The government's legislation relating to plain packaging for tobacco products proceeded to its second reading before the Senate at the end of August. It is envisaged that parts of the legislation will become operative as early as 1 January, 2012 although the principal provisions relating to the appearance of tobacco packaging will only come into operation on 1 July 2012. The drafting of this legislation and the preceding consultation process has extended over a lengthy period1 and has given rise to widespread public debate.
This article focuses on trade mark issues arising under the Tobacco Plain Packaging Bill 2011 (TPP Bill) – in particular, the provisions in that Bill relating to the prohibition on trade marks appearing on retail packaging for tobacco products2 and the effect on the Trade Marks Act 1995 of the non-use of trade marks as a result of the TPP Bill.3
Before discussing those aspects of the TPP Bill in detail the following general comments relating to the Bill provide a useful introduction to understanding the Bill:
- The Bill's purpose
The legislation aims to discourage the use of tobacco products, thereby improving public health and the stated objectives of the legislation are to regulate the retail packaging appearance of tobacco products in order to reduce the appeal of such products to consumers.
- The tobacco products affected
The definition of tobacco products in the Bill is broad. Tobacco products are defined as processed tobacco, or any product that contains tobacco, that is manufactured to be used for smoking, sucking, chewing or snuffing.4
- The structure of the Act
In its present form the Bill extends to 109 clauses. There are numerous provisions that address offences and civil penalty provisions (clauses 30 to 50) and even more provisions that set out the powers under the legislation to investigate contraventions (clauses 51 to 83). Unsurprisingly the enforcement provisions are likewise very detailed (clauses 84 to 109).
Prohibitions on trade marks
The Bill contains very detailed requirements governing the retail packaging and appearance of tobacco products. Those requirements include the physical features of the packaging as well as the colour and finish of such packaging. There is a specific prohibition on trade marks, and marks generally, appearing on retail packaging for tobacco products. In relation to the colour of the packaging, the Explanatory Memorandum to the TPP Bill states that "market research found that a particular shade of drab dark brown was optimal in terms of decreasing the appeal and attractiveness of tobacco packaging, decreasing the potential of the pack to mislead consumers about the harms of tobacco use, and increasing the impact of graphic health warnings".5 Interestingly, the draft regulations do not yet specify the colour of the packaging. As presently worded, the regulations states that "the things mentioned in sub regulation (1) must be the colour known as [XXX]".6
An exception to the prohibition on any trade marks on tobacco products provides that a "brand" or "any variant name" may appear on tobacco products if permitted by the regulations.7 In contrast, the regulations to the Bill refer to an "origin mark" being permitted on retail packaging for tobacco products subject to any such origin mark being "an alphanumeric code".8 In order to comply with this requirement, an origin mark must appear only once either on the side outer surface or the bottom outer surface of a pack or carton.9 In addition, an origin mark must be printed in the typeface known as Lucida Sans, be no larger than 10 points in size, in a normal weighted regular font and in the colour known as [XXX].10
The reference to an "origin mark" as an alphanumeric code is unclear.11 No reference to an alphanumeric code appears in the Explanatory Memorandum. The dictionary meaning of alphanumeric is a set of characters conveying information by using both letters and numbers. The presence of the word "code" is even less clear given the definition in the regulations of what is meant by an origin mark. The Explanatory Memorandum refers to brand name or variant name as being allowable but does not refer to "origin mark".
Over and above the provisions in the Bill and the regulations relating to the appearance of tobacco products, the Bill includes a sweeping provision that allows for the future introduction of any additional requirements relating to either the retail packaging or the appearance of tobacco products.12
Effect on the Trade Marks Act 1995 of the non-use of trade marks as a result of the TPP Bill, 2011 13
Notwithstanding the prohibition of trade marks being placed on tobacco products – other than an "origin mark" as defined in the regulations to the TPP Bill – the Bill includes a clause that purports to preserve a trade mark owner's ability to protect a trade mark and to register and maintain registration of a trade mark.14 According to the TPP Bill Explanatory Memorandum15 clause 28 governs the way in which various provisions of the Trade Marks Act 1995 and the Trade Mark Regulations 1995 will operate in relation to the provisions of the TPP Bill. For example, according to the Explanatory Memorandum, a tobacco manufacturer that applies for the registration of a trade mark in respect of tobacco products is taken to intend to use the trade mark in Australia, if it would use it on the products or retail packaging, but for the operation of the Bill. Similarly, if someone applies for removal of a trade mark from the register, alleging that the trade mark has not been used, this allegation will be rebutted by evidence that the registered owner would have used the trade mark, but for the operation of the Bill.
The implications of clause 28 of the TPP Bill are, at best, uncertain. This uncertainty is evident in the government's introduction of the Trade Marks Amendment (Tobacco Plain Packaging) Bill, 2011 the principal purpose of which is to remedy any "unintended interaction between the TPP Bill and the Trade Marks Act 1995".16 To ensure that the government's intentions with respect to plain packaging for tobacco products are not thwarted the Trade Marks Amendment Bill will insert a new section 231A to allow regulations to be made under the Trade Marks Act in relation to the effect of the operation of the Plain Packaging Act and regulations made under that Act on (a) a provision of the Trade Marks Act or (b) of a regulation made under that Act. Regulations made under new section 231A are not intended to have any effect on the operation of the Trade Marks Act in relation to goods or services not governed by the Plain Packaging Act.
The likely consequences of the legislative changes to the Trade Marks Act 1995 are difficult to predict. The amending legislation, read with the TPP Bill, is hardly a model of clarity. In essence, the proposed legislative changes make it reasonably clear that any distortions that might result in relation to the trade mark registration regime are secondary to the government's commitment to further regulate the appearance of tobacco products.
Consequences for trade mark law in Australia
From a trade mark perspective there are several issues that give rise to concern. Amongst those issues are the following:
Right to register but not use
The requirement that a registered trade mark be used, or at the very least that there be a definite commitment to use the trade mark, underpins the trade mark registration system in Australia. Indeed, it is true to say that use is one of the cornerstones upon which Anglo-Australian trade mark law is built. The statutory definition of a trade mark clearly reflects this in defining a trade mark as being a sign used or intended to be used.17
Legislation which prohibits certain traders from using their trade marks cuts across fundamental principals of trade mark law and undermines the underlying rights of trade mark ownership.
A two-tier trade mark system
In terms of clause 28 of the TPP Bill the Registrar of trade marks must not reject or refuse to register or remove a trade mark for tobacco products in the various circumstances listed in that clause. The clause makes no reference to section 41 of the Trade Marks Act which governs the registrability of a trade mark. Under subsection (5) and (6) of section 41, the registration of a trade mark is dependent on an applicant demonstrating use of the trade mark sought to be registered. If the thrust of clause 28 is that the Registrar cannot reject or refuse a trade mark because the trade mark has not been used, it follows that trade marks for tobacco products that might otherwise be subject to objection under subsections (5) and (6) of section 41 are to be assessed without regard to any use of the mark. The consequence of this is that a registration procedure outside the ambit of section 41 will come into operation, thus creating a two-tier trade mark registration system.
The "Henry VIII" clause
This colourful language relates to the new section (section 231A) to be introduced into the Trade Marks Act. This section will provide for the making of regulations that can change the substantive effect of the Trade Marks Act. It is clearly a very broad provision. Inter alia, the regulatory making power under this provision might well be inconsistent with the Act and, more importantly, regulations made under this provision will prevail over the Act.18
Obligations under international trade mark treaties
The effects of the TPP Bill on Australia's obligations under the TRIPS Agreement have been extensively debated. Article 20 of the TRIPS Agreement is one of the provisions which has received particular consideration in the context of Australia's international obligations relating to trade marks. In terms of that article the use of a trade mark in the course of trade shall not be unjustifiably encumbered by special requirements, such as ... 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.
Clearly the plain packaging legislation requires the "origin mark" to be used "in a special form". Furthermore, it is at least arguable that the special requirements contained in the TPP Act are unjustifiable in the sense envisaged by the TRIPS Agreement because, in a trade mark context, the effect of the requirements is detrimental to the capability of trade marks for tobacco products to distinguish those goods in the course of trade. Not only will generic packaging reduce and/or remove the distinctiveness of tobacco trade marks but, at the same time, reduce and/or remove the benefits of distinctiveness and information afforded to consumers by distinctive marks. The arguments that "special requirements" are justifiable in order to discourage the use of tobacco products is the subject of debate.
It follows that there is some risk that the requirements prescribed in the regulations to the TPP Bill are at odds with Australia's obligations under the TRIPS Agreement.
Status of the TPP Bill
According to the Senate Daily Summary the Tobacco Plain Packaging Bill 2011 and the Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 are scheduled to be considered by the Senate on Tuesday 20 September, 2011.