Registering a trade mark will provide a defence against trade mark infringement claims, but not to actions for misleading or deceptive conduct or passing off. This point was shown in the case of Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60.
CLIPSAL is registered as a trade mark for electrical goods.
In 2009, Mr Abdul Kader founded Clipso Electrical Pty Ltd and started to use CLIPSO as a trade mark for various electrical goods, similar to those sold under the CLIPSAL brand. He also registered the CLIPSO trade mark.
Clipsal Australia sued Clipso Electrical for trade mark infringement, misleading and deceptive conduct and passing off.
Clipsal Australia had no success in its trade mark infringement claim, because Clipso Electrical's registration of the CLIPSO trade mark gave it a complete defence.
However, Clipsal Australia was successful in arguing that the CLIPSO trade mark registration should be cancelled because Clipso Electrical had registered CLIPSO in bad faith.
As a result, CLIPSO trade mark registration was cancelled.
Accordingly, Clipso Electrical will not have a defence to any future infringement of the CLIPSAL trade mark.
The Court analysed in detail the relevant market and drew a distinction between electrical contractors (who would not be misled due to their expertise) and others in the market such as consumers, retailers and builders (who could be misled due to their lack of expertise).
As a result, the Court found that Clipso Electrical's use of the CLIPSO trade mark was misleading or deceptive. The Court also found that Clipso had engaged in passing off.
Passing off is misrepresenting your person's goods are those of another who has an established reputation.
The Court found Mr Abdul Kader was personally liable for the conduct of Clipso Electrical because of his close personal involvement in its dishonest conduct. This means Clipsal Australia will have recourse to the personal assets of Mr Abdul Kader, if Clipso Electrical does not have sufficient assets to meet the claim.
Accordingly, just because a new trade mark is accepted and registered by the Trade Marks Office does mean it can be used without the risk of a misleading or deceptive conduct or passing off claim.