In 2012, Australia became the first country in the world to implement a law requiring tobacco products to be packaged in generic and standardised packets. [1] This meant that tobacco companies could no longer display designs, logos, colours and other trademarks on the packaging of their products. The idea behind this measure is that it reduces the consumption of tobacco products by making these products less attractive for consumers. It has garnered support from countries such as the United Kingdom, Hungary, France, Ireland, New Zealand, Norway, Chile and Singapore who have either followed suit or are considering the same. This has obviously led to concerns among major tobacco companies who view this law as an encumbrance on their right to use their trademark. Therefore, these companies have decided to support the Dominican Republic in initiating a dispute against the plain packaging legislation before the World Trade Organisation (‘WTO’).[2]
The claim that was raised before the WTO pertains to violation of Article 20 of the Trade Related Aspects of Intellectual Property Rights (‘TRIPS’) agreement because of unjustifiable restriction on Tobacco companies from using their trademarks. While the decision of this case is still pending before the Panel, in this blog, I shall argue that this measure is consistent with Article 20 of the TRIPS. However, before that, I shall point out why this dispute is so important from the Tobacco companies’ perspective.
Importance of Packaging for Tobacco Companies
The major Tobacco Companies in the world have invested billions of dollars in developing their brand, something which gives them a competitive edge in the market. Since brand loyalty amongst cigarette consumers is quite high and packaging of these products forms an important part of the brand, this is extremely valuable for these companies.[3] For e.g. Marlboro, with its “red roof” packaging, is one of the most widely recognised and valued brands in the industry. The “red roof” packaging is so inherently associated with the brand that when Phillip Morris started selling cigarettes with “red roof” packaging in Canada, even though with their own brand name on the packets, the Canadian federal Court held this to be an infringement of the company’s trademark.[4] Accordingly, packaging of tobacco products is valuable for Tobacco companies and it is not difficult to see why the present dispute has arisen.
The dispute before the WTO: Australia – Tobacco Plain Packaging
In December 2012, after three years of debating the law in its Senate, the Australian parliament passed a law requiring all tobacco products to be packaged in a generic packaging of specific characteristics thereby eliminating any and all differentiation that existed in the same. Considering the importance of packaging in differentiating between these products and the amount of money spent on building up these products, the tobacco companies felt that this law violates their Intellectual Property Right (‘IPR’). This has led to a dispute arising before the WTO where it is claimed that the plain packaging law violates Article 20 of the TRIPS. Article 20 of the TRIPS states:
“The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements […] undertaking.”
The requirement under this Article is that a Trademark should not be unjustifiably encumbered by any special requirements. While the plain packaging law does encumber the Trademark of the manufactures of tobacco products, the question which arises is whether the same is justified or not. For this one needs to understand what is meant by “unjustifiably” or what would be justifiable in the context of this Article. Hence, we turn our attention to Article 7 and Article 8 of the TRIPS agreement which lay down certain objectives and guiding principles respectively. Article 7 states that there is a need to enforce and safeguard IP rights “in a manner conducive to social and economic welfare, and to a balance of rights and obligations”. Article 8 states that “[m]embers may […] adopt measures necessary to protect public health […] provided such measures are consistent with the agreement.”
Now, while it is correctly noted that these articles in no way modify Article 20,[5] they certainly help provide context for its interpretation and are relevant in its interpretation pursuant to Article 31(1) of the Vienna Convention on the Law of Treaties (‘VCLT’). Furthermore, the “right” of member nations to pursue measures for the protection of human health has been reaffirmed by the Doha declaration which is also relevant for interpretation as a subsequent agreement between parties regarding interpretation of the TRIPS.[6] Interpreting Article 20 in light of Article 7, 8 and the Doha Declaration could justify an encumbrance based on public health reasons. Therefore, it may be argued that encumbrances on trademarks would be justified provided they are in pursuance of public health as this would lead to a more holistic interpretation of the agreement.
The justifiability of a measure under this Article can also be gauged using jurisprudence of Article XX of the General Agreement on Trade and Tariffs (‘GATT’) (due to the lack of the same under Article 20 of the TRIPS). While Article XX of the GATT requires measures to be necessary, Article 20 of the TRIPS merely talks about justifiability. This would indicate that the requirement under Article 20 of the TRIPS is more lenient than that of Article XX of the GATT. The term justifiable indicates a greater freedom than the term necessary.[7] Thus, it may be possible to use the necessity test under Article XX after modification in the context of Article 20 of the TRIPS.
Before the WTO, Australia needs to show that their plain packaging law makes a significant contribution in the advancement of their public health objective in order to prove that it complies with Article 20 of the TRIPS. They need to provide a qualitative and quantitative indication as to the degree of this contribution. If this is done it would clearly show that the plain packaging law is consistent with Article 20 of the TRIPS.
This post has been written by Abhishek Hazari who is a second year student at the West Bengal National University of Juridical Sciences.
[1] Australian Government – Department of Health, Introduction of Tobacco Plain Packaging in Australia, available at http://www.health.gov.au/internet/main/publishing.nsf/content/tobacco-plain (Last visited on June 08, 2017).
[2] Bloomberg, Philip Morris leads plain packs battle in global trade arena, available at https://www.bloomberg.com/news/articles/2013-08-22/philip-morris-leads-plain-packs-battle-in-global-trade-arena (Last visited on June 08, 2017).
[3] JG Dawes, Cigarette brand loyalty and purchase patterns: An examination using US consumer panel data, Journal of Business Research, 67(9) 1933-1943 September, 2014.
[4] Marlboro Canada Limited v. Philip Morris Products S.A., 2012 FCA 201.
[5] Daniel Gervais for Japan Tobacco International, Analysis of the Compatibility of certain Tobacco Product Packaging Rules with the TRIPS Agreement and the Paris Convention, November 30, 2010 (Gervais Report) 99.
[6] Vienna Convention on the Law of Treaties, 1969, Article 31(3)(a).
[7] Carvalho N.P., The Trips Regime of Trademarks and Designs (2nd ed., 2011) 424.
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