The tobacco industry, as one might expect, has climbed onto the nearest marble pedestal (the sacredness of property, intellectual property, enterprise and free trade) to denounce the Bill put forward by Senator Fielding - the Plain Tobacco Packaging (Removing Branding from Cigarette Packs) Bill 2009 ["A Bill for an Act to amend product information standards to remove brands, trademarks and logos from tobacco packaging, and for related purposes"] and plans for a Government Bill - being considered by a Senate Committee here - that would give effect to recommendations by the government's Preventative Health Taskforce [PHT].
That denunciation includes a Plain Packaging site, complete with a particularly unhelpful letter from the NSW Law Society (little more than "if either of these proposals was implemented, then trade mark owners could not use their trade marks. While it is noted from the information provided that plain packaging could have positive health benefits, the Committee believes that the protection of intellectual property rights is important and trusts the Taskforce will take this into consideration").
The Institute of Patent & Trade Mark Attorneys of Australia submission to the Senate Committee is somewhat more helpful, concluding that -
It is submitted that there are defects in the wording of the Bill and that those defects are such that the implementation and operation of any resultant legislation will present difficulties. Furthermore, the purpose of the Bill – that is, the removal of trade marks from cigarette packaging – have far reaching consequences – that significantly affect the rights of trade mark owners under the Trade Marks Act and there is nothing in the Bill that addresses the many statutory loose-ends that will inevitably arise under that Act. In addition, the provisions contained in the Bill are in breach of article 8 of the TRIPS Agreement.The Washington-based Property Rights Alliance similarly frets that -
It is submitted that by denying tobacco companies their right to use their trademark to identify their product, this Bill strikes at the very core principles of corporate identity and consumer information that the Australian economy is based upon. As such, it not only violates the legal rights of the companies affected, but furthermore sets a very dangerous principle for the future of a government unwilling to honour or respect intellectual property rights.British American Tobacco (BAT), with around 42% of the $8.3 billion local market, is reported as commenting that it would "take every action necessary to protect ... its right to compete as a legitimate commercial business selling a legal product".
It is finally submitted that as tobacco remains a legal product, the assault on the centuries-old protection of trademarks represents a grave threat to the future of property rights, individual freedom, and freedom of speech, and as such, ought be rejected without reservation.
A paper [PDF] by the Institute of Public Affairs, champions of deregulation and opponents of the 'nanny state', warned this week that forcing the tobacco giants to remove their trademarks from products was equivalent to compulsorily acquiring property, with the result that the government would be obliged to pay the industry $3.4 billion compensation.
Other observers have commented that Australia cannot force removal of the trade marks, because that would be a violation of TRIPS and the Australia-US FTA.
Academic commentators disagree. The Trade Marks Act 1995 (Cth) gives the national government power to revoke trade marks altogether. The Government would appear to have the power to restrict where marks are used (eg evident in restrictions on tobacco advertising on television) without an absolute revocation of a particular mark. There appear to be no plans for the Government to use the marks itself, to favour one mark over another, or to gift one brand owner's existing mark to a competitor (or to a health advocacy body). Would comprehensive restriction however be equivalent to revocation, substantiating the claim that restriction = confiscation = requirement to pay large amounts of compensation?
Advice to Philip Morris on the Plain Packaging site argues that -
Article 20 prohibits any interference with the use of the trademark unless such interference can be characterised as mere justifiable encumbrance:Does TRIPS feature a back door if we accept the contention from the cigarette industry? On first reading TRIPS (Article 7) appears to offer far less leeway than GATT Article XX(b), which would have allowed "the adoption or enforcement by any contracting party of measures ... necessary to protect human, animal or plant life or health". The rationale for restriction on advertising would appear to be the protection of health or life. Although it would affect a handful of companies, which would not be able to exploit the good will inherent in their trade marks, the restriction would not privilege one tobacco company over another, or serve as an invisible trade barrier protecting a local entity from overseas competition.
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.Article 20 does not define the term "encumber". However, according to its ordinary meaning, the term "encumber" refers only to requirements which would have the effect of hampering or limiting the use of a trademark. A requirement, like plain packaging, that effectively constitutes a total ban on the use of a trademark is not a mere "encumbrance". As such, it amounts to an impermissible interference with the trademark owners' rights under TRIPS.
Although plain packaging has been discussed in the UK, Canada and New Zealand it hasn't yet been established. The leading case in the European Court of Justice appears to be The Queen v. Secretary of State for Health (ex parte: British American Tobacco (Investments) Ltd and Imperial Tobacco Ltd; supported by: Japan Tobacco Inc. and JT International SA), 2002, Case C-491/01, in which the court considered restrictions on packaging but did not decide on overall removal of identifiers. In that case the court specifically did not comment on trade mark or other intellectual property aspects of international agreements. In referring to EU Directives it stated that -
the only effect produced by Article 5 of the Directive is to restrict the right of manufacturers of tobacco products to use the space on some sides of cigarette packets or unit packets of tobacco products to show their trade marks, without prejudicing the substance of their trademark rights, the purpose being to ensure a high level of health protection when the obstacles created by national laws on labelling are eliminated. In the light of this analysis, Article 5 constitutes a proportionate restriction on the use of the right to property compatible with the protection afforded that right by Community law.The Court went on to comment that -
I take the view that Article 7 is none the less not at variance with the right of (intellectual) property. In reaching this view I do not base myself on an assessment as to whether the very substance of the use of the trademark right is being undermined in this case, but rather reason on the basis of the trademark right itself. That right is not inviolable in se. Community legislation on trademark rights already provides for a number of individual grounds of invalidity. In this case, particular significance attaches to Article 3(1)(g) of Directive 89/104 on trademarks. Under that provision, trademarks which are of such a nature as to deceive the public are liable to be declared invalid.)
