Government consults on proposal for plain packaging for tobacco products

Plain packaging as a way of reducing tobacco consumption raises a number of trademark-related issues. As the proposal is turning into reality in a growing number of countries, the debate on the impact of plain packaging on trademark rights is heating up.

Following the adoption of plain packaging by Ireland and the United Kingdom, Norway has now taken its first step towards the implementation of plain packaging, with the government releasing a public consultation document.

The rationale of plain packaging is its favourable effect on public health, and the short-term goal is to reduce the consumption of tobacco among young people to below 6% in 2016; the long-term goal is to reduce tobacco in Norway altogether.  

Plain packaging not only implies that tobacco packs must include health warnings; it also means that all trademarks - and, consequently, any indicators of differences between brands - must essentially be removed. The parts of the packaging that are not dedicated to health warnings must be of a standard colour chosen on the basis that it would be the least attractive colour to consumers. Tobacco companies are allowed to put their company name or the product type on the package; however, this is to be written in plain letters in a relatively small font size. These measures make cigarette packs almost indistinguishable from each other, so that supposedly attractive and brand-distinguishing features will not entice people to smoke.

The main issue - from a trademark perspective - is the impact of plain packaging on established trademark rights, and - importantly - whether Norway is free to implement plain packaging in light of its international commitments under the World Trade Organisation’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Pursuant to Article 8 of the TRIPS Agreement, WTO members can validly take measures to protect and promote public health. However, members are obligated to comply with the terms of the agreement.  

The Norwegian government has concluded that plain packaging is not detrimental to the main functions of a trademark, as it will still be legal to put the producer’s name in standardised letters on the packaging. Further, the government’s main argument is that trademark holders are not awarded a positive right to use their trademarks under the TRIPS Agreement, only the right to prohibit third parties from using their marks. Hence, the limitation on the right to use trademarks due to the plain packaging rules would not interfere with the TRIPS Agreement.

However, this conclusion, including the interpretation of the TRIPS Agreement, should be questioned.

First, generic packaging is likely to interfere with the main functions of trademarks, as it may jeopardise their function as indications of origin. The ability to distinguish one trader’s goods from those of another is the fundamental purpose of trademarks. Additionally, plain packaging will undermine the investment function of trademarks, as the resources invested in the goodwill inherent in each mark will be in vain. Further, both the quality function and advertising function of trademarks will be jeopardised with plain packaging.

The loss of these functions would not be offset by the ability to put the company name in standardised letters on the packaging. The ability to recognise and identify a product is significantly reduced when the use of logos, colours and other designs is prohibited. Further, this would not repair the damage to the investment function, and so the government would basically deprive trademark owners of considerable investments carried out through decades.

Plain packaging will thus have a significantly negative effect on trademarks and on the rights that derive from them.

The main purpose of the TRIPS Agreement is to promote the use of trademarks in the course of trade. By extension, according to Article 20 of the TRIPS Agreement, the use of a trademark in the course of trade shall not be:

“unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form, or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.”

This provision seems to presuppose some form of use - otherwise, why would the TRIPS Agreement prohibit unjustifiably encumbrances? Moreover, Article 15 provides for the right to register a trademark - why would one have the right to register a trademark if this does not involve a right to use it? Under Article 19, a trademark owner may even lose its rights if the mark which is subject to the registration is not in use.

In light of this, it is surprising that the Norwegian government, without further discussion, has concluded that plain packaging is not conflicting with the TRIPS Agreement on the basis that trademark holders are provided only with negative rights under the agreement.

In light of the negative impact of plain packaging on trademark rights, it is also alarming that the evidence supporting this measure is conflicting - whether or to what extent plain packaging is or will be effective has not been demonstrated.

The question is thus whether the end justifies the means, or whether the prospects of a reduction in tobacco consumption are too vague to justify this measure.

Siw Lyséll Dølvik and Felix Reimers, Advokatfirmaet Grette DA, Oslo