Australia’s Big Win at the WTO: Plain Packaging of Tobacco Likely to Pick Up!

In 2012, Australia was the first country to adopt plain packaging measures for tobacco products. Several countries such as France, Ireland, UK etc. followed suit and other countries such as India have initiated legislative processes for introduction of such measures. Plain packaging laws and measures generally impose requirements of removal of logos, minimal branding and colouring, and warning signs. These laws have attracted a lot of debate in recent times since opponents of these laws (mainly tobacco producers) claim that these laws run afoul of their intellectual property rights and fail to affect smoking prevalence rates and proponents of this law claim the opposite by celebrating such measures and citing studies and examples where these measures have proven to be effective.

The WTO Dispute: A Brief Background

On 28th June 2018, Australia recently won a long-standing trade dispute, after a WTO panel (the Panel Report can be found here) rejected complaints brought against it by Cuba, Indonesia, Honduras and Dominican Republic (“Complainants”) regarding its plain packaging measures (in which India had also intervened as one of the third parties). The Complainants argued that the following Australian measures (“TPP Measures”) were inconsistent with Australia’s obligations under the TRIPS agreement-

Earlier, Thomas had written a brilliant post describing the legal basis of these complaints. This post will focus on the Panel’s findings on the alleged violation of the Trademarks and Geographical Indications (“GI”) rights safeguarded under the TRIPS agreement.

On Trademarks

The Panel rejected the argument that Article 6quinquies of the Paris Convention (1967), as incorporated by reference in Article 2.1 of TRIPS, provides for a minimum standard of protection to trademarks registered in the country of origin. Article 6quinquies states that registered trademarks shall be “accepted for filing and protected as is in other countries of the Union”. The Panel found that 6quinquies only requires registration “as is” in other countries in the Union, but the protection afforded to such registered trademarks would be in accordance to the domestic laws of the registering country. The Panel found that the TPP measures do not abrogate the right to duly register a trademark as required under Article 6quinquies.

Article 15.4 states that nature of the product to which trademark is applied should not “form an obstacle to registration of the trademark”. It was argued that since the TPP measures restrict the ability of trademark holders to use their sign on a particular good (tobacco products), it is inconsistent with Article 15.4. The Panel interpreted Article 15.4 to mean “that signs or combinations of signs that are otherwise eligible for registration as a trademark may not be denied such registration on the basis of the ‘nature of the goods or services’ to which the trademark is to be applied.” Thus, the Panel rejected the argument that link between registration and usage and restricted Article 15.4 to registration only. On applying this interpretation to the TPP measures, the Panel found that the TPP measures are not inconsistent with Article 15.4.

Article 16.1 gives the exclusive right to the trademark owner to prevent third parties from using “identical or similar” trademarks without his consent. The complainants argued that the TPP measures reduces the distinctiveness of tobacco-related trademarks in a manner which would reduce the ability of trademark owners to demonstrate a “likelihood of confusion”; thus, it is inconsistent with Article 16.1. The Panel noted that this was not a positive right of using the trademark, but rather a negative right of excluding others. The Panel further went on to note that the restrictions imposed by the TPP measures were limited to packaging and products and did not extend to advertising, promotion and other uses of trademarks which are also essential for creating distinctiveness and hence they were consistent with Article 16.1. This finding of the Panel, however, needs to be reconsidered. If a Member country bans tobacco trademark uses such as advertisement and promotion too, the question of how such “distinctiveness” is to be created arises and remains unresolved.

Next, Article 16.3 incorporates Article 6bis of the Paris Convention, which states that countries of the Union can refuse or cancel registration or prohibit use of trademark which creates confusion with respect to a well-known trademark. The complainants argued that the TPP measures violated Article 16.3 of TRIPs since, by prohibiting certain uses of tobacco-related trademarks, they reduce knowledge of the trademarks and they prevent trademarks from attaining or maintaining well-known status. The Panel noted that there was no positive right to use a well-known trademark under the Article. It further noted that possibility of reduced knowledge of well-known trademark does not violate Article 16.3 since, outside the express obligations mentioned in the Article, Members are neither required to specifically refrain from measures which may affect well-known trademarks nor are they required to maintain their well-known status.

The Complainants next contended that the TPP measures violate Article 20 since it imposes “special measures” which unjustifiably impinge the use of trademarks “in the course of the trade”. By noting that the burden of proof to show that the measures are unjustifiable lies on the complainants, the Panel proceeded to apply Articles 7 and 8, which state that Member countries must enforce IPR in a “manner conducive to social and economic welfare” and adopt measures necessary to “protect public health” respectively to determine whether such measures were unjustifiable . The Panel found that the measures were consistent with Article 20 since the complainants had failed to show that the TPP measures were an overreach of the latitude available under Article 20. In applying Articles 7 and 8, the Panel concluded that, by reducing use and exposure to tobacco products, the measures contributed to Australia’s objective of improving public health and is in line with “emerging multilateral health policies in the area of tobacco control”.

On Geographical Indications

Under Article 22.2(b), Member countries are obliged to prevent uses of GIs which leads to unfair competition. The complainants argue that the measures are likely to violate Article 22.2 (b) since the restrictions on use of GI and uniform trade dress would compel competitors to use indications which are likely to mislead the public. The Panel rejected this argument by stating that mere absence of GI on tobacco packaging would not amount to misleading consumers about product characteristics.

Article 24.3 states that Members must not diminish protection of GIs available prior to date of entry into force of WTO Agreement. The Complainants contended that the TPP measures violated this Article since they diminished the protection available to GIs prior to 1st January 1995 by weakening the reputation of tobacco-related GI and consequently, making it difficult to take action against passing off. In response to this, the Panel found that the protection available under the statutory consumer protection laws and common law remedies for misleading representation prior to 1995 was not diminished in any manner under the TPP measures since there had been no legal entitlement to use a GI to maintain the strength of its protection against passing off previously.

Implications of the Ruling: India and Other Countries

In 2012, India first considered the issue of plain packaging for tobacco products when a Bill to amend the Cigarettes and Other Tobacco Products Act (“COTPA”), 2003 was introduced in the Lok Sabha. The Bill, however, did not pass. Later, in 2014, the Allahabad High Court allowed a PIL for implementing plain packaging for cigarettes and tobacco products. In the same year, the government also released the Cigarette and other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014 via a notification which introduced a mandate that 85% of the surface area of tobacco products must be covered by specific health warnings. In 2017, these Rules were challenged before the Karnataka High Court and were declared to be unconstitutional by the Court since it was not found to be based on substantial empirical data. This judgement was however later stayed by a three-member bench of the Supreme Court on January 8, 2018, stating that the warnings were essential to safeguard the health of citizens.

Since India has, in general, exhibited a pro-plain packaging stance over the years, this ruling is likely to accelerate the implementation of similar laws in India. The feasibility and effectiveness of such laws in India, however, has been questioned previously. The ruling will also most probably lead to a domino effect and accelerate implementation of plain packaging laws in other countries like Canada, Thailand etc. where these laws are still pending. In a nutshell, it seems like the tobacco industry’s campaign to claim its brand rights is nearing its end.

These laws may also have a wider impact on general public health legislation and may lead to implementation of stricter laws for producers of unhealthy foods and alcohol. While Honduras has declared that it will appeal the decision of the Panel, Australia has responded that it is ready to contest the appeal in order to protect the health of its citizens.

Image from here.

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