Trademark Logo Goes Up in Smoke To Save Australians? Let's Check The HK-Australian Bilateral Investment Treaty

How to warn people
against blindness who
 cannot do not want to see?

Cigarette manufacturer Philip Morris was not amused when Australia announced last November 2010 that it would prohibit brand logos on cigarette packets, to prevent exposure to children that might be lured to the flames of eternal damnation. Smoking kills 15,000 deaths in Australia each year.

According to the BBC: "Health Secretary Andrew Lansley said "glitzy designs on packets" attracted children to smoking and it made sense to look at "less attractive packaging". Read here. As you can see the substitute for the
brand logo is less than attractive, unless you are a masochist. So "plain packaging law" as the Australian law is described is quite a euphemism.

The proposed ban would be implemented in 2012, and made the cigarette manufacturers worry that this would jeopardise their financial health. 

Philip Morris Brands: Marlboro, Virginia Slims, Merit, Parliament, Benson & Hedges, L&M, Chesterfield, Lark, Cambridge, Basic


If a cigarette manufacturer such as Philip Morris can no longer use their trademarked logos on its cigarette packets (including the heraldry with the slogan "veni-vidi-vice", which is Ceasar's phrase meaning I came, I saw and I conquered) it becomes more difficult to distinguish its brand of cigarettes from other brands of cigarettes. The personality of the brand, the carefully cultivated associations with the brand, will partly go up in smoke. Then again all Philip Morris' competitors deal with the same problem. Cigarette manufacturers such as Philip Morris and British Tobaccco, that have advertised for decades to gain name recognition and brand associations will probably lose relatively more market share than more generic brands.

But can Australia really prohibit the use of trademarked logos and only allow the trademarked brand name on a packet full of warnings?

According to a BBC article, Philip Morris Asia, based in Hong Kong, is now considering a case against Australia for violating the Bilateral Investment 'Agreement between the Governments of Hong Kong and Australia for the Promotion and Protection of Investments' signed in 1993, see here. 

Intellectual property rights falls, according to article 1 (e) iv of the Bilateral Investment Treaty, within the scope of the definition of investment ("intellectual property rights including rights with respect to copyright, patents, trademarks, trade names, industrial designs, trade secrets, know-how and goodwill").

The first sentence of article 6 (1) of the Bilateral Investment Treaty is: "Investors of either Contracting Party shall not be deprived of their investments nor subjected to measures having effect equivalent to such deprivation in the area of the other Contracting Party except under due process of law, for a public purpose related to the internal needs of that Party, on a non-discriminatory basis, and against compensation."

This means that Australia cannot subject an investor in Hong Kong to "measures having effect equivalent to such deprivation", such as the prohibition of the use of a trademarked logo on cigarette packets, except for a public purpose related to the internal needs of Australia. To prevent 15,000 people in Australia each year from dying caused by smoking I think falls within this definition. So the exception can only kick-in in case there is a public purpose, check, and compensation for the expropriation of the use of the logo.

Claimant = company       respondent = state

Bilateral Investment Treaties can be a vehicle for companies to get a binding tribunal judgement against a non-compliant state via for example the Arbitration Rules of the United Nations Commission on International Trade Law. In case a company wanted to change a law or regulation in a state that is not in compliance to the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs), it could lobby its government to bring the case to the Dispute Settlement panel of the World Trade Organization, (which was done collectively by the copyright industries for example in case of DS 362) which is a less direct and less efficient route for a company to take. 

Interested in Bilateral Investment Treaties?

This time I wrote about Bilateral Investment Treaties because it touches upon the protection of intellectual property rights and Hong Kong. At the Chinese University of Hong Kong there are, however two experts in this field who deal with the subject in a broader sense. Professor Bryan Mercurio, Chinese University of Hong Kong (CUHK) has written extensively about the subject. For example two books: 'Bilateral and Regional Trade Agreements: Commentary and Analysis' (Cambridge University Press, 2009)(edited with Simon Lester) 'Bilateral and Regional Trade Agreements: Case Studies' (Cambridge University Press, 2009)(edited with Simon Lester). This year the following book chapter will be published about a particularly fascinating region: Bilateral and Regional Trade Agreements in Asia: A Sceptic’s View’ in Ross Buckley, Richard Hu and Douglas Arner (eds), The Economic and Financial Integration of East Asia (Edward Elgar, forthcoming 2011). See more of Professor Mercurio's publications here.

Another expert is Professor Julien Chaisse (CUHK), who specialises in Foreign Direct Investments, and therefore also writes about Bilateral Investment Treaties: 'Do bilateral investment treaties increase foreign direct investment flows - Revisiting the role of legal parameters in economic empirical research’ as co-investigator with Prof. Christian Bellak (Forschungsprojekt ‘Vielfalt von Bilateralen Investitionsverträgen‘), supported by the Vienna University of Business and Economics (WU) & Arbeitskammer Vienna (Austria) (March 2010-March 2012). See more of Professor Chaisse's publications here.

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100 Percent Australian made UGG Boots From China

Instead of the near undetectable counterfeit eggs, some counterfeit products are easier to determine. See the video, where counterfeiters made some mistakes, here.

The buyer of the fake boots was lured into buying the booths because it said: "100 percent Australian made". And the label said "Made in New Zealand" (see picture). That information was wrong, because as the eBay Guide 'How to tell fake UGG booths' tells you real UGG Australia booths are made in China too.

At the UGG Australia site you can fill in a URL at a search bar to see whether UGG Australia can guarantee that the products sold from that place are genuine, see here. That does not solve the problem for parallel import or discounts via other sites.

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Update WTO IPR and Market Access Case Against China, And What Has Antigua To Do With It?

On April 10 the US requested consultations for two, interrelated, WTO cases:

DS362 China - Measures affecting the protection and enforcement of intellectual property rights

DS363 China - Measures affecting trading rights and distribution services for certain publications and audiovisual entertainment products

These cases are interrelated, because market access is a contributory factor to intellectual property infringement. The salient example is the limited number of movies that are annually allowed into the Chinese market. The number of foreign movies that can be shown in Chinese cinemas is limited to 20 movies per year. One can argue that this stimulated pirated DVDs to the point that only 7 per cent of the DVDs on the market are legitimate. Reuters, 'Market access key to piracy fight', The Age, December 8, 2006, available here.

What happened so far with the respective cases?

DS 362: The following countries joined the consultations: Japan (April 20, 2007), Canada and the European Communities (April 25, 2007), Mexico (April 26, 2007). Subsequently, China informed the DSB that it had accepted the requests of Canada, the European Communities, Japan and Mexico to join the consultations. October 7, 2007, Australian trade minister Warren Truss announced that Australia is going to participate as a third country in the dispute.

"Participation as a third party does not mean we are taking sides in the case," Mr Truss said. "It does, however, allow us to register our views on the legal issues raised in the dispute." Read more here.

September 25, the WTO decided to establish a panel to investigate the claim by the US that China enforces its IP insufficiently. The US and China had twenty days to agree on the panelists. This means that the parties should have agreed yesterday, read more here.

DS363: October 11, 2007, the US Trade Representative has requested the WTO to establish a dispute settlement panel. The US panel request will be considered by the Dispute Resolution Body at its next meeting which will be held October 22, 20007. Read more here.

DS 285 A seemingly unrelated case is the WTO case by Antigua and Barbuda case against the US, because of America's prohibition to offer cross-border gambling and betting services to US citizens (DS285). Seemingly, because Mr Hartley Henderson of Majorwager.com writes:

"In fact many countries are closely monitoring this case to see if the United States is really committed to the WTO and is willing to abide by its rules. In particular, countries like China and a few in Africa are very interested in the outcome of this case given the pressure being exerted on them by the USTR to open up more of its industries. If the USTRs show that they consider the WTO to be a one-way street in favor of themselves, then naturally those industries will stay closed to American interests. The following few months will speak volumes about how serious the U.S. is in the WTO process. " Read Mr Henderson's article here.

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EU Will Not Support US WTO Piracy Case: Good Cop Approach

The EU is not joining the US in filing formal complaints at the WTO in Geneva against China for inadequate copyright and trademark rights enforcement. Although the EU agrees with the WTO case against China in substance, it is not willing to burn its fingers, anxious for economical retaliations.

Ben Blanchard of the Guardian Unlitited wrote:
"Viviane Reding, the EU Information Society and Media Commissioner, said protecting intellectual property rights was a fundamental concern of the block, China's largest trading partner, but legal action was not the way to go."

Read Blanchard's article here.

We'll see whether the good cop bad cop approaches of the EU and US respectively will bear any fruit.

UPDATE
The position of Japan, Switzerland and Australia is unknown. They have 10 days to join the formal complaint of the US as of April 1o. See Managing IP's article 'Allies slow to join US WTO case against China' (which is a bit strange title, because they are undecided and may decide not to join at all) here.

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