The underlying purpose of section 43 is to prevent the public being deceived or confused as to the nature of the goods by reason of the secondary meaning connoted by the mark in question (Pfizer Products Inc v Karam (2006) 237 ALR 787, 53).

Katzmann J at 113 in Primary Health Care Limited v Commonwealth of Australia [2017] FCAFC 174:

….the section is concerned with whether the mark the subject of the application (or a sign contained in the mark) connotes something other than a connection in the course of trade between the relevant goods or services and the person who applied (or intended to apply) it to those goods or services.

For a trade mark to trigger section 43 there must be some connotation within the trade mark that would reasonably be expected to cause deception or confusion in the mind of the relevant buying public. For example, deception or confusion could arise in regard to the:

Character of the goods and/or services including their composition, nature or other properties
Quality or quantity of the goods and/or services
Geographical origin of the goods and/or services
Intended use or purpose of the goods and/or services
Connection in the mind of the buying public with a person or organisation.

However, the mere presence within a trade mark of a person's name, a descriptive term, a geographical place name or a reference to the size of packages or intended use of a product does not automatically demonstrate a connotation sufficient to trigger section 43.

Kitto J in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 states (at 595):

All surrounding circumstances must be considered including the circumstances in which the marks will be used, the circumstances in which the services will be provided, and the character of the probable users of the services.

Hearing Officer Wilson in Mount Everest Mineral Water Limited v Himalayan Spring Mineral Water [2010] ATMO 85 (at 13):

….it does not follow that all trade marks containing descriptive matter would attract a section 43 objection. Only if there is a real and tangible danger that the consumer’s expectations may turn out to be false and result in confusion, would section 43 be triggered.

The prominence and context of the potentially deceptive or confusing element in the trade mark will be important in deciding whether the trade mark is likely to deceive or cause confusion.

What is deception and confusion?

As noted by Lord Denning in Parker-Knoll Limited v. Knoll International Limited [1962] RPC 265 at p174:

….‘to deceive'’ is one thing. To ‘cause confusion' is another. The difference is this: When you deceive a man, you tell him a lie. You make a false representation to him and thereby cause him to believe a thing to be true which is false. You may not do it knowingly, or intentionally, but still you do it, and so you deceive him. But you may cause confusion without telling him a lie at all, and without making any false representation to him. You may indeed tell him the truth, the whole truth and nothing but the truth, but still you may cause confusion in his mind, not by any fault of yours, but because he has not the knowledge or ability to distinguish it from the other pieces of truth known to him or because he may not even take the trouble to do so.

For a ground for rejection to be raised the connotation must be obvious, direct, and immediate and within the trade mark itself. Importantly it must be judged as giving rise to deception and / or confusion.

3.1 The connotation must be obvious and direct

There must be a real and obvious danger of the buying public being deceived and/or confused by the secondary meaning within the trade mark. A possibility of confusion or a suggestion that deception might occur is not sufficient. In Registrar of Trade Marks v Woolworths (1999) 45 IPR 411 (‘Woolworths Metro’), French J said at 43 (when considering the phrase likely to deceive or cause confusion):

the use of the word “likely” in this context does not import a requirement that it be more probable than not that the mark has that effect. The probability of deception or confusion must be finite and non-trivial. There must be a “real tangible danger of its occurring”.

The tests lie in the perception of the ordinary person, as noted by Kitto J in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 594 (referred to with approval by French J in (‘Woolworths Metro’)):

(ii) It is not necessary, in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception.... While a mere possibility of confusion is not enough - for there must be a real, tangible danger of its occurring... - it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder.... It is enough if the ordinary person entertains a reasonable doubt. (iii) In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the characters of the probable users of the goods)... (iv) In applications for registration, the rights of the parties are to be determined as at the date of the application. (v) The onus must be discharged by the applicant in respect of all goods coming within the specification in the application of the goods or class of goods in respect of which registration is desired, and not only in respect of those goods on which he is proposing to use the mark immediately. And the onus is not discharged by proof only that a particular method of user will not give rise to confusion. The test is, what can the applicant do if he obtains registration? (Emphases added.)

It is important to note that these comments were made in deciding an opposition under section 114 of the Trade Marks Act 1905 - marks likely to deceive or cause confusion. They remain a well-recognised definition of "reasonable doubt" in such a context, and the quotation has been edited to emphasise this. While the relevant principles above were set out in the context of a comparison between trade marks, section 43 does not deal with this kind of comparison but only with an evaluation of material within the trade mark itself. However, as mentioned above, the tests can be relevant in deciding whether a connotation within the trade mark is sufficiently strong that the trade mark is likely to offend under section 43.

3.2 The danger of being misled by the trade mark must be immediate

A mere possibility of deception or confusion at some indeterminate time is not sufficient. Each application must be considered as it stands in the current marketplace, not in the marketplace as it was in the past and not as it may be in the future. A sign regarded as deceptive or confusing under the previous legislation may no longer have the same connotation and a ground for rejection may not apply under the current Act. The converse is just as likely - the market may have changed and a term that was meaningless 10 years ago might now have currency in a particular field. Examiners must ensure that they are considering the current marketplace when deciding whether a sign is likely to offend under section 43, remembering there will be signs in that marketplace which have kept their connotations over long periods of time.

3.3 The connotation must arise from the trade mark itself

At least at the examination stage, deception and confusion must result from something within the trade mark under consideration, not through a comparison with another trade mark. This issue was confirmed by the full bench of the Federal Court in Big Country Developments Pty Ltd v TGI Friday's Inc (2000) 48 IPR 513 at 521 where Wilcox, Kiefel and Emmett JJ said:

The case of deception and confusion sought to be made by Big Country and Friday's Australia in the present proceedings is one that falls outside the reasons specified in [section 43]. It does not depend upon some connotation in the registered mark, but upon its similarity to a name used by Big Country and others. So the alleged deception or confusion is not for that reason covered by s43.

This has been subsequently applied in both Primary Health Care Limited v Commonwealth of Australia [2017] FCAFC 174 (see 140) and Pfizer Products Inc v Karam (2006) 237 ALR 787 (see 53).

3.4 Connotations determined following opposition

In some cases a connotation giving rise to a section 43 ground for rejection may not be obvious during examination and will only emerge at opposition when the full facts of a case are available to the decision maker.

This circumstance need not point to a fault in the examination process, but to the capacity for a trade mark to develop a connotation over time. A word with no obvious secondary meaning in respect of the particular goods/services under consideration may have developed one with the passage of time, and from extensive use within a particular trade. These kinds of cases are most appropriately identified and dealt with during opposition proceedings when considerable evidence of use is often supplied by the opposing party. See Down to Earth (Victoria) Co-operative Society Limited v Schmidt (1998) 41 IPR 632 (‘Earthhaven Confest’)

3.5 The connotation must be determined from the trade mark as a whole

When determining the potential connotation within a trade mark, the trade mark as a whole should be considered. Other features incorporated as part of the trade mark can diminish the impact of the offending material and cast doubt as to how it will be seen and interpreted by the relevant consumer. If a secondary or implied meaning can be derived from the material, this may influence what the trade mark connotes.

This issue was considered in Bavaria NV v Bayerischer Brauerbund eV [2009] FCA 428, where Bennet J took into account other elements that appeared as part of the trade mark in question, stating at 89: ‘….the reasonable consumer would not fail to observe the three references to “Holland”, which at least neutralise the connotation with the State of Bavaria’.