Trademark rights to extinguish plain packaging bill?

Australia - The content of the government’s release on the draft plain packaging Bill offers few surprises.cigarette smoker

The government thinks stripping tobacco products of any branding will cut smoking rates as part of a basket of anti-tobacco measures, they’ve picked the colour (an allegedly offensive olive green), and the already garish health warnings are going to extend from just the lip to most of the front packet.

But amongst the consultation paper is also an admission of something the government has long denied – plain packaging could acquire the value of trademarks and expose taxpayers to a compensation bill from big tobacco.

At the time of the government’s initial announcement both Health Minister Nicola Roxon and then Prime Minister Kevin Rudd dismissed these concerns arguing they have still-to-be-publicly released “robust” legal advice supporting no IP violations.

The IPA raised concerns that stripping trademarks from packaging could lead to the acquisition of property rights under the Constitution and lead to compensation on “just terms”.

But the government’s consultation paper now acknowledges property rights risks exist.

Under the banner of “Constitutional provisions” the paper on the “abundance of caution … provides that if preventing the use of trade marks on packaging of products is contrary to section 51 (xxxi) of the Constitution, the trade marks can be used, but only in accordance with restrictions (for example, on size and placement) that would be imposed by the regulations”.

So far we don’t know what the regulations say.

But the clear intent of the provision is if the High Court recognises plain packaging is the acquisition of a value of a trademark logo they can be used in a restrictive fashion without annulling the rest of the Act.

It’s the government’s long-winded way of saying “oops”.

But despite this admission concerns that plain packaging may violate Australia’s obligations under the World Trade Organisation remain.

WTO intellectual property rules require trademarks not be “unjustifiably encumbered [such as] use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings”.

The rules also afford a public health exception “provided that such measures are consistent with the provisions of this agreement”.

But by limiting the use of trademark logos the government may not be “consistent”.

Especially since justifiability may require strong evidence of the plan’s efficacy.

If you judge them on their words the government claims they are convinced. But if you judge them on their actions reportedly they last year commissioned a two-year $600K+ plus study to look at the impact of plain packaging on smoking rates.

Documents released under Freedom of Information show that Australia’s intellectual property agency, IP Australia, has found there are around 3,000 trademarks for tobacco and tobacco products of which “a short study shows approximately 1/3 include logos”.

Publicly IP Australia has been wary of opposing the government’s plain packaging plan but their internal discussions are telling.

One version of a briefing note states “IP Australia considers that plain packaging may not be consistent with Australia’s intellectual property obligations … [and whether it] would constitute an acquisition of property is debateable”.

Emails between IP Australia trademark officials show that arguing Australia’s international IP obligations would not be violated by plain packaging “is a long bow”.

Interestingly IP Australia continues to highlight that “requiring plain packaging would make it easier for counterfeit products to be produced”.

Since Australia is the first country to actually legislate for plain packaging the legal risks are significant.

And tobacco companies have already made clear their fighting intentions.

To date Australia, the United Kingdom, New Zealand, Canada and Lithuania have previously considered plain packaging and rejected it predominantly on intellectual property grounds.

Many countries are now watching what happens in Australia before they decide how they will progress.

There are mixed legal views about whether it violates IP rights and only the High Court and a WTO dispute settlement panel will ultimately decide who’s right.

But treading with caution is wise.

The same FOI documents show IP Australia was only advised of the government’s announcement days before it was public.

At the time the rushed announcement appeared to be a smokescreen to distract the public from the political hammering the government was taking from dropping its emissions trading scheme.

In light of recent polls perhaps not much has changed.

The only difference is this time the government appears to have acknowledged the very real risks that plain packaging poses to property rights and our international obligations.

This honesty is welcome.

By Tim Wilson

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