Bascap presentation final
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This was a presentation I gave at IP Summit 2014 in Brussels on developments regarding moves by France, Ireland and the United Kingdom to introduce 'plain/standardised' packaging for tobacco products. I discussed the impact from a counterfeiting/piracy angle and the implications for restriction of IP rights.
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Bascap presentation final
- 1. IP SUMMIT 2014 BRUSSELS, BELGIUM NIALL TIERNEY INTELLECTUAL PROPERTY ATTORNEY BASCAP CONSULTANT ON PLAIN PACKAGING BASCAP
- 2. Title • Overview of ‘plain/standardised’ packaging laws – figurative/logo trademarks prohibited; • Potential problem of non-use; defence; is a trade mark destroyed if it cannot be used? • Enforcement issues – distinctive character/reputation; • PP laws – restriction on use v elimination/destruction of Intellectual Property; • Compliance with TRIPS and TBT agreements; • WTO disputes against Australia; • Compliance with European Union law: TFEU and Charter of Fundamental Rights.
- 3. Title • Interest of Public Health v Intellectual Property rights. • Public Health interests v potential increase in counterfeiting and burgeoning of black market trade; • The Australian experience – is ‘plain/standardised’ packaging working? • Are smokers rights less than those of non smokers? – threat/danger of counterfeit cigarettes; • Unintended consequences - will PP boost the illicit tobacco trade and line the pockets of black marketers? • Where will proceeds of counterfeit trade end up? • Human rights implications – right of retailers to earn a livelihood, freedom of expression, property rights.
- 4. Title • Will ‘plain/standardised’ packaging spill over to other products? – Obesity – Confectionery/Fast Food products – Alcohol – measures by countries such as Indonesia • Statements by Governments to the effect that ‘plain/standardised’ packaging could be used for other products – Irish Health Minister James Reilly. • Impact on illicit trade – will increase in revenue resulting from a growth of counterfeiting following ‘plain/standardised’ packaging fund the counterfeiting of other products, e.g. clothing, food products? • Infant formula packaging? • Developments outside of the European Union – Turkey, South Africa, India
- 5. For more information please visit: www.iccwbo.org/bascap Jeffrey Hardy William Dobson Director Deputy Director jeffrey.hardy@bascap.com william.dobson@bascap.com +1 239 267 4488 +1 513 878 2630 Tracy Faustin Alexandra Iliopoulou Project Manager Policy & Legal Adviser Tracy.faustin@iccwbo.org alexandra.iliopoulou@bascap.com +33 1 49 53 28 27 + 32 489 97 01 43 THANK YOU !
- 6. For more information please visit: www.iccwbo.org/bascap Jeffrey Hardy William Dobson Director Deputy Director jeffrey.hardy@bascap.com william.dobson@bascap.com +1 239 267 4488 +1 513 878 2630 Tracy Faustin Alexandra Iliopoulou Project Manager Policy & Legal Adviser Tracy.faustin@iccwbo.org alexandra.iliopoulou@bascap.com +33 1 49 53 28 27 + 32 489 97 01 43 THANK YOU !
Editor's Notes
- World Health Organisation Framework Convention on Tobacco Control – 21 May 2003 – signed by 168 countries and legally binding in 179 ratifying countries – FCTC includes a series of non-binding guidelines, including the implementation of ‘plain packaging’ for tobacco products. Australia – implementation of ‘standardised’ packaging for tobacco products in December 2012 (Tobacco Plain Packaging Act) – Post Implementation Review to take place this month. Ireland – Public Health (Standardised Packaging of Tobacco) Bill 2014 – section 7 prohibits a cigarette pack from bearing a mark or trade mark unless it is printed in word format in accordance with the provisions of the Bill – figurative trade marks and get up will be prohibited. United Kingdom – Standardised Packaging of Tobacco Products Regulations – Secretary of State for Health is entitled to bring in the regulations under the powers given to her under the Childrens and Families Act 2014 – Rule 5 of the Regulations stipulates that only a brand name or variant name can appear on cigarette packs – brand name and variant name must appear in a format governed by Rule 5(5); France – Health Minister Tourraine in September 2014 that she intends to introduce ‘plain/standardised’ packaging under the draft Health Bill; Neither Irish nor UK legislation will prevent the tobacco companies from continuing to register their trade marks – what would be the point if you cannot use – will not be able to register for defensive reasons in view the MERIT/NERIT case; Irish and UK legislation stipulate that the restrictions against use will not count as a ground of non-use – significantly neither country has determined what would happen in the event a non-use action is filed against a CTM – e.g. Would a non-use revocation before OHIM have to take into account UK and Irish legislation? If OHIM accepts UK and Irish provisions, is it not a party to undermining the pan EU ‘unitary character’ of the CTM? Enforcement – will UK and Irish legislation make it harder to bring enforcement actions – how will a ‘likelihood of confusion’ claim succeed if there is a prohibition against use of the claimant’s trade marks – will a detriment to distinctive character/repute claim succeed if there is a prohibtion against use of the claimant’s trade marks? Restriction on use or elimination/destruction of trade mark rights – in JTI and BAT v Australia (2012), the Australian High Court held that the Tobacco Plain Packaging Act 2011 did not amount to an unconstitutional acquisition of the claimant’s trade marks – no proprietary interest in trade marks are being acquired (the requirement under the Australian Constitution) – Ireland protects property rights from unjust attack. There is no mention of acquired in the Irish Constitution so same finding is unlikely in Ireland. What about the United Kingdom? – think of protection of property rights in the Magna Carta. Does a restriction on use of a trade mark amount to destruction/elimination - Michael Hölterhoff v Ulrich Freiesleben (2000) CJEU ruling – Use of a trade mark involves identifying the proprietor's goods or services as his own. Although perhaps so self-evident that it may not be specifically set out in trade mark legislation, that is the purpose for which trade marks exist . If use of a trade mark in respect of goods/services for which it is registered is restricted, does not eliminate the existence of the trade mark? TRIPS, GATT and TBT: Disputes by Ukraine, Dominican Republic, Cuba, Honduras and Indonesia against implementation by Australia of ‘plain/standardised’ packaging – Article 8(1) TRIPS allows Member States to adopt measures necessary to protect inter-alia public health provided they are consistent with the terms of the provisions of the Agreement. Article 20 TRIPS however stipulates that “use of a trademark shall not be unjustifiably encumbered by special requirements .... in a manner detrimental to capability to distinguish the goods/services of one undertaking from another”. Technical Barriers to Trade (TBT) – seeks to ensure that technical regulations including packaging and labelling requirements do not create unnecessary obstacles to international trade - Ukraine, Dominican Republic, Cuba, Honduras and Indonesia has also claimed that Australia’s ‘plain/standardised’ packaging law breaches Agreement on Technical Barriers to Trade – Ireland has particularly come under scrutiny at the WTO’s committee on technical barriers to trade. Its proposed PP law is seen as inhibiting fair trade. WTO disputes against Australia – complaints filed Ukraine, Dominican Republic, Cuba, Honduras and Indonesia have been consolidated such that they are all examined at the same time – in a recent ruling, the WTO Panel rejected Australia’s procedural objections to the claims put forward by the Dominican Republic. EU: Potential breach of Article 34 of the Treaty on the Functioning of European Union – would potentially create unlawful barriers to trade mark – potentially affects the efficacy of the CTM which confers on its holder the exclusive right to use for the purpose of putting a product on the market – Bristol Myers Squibb and Others v Paranova - Article 1(2) of the CTM Regulation effectively prohibits EU Member States from interfering with the right to use a CTM as a result of domestic provisions. Any EU Member State would implementing ‘plain/standardised’ packaging would also potentially breach Articles 11 (freedom of expression), 16 (freedom to conduct business) and 17.2 (protection of Intellectual Property)
- Interest of Public Health v Intellectual Property rights – Article 8(1) TRIPS allows Member States to adopt measures necessary to protect inter-alia public health provided they are consistent with the terms of the provisions of the Agreement – Article 43.2.2 of the Irish Constitution which allows the State to delimit property rights in the exercise of the common good. It is likely the Irish Government will argue that the common good in protecting public health outweighs constitutional property rights – any measure must however be ‘proportional’. Is standardised packaging proportional? Answer to this question will depend on whether Governments can convince a court that the evidence shows ‘standardised packaging’ works. Public Health interest v potential increase in counterfeiting – ‘plain/standardised’ packaging is likely to make it easier to counterfeit – combined with high price of genuine product, plain packaging will encourage people to purchase on the black market - European Strategic Partnership Observatory Working Paper No.5 by Thomas Renard referenced Europol’s Annual Threat Assessment which pointed to China as the main source of counterfeit goods, including cigarettes – Royal Canadian Military Police spokesman Corporal David Wells reported that “Organised crime is extensively involved in illicit tobacco market” – retired assistant Director of the US Bureau of Alcohol, Tobacco and Firearms stated that “Smuggled cigarettes have become the new currency of organised crime and that a lot of these criminal organisations are finding it more profitable than illegal narcotics”. The Australian experience - Australian Customs and Border Protection Service (ACBPS) Annual Report of 2012-2013 reported tobacco detections in Australia nearly doubled from 45 to 76 between 2011-2012 and 2012-2013. Significantly, the number of cigarette sticks seized rose from 141 million to 200 million between 2011-2013 and the duty evaded rose from AU$125 million (2011-12) to AU$151 million (2012-2013) - clearly show that, far from reducing the amount of illicit tobacco coming into Australia, standardized packaging has only served to boost the tobacco black market - necessary to bear in mind that the ACBPS figures only reflect actual seizures and do not in any way indicate what the real state of the tobacco black market is in Australia. Suffice to say, if the ACBPS figures reveal an increase in the detections of illicit cigarettes, it should be reasonable to assume the number of un-detected illicit cigarettes that entered Australian market between 2012-2013 also rose – KPMG discovered that Australia’s illegal tobacco market has actually risen to around 13% since the introduction of plain packaging - The market share of one illegal brand “Manchester”, in get-up similar to the well known MARLBORO brand grew in one year alone from 0.3% to 1.3% of total manufactured cigarette consumption. This was higher than that of legal brands such as CAMEL or KENT. AFT Factsheet of 2014 observed that counterfeit cigarettes contain many contaminants such as sand, plastic particles and other packaging materials – pose a risk of immediate injury to smokers – are smokers not entitled to purchase genuine products that are manufactured to high standards of quality – in seeking to achieve its objective of reducing the number of people taking up smoking, will ‘plain/standardised’ packaging not in fact drive smokers to the black market with the risk that their lifes will be put in immediate danger by smoking contraband cigarettes – think of underage minors who may not be aware of the dangers of smoking contraband cigarettes. Unintended consequences – Gov’s state that new ‘standardised packs’ will be difficult to counterfeit because of the presence of complex security features and tax stamps – AFT Fact Sheet of 2014 discovered that tobacco traffickers use counterfeit tax stamps to save the cost of paying US State excise tax on genuine cigarettes so tax stamps are not likely to deter counterfeiters – no indication by the UK, Irish or French Governments as to what type of security features they expect to be used on the new packs. ‘Slippery Slope’ - Plain packaging is not an issue exclusive for the tobacco industry as it would have major ramifications for other consumer goods industries - sets a negative precedent for the country on the protection of intellectual property (IP) rights and raises doubts about its reliability from an investment perspective - plain packaging on one industry sector can be easily extended to others in the future – Former Irish Health Minister has already indicated that Government may well look at other industries, e.g. confectionery or any industry that is perceived to be responsible for an increase in obesity - plain packaging could even be extended to other consumer goods when used as a retaliatory measure by countries opposing to the plain packaging of tobacco products: the Indonesian government has warned that if plain packaging is applied to tobacco products exported by Indonesia, then similar plain packaging measures could be applied in retaliation to imported alcohol or dairy products from countries such as Australia, New Zealand, or other states aiming at introducing this legislation – must also be conscious that proceeds from the illicit tobacco trade may well be used by the same criminal/terrorist organisations to fund the counterfeiting of other products, such as luxury goods, clothing and even foodstuffs – note that baby milk formula has been counterfeited on a regular basis in China and India. The Sun newspaper undertook a covert investigation into the problem of the illicit tobacco trade - investigative journalists, Brian Flynn and Darren Fletcher asked an Indonesian black market trader what he thought of plain packaging. His troubling reply was: “I support the UK government…We will make more money. We can make it cheaper but sell for the same price. It’s good for you, good for me.” Brian Flynn published his report in the Sun edition of 4th June 2014 – very likely that PP will therefore be a boost to the illicit tobacco trade. Where will the proceeds of the counterfeit trade end up – HMRC Report “Tackling Tobacco Smuggling” indicated that the smuggling of cigarettes and hand-rolling tobacco is a key business for organized criminal gangs who use the proceeds of crime to fund the smuggling of drugs, weapons and human beings” – Center for International Maritime Security reported that the product and profit (illegal cigarettes) not only support ISIL and their organised crime network, but other Al-Qaeda affiliates. The illicit tobacco trade is an instrumental part of their funding portfolio.
- ‘Slippery Slope’ - Plain packaging is not an issue exclusive for the tobacco industry as it would have major ramifications for other consumer goods industries - sets a negative precedent for the country on the protection of intellectual property (IP) rights and raises doubts about its reliability from an investment perspective - plain packaging on one industry sector can be easily extended to others in the future Former Irish Health Minister has already indicated that Government may well look at other industries, e.g. confectionery or any industry that is perceived to be responsible for an increase in obesity – Plain packaging could even be extended to other consumer goods when used as a retaliatory measure by countries opposing to the plain packaging of tobacco products: the Indonesian government has warned that if plain packaging is applied to tobacco products exported by Indonesia, then similar plain packaging measures could be applied in retaliation to imported alcohol or dairy products from countries such as Australia, New Zealand, or other states aiming at introducing this legislation. Must also be conscious that proceeds from the illicit tobacco trade may well be used by the same criminal/terrorist organisations to fund the counterfeiting of other products, such as luxury goods, clothing and even foodstuffs – note that baby milk formula has been counterfeited on a regular basis in China and India. The WTO Panel and the Appellate Body decision in the disputes against Australia’s plain packaging measure will have consequences that go far beyond the tobacco industry. The decision-making by WTO panels must be consistent. If the Panel finds that plain packaging of tobacco products is acceptable in its contribution to public health objectives, a WTO dispute regarding plain packaging of alcoholic beverages or foodstuffs, would in all likelihood lead to a similar result. Therefore, this decision will provide a precedent to all WTO Members on the legality of plain packaging or similar types of labelling and packaging measures under WTO law. It is expected that the outcome in the current disputes against tobacco plain packaging requirements would be duplicated in any future disputes against packaging requirements targeted at other products subject to public health measures. In that case, regulators around the world seeking to introduce plain packaging (or similar labelling or packaging requirements) for other products would be likely to rely on the WTO ruling regarding plain packaging for tobacco products.