vendredi, juin 25, 2010

Lithuania: Plain packaging of tobacco products declared unconstitutional

Plain packaging of tobacco products declared unconstitutional

Contributed by Lideika Petrauskas Valiunas ir partneriai LAWIN


Introduction

'Plain packaging' is a term used to describe standardized (ie, generic) packaging of tobacco products without trademarks, logos, pictures, graphics or other promotional elements. The idea was first presented by Dr Gerry Karr in June 1986 during the Canadian Medical Association's annual general meeting. Since then, the introduction of national legislation on plain packaging has been considered in several countries, including Canada, Australia and the United Kingdom. The European Council has also invited the European Commission to analyze the legal issues and the evidence base for the impact of plain packaging, including its effect on the functioning of the internal market.(1) Recently, a proposal for plain packaging was considered in Lithuania.

Although many experts support the public health intentions of such a measure, it would be likely to have a significant impact on the exercise of IP rights.

Draft law

On December 28 2009 Member of Parliament Gediminas Navaitis registered a draft law to add an article to the Law on Tobacco Control. Navaitis proposed the introduction of standardized packaging for tobacco products sold in Lithuania in order to combat smoking. The draft article stated: "Tobacco products sold in the Republic of Lithuania shall be packed in standard white packaging, with all information thereon provided in a standard font of the same size."

As the accompanying memorandum explained, the proposal was formulated to reduce the number of people who smoke and the number of deaths related to tobacco consumption. It would also have prevented tobacco manufacturers from evading prohibitions by:

  • associating tobacco products with other goods;
  • advertising their products by using the dominant colours of their packaging; or
  • using product diversification in advertising.

Preliminary review

The draft law did not immediately cross the constitutional threshold for parliamentary review, as legislative procedure in such cases requires a preliminary review by the European Law Department (which is part of the Ministry of Justice) and by the Parliamentary Legal Department and by the Parliamentary Committee on Legal Affairs.

Parliamentary Legal Department's review
Having assessed the proposal in light of the Constitution and other legislation, on January 19 2010 the department concluded that the draft law would be likely to contradict:

  • the constitutional principle of the inviolability of property;
  • Lithuania's international obligations under Article 10(2)(3)(1) of the Paris Convention for the Protection of Industrial Property; and
  • the free movement of goods under Article 34 of the Treaty on the Functioning of the European Union and the principle of proportionality.

The department considered that:

"Plain packaging would give rise to the situation in which persons would not have free use of their property (ie, trademarks) and would be unable to affix them to the packaging of tobacco products. Under Constitutional Court doctrine, the right of ownership right is not absolute,… [but] may be restricted only in exceptional cases. The [c]ourt has noted that 'the requirements to secure the inviolability of property and its protection under Article 23 of the Constitution shall apply to the full extent to the protection of intellectual property rights and securing the inviolability and protection of trademark owner's property'."

The department stressed that plain packaging of tobacco products might create confusion as to their commercial origin, which would contradict the convention's prohibition against "all acts of such a nature as to create confusion by any means whatever with the establishment, the goods or the industrial or commercial activities of a competitor".

In addition, the draft law might affect trade between EU member states and restrict the free movement of goods. As such, it could be held to contradict the principle of proportionality. On this basis, the department stated that:

"the consequential relationship between the standard labelling of tobacco products and the pursued goal should be assessed. In such a case, the prerequisite for the possibility of achieving the same goal using less restrictive measures should be considered."

European Law Department's review
The European Law Department presented a similar opinion on compliance with EU and Lithuanian law. It also noted that plain packaging might violate IP rights and EU rules on free movement of goods. A situation in which it is effectively impossible to exercise the rights granted by certain marks should be viewed as a violation of the right to intellectual property, which is directly protected under the EU Treaty and by Article 20 of the Agreement on Trade-Related Aspects of Intellectual Property Rights. The latter stipulates that use of a trademark in trade should not be unreasonably encumbered by special requirements for such use that would prevent an entity from distinguishing its goods and services from those of another entity.

The opinion stated that such a regulation would violate the rights inherent in a trademark and would be disproportionate to the aim sought, given the serious doubts about whether the proposed provisions would have a significant effect on smoking. It would also be a disproportionate measure from the perspective of the free movement of goods if a plain packaging regulation were to cause a manufacturer to change the size or shape of its cigarettes or their packaging - the European Law Department found it doubtful that requirements necessitating such changes could be justified on public health grounds. Furthermore, the opinion stated that the draft is a technical regulation in the sense of EU Directive 98/34/EC and should be presented to the commission.

On March 24 2010 the Parliamentary Committee on Legal Affairs accepted most of the arguments of the previously mentioned institutions and concluded that the proposed legislation on plain packaging is likely to infringe the principles of freedom of economic activity, the constitutional principles of rule of law, principles of justice and proportionality and the principle to follow the international obligations of the country enshrined in the Constitution.

On March 30 2010 Parliament rejected the proposal to consider the draft law, with a heavy majority voting for the Parliamentary Commitee on Legal Affairs' conclusion and thus against the draft law.

Comment

As the likely constitutional problems in the proposed legislation have now been formally recognized, the future of plain packaging in Lithuania depends on the commission's opinion and possibly also on evidence collected by the supporters of plain packaging legislation that (i) such a measure could effectively combat smoking, and (ii) no alternative, less restrictive measure could be applied to achieve the same effect. If a plain packaging proposal gathers such support in future, the ability of IP rights holders in the sector to exploit their rights could be severely curtailed.

For further information on this topic please contact Edita Ivanauskienė at Lideika, Petrauskas Valiunas ir partneriai LAWIN by telephone (+370 5 268 1888), fax (+370 5 212 5591) or email (edita.ivanauskiene@lawin.lt).

Endnotes

(1) Article 3 of the Recommendation of November 30 2009 on smoke-free environments (2009/C; 296/2).