Bad Things Can Come in Small Packages Too:

The Global Movement Towards Plain

Packaging

Dr. Allyn Taylor

Overview

• Plain Packaging and Public Health

• Plain Packaging and National

Action

• Legal Challenges to Australia’s

Plain Packaging Law:

• Constitutional

• Bilateral Investment Agreement

• World Trade Organization

(WTO)

• Framework Convention on Tobacco

Control (FCTC) and and Plain

Packaging

• Advocacywww.ads-ngo.com

Plain Packaging and Public Health

• The tobacco industry treats cigarette packaging as

a critical aspect of marketing and invests significant

research and funds into designing packaging that is

appealing to specific groups, especially young

people.

• Plain packaging legislation:

• reduces appeal of smoking.

• makes warnings and images more noticeable &

effective.

• reduces likelihood consumers will acquire false

perception about the safety of tobacco

products.

Plain Packaging and Public Health

• Australia’s plain packaging rules

stipulate:

• brand names can only be displayed

on the lower front, the top, and the

bottom of the packages.

• brand names must be displayed in a

standard font, style, and color.

• the outer and inner surface of the

retail packaging must be a drab dark

brown color and have a matte finish.

• packaging may not have any

decorative ridges, embossing,

bulges, or other decorative

irregularities and must be made of

cardboard

http://www.yourhealth.gov.au/

Plain Packaging: National Action & Litigation

• Australia is the only country to date to formally adopt plain packaging

legislation.

• Ireland, New Zealand and the United Kingdom have announced

intentions to introduce similar plain packaging legislation. Plain

packaging has also being considered by Canada, France, India, South

Africa, and the European Union.

• Since adopting plain packaging legislation, Australia has faced multiple

legal challenges in separate forums:

• The Australian legal system:

• Constitutional challenges dismissed by Australia’s High Court.

• International arbitration pursuant to the Australia-Hong Kong Bilateral

Investment Treaty (Ongoing).

• WTO challenge and dispute resolution procedure for alleged

violation of commitments under three WTO treaties (Ongoing).

1. Australia’s Plain Packaging Litigation:

the Constitutional Challenge• Australian plain packaging legislation was challenged by four tobacco

companies in the High Court of Australia: British American Tobacco, Imperial

Tobacco, Japan Tobacco, and Philip Morris.

• Tobacco industry groups’ two principle arguments:

• (1) The restrictions on groups’ property and related rights (including

trademarks, copyrights, patents, and etc.) by the Tobacco Plain

Packaging Act and Regulations constituted an acquisition of property for

which just terms had not been provided.

• (2) The Act gives the Commonwealth the use of, or control over, tobacco

packaging in a way that amounts to an acquisition of industrial property

for which just terms had not been provided.

• High Court of Australia’s response to industry arguments:

• (1) Court determined that while the tobacco industry’s business may be

harmed, the Commonwealth does not, as a result of the Act, acquire

something in the nature of property itself.

• (2) Court argued that the Act’s requirements are no different than any

other legislation requiring labels warning against the use or misuse of a

product and such labels do not affect an acquisition of property.

2. Australia’s Plain Packaging Arbitration:

The Investor/State Dispute Mechanism under

the Australia- Hong Kong Bilateral Investment

Treaty (BIT)

http://thumbs.dreamstime.com/; http://www.zoomnews.es/ ; https://www.tachnat.com/

The Investor/State Dispute: Arbitration Under

the Australia-Hong Kong BIT

• In 2011, Philip Morris Asia (PMA), a Hong Kong-based company,

served a notice of arbitration against Australia’s plain packaging

legislation under the auspices of a Hong Kong-Australia bilateral

investment treaty.

• The arbitration is ongoing.

• PMA’s claims plain packaging legislation:

• Unlawfully expropriates PMA’s investments and intellectual

property w/o compensation (Art. 6.1).

• Does not provide full protection and security for PMA’s

investments in Australia (Art. 2(2)).

• Unreasonably impairs PMA’s Australian investments (Art.

2(2)).

• Breaches Australia’s international obligations relating to

PMA’s investments under WTO Agreements and the Paris

Convention for the Protection of Industrial Property.

http://media.cagle.com/ http://www.inkcinct.com.au/

• The tobacco industry’s use of BIT investor-state arbitration

provisions to dampen governmental efforts to regulate tobacco is

a troubling development for national and global tobacco control

and may induce a “regulatory chill”, especially in low-income

states lacking resources to battle the tobacco industry

• The tobacco industry has challenged or threatened to challenge

point-of-sale tobacco display limitations in countries including

Australia, Canada, Norway, and Uruguay under the international

investment rules of BITs.

• In February 2010, Philip Morris alleged that Uruguay’s new

tobacco regulations, which mandated that health warnings cover

over 80% of the package, violated several provisions of the

Swiss-Uruguay BIT and filed a request for arbitration.

Bilateral Investment Treaties (BITs)

and Public Health

• Unlike relevant WTO agreements,

BITs do not generally include

provisions that provide states with

flexibility to protect public health.

• Arbitration proceedings may

completely lack transparency -

neither the proceedings nor the final

award may be made public:

– The rules of the UN Commission

on International Trade Law permit

arbitration proceedings to be held

outside the country whose

regulation is being challenged by an ad hoc tribunal.

Bilateral Investment Treaties

and Public Health

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• To prevent the tobacco industry from challenging tobacco

regulations through BITs, states should:

• develop new strategies and measures to ensure that

bilateral investment treaties are not manipulated by the

tobacco industry.

• ensure that states retain the right to protect their

populations within any bilateral investment treaty.

• consider renegotiating investment treaties to include

exceptions for the protection of public health and exclude

investor-state arbitration provisions.

• Australia has announced it will oppose the inclusion of

investor-state arbitration in future free trade agreements in

part because of tobacco industry challenges to its plain

packaging legislation.http://media.cagle.com/ http://www.inkcinct.com.au/

Bilateral Investment Treaties:

The way Forward for Public Health

3. Australia’s Plain Packaging Litigation:

Challenges through the WTO

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• Indonesia, Ukraine, Honduras, the Dominican Republic, and Cuba

are seeking WTO dispute panel rulings arguing Australia’s plain

packaging law violates global trade rules.

• Challenges to plain packaging under WTO Law under:

• the General Agreement on Tariffs and Trade (GATT) 1994.

• the Agreement on Technical Barriers to Trade (TBT).

• the Agreement on Trade Related Aspects of Intellectual

Property Rights (TRIPS).

• The complaints by all five countries against Australia are ongoing.

• The WTO Director-General established dispute panels for the

five countries on May 5, 2014.

• Challenges to plain packaging have drawn the support of US

business groups like the US Chamber of Commerce, the

National Association of Manufacturers, and the United States

Council for International Business.

WTO & GATT (1994)

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• The WTO challenges to Australia’s plain

packaging legislation under the GATT

assert:

• Australia’s plain packaging

legislation violates Art. III.4 of the

GATT because the measures “fail to

respect the national treatment

requirement… by not providing

equal competitive opportunities to

imported tobacco products and

foreign trademark right holders as

compared to like domestic tobacco

products and trademark right

holders.”

• Exceptions to GATT rules:

• GATT Art. XX(b) permits measures

necessary to protect human health.

WTO & Technical Barriers to Trade

Agreement (TBT)

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• The WTO challenges to Australia’s plain

packaging legislation under the TBT assert:

• Australia’s plain packaging legislation

violates Art. 2.1 of the TBT because it

fails to respect national treatment

requirements by “not providing equal

competitive opportunities to imported

foreign trademark right holders as

compared to domestic…”

• Australia’s plain packaging legislation

violate Art. 2.2 of the TBT because they

are more trade-restrictive than

necessary to achieve Australia’s

objective of reducing the appeal of

tobacco products.

WTO & TRIPS

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• The TRIPS Agreement establishes a minimum

set of standards for the protection of

intellectual property rights, including

trademarks. TRIPS applies to all trademarks,

including tobacco packaging.

• Flexibilities “enshrine a high degree of

domestic regulatory autonomy with respect

to health protection.”

WTO & TRIPS

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• The WTO challenges to Australia’s plain

packaging under TRIPS arise under a

number of TRIPS articles (Arts. 1.1, 2.1, 3.1,

15, 16, 20, 27).

• Art. 20 claim is perhaps most relevant.

Challengers assert Australia’s plain

packaging legislation violates Art. 20

because it unjustifiably encumbers the

use of tobacco industry trademarks

through special requirements such as

“use with another trademark, use in a

special form, or use in a manner

detrimental to its capability to

distinguish the goods or services of one

undertaking from those of other

undertakings.”

WTO Dispute Panels

• Ongoing WTO cases are

seen by many as a means to

delay and discourage plain

packaging measures.

• The Ukraine/Australia

WTO panel took over

two years to be

composed.

• Legal scholarship suggests

that Australia’s plain

packaging laws are on firm

legal ground

“Plain” Packaging

http://media.cagle.com/ http://www.inkcinct.com.au/

Plain Packaging & the FCTC

http://smokefreepartnership.org/

Plain Packaging & the FCTC

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• FCTC establishes binding international legal obligations for national governments

that have ratified the treaty.

• Health advocates argue that the WHO FCTC gives countries the right to use plain

packing to promote public health objectives.

• In it’s plain packaging proposal, the New Zealand Ministry of Health argued

that New Zealand should institute plain packaging as part of its obligations

under FCTC Articles 11 and 13.

• FCTC support of plain packaging under Article 13:

• Art. 13 obligates States Parties to institute a comprehensive ban on all

tobacco advertising, promotion, and sponsorship.

• The FCTC State Parties developed non-binding Guidelines to help parties

meet their obligations under the Convention. The Guidelines for Art. 13 state

that “parties should consider adopting plain packaging requirements to

eliminate the effects of advertising or promotion on packaging.”

Advocacy

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Areas of Focus for Advocacy

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• Clarify or renegotiate BITs to

include exceptions or exemptions

for tobacco control measures.

• Increase coordination regarding

tobacco control across

government ministries.

• Stress obligations under the FCTC

Art. 13 to institute a

comprehensive ban on all tobacco

advertising, promotion, and

sponsorship and, pursuant to the

Guidelines for Art. 13, adopt plain

packaging requirements.

Areas of Focus for Advocacy

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• Stress that plain packaging is consistent with international legal

obligations and a state’s plenary authority to protect public health

under international law:

• Plain packaging represents “an exercise of sovereign regulatory

power which restricts the exploitation of IP rights to protect and

promote an important public interest, namely public health.”

• Plain packaging represents a logical step in a state’s long-

running efforts to reduce tobacco use “through the

implementation of a comprehensive programme of tobacco

control measures” and, as such, does not violate any “legitimate

expectations” of investors or obligations requiring states to

maintain stable and predictable regulatory environments.

(Liberman).