This post is based upon a presentation I gave at a panel organized jointly by the Centre for Law, Technology and Society and the Centre for Health Law, Policy and Ethics at the University of Ottawa on February 1, 2017.
Canada is on the cusp of passing new legislation and enacting new regulations that will put us among a growing number of countries that have made plain packaging mandatory for tobacco products. Bill S-5, currently before the Senate, will amend the Tobacco Act to enable regulations to dictate the appearance of tobacco packaging. While the regulations are not currently available, it is to be expected that they will contain measures similar to those already introduced in Australia and Britain. Essentially plain packaging means prescribing a plain colour, size and configuration for all tobacco packages. In addition, packages will be used to convey graphic images and public health warnings. The only permitted use of tobacco trademarks will be of word marks consisting of the brand name and sub name in a prescribed font, colour and type-size. Tobacco trademarks consisting of logos, crests, images, colour, shape, configuration, or design will no longer be capable of use on tobacco product packaging.
Plain packaging is a movement driven by the World Health Organization’s Framework Convention on Tobacco Control, of which Canada is a signatory. Interestingly, however, the treaty does not require signatories to implement plain packaging. Article 11 of the Convention addresses packaging, but merely requires that false and deceptive elements on packaging be banned (e.g. using “mild” to designate cigarettes that are every bit as harmful as regular cigarettes); that health warnings take up 30-50% of packaging surface; and that packages contain information about constituent ingredients and product emissions. Canada’s current packaging regulations are consistent with these requirements. Plain packaging is merely mentioned as something that signatory states “should consider” in paragraph 46 of the Guidelines for Implementing Article 11 of the Convention. Thus, it is important to underline that Canada is not under an international obligation to introduce plain packaging legislation.
While the link between smoking and serious illness/death seems uncontestable, and the reduction of smoking is clearly an important public health objective, there is reason to question the wisdom of the plain packaging approach. Australia was the first country to introduce plain packaging in 2011. Its legislation survived a constitutional challenge (it was argued to be an illegal expropriation of trademark owners’ rights), and is currently being challenged before the World Trade Organization (WTO) as a violation of Australia’s obligations under the TRIPS Agreement. Although considerable sums of money have been spent on defending Australia’s statute, the evidence emerging as to the beneficial impact of the legislation is ambivalent.
Plain packaging measures in Canada are also likely to face legal challenges. Restrictions on the use of trademarks in the 1988 Tobacco Products Control Act were found by the Supreme Court of Canada to be a violation of the freedom of expression of trademark owners that could not be justified under s. 1 of the Canadian Charter of Rights and Freedoms. These provisions were struck down by the Court. Provisions related to the use of tobacco trademarks in sponsorship activities in a reconstituted Tobacco Act were also challenged for violating the freedom of expression, but the Supreme Court in 2007 found that the violation was justified as rationally connected to a pressing and substantial government objective, and that it minimally impaired the rights concerned. The takeaway from these cases is that restrictions on the use of tobacco trademarks (such as those necessary to implement plain packaging) clearly violate the freedom of expression. In any court challenge, therefore, the issue will be whether the measures can be justified under s. 1 of the Charter as a “reasonable limit, demonstrably justified in a free and democratic society”. It is important to remember that plain packaging restrictions are extreme and the evidence linking plain packaging to harm reduction is ambivalent. It is not obvious at the outset that such measures would survive a Charter challenge.
Trademark owners have also objected that the restrictions will harm their ability to acquire and maintain trademark rights in relation to tobacco products. Bill S-5 contains provisions that indicate that non-use of tobacco trademarks resulting from plain packaging regulations will not be a basis for the invalidation of existing registered trademarks. However, this does not settle the question. Trademark rights cannot be acquired (or maintained) at common law without use, and the law does nothing to address this category of rights. Further, certain kinds of trademarks (distinguishing guises, three-dimensional marks and other non-traditional subject marks soon to become registrable in Canada) cannot be registered until they have acquired distinctiveness through use. Plain packaging regulations might therefore constitute a bar to the registration of certain types of trademarks for use in relation to tobacco products.
Canada’s existing international obligations under both the TRIPS Agreement and the NAFTA may lead to further challenges to the introduction of plain packaging. The creation of an impediment to the registration of certain types of trademarks for tobacco products may violate Article 15 of TRIPS, and there is an open and ongoing debate as to whether plain packaging laws also violate Article 20 which provides that “The use of a trademark in the course of trade shall not be unjustifiably encumbered by 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.. . “. Australia’s legislation has been challenged under TRIPS, and a decision on its compliance with that treaty may be imminent.
For its part, Article 1110 of the NAFTA provides that no member state can take a measure that is “tantamount to expropriation” of an investment except in limited circumstances which include a requirement to pay compensation. It is not clear whether a U.S.-based tobacco company could succeed before a NAFTA tribunal in arguing that the plain packaging laws amounted to an expropriation of their investment in their trademarks. The domestic challenge to Australia’s legislation turned on a property rights clause in the Australian constitution, and raised the question of whether the plain packaging was an expropriation of trademark rights. The majority of the court found that it did not, but of course that decision would not be binding on a NAFTA tribunal.
The plain packaging regulations on the horizon for Canada are being introduced in the face of considerable uncertainty as to their legality both under Canada’s constitution and Canada’s international trade obligations. The extensive resources required to defend such measures should be weighed carefully not just against the likelihood of success of any challenges, but also against the public health benefits that are likely to flow from further changes to how tobacco products are packaged in Canada.
It is perhaps also worth noting that there have been rumblings about plain packaging measures for other products considered harmful to public health, such as alcoholic beverages and junk food. The issues raised in relation to tobacco products have much broader implications, making this file one to watch.