Plain packaging introduction on tobacco products
Text o f a letter to Giuseppe Casella, DG Internal Market, Industry, Entrepreneurship and SME's at European Commission.On behalf of the Polish Confederation Lewiatan, we would like to express our concerns related to the notification of Hungarian law concerning the intentions of plain packaging introduction on tobacco products. We have always opposed these kind of measures because of their impact on intellectual property rights, which are a key driver for the development of the knowledge- based economy.
We strongly believe that there is a number of arguments which show the inaccuracy of these measures. Allow us to briefly mention the most important ones:
1. Inconsistency with Article 34 of the Treaty on the functioning of the European Union (TFEU)
Article 34 of the Treaty forbids quantitative restrictions on imports between Member States and all measures having equivalent effect. In the opinion of the Polish Confederation Lewiatan, any measure of a Member State aimed at introducing standardized packaging of tobacco products would constitute a violation of this Article.
Moreover, depriving manufacturers of the possibility to use their trademarks and to indicate the origin of their products will hinder, if not block, their opportunities to enter new markets. Limiting competition methods to just one - the price criterion - will make it harder for manufacturers with a small market share to strengthen their market position, which undermines the element of free and fair competition, and in consequence, violates Article 34 TFUE.
2. Violation of the right to a trademark
Introduction of standardized packaging of tobacco products is inconsistent with the Paris Convention for the Protection of Industrial Property and Council Regulation (EC) No 207/2009 on the Community trademark. According to the content of the aforementioned Regulation, the Community trademark is of consistent character and has the same effect in all Member States.
Standardization of the packaging of tobacco products would restrict the principle of equality of entities applying for a protection right for a trademark. There is no doubt that an entrepreneur who wants to successfully launch its products has to have a possibility to differentiate them from the products of the same kind, yet produced by another manufacturer. Standardization of the packaging of tobacco products will deprive manufacturers of the possibility to customize their products (essential function of a trademark), and will prevent customers from associating a product with a given manufacturer. An additional argument against introducing plain packaging, based on pro-health arguments, is the very probable threat of the "domino effect", i.e. imposing in the future such regulations on other products, e.g. from food or alcohol industry.
3. Violation of WTO obligations
Apart from the issue of compliance with EU regulations and international treaties, it should be borne in mind that accordance to the Directive 2014/40/EU, all new provisions related to packaging, adopted by the Member States must be compatible with WTO obligations. There are numerous arguments pointing out that the introduction of plain packaging requirement is a violation of these obligations.
Up to date, five countries (Indonesia, Honduras, Cuba, the Dominican Republic and Ukraine) have filed lawsuits to WTO against Australia with respect to imposing the plain packaging obligation in this country. The dispute drew attention of many of their major business partners who have joined the proceedings as interveners (third parties). If the requirement imposed under Australian provisions of law is deemed inconsistent with WTO obligations, Australia will be obliged to change its law.
4. Violation of the principle of proportionality
Provisions encouraging development of illicit trade and criminal activity should be deemed explicitly disproportionate, in particular if they infringe fundamental rights and do not influence public health protection in a positive way. The plain packaging requirement would lead to an increase in illicit trade and choosing cheaper (often illegal) products by consumers.
We hope in your positive approach in this regard.
Polish Confederation Lewiatan