Ukraine WTO Trademark Dispute Vs. Australia Tests Public Health Measures

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Ukraine yesterday filed a World Trade Organization dispute settlement case against Australia for its 2011 law requiring plain packaging on tobacco in an effort to address the severe public health problem related to its use. The case could represent an important measure of the power of trade interests versus public health decisions by governments.

Ukraine argues that Australia’s law violates the 1994 WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), as well as the Technical Barriers to Trade agreement and the General Agreement on Tariffs and Trade (GATT), which generally covers trade in goods.

The dispute is number DS434 and it is expected to be available soon on the WTO website here.

The Ukraine case filed on 13 March targets Australia’s Tobacco Plain Packaging Act 2011, its Trade Marks Amendment (Tobacco Plain Packaging) Act 2011, and related regulations. Filing the case first means the two sides hold consultations to see if they can settle their differences on their own. The two sides have 60 days to settle the dispute bilaterally, after which the complainant can ask the establishment of a panel, which is done at a Dispute Settlement Body meeting.

The issue was discussed among WTO members at the last meeting of the WTO Council on TRIPS (IPW, WTO/TRIPS, 28 February 2012). At that meeting, countries restated positions they had taken in the past several TRIPS Council meetings, according to sources. Only Chile was said to have shifted positions, moving slightly more toward the Central America and Caribbean countries that have opposed regulations on tobacco out of economic interests.

The minutes for past TRIPS Council meetings that include detailed explanations of positions are WTO documents IP/C/M/66 and IP/C/M/67.

The World Health Organization has invited health and trade officials in Geneva missions to attend a workshop on 15 and 16 March on “trade-related issues relevant to implementation of the WHO Framework Convention on Tobacco Control” (FCTC). The event aims “to promote the sharing of knowledge and information” among parties to the convention of tobacco-control measures taken pursuant to the convention. It also will “review ongoing trade and investment concerns in this area.” The event will include panels and available experts.

The WHO also published in time for the meeting its Global Report on Mortality Attributable to Tobacco, available here.

WHO has addressed the TRIPS Council on the global problem of smoking, and has said plain packaging is covered under recommendations of the agreed tobacco convention. The 2005 convention has 179 members.

In a 2010 declaration agreed in Punta del Este, Uruguay, convention parties affirmed their “firm commitment to prioritize the implementation of health measures designed to control tobacco consumption in their respective jurisdictions” and their “right to define and implement national public health policies, pursuant to compliance … particularly with the WHO FCTC.”

Australia’s Defence

At the February TRIPS Council, sources said Australia again addressed questions about its new law passed on 21 November and expected to take effect on 1 October 2012 for Australian produced products, and 1 December 2012 for all products. The Australian legislation included amendments to extend implementation time, and provide two more weeks for retailers to finish selling their existing non-compliant packages. It also was amended to address a technical concern of tobacco companies to allow rounded corners to be used inside the top of cigarette packs.

Australia also explained to the TRIPS Council the extensive research, analysis and consultation process that was conducted in the lead-up to the passage of the law. It said it is confident that as part of a broader initiative to address tobacco use, the new law will be effective in reducing smoking.

Australia, which in other contexts is seen as one of the most vigorous nations on IP rights protections, restated its full commitment to international IPR obligations. It said the new law was amended to ensure trademark owners receive full protection for their trademarks and can register trademarks. Non-compliant packages will be allowed to imported and then repackaged before first sale.

Countries that have spoken in favour of countries’ right to use flexibilities in the TRIPS Agreement for public health purposes including tobacco control included Brazil, Chile (now shifting), China, India, the EU and Switzerland. Supporters of Australia were New Zealand, Norway and Uruguay.

The 2001 Doha Declaration on TRIPS and Public Health reinforced countries’ right to take public health measures on behalf of their public interest. Brazil and others have raised that as well as the Doha Declaration, and TRIPS Article 8, which it has said specifically authorises WTO members to adopt measures needed to protect public health and nutrition in addition to measures to promote the public interest in vital sectors for social, economic and technological development.

Countries said to be in opposition to the Australian law include: Cuba, Dominican Republic, El Salvador, Honduras, Mexico, Nicaragua, Nigeria and Zimbabwe.

At the February TRIPS Council, the Dominican Republic again asserted the inconsistency of the Australian law with TRIPS, and arguing it would “destroy” the intellectual property rights and limit information for consumers. It noted the product is legal to sell in Australia, and that the registered marks, geographical indications and other elements of the package play an important role in providing information. It suggested other measures might be more viable to address the health concerns of tobacco.

Industry Fuming

The tobacco industry has already filed two lawsuits against Australia, one through a bilateral treaty between Hong Kong and Australia, and one within Australia.

A tobacco industry representative told Intellectual Property Watch, “Australia’s plain package tobacco measure is a very tough challenge on tobacco industry and growers of tobacco all over the world. All eyes are now on the issue as it will be taken to WTO dispute settlement by the WTO members who do not share Australia’s approach towards tobacco regulation.”

“The plain packaging restriction is of relevance to other industries, like alcohol, food and soft drinks, which may well be next on the list for this type of regulations,” the industry representative said. “The enforcement of the Australian measure will result in denial of trademark rights to tobacco industry which amounts to expropriation of assets and is incompatible with international trade and investment rules. This will have severe impact on the tobacco industry as a whole and growers of tobacco leaf for whom this activity is essential for their subsistence.”

Ukraine, a tobacco producer, joined the WTO in 2008. Ukraine itself was in the past the target of actions for intellectual property rights violations by countries such as the United States, and it continues to be of concern.

The plain packaging issue was discussed in TRIPS Council in February 2012, October 2011, and June 2011.

It was discussed in the TBT Committee in November 2011 and June 2011.

Rachel Marusak Hermann contributed to this story.

William New may be reached at wnew@ip-watch.ch.

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Comments

  1. Nuno Pires de Carvalho says

    Dear Rachel and William,

    Your informative piece contains the following statement that reveals the basic misunderstanding that has obscured the debate over this issue: “Australia, which in other contexts is seen as one of the most vigorous nations on IP rights protections, restated its full commitment to international IPR obligations.” This sentence implies that Australia strongly protects IP, except in the field of trademarks for tobacco. This is not correct. In both the Tobacco Plain Packaging Act 2011 [TPPA], and the Trade Marks Amendment (Tobacco Plain Packaging) Act 2011, there is not a shred of evidence that Australia has diminished the protection of tobacco trademarks. On the contrary, section 28 of the TPPA provides in the opposite direction: in spite of the measures restricting the use of tobacco trademarks, their registration and protection remain untouched. [This is compliant with Article 15.4 of TRIPS and is important for the purposes of Article 16.3, because Australia extends protection against dilution only in the case of registered well-known trademarks. See Section 120(3)(b)(i) of the Trade Marks Act 1995, as consolidated as of 14 January 2011.].
    The issue here is not one of protection – it is one of use. Article 20 of the TRIPS Agreement is not about protection (or limitation of protection), but rather of use of the trademarks. So, here is the real issue: how far can WTO Members go when it comes to impose measures that limit the freedom of trademark owners to use their own trademarks? The answer is provided by Article 20 of TRIPS: they can go as far as it is justifiable. Please note that Article 20, by contrast with Article 8.1 (which also provides for the possibility of measures that may affect the use of IP rights), does not refer to the necessity of the measures. So, WTO Members, in imposing encumbrances on the use of trademarks, are not conditioned by reasons of necessity (necessity implies a link of cause and effect and thus is much more difficult to demonstrate when issues of public policy are at stake), but rather of justifiability.
    In this regard, I would draw your attention to Section 40(4) of the Industrial Property Act of Oman, of 2008: “(4) The Minister of Health may take measures to limit the use of marks with the purpose of facilitating the prescription of and the access to generic pharmaceutical products and medical devices, or with the purpose of discouraging the public consumption of goods that are deemed prejudicial to health provided such measures do not impair the use or effectiveness of trademarks used in relation to such good or service to distinguish goods of one undertaking from those of other undertaking.” Under the Omani law, the Minister of Health may prohibit the use of trademarks for tobacco products (among other products, like fast food). But, if he allows the use, he cannot take measures that impair their distinctiveness as compared to identical goods. This is, to my knowledge, the provision that best implements the spirit and the letter of Article 20 of TRIPS. The Omani statute can be found in IP-lex, in the WIPO website.

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