This is a guest post from trade lawyer Adarsh Ramanujan
As a practitioner in international trade law, I have always loved the WTO Dispute Settlement Body (DSB) Reports (the Appellate Body Reports more than the Panel Reports, to be honest). They are structured and well-written, though unnecessarily lengthy at times. They display great depth in treaty interpretation. We get to put forth highly sophisticated arguments on treaty interpretation and the DSB Reports provide a detailed reasoning for accepting or rejecting those arguments.
The Panel Report in the tobacco plain packaging dispute (summarized here earlier) is no exception (the Panel report can be obtained here). Obviously, that does not mean I always agree with them. I am not convinced that the Panel got everything right in holding that the Tobacco Plain Packaging Measures (TPP measures) do not violate the TRIPs Agreement. I also do not think that the Complainants raised all the right arguments. They missed some important ones.
It’s a long Panel finding and will take several detailed articles to cover my thoughts and some of this also extends to the TBT Agreement. For now, in this two-part series, I will restrict my myself to the TRIPs Agreement alone and limit myself to a few specific points relating to trademarks.
i. In Part-I, I will cover the points where the Panel went wrong:
a. Registrability of potentially registrable non-distinctive marks (Article 15.4)
b. Cancellation of registered but inherently non-distinctive signs (Article 16.1)
c. Maintenance and/or acquisition of well-known mark status (Article 16.3)
ii. In Part-II, I will cover the following point where the Complainants argued incorrectly:
a. Diminishing enforcement possibilities through loss of distinctiveness
A. Registrability of potentially registrable non-distinctive marks
Let’s start with the first point under Article 15.4 of the TRIPs Agreement where the Panel went wrong. This provision states –
“The nature of the goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark.”
The complainants argued that the measures created obstacles to the registration of new non-word signs (meant for tobacco products) not inherently distinctive since they now have no opportunity to acquire distinctiveness through use on such products. The Panel concludes that allowing the use of a sign to acquire distinctiveness is not regulated by the TRIPs Agreement. According to the Panel (among others, refer to para 7.1864, 7.1869, 7.1887):
- the obligation under Article 15.4 applies only to ‘trademarks’ and not ‘signs’
- ‘trademark’ is defined in Article 15.1 only covers signs that have already acquired distinctiveness as opposed to signs capable of acquiring distinctiveness in the future
As the title to my post indicates, the WTO Panel has effectively ruled that a WTO member country can pull the rug from under your feet and get away with it. This is not a good faith interpretation of a treaty – the age-old pacta sunt servanda doctrine enshrined under Article 26 of the Vienna Convention has been given a go-by.
For non-inherently distinctive marks, the WTO Panel has ruled that the obligation under Article 15.4 applies only after the mark acquires distinctiveness and is not applicable to the period before the acquisition of distinctiveness. This gives an easy way out to Members to create obstacles to the registration of marks for particular products by never allowing them to acquire distinctiveness in the first place. Members cannot be given the leeway to render an obligation ineffective by preventing the circumstances that would give rise to such obligations. While this case may have been for trademarks on tobacco-related products, the Panel failed to appreciate that its ruling on Article 15.4 applies across the board: to all trademarks across all products and services.
B. Cancellation of registered but inherently non-distinctive signs
The second point where the Panel got it wrong relates to Article 16.1. This provision states –
“The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use.”
Cuba’s (one of the complainants) argument was that the plain packaging measures cause loss of distinctiveness of registered trademarks that consist of non-inherently distinctive signs that had previously acquired distinctiveness by use. Such marks could be invalidated for lack of distinctiveness, and owners of trademarks previously protected and used could lose the minimum level of protection guaranteed by Article 16. The Panel rejected this claim (among others, refer to paragraphs 7.2005, 7.2010, 7.2011) on the following basis:
- Article 16.1 does not obligate members to refrain from regulatory conduct that might negatively affect the distinctiveness of such trademarks through use.
- Use of the trademark to maintain or further strengthen a mark’s distinctiveness is not a right under Article 16.1, but only a legitimate interest to be considered under Article 17.
- Article 16 of TRIPs is not relevant to assess any measure that may affect distinctiveness of non-inherently distinctive signs and consequently, is not attracted to situations of cancellation/invalidation on that ground.
My criticism here is identical to the earlier point. If a registered but non-inherently distinctive mark is cancelled because of its loss of distinctiveness (due to non-use), the right under Article 16.1 is just taken away.
C. Maintenance and/or acquisition of well-known mark status
The third point where the Panel got it wrong relates to Article 16.3. This provision states –
“Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use.”
The argument before the Panel was that only consistent use would permit a trademark holder to maintain and/or attain a well-known mark status. Without this status, a trademark holder may not enforce against use in non-similar goods. The Panel rejected both aspects of the claim (among others, refer to paragraphs 7.2109, 7.2121, 7.2123, 7.2127, 7.2129) –
- Factually, acquisition and maintenance of well-known mark status can be through use outside Australia.
- Legally, Article 16.3 and Article 6bis do not obligate Members to permit or maintain the occurrence of the factual circumstances described in these provisions.
Yet again, from a legal perspective, the Panel has enabled members to ingeniously undercut Article 16.3 by taking away the triggering event that entitles enforcement against non-similar goods.
The factual finding of the Panel is even more troublesome. Is it sufficient for trademark holders to rely on reputation from one country to prove its well-known status in another? Our very own Supreme Court in the Prius case ((2018) 2 SCC 1) did not consider that cross-border reputation alone (without actual proof of reputation in India) would suffice for protection. I am sure one would find similar rulings in other parts of the globe. Therefore, for the Panel to have relied solely on cross-border reputation as a factor to conclude that trademark holders can nevertheless attain the well-known mark status is fallacious.
