Sunday, April 29, 2012

The tobacco wars

Tobacco sheds
We have seen some recent litigation in the Australian High Court relating to a tobacco company challenge to legislation requiring plain packaging of cigarettes. The New Zealand government may be looking toward similar legislation if Australia is successful in removing all tobacco company logos from cigarette packs.

The issue in Australia is whether the Australian government, in banning use of logos and other insignia on packaging, has acquired property in the form of these marks. This argument is based on trade marks being a form of property. There is an argument that preventing their use amounts to effective seizure or acquisition of the trade marks.

In response, the Australian Government says that trade mark use by companies in Australia is a privilege. A privilege is not a property right and can be curtailed. Trade marks registrations provide only a liberty to act subject to regulation by law.

My view is that intellectual property rights (for example trade marks) have long been accepted as a form of property, rather than as a privilege. For example, the New Zealand government is permitted to use a patented invention in certain limited cases, but is required to pay reasonable compensation to the patentee, presumably as recognition of the restriction on their rights.

It will be interesting to see how the Australian High Court handles this one. There will be significant implications if the Court finds that trade marks are not actually a form of property. These implications will extend not only to tobacco, but to all goods and services. It could be that intellectual property rights are at risk in ways we have not previously considered.

Thanks to Jonathan Aumonier-Ward for this article.

A world first in Australia

The Australian law requires all cigarettes to be sold in plain olive packs, with 80 per cent covered in graphic health warnings, and labels printed in the same simple font. Australia is not the first country to draft legislation like this, but it is the first country to pass it into law. A similar bill in Canada failed in 1995 following a Supreme Court fight and pressure from affected companies.

The four largest tobacco companies selling in Australia are Philip Morris, British American Tobacco, Imperial Tobacco and Japan Tobacco. The four companies joined forces when the Australian legislation was proposed, forming the Alliance of Australian Retailers.

The companies argue that the Australian government is acting unconstitutionally and in violation of international agreements. They argue the government is trying to take ownership of the companies’ intellectual property by preventing them from using it in the country.

The Australian government has responded to tobacco companies, saying it does not intend to acquire or expropriate any of their property rights – merely curtail those rights.

Property or privilege?

The Australian case has significant implications for intellectual property in general, if the court finds that plain packaging is not an unreasonable limitation on intellectual property rights. These implications extend not only to tobacco, but to all goods and services.  Intellectual property rights are at risk in ways we have not previously considered.

Philip Morris Asia, in bringing the court case against the Australian government, has argued that the government seeks to deprive tobacco companies of its very lucrative investments in trade marks and other intellectual property.

The New Zealand aspect

New Zealand is a party to a number of international intellectual property treaties that restrict rights to unjustifiably deny the use of trade marks. These include the WIPO  Paris Convention for the Protection of Industrial Property and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. Complaints have been made to the WTO in relation to the Australian legislation based on these treaties. The same complaints could be expected if New Zealand follows Australia’s lead.

The benefit or otherwise of any international agreement is a political and economic consideration, not a legal one. That will be a trade policy decision for the government of the day to make. It is not an intellectual property issue.

The real issue for New Zealand is the potentially fundamental shift signalled by the government. Intellectual property has long been a right not merely a privilege. Generally speaking people have been allowed and encouraged to acquire and exploit their intellectual property. The government seems to be signalling this may no longer always be the case. This could open the flood gates into other areas.

What now?

We have seen that the new laws in Australia have brought about a number of complaints. There has been action in the local Court. There has been complaint to the WTO. The core issue involves breaches of treaties and other agreements prohibiting the ‘unjustifiable denial’ of a person’s right to use their own trade marks. It seems inevitable that if you are taking away someone’s right to do something that you will face complaints.

Photo courtesy of author trbpix under Creative Commons licence.

1 comment:

  1. It has been a very proactive debate regarding the future of the tobacco industry in Australia. Many pro-tobacco backers point that the tobacco industry is invaluable to the economy while products such as best ecig can't replicate the tobacco industry.


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