Tobacco companies know that plain packaging will affect their ability to differentiate their products from competitors, and will erode much of the goodwill and reputation that attaches to their brands – valuable assets built up over many years. The tobacco companies are concerned about the introduction of the law, and the impact that the proposed measure may have on their share prices. The challenge for politicians is to balance this loss of rights against the public health issues.
This balance could be harder to achieve than many assume. In 2012, Australia became the first country to require all tobacco products to be sold in plain packs. In a court case, tobacco firms argued that the Australian Packaging Act, in removing their right to apply their trade marks to their products, amounted to theft of their intellectual property (IP). IP rights play a significant factor in the valuation of a brand on balance sheets. Reducing the value of IP, by reducing the ability to exploit it, erodes one of tobacco companies’ main assets. The court disagreed, holding that the Act did not amount to theft, as Australia would not “thereby acquire something in the nature of property itself.”
Plain packaging may also increase the likelihood of counterfeits flooding the market. Branding acts as a signpost of genuine goods. Consumers know what products they are getting and what the quality level is. Removing branding may make it easier for counterfeiters to make copies. And an increase in counterfeit cigarettes may, in turn, lead to problems with public health; the very thing that plain packaging is intended to improve.
Despite these arguments, the World Health Organisation remains convinced of the merits of plain packaging and its ability to lure consumers away from “bad” products. But there is a broader dynamic here. Many government bodies have also stated that they draw on experience from tobacco control to formulate their policies on the regulation of alcohol. The proposed introduction of graphic health warnings for alcoholic drinks in Thailand was based on the approach it took to tobacco advertising. The South African health minister has indicated that he would favour an approach to alcohol control similar to that taken in relation to tobacco.
In light of the current public health war on alcohol, sugar, salt and fat, it seems probable that the introduction of plain packaging will spill over into other industries – including alcoholic drinks, confectionery and fast food. But unlike smoking, there is an acceptable level of consumption of these products. It’s hard to see how the introduction of plain packaging in these industries could be justified.
Lindsay Cook is a solicitor at intellectual property law firm Rouse.