As a law school student, I once heard an accomplished practitioner of international law stating that “International law is English”. The WTO Appellate Body’s Report in the tobacco plain packaging dispute issued in June this year proves something more than this statement: “International law is convoluted English”. I had previously written about the WTO Panel Report in this dispute (or set of disputes), which are available here and here.
Background
To recollect, this set of disputes concerned Australia’s legislative measures to impose plain packaging norms on tobacco products (“Tobacco plain packaging” or “TPP” measures), whereby the domestic law eliminated the possibility of applying figurative trademarks, or figurative or stylised elements of composite and wordmarks to tobacco retail packaging and products. The Panel dismissed the complaint (available here). This was appealed to the WTO Appellate Body (here), which dismissed the appeal and agreed with the Panel Report.
There are multiple treaties and issues involved in this dispute, though not all are relevant for the present blog. The present focus is the TRIPS Agreement. The primary issues concerned the protection of Article 16.1 and Article 20 of the TRIPS Agreement.
Quick summary
On Article 16.1 of the TRIPS Agreement, the Appellate Body agreed with the Panel that there is no obligation on member countries to confer the positive right to use a registered trademark; there is only a mandate to confer a negative right to “prevent” others from using the registered trademark. Correspondingly, there cannot be a violation of Article 16.1 of the TRIPS Agreement if a member country prohibits the use of certain registered trademarks. All arguments of the Complainants/appellants that the right to use is necessarily inherent/implied were rejected on the application of customary rules of treaty interpretation (paragraphs 6.571-6.619).
On Article 20 of the TRIPS Agreement, though the Appellate Body did point out a particular error in the reasoning of the Panel (paragraphs 6.692-6.694), it ultimately agreed with the conclusion reached by the Panel (paragraphs 6.635-6.699). That is to say, the TPP measures were not “unjustifiable” encumbrances on the use of a registered trademark. As a matter of interpretation, without necessarily exhausting the list of factors to be considered under Article 20, the Appellate Body agreed with the Panel that the factors in determining whether an encumbrance “unjustifiable” or not, included (paragraphs 6.651, 6.659):
- the nature and extent of encumbrances resulting from special requirements, taking into account the legitimate interest of the trademark owner is using its trademark in the course of trade;
- the reasons for the imposition of special requirements; and
- a demonstration of how the reasons for the imposition of special requirements support the resulting encumbrances.
History would show that nothing is as simple when it comes to an Appellate Body report. On the specific topic of whether one must consider alternatives that impose lesser restriction/encumbrance, in 1 of the most convoluted passages I have ever read the appellate body holds (paragraph 6.653):
“…Therefore, we do not consider that the test of necessity, which includes a consideration of alternative measures, could be transposed into the examination of whether the use of a trademark is unjustifiably encumbered by special requirements under Article 20 of the TRIPS Agreement. This does not mean that, in the circumstances of a particular case, the existence of an alternative measure involving a lesser degree of encumbrance on the use of a trademark cannot be used as a consideration in evaluating the justifiability of special requirements and related encumbrances on the use of a trademark. However, such an examination is not a necessary inquiry under Article 20 of the TRIPS Agreement.”
The critique qua Article 16.1
One of the fundamental arguments raised by the Complainant in the context of Article 16.1 is that by prohibiting the use of the registered trademark, the TPP measures, over time, would make it impossible for the right holder to demonstrate a “likelihood of confusion” in an infringement proceeding. I had previously examined this in my earlier post on the Panel Report, where I had concluded that though the Complainant had not particularised their arguments clearly, this is a strong argument in a certain subset of situations (similar goods and identical/similar wordmark). Unfortunately, the particularised arguments were not raised at the Appellate Body level either.
Nevertheless, the Appellate Body agrees with the Panel’s reasoning in rejecting this argument (paragraphs 6.597-6.602; 6.614-6.619), which was this: the creation or maintenance of the factual circumstances that would result in such “likelihood of confusion” is not an obligation under the TRIPs Agreement and thus, by reducing the instances where a likelihood of confusion arises (factually), a member does not violate Article 16.1.
Immediately, what comes to my mind is a well-known doctrine: what cannot be done directly, cannot also be done indirectly. From an interpretation point of view, I would typically pigeonhole this doctrine within the broader ambit of the principle of effective interpretation (the famous ut res mages… principle), which requires that every word and every provision must be given meaning and effect, to the best extent possible. If a right is granted only on paper simply to be taken away in practice, I would consider it to be in violation of the treaty. Granted, that the TPP measures, in my analysis, erode or indirectly take away the right under Article 16.1 in a certain subset of situations. However, to not even acknowledge this is just intellectual dishonesty.
The critique qua Article 20
Another amusing part of the Appellate Body judgement concerns the interpretation of Article 20 and its relationship with Article 16. According to the Appellate Body, Article 20 does not confer a “right” on the trademark holder but only imposes an obligation on the member country from “unjustifiably” encumbering the use of the trademark (paragraph 6.610). Suddenly, it took me back to my 1st semester in law school, when I learned about jural correlatives (Hohfeld): the presence of duty in one indicates the presence of right in another. Yet, the Appellate Body believed that the presence of an obligation on member country to not “unjustifiably” encumber the “use” of a trademark does not imply that the trademark holder has a right to “use” by default.
As illogical and nonsensical as the Appellate Body this finding may be, it justified its conclusion on the customary rules of treaty interpretation because Article 20 does not use the word “right” whereas Article 16.1 explicitly uses the word “right”. Just another example of where interpretation transcends logic.
In other parts of the Report, the Appellate Body does recognise based on precedents that “[e]very trademark owner has a legitimate interest in preserving the distinctiveness, or capacity to distinguish, of its trademark so that it can perform that function [of distinguishing goods and services of undertakings in the course of trade]” (paragraph 6.667, citing the Panel Report in EC-trademarks and geographical indications (US)). Thus, “use” of a trademark is a “legitimate interest” for a trademark owner but not the “right”, even though there is a duty/ obligation placed on member countries as far as placing restrictions on “use” is concerned.
Concluding thoughts
I do not have a conclusive view on whether the TPP measures are TRIPS compatible. However, with the deepest respect, I believe the Appellate Body Report is intellectually dishonest; it is a play on words. And, as cynical as it may sound, I suspect the Appellate Body wrote the Report to justify a predetermined conclusion rather than to reach a conclusion.
Featured image from here
It is no strange that most domestic practitioners when read TRIPS Agreement, they expect positive rights sparkling out from the Agreement.
Your argument under heading :the critique qua Art. 20″ is good for the interpretation of domestic IP laws but not for TRIPS Agreement. It is well settled customary law that a treaty cannot be interpretated in a manner to broaden its scope to cover what was not agreed by the members of the treaty.
However, I believe that Trade Marks are only IP for which provisions were drafted with different intentions than other IPRs mentioned in the TRIPS. Even Prof. Gervais agrees on it. This is what the complainant missed while arguing. You have to look into the history of TRIPS (exhausting work).
Thanks for your comment. But I disagree with you. You may not be aware that I am a WTO law practitioner – have been so for many years, and was fortunate to argue actual cases before both the Panel and the AB; living in geneva for a few years. So, when I wrote the blog entry, I was fully conscious of Art. 31-33 of the VCLT and pacta sund servanda. I have lived and breathed those provisions for several years handling wto litigation.
I understand your concern, though and to a large extent, I agree with you – it is tough with the TRIPS. But in truth, having followed Appellate Body Reports on TRIPS and other Agreements, my position is that the AB has been quite inconsistent in its application of the VCLT. Take the classic example of the Zeroing Dispute. Another classic example is SCM Agreement interpretation of “public bodies”. There are many more examples but I wont bother. The point is that when the AB prefers, it has not been shy of reading a provision expansively, such as to imply standards/obligations using the principle of effectiveness (same as ut res mages…).
Of course, treaty interpretation is always an art (not doubt). But frankly, I was disappointed that the lack of comprehensiveness in the treaty interpretation employed here. Basically, my sense is exactly what I put in the blog – they wrote something to suit a conclusion. I ought to have done a better job of treaty interpretation – I will admit that I don’t necessarily think the conclusion may change in the end (because its tough to argue it as “as such” violation in this case). But that does not mean I agree with their process of treaty interpretation.
Anyhow, your point is taken. THanks.
Pardon my ignorance of your professional expertise in WTO matters. Just to clarify I didn’t mean to point on you personally. I was referring in general to some other people (be it Pro IP or Anti IP), who have misguided the audience especially in this Covid situation.
Thanks for your further inputs.
I would like to read more posts from you (if possible).