Jack Ellis

A dispute resolution panel of the World Trade Organisation (WTO) has reportedly ruled in favour of Australia in a complaint brought by a number of countries, including several major tobacco exporters, against its plain packaging policy. While the world awaits public confirmation of the decision, the early leaks suggest a significant blow has been dealt to tobacco brand owners.

Citing two people familiar with the matter, Bloomberg reported late last week that a panel of the WTO’s Dispute Settlement Body has upheld Australia’s contention that the plain packaging regime it introduced in 2012 – which bans all forms of branding on packaging for tobacco products except for the brand name in standardised font – does not violate the country’s obligations under the Trade-Related Aspects of IP Rights (TRIPS) Agreement. The leak followed the WTO panel privately revealing its decision to relevant parties on May 2, with the full decision set to be published publicly in July. It is understood the claimant countries will now have an opportunity to appeal (and a spokesperson for British American Tobacco has flagged that this is likely).

Australia’s Tobacco Plain Packaging Act 2011 requires all cigarettes, cigars, rolling tobacco and pipe tobacco to be sold in identical packets that are of drab olive colour, with 75% of the front of the pack and 90% of the back covered by graphic, government-issued health warnings. In the years since the law was enacted, countries including Cuba, Honduras, Indonesia, Ukraine and the Dominican Republic – most of which are major tobacco producers – lodged objections with the WTO in which they claimed that the act effectively destroys the IP rights of tobacco companies. As a result, they argued that Australia is in contravention of its TRIPS obligations, and that its plain packaging laws may be creating unnecessary barriers to trade in violation of the WTO Agreement on Technical Barriers to Trade, as well as consumer confusion in violation of the Paris Convention for the Protection of Industrial Property.

Commentators have long predicted that the eventual result of the WTO case – which has been delayed several times over the years – will be a tipping point in terms of the worldwide adoption of plain packaging regulations. Since Uruguay’s victory in an earlier and very similar case brought before the World Bank’s dispute resolution body by tobacco company Philip Morris, the number of countries implementing or discussing plain packaging regimes has grown significantly.

In fact, speaking to World Trademark Review last October, Enrico Bonadio, senior lecturer of IP law at City University in London, and co-author of The New Intellectual Property of Health Beyond Plain Packaging, suggested that an Australian victory at the WTO could be the end of the road for the tobacco industry’s long-fought legal battle against plain packaging legislation. “Tobacco companies, in my opinion, need to think of alternative strategies outside of litigation,” he said. “The WTO decision would be a turning point. I really don't see how they will effectively spend money to fight legal battles if it goes against them – it would certainly be an ill-informed strategy to continue down that path. I understand that they are afraid to lose their most important tool of communication – packaging – and that their reaction has been so widespread and strong because once they lose that, they will not have any other tool to communicate to their existing and potential customers. But I can't see any way to stop this trend.”

Responding to reports of the WTO panel’s decision, Canadian Cancer Society senior policy analyst Rob Cunningham told World Trademark Review that the decision would be seen as “a significant defeat for the tobacco industry”, adding that he expects it to result in an uptick in countries adopting plain packaging on tobacco products: “A WTO decision continues the tobacco industry’s legal losing streak on plain packaging, and will result in far more countries moving forward to implement this measure.  Plain packaging has been implemented in Australia, the UK, and France, and will be implemented later in 2017 in Ireland and Norway, and in 2018 in Hungary.  Many other countries are in progress, including New Zealand, Canada, Uruguay, Belgium, Slovenia, Belgium, Singapore, Thailand, among others.”

However, as alluded to by Bonadio, this does not necessarily mean an end to the role of brand in this sector. Rather, rights holders will have to be more innovative than ever before in terms of IP strategy, marketing and business models in order to survive and maintain differentiation. In the meantime, trademark owners and counsel in other industries where there are significant public health concerns – such as food and beverages – will be watching closely to determine the impact the reported WTO decision could have on them. 

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