INTA contends that the WTO panel failed to consider the correlation between plain packaging and counterfeiting, arguing that Australia’s law “will facilitate the spread of counterfeit tobacco products by making them easier to produce and more difficult to detect.”
Australia’s Tobacco Plain Packaging Act (TPPA) was enacted in 2011 and prohibits all use of trademarks (other than word marks) on tobacco product packaging. The law seemingly created a domino effect around the world, with countries including Hungary, Ireland, New Zealand, Norway, and the UK having enacted similar laws since, and many other countries presently considering various approaches to restricting tobacco and other products, including alcohol, snack foods and soda. Most recently, Canada enacted the Tobacco and Vaping Products Act, which places certain restrictions on tobacco products, and is still considering broader plain packaging regulations.
Complaints about the law have been pending with the World Trade Organization (WTO) for some time, and, on January 14, the International Trademark Association (INTA) submitted a brief opining in the latest stage of that case.
WTO: Special, but Justifiable
In June of 2018, the WTO ruled on consolidated complaints brought by tobacco-producing countries Cuba, the Dominican Republic, Honduras, and Indonesia against the Australian law. The complaints asked the WTO to decide whether Australia’s law violated provisions of the Agreement on Technical Barriers to Trade and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). One key assertion was that the law is inconsistent with TRIPS, Article 20, which says:
The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, 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. This will not preclude a requirement prescribing the use of the trademark identifying the undertaking producing the goods or services along with, but without linking it to, the trademark distinguishing the specific goods or services in question of that undertaking. [emphasis added]
The WTO ultimately ruled against the complainants, maintaining that, while Australia’s law clearly constituted special use requirements that were detrimental to trademarks, it was justifiable under TRIPS Article 8.1, which 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.
The key here is that the WTO considers the special restrictions “justifiable” and therefore TRIPS-compliant.
Honduras appealed the WTO ruling to the Appellate Body of the Dispute Settlement Panel of the WTO in July 2018 and the Dominican Republic appealed in August. The WTO Appellate Body decided to consolidate the appeals in September. The panel generally has three months to circulate its report in an appeal, but the Appellate Body in this case said that it could not meet that timeframe due to the “exceptional size and complexity of the consolidated proceedings, including, the considerable volume of the panel record and the size of the panel report, the number of issues appealed, and the many complex aspects of these appellate proceedings”—not to mention a backlog of appeals.
The INTA Brief
Now, INTA has filed an amicus brief in the consolidated appeal by Honduras and the Dominican Republic. INTA’s brief calls on the WTO Appellate Body to consider the “highly negative effects that the TPPA could have not just within the tobacco industry, but potentially across all sectors of consumer goods.”
INTA further contends that the WTO panel failed to consider the correlation between plain packaging and counterfeiting. Australia’s law “will facilitate the spread of counterfeit tobacco products by making them easier to produce and more difficult to detect,” says the brief. It continues:
By eliminating the source function served by trademarks, the TPPA measures open up the market for counterfeiters (often backed by organized crime or terrorist organizations). Those counterfeit products will likely not meet the necessary health and safety requirements for tobacco products, increasing the risk of harm to consumers.
The brief also says that the WTO panel erred in its finding that the TPPA requirements are justifiable under TRIPS. “The special requirements contained in the TPPA are unjustifiable, in the sense envisaged by TRIPS, because the effect of the requirements is detrimental to the ability to distinguish those goods in the course of trade.” Such generic packaging “reduces and/or removes the benefits of distinctiveness and information afforded to consumers by distinctive marks…. [and creates] a presumption of equivalence between the products, which is highly damaging for trademark rights, innovation, quality, and safety reasons.”
Is Plain Packaging Even Working?
The Australian government released the findings of a series of peer reviewed studies on the efficacy of the plain packaging law in 2016. The government said that the studies “show that the tobacco plain packaging measure is having an impact by reducing the appeal of tobacco products, increasing the effectiveness of health warnings, and reducing the ability of the pack to mislead. The studies also provide early evidence of positive changes to actual smoking and quitting behaviours.”
But experts have raised doubts about the government’s interpretation of the data presented in those studies. Economists Sinclair Davidson and Ashton de Silva authored a paper in 2016 characterizing the government’s evaluation as falling short of its own criteria for justifying evidence-based policy. Davidson and de Silva said the government’s studies “suffer from inconsistencies and methodological differences” and that “the evidence is not consistent with the stated aims of the plain packaging policy.”
INTA argues that the TPPA should not have been introduced before a thorough “impact assessment and the proper legal considerations, in particular regarding the implications on intellectual property legislation and international agreements to which Australia is signatory,” were conducted.
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