Dr Matthew Thomas, Social Policy Section
The Government plans to introduce plain packaging for all
cigarettes sold in Australia by 1 July 2012. The legislation would
restrict or prohibit:
- tobacco industry logos
- brand imagery
- colours, and
- promotional text other than brand and product names in a
standard colour, position, font style and size.
In addition, the existing graphic health warnings displayed on
cigarette packaging would be updated and expanded. Beyond these
broad parameters, there is no further detail on the proposal at
this stage. This is at least partly because the Government has yet
to develop and test package designs that will make cigarettes less
appealing, especially to young people. However, it is likely that
the measure will closely resemble the plain packaging
recommendation of the National Preventative Health Taskforce.
The tobacco industry is strongly opposed to the proposal, with a
number of companies having indicated that they are prepared to
fight it on legal grounds.
Legal arguments against the proposal
Government imposition of mandatory plain packaging for tobacco
products has been objected to on the claimed grounds that the
measure breaches trademark law, international trade agreements and
intellectual property rights.
The tobacco industry uses trademarks as a means to enable
consumers to make judgments about particular brands of cigarettes
and to differentiate between them. As such, the industry argues
that trademarks are of significant value to their owners and the
wider economy and must be protected at both domestic and
international levels.
Currently, trademarks and related intellectual property rights
are protected under a range of international trade agreements,
including the Agreement on Trade-Related Aspects of International
Property Rights 1994 (TRIPS). The tobacco industry maintains that
the introduction of plain packaging regulations would violate
minimum obligations for the protection of intellectual property
rights under trade agreements in general, and under Article 20 of
TRIPS, in particular. Essentially, the relevant section of Article
20 specifies that the use of a trademark should not be restricted
in such a manner as to limit its ability to differentiate a given
good or service from other goods and services.
As the tobacco industry sees it, the demand for plain packaging
represents an illegitimate restriction in breach of the system of
international trademark protection with which governments are
obliged to comply. The industry is also likely to argue that the
introduction of plain packaging regulations in Australia would
constrain the free movement of tobacco products between Australia
and other countries, and thereby constitute an unlawful barrier to
international trade.
In response to such claims it has been argued by some legal and
public health commentators that the purpose of trademark law is not
limited to the protection of private property rights. Trademark law
is also concerned with ensuring the provision of accurate
information to consumers. For example, Articles 8(1) and 17 of
TRIPS both provide for member states to adopt measures necessary to
protect public health and the public interest, so long as these
measures take account of the legitimate interests of trademark
owners. As a number of public health advocates see it, plain
packaging of tobacco (along with mandatory health warnings) is
entirely consistent with the goal of promoting consumer welfare and
the obligations of multilateral and regional trade agreements.
Further, they argue that trademark protection is not an inviolable
right; rather, it is a privilege that can be withdrawn or modified,
especially in the interests of public health.
Unsurprisingly, the tobacco industry does not agree with such
assessments. It is likely to first fight the proposal on the
grounds that it violates the right of property ownership. Should it
fail in this approach, it is likely to demand significant
compensation for what it sees as the deprivation of its property
rights. For example, in its submission to the Senate Committee
inquiring into the Plain Tobacco Packaging (Removing Branding from
Cigarette Packs) Bill 2009, Philip Morris argued that the plain
packaging requirement would be in breach of its property rights as
guaranteed under section 51 (xxxi) of the Constitution. Section
51(xxxi) guarantees just terms compensation where property is
acquired compulsorily from any state or person. Philip Morris has
indicated that, in its view, if the Government were to require
plain packaging, then it would need to acquire the relevant Philip
Morris property and/or pay reasonable compensation. In response to
such claims it may be argued that the Government has no interest in
acquiring tobacco industry-owned trademarks; it simply does not
want them appearing on tobacco products for reasons of public
health. Given that the Government would not stand to gain any
benefit from the acquisition, it could be argued that the proposal
would not amount to an acquisition of property as specified at
section 51(xxxi) of the Constitution.
Other arguments against the proposal
The tobacco industry is also likely to contest the proposal on
the grounds of evidence and unintended consequences.
Because no jurisdiction has yet introduced plain packaging
requirements, the research evidence supporting the measure is
speculative. That said, a significant number of market testing
studies indicate that tobacco packaging acts as a promotional tool,
and threatened legal challenges to plain packaging from the
industry provide some support for this finding. Put simply, if the
plain packaging proposal did not threaten to reduce the
industry’s profitability, then it would be unlikely to mount
a legal challenge against it.
The industry is also liable to argue that plain packaging could
actually lead to an increase in smoking uptake. This is because,
with the introduction of plain packaging, price would become the
sole identifiable product feature, resulting in price competition
among tobacco companies. This, in turn, would result in cigarettes
being more affordable to vulnerable smokers, and particularly young
people. One logical response to such claims is that, were tobacco
companies to reduce their prices in response to the measure, then
an increase in excise could be used to counter this effect.
The industry has also argued that plain packaging would make it
easier to counterfeit and smuggle tobacco products. The resulting
distribution of tobacco products through unregulated, untaxed
criminal networks would both enhance their accessibility to
vulnerable and underage smokers and make policing of illicit trade
more difficult. The National Preventative Health Taskforce has
argued that this need not be the case. For example, one strategy
for reducing the potential for illicit trade would be the mandating
of some form of tax markings that would make cigarette packages
difficult to counterfeit.
It is difficult to determine the likely fate of the plain
packaging proposal given that the position of the Coalition and the
independent members is unknown.
Library publications and key documents
Australian Government, Australia: the
healthiest country by 2020. National Preventative Health Strategy
– the roadmap for action, Department of Health and
Ageing/The Taskforce, Canberra, 2009,
http://www.health.gov.au/internet/preventativehealth/publishing.nsf/Content/nphs-roadmap