Tag Archive | "tobacco"

Tobacco Trademarks in Peril: Australian Courts Can’t Be Bothered

IPM_122634091

See: IP Magazine

The unreasonable expropriation of intellectual property or the advancement of public health? This was the question posed by Philip Morris Asia Limited v. The Commonwealth of Australia.

In 2011, Australia passed its “plain packaging legislation,” creating restrictions on the fonts, size, colors, and location of tobacco brand marks on product packaging. The legislation also requires enlarged health warnings and creates limitations on the quantity and color of cigarette products per package. Needless to say, tobacco companies across the world were outraged.

Philip Morris Asia (“PM Asia”), a Hong Kong corporation, owns Philip Morris Australia (“PM Australia”) and PML, both incorporated in Australia. PML owns a whole slew of tobacco trademark licenses that were negatively impacted by Australia’s plain packaging legislation. PM Asia brought suit under the 1993 Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (“BIT”). Its primary argument was that the legislation’s trademark limitations unreasonably expropriated the value of PM Asia’s investments in Australia. The Commonwealth responded with a thoughtful and solid justification for its legislation as a means to protect the public health of its citizens. The government also convincingly alleged that PM Asia was likely abusing its power under the BIT, in light of its awareness of Australia’s ongoing efforts against tobacco sales. So who has the more convincing argument?

On the procedural front, this case most favorably leans towards Australia. PM Asia had the ability to consider any potential economic impacts to its business prior to its acquisition of PM Australia and PML given its awareness of Australia’s ongoing efforts against tobacco sales.  It, therefore, cannot argue that its intellectual property or the value of its Australian investments has been expropriated due to the plain packaging legislation. This prior knowledge will likely be seen as an abuse of power under the BIT.

But in a broader sense, it’s worth questioning whether Australia is overreaching its bounds as a regulator by unreasonably inhibiting consumer choice. Is it reasonable for a government to dictate the consumption of social vices by its citizens?

To begin purely in the realm of philosophy, on one end of this dispute is the claim that such vices (e.g., gambling, alcohol, tobacco) exist in the market simply because there is a demand for it. If citizens want to consume such products and/or services, that is their choice, and governments should not inhibit the free will of its citizens. On the other end of the spectrum is the contention that the government was created for the sole purpose of enhancing the quality of its citizens’ lives by creating order, a system of checks and balances, levying taxes, and providing social welfare services. Vices such as smoking inhibit citizens’ quality of health. Furthermore, private corporations solely concerned with profits will do whatever is necessary, by way of catchy advertising and alluring products, to exploit the weaknesses of human character. It is, therefore, the government’s responsibility to protect the citizenry from such deceit through legislation like the one in question in this case.

There is no easy middle ground in this case. Therefore, I think it would be wise to step away from vices and social conduct, and turn, instead, to the role of intellectual property in international business. The plain packaging legislation can, in many ways, be seen as giving a government broad-reaching authority over international trademarks. This, I believe, is a more easily settled debate. To take away a corporation’s right to use its own distinguishing mark, over which it has a legal right to exclude use by others, strips it of its ability to engage with its consumers. The entire concept of brand loyalty becomes compromised. To limit intellectual property use in an industry often burdened with social stigma can serve as a starting point for further and more restrictive regulation of intellectual property in other industries. There is no such thing as moral utility in the world of intellectual property law. To keep it as such is the necessary tradeoff for promotion of innovation and advancement globally.

References

Philip Morris Asia v. Australia, Case No. 2012-12, Notice of Claim, (UNCITRAL Jun. 27, 2011).

Philip Morris Asia v. Australia, Case No. 2012-12, Australia’s Response to the Notice of Arbitration, (UNCITRAL Dec. 21, 2011).

 

Shirin Lakhani is a 2L JD/MBA candidate at University of Denver Sturm College of Law and staff editor on the Denver Journal of International Law and Policy.

Posted in 1TVFA Posts, 2Featured Articles, Shirin LakhaniComments (0)

Critical Analysis: Tobacco and Trans-Pacific Trade

The United States, Canada, Mexico, Japan, Australia, South Korea, Vietnam, and five other countries stand to gain a great deal from the Trans-Pacific Partnership (“TPP”), a potential lucrative regional trade agreement. The agreement would further lower tariffs and other trade barriers to commerce. However, countries have not been able to agree on how the issue of tobacco should be settled. Specifically, countries have not been able to agree on the extent to which countries should be allowed to regulate the sale of foreign tobacco products.

A majority of future tobacco related deaths will be in developing countries. Image Source: Unconventional Health

A majority of future tobacco related deaths will likely be in developing countries. Image Source: Unconventional Health

There is a clear consensus in the scientific community and public health-oriented organizations that tobacco use leads to a wide variety of health issues. According to the World Health Organization (“WHO”), there are currently more than one billion smokers in the world. Of these one billion, tobacco kills nearly six million each year, with 600,000 deaths due to second-hand smoke. This high level of tobacco use is leading countries down a dangerous path that will result in more than eight million deaths annually by 2030. Thus, the need for tobacco regulation has never been more pressing.

Because of the need for tighter tobacco controls and a disturbingly high level of illicit trade in the product, Malaysia proposed a special “carve out” exemption in the TPP for tobacco. This would allow countries that are parties to the TPP to set their own potentially stiff regulations on tobacco and exempt them from broader potential trade restrictions. This type of exemption could also mean that “health considerations could take precedence over expanded trade.” As tobacco is a uniquely dangerous agricultural product, many, particularly developing countries, have welcomed the proposed exemption.

While the Obama administration initially led many to believe it would support such types of strong measures, the administration recently proposed its own weak measure in regards to tobacco. The United States proposal “cites tobacco within the standard public health and safety exception that appears in U.S. trade agreements, but…no longer includes other tobacco-specific protections.” This means that companies would still be able to challenge public health, safety, and environmental regulations. Although some claim that there is language included within the proposed TPP that would “reduce the likelihood of those changes prevailing,” the fact of the matter is that tobacco presents so many health and regulatory concerns that it cannot and should not be afforded the same status as other products.

The tension between the free trade and the need for control of dangerous products such as tobacco has never been clearer. While tobacco is still legal, and thus cannot be limited to the extent many would dream of, the tobacco industry has greatly expanded into developing countries’ markets. Nearly 80 percent of all future deaths caused by tobacco will likely be in these developing countries. The United States has a unique opportunity to make great strides in promoting public health and leave the tobacco industry behind in negotiating the TPP. However, the recent U.S. TPP proposal shows that big tobacco business still controls much of the world economy, and that business will continue to be able to challenge helpful and necessary tobacco regulations under the guise of free trade.

 

Bailey Woods is a 3L and Candidacy Editor on the Denver Journal of International Law and Policy.

Posted in 1TVFA Posts, 2Featured Articles, Bailey Woods, DJILP StaffComments (0)


University of Denver Sturm College of Law

Posts by Date

October 2017
M T W T F S S
« Sep    
 1
2345678
9101112131415
16171819202122
23242526272829
3031  
Resources