Long-running litigation between Uruguay, which has some of the toughest anti-smoking laws in the world, and cigarette giant Philip Morris could have direct consequences for plain packaging legislation globally and the case is being watched “with interest” by the IP community in Australia. However, could it also pave the way for legal action in Europe?

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RE: The international implications of the Philip Morris branding battle in Uruguay

Thank you for a concise and clear analysis of the implications of Philip Morris' (PM) action against Uruguay. I should like to submit that something has not been stressed clearly enough in this matter. Not only does plain packaging or restrictive health warning laws not involve the compulsory acquisition or expropriation of property: strictly speaking, there is no 'property' as such involved. Under standard trademark law a trademark 'proprietor' has an 'exclusive right' in respect of the (commercial) use of the mark for specified goods or services. This means that the right holder can prevent any third party from commercially using his mark.

Both in Uruguay and Australia this exclusive right remains intact so far. How can you tell? If, for example, a consignment of counterfeit ‘Marlboro’ cigarettes were sent to Uruguay or Australia where that mark is registered or otherwise protected by PM, this company could block the importation of those cigarettes or could seize the cigarettes after they have cleared customs. PM could do this on the basis of its exclusive trademark rights. This would be so regardless of the fact that PM may be unable to use that trademark itself, or may be required to comply with strict regulations on its use in those countries.

The point is that two things need to be distinguished: (i) the intellectual property (IP) right in a trademark, which only grants a right to exclude third parties from using the mark; and (ii) the ‘right’ to trade using or not using a trademark on one’s goods. This latter right may result from a constitutional or legal statement of ‘freedom of trade’. As with any product (especially dangerous or sensitive products), freedom to produce and commercialize can be regulated, restricted or outright banned by law. However, even if the trade in tobacco products was totally banned in Uruguay or Australia (which it is not at present), PM could still fully benefit from its IP trademark rights. Remember: IP does not give a right to use the protected object, it only grants a right to exclude other persons from using. For PM to have been ‘expropriated’ of its IP trademark rights it would have had to be deprived of its right to exclude others from using its marks. It has not been so excluded.

Let us hope the arguments can focus better and the IP dimension is dropped, as IP does not seem to be an issue here. The question is basically whether PM can, under national law, trade its (dangerous) goods totally unfettered or rather subject to certain regulatory constraints, or whether it cannot trade those goods at all. The law can determine any of those scenarios on grounds of public interest, public health, etc. (Perhaps in Uruguay PM could just switch its line of business to marihuana which -- apparently -- is less of a health hazard than tobacco).

Octavio ESPINOSA, on 23 Sep 2014 @ 22:55

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