the WTO agreements that Australia is a party.
Since the arbitral tribunal commenced against Australia did not exercise jurisdiction over the dispute, the claims were not examined on their merits. Hence, the decision of the tribunal did not incur any indications for potential investment treaty disputes in relation to plain packaging legislations. Nevertheless, a similar investment treaty dispute filed against Uruguay might provide implications, because it concerns regulations that impose restrictions on tobacco packaging, even though they were not as restrictive as plain packaging. We will, therefore, finally discuss the arbitration case filed against Uruguay and the findings of the arbitral tribunal related to the tobacco companies’
claims102.
43 Packaging Act (Cth) (TPP Act)” was enacted on 21 November 2011103. Under the TPP Act, “Tobacco Plain Packaging Regulations 2011”, as later amended by the “Tobacco Plain Packaging Amendment Regulations 2012 (No. 1) (Cth) (TPP Regulations)” which prescribed implementing regulations was promulgated104. In addition, Trade Marks Act 1995 was amended for the purposes of integration of the TPP Act with the trademark legislation105. The mentioned laws jointly constitute the Australian Plain Packaging scheme which introduced certain requirements concerning tobacco product packaging;
and obliged all products sold at retail outlets to comply with the requirements as of 1 December 2012. The mentioned plain packaging scheme regulated by Australia will be collectively referred to as “TPP measures” in this chapter.
1. Objectives of the Law
The TPP Act has two primary stated objectives. The first one concerns the improvement of public health. The sub-objectives for improving the public health are stated as: “discouraging people from taking up smoking,” “encouraging people to give up smoking,” “discouraging people who have given up smoking (…) from relapsing,”
and “reducing people’s exposure to smoke from tobacco products.”106. The other primary objective is “to give effect to Australia’s obligations as a party to the FCTC”. The explanatory memorandum of the TPP Bill states: “introduction of plain packaging for
103 Tobacco Plain Packaging Act 2011 (Cth). (“TPP Act”)
104 Tobacco Plain Packaging Regulations 2011 (Cth). (“TPP Regulations”)
105 Trade Marks Amendment (Tobacco Plain Packaging). Act 2011
106 TPP Act, Section 3.
44 tobacco products is one of the means by which the Australia Government will give effect to Australia's obligations under the [FCTC]107”, and makes reference to Art. 5, 11 and 13 of the FCTC, as well as the guidelines adopted by the COP for Art. 11 and Art. 13.
The Act aims to achieve the mentioned objectives by means of regulating the appearance of tobacco products and their packs. The ultimate goals of doing so are listed as:
“reducing the appeal of tobacco products; reducing the ability of the tobacco packaging to mislead consumers about the harmful effects of tobacco use; and increasing the effectiveness of health warnings”108. Evidently, the purposes of the legislation were explicitly set out in conformity with the purposes of plain packaging as previously discussed109. In the explanatory memorandum, the connection between the stated objectives of plain packaging and how it will contribute to its objectives were laid down with reference to empirical studies that provided scientific basis.
2. Requirements on Retail Packaging of Tobacco Products
As per the TPP Act, physical features of the packs must be according to the standards specified in the law, besides carrying the mandated graphic health warnings, textual statements and informative messages. Substantive provisions of the legislation require tobacco packaging to be of rectangular shape, have a matte finish and be drab
107 Explanatory Memorandum, Tobacco Plain Packaging Bill 2011 (explanatory memorandum), available at: <http://classic.austlii.edu.au/au/legis/cth/bill_em/tppb2011190/memo_0.html>. (last accessed 30.12.2019)
108 Ibid.
109 See above § Ch. 1 (II)(C).
45 dark brown unless the regulations prescribe a different colour110.
Most importantly, it explicitly bans the use of non-word trademarks on any part of the packs by prohibiting composite marks and figurative marks111. As part of the limited exceptions to this prohibition, only the brand, business or company name, as well as the variant name for the product are permitted to be used on the packs112. Utilization of such exceptions are also strictly regulated by the Act and must be in standard font, size and colour, while prohibiting “stylized word marks” as well113. Further to the described restriction on trademark use, use of all marks are prohibited on the tobacco products, such as the cigarette sticks and cigars114. Breach of the mentioned prohibitions of TPP Act constitutes both civil and criminal liability, pursuant to the severe “offences and civil penalty provisions” of the Act115.
“The Competition and Consumer (Tobacco) Information Standard 2011” also took effect in December 2012 to operate in conjunction with the Australian Plain Packaging Scheme116. By virtue of the requirements set out in the Standard, the surface
110 Sections 18, 19. For all main requirements imposed by the Australian Plain Packaging Scheme, see Bond C.: Tobacco Plain Packaging in Australia: JT International SA V Commonwealth and Beyond, QUT Law Review 17 (2), 2017, pp. 1-20, at p. 6.
111 TPP Act, Section 20(1)
112 TPP Act, Section 20(3).
113 TPP Act, Section 21.
114 TPP Act, Section 26.
115 TPP Act, Chapter 3.
116 Parliamentary Secretary to the Treasury, Competition and Consumer (Tobacco) Information Standard 2011, 22 December 2011; Also see Liberman J.: Plainly Constitutional: The Upholding of Plain Tobacco Packaging by the High Court of Australia, American Journal of Law & Medicine 39, 2013, pp. 361-381, at
46 of tobacco packs covered by the mandatory warnings was considerably enlarged. Most notably, the front surfaces of the cigarette packaging were increased to seventy-five percent and the back surface to ninety percent.
3. Intellectual Property-Saving Provisions
Another important feature of the TPP Act lies within its inter-relationships with the Australian laws pertaining to trademark and design117. It is prescribed by the TPP Act that the prohibition on the use of trademarks does not hinder the rights of registered trademark owners with regards to tobacco products. It is also provided that non-use of trademarks due to the TPP Act cannot be grounds to refuse a trademark registration or revoke the registration of a trademark118. With these provisions, it is explicitly provided that tobacco companies maintain their rights pertaining to trademark registrations, although use of such trademarks are severely restricted. In fact, it is stipulated that the Act “does not have the effect that the use of a trade mark in relation to tobacco products would be contrary to law.”119. Furthermore, rights pertaining to designs as per the Designs Act are also maintained. In cases where a registered design is not used to comply with the prohibitions under the TPP Act, such non-use cannot be grounds for requiring the grant of a license for the design or revoking the registration of the design120.
p. 364. (“Plainly Constitutional”)
117 Trade Marks Act 1995 (Cth); Designs Act 2003 (Cth).
118 TPP Act, Section 28 (3).
119 TPP Act, Section 28 (2).
120 TPP Act, Section 29.
47 These kind of provisions were specifically designed to ensure that tobacco companies preserve their rights to protect, register and maintain the registration of trademarks121. Section 28 is particularly important because it prevents tobacco-related trademarks and designs from being subject to legal consequences of non-use. For example, in case there is an application for the removal of a trademark from the registry on the basis that it was not used, this provision provides a basis for the owner of the non-used trademark to defend himself. In this way, the provision holds tobacco-related trademarks exempt from the legal consequences of non-use, eliminating some of the potential arguments of the tobacco companies in relation to trademarks.
4. Safe-Guard Clause in Case of Unconstitutionality
One of the salient provisions of the Act provides that it does not apply “to the extent that its operation would result in an acquisition of property from a person otherwise than on just terms122.” It is further stated that:
“[In the event that] this Act would result in such an acquisition of property because it would prevent the use of a trade mark or other sign on or in relation to the retail packaging of tobacco products, or on tobacco products, then despite any other provision of this Act, the trade mark or sign may be used on or in relation to the retail packaging of tobacco products, or on tobacco products,
121 In the outline of the Explanatory Memorandum, it is provided that: “(…) [The TPP Act] ensures that its operation will not affect trade mark owners’ ability to protect their trade marks from use by other persons, and to register and maintain the registration of a trade mark.”. See Explanatory Memorandum, p. 4.
122 TPP Act, Section 15 (1).
48 subject to any requirements that may be prescribed in the regulations for the purposes of this subsection123.”
This provision stands out as a safe-guard clause against the possibility that the operation of plain packaging was found to violate the constitution by a court decision. By virtue of this provision, in case plain packaging as prescribed by the Act was found unconstitutional, an alternative scheme could be operated through regulations in compliance with the verdict of the court, without having to amend the Act124. Aware of a possible legal challenge from tobacco companies invoking section 51(xxxi) of the Australian Constitution as discussed below, the Australian government sought to eliminate the possibility of having to compensate tobacco companies in case of an effective challenge.