As discussed in the last post, Australia successfully defended the domestic challenge to its plain packaging laws. So what are the prospects for the plain packaging complaints at the WTO and under the Australia-Hong Kong BIT? Some experts weigh in.
At Lawyers Weekly, Andrew Mitchell says the WTO claims have “serious problems” and are unlikely to be successful. The complainants are arguing that TRIPS gives tobacco companies a positive right to use trademarks, which is a flawed argument: “[TRIPS] gives a negative right that restricts others from using your trademark,” he explained. “Tobacco companies still have the right to use their trademark and are simply prohibited from exercising a positive right to use it on tobacco products.”
On the investment claims, we have Andrew and also Don Anton:
Don Anton, an international law academic at the Australian National University, said that Philip Morris Asia’s suit is also “questionable”. The tobacco company has challenged plain packaging by claiming the Australian Government has breached the ‘fair and equitable treatment’ obligation under its bilateral investment treaty with Hong Kong.
He told Lawyers Weekly that Australia has a reasonable argument under the various bilateral investment treaties in play that plain packaging is about protecting public health and not stealing intellectual property.
“Under most investment treaties public regulation for a public purpose, such as promoting the health and welfare of the citizenry, is not direct or indirect expropriation and therefore is not prohibited by investment treaty prohibitions against expropriation,” he said.
The tobacco company also “faces hurdles” trying to prove that investors’ legitimate expectations have been violated, an important aspect of the obligation, Mitchell continued.
“Australia’s history of progressively sterner tobacco regulation makes it difficult for them to say they had a legitimate expectation that the tobacco regulatory environment was frozen in time and that plain packaging wouldn’t be introduced,” he said.
Mitchell added that the timing of Philip Morris Asia’s acquisition of shares in Philip Morris Australia on 23 February 2011 – 14 months after the Government announced its intention to introduce plain packs – is also unfavourable to the tobacco company’s argument.
“It will be very difficult to argue that at the time of making that investment they had a legitimate expectation that plain packaging wasn’t going to be introduced when the Government had already announced it was going to do exactly that,” he said.
Over at The Australian, another skeptic is Mark Davidson, a professor of law at Monash University, who says: "PMA will struggle to show that there has been any expropriation within the meaning of the BIT."
On the other side of the argument, Philip Morris Australia spokesman Chris Argent thinks they have a good claim (shocking, I know!): "Despite the fact that plain packaging does not reduce smoking it does devalue our investment by confiscating our brands," a bullish Argent says, "and therefore compensation will be due."
For more neutral voices, Kyla Tienhaara of the Regulatory Institutions Network says there are no guarantees Australia will win the international cases. The BIT dispute is particularly concerning: "Unlike the WTO, there's no exception under the treaty for public health measures. And unlike in the Australian Constitution, 'expropriation' - the act of a government taking private property - is defined very broadly." And a European financial services firm called the Berenberg Bank believes the WTO claim will succeed. They note that international intellectual property treaties "support trademark protection, regardless of the nature of the product". They also warn the government has not provided the scientific evidence to justify the effectiveness of plain packaging as an anti-smoking measure needed to trigger the public health exemption clauses: "The relevant public health exemption which allows members to void trademark rights to protect public health requires evidence that the suppression of trademarks is necessary - based on scientific evidence - and the only way to protect public health."
As for me, just briefly, on the "trade" claims, such as TBT Articles 2.1 and 2.2, I haven't seen anything to suggest that there is a compelling claim of violation. But presumably the complainants have something in mind, so I'll reserve judgement until I see their full argument. (I'm not sure when that will happen, though. Some countries make their WTO submissions public, but I don't know if that will be the case here.)
On the IP issues, I'm fairly convinced by the arguments -- offered on this blog and elsewhere -- of various people who know more than I do about IP that the claims here are weak.
Finally, on investment, it seems to me there is a lot of uncertainty as to just what the relevant obligations require. That may make these claims the most likely ones to succeed. But there are still a number of hurdles to overcome, as noted above.
Speaking of the international complaints, Ukraine's panel request -- hot off the elecronic presses -- is here: http://www.worldtradelaw.net/pr/ds434-11(pr).pdf