Plain packaging for tobacco products: some legal issues

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This Kat was wondering what has been happening in Australia, where plain packaging for tobacco products has been mooted as a means of discouraging smoking.  He is indebted to his friend John Nobel (British Brands Group) for letting him have this helpful update on a topic which this blog has covered on two earlier occasions, here and here:

"On 6 July two Bills were tabled in Australia’s House of Representatives: the Tobacco Plain Packaging Bill and the Trade Marks Amendment Bill. Coincidentally on the same day the UCL Law Faculty circulated a paper, “Implications of WTO law for plain packaging of tobacco products” (by Tania Voon and Andrew Mitchell) to those who hoped to attend the aborted event “'Tobacco or trademarks: Australia's plain packaging of cigarette products and the WTO”.  

Closer to home ['home' is a relative term, but in this context it's Britain], the Department of Health is to launch a consultation by the end of this year on plain packaging, while the European Commission (DG Sanco), having already consulted on this subject last year, is due to publish its response early in 2012. The consultation is understood to have generated a substantial number of submissions covering IP. All this suggests the topic may be worth re-visiting for IPKat readers.  

Whatever one’s view of tobacco products, these developments are of keen interest to those involved in brands and trade marks, raising questions on the lengths to which countries may go to regulate legal products but more particularly on the extent to which they can disrupt long-established, legitimate and immensely valuable trade marks.  

The paper by Tania Voon and Andrew Mitchell addresses both the international trade and IP aspects of plain packaging, arguing that the proposal is consistent with TRIPS, the Technical Barriers to Trade (TBT) Agreement and GATT 1994, calling any challenge by tobacco companies under such agreements “a desperate last gasp” (having said that, Australia has notified its draft Bill to the WTO under the TBT agreement and a number of states have raised concerns over both the legality and the proportionality of the measure).  

Leaving aside the trade arguments – which Voon and Mitchell dismiss and which are now the subject of a legal challenge by Philip Morris International (on the basis of Australia’s Bilateral Investment Treaty with Hong Kong) – it is the IP aspects which will be of particular interest and relevance to brand owners and IP practitioners. The Voon Mitchell paper sets out some of the IP areas where debate is likely to rage and it is worth looking in particular at two key ones: 

(1)     Would plain packaging deny the registration of trade marks or invalidate existing trade marks contrary to international agreements? This is addressed by TRIPS (Article 2 and 15.4) and the Paris Convention (Article 6 quinquies). Voon and Mitchell argue that these provisions are not relevant as trade mark rights are negative rights, in that they prevent others from doing something (this reflects TRIPS Article 16). Plain packaging proposals would prevent use, not deny registration or invalidate rights. Neither TRIPS nor the Paris Convention provides a right to trade mark owners to use their rights. Where a Member State requires proof of use in order to validate a trade mark (like the UK), a trade mark owner can prevent invalidation by demonstrating a valid obstacle to use, which a plain packaging regulation would be.  

The counter arguments are that trade mark rights are a bundle of rights (not just a negative right to exclude others) and that registration and use are inherently linked. In addition, the right of the trade mark owner to exclude others from using the mark implies that the use of the mark is reserved to its owner. The right to a trade mark that cannot be used is not a right in any legal sense. In countries where an application for registration depends on existing use or an intention to use, registration would be effectively impossible. Further, in such countries that require evidence of use, there is a positive obligation to use. It is also worth noting that the Paris Convention and TRIPS provide protection against invalidation and plain packaging amounts to an invalidation.  

(2)     Would plain packaging represent an unjustifiable encumbrance on a trade mark and therefore contrary to TRIPS (Article 20 requires that “The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements….”)? Voon and Mitchell acknowledge that plain packaging is a special requirement that may be considered an encumbrance but claim this is justifiable on health grounds. Article 20 should be read in conjunction with Article 7 (protection and enforcement of IPRs being conducive to social and economic welfare), Article 8 (Members may adopt measures necessary to protect public health) and the Doha Declaration which re-affirmed Members’ rights to protect public health. Further, were a Member State to claim that Australia was in violation of Article 20, it would be down to that Member State to prove it.    

Controversy is likely to focus on whether plain packaging is justifiable. It is likely to be argued that an encumbrance can only be justified if it is necessary to protect public health. There is no convincing evidence that plain packaging will lead to a reduction in smoking, there are other less restrictive measures available and countries have reduced smoking without recourse to plain packaging. All this suggests that plain packaging is open to challenge whether the measure is justifiable, necessary and proportionate. 

There must be some relief in UK and European government circles that it is Australia experimenting with such regulation. There seems plenty to argue that plain packaging would amount to a denial of registration, effective invalidation and an unjustifiable encumbrance on trade marks. Bearing in mind the value of the trade marks at stake, we can expect these arguments to be made formally and forcefully".

The IPKat thinks this is a very useful summary of the lines of argument which we are most likely to be hearing when the debate in Europe takes place. Merpel wonders whether the legal arguments will indeed be weighed and balanced or whether, this being the real world, the result will be based on the fact that people who oppose smoking lobby harder to wipe it out than people who support it fight to preserve it.