As countries around the world choose health over commercial interests, legal rights of giant corporate bodies are under grotesque violation. Swetha Meenal argues about the possible economic repercussions of the move in India, following the possible violation of Intellectual Property rights and the losses that ensue.
On July 8, 2016 the six year legal battle against the government of Uruguay, instituted by Philip Morris International (PMI), before the International Centre for Settlement of Investment Disputes in retaliation to the country’s anti-tobacco policy (which was in violation of the Bilateral Investment Treaty), was dismissed by the World Bank Dispute Settlement body. This has lead to the creation of a strong precedent and has bolstered the efforts being contemplated by other countries about prioritization of public health over commercial interests. This victory is bigger than that of UK and Australia in their fight against the Tobacco companies, as it involved unparalleled support from the health activists, multinational corporations, and has established the fact that small countries cannot be discouraged from exercising their legitimate rights by stimulating a chilling effect, or by threatening them with the costs of the litigation.
As stringent anti-tobacco policies are being devised across the globe, it is not surprising to witness a multitude of law suits against each of the governments by the leading tobacco companies, following the outright violation of their Intellectual property rights and the rupture of link between the producers and the consumers. But in the light of recognition of the adverse health effects that smoking manifests in, several countries have now passed regulatory measures to standardise the appearance of the cigarette packages, in accordance with article 11 of the FCTC (Framework Convention on Tobacco Control), codified by the WHO, to protect the present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke. This requires the signatories to implement a rule to display nothing but a standard background colour on the boxes, and pictorial and written warning, depicting the real effects of cancer and permitting the manufacturers to only print the brand name in a required size, font and position. This regulatory scheme, called the Plain packaging, is a comprehensive tobacco control measure, that mandates cigarettes and other tobacco products to be sold in standardized or generic packs without any attractive trademarks, logos, brand names or colors, in addition to imposing a ban on tobacco advertising and promotion on radios, televisions, newspapers and magazines.
Australia has been the first country in the world to legalise plain packaging; setting a precedent for the other countries in the world, by passing laws strictly, in 2011. Uruguay was however the first to mandate 80% of the pack to be covered with health warnings, in addition to prohibiting the usage of misrepresenting words like “mild” and “light” on the boxes and requiring the constituents and emissions to be printed on them. On 1 December 2011, the Tobacco Plain Packaging Act 2011 received Royal Assent and became the law in Australia. Other countries seem to have followed suit and now countries around the world including England, New Zealand, France, Brazil, India and South Africa are in the process of strict implementation.
In India, the High court of Allahabad ordered that the Government of India “must consider implementing” the plain packaging scheme for the tobacco products at the earliest. The orders were passed pursuant to a public interest litigation initiated by a non-profit organisation, Love care Foundation. This New Delhi based organisation filed a PIL requesting the implementation of a plain packaging rule, as the colorful cigarette packing often attracts youngsters to smoke, thereby making it imperative to implement the plain packaging scheme.
The judgement directed the Central Government of India, through the Ministry of Health and Family Welfare, by issuing a notification in regard to the Cigarettes and Other Tobacco Products (packaging and labelling) amendment Rules, 2014, which were supposed to come into effect on April 1, 2015. And although plain packaging has become the law of the land, the status of the bill seems to be unclear, as the Health Ministry requires more time to deliberate upon the amendment rules with regard to the specifications of the content and colour of the health warning messages which are to be displayed on the tobacco product packaging.
After a yearlong debate on the harmful effects of tobacco in all forms by the parliamentary committee on Subordinate Legislation, the health ministry submitted a notification dated September 24, 2015 in Rajasthan high court calling for implementation of new, bigger pictorial warnings covering 85 % of the tobacco packets on both sides by April 1, 2016. A direction was issued by the union government to seize all tobacco products which did not adhere by the 85% warning-display requirement. All required measures are being taken to ensure that the new cigarettes imported to the country carry the required pictorial warnings, before entering the market.
Contrary to the popular belief and efforts, statistics from Australia show that, instead of resulting in the aimed objective, the move has already resulted in increased consumption, especially among the smokers aged 18 to 29, between 2011 and 2013. As plain packaging reduces the value to “consumers of brand identification”, low cost brands now comprise 44.5% of the sales, almost tripling their market share since plain packaging’s introduction. Neilsen data shows that low-cost cigarettes accounted for 42.3% of the cigarettes purchased in the first year of plain packaging, up from 35.2% in the previous full year. Some brands are even including free bonus cigarettes or “loosies” in packets. But this issue seems to be taken care of in India, by COPTA (Cigarettes and other Tobacco Products (prohibition of Advertisement and Regulation of Trade and commerce, Production, Supply and Distribution) Act, 2003, which prohibits the sale of cigarettes or tobacco health products without the prescribed warnings on the package. Since loose cigarettes do not contain the warning, the sale may be deemed illegal under this Act. But this ban hardly is observed owing to lack of stricter implementation measures, and 75% of all cigarettes in India are sold in single sticks as per the study by Asian Pacific Journal on Cancer Prevention.
Further, production and sales of tobacco, in India, directly or indirectly involve about 7 million workers with tobacco contributing roughly 2% of our central tax revenue. We represent the second largest group of smokers in the world, after China. For multinational companies- the ITC Group, Godfrey Philips India Ltd, VST Industries Ltd. and GTC industries Ltd account for Rs.150 billion in annual revenue and ITC group, of these four, dominates the cigarette production and controls about 70% of the market volume. Also, the parliamentary panel which examines proposed legislative changes on the issue supported the fact that millions of farmers and other employees in India’s tobacco industry would lose their jobs if cigarette sales dropped as a result of new packing. For example, the plain-packaging laws have already cost farmers in Gujarat, approximately 3500 crores, as the ready crops lay at their homes with no buyers, and ready to be destroyed by the monsoon. Thus a fine line will have to be drawn to balance the health of citizens versus the interests of the commerce, where neither side will have to sacrifice one’s right at the expense of the other. Further, it would cost our government money, that it would eventually take off our pockets. Studies suggest that, within two months of implementation, the move cost the government 9,000 crores, as 20.2% of the industry is cryptically finding a way to keep their property rights; leading to a vicious cycle of grotesque violation of the companies’ property rights and the health measures adopted by the government.
India affords full protection to trademarks under the Trademarks and Merchandise Act. The new statute for Trademarks, The Trade Mark Act, 1999 had been enacted in India to bring it in conformity with the TRIPS Agreement, to which India is a signatory. And it is imperative that the further moves or the public policy that is being brought about in our country, be in line with our obligations that arise under the agreements we’ve assented to and the treaties that we’ve signed.
The writer, A.Swetha Meenal, is a third year student at Jindal Global Law School.