Big-Four Tobacco Companies’ Fight Against Plain-Packaging Legislation
Beginning in December 2012, all cigarettes sold in Australia will have to be in olive-green packs covered with health warnings and graphic images. The manufacturer’s name will only appear in small, standard font, and the shape, size, and opening of the packs will be standardized. In addition, the bill will also prevent the displays of logos, decorative fonts and other trademark devices.
Consequently, large tobacco companies such as Phillip Morris, Imperial Tobacco, Japan Tobacco International, and British Tobacco are challenging the validity of this law forcing them to sell their products in unbranded packaging. According to them, it allows the Australian government in essence to acquire their intellectual property, trademarks and logo, without any compensation.
The Australian Constitution, like its U.S.counterpart, recognizes the right of the state to acquire private property for public purposes only if “full indemnification” is provided to the former owner (article 51). The tobacco companies are therefore seeking billions of dollars in damages from the Australian government should they lose the right to their trademarks. In response to the constitutional argument presented by the tobacco companies, the Australian government said that it would be inappropriate for it to compensate companies for their trademarks by requiring them to market their products in a way that would prevent damage to public health.
The companies also claim that their trademarks are being infringed under the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which was signed and ratified byAustralia. Article 20 is intended to prevent the imposition of special requirements on the use of trademarks in the course of trade, particularly if they are detrimental to the ability of consumers to distinguish the goods of one from those of another. Since it is obvious that the intent of the bill is to diminish the ability of consumers to distinguish the cigarettes of one company from another, the law clearly violates article 20. Section 8 of this article contains an exception, which allows member nations to adopt measures to protect public health, but only if they are consistent with the rest of TRIPS. While the current obligations to publish health warnings on cigarette packets would fall within this exception, it is difficult to see how banning the use of a cigarette company’s trademark, logo, and other defining features would fall within the permitted exception of article 8.
Although health professionals and many other individuals support the government on this unprecedented legislation, IP Australia does not appear to be very fond of the Government’s plans. According to confidential documents obtained recently by British American Tobacco, IP Australia submitted a briefing paper to the parliamentary secretary for information on the government’s proposal. According to the paper, “IP Australia considers that restricting the right to use a trademark would reduce the ability of a trademark to fulfill its economic role”.
Smoking kills 15,000 Australians each year. With 15.1% of the population over 14 years old smoking daily, it is the country’s top drug and preventable illness issue. But as necessary as it may be to legislate in order to fight cigarette smoking and the effect it has on people, it does not mean the government should ignore the effects such legislation is bound to have on intellectual property rights.