In the comments to another post, two readers suggested a discussion of this memo by the law firm Lalive, written to Philip Morris, entitled "Why Plain Packaging is in Violation of WTO Members’ International Obligations under TRIPS and the Paris Convention."
The memo defines "plain packaging" as follows:
Plain packaging refers to regulations requiring tobacco companies to sell cigarettes in generic packages. Except for the brand name of the tobacco product, which would be written in a standard font, colour and size, all other trademarks, logos, colour schemes and graphics would be prohibited and the package itself would be in a neutral colour. Only the product content information and health warnings required by law would be displayed. The stated objective of plain packaging is to strip cigarettes of their perceived attractive image in order to reduce the incidence of smoking.
It sees a number of TRIPS violations:
Plain packaging would be inconsistent with a Member State’s obligations under TRIPS and the Paris Convention. Indeed, such a requirement would breach a number of key provisions as a result of its undue impact on the trademark owner’s intellectual property rights. In particular, it would constitute a breach of Article 15(4) of TRIPS (which reproduces Article 7 of the Paris Convention), Article 6 quinquies (B) of the Paris Convention, as well as Articles 17 and 20 of TRIPS. In addition, contrary to what is argued by proponents of plain packaging, Article 8(1) of TRIPS does not allow States to circumvent the minimum protections provided by TRIPS.
Also in the comments to the other post, Benn McGrady starts off the discussion of these issues as follows:
As for me, I'm just going to make some brief points about Article 17 and Article 8(1). Any TRIPS experts out there should feel free to add their thoughts in the comments.
First up, Article 8(1), which states:
Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.
Here, I just have a quick question: Does this provision have any impact? It says you can pursue certain policy goals, but only to the extent the measures you take are consistent with the TRIPS Agreement. So doesn't it really just say you have to follow the TRIPS Agreement with regard to any policies you are pursuing?
Turning to Article 17, the memo has this to say:
26. Article 17 of TRIPS sets out that Member States may only impose limited exceptions on trademark rights, and even then they must take into account the legitimate interests of the trademark’s owners. Article 17 reads as follows:
Members may provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties.
27. Plain packaging, unlike exceptions such as fair use, would not fall under the scope of the exceptions permitted by Article 17 because it in no way takes into account the legitimate interests of the owners of tobacco trademarks or of tobacco consumers and is an overly broad encroachment on the owners’ rights.
28. First, plain packaging cannot be said to constitute a “limited” exception. Indeed, plain packaging annihilates the rights conferred by trademarks.
29. Second, plain packaging fails to take account of the legitimate interests of trademark holders, which have been defined by a WTO dispute settlement Panel as follows:
Every trademark owner has a legitimate interest in preserving the distinctiveness, or capacity to distinguish, of its trademark so that it can perform that function. This includes its interest in using its own trademark in connection with the relevant goods and services of its own and authorized undertakings. Taking account of that interest will also take account of the trademark owner’s interest in the economic value of its mark arising from the reputation that it enjoys and the quality that it denotes.
30. The Panel clearly set out that the trademark owner’s legitimate interests, including “its interest in using its own trademark in connection with the relevant goods and services of its own and authorized undertakings.” Plain packaging, unlike more benign exceptions such as fair use, entirely prohibits the use of tobacco trademarks, and therefore entirely deprives the owner of the trademark’s basic function, which is its “capacity to distinguish”. In addition, a plain packaging measure does not in any way attempt to accommodate the owners’ interest in the economic value of the trademark as it effectively wipes out that value. The value of the trademark, according to the WTO Panel, arises from the reputation it enjoys and the quality it denotes. If the trademark owner is precluded from using the trademark, such goodwill becomes meaningless. Trademark owners’ legitimate interests in the use of their trademarks would therefore not be taken into account at all by a plain packaging requirement. Rather, they would be entirely disregarded and denied. Indeed, as noted above, plain packaging effectively amounts to an indirect invalidation of the trademarks subject to such regulation.
31. More generally, a plain packaging measure completely ignores the balance that TRIPS, according to its preamble, seeks to establish between the private rights of intellectual property owners and the public interest.16 A TRIPS provision cannot be interpreted in a way that shifts that balance. As a result of its complete disregard for the intellectual property rights of obacco trademark owners, a plain packaging measure would be in clear breach of Article 17 of TRIPS.
There's a lot going on here, and I'm just going to make a brief point. I wonder whether the plain packaging situation could be considered "limited" because it does not let someone else use the trademarks. In the various TRIPS cases where these kinds of exceptions have come up, the issue has been someone other than the copyright/patent/trademark holder using the copyright/patent/trademark. Here, that is not the case. No one else is going to use the cigarette trademark, so that aspect of the trademark right remains intact. It's just that the trademark holder cannot use it. As a result, it could be argued that the diminution of rights is "limited." (The McGrady comment makes a similar point, I think.) For more on the "limited exception" issue under Article 17, see the EC - Trademarks/GIs reports: Australia case, paras. 7.650-661 and U.S. case, paras. 7.650-661.