Guest Post: Plain Packaging Laws for Tobacco Products

L. Gopika Murthy submits her second piece for the SpicyIP Fellowship with a guest post on Plain Packaging Laws. The submission discusses the purpose of plain packaging laws as well as the effect of these laws on the intellectual property rights of the tobacco companies. Gopika is a 2nd year student at NLSIU, Bangalore and her first submission can be viewed here


Recently, a Private Members Bill seeking amendment to the present Cigarettes and Other Tobacco Products Act (COTPA), 2003 was introduced in the Lok Sabha. The proposed Bill, namely, The Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Amendment Bill 2012,[1]asks for plain packaging of cigarettes and other tobacco products. This essentially aims to de-glamourize tobacco packets by restricting tobacco industry logos, colours, brand logos and promotional texts from the packets of tobacco products. Brand and product names would be permitted in a standard colour, position, font and size in a predefined area on the packet. Therefore, if the Bill gets passed, all packets of tobacco products will be similar with 60% of the front and the back cover occupied by graphic health warnings. This is an attempt to reduce the appeal of cigarettes and tobacco products for the youth and especially to deter their initiation into tobacco use.[2]

Image from here

This Bill has been proposed immediately following the enforcement of mandatory plain packaging laws in Australia on December 1. Australia has thus become the first county to pass legislation making plain packaging of tobacco products compulsory. Tobacco products in Australia now are all sold in brown packets with most of the packets covered with graphic images that convey the hazards of tobacco use. These images vary from those of a skeletal man dying of cancer, a sick baby in a hospital with an oxygen tube going to its nose to those of mouth cancer and a sick child affected by the cigarette smoke. Surveys conducted among consumers in Australia indicate that many of them find these images extremely off-putting and that it does influence their decision to buy a tobacco product.[3]While some smokers state that they continue to buy the packets despite their discomfiture, some have switched to cigarette cases to avoid buying the packets. However, some smokers have answered that they do not really notice the packets and therefore it does not influence their decision to purchase the packets at all. The major purpose behind this legislation is to make the health hazards of smoking more visible and therefore, to render tobacco products as drab and unattractive as possible. It is especially aimed at the youth as in Australia 80 percent of the smokers start before the age of 18 and 99 percent before the age of 26. The health authorities in Australia expect that the plain packaging laws would help reduce the number of people taking up tobacco use.

The constitutionality of the plain packaging law was challenged in Australia by tobacco companies including British American Tobacco, Imperial Tobacco and Philip Morris on the ground that their intellectual property was being acquired by the State on other than just terms. [4]However, the seven judge bench of the Australian High Court has ruled that the plain packaging laws are not unconstitutional on that ground. The Court held that although the IP rights and other related rights of tobacco companies may be restricted as a result of the plain packaging laws, the restriction imposed by this law does not “involve the accrual of a benefit of a proprietary character to the Commonwealth which would constitute an acquisition.”[5] 

Legal arguments against plain packaging laws have been raised on the grounds that it violates Art 20 of TRIPS, 1994. Art 20 of TRIPS specifies that the use of a trademark should not be restricted to such an extent that is detrimental to its capability to distinguish the goods or services of one undertaking from that of another. However, the Parliament of Australia has rebutted this argument using Art 8(1) and Art 17 of TRIPS which allows member states to adopt measures that are necessary for protecting the public health provided that those measures do not take away the legitimate interests of the owner of the trademark. The restriction placed by the plain packaging laws which allows the brand logo of the tobacco companies to be displayed only in accordance with a pre-defined setting on a particular area of the packet, according to the Parliament does not take  away the IP rights of the tobacco companies. Philip Morris Asia has also instituted proceedings against Australia under the 1993 Bilateral Investment treaty between Australia and Hong Kong[6]on the ground that this law expropriates its IP rights and denies it fair and equitable treatment. Moreover, three countries have instituted proceedings against Australia under the WTO for breach of their commitment to global trade rules.

The Bill proposed by Shri. Baijayant Panda is likely to be introduced in the winter session of the Parliament. If this bill is passed, WTO proceedings as well as a constitutional challenge under Art 300A by the tobacco companies for deprivation of their IP rights without adequate compensation may be instituted. However, considering that the Bill only places restrictions on the display of the brand logo and brand name and does not completely disallow it, the constitutional challenge is unlikely to hold ground.

[Editor’s note: For a broader discussion on whether ‘intellectual property’ falls within the definition of ‘property’ as understood in Art. 300A of the Constitution, please see Prashant’s previous post here

[4]The Australian Constitution allows the Parliament to acquire property only “on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws”.

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