Thursday, August 16, 2012

The tobacco tango

Tobacco shedsYesterday we saw the conclusion of one of the battles in the "tobacco wars". In an earlier post I covered litigation in the Australian High Court relating to a tobacco industry challenge to legislation requiring plain packaging of cigarettes.

The High Court has just found the proposed tobacco plain packaging laws to be both legal and constitutional. From December all tobacco products in Australia must be sold in a uniform olive box with black lettering. The full judgment will not be released until later this year, although it has already attracted comments from a wide audience.

Unintended consequences

A major change like this, even if well-intentioned, is bound to have unintended consequences. I guess it is a matter of opinion whether these consequences are really unintentional, or whether they are merely collateral damage.

British American Tobacco spokesman Nick Booth commented that if plain packaging is brought in, companies will use other devices to attract customers. "Ultimately, if we're not able to use our brands to compete, we'll be forced to compete on things like price, which could actually frustrate the intended goals of plain packaging".

Trust is important to brands, says Stephen Cheliotis of the Centre for Brand Analysis (TCBA). If consumers decide the source of a given product is no longer reliable or safe they will vote with their wallets. Known brands have to uphold certain standards to retain consumer trust. Making packaging easy to copy gives rise to counterfeit cigarettes. Some counterfeit cigarettes have reportedly been found to contain abnormally high levels of cancer-causing chemicals.

The nanny state

Booth also poses the question of where does it end? What about alcohol, fatty foods, sugary drinks and sweets? Should they all be sold in plain packaging or unbranded?

Herald-Sun journalist Patrick Carlyon asks why Australia is still awash in beer and spirits television advertisements. Alcohol is a contributing factor in about a quarter of road deaths in Victoria, Australia. Children are victims of alcohol-related harm in more than one-fifth of Australian homes. It is thought to be a risk factor in about 20,000 cases of child abuse. Yet no one is suggesting that alcohol be plainly packaged.

There are plenty of commercials depicting families gathered at the dinner table eating fast food. Yet Australian waistlines and rates of diabetes are increasing. Does this suggest the introduction of taxes on unhealthy foods, the limiting of advertising on those foods, banning advertising altogether, followed by the introduction of plain packaging?

A property right?

One of the most interesting questions for me remains unresolved. The Australian Government's view was that:
  1. a trade mark itself is a privilege. It is not a property right. The Government can take it away.
  2. trade mark owners acquire a registration on the proviso that it cannot be used in certain areas
We don't know which one of these arguments found more favour with the High Court. We won't know this until the decision is publicly available.

I can kind of understand the second argument. A patent right gives its owner the right to exclude others rather than the right for the owner to work an invention. Maybe argument 2 along these lines.

But argument 1 is a different matter altogether. This is a major change. I have always thought of trade marks as property rights. Something you own. Something you have the right to control. Something you have the right to use.

What now?

The Australian Government has won the battle but not the war. I understand complaints have been lodged with the World Trade Organisation (WTO) by some countries who claim the law breaches trade agreements. It is going to be an interesting issue to follow.

Photo courtesy of author trbpix under Creative Commons licence.

1 comment:

  1. Matt

    I disagree with much of this, I'm afraid.

    Firstly, the self-interested arguments of Big Tobacco regarding unintended consequences are just not credible. Advertising and display of cigarettes is already restricted, so consumers have to ask for their preferred brand by name anyway. The name is still printed on the pack. All that changes is that the more attractive and distinctive logos will no longer be allowed. The only place these are currently seen is when smokers take out their packs in front of bystanders and impressionable young people.

    And with the requirement for gruesome images of the damage done by smoking, the 'plain packs' are far from plain! What do counterfeiters need now, or in the future, other than a colour photocopier?

    The suggestion that tobacco companies will be forced to compete on price is laughable. What are they saying? That at the moment they are happily ripping consumers off with huge margins that they will easily be able to cut to counter the effect of plain packs? If so, what does that tell us about the nature of addiction?

    Setting aside the fact that you are quoting opinion from the Murdoch press, the 'nanny state' issue is also a line that was developed and pushed by Big Tobacco, its partners and apologists -

    There is a case to be made for proportionate regulation of alcohol packaging and advertising. This is not very controversial, and we already have mandatory labelling laws for alcohol.

    However, while alcohol plays a role in much harmful behaviour, it is neither addictive in the way tobacco is (a majority of people who drink are not alcoholics), nor is it directly causative of the harm, i.e. alcohol abuse is generally a symptom of other problems.

    Tobacco, on the other hand, is highly addictive, and directly causative of harm and death in those who are addicted to it, and those who are exposed to second hand smoke.

    Some of the statistics related to tobacco use in Australia are as follows:

    - In 2003 there were 15,511 smoking-related deaths in Australia.
    - Tobacco use accounted for 7.8% of the total burden of disease and injury in Australia 2003.
    - Tobacco caused 14.8% of all Australian deaths among men in 2003 and 8.4% of deaths from all causes among women.
    - There were 5,081 smoking-attributable deaths in NSW in 2006.
    - In NSW, there were 42,356 smoking-related hospital admissions in 2006-07.
    - In 2004-5, the social costs of tobacco use in Australia were an estimated $31.5 billion, an increase of $10.4 billion from the previous costs estimated for 1998-9.


    Since we have a great public health system in this country, the taxpayer is burdened with much of the financial cost of smoking-related harm.

    We would all love to see the road toll reduced (but actually, we are achieving that as well: But the above figures for tobacco-related illness, death, social cost and economic cost dwarf the harm done on our roads.

    Finally, registration of a trade mark has never carried any guaranteed right to use. It is a right to exclude, and the plain packaging laws do not change this. They even provide protections against removal for non-use of trade marks which are prohibited from use under the laws.

    And the statutory grant of IP 'rights' has always been a privilege. With regard to patents, the Statute of Monopolies of 1623 expressly said so. Trade marks have always been a little different from other IP rights, because of their consumer protection and competition functions, but none of this guarantees anyone a right to use a particular trade mark in any particular manner.

    The Australian government has done well to get this legislation through, and the High Court has made the right decision. All the rest is just so much FUD.



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