Comments for When plain packaging becomes a matter for the judges

To date, many countries, including the UK, Egypt, Singapore, India and a majority of the Latin American countries, have regulated the retail marketing of tobacco products by requiring a significant portion of the pack to display health warnings (at least 30%), yet permitting trademarks to be displayed. Uruguay has required 80% of the pack to display health warnings (which measure has been challenged in the ICSID). It might be worth considering whether such an approach is more desirable (over plain packaging) as it least interferes with trademark rights, but at the same time conveys a powerful message about the ill consequences of smoking.

A possible technique that may be employed, if it stands the test of pragmatism, is to permit the use of tobacco trademarks in the same form they have been registered (even in a limited and confined space) but to compel, by legislation, the tobacco seller to remove the mark from the packaging immediately after the time of sale. Thus, at the time of sale the mark would be intact, but not after. In effect, the trademark would comprise a removable sticker. This is not only in line with the first sale doctrine and might be a useful compromise to preserve the interests of the tobacco trademark owners, but also totally eliminates the after sale promotional effect of tobacco trademarks.

This way, a measure aimed at protecting public health would be considered reasonable, which carries out a government’s obligation towards its citizens in a way that it least interferes with trademark rights.

The question asked to the panel of the dispute settlement body of the WTO is whether the protection of IP rights contained in international agreements such as the TRIPs should prevail on national public health interests. Indeed, the Australian government is trying to reduce the effects of cigarets branding. I don’t think that Ukrainian arguments based on provisions of the TRIPs can encounter this legitimate attempt to alleviate this great cause of mortality.

The article 1.1 of the TRIPS refers to the obligation for the member states to give effect to this international agreement. Since the TRIPs sets a minimal standard of protection, the member states are free to provide further protection if they consider that it is required. On the contrary, they cannot, as Australia is allegedly doing with its Plain Packaging Act, go below the minimal level of protection granted because it would be a direct contravention of the TRIPs provisions. I would agree to say that the Plain Packaging Act infringes or at least restricts some of the rights contained in the TRIPs.

First of all, the Australian government limits the possibility for tobacco firms to use their trademark. Under article 15.1 of the TRIPs, the member states have the obligation to apply the rule according to which any distinctive sign constitutive of a trademark can be registered? The registered sign is supposed to enable the consumer to associate it with the relevant product as a way to distinguish with other “brands”. With the Plain Packaging Act, the differentiation effect of the trademark is eased, which clearly diminishes the profit usually brought to tobacco companies. Moreover, article 15.4 of the TRIPs prevents the nature of the goods to be an obstacle to the registration.

However, the Australian government is pursuing a legitimate goal when it limits the freedom of tobacco industries to use their trademarks. Public health is a matter of general interest which can justify a restriction to IP rights, provided that it is proportional. Here, we can say that it is the case since the Plain Packaging Act does not require the total absence of the sign registered as a trademark but only imposes a standard form of character to present it. The brand can still be written down on the package, so that the consumers are able to differentiate between brands and choose the one that suits them most. The use of trademark by tobacco still exists, even if reduced for a legitimate purpose. As a consequence, I do not think that tobacco companies are precluded from keeping their notoriety and thus not suffer from any unfair competition in the sense exposed by the Paris Convention referred to by the TRIPs in its article 2.1.

According to Ukraine, article 16.1 of the TRIPs is also violated by the Australian measures but I do not see the relevance of the argument. Ukraine adds that the Plain Packaging act does not respect article 16.3 of the TRIPs. Ukraine advances that tobacco companies are unable to prohibit others to use the sign registered or a similar sign and that the additional protection for well-known trademarks is ineffective because tobacco companies cannot show, by the means of an eye-catching sign on the package, prove their right to TM normal and additional protections. In my opinion, the Australian measures do not affect the scope of the trademark owned by the tobacco industries vis-à-vis third parties. As I exposed it, the trademark still fully exists and prevent third parties from copying or imitating it, even if the sign on the package does not stand out as before.
Finally, Ukraine argues that the Plain Packaging Act puts an undue burden on free use of trademark in the course of trade and especially on its distinctive character, with the result of potential confusion for the consumer. However, the different names of the different brands remain on the package which permits the distinctiveness needed following article 20 of the TRIPs. In addition, the use of the trademark is not “unjustifiably encumbered” but this measure is plainly justifiable regarding the need to reduce smoking as a great cause of mortality. The branding of cigarets increase the consumption and thus, the risks for public health. The smokers are usually used to a specific brand, so that the outstanding logo of this brand on the package would attract them and induce them to smoke. On the contrary, a plain package with a warning on the health risks caused by smoking pursue the legitimate goal to decrease the bad effects of cigarets on public health.

In my opinion, the protection of public health is a sufficient justification to restrict (and not suppress) the use of a trademark on the package of cigarets. In the end, the public interest must prevail on the interest of tobacco industries. This conclusion is not only based on equitable grounds but derives from article 8 of the TRIPs which expressively allow member states to adopt the necessary measures to protect public health if they are consistent with the provisions of the TRIPs. I tend to think that the Australian measures are indeed a necessity for public health and, as proved in the previous paragraphs, not inconsistent with the TRIPs.

First, the aim of the Tobacco Plain Packaging Act of 2011 is to tackle a public health issue, it is thus of general interest. Note that Australia has the highest incidence of skin cancer in the world and that smoking is associated with a 52% increased risk of developping some types of skin cancer. Cancer is a major health issue in Australia.

Second, as we have seen in class (what is protected), and as stated in article 15 of the TRIPS agreement (protectable subject matter) : TM can be a combinaision of letters, words,, a color, a lettertype… and a combinations of all those things. « Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible »

Thirdly, contrary to Ukraine, we consider that the Australian law do NOT reduce the scope of what is to be protected. Why? Because it allows the Tobacco industry to register their TM without any restriction. The Australian statutes are NOT reducing the protectable subject matter of TM, they are reducing the right to use the TM. Those must be distinguished. The whole combination of signs is registerd but only 1 type of sign (a part of the registred combination) is allowed to put on the cigarettes packaging. Tobacco Plain Packaging Act of 2011 do not violate article 15 of the TRIPS.

The question now is : is that restriction in the use of TM on packagings a justifiable requirement letting the capability to distinguish the goods of one undertaking from those of other undertakings in the sense of Article 20 of the TRIPS?

We take the view that the essence of the TM right is maintained, that the goods keep the essential of their distinctiveness. The name of the undertaking is in the field of cigarettes highly sufficient to achieve distinctiveness. Actually, most of the packagings have already a similar shape and people usually buy the same brand. Consumers would probably keep smoking the same, looking for a name rather than a color in their stores. So the Australian measures do not violate Article 16 and of the TRIPS.

Furthermore, we cant say there is unlawful competition here, because all the tobacco firms are put on an equal footing : none of them may be more distinctive than the other. They all have the same means to achieve distinctiveness.

So we can conclude that the dispute at presence could be analysed in 2 ways. First, a balance of the interests at stake can be made. Trying to raise awareness regarding the harmful consequences of smoking by putting health warnings on the cigarettes packagings is, in my opinion, of general public interest and that interest should prevail on private interests. Both are lawful, both expressed in legally binding materials (law v. convention). But still, the generality and higher legitimacy of the public health interest should authorise some restrictions to the second for the aimes of the first. The Tobacco Plain Packaging Act of 2011 puts justifiable requirements on the use of TM and maintain the distinctiveness of it. It is consistent with Article 20 of the TRIPS.

Then, if we take a supranational point of view : the TRIPS agreement provide in their Article 8 : that the Members may adopt measures necessary to protect public health and nutrition provided that such measures are consistent with the profisions of the agreement. My view is that the quarelled statutes are consistent with the TRIPS since, the objective is of high legitimacy and the essence of their TM right is preserved : all the TM conserve their distinctiveness. We can add that when Ukraine states that the Australian measures are « more trade-restrictive thant necessary to fulfil the stated health objectives », they neglect the margin of appreciation given to the Member state both by article 1.1 and 8 of the TRIPS.

Plain packaging in Australia is a measure that requires the removal of all branding such as colours, images, trademarks,… on cigarettes packaging. It permits to print only the brand name in a regulate size, colour (drap dark brown) and font on a distinctive place on the packaging.
This measure was set out for the purpose of encouraging people to quit smoking. Some studies actually showed that plain packaging, which actually put some horrible images (for the purpose of wealth warning) on cigarette packaging, gives a real incentive to young people to quit smoking or at least to think about it. It has also an incentive for them to start hiding the images or smoke less. So from the point of view of encouraging people to stop smoking and promote health, the plain packaging measure is, personally speaking, a good idea. But it’s true that from the intellectual property point of view, it is a measure that reduces and prohibits the use of trademarks and some other IP rights.

Australia was the first country to make rules on plain packaging. Some countries are afraid it might go at an international level so they are asking for a panel to be established to examine this matter at the WTO (World Trade Organization). This panel might examine two main acts : The Tobacco Plain Packaging Act of 2011 and the Trade Marks Amendment.Those acts and measures taken by Australia impose a plain packaging and if manufactures do not respect them, set some criminal penalties for the violation of such measures.

Some countries such as Ukraine do not agree with those measures and actually assert that it’s a violation of some TRIP’s obligations.
Ukraine is claiming the violation of the Articles 1, 2, 3, 15, 16, 20 of TRIP’s.

We shall see if there’s actually a violation or not of those articles.

The articles 1, 2 and 3 are the general provisions of TRIP’s. First of all, Article 1.1 require from Members to give effect to the provisions” of the Agreement and may implement in their law more extensive protection than required but without contravene the provisions. Secondly, Article 2.1 require from Members to respect provisions of the Paris Convention. The Article 19 of the Paris Convention authorize members to make special agreements fro the protection of industrial property in so far as these agreements do not contravene with the provisions of the Convention. Finally, the Article 3.1 impose to Members to treat other Members no less favourable than their protection.

On basis of those articles, we are going to see if Articles 15, 16 and 20 are violated by the rules taken by Australia. If Australia do not respect those following articles, we might assert that those Acts are contrary to the provisions of TRIP’s and therefore violation IP rights agreement.

The article 15 is written as follow :
1. Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible. …
4. The nature of the goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark.
Article 15.1 lays down what can be protected under trademark registration. Cigarette packaging contain signs that are capable of distinguishing the goods or services of one or another manufacture of tabacco. This article makes the “distinctiveness” the criterion for trademark protection. But as Australia Act impose a certain colour (drap dark brown) and a special font for each bran of cigarettes, it is against distinveness and it prevent undertakings to be capable of distinctiveness from other brands. Therefore, the rule of plain packaging “fail to give legal effect to the obligation that any distinctive sign be capable of constituting a trademark” (Request for the Establishment of a Panel by Ukraine) and violates TRIP’s agreement.

Article 15.4 is clearly violate TRIP’s agreement as well because Australia’s Act make the nature of the good an obstacle to protection (because already registrated) of the trademark. So basically, from the point of view of promoting health and give incentive to people to quit smoking, the plain packaging might be a good way to tackle the problem of young people smoking. But from the juridical point of view, IP’s right (and moreover trademark) are violated by the fact that Australia’s Act form an obstacle to the protection of the trademark by preventing brands to be distinctive.

Article 16 gives the exclusive right to the owner of the trademark to prevent all third parties to use of its trademark without its consent. This provision is also violated when Australia renders this exclusive right completely ineffective by preventing any distinctiveness from other brands.

Finally, Article 20 might also be violated because the use of the trademark is encumbered by special requirement as the use of a special form and is detrimental to the capability to distinguish the goods from others. But we might also put some attention to the world “unjustifiably” in this article.
This would be to the WTO to decide wether or not health is a justified reason to encumbered the use of the trademark. It is true plain packaging is bad for health but we have to make a balance of interest between IP’s right and security and health for the public.

In my opinion, most of the articles of TRIP’s are violated. Therefore, Australia’s Act should be removed. But in the balance of interest, the “young people smoking” issue is a big one to tackle nowadays. Therefore it might be as important as the protection of IP’s right or even more important for some countries and they would prefer restricting. Personally speaking, I think plain packaging really give the incentive to quit, or at least to think of quitting smoking. But there might be other ways to tackle the problem and decreade the consumption of tabacco.

On September 28, 2012, the WTO decided to establish a dispute settlement panel at the request of Ukraine to study the complaint against measures taken by Australia concerning trademarks and other plain packaging requirements. Ukraine mentioned the violation of following articles of the TRIPS agreement : Articles 1, 1.1, 2.1, 3.1, 15, 16, 20 and 27. We’ll review them one by one to try to figure out if Ukraine’s claim based on these articles is legitimate or not.

The first article states that all members should give effect to the provisions of the TRIPS agreement. It also mentions that members can go beyond the protection that is required in the agreement, provided that these additional rules do not contradict the provisions found in TRIPS. It is hereby clear that members are given a certain flexibility to complement the existing provisions if they wish to do so. And this is where the problem arises, because according to Ukraine, the Australian legislation is in contradiction with some of the articles of TRIPS.
This first article also says that “Members shall accord the treatment provided for in this Agreement to the nationals of other Members”. Ukraine claims that the Australian measures fail to respect this non-discrimination principle by according less favorable treatment to products imported from other countries than to those who are from Australian origin. Thereby they do not provide equal competitive opportunities to all imported tobacco products alike.

As already mentioned before, the disputed measures fail to respect the non-discrimination requirements. This also indicates a violation of article 3.1 of TRIPS stating that “Each Member shall accord to the nationals of other Members treatment no less favorable than that it accords to its own nationals with regard to the protection of intellectual property ». The same idea of non-discrimination can be found in article 27 of TRIPS which says the following : « patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. »

It is also held by Ukraine that these Australian laws clearly violate article 15.4 TRIPS because it is clear that the measures prevent the registration and protection of tobacco-related trademarks. Thus it goes against the rule that the nature of the goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark. The same deduction can be made to conclude to the infringement of article 2.1 TRIPS.

There is also a breach of article 16.3 TRIPS for the measures fail to provide the protection for well-known brands simply because they don’t allow tobacco industries to prove that they are entitled to such a protection. Furthermore, there is a violation of art 16.1 of TRIPS because since the tobacco-companies cannot use their trademark signs, they are not able to use these signs and prevent third parties from using similar ones.

Finally, there is an obvious infringement of article 20 of the TRIPS Agreement because “the Australian legislation constitutes an unjustifiable encumbrance of the use of trademarks by imposing the use of the trademark in a special form and in a manner that is detrimental to the trademark’s capability to distinguish the goods of one undertaking from those of other undertakings”. This is true because The Plain Packaging Act requires that tobacco product packages be “drab dark brown, in a matte finish, with no other colors, logos, or brand features visible on the package, other than the brand and variant name in a standard form and font below the graphic health warning”. The same act also imposes a standard form on the type and size of the package to be used.

After the analysis of these articles, I believe Ukraine’s claim is legitimate. There’s a clear infringement of several TRIPS articles. There are various negative consequences that could arise from plain packaging. For starters the fact that tobacco smuggling would increase because plain packs are more easily counterfeited. Furthermore, plain packs would cause confusion and extra costs for small businesses. Of course, there is no denying that Australia’s prior intentions are admirable, but by implementing these measures, there might be a high risk of disproportion of the different interests.

Plain packaging was introduced by the Australian Tobacco Plain Packaging Act (TPP) of 2011. Quite obviously, its goal is to have a positive impact on the consumption of cigarettes, by encouraging people to quit smoking or discouraging them from taking up smoking.
But what does this act imply, concretely? Plain packaging, as the Australia’s High Court has defined, is purposed to improve public health by imposing significant restrictions on the color (which is now an unattractive brown color), shape and finish of retail packaging, and by prohibiting the use of trademarks on cigarette packaging. The Act only allows the mention of the brand in common lettering format.
Of course, this is an obvious attack on the protection provided by trademark, and some (amongst which Ukraine, but also the Dominican Republic) have recently defied the legality of the Act and alleged that it has been adopted in violation of several provisions of the TRIPS Agreement.
Allegedly, articles 1, 1.1, 2.1, 3.1, 15, 16, 20 and 27 have been violated.
What is the reasoning behind this?
To understand the extent of the issue, it is necessary to review these provisions and if necessary to nuance them.

– Article 1.1 basically states that States may but do not have to give greater protection. States have the liberty to choose the methods of implementation of the Treaty.
– Article 3.1 provides for equal treatment
The section dedicated to trademark becomes very interesting regarding possible different interpretations.
As such, article 15.4 provides that “The nature of goods and services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark”. Quite obviously, this provision is also violated since the Act now prohibits the registration of trademark which relate to cigarette branding and packaging. Only cigarettes are targeted by this measure.
Moreover, combined with articles 1.1, and 3.1, this seems goes against a general principle of equal treatment, since owners of rights related to the trademark protection of cigarettes do not have the same liberty of choice nor the same extent of protection than owners whose trademark protection is related to another type of good.
Article 16: 1 then provides that “The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use.
This article is not very supportive of the TPP Act either: by imposing a similar appearance for all cigarette packages, the Australian Parliament takes away the right that is provided for in the present provision, which consists in a power of consent, a right to allow a third party to use similar or identical recognition signs. This right, inherent to trademark, transfers this right to the Australian Government.
Article 20 then provides that “the use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings”. Again, not much research is needed to see that the measure prescribed by the TPP Act does create a problem regarding the ability to recognize different brands.
However, coupled with articles 17 of the TRIPS Agreement, attention must be paid to the principle of proportionality and the importance of public interest.
Indeed, article 17 provides that “Members may provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties”.
I believe this article, although not invoked by any party, may somehow counterbalance the arguments advanced by the Act’s attackers. It has been stated by the Australian Government that the sole purpose of this legislation is to create a positive impact on public health, by discouraging the consumption of cigarettes. As article 17 allows Members to limit the protection provided by trademark, I believe any Court would have to put the interests at stake in balance: on the one hand, we have the interest of the population, its longevity and its general health, knowing that more and more people get an addiction to the substances contained in the cigarettes. On the other hand, we have an economic interest: the market of cigarettes is very important and very lucrative, and measures as imposed by the Act would, without a doubt, affect it quite negatively.

Finally, article 27 states that all innovative inventions may be registered. However, it nuances the absolution of this statement by allowing the States to exclude from patentability all inventions which may harm animal or human life.
It is now widely recognized that the substances contained in cigarettes are very harmful for the environment and for human life, as it is the origin of air pollution and the source of cancers which affect not only the smoker himself, but also his surroundings (including non-smokers and children which are inevitably exposed to it)

I believe it belongs to each Court’s sensibility to the matter to decide which is more important, for both sides are defendable. Besides, although the critics against Australia’s High Court’s decision seem founded to me , it would not be the first time that a Court has interpreted one or more provisions broadly (sometimes very broadly) for the purpose of greater “morality” or for the general public interest. I must also point out that this decisions, although taken by Australia, is groundbreaking in the sense that it does not only affect Australia’s public interest, but the entire living population.
So, the key question that surrounds this whole debate seems to be that of proportionality. In this case, I think that from a strict “respect-of-the-law” point of view, the Australian Parliament has been oblivious of the TRIPS Agreement which they are compelled to respect, and have interpreted the Agreement in an excessively broad manner, and “forgetting” a general principle of adequacy between the measure taken and the purpose to be achieved. The economic interests at stake have hardly been taken into account, which goes against article 17 of the TRIPS Agreement. Although it has been proven very effective (though different studies), seems a little bit extreme and perhaps other less limiting measures would have been suitable.
From a more “humanistic” and long-term point of view, I believe this progressive and innovative decision is a turning point which might in fact be very beneficial, and should be an example.