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Where will plain packaging rules land next?

Plain packaging for tobacco products has been implemented in Australia, and its impact on trademark rights could extend to other jurisdictions and even industries. Peter Leung explains.

Australia’s tobacco plain packaging law reached its domestic legal conclusion last August after the High Court upheld its constitutionality. However, the reality of doing business in an environment where the use of trademarks may be severely limited is still unsettled. Today’s panel will explore how these restrictions will affect trademark owners.

Beyond tobacco

Moderator Carla Michellotti of Leo Burnett in Chicago explains that plain packaging issue is more wide ranging than most people realize and can affect all types of trademarks. “Too much of the plain packaging discussion has been centered on tobacco,” she warned. “It’s not just tobacco; this can impact advertising in other products like food, pharmaceuticals, and alcohol.”

One example is a recently defeated attempt in the United States to limit advertising aimed at children. One proposal brought up before the Interagency Working Group consisting of the Federal Trade Commission, the Center for Disease Control, the Food and Drug Administration and the Department of Agriculture would have restricted the use of mascots on foods marketed to minors.

History may also justify these concerns. Richard Gilbey of Gilbey Legal in Paris warns that while the focus is on tobacco right now, governments and societies have deemed other products as “evil” in the past and have subjected them to restrictions.

He notes that while public health concern relating to tobacco use is understandable, data concerning other human activities such as automobile use and drinking suggest that these are at least as serious a problem as smoking. Though it may seem inconceivable that these products are subjected to the same restrictions as smoking, he warns that it is not so far-fetched.

“In the first half of the 20th century, alcohol was the bad product,” he said, pointing out that some countries—including the United States—had complete prohibitions on alcohol.

A limit on competition, and more

The panel will also explore how these trademark restrictions go beyond limiting intellectual property and extend to affecting competition and even freedom of expression. Gilbey points to one example, a French law passed in December 2011 prohibiting medicines manufacturers from enforcing IP rights on the shape, texture, or color of their medicines. This allows generic manufacturers to make generic pills that appear exactly the same as the innovator company’s version.

These limitations on IP are often justified by pitting IP rights against another important issue. In plain packaging, the restrictions are justified by public health concerns, a cause that garners universal support. However, though proponents of tobacco packaging restrictions wear the mantle of public health against an easily demonized industry, these types of restrictions can also be seen as an attack on competition and an appropriation of property.

It’s not that trademarks cannot be regulated, explains Gilbey, but there has to be proportionality between the restrictions and the good being advanced. If proportionality is not followed, then regulations like the plain packaging rules amount to expropriation of the intellectual property.

Michellotti said that practitioners need to be aware how the trend of governments severely limiting the use of trademarks will have negative effects on businesses and undermine the core function of trademarks.

She expressed skepticism about a claim often made by plain packaging proponents, that the law was merely a regulation of the brand owner’s use of their intellectual property, not a taking or a destruction. The Australia High Court made such a point in its decision upholding the scheme’s constitutionality, that even though brand owners had a property right in their marks, it found that the plain package law did not deprive the brand owners of the ‘substance’ and ‘reality’ of their brands, because they still had use of their actual brand names to distinguish their products and to continue to generate goodwill.

“When you own a trademark but you don’t have use of it, it kind of debunks the use of the mark,” she said. “If the government prevents the use of a trademark, you own an asset without a purpose.”

A new “use” of a trademark

Beyond restricting the use of the trademarks, aspects of the plain packaging rules like Australia’s may also serve to turn the brand owner’s marks against it.

Trademarks, packaging and branding are used to identify the product to consumers and to attract them to the product. However, most of plain packaging proposals require that a significant portion of the packaging, sometimes up to 75%, be dedicated to graphic warnings about the dangers of smoking. The trademark, the name of the company and product take up less than half the package, and Gilbey says that the packaging is essentially functioning as a “signature” for the graphic warning designed to turn users away from the product.

“The trademark owner has just become an agent or officer of the government, in assisting the government in turning the consumer away from the brands at its own expense,” he argued. “This is a fundamental change for the role of trademarks.”

Committees in INTA’s Policy Development and Advocacy Group have engaged governments around the world on the subject of plain packaging. To learn more or find out how you can get involved, contact Seth Hays, INTA External Relations Manager, at shays@inta.org.

CW21 Plain Packaging: What's Left in a Brand? takes place today from 11:45 am to 1:00 pm

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Plain packaging around the world

New Zealand

Brand owners have paid close attention to the fate of plain packaging legislation in Australia, but New Zealand, with historically close ties to its neighbor, has watched the developments with particular interest. In February this year, Associate Health Minister Tariana Turia announced plans to introduce plain packaging with large health warnings for all tobacco products. Work on implementation has started, but there will be no changes until the WTO dispute involving Australia is resolved.

Thailand

Thailand’s proposed tobacco packaging law, the Tobacco Consumption Control Act, looks set to go further than Australia’s plain packaging rules when it comes to curtailing brand owners’ rights.

Thailand already has laws regulating tobacco packaging, requiring that 55% of the packaging be covered by graphic health warnings. There are also laws prohibiting advertising and marketing.

The latest draft of the plain packaging law contains few specifics about packaging. Instead, the bill leaves the responsibility of drafting specific regulations to a government body. Even though the substantive regulations have not been written, Section 40 of the draft law does refer to the various factors to be regulated, including “the size, color, symbol, label including the character of the displaying of trademark, symbol, picture” of the packaging.

United Kingdom

The United Kingdom has also been exploring plain packaging, closing a public consultation in August last year. The proposed plain packaging regime is based on the World Health Organization’s Framework Convention on Tobacco Control. The main requirements are similar to Australia’s, requiring prescribed colors and fonts both outside and within the package, as well as a prohibition of branding (including logos and colors associated with the brand), advertising, or permitted on the inside or outside of packages. Package shapes and design, as well as foil color are also standardized, and possibly package materials as well.

European Union

The European Commission published its most recent proposed revision to its Tobacco Products Directive in December 2012. While the revision stops short of adopting a plain packaging regime such as Australia’s, it does contain further labeling restrictions over the current system. The proposal would require combined picture and text health warnings covering 75% of the front and the back of the package, as well as information on services to help smokers quit. The proposal would also standardize certain packaging aspects such as container size to ensure that the graphic warnings are clearly visible. Member states may also introduce their own plain packaging rules in “duly justified cases”.

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