On 28 June 2018, the World Trade Organization (WTO) dispute settlement panel handed down its decision finding that Australia’s legislation requiring tobacco products be sold in plain packaging does not violate its trade obligations. The WTO panel found the legislation contributed to Australia’s objective of improving public health by reducing the use of, and exposure to, tobacco products and to be an integral part of Australia’s comprehensive tobacco control policies.
Introduced in 2012, Australia’s Tobacco Plain Packaging Act 2011 (TPP) imposes substantial limitations on the appearance of cigarette packaging, including shape and colour. Most significantly, it prohibits the use of trade marks, including figurative, logo, and colour marks, with the exception of tobacco company brand, business/company names, and tobacco variant names, which can be displayed in mandated size, font, and position. The TTP dictates physical characteristics of cigarette packets including shape, dimension, packet opening, as well as colour (dull olive).
The TPP survived a challenge brought by a number of tobacco companies in 2012 in the Australian High Court on the basis that it violated the Australian Constitution. Additionally, an investor-state dispute brought by Philip Morris Asia Limited claiming the TPP breached Australia’s foreign investment provisions in its bilateral investment treaty with Hong Kong was dismissed in 2015.
In 2012, Honduras utilised the WTO’s dispute settlement process for a determination whether the TPP violated provisions of the Agreement on Technical Barriers to Trade and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Similar challenges were later brought by the Dominican Republic, Cuba, and Indonesia. Given the similarity of claims, a single panel was compiled in 2014 to hear the disputes jointly.
The complainants’ key argument was that the TPP is inconsistent with TRIPS’ trade mark protection provisions; specifically, that the TPP unjustifiably encumbers by special requirements the use of tobacco companies’ trade marks in the course of trade in violation of Article 20.
While agreeing that the TPP encumbered, by special requirements, the use of tobacco companies’ trade marks in the course of trade, in finding the TPP measures are not “unjustifiable,” the WTO looked to the principles of TRIPS under Article 8.1, which provide that countries may formulate or amend their laws and adopt measures necessary to protect public health. The WTO was not persuaded that the complainants demonstrated that Australia had acted beyond the bounds of the scope available to it under Article 20 in choosing an appropriate policy intervention to address its public health concerns relating to tobacco products and rejected claims that alternative measures would be equally effective. It found that the TPP was designed to complement Australia’s pre-existing measures including advertising and promotional bans, excise taxes, graphic health warnings on tobacco products, and investments in anti-smoking initiatives.
Honduras and the Dominican Republic have appealed the WTO decision; however, the decision is expected to encourage other countries to implement similar plain packaging legislation. The decision may also have implications for other industries and there are concerns similar legislation could be extended to alcohol, sugary drinks and junk food in the future.