Facts to Dispel the Myths of Standardized Packaging

Standardized or plain packaging, applied as part of comprehensive tobacco control, is effective in reducing tobacco use. The tobacco industry fights standardized  packaging by raising many myths, which are exposed below:

 
myth“Standardized packaging on cigarette packs is a ‘violation of international treaties’ and will have ‘far reaching implications on the use of trademarks and intellectual property (IP) rights in other industries”

factWhen standardized packaging is applied on tobacco products, the trademarks are not being acquired by anyone but their use is being restricted. A High Court ruling declared on 15 August 2012 that standardized packaging in Australia was not in breach of the Australian constitution, as it did not represent an appropriation of company trademarks by the government.[i] The government was not using the brands for their own profit and only restricts the tobacco companies’ use of their trademarks and packaging. For this reason, there will be no need to compensate tobacco companies for acquisition of property. It is the government’s right to impose regulations to protect public health.[ii]

Australia’s standardized packaging law restricts or prohibits the use of logos, colours, brand images or promotional information on packaging other than brand names and product names displayed in a standard colour and font style, with graphic health warning images occupying both on the front and back panels of the pack. These aim to improve public health by increasing the noticeability and effectiveness of health warnings and to eliminate the effects of advertising and promotion on packaging. This is in line with its international obligations under Articles 11 and 13 of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC). [iii]

In fact, Australia has not breached any of its international IP obligations by introducing standardized packaging, because the measure falls within the scope of permissible regulation under both the Paris Convention and the Agreement on Trade Related-Aspects of Intellectual Property (TRIPS Agreement).

The industry’s claims that Australia’s standardized packaging scheme violates Article 15.4 of the TRIPS Agreement because “the measures effectively prevent registration and protection of tobacco-related trademarks based on the nature of the product” is unacceptable. Article 15.4 of the TRIPS Agreement provides that “The nature of goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of a trademark.”

The Standardized Packaging Act does not prevent the registration of new trademarks nor does it require the invalidation of already registered trademarks. It merely limits the use of such a trademark. The Standardized Packaging Act specifically states that trademark registration may not be denied or revoked in cases where a trademark owner is prevented from using a mark due to standardized packaging requirements.

It is also important to draw a clear distinction between registration and use of a trademark. While TRIPS grants trademark owners the right to register their signs, it does not grant them a positive right to use that registered trademark. Rather, Article 15 of the TRIPS Agreement grants trademark owners the right to prevent or exclude third parties from using a registered trademark. This is a right to exclude, which is unaffected by the Plain Packaging Act. [iv] In any case, they allow for member countries to implement measures necessary to protect public health.

Although standardized packaging affects the use of tobacco trademarks it does not affect their registration. Therefore, the Standardized Packaging Act complies with Australia’s obligations arising out of Article 15.4 of the TRIPS Agreement.

Moreover, standardized packaging will not disadvantage imports, or restrict international trade. Article 16.1 of the Agreement on Trade-Related Aspects of International Property Rights (TRIPS) does not grant owners the right to use a registered mark or be exempted from legitimate regulatory limitations on the use of that mark. It simply prevents third parties from using trademarks and this right would not be affected by plain packaging. Basically, it grants a right to exclude rather than to use.[iv]

Philip Morris Asia caused international outrage in 2011 by challenging Australia’s standardized packaging laws and suing the government for alleged breaches in the ‘fair and equitable treatment’ obligation under its bilateral investment treaty with Hong Kong. Don Anton, an international law academic at the Australian National University, said that Philip Morris Asia’s suit is also “questionable”. He argued that “Under most investment treaties public regulation for a public purpose, such as promoting the health and welfare of the citizenry, is not direct or indirect expropriation and therefore is not prohibited by investment treaty prohibitions against expropriation.” Therefore, standardized packaging is about protecting public health and not stealing intellectual property.[v]

In December 2015, the arbitration tribunal threw the case out and there have been no further challenges under international investment treaties against Australia or any of the other countries that have adopted standardized packaging laws such as Ireland, United Kingdom and France. There are several countries in various stages of development and adoption of similar laws, including New Zealand, Norway, Canada, and Singapore.

myth“Standardized packaging makes it easier for packaging to be copied by counterfeiters, exposing consumers to products of unknown and potentially dangerous ingredients”
factStandardized packaging is not a plain white box. It is standardized packs carrying sophisticated markings, tax stamp, texts and prominent pictorial health warnings depicting the harmful effects of smoking, and other labels that are required on current packs. Also, cigarettes already contain ingredients and chemicals that are proven toxic, carcinogenic and dangerous to health, and smokers need to be adequately warned about these. [vi]
myth“Standardized packs will lead to increased smuggling because the packs are easier to forge” 

factAs mentioned, the packs are not actually plain but carry sophisticated markings that will be difficult to counterfeit. Furthermore, there is no evidence that standardized packaging leads to an increase in smuggling of tobacco.

Industry-commissioned studies however often overstate the magnitude of illicit tobacco and fail to provide adequate information on the methodology used.[vii] For example, the amount of illicit tobacco purchased in Australia as claimed by tobacco industry has been found to be exaggerated and misleading. In 2011, Deloitte Illicit Trade of Tobacco in Australia Report (commissioned by Philip Morris Ltd, British American Tobacco (BAT) and Imperial Tobacco) suggested that about 15.9% of smokers had bought illicit tobacco in the last year (2010).[viii]

The Australian Department of Health and Ageing (DoHA) rejects the validity of this report because it does not include a detailed or transparent methodology.[ix] The 2010 National Drug Strategy Household Survey by contrast revealed that only 1.5% of smokers used illicit tobacco products half the time or more.[x] Even allowing for illicit smokers to smoke more than average, illicit tobacco would make up 2%-3% of the tobacco market, which is significantly less than that claimed in the Deloitte report.[xi]

Additionally, several peer-reviewed studies on the Australian illicit tobacco market found no change in smokers’ reported use of unbranded illicit tobacco, no evidence of increases in use of contraband cigarettes, low levels of use of cigarettes likely to be contraband, and no increase in purchases of tobacco from informal sellers. [xii], [xiii] [xiv] These findings are consistent with the Australian Institute of Health and Welfare (AIHW) National Drug Strategy Household Survey (NDSHS) data that indicates the reported use of illicit tobacco in Australia declined from 6.1% in 2007 to 3.6% in 2013.[xv]

Furthermore, an impact assessment carried out by the European Commission rejected the tobacco industry’s claims on standardized packaging and illicit trade declaring ‘no convincing evidence has been submitted’.[xvi] In addition, the UK All Party Parliamentary Group on Smoking and Health also found no evidence to support the tobacco industry’s claims, asserting ‘evidence to our inquiry… showed that external packaging is not what is used by enforcement authorities in determining whether tobacco products are illicit. Covert and overt security markings… [including] coded numbers and anti-counterfeit marks… would still be present on standardized packaging. [xvii]

myth“Standardized packaging will hurt small, local retailers because it will encourage smokers to use counterfeit cigarettes” 
factA scientific study of pre- and post implementation of standardized packaging (between 2011 and 2013) conducted by the Cancer Council Victoria found standardized packaging has not driven smokers to buy cheap imports or illicit tobacco, or to favour discount retailers over corner stores. There were no changes among current smokers in usual place of purchase of tobacco products and also no evidence of smokers shifting from purchasing in small retail outlets to purchasing in supermarkets.[xiii] 
 
myth“If all packs ‘look the same’ it will create confusion and increase transaction time for tobacco retailers” 
factThe Australian Government has rejected the tobacco industry’s claim that standardized packs would increase serving time for retailers and involve additional costs as findings were merely based on interviews with a handful of retailers and then used to predict the impact on sales nationally. Other studies of retail outlets conducted across Australia over the period of implementation of legislation found that effects on serving time were minor and short-lived. Simulated and real world studies found no significant increase in transaction times for standardized packaged tobacco transactions. Transaction delays were encountered in the first days after implementation of plain packs in Australia, but transaction times returned to normal within two weeks.[xviii] The results also confirmed that generic/plain tobacco packs provide modest gains in retailer efficiency.[xix] There was no lasting effect on retail serving time.[xx] 
 
myth“Standardized packaging does not reduce consumption”

fact

Tobacco sales or purchases of tobacco have continued to fall since the introduction of standardized packs. Based on Australian Bureau of Statistics (ABS), total consumption of tobacco and cigarettes as measured by estimated expenditure on tobacco products i.e. AUD7.174 billion in September 1959, AUD4.712 billion in December 2012 and AUD3.415 billion in March 2017. [xxi]

 
myth“Standardized packaging on tobacco will set the precedent for other consumer products”
factTobacco is not like any other product. It is the only legal consumer product on the market that is lethal when used as intended and kills two out of every three of its long-term users. Standardized packaging is a health measure and restrictions on the packaging of tobacco product are necessary due to the harmful nature of tobacco. Although it has been more than three years since standardized packaging was introduced in Australia, no other product has been subject to similar packaging laws in the country or other countries that have approved standardized packaging of tobacco. 

  

[i] Philip Morris Limited. Philip Morris Limited Comments on Australian High Court Decision on Plain Packaging for Tobacco Products, 15 August 2012. News Release. Available at: http://www.pmi.com/eng/documents/20120815_Philip_Morris_Limited_Media_Statement.pdf

[ii] Cancer Council. Myths and Facts: Tobacco Industry Myths about Plain Packaging. Available at: http://www.cancervic.org.au/plainfacts/browse.asp?ContainerID=plainfacts-myths

[iii] World Health Organization. WHO Framework Convention on Tobacco Control: Guidelines for Implementation Article 5.3; Article 8; Article 9 and 10; Article 11; Article 12; Article 13; Article 14 – 2013 edition. World Health Organization, Geneva, Switzerland. Available at: http://apps.who.int/iris/bitstream/10665/80510/1/9789241505185_eng.pdf?ua=1

[iv] Andrew Mitchell and Mariela Maidana-Eletti. Plain Packaging in Australia: Implications for Trademark Rights under the TRIPS Agreement and the Paris Convention. Available at: https://seatca.org/dmdocuments/Plain%20Packaging%20in%20Australia_%20Implications%20for%20Trademark%20Rights%20under%20the%20TRIPS%20Agreement%20and%20the%20Paris%20Convention.pdf

[v] L, Mezrani. Tobacco Challenges Unlikely to Succeed, Lawyers Weekly, 17 August 2012. Available at: http://www.lawyersweekly.com.au/news/10593-tobacco-challenges-unlikely-to-succeed

[vi] U.S. Department of Health and Human Services. A Report of the Surgeon General: How Tobacco Smoke Causes Disease: What It Means to You. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2010.

[vii] tobaccotactics. Countering Industry Arguments Against Plain Packaging: It will Lead to Increased Smuggling. Available at: http://tobaccotactics.org/index.php/Countering_Industry_Arguments_Against_Plain_Packaging:_It_will_Lead_to_Increased_Smuggling

[viii] Deloitte. Illicit Trade of Tobacco in Australia. A report prepared for British American Tobacco Australia Limited, Philip Morris Limited and Imperial Tobacco Australia Limited, February, 2011. 

[ix] Australia. Senate Estimates – Senate Community Affairs Committee, Answers to Estimates Questions on Notice Health and Ageing Portfolio. Additional Estimates 2010-2011, 23 February 2011, Question: E11-032.

[x] Australian Institute of Health and Welfare. National Drug Strategy Household Survey detailed report 2013. Drug statistics series no. 28. Cat. no. PHE 183, 2014. Canberra: AIHW.

[xi] Cancer Council Victoria. Plain packaging of Tobacco Products: A Review of the Evidence, May 2011. Available at: http://seatca.org/dmdocuments/Plain%20packaging%20of%20tobacco%20products-%20a%20review%20of%20the%20evidence_May%202011.pdf

[xii] Australian Government, Department of Health. Post-Implementation Review: Tobacco Plain Packaging 2016. Available at: https://seatca.org/dmdocuments/Post-Implementation%20Review%20Tobacco%20Plain%20Packaging%202016.pdf

[xiii] Scollo M, Zacher M, Durkin S, et al. Early Evidence about the Predicted Unintended Consequences of Standardized Packaging of Tobacco Products in Australia: A Cross-Sectional Study of the Place of Purchase, Regular Brands and Use of Illicit Tobacco. BMJ Open 2014;4: e005873. doi:10.1136/ bmjopen-2014-005873. Available at: http://bmjopen.bmj.com/content/4/8/e005873.full.pdf+html

[xiv] Scollo M, Zacher M, Coomber K, et al. Use of Illicit Tobacco Following Introduction of Standardized Packaging of Tobacco Products in Australia: Results from a National Cross-Sectional Survey. Tobacco Control 2015;24: ii76–ii81. Available at: http://tobaccocontrol.bmj.com/content/24/Suppl_2/ii76.full.pdf+html

[xv] Australian Institute of Health and Welfare (AIHW). Tobacco Smoking in the General Population.

[xvi] European Commission (2012). Impact Assessment on the Proposal for a Directive of the European Parliament and the Council. Available at: http://ec.europa.eu/health/tobacco/docs/com_2012_788_ia_en.pdf 

[xvii] All Party Parliamentary Group on Smoking and Health (2013). Inquiry into the Illicit Trade in Tobacco Products. Available at: https://seatca.org/dmdocuments/APPG_Inquiry%20into%20the%20Illicit%20Trade%20in%20Tobacco%20Products_2013.pdf

[xviii] Wakefield M, Bayly M, and Scollo M. Product Retrieval Time in Small Tobacco Retail Outlets Before and After the Australian Plain Packaging Policy: Real-World Study. Tobacco Control 2014; 23(1):70-6.

[xix] Carter O, Welch M, Mills B, Phan T, and Chang P. Plain Packaging for Cigarettes Improves Retail Transaction Times. BMJ, 2013; 346:f1063.

[xx] Bayly M, Scollo M, Wakefield M. No Lasting Effects of Plain Packaging on Cigarette Pack Retrieval Time in Small Australian Retail Outlets. Tobacco Control 2015; 24: e108–9.

[xxi] Australia Government, Department of Health. Tobacco Control Key Facts and Figures: Tobacco sales. Available at: https://www1.health.gov.au/internet/publications/publishing.nsf/Content/tobacco-control-toc~tobacco-sales