Following up on the "plain packaging of tobacco products under TRIPS" post, which generated a good deal of discussion, there's a related issue in a BIT challenge to Uruguayan measures that affect the use of trademarks. As Luke Peterson of the Investment Arbitration Reporter explained a few weeks ago:
One of the world’s largest tobacco companies, Philip Morris International, has filed an arbitration claim against the Republic of Uruguay challenging tobacco industry restrictions introduced by Uruguayan health authorities.
The firm contends that a series of measures taken by Uruguay to dampen tobacco use in that country have given rise to breaches of the Switzerland-Uruguay bilateral investment treaty.
Here's a bit more from the details furnished to Luke by the claimant:
The three measures challenged under the request for arbitration are extreme pieces of regulation that have seriously harmed the companies’ investments in Uruguay and deprived the companies of their ability to use their legally registered brands. Under Ordinance 514 (3) the Ministry of Public Health took the drastic step to prohibit any brand variations. Until the enactment of the Ordinance, Abal Hermanos sold multiple product varieties under each of its brands such as “Marlboro Red,” “Marlboro Gold,” “Marlboro Blue” and “Marlboro Green”. Article 3 has forced the company to cease selling all but one of those product varieties under each brand that it owns or licenses, leading to a withdrawal of 7 out of the 12 product varieties that were previously sold in Uruguay. The companies believe that arbitrarily removing brands has simply led to consumers changing to local brands or contraband and counterfeit cigarettes, when they can no longer find their preferred products legally for sale in Uruguay. Illegal cigarettes are an increasingly serious problem in Uruguay, according to the Tobacco Atlas of 2009 - one in four products consumed are counterfeit or contraband - among one of the highest levels in the world.
A second measure, Decree 287/09, expands the size of the mandatory warning labels on cigarette packaging from 50% to 80% of the front and back of the package. No other country in the world imposes such a high requirement, which makes it virtually impossible for the companies to use their brands and trademarks to promote their own products or even distinguish them from other brands. The companies consider that the previously mandated 50% health warning is more than a sufficient amount of space to clearly communicate the well-established health effects of smoking.
It's not exactly like the plain packaging measure, but it does have similarities.
As for the legal claims:
The companies’ claims are based on a 1991 treaty between Switzerland and Uruguay, in which each country guaranteed certain minimum standards of treatment for the other country’s investors, and agreed to go to international arbitration over any alleged failure to live up to those commitments. The companies contend that, as a result of Uruguay’s measures, they have been deprived of fair and equitable treatment, that the value of their investments has been taken without compensation, and that the use of their investments has been unreasonably impaired—all of which are violations of the Switzerland-Uruguay treaty.
So it sounds like the fair and equitable treatment and expropriation provisions will be at issue. Evaluating the measures under these provisions will likely be more difficult than the TRIPS analysis. The TRIPS provisions are very specific, whereas these provisions are a bit vague.
Another recent article by Luke cites to some further interesting references on the "plain packaging" issue. First, there's a 1994 memo by fomer USTR Carla Hill's law firm, which argued that plain packaging could violate the Paris Convention, the NAFTA (both the IP provisions and the expropriation of investment provisions) and the TRIPS Agreement (Articles 16 and 20).
Responses to these arguments were then offered by the Canadian law firm Fasken and Canadian law professor Jean-Gabriel Gastel.
