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Cigarettes, plain packaging and trade marks

Print publication

10/04/2015

In March, MPs backed legislation for the plain packaging of cigarettes. Only health warnings, a bland colour covering the entirety of the packaging and brand names in plain, black text will be permitted.

Health campaigners have welcomed the news; tobacco companies have not. One of the arguments used by the tobacco companies is that the plain packaging legislation amounts to an unlawful and unwarranted interference with their property rights, namely the brands in which they have invested substantial sums of money over, in some cases, several decades. The possibility of compensating the brand owners for the effective confiscation of these rights does not appear to be on the table.

Under EU and UK law, if a brand owner does not use its mark, the mark is liable to revocation – a situation the tobacco companies could find themselves in if the draft legislation becomes law.

A plain packaging law has been in effect in Australia for over two years now. The jury is still out on the health benefits of the law but one apparent consequence, not perhaps foreseen by the legislator, is an increase in the number of counterfeit cigarettes circulating on the Australian market. The counterfeit cigarettes continue to carry branding and appear to be popular with consumers. The guarantee of origin, and quality, is, however, missing from counterfeit goods; the tobacco companies are arguing that, perversely, the ban on plain packaging may be leading to greater risks as smokers cannot be sure what they are inhaling from counterfeit cigarettes.

There is an argument, which the tobacco companies can be expected to use, that the legislation may be in breach of the Paris Convention on the Protection of Intellectual Property and of various provisions of the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).

Assuming the draft legislation makes its way onto the statute book, it seems very likely that one or more of the tobacco companies will take legal action. Indeed, the Australian law is currently the subject of a challenge by tobacco companies.

Interestingly, there is now a debate in Australia about whether plain packaging legislation should be extended to obesity-producing foodstuffs, particularly where targeted at children. So, other brand owners – not just in the tobacco industry – will be watching developments closely.

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