Source: https://www.tobaccofreekids.org/plainpackaging/tools-resources/legal/legal-issues-in-detail
Timestamp: 2019-04-25 03:53:18+00:00

Document:
The tobacco industry legal challenges to plain packaging have all so far been defeated. Despite this, the tobacco companies continue to assert aggressively that plain packaging is unlawful in every country that considers the policy.
This Toolkit is intended to provide governments and civil society organizations with the resources to ensure that tobacco product plain packaging legislation is robust and can stand against any legal challenge from the tobacco industry. Following the recommended steps outlined in this Toolkit should lead to a strong, defendable law. Nevertheless, government officials need to be aware of the legal arguments that the industry use to challenge the laws and be prepared for the risks of a legal challenge.
National courts: Legal challenges have been commenced, and dismissed, in the domestic courts of most of the countries that have adopted plain packaging laws including Australia, the UK, Ireland and France.
Regional courts: A legal challenge to the European Union’s Tobacco Products Directive (TPD), dismissed in May 2016, included a claim against the provision in the TPD that permitted Member States to adopt plain packaging if they choose to.
International courts: An international investment arbitration claim brought by Philip Morris against Australia was dismissed by the Tribunal in December 2015. A World Trade Organization complaint brought by 4 countries against Australia is awaiting the panel’s ruling.
British American Tobacco’s website states that plain packaging is “Legislation that we believe is ineffective and unlawful”1.
Japan Tobacco International’s website states that “plain packaging would infringe JTI's fundamental legal rights to property, expression and trade – without justification. These rights are protected by Constitutions, international trade treaties, intellectual property laws, bilateral investment treaties, and national laws.”2.
For policy or health officials, these issues can appear to be complex and daunting at first glance. These pages try to set them out in readily comprehensible terms. However, assistance is also available from the CTFK International Legal Consortium to help state officials understand these issues or respond to tobacco industry threats and allegations.
Every legal jurisdiction is different. The analysis of the legal issues contained on this page should not substitute for proper consideration of the legal issues undertaken by in country lawyers. See Guide 4.2.
The tobacco industry claims that plain packaging interferes with its trademark rights in a way that conflicts with domestic, regional, and international intellectual property laws and obligations. Most of its arguments rely— in some way— on the contention that registered trademarks afford the owner a positive right to use that trademark. They argue that this principle is found in international law, under the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as well as being recognized under national trademark laws as either an implicit or explicit right.
It is no part of international, EU or domestic common law on intellectual property that the legitimate function of a trade mark (i.e. its essence or substance) should be defined to include a right to use the mark to harm public health.6 [¶40].
The “Exclusive Right to Use” in National Trademark Acts.
In most countries, national trademark legislation clearly sets out the nature of the right conferred on a trademark owner as being a right to exclude or prevent others from using the trademark for the product or service for which it is registered.10 However, in some countries, the trademark legislation is drafted to afford the owner an “exclusive right to use” the trademark.
in relation to the goods and/or services in respect of which the trademark is registered.
While the decisions on the nature of trademarks have held in favor of an “exclusive right,” intellectual property law issues are complex. Plain packaging policies do place strict restrictions and controls on the use of trademarks on product packaging. Given these restrictions it is important that separate legal consideration is given to the way in which plain packaging laws would interact with domestic or national intellectual property laws.
It is always important to include a trademark-saving provision in any plain packaging laws (see Guide 3.2 Draft the Law and the Each Clause Explained page) and it is possible that an explicit exemption from aspects of a country's trade mark act will need to be included.
As indicated above in section 1.1, the main concern as to compatibility with national intellectual property laws is the argument that registration provides an explicit or implicit "right to use" the trademark or design, which is breached by the restrictions in plain packaging laws. The tobacco companies have also raised some other issues on compatibility with trademark laws.
The companies argue that where tobacco advertising bans exist, packaging is the only remaining place that word and figurative trademarks for tobacco products is still permitted and so can perform these essential functions. The tobacco companies argue that courts have upheld the fundamental importance of these essential functions of trademarks.
Some national trademark acts provide increased protections for trademarks that have acquired a higher reputation. The tobacco companies argue that because plain packaging means they cannot use their trademarks, the reputation of those marks will be reduced, and thus they will lose protections that were previously guaranteed under national law.
Many national trademark acts have a provision that allows an application for revocation of a trademark’s registration where it has not been used for five years or more and there is no good reason for its non-use. The tobacco companies argue that plain packaging will inevitably mean they do not use their trademarks, which could lead to applications for revocation. This could lead to them being deprived of their marks. This argument can be addressed effectively with a trademark-saving provision as outlined in Guide 3.2 Draft the Law.
The tobacco companies claim that restricting or controlling the use of trademarks on the packaging of tobacco products through plain packaging laws, has the effect of “taking” or “appropriating” their property rights in those trademarks.
It is generally accepted that trademarks are a form of property, and so there is the potential for the trademarks rights to be taken or acquired by others. The issue is then whether plain packaging laws result in a regulatory or indirect “taking” for which tobacco companies should receive compensation.
Property rights, or the freedom to peaceful enjoyment of property, are protected in many countries’ constitutions, as well as in regional Human Rights treaties. In addition, foreign investors are given protections under international investment treaties to prevent the unlawful “expropriation” of their investments by states. Different jurisdictions use different terminology for this taking, such as “expropriation”, “acquisition,” or “deprivation” and varying legal tests are applied.
In Australia, the High Court firmly rejected these arguments, stating that,although the Tobacco Plain Packaging Act regulated intellectual property rights and imposed controls on the packaging of tobacco products,it did not confer a proprietary benefit on the Commonwealth or any other person. As a result, no one acquired any property by registering a trademark.
In the UK, the High Court determined that plain packaging is merely a legitimate control on the use of the trademarks. Consequently,no acquisition or deprivation results from plain packaging laws. The judgment on the UK regulations went on to say that, even if there had been a deprivation, it would be justified without compensation owing to the urgent need to protect against the harms of tobacco. This was confirmed by the Court of Appeal ruling.
In France, the Conseild'État found that the right not to be deprived of property poses no obstacle to the regulation of goods in the public interest provided the measure is proportionate. The Court held that while the effects of plain packaging are hard to quantify, the regulations must be regarded as unable to do anything other than, reduce tobacco consumption over time and, consequently, are a proportionate measure.
In PMI v Uruguay, an international investment tribunal dismissed a claim by Philip Morris against Uruguay’s 80% health warnings and Single Presentation Requirement that prevented multiple brand variations. Part of the claim was that the measures had the effect of “expropriating” Philip Morris’s trademarks and brands, in breach of the Bilateral Investment Treaty — this claim was unanimously rejected by the panel.
See the Summaries of Legal Challenges page for more details on these cases.
Many national constitutions, as well as regional human rights treaties, provide for the right to freedom of expression and the right to conduct a business or trade. The tobacco industry has claimed that plain packaging laws violate these rights.
In any system of rights, there is a balance to be struck between competing rights and freedoms. The freedoms relied upon by the tobacco industry are never expressed in absolute terms and are always subject to laws enacted for the public interest. In many legal systems, the freedom of commercial expression is given a lower priority than other forms of expression, such as political or journalistic freedom of expression. In the case of plain packaging laws, freedom of expression must be balanced against the right to life or health, or simply the inherent right of the state to regulate for the public good.
An assessment of these issues needs to be undertaken for each country. However, all the courts that have considered the legislation thus far have found that plain packaging regulation is no different to regulations for warnings or labeling imposed on other products, especially potentially dangerous consumer products. For plain packaging, the balance has always been found to be in favor of the government’s right to regulate to protect public health rather than commercial interests.
The issue of whether there is sufficient evidence or not that the policy will contribute to or achieve its objectives goes to the heart of many legal tests. These legal tests vary between jurisdictions but, as is stated throughout this Toolkit, the tobacco companies have consistently claimed that there is no evidence to demonstrate plain packaging will work to reduce smoking rates. The companies have commissioned numerous reports that criticise the supporting evidence, either as individual studies or as a whole. Full details are provided on the Tobacco Industry Arguments (and How to Counter Them) page .
However, this Toolkit also clearly establishes the volumes of evidence that show plain packaging will be an effective component of a comprehensive tobacco-control strategy. See Research Evidence and Post Implementation Evidence from Australia pages.
The High Court challenge against the UK Regulations was the first (and as yet only) legal challenge that addressed the evidence on both sides in detail. The 400-page judgment of Mr Justice Green goes to considerable length to assess this evidence.
Mr Justice Green made particular critical note of the fact that the tobacco companies refused to provide access to any internal research or documentation on plain packaging, even to their own instructed experts. More detail on this is given below in the case summary.
See the Summaries of Legal Challenges page for more details on these UK challenges.
These arguments concern the justification for the measure considering the benefit of the public interest relative to the burden it places on the applicant. Similar principles are applied across many legal jurisdictions, both national and international, and consider whether or not the measure has a legitimate objective and if the measure is both suitable and necessary to achieve its objectives.
There is often a balancing of the importance of the objective, the extent to which the measure is capable of achieving the objective, and the degree of interference with an applicant’s interests. Guide 1.1 Set Policy Objectives, describes the importance of setting clear and measurable objectives for plain packaging. Without clear objectives, courts are faced with a more difficult task in determining this balance.
Courts are generally willing to accept that tobacco control measures have a legitimate public health objective. The tobacco industry seeks to argue that there is no evidence to support the contention that plain packaging will be effective to reduce smoking rates (and so it is unsuitable to meet its objectives) and that there are alternative more effective measures at reducing smoking rates (and so plain packaging is unnecessary).
A court or tribunal must therefore undertake an analysis of the evidence in support of the measure to see if it is justified. The intensity of that analysis, the margin of appreciation, or how much deference is given to the government in taking decisions about public health will vary between jurisdictions.
(a) The objective of the Regulations is ‘improving public health by reducing smoking’. The Defendant has failed to demonstrate that the Regulations are suitable or appropriate to meet this objective because it has failed to establish that the Regulations will cause a material decrease in smoking rather than an increase16 ... [and] because the evidence does not show that there are no equally effective but less restrictive alternatives.17"
This argument was rejected by the UK Courts and elsewhere.
In both the UK and France, the courts found that plain packaging was a reasonable, proportionate and necessary measure having regard to its objectives and the great harms caused by tobacco.
The French Conseil d'État found that plain packaging regulations must be regarded as unable to do anything other than reduce the consumption of tobacco products over time and, consequently, are a proportionate means to ensure the accomplishment of the objective of protecting public health.
This finding by the UK Court of Appeal reinforces the importance of setting out all the objectives of the legislation (including reducing the appeal of packaging, enhancing the health warnings, and reducing the misleading effect of packaging) in official documents and not to just rely on plain packaging being a policy to reduce smoking. It is also important to consider the various alternatives put forward in the course of consultation or stakeholder input (see Guide 2.1 Evidence Review and Guide 2.3 Stakeholder Input / Public Consultation).
See the Summaries of Legal Challenges page for more details on cases mentioned above.
using procedures that are not in accordance with a country’s constitutional and administrative rules.
The steps set out in this Toolkit, adapted for compliance with national administrative processes, should provide a sound procedural basis for adopting plain packaging.
In the legal claims in the UK and France, the tobacco companies made different technical due-process claims. These were rejected by the courts in both cases, but these are fact specific issues that concern the procedures used by each government.
The dissenting opinion of one of the arbitrators in the PMI v. Uruguay case held that there was no documentary record that the Ministry of Health had given any proper consideration to the single presentation requirement before it was adopted, and that arbitrator found Uruguay in breach of its duty to provide “fair and equitable treatment.”While the majority of the tribunal did not agree, this acts as a cautionary reminder that to protect against tobacco industry legal challenges, officials should ensure both proper consideration of the evidence and issues, and make careful records of the policy development and decision making process (see Guide 1.2 Establish a Document Record).
World Trade Organization (WTO) law limits the way in which WTO Members may restrict or regulate international trade in goods and services, and also imposes obligations on the protection of intellectual property rights. The law is enforced through a system of dispute settlement between its Members. This means only the governments of other WTO Member States may bring a complaint that may then be referred to a dispute panel. A panel ruling may be appealed to the Appellate Body.
The tobacco companies regularly allege in letters and submissions to governments that effective tobacco packaging and labeling laws, including large health warnings and plain packaging, breach the WTO agreements. Ministry of Health officials need to be robust in responding to or dealing with these allegations.
breaches the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) by failing to provide protection of trademark rights as required under that agreement, including by unjustifiably encumbering the use of trademarks in the course of trade.
breaches the WTO’s General Agreement on Tariffs and Trade (GATT 1994), the Agreement on Technical Barriers to Trade, and the TRIPS Agreement because the measure discriminates between like imported and domestic products, as well as discriminating between like imported products.
The Australian Government has published an executive summary of its legal arguments refuting these claims. Read the executive summary.
The World Health Organization (WHO) publication on plain packaging of tobacco products, in section 3.2.1, contains a useful summary of the main elements of WTO law relevant to tobacco plain packaging. The document highlights that there are well-established principles (regularly ignored by the tobacco industry) that demonstrate the flexibility WTO Members have to regulate in the public interest and that protection of human health is accorded the highest importance in WTO dispute settlement. Read the full publication.
The WTO dispute panel determining the complaints against Australia (and ultimately the appellate body if the ruling is appealed) will be the final arbiter of these issues.However, it is useful to note that a number of national courts and international tribunals have also considered whether plain packaging or other tobacco packaging measures breach the WTO rulings.
In both the UK and France the tobacco companies’ legal challenges before the national courts included claims that the governments were in breach of their international obligations because plain packaging laws violated the WTO agreements, in particular the TRIPS agreement. The courts in both countries rejected these claims.
In the PMI v Uruguay arbitration claim, the tribunal held that Uruguay’s packaging requirements did not violate Uruguay’s international obligations in particular under the WTO agreements.
International Investment Treaties (IITs) are agreements between two or more countries. These agreements give investors located in one party to the IIT protections and legal security for their direct investments into the other party or parties to the IIT. The purpose of IITs is to encourage more direct foreign investment. Almost all nations across the globe have signed up to these agreements and the protections they afford to foreign investors.
Most IITs include what is known as Investor-State Dispute Settlement (ISDS) provisions. These provisions provide a system for foreign investors to commence an arbitration claim if the investor believes the government of the host nation has breached their obligations under the IIT. The measures that are challenged can sometimes be genuine, public-interest policies or decisions to protect the environment or public health but which in some way affect the use of the investment or its value.
These claims can be for millions, sometimes billions of dollars in compensation, and the arbitration lawsuits typically take many years to resolve and involve huge legal bills. However, one of the primary aims of the tobacco industry in bringing these claims is to create “regulatory chilling effect” and deter other governments from enacting effective tobacco-control regulation.
Philip Morris has brought two international investment arbitration claims against tobacco-control under Bilateral Investment Treaties — the first against Uruguay’s 80% health warnings and its Single Presentation Requirement; the second against Australia’s plain packaging laws. Both claims were dismissed. The tribunal in the claim against Australia’s plain packaging declined jurisdiction on the basis that the claim was an “abuse of rights,” so the merits were not determined. A short summary of these cases is in the Summaries of Legal Challenges page.
Although the case against Uruguay did not concern plain packaging legislation, the ruling has significant relevance to the legality of the policy as it concerns many of the broad themes set out above. In particular, the tribunal found that the tobacco-control measures were not an expropriation of property, that there was no “right to use” a trademark, and that the measures were compatible with the WTO agreements.
More information about international investment law and tobacco control is available from the WHO FCTC Knowledge Hub on legal challenges.
The legal claims against plain packaging have broad similarities across jurisdictions. The table below sets out the typical legal claims made by the tobacco companies in their challenges and what the courts and tribunals have ruled on those claims. The rulings and judgments used are from the cases detailed in part 4 of this Tools and Resources section. Relevant paragraph numbers from the rulings are given in square brackets [¶].
JTI,Plain Packaging, accessed at http://www.jti.com/about-tobacco/product-regulation/plain-packaging/ (last visited on January 10, 2017).
The Guardian, Australia wins international legal battle with Philip Morris over plain packaging, accessed at https://www.theguardian.com/australia-news/2015/dec/18/australia-wins-international-legal-battle-with-philip-morris-over-plain-packaging (Dec. 17, 2015).
See also, Physicians for a Smoke-Free Canada, The Plot Against Plain Packaging, available from: http://www.smoke-free.ca/pdf_1/plotagainstplainpackaging-apr1'.pdf (last accessed Feb. 22, 2017); see alsothe tobaccotactics website: http://www.tobaccotactics.org/index.php/Countering_Industry_Arguments_Against_Plain_Packaging:_It_Breaches_Intellectual_Property_Rights#cite_note-10.
his principle has been confirmed in UK High Court challenge: R (British American Tobacco &Ors) v. Secretary of State for Health EWHC 1169 (Admin) paragraph 40; the Australian constitutional challenge: JT International SA v. Commonwealth of Australia HCA 43 (October 5, 2012) paragraph 267; the investment arbitration case PMI v. Uruguay Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) and AbalHermanos S.A. (Uruguay) v. Oriental Republic of Uruguay (ICSID Case No. ARB/10/7); and in the WTO dispute panel decision DS174 European Communities — Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs,paragraph 7.210.
R (British American Tobacco &Ors) v. Secretary of State for Health  EWHC 1169 (Admin) paragraph 40.
PMI v. Uruguay Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) and AbalHermanos S.A. (Uruguay) v. Oriental Republic of Uruguay (ICSID Case No. ARB/10/7).
European Communities, Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs. WT/DS290/R 15 (March 2005) paragraph 7.246.
Mark Davidson, Plain Packaging of Tobacco and the "Right" Use of a Trade Mark. 8 European Intellectual Property Review 498-501 (2012). Available from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2137455; T., S. L. Voon and A. D. Mitchell, “Implications of WTO Law for Plain Packaging of Tobacco Products” in Public Health And Plain Packaging Of Cigarettes: Legal Issues, A.D. Mitchell, T. S. L. Voon, and J. Liberman, eds., A.D. Mitchell, T. Voon and J. Liberman, eds., UK, 2012; University of Melbourne Legal Studies Research Paper No. 554. Available from SSRN: https://ssrn.com/abstract=1874593.
Australia, Trade Marks Act 1995. Available from: https://www.legislation.gov.au/Details/C2013C00143.
R (British American Tobacco &Ors) v. Secretary of State for Health  EWHC 1169 (Admin) paragraph 41.
ConseilConstitutionnel, Decision No. 2015–727 DC of January 21, 2015 paragraph 21.
AG’s Opinion on Case C 547/14 Philip Morris Brands SARL and Others (Request for a preliminary ruling from the High Court of Justice (England and Wales), Queen’s Bench Division (Administrative Court), United Kingdom). See Paragraphs 148 to 151. Available from: http://curia.europa.eu/juris/liste.jsf?num=C-547/14.
A review of the Tobacco Act “New Steps Towards a Reduction in Tobacco Use” (SOU 2016:14). Available from: http://tobaksfakta.se/wp-content/uploads/2016/03/Summary1.pdf.
R (British American Tobacco &Ors) v. Secretary of State for Health  EWHC 1169 (Admin) paragraph 406.
See note 16 above at paragraph 651.
A previous WTO panel ruling that did not concern tobacco:European Communities,Protection of Trademarks and GI for foodstuffsWT/DS290/R 15 (March 2005) at paragraph 7.246.

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