09 September 2013

TRIPS and Tobacco

'Rights, Privileges, Legitimate Interests, and Justifiabilty: Article 20 of TRIPS and Plain Packaging of Tobacco' by Mark Davison and Patrick Emerton in American University International Law Review (Forthcoming) comments that
 Australian legislation for the plain packaging of tobacco products raises a number of issues concerning the interpretation of TRIPS. Some have argued that TRIPS either confers a right to use or something approaching a right to use that is far more than a privilege to use a trademark. Consequently, the room for government regulatory action against the use of trademarks is severely restricted by Article 20 of TRIPS. This article rejects those arguments as being too focussed on what are the claimed entitlements of trademark owners without adequately addressing the capacity of governments to restrict the privilege of use of trademarks and the nature of the relationship between trademark owners and governments acting in their capacity as regulators. TRIPS does not confer upon trademark owners a claim to be at a particular point on any spectrum of entitlement to use their trademarks in the course of their trade. It establishes a complex system of rights and obligations, and it is against that system, not individual trademark owners’ hopes for the outcome of that system, that the international legality of plain packaging is to be assessed.
The authors ask "Do the interests of the State justify a claim right to support the duties imposed on tobacco companies by plain packaging legislation?". They respond
In order to answer this question, one needs to weigh the interests of the State that are described above against the limited legitimate interest of trademark owners that is identified by Article 20, keeping in mind the foregoing remarks about onus of proof. What one does not do is consider the question from a fixed position of the importance of trademarks to trademark owners or by reference to the full entitlements of trademark owners against other traders. Doing so fails to take into account the relational nature of property, rights, privileges and legitimate interests. 
On the other hand, the legitimate interests of the State need to be considered in the context of the intellectual property in question. One cannot simply say ‘public health’ or ‘social and economic welfare’ or ‘balance of rights and obligations’ and automatically win the day. However, the connection between those legitimate interests and the many different working parts of the international trademark system has been spelled out above in some detail. 
Finally, in balancing the respective interests of the State and tobacco trademark owners, some important aspects of the specific balance created by the plain packaging legislation need to be borne in mind. First, the legislation does not take away the rights of exclusion or even the opportunity to obtain the right of exclusion via registration. If the tobacco companies can win the hearts and minds of the Australian people in a democratic election, the government can alter the legislation and fully restore the privilege of use that existed prior to the plain packaging legislation. Tobacco companies can and do make donations to electoral parties that are prepared to accept those donations. They can and have run their own advertising campaigns against plain packaging legislation albeit with a spectacular lack of success. In that sense, the plain packaging legislation is temporary because it is no more permanent than any other legislation. Second, the legislation applies to all tobacco packaging equally. It does not discriminate in favour of one trademark owner or against another. 
Third, and importantly, a very significant aspect of the privilege of use is maintained. As noted at the start of this article, the privilege of using word trademarks is maintained by the legislation.Due to the regulation of sale of tobacco prior to the plain packaging legislation, word trademarks were the primary, if not the sole means by which tobacco products were differentiated in the course of trade. Display of packaging at or prior to the point of sale was already prohibited. The maintenance of the privilege of using word trademarks means that tobacco companies continue to have the opportunity to distinguish their products from other products and to do so by the prime means of distinguishing that existed prior to the plain packaging legislation. This maintenance of that critical part of the privilege of distinguishing one tobacco product from another tobacco product is part of the balancing of the interests of tobacco trademark owners with the legitimate interests of government. 
Fourth, it seems that all commentators agree that a government can simply prohibit the sale of tobacco altogether without that prohibition being subject to any scrutiny or any scrutiny of any significance under TRIPS. The theoretical basis upon which the government can do an end run around trademarks in this way is not clear. It might well be argued that if the sale of the product is prohibited, there ceases to be any legitimate interest in using trademarks to differentiate between different brands of the product. However, that would seem to avoid the logically prior question as to whether the government has a legitimate interest in banning the product, which interest underpins a claim right grounding a correlative duty not to sell the product; especially since the ban has the effect of both detrimentally affecting the right of exclusion and the privilege of use. Presumably, the Paris Convention requirement not to deny registration on the basis of the nature of the goods in question would not apply where the sale of the product is unlawful and both registration and the right of exclusion would be lost in due course. (If the position were otherwise, trademarks for heroin would not only be registrable but there would be an obligation to register them.) While there may be disagreement about the theoretical basis or justification for prohibiting the sale of (hitherto) trademarked products, it would probably be agreed that a prohibition on any sales of tobacco would not benefit the interests of tobacco trademark owners. If the government has the power to impose a duty not to sell at all and its power to impose such a duty is unquestioned, that fact must have some implications for the balancing act under Article 20. If regulation short of prohibition does no greater damage to the relevant legitimate interests of tobacco trademark owners than prohibition, why does government not have the power to impose that regulation, particularly when (as noted above) tobacco trademark owners continue to enjoy the privilege of using their word trademarks to distinguish their products in the marketplace? 
Fifth, we draw some comfort from the fact that the legal advice to major tobacco companies clearly indicated to them that they have no prospect of successfully resisting plain packaging legislation via TRIPS or GATT. In 1994, a number of tobacco companies held a conference addressing issues such as the possibility of plain packaging. A presentation to that conference stated that a working group had considered the issue with a strong legal accent. The conclusion of the working group expressed in the overhead slide to the conference was literally: “GATT/TRIPS little joy”. We agree with the legal conclusion implicit in that statement but do not necessarily agree with the sentiment accompanying it. The occasional suggestion that Article 20 was specifically drafted with plain packaging in mind is news to tobacco companies. 
Ultimately, there is good reason for believing that the real complaint of tobacco companies is the loss of a chance to further promote their product. Their interest in doing so was never legitimate.
They conclude -
All of the above could be put into the following, relatively brief statements. 
1. Trademark owners do not have a right to use their trademarks. Nor do they have something more than a privilege that approaches a right. They have a privilege of using their trademarks. 
2. In considering the extent to which the privilege is defeasible, attention needs to be paid to the relationship between trademark owners and those claiming a right to prevent the exercise of the privilege. Other traders have little or no legitimate interest in preventing the exercise of the privilege of use. In that sense and in the context of that relationship, the privilege of use is not subject to significant limitations. 
3. Governments, as regulators of trademarks in a manner that does not favour other traders, do have significant interests in preventing the exercise of the privilege. In that sense and in the context of that relationship, the privilege of use is subject to very significant limitations.  
4. The privilege is particularly defeasible in the context of public health and the promotion of tobacco via the use of signs to promote consumption. 
5. Article 20 acknowledges points 1 to 3, by permitting States to defeat the privilege via the assertion of claim rights against trademark owners when such claim rights are justifiable, that is, are grounded in internationally recognizable legitimate interests that defeat those of trademark owners. In light of point 4, plain packaging is likely to be justifiable in this sense and hence permissible under Article 20.