Presentation at the launching of the International Property Rights Index (IPRI) 2019, Makati City, Philippines, October 16, 2019

1. Launching of International Property Rights Index 2019
Fairmont Hotel, Makati City
October 16, 2019

2. “Man… had still in himself the great foundation of
property… when invention and arts had improved
the conveniences of life, was perfectly his own, and did
not belong in common to others.”
— John Locke, Second Treatise on Government (1690).
“A power ‘to promote the progress of science and useful
arts, by securing, for a limited time, to authors and
inventors, the exclusive right to their respective writings
and discoveries.’… The public good fully coincides in
both cases with the claims of individuals.”
— James Madison, The Federalist Papers, No. 43 (1788)
“All creation is a mine, and every man, a miner…In the
beginning, the mine was unopened, and the miner stood
naked, and knowledgeless, upon it…. improves his
workmanship. This improvement, he effects by Discoveries,
and Inventions…”
— Abraham Lincoln, Lecture on Discoveries and Inventions
(1858).
INTRODUCTION
EARLY PHILOSOPHICAL BASIS OF IPR PROTECTION

3. CURRENT SITUATION

4. PURPOSE OF THE STUDY
To answer (1) Impacts and implications to investments and the economy
in general, as well as individual consumption of the products brand
banning is intended to curtail?
(2) To what extent should the state intervene in protecting public health
without damaging private property rights and the security they provide
to investments and innovation?
(3) When IPRs like brand and trademarks are withheld in order to benefit
consumers is it achieved without unintended consequences?
(4) As the market responds to the banning of brands are there
unintended beneficiaries or unintended victims?
(5) What conclusions can developing and emerging economies draw from
the experience of developed countries that instituted plain packaging?

5. REVIEW OF LITERATURE
Haber (2016): “There are no wealthy countries with weak patent rights, and
there are no poor countries with strong patent rights. Indeed, Figure 1 shows a
remarkably tight pattern: as patent rights increase, GDP per capita increases
with it. Roughly speaking, for every one-unit increase in patent rights
(measured from zero to fifty) per capita income increases by $780.”

6. DATA AND METHODOLOGY
SURVEY OF GLOBAL RANKINGS
Developed
economies with
stronger rule of
law and private
property
protection
generally have
higher
economic or
GDP size.

7. ILLICIT TRADE INDEX
Economist Intelligence Unit’s (EIU) Global Illicit Trade Environment Index (GITEI)
measures how economies enable (or inhibit) illicit trade through policies.

8. COUNTRY IMPACT OF BANNING TOBACCO BRANDS
1. Australia. First country to legislate brand bans of cigarettes in December
2012. KPMG data show -- estimated share of illicit and smuggled tobacco rose
from 11.5% of total tobacco consumption in 2012 (before ban implementation)
to 13.5% in 2013, 14.7% in 2014, up to 15% in 2017.

9. 2. Canada. Even before banning tobacco brands was legislated, high tobacco
taxes and other restrictions had opened the door for contraband tobacco and
illicit products to enter the marker as they are attractive to people who want
cheaper products.

10. 3. UK. Tobacco smuggling apprehended by the government has not waned.
4. New Zealand. “The types of concealments we've seen for tobacco rivals
what we're seeing for drugs… We've seen a steady rise in tobacco smuggling
cases.” (TVNZ, Nov. 2018)

11. “Plain packaging for confectionery,
crisps and high-sugar drinks: This
would level the playing field
between confectionary products and
fruit and vegetables which do not
benefit from the same level of
branding and product recognition.
This mirrors the action taken against
smoking without reducing the
availability of confectionary….”
(June 2019)
BANNING BRAND FOR CONFECTIONERY, CRISPS AND HIGH-SUGAR DRINKS
“Critics say plain packaging, like
with cigarettes, will make shops
“grey and boring” and do nothing
for waistlines.”

12. “From the smoking ban in
2007 to the introduction of
plain packaging a decade
later… there are signs sugar
is heading the same way….
now a leading think tank
has even suggested sweets,
snacks and sugary drinks
should be wrapped in plain
packaging to make them
less appealing…”
“major brands… be
compelled to use a
uniform drab design
intended to put off
consumers. This would
be in line with the
greeny brown colour –
chosen for its ugliness
– seen on cigarette
packs.”
June 2019…

13. https://www.theguardian.com/society/2019
/oct/10/childrens-health-england-must-be-
put-ahead-of-profits-says-chief-medic
“Among the recommendations are
bans on promoting and advertising
junk food… ban on eating and
drinking on urban public transport
… option of plain packaging as
there is for cigarettes.”
https://www.dailymail.co.uk/health/article-7554765/Ban-snacks-buses-says-outgoing-nanny-chief-
Dame-Sally-Davies.html
“She wants the
Government to threaten
the food industry with
'cigarette style' plain
packaging for sweets
and chocolates if they
fail to meet sugar
reduction targets.”
October 2019…

14. https://www.gov.uk/govern
ment/publications/time-to-
solve-childhood-obesity-
cmo-special-report

15. https://www.packagingnews.co.uk/fe
atures/comment/ron-cregan-plain-
packs-confectionery-leave-bitter-
taste-14-10-2019
“The report should have the food and drink’s packaging industry contemplating the worst
because it could happen sooner than we think. Lawmakers often take their lead from public
health bodies like the Food Ethics Council and supranational organisations like the World
Health Organisation (WHO), who wield the ban hammer in the name of protecting public
health.
Simplifying the design, construction and manufacturing of consumer packaging effectively
lowers, and even removes, the barriers to entry for counterfeiters. Without this complexity,
plain packaging allows criminal gangs to copy and reproduce authentic and legitimate
products with relative ease.”
“The UK’s Nanny-in-Chief – the
outgoing Chief Medical Officer, Dame
Sally Davies – has called on the
Government to threaten the food
industry with ‘cigarette style’ plain
packaging for sweets and chocolates
if they fail to meet sugar reduction
targets.

16. https://www.bangkokpost.com/lifestyle/family-and-
health/1575750/
http://www.nationmultimedia.com/detail/national/30358709
https://www.freemalaysiatoday.com/category/nation/2019/02/13/after-
smoking-ban-putrajaya-mulls-plain-packaging-for-cigarettes/
https://www.worldofbuzz.com/report-
ministry-of-health-could-introduce-plain-
packaging-for-cigarettes-soon/

17. Banning of brands is a historic policy reversal from upholding private
property rights and protecting IPR. Increased property right
protections and economic freedom coincided with advances in
science that together allow people across the world to live longer,
wealthier, and healthier lives. Data from the Maddison Project:

18. CONCLUSIONS AND RECOMMENDATIONS
• Banning brands will result in a soured investment environment, danger
that one’s corporate brand meticulously built over many decades and
worth several hundred million dollars can be forfeited and discarded by
government dictate.
• Individual consumers will have little brand choices and just pick the
cheapest among generic-branded products – without regard to their
reputation.
• The state can protect public health without damaging private property
right protections and security of innovation. In the first place, public
health is not really in danger, people are living longer and healthier.
• Cases of Australia, France, UK and other countries, plain packaging has
not contributed to reducing smoking incidence. Many smokers do not
quit, simply switch to cheaper products, often counterfeit. And this
ironically increases more smoking.

19. • The law of unintended consequences always kick in. Unintended
beneficiaries are the smugglers and producers of illicit products,
criminal gangs and terrorist groups, plus certain corrupt government
officials that allow illicit goods to be sold and circulated.
• Unintended victims are the consumers who will have fewer or zero
brand choices. They will continue their consumption of the “sin”
products but will choose the cheaper, illicit products. Government tax
revenues can also decline.
• Banning brands is ineffective at achieving its policy goal, damages the
IPR environment, and cedes market share to criminal syndicates that
prefer to remain anonymous rather than earn a reputation.
• IPRs like trademarks and brands should be protected -- for consumer
choices, for investment protection, even for government taxation and
battling criminality and terrorism – and not prohibited.

20. Selected Appendix

21. https://brandirectory.com/reports/plain-
packaging-2019
“With health advisors labelling obesity ‘the
new smoking’, it is not surprising that there
have been repeated calls for plain packaging
legislation to expand into the food and drink
sectors. It is obvious, however, that this type
of legislation could severely damage these
companies’ business values.”
US$234.0 B of enterprise value stands to be
lost if plain packaging legislation was
implemented for these eight companies,
nearly US$50 billion more than in 2017:
+ Implied loss across entire beverage industry
is US$430.8 B, almost 50% more than in 2017
+ Alcohol companies: AB InBev, Heineken, and
Pernod Ricard, would see 100% of their
revenue exposed
+ Pernod Ricard has the largest proportion of
enterprise value at stake – 36.2%
+ AB InBev is set to lose the most enterprise
value in absolute terms – US$64.6 B
+ Coca-Cola Company and PepsiCo could
each see over 25% of their enterprise
value at risk
+ Nestlé and Mondelēz, less exposed
than those in the drinks industry

22. Thank you.
Paper available: https://atr-
ipri2017.s3.amazonaws.com/uploads/Case+Studies+2019/Philippines_
newlayoutv2.pdf
Author blogs:
http://funwithgovernment.blogspot.com/
https://ipinasia.wordpress.com/
minimalgovernment@gmail.com