Plain Packaging: The Expropriation Debate

1. Plain Packaging: The Expropriation Debate Professor Spyros Maniatis Head, Centre for Commercial Law Studies Queen Mary University of London Maniatis, 2014

2. Plain Packaging: The Expropriation Debate WHO Framework Convention On Tobacco Control (2003) Article 11: Packaging and Labelling of Tobacco Products No direct reference to plain packaging. Guidelines on the implementation of Article 11: Plain packaging 46. Parties should consider adopting measures to restrict or prohibit the use of logos, colours, brand images or promotional information on packaging other than brand names and product names displayed in a standard colour and font style (plain packaging). This may increase the noticeability and effectiveness of health warnings and messages, prevent the package from detracting attention from them, and address industry package design techniques that may suggest that some products are less harmful than others. Maniatis, 2014

3. Plain Packaging: The Expropriation Debate TRIPs, Article 16 “The owner of a registered trademark shall have the exclusive right to prevent ...” TRIPs, Article 17: “Members may provide limited exceptions to the rights conferred by a trade mark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trade mark and of third parties.” According to WTO Panels this means “a limited derogation that does not undercut the body of rules from which it is made”. Is there a distinction to be made between registrations of composite marks on the one hand and “split” registrations (separate registrations of word marks and get up – without words – marks ). Maniatis, 2014

4. Plain Packaging: The Expropriation Debate The WTO Panel in EC – TMs and GIs has acknowledged the “legitimate interests” of trade mark owners in preserving the trade mark’s “capacity to distinguish” as “badges of interest” and “conveyors of messages” that includes the interest in “using its own trade mark in connection with the relevant goods and services of its own”. This must also take account “of the trade mark owner’s interest in the economic value of its mark arising from the reputation that it enjoys and the quality that it denotes”. Positive v Negative / Exclusionary Rights Approach Trade marks owners can still exclude others from using their trade marks but there are limitations regarding their own use. Maniatis, 2012

5. Plain Packaging: The Expropriation Debate From a European perspective note the post-harmonization shift from the language of exhaustion based on the origin function to the recognition of the legitimate interest of trade mark proprietors, delineated by the functions of a trade mark, as the starting point for protection.. Article 16 of TRIPs also provides for the adoption of Article 6bis of the Paris Convention. Would the right be lost due to non use? Exclusionary language but is the right in essence expropriated? TRIPs Article 20: “use of a trade mark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trade mark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.” Maniatis, 2014

6. Plain Packaging: The Expropriation Debate Plain packaging: “special form” and “detrimental” but is it “unjustifiable”? Protecting health v protecting against confusion or even deception (arguments regarding counterfeiting). Does Article 20 cover both exclusionary and positive rights? Do the WHO guidelines provide sufficient justification? Advertising and promotion restrictions have been adopted and enforced but they where part of the FCTC provisions not the guidelines. Note the approach of the CJEU in C-491/01 and C-324/09. , Maniatis, 2012

7. Plain Packaging: The Expropriation Debate C-491/01 149 While the right to property formed part of the general principles of Community law, it was not an absolute right and had to be reviewed in relation to its social function. Consequently, its exercise could be restricted provided that those restrictions, in fact, corresponded to objectives of general interest pursued by the Community and did not constitute a disproportionate and intolerable interference impairing the very substance of the rights guaranteed. 153 The restrictions on the trade mark right which could be caused by Art.7 of the Directive did in fact correspond to objectives of general interest pursued by the Community and did not constitute a disproportionate and intolerable interference, impairing the very substance of that right. Maniatis, 2014

8. Plain Packaging: The Expropriation Debate C-324/09 81 When certain information, which is required as a matter of law ... is missing, the trade mark’s function of indicating origin is impaired in that the mark is denied its essential function of guaranteeing that the goods that it designates are supplied under the control of a single undertaking which is responsible for their quality. 82 In the third and final place, as the Advocate General has observed at point 76 of his Opinion, the question whether or not the offer for sale, or the sale, of trade-marked goods without their packaging and thus without certain information required under Article 6(1) of Directive 76/768 is a criminal offence under national law does not affect the applicability of EU rules concerning intellectual property protection. Maniatis, 2014

9. Plain Packaging: The Expropriation Debate TRIPs, Article 15(4): “the nature of the goods or services to which a trade mark is to be applied shall in no case form an obstacle to registration of the trade mark”. Link between registration and use? Registration may be obtained and maintained without use. Does it have any positive value without use? Trade mark law does not exist in a legislative / regulatory desert. TRIPs, Article 8(1): “members may, in formulating or amending their laws and regulations, . adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.” Maniatis, 2014

10. Plain Packaging: The Expropriation Debate Exception or interpretive tool? Relevant factors: Effectiveness? How can it be tested without being applied and tested? Consumer surveys / consumer behavioural studies. Proportionality? Smokescreen? Maniatis, 2012

11. Plain Packaging: The Expropriation Debate Paris Convention, Article 6 quinquies (B) (iii): trade marks can be denied registration or invalidated ... “when they are contrary to morality or public order and, in particular, of such a nature as to deceive the public.” A neutral provision? Is tobacco a public order issue? Lawfulness v Public Order. Freedom of Commercial Speech argument? Probably limited in Europe (commercial lagging behind political and artistic), but would the US pose a challenge? Maniatis, 2012

12. Plain Packaging: The Expropriation Debate Australia, Tobacco Plain Packaging Act 2011 – an Act to Discourage the Use of Tobacco Products The Act covers the relationship between marketer and consumer not marketer and retailer. Existing trade mark registrations are maintained (against non use provisions) and new registrations may be obtained; restrictions cover use. Prescriptive plain packaging allowing two word marks only, no logos, no trade dress. Provision that if the prescriptive measures comprise an acquisition of property not on just terms then there is an alternate plan “to the extent necessary”. Maniatis, 2014

13. Plain Packaging: The Expropriation Debate Request of Consultations by Ukraine, Honduras, Dominican Republic, Indonesia and Cuba • Articles 16.1, 15.4, 20 and 2.1 TRIPS incorporating Article 6quinquies Paris Convention (the measures: a) interfere with the enjoyment of rights in a tm; b) introduce an obstacle to registration based on the nature of the goods; c) impose unjustifiable encumberments to the use of a tm and detriment the tm’s capability to distinguish tobacco products;d) fail to provide effective protection to the tm “as it is”) • Article 16.3 TRIPS (measures prevent owners of registered tms that are “well-known” from enjoying the rights conferred by a tm) (Indonesia) • Article 1 TRIPS (Australia’s failure to give effect to Article 20) (Ukraine) Maniatis, 2014

14. Plain Packaging: The Expropriation Debate Request of Consultations by Ukraine, Honduras, Dominican Republic, Indonesia and Cuba • Articles 22.2(b) TRIPS and 2.1 TRIPS incorporating 10bis Paris Convention (failure to: a) provide effective protection against acts of unfair competition to nationals of other countries of the Union; b) prevent acts that create confusion between goods of competitors; c) provide effective protection against acts of unfair competition with respect to geographical indications; d) prevent acts that create consumer confusion as to the origin of the good) (not raised by Ukraine) • Article 24.3 TRIPS (diminishing the level of national protection afforded to geographical indications as compared to the level of protection available prior to 01.01.1995) (not raised by Ukraine) Maniatis, 2014

15. Plain Packaging: The Expropriation Debate Request of Consultations by Ukraine, Honduras, Dominican Republic, Indonesia and Cuba • Article 3.1 TRIPS (Non-compliance with the national treatment requirement by favoring domestic traders) • Articles 2.2 TBT (unnecessary obstacle to trade and more trade restrictive than necessary to achieve legitimate health objectives) • Article III:4 GATT 1994 and Article 2.1. TBT (the measures result in treatment less favorable of imported products than of like products of national origin) • Article IX:4 GATT 1994 (the marketing requirements imposed materially reduce the value and/or unreasonably increase the production cost of imported cigar products) (Cuba) • No Justification Pursuant Articles 8 & 17 TRIPS (Honduras) Maniatis, 2014