10 June 2020TrademarksSarah Morgan

WTO backs Australia plain packaging rules

The  World Trade Organization’s (WTO) Appellate Body has reaffirmed the Australian government’s plain packaging restrictions on tobacco products.

In a  decision published yesterday, June 9, the Appellate Body upheld a WTO panel’s 2018 decision, rejecting complaints from Honduras and the Dominican Republic that the rules are unfair restrictions on trade.

Australia was the first country to introduce the plain packaging requirement for cigarettes, requiring cigarettes to be sold in dark brown logo-free packaging. The rules were approved in 2011 and came into force the following year.

However, Indonesia, Cuba, the Dominican Republic, Honduras and Ukraine subsequently filed challenges against the rules at the WTO, claiming that the measures create unnecessary barriers to trade.

But, in June 2018, the WTO  endorsed the rules, backing Australia’s argument that its restrictions don’t violate international trade law because they qualify as legitimate public health measures.

Soon after, Honduras and the Dominican Republic  appealed against the ruling, claiming that the panel had erred in its ruling.

However, the WTO Appellate Body said that it had found no errors in the earlier panel's conclusions, rejecting the requests for Australia to change its packaging rules.

“Taken as a whole, therefore, we consider that the evidence before us supports the view that, as applied in combination with the comprehensive range of other tobacco control measures maintained by Australia … the TPP measures are apt to, and do, make a meaningful contribution to Australia's objective of reducing the use of, and exposure to, tobacco products,” said the Appellate Body.

It also rejected the argument that the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) gives tobacco companies a right to use a trademark.

“Neither the TRIPS Agreement nor the provisions of the Paris Convention (1967) that are incorporated by reference into the TRIPS Agreement confer upon a trademark owner a positive right to use its trademark or a right to protect the distinctiveness of that trademark through use,” said the Appellate Body.

According to the WTO, Australia does not have an obligation to allow a company to use its trademarks but must ensure that the owner of a registered trademark can exercise its “exclusive right to prevent” infringement by unauthorised third parties.

The Appellate Body's ruling is the last outstanding judgment from hearings that it carried out while still functioning. In December last year, two out of its three remaining members’ four-year terms came to an end. The US refused to sanction any new judicial appointments and the body is now suspended.

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