Victory Plain and Simple - Australia Triumphs on Tobacco Plain Packaging Law Challenge at WTO

Discussion around plain packaging laws in relation to tobacco products has gone quite in recent times, and the slow movement towards more plain packaging laws hasn't helped this movement. Nevertheless, this blog has discussed the topic to some degree (more here, here and here), and one particular issue in the back burner has been a WTO challenge against the Australian plain packaging legislation. The matter started nearly 5 years ago, and only recently found its ultimate conclusion. The decision by the WTO panel is a behemoth at nearly 900 pages, so this blog post will endeavour to only focus on the main parts, rather than summarise the whole decision. For anyone wanting to know more, please refer to the full decision.

By way of a primer, the case of Australia v Indonesia and others concerned WTO proceedings with regards to the Australian Tobacco Plain Packaging Act 2011, which set certain rules on the packaging of tobacco products. According to Indonesia (and other countries such as Honduras, Cuba and the Dominican Republic) the law contravenes a number of WTO agreements, including the TRIPS Agreement, TBT Agreement and GATT 1994.

The panel first looked at whether the Australian Act contravened Article 2.2 of the TBT Agreement, which prohibits regulations that create unnecessary obstacles for trade that go beyond what's necessary to protect a legitimate objective, including "…protection of human health or safety, animal or plant life or health, or the environment". The panel concluded that the objective of protecting people's health by reducing smoking rates, as put forth by Australia, was a legitimate objective, and didn't restrict trade beyond achieving that legitimate objective (although did potentially restrict trade volumes). They made a 'meaningful contribution' to those ends, and the risk of the non-fulfilment of the objectives by declaring the measures unlawful under Article 2.2 would potentially have grave consequences.

Tobacco manufacturers yearn for the 'good old days'

In relation to the arguments under Article 15 of the TRIP Agreement, which prevents the prohibition of the registration of trademarks where the application of the mark would form an obstacle for registration of the mark. The panel rejected this argument, as the Act does not prevent the registration of marks, even if might impact the level of protection to those marks. They can be registered just as well, just not applied to tobacco products. In terms of Article 16.1 of the TRIPS Agreement, the panel saw that the reduced likelihood of confusion between brands was not an infringement of the article, as "…Article 16.1 does not require Members to refrain from regulatory measures that may affect the ability to maintain distinctiveness of individual trademarks or to provide a "minimum opportunity" to use a trademark to protect such distinctiveness". Article 16.1 is only concerned with the rights afforded to rightsholders relating to trademarks, and not their efficacy (or reduction thereof) through legislation. Rightholders still have the capability to prevent unauthorized use of identical or similar tobacco trademarks on identical or similar products where such use would result in a likelihood of confusion.

Similarly, the Panel saw that Article 16.3 was not infringed either (mandating the protection of 'well-known' trademarks), as the possibility of a reduced knowledge of previously well-known trademarks in the market does not, in itself, constitute a violation of Article 16.3. The panel emphasised that "…Article 16.3 does not require Members to refrain from taking measures that may affect the ability of right owners to maintain the well-known trademark status of individual trademarks, or to provide a "minimum opportunity" to use a trademark in the market".

The Panel then moved onto Article 20 of the TRIPS Agreement, which prevents the unjust encumbering of trademark use through special requirements. They ultimately concluded that Australia's public policy considerations offered an appropriate intervention in the use of tobacco related trademarks through special requirements, i.e. plain packaging. The Panel acknowledged the economic value in the trademarks themselves, but the efforts to curb smoking in Australia through plain packaging have had a genuine impact on smoking rates, and are therefore justifiable under Article 20.

Ultimately the panel saw no infringement of Australia's international obligations under the treaties, and allowed the law to stand.

The decision goes into great detail in many aspects of trade and international legislation surrounding trademarks – well beyond what this blog can, and should, discuss. The decision is hugely important, and will undoubtedly encourage other countries in their adoption of plain packaging measures. Honduras has already stated that they have appealed the decision, so the plain packaging saga will go on for a further number of years, due to the sheer value of the marks and brands at stake.

Source: BBC News

Plainly Winning - Australia Wins Plain Packaging Challenge at the WTO

Plain packaging seems to be a nigh inevitability in the current legislative climate, especially with countries pushing for stricter laws surrounding cigarettes and their marketing. This blog has discussed the challenge against the Australian Tobacco Plain Packaging Act 2011 in the WTO and in Asia (discussed here and here) by a number of countries, but the conclusion of those disputes has been coming for some years now. While similar initiatives have been introduced in a number of countries, including the UK, the disputes seem to have put a damper on those efforts, if nothing at least for the duration of the cases.

The WTO dispute (including others made by other nations) concerns the TPP Act 2011, which introduced measures to standardize tobacco product packaging, including changing the color to a boring olive green, and prominently displaying graphic warning labels. The arguments presented against the legislation were that it presents a technical barrier to trade under the Agreement on Technical Barriers to Trade (Articles 2.1 and 2.2), and infringing various provisions under the TRIPS Agreement, for example giving other Member countries more or less favorable treatment (Article 3.1) or creating an obstacle for the registration of a trademark due to the nature of the goods it is used for (Article 15.4). Finally, the Act allegedly gives imported products less favorable treatment under The General Agreement on Tariffs and Trade (Article 3.4).

As discussed above, while the judgment hasn't been released yet, sources at the WTO have claimed that the WTO has sided with the Australian government's argument on the measure qualifying as a legitimate public health measure. The restriction of branding, therefore, does not infringe the above Agreements, and is appropriate for the aim sought by the legislation.

The details of the case will be discussed more when the decision is released in July, but it still remains an important signpost in the development of plain packaging legislation worldwide.

Without a doubt, the tobacco companies and the relevant countries will appeal the decision, as has been indicated by British American Tobacco.

'Quitting clearly had no benefits', Alan thought

According to the WTO, a barrier to trade would amount to, for example, any methods that would give domestically produced goods an unfair advantage. Additionally, countries have the prerogative to "...adopt the standards they consider appropriate — for example, for human, animal or plant life or health, for the protection of the environment or to meet other consumer interests". Even if the standards are brought in to protect these legitimate aims, they still cannot be "...applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade".

This writer does not claim to be a master of international trade law, but would argue that the application of a plain packaging standard to protect human life and health would not amount to a barrier on trade, as the standard would apply equally to Australian and foreign tobacco producers, and is clearly not an arbitrary or unjustifiable measure to do so. Plain packaging evens the playing field for all tobacco producers, but also seeks to stop the starting of a smoking habit, lowering the amounts of tobacco products used in that particular country (Australia showing a drop of 6% in smoking rates in adults, and the reduction of sales of tobacco products by nearly $500 million after the law's introduction).

In the end, plain packaging will be a hard fought, long battle, which will clearly go on for years to come. The tobacco industry is also in a state of transition from the old business models to new ones, including vape products, but the core remains the same and the brands equally valuable to that business. This writer is wholly for plain packaging, but its impact on IP will be a milestone for not just tobacco, but for other possibly harmful products in the future.

Source: Sydney Morning Herald