Australia: Trademark Claims

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As part of the fight against the new tobacco control measure of plain packaging in Australia, tobacco companies have argued that the plain packaging policy violates intellectual property (IP) rights and trademark claims. IP and trademark claims have been made by tobacco companies opposing public health regulation for more than 20 years, despite internal industry documents showing that the industry has been aware of the low success rate of such claims since 1992.

Summary of IP Claims

  • In its April 2010 submission to the Australian Senate Community Affairs Legislation Committee inquiry into plain packaging, Imperial Tobacco said – under the heading "breach of law and international treaties" – that the new laws risked "breaching Australian law and international legal and treaty obligations. The introduction of plain packaging would seriously damage Australia’s international reputation as a supporter of legitimate business and a defender of commercial rights and freedoms, particular in relation to intellectual property.”[1]
  • Imperial Tobacco also advised the Senate Committee that it would “robustly defend any expropriation of our valuable corporate assets” and added that plain packaging “raises significant legal questions”.
  • That same year, Philip Morris launched a "Plain Packaging of Tobacco Products" website "to describe its likely effects on retailers, manufacturers, governments and consumers." It claimed that plain packaging “would effectively eliminate the use of trademarks in relation to tobacco products, constituting a violation of trademark rights protected by national and international law.”[2]
  • On 31 May 2011, British American Tobacco Australia (BATA) announced that it was taking the Australian Government to court over its refusal to make public its legal advice on plain packaging.[3] The company said: "BATA is hopeful that the Full Federal Court orders the Government to release the key document which it has continually declined to do through the Freedom of Information (FOI) process. BATA suspects that Minister Roxon hasn’t released the legal advice because it’s likely to demonstrate her plain packaging laws are flawed." In addition, BATA successsfully argued for the date of the hearing to be brought forward from November to August 2011.[4]
  • On 8 June 2011, several US-based business associations issued a statement opposing Australian plain packaging, because it "risks establishing a precedent of IP destruction for an entire industry".[5]
The groups were:
  • Later that month, Philip Morris served the Australian Government with a "notice of claim", leaving both sides with three months to negotiate before court action, in relation to the violation of intellectual property rights under Australia's bilateral investment treaty with Hong Kong. "If no mutually agreeable solution is found, then it proceeds to us seeking compensation. We estimate the damage will potentially amount to billions of Australian dollars," a spokeswoman for Philip Morris Asia told Dow Jones Newswires.[6]

For more information on legal cases in Australia, see Australia: Challenging Legislation.

Responses to the Legal Claims

False claims

Australia's Trade Minister at the time, Craig Emerson, dismissed the industry's trademark and IP rights arguments. Speaking to the newspaper The Age, he said:[7]

"Claims that the Australian government is attacking trademarks are false. We are protecting public health and won't be threatened or intimidated by big tobacco companies [...] The government will not subjugate Australia's national sovereignty in any trade agreement. Nor will we contract out government policy to private corporations."


Misappropriation

The claims were also criticised by patent and trademark attorney Glen Gordon.[8] Among other points, he argued:

"The primary right obtained from trademark registration is a negative right; it is actually the right to prevent other people from (mis)using the trademark. The proprietors may use the mark themselves subject to other laws, but they actually gain from registration the right to take legal action that will stop third parties from using the mark on the same or similar goods [...] the change to plain packaging will not adversely affect this right."


Intimidation

Julia Gillard, Australia's Prime Minister at the time, was not impressed by the industry's legal threats. She told The Guardian:[9]

"We're not going to be intimidated by Big Tobacco's tactics, whether they're political tactics, whether they're public affairs kind of tactics out in the community, or whether they're legal tactics. We're not taking a backward step. We've made the right decision and we'll see it through."


Delay

The legal threat might not be more than a strategy to delay the introduction of plain packaging. Donald Rothwell, Professor of International Law at the Australian National University, said in an email to Dow Jones Newswires that it could be some time before a resolution is reached as it must first be proven that the dispute exists, given the new laws haven't yet been passed.[6]

Martin Dockrell, Director of Research and Policy at London-based public health charity ASH, told The Guardian he expected the Australian suit to be the first of many as governments around the world tighten up the rules on cigarette packaging:

"Legal action is a standard delaying device for them. They are going to throw huge amounts of money into this."[9]


Last resort

In an editorial entitled "Why Australia has to win its trial of strength against the tobacco giants" in the European Journal of Cancer Care,[10] S.J. O'Connor wrote that he agreed with the then Australian Health Minister Nicola Roxon that the proposals will "remove the last vestige of glamour from tobacco products" and "the fact that the tobacco industry have resorted to the use of a relatively obscure bilateral treaty between Australia and Hong Kong to intimidate the Australian government into retracting the proposals clearly implies that they think the same thing."

Countering Industry Arguments Against Plain Packaging

For more information on the legal advice given to tobacco companies regarding intellectual property claims see Countering Industry Arguments Against Plain Packaging: It Breaches Intellectual Property Rights

Outcome of Trademark Appropriation Litigation

On the 15 August 2012, the High Court in Australia ruled that plain packaging law, due to be implemented on the 1 December 2012, was constitutionally valid.[11] The key issue before the court was whether, under the constitution, plain packaging represented an "acquisition of property" by the government, from which they could benefit.[12]

According to The Sydney Morning Herald, president of the Australian Council on Smoking and Health Mike Daube said that the ruling was “a massive win for public health” and that “It is also the global tobacco industry’s worst defeat” to date.[11]

International legal challenges

World Trade Organization

Australia has also been challenged by the international community over its plain packaging law. Under the World Trade Organization (WTO) countries are able to challenge the practices of other countries by calling for a disputes panel to be convened. Private businesses and organisations are not permitted to do this.

On 28th September 2012, in response to a request by the Ukraine, the World Trade Organization Dispute Settlement Body agreed to set up a panel to assess whether the plain packaging law passed in Australia breaches intellectual property (IP) rules under the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement and violates the Agreement on Technical Barriers to Trade (TBT). On the WTO website it stated that the Ukraine disputes panel with Australia is "established, but not yet composed".

Ukraine is not the only country to file a grievance against Australia’s plain packaging law. On 5 May 2014, panellists were appointed to examine the complaints of the Ukraine, Honduras, Dominican Republic, Cube and Indonesia.[13] These countries argue that plain packaging law breaches the WTO’sGeneral Agreement on Tariffs and Trade (GATT), Agreement on Technical Barriers to Trade (TBT Agreement) and Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement) because plain packaging is discriminatory, more trade restrictive than necessary, and unjustifiably infringes upon trademark rights.

It is claimed that Philip Morris is covering some legal costs for the Dominican Republic and British American Tobacco are doing the same for both Ukraine and Honduras.[14]

Expert Legal Opinion

The Australian McCabe Centre for Law and Cancer states that in their view:

Australia's laws comply with its WTO obligations. The laws represent a sound exercise of Australia's sovereign power to regulate, are non-discriminatory, based on evidence, well-drafted, and have behind them the legal and political force of the WHO Framework Convention on Tobacco Control, its Article 11 and Article 13, other decisions of its Conference of the Parties, and other international instruments including the Doha Declaration on TRIPS and Public Health.[13]

In August 2012, Andrew Mitchell, an international law expert at Melbourne University told the Australian publication Lawyers Weekly that the WTO claims were unlikely to be successful. [15]

A ruling on the challenges made under the auspices of the WTO is expected in the second half of 2016.

Bilateral Investment Treaty

Philip Morris Asia challenged Australian plain packaging legislation, saying that the Australian Government breached the "fair and equitable treatment" obligation under The Australia – Hong Kong Bilateral Investment Treaty.

In response to this claim, Andrew Mitchell (international law expert) highlighted that the timing of Philip Morris Asia’s acquisition of shares in Philip Morris Australia on 23 February 2011, a whole 14 months after the Government announced its intention to introduce plain packs, is a concern. It suggests the acquisition was a strategic move in order to make this argument.[15] “It will be very difficult to argue that at the time of making that investment they had a legitimate expectation that plain packaging wasn’t going to be introduced when the Government had already announced it was going to do exactly that,” he said.[15]

On 18 December 2015, the Permanent Court of Arbitration issued a unanimous decision that it had no jurisdiction to hear Philip Morris's claim.[16][17][18]

Call for Action from the Medical World

Australia should not fight this battle alone, according to S.J. O'Connor when he called for other governments to get off the fence and listen to the advice of healthcare professionals. His plea is for a concerted international action to step-up the pace of anti-smoking measures:

"I hope that there will be a strong and resounding repudiation of the tobacco industry's attempts to hold back the tide of progress inherent in these measures, and that we will see strong political action on the part of national governments in this respect. Otherwise it is they and not the tobacco industry who should be suing for financial compensation for the immense costs involved in palliating the consequences of this particular ‘consumer good’, and I doubt that even the tobacco companies have enough resources to meet that particular bill on a global scale."[10]

TobaccoTactics Resources

External Links

  • Cancer Council Australia’s Plain facts website provides up to date information on the impacts of plain packaging in Australia and provides critiques of tobacco industry reports claiming that plain packaging in Australia has not been successful.

Notes

  1. Imperial Tobacco, Submission to the Senate Community Affairs Legislation Committee for the inquiry into the Plain Tobacco Packaging (Removing Branding from Cigarette Packs) Bill 2009, April 2010
  2. Philip Morris, www.plain-packaging.com (no longer live), undated
  3. BAT Australia, Federal Court hearing set for secret plain pack advice, 31 May 2011, accessed 7 June 2011
  4. Belinda Merhab, Cigarette packaging appeal expedited, Sydney Morning Herald, 7 June 2011, accessed 9 June 2011
  5. PR Newswire, Leading Business Organizations in the U.S. Issue Joint Statement in Opposition to Australian Government's Proposed Tobacco Plain/Standardized Packaging Legislation, 8 June 2011, accessed 26 June 2011
  6. 6.0 6.1 Dow Jones Deutchland, Philip Morris Warns Australia Government Of Legal Battle], 27 June 2011
  7. Christian Kerr, Trade minister blasts tobacco companies over claims government plan in breach, The Age, 19 May 2011, accessed 8 June 2011
  8. Glen Gordon, Trademark attorney: Tobacco companies have no case on plain packaging, www.crikey.com.au, 5 May 2010, accessed 9 June 2011
  9. 9.0 9.1 Dominic Rushe, Philip Morris to sue if Australia puts all cigarettes in plain green wrappers, Tobacco firm claims Canberra's ban on logos and other packaging restrictions will lose it billions, the Guardian, 27 June 2011
  10. 10.0 10.1 S.J. O'Connor, David versus Goliath. Branding, intellectual property rights and the 'nanny state’: why Australia has to win its trial of strength against the tobacco giants, European Journal of Cancer Care, Volume 20, Issue 5, pages 561–562, September 2011
  11. 11.0 11.1 Mark Metherell, Big Tobacco loses high court battle over plain packaging, The Sydney Morning Herald, 15 August 2012, accessed August 2012
  12. Philip Morris Limited, Philip Morris Limited comments on Australian High Court decision on plain packaging for tobacco products, 15 August 2012, accessed August 2012
  13. 13.0 13.1 McCabe Centre for Law and Cancer, Dispute in the World Trade Organization: Latest developments, accessed December 2015
  14. A. Martin, Philip Morris leads plain packs battle in Global Trade arena, Bloomberg Business News, 22 August 2013, accessed December 2015
  15. 15.0 15.1 15.2 L, Mezrani, Tobacco challenges unlikely to succeed, Lawyers Weekly, 17 August 2012, accessed October 2012
  16. J. Mather, Philip Morris loses case against Australia’s plain packaging law, Financial Review, 18 December 2015, accessed December 2015
  17. D. Hurst, Australia wins international legal battle with Philip Morris over plain packaging, The Guardian, 18 December 2015, accessed December 2015
  18. G. Hutchens, Australian government wins plain packaging case against Philip morris, The Sydney Morning Herald, 18 December 2015, accessed December 2015