End users matter in markets dominated by tradies: The CLIPSAL trade mark case

27-Feb-2017

A recent Federal Court decision made notable comments on the class of consumer for goods typically purchased by tradies. In Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd, the spotlight was on light switches and electricians, but the comments of Perram J may be applicable to any trader in the building industry.

Class of consumer

Any assessment as to deceptive similarity of trade marks requires identification of the class of consumer for the goods being offered under the respective marks. The core goods in issue in this case were electrical products that by law can only be installed by a licensed electrician. The market participants for these goods, however, were not confined to electricians. On examination of both the trade channels and marketing strategies of the parties it was held that the market for specialised electrical goods was a segmented one relevantly comprising of:

  1. contractors;
  2. wholesalers; and
  3. non-purchasing end-consumers.

The same might apply to any field where specialist contractors install goods purchased under the direction of end-users.

The respondents had sought to limit the class of consumer to contractors and wholesalers and argued that the level of exposure that these groups had to the market leader CLIPSAL mark meant that this mark was so well known to them that they would not be confused by the respondents’ use of the CLIPSO mark for the same goods. The Court, however, recognised that although end-users rarely purchased (and even more rarely installed) these goods, end-users can be instrumental in the decision making behind the purchase of these goods by influencing choices made by architects and builders engaged on their behalf.

Accordingly, the market was found to be broader merely than the trade so as to include general members of the public.

Facts and outcome of the case

The trade mark CLIPSAL has been in use since 1920 and this brand is the market leader in Australia for light switches. The trade mark CLIPSO was used and registered for light switches, among other goods in class 9, in the face of registrations for CLIPSAL, including Registration 506651 covering all goods in class 9.

The applicants commenced proceedings for cancellation of the CLIPSO registration, trade mark infringement, passing off, and for misleading and deceptive conduct under Australian Consumer Law. The cancellation action was based on the following opposition grounds, assessed as at the time of the filing of the CLIPSO registration:

  1. deceptive similarity – s44;
  2. prior reputation – s60; and
  3. bad faith – s62A.

Cancellation was also sought on the basis that use of the CLIPSO mark was likely to deceive or cause confusion, assessed as at the later time of the filing the action for its cancellation. All cancellation grounds were made out as were the infringement, passing off, and Australian Consumer Law claims in respect of the applicants’ CLIPSAL word mark.

Corresponding claims were also pressed in relation to a shape trade mark under Registration 982758, the subject of which was the appearance of a light switch - also known in the trade as a Dolly Switch – and covering a more limited range of goods in class 9. Although deceptively similarity was found, use as a trade mark, goodwill or reputation in the shape of the product was not established: the shape of the applicants’ product was regarded as being no more than an “ordinary light switch, which is a very familiar object in everyday life”. Accordingly, the claims in respect of the shape mark were not successful.

Credit of key witness

The reliability of the respondents’ evidence was central to many of the issues considered in this case, and much of the decision is directed to the credit, or lack of it, of its key witness. He was observed to be unreliable, so much so that Perram J remarked “It would be an affront if the respondents’ registration were permitted to continue”.

It has held that the respondents chose the CLIPSO mark because of its similarity to CLIPSAL and wished to exploit the applicants’ reputation in the CLIPSAL mark. This went to the issue of bad faith. It also had a bearing on the likelihood of the CLIPSO mark being misleading as courts may more readily infer that the use of a mark is misleading when that was indeed the intent of its use.

The dishonest conduct of the key witness, who was the director and co respondent of Clipso Electrical Pty Ltd, rendered him personally liable in addition to his company’s liability.

More…

Having products more usually purchased by tradies available for direct sale to end-users, and engaging in marketing campaigns that encourage end-users to direct the decisions made by tradies, examples of which are discussed by Perram J, can assist in establishing deceptive similarity. The full decision of the Court may be read here.

By Michelle Cooper
Contact Michelle: m.cooper@watermark.com.au