This is from last week's Philip Morris v. Uruguay investment arbitration award:
266 The Claimants also argue that a trademark is a property right under Uruguayan law which thus accords a right to use. Again, nothing in their argument supports the conclusion that a trademark grants an inalienable right to use the mark. As the Respondent rightly points out, the scope of the property right is determined by Uruguayan IP laws, such that, in order to work out the legal scope of the property right, it is necessary to refer back to the sui generis industrial property regime in Uruguay. Professor Fischer, one of the Claimants’ experts, confirms in a paper prepared not for the purposes of this dispute that a trademark confers on its owner only “the right to prevent others from using a trademark or trademarks that may be confused with their own.”
267 In the Tribunal’s view, both Parties have focused on a dichotomy between a right to use and a right to protect. However, it may be more fruitful to view the case as a question of an absolute versus exclusive right to use. Ownership of a trademark does, in certain circumstances, grant a right to use it. It is a right of use that exists vis-à-vis other persons, n exclusive right, but a relative one. It is not an absolute right to use that can be asserted against the State qua regulator.
268 As explained by Professor Barrios with reference to Professor Bugallo’s work on Intellectual Property, it is the “right to exclude third parties from the market (called the negative facet) [that] renders the exclusive use of the registered trademark in the marketplace possible.” Nothing in any of the legal sources cited by the Claimants supports the conclusion that a trademark amounts to an absolute, inalienable right to use that is somehow protected or guaranteed against any regulation that might limit or restrict its use. Moreover, as the Respondent has pointed out, this is not the first time that the tobacco industry has been regulated in such a way as to impinge on the use of trademarks.
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271 The Tribunal concludes that under Uruguayan law or international conventions to which Uruguay is a party the trademark holder does not enjoy an absolute right of use, free of regulation, but only an exclusive right to exclude third parties from the market so that only the trademark holder has the possibility to use the trademark in commerce, subject to the State’s regulatory power.
The WTO panel on plain packaging will be considering similar issues. It will be interesting to see if the Philip Morris v. Uruguay reasoning is raised by the parties to the WTO proceeding, and how the panel takes the reasoning into account.
