On Thursday last week Mr Justice Green handed down his decision in Tobacco Packaging [2016] EWHC 116 affirming the prohibition of advertising upon tobacco products in the UK.

In his hefty 1000 paragraph decision, Green J rejected a request for judicial review brought by several of the world's major tobacco companies (including British American Tobacco and Philip Morris) in respect of The Standardised Packaging of Tobacco Products Regulations 2015 (commonly referred to as the "plain packaging" rules).  As a result, the plain packaging rules were implemented on 20 May 2016. Retailers will have a one year grace period to sell off current stock but from 21 May 2017, all tobacco products on sale in the UK must comply with these rules.

As well as preventing manufacturers from advertising or placing branding upon their products, tobacco products manufactured for sale in the UK must display large graphics warning of the dangers of smoking and must be packaged in a drab olive-brown hue (aka Pantone 448 C) which, according to researchers, is the least appealing colour to consumers.

Expropriation of trade mark rights?

Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International, who jointly brought the challenge, argued (amongst several other grounds) that their intellectual property rights have been expropriated by the new packaging rules.  

Counsel for the tobacco companies argued that merely being able to restrict others from using a trade mark (as opposed to being free to commercially exploit their marks as they see fit) would render the marks useless for practical purposes.  The Department of Health itself acknowledged in its final impact assessment that“standardised packaging reduces the ability of tobacco manufacturing firms to sustain sales of higher-priced products relying on brand characteristics”

In rejecting the tobacco companies' arguments, the judge accepted that whilst there would be limitations on how the marks could be used, title to the rights remained in the hands of the tobacco companies and the rights were therefore not expropriated.  Indeed, packaging may still display the relevant name and brand, subject to various conditions (no spicing up the font type (Helvetica) or size (14 for the brand, 10 for the variant)). As such, the judge found that the trade marks still "serve their core function as an identifier of origin".

The judge accepted that the new rules would"significantly and even substantially diminish" the substance of the tobacco companies' trade marks.  However, given the ultimate retention of title in the rights and the public health based interest in the restrictions, he considered the impositions to be valid. He also rejected the contention that any compensation should be due.    

Thursday's UK ruling comes shortly after the European Court of Justice's ruling rejecting the tobacco industry's challenge at the European Union level (joined Cases C-358/14C-477/14, and C-547/14), where they failed to establish that the newTobacco Products Directive (2014/40/EU) was unlawful. (The Tobacco Products Directive covers, in particular, the prohibition from 20 May 2020 of tobacco products with a characterising flavour (e.g. menthols) and for the standardisation of tobacco products' labelling and packaging and also various special rules for e-cigarettes). The judgment also follows policy in Australia, who was the first country to introduce plain packaging restrictions.

So far, only British American Tobacco has said it plans to appeal against the decision: a BAT spokesperson said the judgment was “by no means the final word” on the lawfulness of plain packaging.  Philip Morris has said even though it is disappointed with the ruling, it won't appeal.

Comment

Justifications for the decision leave an air of uncertainty for brand owners in any area that is considered to be at the centre of major public health concerns.  If the rationale is that the tobacco industry should not be entitled to profit from encouraging a lifestyle which ultimately imposes a huge cost on public funds, what restrictions may be lurking for manufacturers of high sugar foods, which are a major cause of obesity and type 2 diabetes, or alcohol products, where the estimated cost to the NHS of misuse is £3.5 billion every year.

Justifications for the decision leave an air of uncertainty for brand owners in any area that is considered to be at the centre of major public health concerns.  If the rationale is that the tobacco industry should not be entitled to profit from encouraging a lifestyle which ultimately imposes a huge cost on public funds, what restrictions may be lurking for manufacturers of high sugar foods, which are a major cause of obesity and type 2 diabetes, or alcohol products, where the estimated cost to the NHS of misuse is £3.5 billion every year.