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Tobacco companies huff and puff over plain packaging

Tobacco companies are flexing their muscles over plain packaging laws. But will they succeed, asks EIP lawyer Tristan Sherliker.

Cigarette companies are angry over plain packaging moves sbarabu

New regulations on tobacco packaging have blazed through both Houses of Parliament with little discussion on, or amendment of the laws. The bill has yet to receive Royal Assent, but that is a mere formality. It now seems almost certain that from May 2016, packaging will be standardised and ugly. Designed to protect children from becoming interested in the bad habit, the following key regulations will take effect for all tobacco products across England:

  • packaging must be a drab greenish-brown;
  • brands will only be shown in plain font (e.g. Arial)
  • no logo devices will be permitted;
  • graphic photographs showing the medical effects of smoking will be displayed on all packs, and will dwarf what branding is permitted.

In one move, the new legislation has stubbed out tobacco branding. Following the announcement, shares in Philip Morris International (owners of the Marlboro cigarette brand) dropped to new lows . But was this really such a surprising move?

Lighting up controversy

Some see it as being rushed through, criticising the summary nature of the discussion and the lack of proper consideration of amendments. In fact, the proposals have been in the wings for some considerable time. It was first in 2011 that the government committed to the move, and conducted a full study and consultation. In Australia, similar laws have been in place since early 2011 – and Ireland also passed equivalent domestic laws last month ahead of the UK, becoming the first European country to do so.

In response, tobacco companies have threatened judicial review, and Philip Morris in particular has said it will seek fair compensation – to the tune of billions of pounds – once the restrictions are effective.The tobacco companies’ legal argument is rooted in trade mark law: they say, in part, that because a registered trade mark must be used in good faith in order to be maintained, their rights will go up in smoke because they will be prevented from using them properly.  But that is to mischaracterise the issues, as that particular problem has been accounted for already. In reality the challenge is likely to be rooted in a much more complex mix of judicial review, human rights and intellectual property (IP) laws.

Healthcare concerns

It is certainly not the first time that Philip Morris has been involved in trade mark disputes: IP practitioners will be familiar with their awkward defeat in the Court of Appeal  when it was criticised for its “ghost mark” registration tactics. The legal landscape for their challenge is not clear-cut, however, and may even be favourable for it. In a decision last week, for example, well-known brand ASOS won a challenge by similar brand Assos  – and although Judge Sales said “there is nothing to indicate that an ability to use one’s name for marketing purposes is regarded as fundamental right or interest in the legal traditions of member states.”, that was the minority view and did not carry the day.

So human rights arguments might well apply to tobacco brands, but the fact remains that tobacco is extremely unhealthy. Can freedom of speech really stand up to value of health?  Health concerns, where they amount to long-term quality of life arguments as in this case, are matters of national concern, and legislating to guard against those concerns is very compelling. It is also important to remember that corporations, although they are entitled to rely on human rights from a legal perspective, still only exist as a legal construct and they cannot exceed the laws that are imposed on them. 

And while it is true to say that tobacco brands are highly valuable, the long-term quality of human life cannot be so valued. What is comparable, though, to the billion-dollar brand value is the costs of healthcare consequences, which are reportedly up to £1.5bn per year. This adds up quickly and may well bear on any arguments as to irrationality levelled against the government in the inevitable judicial review proceedings.

Smoke and mirrors

Where the tobacco companies’ case may be more convincing is in the area of legitimate expectation. That is to say, if they are allowed to do business they should be allowed to do so in a proper landscape of competition. Either a product is permissible and saleable or it is not, and it should not be allowed. Tobacco has been subject to a series of regulatory provisions in the UK in the last decade – we are all familiar with the warning labels all packs bear. There are also strict regulations forbidding advertising or promotion of tobacco products, either per se or by means of other brand-sharing products. But the new comparison to the new plain packaging regulation, which certainly stifles normal competition, will also make it much easier to produce counterfeit products and much harder for consumers to spot the difference. 

From a wider legal perspective, too, the precedent may be worrying. If imposing such heavy marketing restrictions becomes a legitimate legislator tactic, it could be very far-reaching indeed. There are plenty of other regulated products that might well succumb to it, such as beers and spirits, e-cigarettes, or even Swiss army knives. Few would say that the desires of the tobacco industry weigh against the need to protect children from the damaging and addictive habit, but it is not so clear that plain packaging is the right way to achieve this. Whatever the outcome of the legal challenges, it will be interesting to see how the decisions fall.

Tristan Sherliker is an associate in the IP Litigation group at EIP, London

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Tristan
Sherliker

10 April 2015

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