Will trademarks go up in smoke?

In Insights, Uncategorized

18 March, 2014

More than 10 years ago the Tobacco Products Directive (2001/37/EC) was adopted in the EU, and on 26 February 2014 the revised Tobacco Products Directive governing the manufacture, presentation and sale of tobacco and related products was formally approved by the European Parliament. This new directive sets in more stringent rules for tobacco and related products with the focus on limiting their appeal to young people.

Before implementation, these new rules were subject to a great deal of discussion, as especially the tobacco companies feared that the European Parliament would implement a requirement of plain packaging as seen in Australia and New Zealand.

Australia was the first country to implement these new measures mandating plain packaging for tobacco products. Australia has since 2012 completely banned the use of graphical trademarks or other kinds of decoration on cigarette packaging. Now, e.g. CAMEL must be written in a neutral font, size and position on the cigarette packages. Brand owners can therefore not use their trademarks in the stylized logo form that we usually see.

Cigarette packages from Australia. Source: http://www.theaustralian.com.au/

So what will these new cigarette packages in the EU look like?

Source: http://europa.eu/rapid/press-release_MEMO-14-134_en.htm
Source: http://europa.eu/rapid/press-release_MEMO-14-134_en.htm

From now on packages in the EU will feature mandatory pictures and text with health warnings covering at least 65 % of the front and back of cigarette packs, which must be placed on the top edge of the packaging. In addition, 50 % of the sides must be covered with health warnings such as “Smoking Kills – quit now”. Moreover, no promotional or misleading features or elements will be allowed on cigarette packaging.Therefore, from now on only a small part of the packaging will be available for branding. And in addition, Member States are allowed to introduce further measures for plain packaging if justified on grounds of public health, and where found proportionate and not leading to hidden barriers to the trade between member states[i]. Therefore we might see EU Member States implementing plain packaging measures as seen in Australia.

Of course the tobacco companies are not exactly jumping for joy over the new directive or the measures for plain packaging, and have claimed that it will have unintended consequences.  One of their arguments is that plain packaging will be easier to copy, and it will be harder to prevent counterfeit products from entering the markets.

What about the trademarks?

As an IP professional my concern immediately goes to the issue with possible restrictions on how to use trademarks on the packaging, and whether these new requirements jeopardize the actual function of trademarks.

One of the fundamental features of trademarks is their function as an indication of origin. Trademarks make it possible for owners to distinguish their products from other manufacturers of the same products. This fundamental function will not be fulfilled if trademarks are not visible, as consumers will not be able to make a reasoned choice based on their preferences. If such plain packaging requirements are implemented in the EU, the trademark owners will be prevented from using their trademark to distinguish themselves from their competitors, which will jeopardize the ability of these trademarks to function as an indication of origin.

Another issue is the “use requirements”. After a 5-year period from the registration date, a trademark can be cancelled – entirely or partially – for goods and/or services for which it is registered, if the owner is not able to prove use of the trademark for these goods/services.

Therefore, if the tobacco companies can no longer use their trademarks for tobacco products, they could in theory after 5 years risk being met with cancellation actions putting their trademarks in great danger, as they will not be able to prove use of their trademarks for tobacco products.

A cancellation on such grounds seems completely unreasonable, and fortunately European case law states that even where there has been no genuine use of a trademark in the relevant period, the registration shall not be revoked if there are “proper reasons”[ii].

Even though revocation based on non-use as a result of plain packaging would be refused as an argument, there is still the risk of the trademarks losing their actual value.

If consumers stop associating trademarks such as CAMEL and KINGS, all meaning of the trademark will be lost, regardless of whether the trademark technically still exists. The actual value of the trademark will be gone, and the tobacco manufacturers will witness their trademark rights going up in smoke.

It will be interesting to follow how these new rules will affect trademarks, and whether the same measure will be seen implemented in other areas as well. If the focus is public health then what about unhealthy foods and alcoholic products?

Maria Dam Jensen, Legal Counsel

[i] http://europa.eu/rapid/press-release_MEMO-14-134_en.htm

[ii] Case T-28/09 Mo-Hwa Park v OHIM and Case C-259/02 La Mer Technology Inc v. Laboratories Goemar

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