Plain packs: an attack on intellectual property

A taxpayer bailout of Big Tobacco is headed Britain’s way. This man-bites-dog scenario will result from today’s free parliamentary vote that, despite going ahead without a formal debate, is expected to endorse the introduction of plain packaging for cigarettes. The UK tobacco industry will no doubt then sue the government, the industry will triumph in the legal battle, and the taxpayer will be sent the enormous bill.

With the new regulations subject to parliamentary approval, fiscally prudent MPs and taxpaying non-smokers should focus on one critical question: does Australian-style plain packaging damage tobacco companies’ brand equity by trampling on their trademark rights?

In their legal ignorance, anti-tobacco lobbyists believe international treaties allow company trademarks to be wiped out. Not so. An informed reading finds these treaties do not allow the government to seize tobacco trademarks. Similarly, public-health minister Jane Ellison does not appear to appreciate the strength of the British tobacco industry’s forthcoming legal challenges, filed under the UK Human Rights Act and EU law, respectively. Nor has she thoroughly examined each of the relevant trade treaties, such as the Paris Convention of 1883 and the Trade Related Aspects of Intellectual Property Rights.

If she had done so, Ellison would know that in each case plain packaging runs afoul of key principles and provisions of these treaties. Under these treaties, pro-plain-packaging lobbyists must provide compelling evidence that the registered trademark – the packaging, itself, not the cigarettes inside the package – causes harm. They must also prove that erasing the trademark is an effective remedy, because it will improve public health.

Anti-tobacco lobbyists claim that tobacco is a uniquely dangerous product, and that since the public interest underlies all these treaties, health concerns trump trademark rights. The problem, however, is that they do not. On the contrary, these treaties make quite clear that, legally, health rights do not outweigh intellectual-property rights. Intellectual property is, in fact, a fundamental human right, according to the United Nations’ Declaration on Human Rights. A joint World Trade Organisation and World Health Organisation study confirmed this key point.

Plain-packaging campaigners also argue that these treaties govern registration of trademarks, but not their use, and therefore governments can lawfully restrict or prohibit trademark use. However, the main purpose of safeguarding trademark registration is, unsurprisingly, to permit their use. Banning trademark use would essentially void all intellectual property treaties. That is why similar moves have already been rejected by the World Trade Organisation in respective arbitration cases.

Perhaps the worst unintended consequence of trampling on trademark rights is that, once the tobacco companies successfully sue the government for damages, the treasury will hand billions of taxpayer pounds over to the very industry that is said to be the greatest threat to public health. The Centre for Economics and Business Research has estimated that British taxpayers would face a £5 billion tobacco bill. Such an estimate is actually on the very conservative side. It is far more likely, in fact, that the cost of a tobacco bailout will be over £10 billion – perhaps as high as £12 billion.

Such sums will blow a rather large hole in the chancellor’s budgetary projections. What’s more, this involuntary subsidising of Big Tobacco would be a public-relations disaster for the government. Perhaps the only logical explanation for this ludicrous outcome is that the pro-plain-packaging lobby is actually a Trojan horse for Big Tobacco. How else may one explain their costly campaign?

Patrick Basham directs the Democracy Institute, an independent London- and Washington-based think tank. He is also the co-author (with John Luik) of Erasing Intellectual Property: Plain Packaging of Consumer Products and the Implications for Trademark Rights and The Plain Truth: Does Packaging Influence Smoking?.