AYMERIC: Legal Challenges of Any Tobacco Plain Packaging Laws Bound to Fail in New Zealand

Source from:  Mondaq  05/07/2013

Are tobacco companies entitled to the same protection offered by New Zealand law as any other business?

If you'll pardon the pun, there's no doubt there will be plenty of fuming legal debates that go on once the idea of plain packaging of cigarettes moves beyond an idea and into everyday New Zealand life.

Intellectual property1 lawyers like myself are moved to ponder questions such as: does plain packaging amount to a breach of the New Zealand Bill of Rights Act? Is it a compulsory acquisition of property rights by the government? And, does it "unjustifiably encumber the use of a trade mark" in breach of our international obligations as a WTO member?

Importance of trade marks

Before answering these questions, we must first look again at the importance of trade marks. Intellectual property rights such as trade marks and rights in packaging "look and feel", together with associated reputation and goodwill can be a business' most valuable assets.

A brand or logo acts as a "badge of origin" and enables customers to know what they are buying, and from whom it came. This is particularly valuable in the fast moving consumer goods (FMCG) industry, where consumers have very distinct preferences for Pepsi over Coke, say, or Adidas rather than Nike. These loyalties exist largely because it is marketing and branding, more than anything else, which make an FMCG product distinctive.

This is why New Zealand has strong intellectual property laws (such as the Trade Marks Act 2002, the Fair Trading Act 1986, and the common law tort of passing-off). It is critical for businesses to protect the intangible assets they have gained over the years.

Key differentiator

Cigarettes are not different from any other FMCG product in the sense that they are interchangeable and it is brand rather than actual product content that is the key differentiator. It is therefore unsurprising that the tobacco industry becomes nervous when the New Zealand government starts talking about following Australia and introducing plain packaging of tobacco products this side of the Tasman.

In fact, the industry has articulated a principled stance in defence of its intellectual property rights (in opposition2 to the proposal) and promised to legally challenge any introduction of such legislation.

Precedent

Are tobacco companies entitled to the same protection offered by New Zealand law as any other business? The decision of the High Court of Australia to allow plain packaging certainly sets a persuasive precedent, and many legal commentators have since weighed in with their thoughts.

Parliament control

However one point missed by most commentators is that regardless of how much of a legal fight the tobacco industry puts up, and even how strong its legal position might be, the New Zealand judiciary has very limited power to override the clear intention of Parliament.

This has been shown in the Courts before. One example can be found in the High Court's decision in the 2000 retrial of Teina Pora. It is a fundamental principle of law that a heavier penalty cannot be imposed than the one applicable at the time the offence was committed. Yet, the government of the time, as a result of public sentiment after a spate of high profile home invasion cases, legislated to increase non-parole periods from 10 years to 13 years for home invasion murders, even if committed before the commencement of the new legislation.

No amount of judicial interpretation enabled the High Court in December 2000 to avoid applying the Crimes (Home Invasion) Amendment Act 1999 and the Criminal Justice Amendment Act (No 2) retrospectively.

In that decision, Justice Keith delivered the majority opinion, stating that Parliament's words and purpose were so plain that breaches of our Bill of Rights Act could not be removed by judicial interpretation.

Courts in New Zealand have always been reluctant to be interventionist or act as social engineers. Unlike in Australia and the United States which both have a written constitution, our legal and political system does not give our Supreme Court latitude to decide on social issues like plain packaging.

The one glimmer of hope for the tobacco industry at the moment is that the prime minister has indicated the Government would be guided by any ruling issued by the World Trade Organisation. But in the absence of this, it seems the tobacco industry might be ultimately unsuccessful in any legal action to prevent plain packaging.

Powerful marketing tools

One thing is clear: the plain packaging debate demonstrates that intellectual property rights in the form of trademarks are powerful marketing tools indeed. Why else would the tobacco industry fight so vehemently to retain them?

Footnotes

1Refers to the ownership of an intangible thing - the innovative idea behind a new technology, product, process, design or plant variety, and other intangibles such as trade secrets, goodwill and reputation, and trade marks. Although intangible, the law recognises intellectual property as a form of property which can be sold, licensed, damaged or trespassed upon. Intellectual property encompasses patents, designs, trade marks and copyright.

2In New Zealand, once a patent application has been accepted, it will be published in the Intellectual Property Office Journal. There is then a three month period where the application may be objected to (or opposed), by a third party. If no opposition is made the patent application will proceed to grant.

Any party that has an interest in the subject matter of the patent can oppose acceptance. The grounds that can be used to oppose a patent application include lack of novelty, lack of inventive step and insufficient disclosure of the invention.

Not all countries have an opposition period on patent applications. Enditem