Tobacco Labelling – A View – Ainslie Van Onselen

In 2011, Australia prepared to legislate plain packaging for all cigarette sales in a bid to curb the damaging effects of smoking. A global first. So is this an example of a nanny state gone wild or a long overdue health measure? To discuss the proposed legislation, on Tuesday 14 June 2011, The Sydney Institute heard from two commentators on the issue. Ainslie Van Onselen is a former senior lecturer in law at Edith Cowan University, a Sydney based lawyer and company director, currently in sole practice, and also writes a weekly column in The Australian’s Legal Affairs section. Dr Simon Chapman is Professor in Public Health at the University of Sydney. His Public Health Advocacy and Tobacco Control: Making Smoking History was published by Blackwell (Oxford) in 2007.

 

TOBACCO LABELLING – TWO VIEWS

 

AINSLIE VAN ONSELEN

 

It’s probably important that I make two things clear from the outset. First, I am not a smoker and I am not a smoking denier or sceptic. I believe smoking kills and that’s it harmful to your health. To my mind that statement is a truism. Secondly, I don’t act for tobacco companies or receive or derive any benefit from them. I am an independent commentator on this issue in the full sense of that word. However, as a practising lawyer and former law academic, I do believe quite strongly in intellectual property rights. So unless Professor Chapman has a law degree that I am unaware of (and I wouldn’t be surprised if he did) – he and I are running parallel arguments – he is running a medical argument that I do not necessarily disagree with and I am running a legal argument contra to the Bill.

Importance of trademarks

 

There is no disagreement that trademarks are important. A trade mark can be a word, phrase, letter, number, sound, shape, logo or picture, an aspect of packaging – even a smell. They protect a trader’s brand name and are integral to a company’s marketing strategy for their good or service.  They build good will with a company’s clients; which in turn improve its bottom line. They are the reason why you buy one company’s product over another. Trademarks are to a company like your individual identity is to you. One of the great things about this world is that I am not standing up here looking at a room full of clones. But that is exactly what the government is trying to do via the Tobacco Plain Packaging Bill. It’s making clones out of tobacco products based on the untested hope that it might reduce cigarette smoking.

A registered trade mark in this country gives a company the legal right to use, license or sell it within Australia for the goods and services for which it is registered. That is, until the Tobacco Plain Packaging Bill was put on the table. No registered trade mark owner in this country now has that certainty. By exterminating a tobacco company’s ability to use its trade mark, the government is trying to use an indirect legal method which has the potential to have damaging impact on intellectual property rights in Australia in order to get the same effect as if it had banned cigarettes.

Why not just ban smoking?

So why doesn’t the federal government just ban cigarette smoking? If it did we wouldn’t need to have this argument and Professor Chapman should be happy. In fact most of the feedback I have received from my column on this issue in the Legal Affairs Section has revolved around this. The common comment I receive is “Yes, I agree the Bill may undermine IP rights – But who cares? Cigarette smoking should be illegal anyway”. So why doesn’t the government just ban smoking? Nicola Roxon – the federal Health Minister – has stated on the ABC’s Q&A and elsewhere in answer to this question that if smoking was introduced today it would be illegal but basically we are stuck with it. But you could say the same for alcohol and some prescription drugs or other vice products.

No, the real reason why the government doesn’t ban smoking is because a Labor federal government does not want to be labelled a nanny state and is fearful of comparisons to the USA in the 1920s under prohibition.  So instead of using a direct public health measure – i.e. being upfront and banning smoking – they are indirectly using intellectual property laws to achieve a back door public health policy outcome and this, This, I object to. I would describe it as misusing the law.

Intellectual property expert Adam Liberman, a professorial visiting fellow at the University of New South Wales, said he believed the Bill was the first time the government had sought to use indirect means – intellectual property laws – to achieve a direct policy aim of limiting cigarette consumption. Last Friday he was quoted as saying to The Australian “It’s something that makes me feel uncomfortable. One can use the thin edge of the wedge argument. You start here so where does it end?”

 

Where does it end? Well Plain packaging could set a precedent for government to step in and prevent other companies from using their branding and trade-marks. Alcohol companies, manufacturers of junk food and other high sugar – high fat foods and any other company connected to social harm – sleeping pills, mobile phones the list is endless – have effectively been put on notice that they too could face restrictions on the use of their trademarks so important to their branding. If put into effect the inevitable consequence of this is business uncertainty leaving constrained investors no choice but to invest overseas rather than in Australia.

TRIPS Agreement

And this is why there are such strong safeguards in place in the World Trade Organisation TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement (1994)[i] as well as in the Paris Convention for the Protection of Industrial Property (1883). They contain the bare minimum protection that Member states must grant to intellectual property rights.  The preamble of TRIPS makes it clear that it seeks a balance between the private rights of intellectual property owners and the public interest. Australia signed and ratified TRIPS in 1995 and is under a legal obligation to comply with its contractual commitment to implement the agreement.

On the day that British America Tobacco launched its national media campaign against the Tobacco Plain Packaging Bill  its Australia CEO, David Crow told the ABC on 17 May 1 that “We’ll defend our rights to hold trademarks, to own intellectual property”. Fighting words – almost Churchillian – but words nonetheless that I agree he is entitled to state.

David Crow was referring to the tobacco giant’s claims that plain packaging will mean trademarks are being infringed under the World Trade Organisation TRIPS agreement. And it is on this issue, and this issue alone, that I oppose the federal government’s Tobacco Plain Packaging Bill. I am not overly concerned with defending the litany of other complaints that big tobacco has against the Bill such as allegations that it will lead to black market cigarettes, a price war or breach Australia’s Constitution some or all of which may or may not have legitimacy.

The potential legal battle flagged by Big Tobacco based on TRIPS has been criticised by several law academics including Professor Thomas Faunce of ANU and Professor Mark Davison of Monash University (the latter being a Member of the federal government’s Expert Advisory Group). Most of the criticism in the media in relation to the intellectual property argument, however, has been glib, focused instead on the usual Grim Reaper warnings of the bleeding obvious: smoking is harmful to your health. Leaving aside the politics of smoking; it is worth examining the veracities of the cigarette companies claims more closely. Why? Because if the doomsday prophecy of millions of dollars of compensation payouts to cigarette companies comes true then this is not the type of PR any government would want to face.

I will now endeavour to explain the details of TRIPS and why I agree with British America Tobacco’s CEO. There are a number of arguments raised by the tobacco companies to contend that the plain packaging bill violates TRIPS. TRIPS Article 15.4 (with Paris Convention Article 6) and TRIPS Articles 16, 17 and 20 are regularly bandied about. Like any good litigator though I intend to focus on the strongest argument raised by the cigarette companies and that is that plain packaging violates TRIPS Article 20. Article 20 of TRIPS is intended to prevent the imposition of special requirements on the use of a trade mark in the course of trade, particularly if they are detrimental to its capability to distinguish the goods of one undertaking from those of another.

For those of you not familiar with Article 20 I’ll read the relevant part to you:

The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, [then goes to list 3 examples] such as (1) use with another trademark, (2) use in a special form or (3) use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.”

It is the third example of a special requirement words that I submit are at the crux of this argument “use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.” This is exactly what the government is doing and has said this expressly in the government’s Consultation Paper dated 7 April 2011 which states at page 15 that “It is proposed that the legislation will prevent a trade mark from being placed on tobacco products or their retail packaging.” This is the ultimate encumbrance.

To that end, the Bill requires that all cigarette packets will be a dark olive matt brown colour and packet shape, size and openings will all be standardised. The Bill will also prevent the display of logos, decorative fonts and other trade mark devices. Font used on the packaging will all be required to be in Lucida sans size 14. The vast majority of the packet will be covered with graphic health warnings and the name of the brand will be at the bottom of the pack below the health warning. Even the ‘Tidy Man’ littering symbol will be removed.

It is very obvious, then, that the aim of the Bill is to diminish the consumer’s ability to (using the words of Article 20) “distinguish the cigarettes of one company from another’s”, and this is a breach of Article 20, specifically the third example of a “special requirement” listed in the Article 20. I should note, that this is the strongest argument in the tobacco companies’ armour in relation to TRIPS, accepted by a law academic who sits on the government’s Expert Advisory Group, Associate Professor Mitchell from The University of Melbourne. In a 2010 article entitled “Australia’s move to the Plain Packaging of Cigarettes and its WTO Compatibility” published in the Asian Journal of WTO and International Health Law & Policy Mitchell conceded this expressly at p 411 of his Article. He further states at p412 “Plain packaging is likely to fall within the scope of Article 20, because it constitutes a special requirement encumbrance.” And further down the page “Plain packaging is clearly an encumbrance within the meaning of Article 20. Plain packaging also appears to be a “special requirement”. Indeed, plain packaging seems to be the “ultimate encumbrance” to a trademark as the Bill prohibits the use of a registered trademark altogether. The main issue is whether the special requirement encumbrance imposed by the government is justified.

Mitchell states at p 413: “Justifiability is to be determined on a case by case basis. The concept of ‘justifiability’ under Article 20 is ambiguous and has not been considered in any WTO jurisprudence.” So the law is not clear on this issue and for the government to argue otherwise is misleading. I agree with Mitchell up to this point. It’s from here that we don’t see eye to eye. He, like so many of the other academics actively involved in promoting the plain packaging bill, then cites Article 8 of TRIPS as a pseudo exception to Article 20 as  Article 8 allows member nations to adopt measures to protect public health. The argument is that the encumbrance of plain packaging is justifiable based on public health grounds. This sounds reasonable in isolation. However, Article 8 is not an exception to Article 20 which is evident when you read the Article.

Article 8 says:

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.

 

It is the last words that academics such as Andrew Mitchell and Mark Davison who sit on the Governments Expert Advisory Panel for the legislation and who therefore have a vested interest in the success of the legislation conveniently gloss over. “Provided that such measures are consistent with the provisions of this Agreement” That is, public health measures are only permitted if such measures are consistent with the rest of TRIPS including Article 20.

Now, whilst the current obligations to publish health warnings on cigarette packets would I submit fall within Article 8, it is difficult to see how totally banning the use of a cigarette companies trade mark, logo and other defining features is not inconsistent with Article 20 and the general principles of TRIPS. Article 8 does not allow States to circumvent the minimum protections provided by TRIPS. And subsequent declarations such as the 2001 DOHA Declaration have never stated that the provisions of TRIPS are otiose or obsolete – far from it. Nor have they stated that Article 8 is an exception to Article 20 – it is not.

Direct Health Measure

Now a Member country can take a direct public health measure. Australia would be entitled to ban cigarette smoking just as say France was allowed to ban asbestos based on public health grounds. After all, you can’t trademark an illegal product. But the government is not prepared to do this. Rather, it indirectly denies a company the use of its trade mark while still allowing that company to have its trademark registered and this is going a step too far. To my mind all this talk of olive brown packets, standard text combined with large graphic depictions of damaged eye balls and teeth falling out on said packets is too Orwellian. What next? Will the CEO’s of cigarette companies only be permitted to make public comment if they appear in olive brown overalls? There has to be a line.

Potential dispute settlement proceedings under TRIPS

Being in breach of TRIPS means Australia is potentially exposing itself to dispute settlement proceedings initiated by other WTO member states before the WTO’s Dispute Settlement Body (DSB). Some commentators have said this is unlikely to happen because of the subject nature of the legislation, but according to a briefing paper to Philip Morris International Management SA dated July 2009 there are examples in the past where member states have initiated cases before the DSB or its predecessor concerning tobacco products.

In 2008, the Philippines filed a complaint against Thailand regarding custom and fiscal measures on cigarettes. In 2003, Honduras filed a complaint against the European Communities, the United States and some Latin American countries in relation to measures affecting the importation and internal sale of cigarettes, and in 2001 Chile filed a complaint against Peru in relation to taxes on cigarettes.

Only last week The Age reported on 9 June that Australia’s plain packaging has drawn fire from a bloc of poor countries. The Dominican Republic has led a push backed by 8 other tobacco producing counties – Honduras, Nicaragua, Ukraine, the Philippines, Zambia, Mexico, Cuba and Ecuador – at a meeting of the Word Trade Organisation in Geneva saying it had “serious and grave concerns” that the plain packs would hurt tobacco producers in vulnerable economies. To say that these countries won’t bring dispute proceedings before the DSB is a furphy.

IP Australia’s concerns re TRIPS

And although health professionals applaud the government on this unprecedented legislation, the country’s peak intellectual property body, IP Australia, does not appear to be as in love with the government’s plans. According to confidential documents obtained by British America Tobacco under FOI, in April 2010 IP Australia submitted a briefing paper to the Parliamentary Secretary for Information on the government’s proposal. The paper reveals that:

IP Australia considers that restricting the right to use a trademark would reduce the ability of a trade mark to fulfil its economic role… any restrictions should only be introduced if there is a clear public purpose to be served. Notably analysis of the public interest need should be based on strong empirical evidence…. IP Australia is unaware of any subsequent evidence that establishes that the public interest would be better served by plain packaging.

The paper then proceeds to foreshadow the potential for dispute in this area and states it is unaware of any other overseas jurisdiction that requires plain packaging of tobacco products.

Other concerns re the Bill – Law Council of Australia

Other incidental criticisms of the intellectual property implications of the Bill are coming out of the woodwork. On 6 June 2011, the Law Council of Australia wrote to the Tobacco Reform Section of the Australian Government in relation to the Tobacco Plain Packaging Bill to express concerns in respect of how section 15 of the Bill sat with the Trade Marks Act 1995 (Cth) – how it impacted on the registration of new trademarks and court proceedings in particular. These unintended consequences of the Bill are just the tip of the iceberg.

 

Lack of proof that smoking will reduce as result of plain packaging

Earlier this month Federal Health Minister, Nicola Roxon admitted that there is no proof plain cigarette packaging will cut smoking rates.  She said this is because no government has ever done it before. That argument is shallow. Surely, sample testing on small localised communities could provide evidence before imposing this untested legislation on an entire nation?

The UK government has recently shelved its plans to introduce plain packaging due to a lack of evidence that it will actually reduce smoking. Just because you (like me) may hate cigarette smoking, and the effect it has on people, that does not mean a government should blindside itself from the ramifications this legislation may have on intellectual property rights.

ENDNOTE

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[i] Negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT)