Australia could be the first country to enact a plain packaging law for tobacco products.
In April 2011, the government released the Tobacco Plain Packaging Bill (Exposure Draft), which requires tobacco products to be sold in plain packaging. With the bill gaining the support of the opposition party, it is expected to be in force as early as 2012.
Opposition to the Bill has, unsurprisingly, come from the tobacco companies. They have indicated that they will fight the plain packaging bill relying upon a number arguments. The tobacco companies state that the Bill is a breach of the Constitution as plain packaging breaches the Commonwealth's acquisition powers. They also state that it is a breach of Trade Related Aspects of Intellectual Property Rights ("TRIPS") as plain packaging breaches Australia's obligations to protect trade marks under the WTO TRIPS. Finally, they claim that it is a breach of the Agreement on the Protection and Promotion of Investments with Hong Kong (Hong Kong Agreement) as plain packaging "deprives" Hong Kong investors, for example Philip Morris Asia, of their investments, thereby breaching the agreement.
The government has vowed to continue with the reform, noting that none of the above arguments are likely to succeed. While this may be prove true of the Constitutional and TRIPS arguments, the situation is less certain under the Hong Kong Agreement.
In 2005, the World Health Organisation's Framework Convention for Tobacco Control ("WHO Convention") came into force . Article 13 of the WHO Convention requires members to develop bans on tobacco advertising and the guidelines to Article 13 suggest the introduction of plain packaging laws. Australia has required tobacco packaging to include prominent graphic health warnings on cigarette packets since 2006, going so far as to include images of diseased organs. It is not the first country to consider the move to plain packaging with the United Kingdom, France, New Zealand and Belgium all having touched up on the issue but the consensus is that they are watching developments in Australia before formulating their own strategies.
Looking at each counter argument in a little more detail:
Breach of the Constitution
Section 51(xxxi) of the Constitution allows the Commonwealth to acquire "property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws". The tobacco companies argue that, by prohibiting use of trade marks on tobacco packaging, the Commonwealth has "acquired" property on unjust terms – ie without compensation. However, as stated above, this argument is unlikely to succeed as the High Court precedents suggest the Commonwealth is not actually "acquiring" any property, in that it is not receiving any direct property or legal interest in return.
Breach of TRIPS
Article 20 of TRIPS states that "the use of a trade mark in the course of trade shall not be unjustifiably encumbered by special requirements". Tobacco companies, along with countries such as Japan and the Dominican Republic, argue that plain packaging breaches Article 20.
As a counterargument, plain packaging supporters highlight that Article 8 of TRIPS also allows countries to enact measures "necessary for public health", provided they are consistent with the rest of TRIPS. Moreover, WTO judicial precedents suggest that Article 8 could be successfully used to defend plain packaging. In particular, it has been held that the identification of health objectives and the extent to which a nation wishes to pursue them, is a matter for individual nations.
Breach of the Agreement for the Protection and Promotion of Investments with Hong Kong
Under the Agreement, a party must not expropriate the other party's investors of their investments (including IP rights) without compensation. Philip Morris Asia has indicated that it will use this provision to claim billions in compensation.
Under international law, it is well established that "property has been expropriated when the effect of the measures taken by [a State] has been to deprive the owner of ...access to the benefit and economic use of his property".
Under this argument, unlike that concerning TRIPS, there is no public health exception readily available. Similarly, Philip Morris does not have to prove that the Australian Government obtained any property or legal rights as a result of the expropriation.
This final agreement therefore provides the clearest course of action for tobacco companies, although proving monetary loss could be difficult.
One option for the Australian government is to pay compensation in order to save the legislation. This would in effect weigh the public health cost of tobacco against the perceived savings from plain packaging.
The tobacco companies' arguments against plain packaging under the Australian Constitution or TRIPS are unlikely to succeed. Relying upon Australia's Agreement for the Protection and Promotion of Investments appears to provide a more "hopeful" avenue for tobacco companies to pursue, although the Australian government could still preserve the legislation by paying compensation.
Another factor to consider is the questionable value of tobacco trade marks in Australia given the government's extensive efforts to restrict cigarette advertising, not least through the use of prominent graphic health warnings.
Who stands to gain the most from the implementation of plain packaging in Australia? Potentially, it is the countries, such as those mentioned earlier, who will monitor how matters develop in Australia. In summary, you could argue the real value of the tobacco industry's fight against plain packaging will be reaped by those countries considering implementing the same and using Australia as a test case.
Courtney MacIntosh, based in Canberra, is a senior associate specialising in complex procurement and intellectual property. You can reach her at firstname.lastname@example.org
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