Transcript The International Legality of Plain Packaging - Smoke-Free
The International Legality of Plain Packaging
Eric LeGresley [email protected]
Plain Packs Include
• ‘wordmark’ of TM • std. pack colour,
dimensions
• std. font style, size,
colour, placement
• national treatment
Does Not Include
• expropriation of TM ownership • blanket denial of use of TM elements off pack
Tobacco Co. Arguments
1 2 3 4 5 discrim. foreign/new entrants inadequate protection of TM unjustif. encumbrance on TM use unfair competition unnecessary obstacle to int’l trade
Tobacco Co. Arguments
6 7 creation of confusion disguised restriction 8 9 encouragement of counterfeiting expropriation of investment 10 inequitable treatment of investment
Argument No. 1
Even if national treatment results in no
de jure
discrimination, plain packaging amounts to
de facto
discrimination against new entrants in violation of the
WTO Agreement
.
Rebuttal
if de facto discrim., saved by the WTO Art. XX(b) health exception
Art. XX(b) has 3 requirements: manner of application is • • not arbitrary or unjust discrim.
not a disguised restriction and the policy is • necessary to protect human health
WTO Agmt.
, General Exceptions
WTO Agmt , Art. XX “Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustif. discrim… or a disguised restriction on int’l trade, nothing in this Agmt shall be construed to prevent… measures:… ( b ) necessary to protect human, animal or plant life or health”
Manner of Application
Reformulated Gasoline : “disguised restriction” includes both arbritrary and unjustifiable discrimination
Auto Spring Assemblies disguised restriction : if the implementation does not overreach the identified purpose, not a
Disguised Restriction?
PP is not prima facie • • disguised: no intention to deceive no advantage for domestic
PP would not exceed public health purpose if removes only elements of pack design usable to segment and expand the market
Necessary?
is PP least trade restr. measure that would achieve the health purpose?
WTO (trade not health experts) should defer to chosen health purpose provided it isn’t disguised
defining a legisl. purpose that is closely linked to the cig pack thus is critical for Art. XX(b) acceptance
Purpose of Plain Packs
to prevent retail tobacco packaging being used as a visual enticement for sale or consumption, whether: • at the store counter, or • as a ‘badge product’ in public
Argument No. 2
Plain packaging provides inadequate protection of tobacco TM rights as required under the
Paris Convention
,
TRIPS
, and regional trade agreements such as
NAFTA
.
Registration of TM
Paris , Art. 6 quinquies “A. (1) Every TM duly registered in the country of origin shall be accepted for filing and protected… “B. TM covered by this Article may be neither denied registration nor invalidated except in the following cases… [none of which are applicable]” TRIPS , Art. 15(1) “Any sign… capable of distinguishing the goods or services of one undertaking from those of other undertakings… shall be eligible for registr. as TM.”
Similar right under NAFTA Arts. 1708(3)&(4)
Exclusivity of Use
TRIPS , Art. 16(1) “The owner of a registered TM shall have the exclusive right to prevent all 3rd parties not having the owner's consent from using in the course of trade identical or similar signs…”
Almost identical protection is also provided under NAFTA Art. 1708(2).
Rebuttal
these treaty rights pertain to TM registration & exclusivity of use
PP permits/grants: • • • • TM registration use of ‘word mark’ on pkg. sufficient use to maintain registr.
right to prevent others using TM
Rebuttal
if PP creates non-use of TM this is independent of the will of the TM owner, thus is not justification for termination of registr., under NAFTA
Argument No. 3
The limits imposed by plain packaging unjustifiably encumber TM use in breach of
TRIPS
and
NAFTA
.
TRIPS
: Encumber TM
Art. 20 “The use of a TM… shall not be unjustifiably encumbered… in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings…
TRIPS
: Encumber TM
But also note Art. 17 “Members may provide ltd. exceptions to the rights conferred by a TM… provided that such exceptions take account of the legitimate interests of the owner of the TM & of 3rd parties.”
NAFTA
: Encumber TM
Art. 1708(10) “No Party may encumber the use of a TM in commerce by special require ments, such as a use that reduces the TM’s function as an indication of source...”
NAFTA
: Encumber TM
But note Art. 1708(12) “A Party may provide ltd. exceptions to the rights conferred by a TM… provided that such exceptions take into account the legitimate interests of the TM owner and of other persons.”
Rebuttal
‘justifiability’ scales with the importance of the policy
limits on TM use are justifiable: • • objective is significant & pressing rationally connected to objective
Rebuttal
limits on TM permitted provided they take into account the legitimate interests of TM owner and 3 rd parties
public is a 3 rd party and protection of health is a legitimate interest
Existing ‘Plain Packs’
comparable TM use limits exist • • zoning by-laws restricting signs prescription drugs in plain bottles
Argument No. 4
Mandated plain packaging of tobacco creates unfair competition in violation of the
Paris Convention
.
Paris
, Unfair Competition
Art. 10 bis “(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.
(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.”
Rebuttal
policy adherence is not the act of a competitor
implementation is not unfair if there is national treatment – foreign & domestic treated alike
separate print runs required for most markets so no added printing cost
Argument No. 5
Plain packaging is an unnecessary obstacle to international trade contrary to the
TBT Agreement
and
NAFTA
.
TBT
: Unnecessary Obstacle
Art. 2.2
“Members shall ensure that technical regs. are not… applied with a view to or with the effect of creating unnecessary obstacles to int’l trade. “For this purpose, technical regs. shall not be more trade-restrictive than necessary to fulfil a legitimate objective, of human health or safety...” taking account of the risks non-fulfilment would create . Such legitimate objectives are… protection
TBT
: Unnecessary Obstacle
Note the preamble of the TBT which states: “ Recognizing that no country should be prevented from taking measures necessary to ensure the… protection of human, animal, and plant life or health… at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination… or a disguised restriction on int’l trade...”
NAFTA : Unnecessary Obstacle
Art. 904(4) “No Party may… apply any standards related measure… with the effect of creating an unnecessary obstacle to trade... “An unnecessary obstacle to trade shall not be deemed to be created where: (a) the demonstrable purpose of the measure is to achieve a legitimate objective; and (b) the measure does not operate to exclude goods of another Party that meet that legitimate objective.”
Rebuttal -
TBT
health measures are OK when “no more trade restr. than necessary,” but also weigh downside risk
preamble: health protection at the level country deems appropriate if application not arbitrary, unjustif. discrim. or a disguised restriction
Rebuttal -
NAFTA
not an “unnecessary obstacle” if • • objective is legitimate, and measure does not exclude foreign goods that meet the objective
Argument No. 6
Plain packaging of tobacco products creates confusion in the minds of the consumer in violation of the
Paris Convention
and
TRIPS
.
Paris
: Create Confusion
Art. 10 bis (3) “The following in particular shall be prohibited… all acts of such a nature as to create confusion … with the establishment, the goods, or the industrial or commercial activities, of a competitor…” Art. 6 bis (1) “[Parties] undertake… to refuse or to cancel the registration, and to prohibit the use, of a TM which… [is] liable to create confusion…”
TRIPS : Creation of Confusion
Art. 16 (1) “The owner of a registered trademark shall have … [the right to prevent others from using identical or similar signs] where such use would result in a likelihood of confusion …”
Rebuttal:
PP is an act of legisl. obeyance not the choice of competitor, thus the prohib. on competitive acts Paris that would create confusion is inapplicable, as is the obligation to cancel a confusing TM
new PP will look less like the old TM than the prior branding of competitors’ cigs, thus TRIPS prohibition on use of signs identical or similar to a TM is inapplicable
Confusing Trademarks?
Confusing Trademarks?
Argument No. 7
Plain packaging of tobacco is a disguised restriction to trade in violation of
TRIPS
.
TRIPS : Disguised Restriction
Art. 3(1) “Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property…” Art. 3(2) “Members may avail themselves of the exceptions… only where such exceptions are necessary to secure compliance… and where such practices are not applied in a manner which would constitute a disguised restriction on trade.”
Rebuttal
Both domestic and foreign cigarettes woul
no benefit conferred on domestic producers, the hallmark of a disguised restriction
Argument No. 8
Mandated plain packaging of tobacco encourages counterfeiting in violation of
TRIPS
.
TRIPS
: Counterfeiting
TRIPS incl. numerous provisions regarding protection against counterfeiting, including Arts. 41, 46, 51, 59, and 61
Rebuttal
TM increase product identification, they do not make counterfeiting more difficult • many counterfeit branded items currently sold, including tobacco products • copying TM image is not an impediment to counterfeiters PP are entirely compatible with anti counterfeit markings such as holograms
Argument No. 9
Plain packaging is tantamount to an expropriation of investment in violation of
NAFTA
.
NAFTA : Expropriation & Compensation
Arts. 1110(1) and (2): only expropriate investment if: • done for a public purpose, • on non-discriminatory basis, • with due process of law, and • payment of fair mkt value comp. Art. 1110(7): no compensation if limitations of IP rights are consistent with NAFTA Chpt. 17
Rebuttal
does not strip ownership, so not exprop., ntlzn. or tantamount to ntlzn. not tantamount to exprop. because owner may still sufficiently use the TM assuming PP is tantamount to exprop.: is consistent with Chpt. 17, rendering comp. requirement inapplicable assuming above points fail, value comp.
NAFTA would not preclude PP simply require fair mkt.
Argument No. 10
Mandated plain packaging is an unfair and inequitable treatment of investment in violation of
NAFTA
.
NAFTA
: Unfair Treatment
Art. 1105 (1) “Each Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.”
Rebuttal
‘fair and equitable’ obligation sums Arts. 1102, 1103 and 1104 which require providing treating which is the better of ntl. treatment or MFN (if that exceeds ntl. treatment)
PP, applying to all domestic and all foreign producers, constitutes both ntl. treatment and MFN
The Final Word
“In summary, the… international trade argument by itself will not however be sufficient to ward off the threat of plain packs.”
Internal industry memo “International Trade Aspects of Labelling” J.F. Clutterbuck, 11 April 1994 502592651-655 (almost certainly John F. Clutterbuck, solicitor, Rothmans International)