The International The International Legality ofLegality of
Plain PackagingPlain Packaging
Eric LeGresleyEric LeGresley
[email protected]@sympatico.ca
Plain Packs IncludePlain Packs Include
• ‘‘wordmark’ of TMwordmark’ of TM
• std. pack colour, std. pack colour, dimensionsdimensions
• std. font style, std. font style, size, size, colour, colour, placementplacement
• national national treatmenttreatment
Does Not IncludeDoes Not Include
• • expropriation of TM expropriation of TM ownershipownership
• • blanket denial of use of TM blanket denial of use of TM elements off packelements off pack
Tobacco Co. ArgumentsTobacco Co. Arguments
11 discrim. foreign/new entrantsdiscrim. foreign/new entrants
22 inadequate protection of TMinadequate protection of TM
33 unjustif. encumbrance on TM unjustif. encumbrance on TM useuse
44 unfair competitionunfair competition
55 unnecessary obstacle to int’l unnecessary obstacle to int’l tradetrade
Tobacco Co. ArgumentsTobacco Co. Arguments
66 creation of confusioncreation of confusion
77 disguised restrictiondisguised restriction
88 encouragement of encouragement of counterfeitingcounterfeiting
99 expropriation of investment expropriation of investment
1010 inequitable treatment of inequitable treatment of investmentinvestment
Argument No. 1Argument No. 1
Even if national treatment results Even if national treatment results in no in no de jurede jure discrimination, plain discrimination, plain packaging amounts to packaging amounts to de factode facto discriminationdiscrimination against new against new entrants in violation of the entrants in violation of the WTO WTO AgreementAgreement..
RebuttalRebuttal
if if de factode facto discrim., saved by the discrim., saved by the WTO WTO Art. XX(b) health exception Art. XX(b) health exception
Art. XX(b) has 3 requirements: Art. XX(b) has 3 requirements: manner of manner of application isapplication is
•• not arbitrary or unjust discrim.not arbitrary or unjust discrim.
•• not a disguised restriction not a disguised restriction
and the policy isand the policy is
•• necessary to protect human necessary to protect human healthhealth
WTO Agmt.WTO Agmt., General , General ExceptionsExceptions
WTO AgmtWTO Agmt, Art. XX , Art. XX ““Subject to the requirement that such Subject to the requirement that such measures are not applied in a manner measures are not applied in a manner which would constitute a means of which would constitute a means of arbitrary or unjustif. discrim… or a arbitrary or unjustif. discrim… or a disguised restriction on int’l trade, disguised restriction on int’l trade, nothing in this Agmt shall be nothing in this Agmt shall be construed to prevent… measures:…construed to prevent… measures:… ((bb)) necessary to protect human, necessary to protect human, animal or plant life or health”animal or plant life or health”
Manner of ApplicationManner of Application
Reformulated GasolineReformulated Gasoline: “disguised : “disguised restriction” includes both restriction” includes both arbritrary and unjustifiable arbritrary and unjustifiable discriminationdiscrimination
Auto Spring AssembliesAuto Spring Assemblies: if the : if the implementation does not implementation does not overreach the identified purpose, overreach the identified purpose, not a disguised restrictionnot a disguised restriction
Disguised Restriction?Disguised Restriction?
PP is not PP is not prima facieprima facie disguised: disguised: •• no intention to deceiveno intention to deceive •• no advantage for domesticno advantage for domestic
PP would not exceed public PP would not exceed public health purpose health purpose ifif removes only removes only elements of pack design usable to elements of pack design usable to segment and expand the marketsegment and expand the market
Necessary?Necessary?
is PP least trade restr. measureis PP least trade restr. measure that that would achieve the health purpose?would achieve the health purpose?
WTO (trade not health experts) WTO (trade not health experts) should defer to chosen health should defer to chosen health purpose provided it isn’t disguisedpurpose provided it isn’t disguised
defining a legisl. purpose that is defining a legisl. purpose that is closely linked to the cig pack thus is closely linked to the cig pack thus is critical for Art. XX(b) acceptance critical for Art. XX(b) acceptance
Purpose of Plain PacksPurpose of Plain Packs
to prevent retail tobacco to prevent retail tobacco packaging being used as a visual packaging being used as a visual enticement for sale or enticement for sale or consumption, whether:consumption, whether:
•• at the store counter, or at the store counter, or
•• as a ‘badge product’ in publicas a ‘badge product’ in public
Argument No. 2Argument No. 2
Plain packaging provides Plain packaging provides inadequate protectioninadequate protection of tobacco of tobacco TM rights as required under the TM rights as required under the Paris ConventionParis Convention, , TRIPSTRIPS, and , and regional trade agreements such as regional trade agreements such as NAFTANAFTA..
Registration of TMRegistration of TMParisParis, Art. 6, Art. 6quinquiesquinquies““A. (1) Every TM duly registered in the country of A. (1) Every TM duly registered in the country of origin shall be accepted for filing and protected…origin shall be accepted for filing and protected…““B. TM covered by this Article may be neither B. TM covered by this Article may be neither denied registration nor invalidated except in the denied registration nor invalidated except in the following cases… [none of which are applicable]”following cases… [none of which are applicable]”
TRIPSTRIPS, Art. 15(1), Art. 15(1)““Any sign… capable of distinguishing the goods Any sign… capable of distinguishing the goods or services of one undertaking from those of or services of one undertaking from those of other undertakings… shall be eligible for registr. other undertakings… shall be eligible for registr. as TM.”as TM.”
Similar right under NAFTA Arts. 1708(3)&(4)Similar right under NAFTA Arts. 1708(3)&(4)
Exclusivity of UseExclusivity of Use
TRIPSTRIPS, Art. 16(1), Art. 16(1)““The owner of a registered TM shall The owner of a registered TM shall have the exclusive right to prevent have the exclusive right to prevent all 3rd parties not having the all 3rd parties not having the owner's consent from using in the owner's consent from using in the course of trade identical or similar course of trade identical or similar signs…”signs…”
Almost identical protection is also Almost identical protection is also provided under provided under NAFTANAFTA Art. 1708(2). Art. 1708(2).
RebuttalRebuttal
these treaty rights pertain to TM these treaty rights pertain to TM registrationregistration & & exclusivity of useexclusivity of use
PP permits/grants:PP permits/grants:
•• TM registrationTM registration
•• use of ‘word mark’ on pkg. use of ‘word mark’ on pkg.
•• sufficient use to maintain registr.sufficient use to maintain registr.
•• right to prevent others using TMright to prevent others using TM
RebuttalRebuttal
if PP creates non-use of TM this if PP creates non-use of TM this is independent of the will of the is independent of the will of the TM owner, thus is not TM owner, thus is not justification for termination of justification for termination of registr., under registr., under NAFTANAFTA
Argument No. 3Argument No. 3
The limits imposed by plain The limits imposed by plain packaging packaging unjustifiably encumberunjustifiably encumber TM use in breach of TM use in breach of TRIPS TRIPS and and NAFTANAFTA..
TRIPSTRIPS: Encumber TM: Encumber TM
Art. 20Art. 20
““The use of a TM… shall not be The use of a TM… shall not be unjustifiably encumbered… in a unjustifiably encumbered… in a manner detrimental to its manner detrimental to its capability to distinguish the goods capability to distinguish the goods or services of one undertaking or services of one undertaking from those of other from those of other undertakings…undertakings…
TRIPSTRIPS: Encumber TM: Encumber TM
But also note Art. 17But also note Art. 17
““Members may provide ltd. Members may provide ltd. exceptions to the rights conferred exceptions to the rights conferred by a TM… provided that such by a TM… provided that such exceptions take account of the exceptions take account of the legitimate interests of the owner legitimate interests of the owner of the TM & of 3rd parties.”of the TM & of 3rd parties.”
NAFTANAFTA: Encumber TM: Encumber TM
Art. 1708(10)Art. 1708(10)““No Party may encumber the use No Party may encumber the use of a TM in commerce by special of a TM in commerce by special require-ments, such as a use that require-ments, such as a use that reduces the TM’s function as an reduces the TM’s function as an indication of source...”indication of source...”
NAFTANAFTA: Encumber TM: Encumber TM
But note Art. 1708(12)But note Art. 1708(12) ““A Party may provide ltd. A Party may provide ltd. exceptions to the rights conferred exceptions to the rights conferred by a TM… provided that such by a TM… provided that such exceptions take into account the exceptions take into account the legitimate interests of the TM legitimate interests of the TM owner and of other persons.”owner and of other persons.”
RebuttalRebuttal
‘‘justifiability’ scales with the justifiability’ scales with the importance of the policy importance of the policy
limits on TM use are justifiable: limits on TM use are justifiable:
•• objective is significant & objective is significant & pressing pressing
•• rationally connected to rationally connected to objectiveobjective
RebuttalRebuttal
limits on TM permitted provided limits on TM permitted provided they take into account the they take into account the legitimate interests of TM owner legitimate interests of TM owner and 3and 3rdrd parties parties
public is a 3public is a 3rdrd party and party and protection of health is a protection of health is a legitimate interestlegitimate interest
Existing ‘Plain Packs’Existing ‘Plain Packs’
comparable TM use limits existcomparable TM use limits exist
•• zoning by-laws restricting signszoning by-laws restricting signs
•• pprescription drugs in plain rescription drugs in plain bottlesbottles
Argument No. 4Argument No. 4
Mandated plain packaging of Mandated plain packaging of tobacco creates tobacco creates unfair unfair competitioncompetition in violation of the in violation of the Paris ConventionParis Convention..
ParisParis, Unfair Competition, Unfair Competition
Art. 10Art. 10bisbis““(1) The countries of the Union are (1) The countries of the Union are bound to assure to nationals of bound to assure to nationals of such countries effective protection such countries effective protection against unfair competition.against unfair competition.(2) Any act of competition (2) Any act of competition contrary to honest practices in contrary to honest practices in industrial or commercial matters industrial or commercial matters constitutes an act of unfair constitutes an act of unfair competition.”competition.”
RebuttalRebuttal
policy adherence is not the act of policy adherence is not the act of a competitora competitor
implementation is not unfair if implementation is not unfair if there is national treatment – there is national treatment – foreign & domestic treated alikeforeign & domestic treated alike
separate print runs required for separate print runs required for most markets so no added most markets so no added printing costprinting cost
Argument No. 5Argument No. 5
Plain packaging is an Plain packaging is an unnecessary unnecessary obstacleobstacle to international trade to international trade contrary to the contrary to the TBT Agreement TBT Agreement andand NAFTA NAFTA..
TBTTBT: Unnecessary : Unnecessary ObstacleObstacle Art. 2.2Art. 2.2““Members shall ensure that technical Members shall ensure that technical regs. are not… applied with a view to or regs. are not… applied with a view to or with the effect of creating unnecessary with the effect of creating unnecessary obstacles to int’l trade. obstacles to int’l trade.
““For this purpose, technical regs. shall For this purpose, technical regs. shall not be more trade-restrictive than not be more trade-restrictive than necessary to fulfil a legitimate objective, necessary to fulfil a legitimate objective, taking account of the risks non-taking account of the risks non-fulfilment would createfulfilment would create. Such legitimate . Such legitimate objectives are… protection of human objectives are… protection of human health or safety...”health or safety...”
TBTTBT: Unnecessary : Unnecessary ObstacleObstacleNote the preamble of the Note the preamble of the TBT TBT whichwhich states:states: ““RecognizingRecognizing that no country should be that no country should be prevented from taking measures prevented from taking measures necessary to ensure the… protection of necessary to ensure the… protection of human, animal, and plant life or health… human, animal, and plant life or health… at the levels it considers appropriate, at the levels it considers appropriate, subject to the requirement that they are subject to the requirement that they are not applied in a manner which would not applied in a manner which would constitute a means of arbitrary or constitute a means of arbitrary or unjustifiable discrimination… or a unjustifiable discrimination… or a disguised restriction on int’l trade...”disguised restriction on int’l trade...”
NAFTANAFTA: Unnecessary : Unnecessary ObstacleObstacle Art.Art. 904(4)904(4)““No Party may… apply any standards-No Party may… apply any standards-related measure… with the effect of related measure… with the effect of creating an unnecessary obstacle to creating an unnecessary obstacle to trade... trade...
““An unnecessary obstacle to trade shall An unnecessary obstacle to trade shall not be deemed to be created where: (a) not be deemed to be created where: (a) the demonstrable purpose of the measure the demonstrable purpose of the measure is to achieve a legitimate objective; and is to achieve a legitimate objective; and (b) the measure does not operate to (b) the measure does not operate to exclude goods of another Party that meet exclude goods of another Party that meet that legitimate objective.”that legitimate objective.”
Rebuttal - Rebuttal - TBTTBT
health measures are OK when “no health measures are OK when “no more trade restr. than necessary,” more trade restr. than necessary,” but also but also weigh downside riskweigh downside risk
preamble: health protection at the preamble: health protection at the level country deems appropriate if level country deems appropriate if application not arbitrary, unjustif. application not arbitrary, unjustif. discrim. or a disguised restrictiondiscrim. or a disguised restriction
Rebuttal - Rebuttal - NAFTANAFTA
not an “unnecessary obstacle” ifnot an “unnecessary obstacle” if
•• objective is legitimate, and objective is legitimate, and
•• measure does not exclude measure does not exclude foreignforeign
goods that meet the goods that meet the objectiveobjective
Argument No. 6Argument No. 6
Plain packaging of tobacco Plain packaging of tobacco products products creates confusioncreates confusion in the in the minds of the consumer in minds of the consumer in violation of the violation of the Paris Paris ConventionConvention and and TRIPSTRIPS..
ParisParis: Create Confusion: Create Confusion
Art. 10Art. 10bisbis (3) (3) ““The following in particular shall be The following in particular shall be prohibited… all acts of such a nature as to prohibited… all acts of such a nature as to create confusioncreate confusion… with the … with the establishment, the goods, or the establishment, the goods, or the industrial or commercial activities, of a industrial or commercial activities, of a competitor…”competitor…”
Art. 6Art. 6bisbis(1)(1)““[Parties] undertake… to refuse or to [Parties] undertake… to refuse or to cancel the registration, and to prohibit cancel the registration, and to prohibit the use, of a TM which… [is] liable to the use, of a TM which… [is] liable to create confusion…”create confusion…”
TRIPSTRIPS: Creation of : Creation of ConfusionConfusionArt. 16 (1)Art. 16 (1)
““The owner of a registered trademark The owner of a registered trademark shall have … [the right to prevent shall have … [the right to prevent others from using identical or similar others from using identical or similar signs] where such use would result in a signs] where such use would result in a likelihood of confusionlikelihood of confusion…”…”
Rebuttal:Rebuttal: PP is an act of legisl. obeyance not the PP is an act of legisl. obeyance not the
choice of competitor, thus the choice of competitor, thus the Paris Paris prohib. on prohib. on competitive actscompetitive acts that would that would create confusion is inapplicable, as is create confusion is inapplicable, as is the obligation to cancel a confusing TMthe obligation to cancel a confusing TM
new PP will look less like the old TM new PP will look less like the old TM than the prior branding of than the prior branding of competitors’ cigs, thus competitors’ cigs, thus TRIPSTRIPS prohibition on use of signs identical or prohibition on use of signs identical or similar to a TM is inapplicablesimilar to a TM is inapplicable
Confusing Trademarks?Confusing Trademarks?
Confusing Trademarks?Confusing Trademarks?
Argument No. 7Argument No. 7
Plain packaging of tobacco is a Plain packaging of tobacco is a disguised restrictiondisguised restriction to trade in to trade in violation of violation of TRIPSTRIPS..
TRIPSTRIPS:: Disguised Disguised RestrictionRestriction
Art. 3(1) Art. 3(1) ““Each Member shall accord to the nationals of Each Member shall accord to the nationals of other Members treatment no less favourable than other Members treatment no less favourable than that it accords to its own nationals with regard to that it accords to its own nationals with regard to the protection of intellectual property…”the protection of intellectual property…”
Art. 3(2) Art. 3(2) ““Members may avail themselves of the Members may avail themselves of the exceptions… only where such exceptions are exceptions… only where such exceptions are necessary to secure compliance… and where such necessary to secure compliance… and where such practices are not applied in a manner which practices are not applied in a manner which would constitute a disguised restriction on would constitute a disguised restriction on trade.”trade.”
RebuttalRebuttal
Both domestic and foreign Both domestic and foreign cigarettes woulcigarettes woul
no benefit conferred on domestic no benefit conferred on domestic producers, the hallmark of a producers, the hallmark of a disguised restrictiondisguised restriction
Argument No. 8Argument No. 8
Mandated plain packaging of Mandated plain packaging of tobacco tobacco encourages counterfeitingencourages counterfeiting in violation of in violation of TRIPSTRIPS..
TRIPSTRIPS : Counterfeiting : Counterfeiting
TRIPS incl. numerous provisions TRIPS incl. numerous provisions regarding protection against regarding protection against counterfeiting, including Arts. 41, 46, counterfeiting, including Arts. 41, 46, 51, 59, and 6151, 59, and 61
RebuttalRebuttal
TM increase product identification, they TM increase product identification, they do not make counterfeiting more do not make counterfeiting more difficult difficult
•• many counterfeit branded items many counterfeit branded items currently sold, including tobacco currently sold, including tobacco products products
•• copying TM image is not an copying TM image is not an impediment to counterfeitersimpediment to counterfeiters
PP are entirely compatible with anti-PP are entirely compatible with anti-counterfeit markings such as hologramscounterfeit markings such as holograms
Argument No. 9Argument No. 9
Plain packaging is tantamount to Plain packaging is tantamount to an an expropriation of investmentexpropriation of investment in in violation of violation of NAFTANAFTA..
NAFTANAFTA: Expropriation & : Expropriation & CompensationCompensationArts. 1110(1) and (2): Arts. 1110(1) and (2): only expropriate investment if:only expropriate investment if:• • done for a public purpose, done for a public purpose, • • on non-discriminatory basis, on non-discriminatory basis, • • with due process of law, and with due process of law, and • • payment of fair mkt value comp. payment of fair mkt value comp.
Art. 1110(7): Art. 1110(7): no compensation if limitations of IP no compensation if limitations of IP rights are consistent with rights are consistent with NAFTANAFTA Chpt. Chpt. 1717
RebuttalRebuttal does not strip ownership, so not does not strip ownership, so not
exprop., ntlzn. or tantamount to ntlzn. exprop., ntlzn. or tantamount to ntlzn. not tantamount to exprop. because not tantamount to exprop. because
owner may still sufficiently use the TM owner may still sufficiently use the TM assuming PP is tantamount to exprop.: assuming PP is tantamount to exprop.:
is consistent with Chpt. 17, rendering is consistent with Chpt. 17, rendering comp. requirement inapplicablecomp. requirement inapplicable
assuming above points fail, assuming above points fail, NAFTANAFTA would not preclude PP simply require would not preclude PP simply require fair mkt. value comp.fair mkt. value comp.
Argument No. 10Argument No. 10
Mandated plain packaging is an Mandated plain packaging is an unfair and inequitable treatment unfair and inequitable treatment of investment of investment in violation of in violation of NAFTANAFTA..
NAFTANAFTA: Unfair Treatment: Unfair Treatment
Art. 1105 (1)Art. 1105 (1)
““Each Party shall accord to investments Each Party shall accord to investments of investors of another Party treatment of investors of another Party treatment in accordance with international law, in accordance with international law, including fair and equitable treatment including fair and equitable treatment and full protection and security.”and full protection and security.”
RebuttalRebuttal
‘‘fair and equitable’ obligation fair and equitable’ obligation sums Arts. 1102, 1103 and 1104 sums Arts. 1102, 1103 and 1104 which require providing treating which require providing treating which is the better of ntl. which is the better of ntl. treatment or MFN (if that treatment or MFN (if that exceeds ntl. treatment)exceeds ntl. treatment)
PP, applying to all domestic and PP, applying to all domestic and all foreign producers, constitutes all foreign producers, constitutes both ntl. treatment and MFNboth ntl. treatment and MFN
The Final WordThe Final Word
““In summary, the… international trade In summary, the… international trade argument by itself will not however be argument by itself will not however be sufficient to ward off the threat of plain sufficient to ward off the threat of plain packs.”packs.”
Internal industry memoInternal industry memo
““International Trade Aspects of Labelling”International Trade Aspects of Labelling”
J.F. Clutterbuck, 11 April 1994J.F. Clutterbuck, 11 April 1994
502592651-655502592651-655
(almost certainly John F. Clutterbuck, solicitor, Rothmans International)(almost certainly John F. Clutterbuck, solicitor, Rothmans International)