the phrase “SHAPE Shopfitters”, rather than just the word “SHAPE”.
As a result, the prospect that the word mark would be deceptively similar was roundly dismissed. The two devices with the word in a circle were closer, but the absence of the word Shopfitters and the difference between a circle and the “bottle cap” border were decisive.
The Circle Mark and the Transparent Mark have a closer similarity, because of – in combination – the use of capitals of the word “SHAPE”, the placement of that word inside a circle, and the use of a circle itself. However, as I have set out, in my opinion even imperfectly, a reasonable industry participant of ordinary intelligence and memory is likely to recall the word “Shopfitters” in conjunction with the word “Shape”, especially because of the alliteration involved. I also consider such a person will recall the applicant’s Mark has a distinctive border that is not a smooth circle.
I do not consider the evidence about several industry participants referring to the applicant as “SHAPE” affects these findings in a way which means that word would be recalled as the only essential feature of the applicant’s Mark. Rather, that evidence is evidence of the contraction of the applicant’s business and trading name in ordinary speech, and such a contraction does not necessarily carry over to what a reasonable person is likely to recall of the applicant’s Mark. It goes only to how industry participants might refer to the applicant in conversation.
Given these findings, it was unnecessary for her Honour to express an opinion on whether the registration of Shape Shopfitters’ trade mark with the blue background imposed a limitation on the scope of the registration.[2]
Mortimer J’s conclusions do not explicitly turn on the fields of activity of the respective parties, apparently a closely fought battle in the context of the misleading or deceptive conduct case. Indeed, at [258] her Honour expressly said it made no difference whether the relevant public was defined as the “buyers” of construction services or participants in the commercial construction industry.
Although Shape Australia was much larger than Shape Shopfitters, you might recall that for much of its life it had operated under the name ISIS Group Australia and had changed its name after Shape Shopfitters came on to the scene and the name of the ancient Egyptian goddess took on some rather unfortunate (to say the least) connotations. ?
Referring to s 70 read with the definition of “limitation” provided by s 6. ?
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]”.
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. ?
There were also end-consumers who actually bought the products themselves, but they were considered too small a segment to qualify as ‘substantial’. ?
Apparently, this refers to the practice, particularly prevalent amongst Australians, of modifying words colloquially to suggest familiarity such as “kiddo” for “kid”. ?
Bridling at [179] – [180] against even that scope for reputation permitted by Henscke. ?
The Full Court has allowed Hansen’s appeal from the dismissal of its trade practices/passing off action against Bickford’s Monster Energy drinks.
Before the trial judge, it was conceded that Bickford’s get up would be confusingly similar to Hansen’s, but the trial judge found that Hansen did not have sufficient reputation with the public in Australia to found its claim.
Hansen had never traded here nor sold its energy drinks here. However, there was evidence that it had “indirectly” promoted its brand name and get up here through activities such as sponsorships of sporting events and logos on clothing.
The Full Court reported the trial judge as finding that Hansen could not succeed unless it established a relevant reputation within its target market in Australia – males between the ages of 18 to 30. His Honour went on to find the evidence was insufficient to support such a finding. The indirect advertising was too fleeting and occasional to establish a reputation within the target youth market in Australia “other than perhaps some extreme sports enthusiasts”.
The Full Court allowed the appeal on the grounds that the “target market” was not the relevant section of the public to test Hansen’s reputation. It was necessary only for Hansen to show that it had a reputation in Australia with any relevant section of the public.
Tamberlin J (with whom Siopis J agreed) held:
[46] … In our view, the language of the section and its purpose do not require the Court to select any particular group as targeted by advertisers when assessing whether a breach has occurred. The fact that certain pieces or strategies of advertising may target a particular class of people as potential customers of the relevant product does not justify the conclusion that a significant number of persons in that class must be shown to be aware of the reputation before a claim under s 52 is made out. The question which must be answered can properly be framed as being whether a not insignificant number of persons in the Australian community, in fact or by inference, have been misled or are likely to be misled. (emphasis supplied)
Finkelstein J agreed in the result, but disagreed about the need for a reputation amongst more than an insignificant number of persons. While his Honour accepted that passing off required the establishment of a reputation amongst a significant or substantial number of the Australian public, there was no warrant to import that requirement into an action for contravention of the Trade Practices Act.
Siopis J, as noted, agreed with Tamberlin J indicating also (?) that the earlier decisions requiring a not insignificant number were not “plainly wrong”.
The significance of the High Court’s reference in [103] of Campomar v Nike to isolating a representative of the class as the hypothetical individual to test “representations to the public”, therefore, bearing in mind the references in [102] to “ordinary” or “reasonable” members of that class, remains to be tested in some future High Court case.
As the trial judge did not explicitly find that Hansen did in fact have a reputation amongst Australian extreme sports enthusiasts, matter was remitted to him for further hearing.
Importantly for the future, Finkelstein J accepted that indirect marketing activities could be sufficient to establish the foundation for a s 52 claim:
63 There are a plethora of examples of indirect advertising and it is a key topic of discussion in advertising literature. Indirect advertising of the kind with which everyone is familiar is the sponsorship of sports. Many people in many countries place great value upon entertainment, competition and accomplishment, all of which are seen in the sporting arena. Brand names and logos appear around sporting arenas, on the clothing worn by sportsmen and women and on the equipment sportsmen and women use. This form of advertising is seen by many thousands of fans who attend sporting events and, in the case of popular sports, by hundreds of thousands of people if the event is broadcast on television. There are numerous studies that show that this type of indirect advertisement is far more effective at eliciting a consumer recall response than a direct television commercial.
64 In my opinion the judge was entitled to infer that the indirect brand advertising employed by Hansen (and, for that matter, Bickfords) can establish reputation as well as, if not better than, direct advertising. After all, everyone knows that James Bond drives an Aston Martin, Janis Joplin wanted to own a Mercedes Benz and Audrey Hepburn had breakfast at Tiffany’s.
Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181
