The Conflicts Between Trade Mark Protection and Public Health
Under the Bilateral Investment Agreement
—A Case Study of Tobacco Control—
Wen-Cheng Huang
1. Introduction
This contribution aims to explore the potential conflict between trade mark protection and public health under the Bilateral Investment Agreement (BIA). Normally, the protection of trade mark would contribute to consumer protection. However, in some circumstances, the excessive protection of trade mark would lead to the impairment of public health. Furthermore, the traditional BIT model normally lacks an exceptional clause to strike a balance between investment protection and the maintenances of the other public interests.
This article would first start to ask two primary questions: why does the BIA include trademarks and how does the BIA protect trademarks. After analyzing the main features of trade mark protection under the BIA, this article would move to a case study of tobacco control. The author attempts to point out the functions of trade mark and its corresponding monopoly rights. The author tends to point out that, in some circumstances, tobacco control does not constitute indirect expropriation.
2. The Regime of Trade Mark Protection Under the Bilateral Investment Agreement
2.1 Why does the Bilateral Investment Agreement include Trade Mark?
Initially, only tangible property has been recognized as investment under the Bilateral Investment Agreement (BIA). However, on the one hand, the inclusion of intellectual property rights (IPRs) within the scope of foreign investment under the BIA is due to the widespread violations of IPRs created in developed countries. To protect trade mark under the BIA would create an incentive for multinationals to invest in developing countries by establishing a commercial presence within the territory of the host state. On the other hand, the ground for the BIA to protect IPRs is to promote more technology transferred to developing countries[1], and here more specifically, protecting trade mark under the BIA would keep the income in the hands of the local firms and avoid counterfeiting[2].
The difficulty of protecting IPRs under the BIT is because those IPRs depend on the extent to which the law of the host state itself recognizes. In other words, any IPRs including trade mark only has territory effect[3]. While now it becomes widely acceptable that, once IPRs has been acquired by the alien under the national law of the host state, the acquired IPRs could be converted into IPRs protected by international law through the application of BITs[4]. The condition that the host state can absolutely control the property it had created can no longer keep, as a result of the application of the BIT. Therefore, any state interference with IPRs may violate the BIT which amounts to an expropriation and needs to be compensated[5].
2.2 How does the BIA Protect Trade Mark
Basically, most of the BIAs start from the minimum protection provided by the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS Agreement), and go further beyond the TRIPS.
Frist, The TRIPS Agreement requires Member States of the WTO to apply the Paris Convention standards concerning trade mark[6], and in some points, it imposes its own additional obligations on Member States[7].
Nevertheless, Article 7 of the TRIPS provides that, the protection of IPRs should contribute to the mutual advantage of producers and users of technological knowledge and in a manner conductive to social and economic welfare, and to a balance of rights and obligations. Article 8.1 entitles Members to adopt measures necessary to protect public health, as long as such measures are consistent with the provisions of this Agreement. Therefore, when applying the TRIPS standards, countries are still entitled to strike a balance between trade mark protection and public health[8].
Second, due to the deadlock of Doha negotiation, more and more countries choose to gain more IPRs protection from the other countries by engaging in BIAs[9]. The so-called TRIPS-plus approach adopted by the BIAs aims to provide more IPRs protection beyond the level of the protection of the TRIPS, while there is no fixed definition of TRIPS-plus, since the investment provisions are produced on an ad hoc basis[10].
Third, it is increasingly acceptable that the property value of trade mark becomes more important for investors and needs to be protected under the BIA, other than the original function of trade mark as identifying the origin of products. Therefore, the importance of property value of trade mark has been overemphasized under the BIA, while original function of trade mark aiming to promote consumer protection has been overlooked.
Finally, the BIA prevents trade mark from unlawful expropriation and confers the trade mark holder a direct access to an international arbitral tribunal[11]. By giving their consents to investor-state arbitration under the BIAs, states waive their immunity and grant arbitrators a broad jurisdiction over investment issues regarding domestic public law[12].
3. A Case Study: Philip Morris v. Uruguay
In this case, I would like to discuss two contested measures imposed by Uruguay. First, Uruguayan regulation requires each cigarette brand to keep only one presentation, and thus this leads to the prohibition of different presentations for cigarettes sold under a given brand[13]. Second, Uruguayan regulation increase the size of health warnings on cigarette packages to 80 per cent of the surface of the front and back of the packages[14].
3.1 Single Presentation Requirement
3.1.1 The Plaintiff’s Claim
On 6 March 2008, Uruguay first passed a law prohibiting the use of description which may directly or indirectly create an incorrect impression that a specific tobacco product is less harmful than another. Therefore, the purpose of this law is to prevent consumers from misunderstanding the quality of the cigarette. As long as the presentations of certain trade marks have such effect, they shall be prohibited by this law.
Subsequently, on 18 August 2008, the Ministry of Public Health of Uruguay issued an Ordinance to implement this law. This Ordinance effectively prohibited all tobacco companies from the sale of different products under the same brand. As a result, the plaintiff was only allowed to sell one of the five presentations under the same brand.
Philip Morris asserted that the single presentation requirement for each brand by the Uruguayan Ordinance constituted an unreasonable measure under Article 3.1 of the Switzerland-Uruguay BIT[15], since this Ordinance went beyond the purpose of the original to include some presentations which do not convey a wrong impression to consumers. In addition, there is no rational relationship between the single presentation requirement and the goal pursued by the law.
3.1.2 The New Forms of Expropriation
In early days, expropriation involved the direct seize of physical property. While, later identifying indirect expropriation becomes more difficult, since it is not visibly recognized as expropriations or as creeping expropriation[16]. In Middle East Cement Shipping and Handling Co. v. Egypt, indirect expropriation was described as ‘measures taken by a state the effect of which is to deprive the investor of the use and benefits of his investment even though he may retain nominal ownership of the respective rights[17].’
3.1.3 The Multiple Functions of Trade Mark
In modern society, a trade mark may have several roles. Initially, the basic function of a trade mark has been used to give the consumer a guarantee of the identity of the origin of the marked product or service by enabling him to distinguish, without any confusion, that product from others of a different provenance[18]. The second important function of a trade mark is to indicate to the consumers the quality of the specific goods or services sold with a registered mark[19]. The third function of a trade mark is to be a means of advertising[20]. Finally, a trade mark can also be seen as an investment vehicle[21].
However, all functions of a trade mark lie in the basic presumption that conveys correct information to consumers. Therefore, in the present case, as long as Uruguay can demonstrate that several trademarks containing the word ‘Marlboro’ plus several colors leads to the false impression that the contested measures aim to prevent, Uruguay can justify its measure. A trade Marks only confers its holder a monopoly over the use of the mark associated with the goods for which it is registered[22]. Therefore, even under the international protection provided by the BIT, the plaintiff is still not entitled to convey incorrect information to the consumers.
Article 3.1 of the Switzerland-Uruguay BIT provides that, each Contracting Party shall protect within its territory investments ‘made in accordance with its legislation’ by investors of the other Contracting Party. It is therefore legitimate for the plaintiff’s trade makes to be subject to Uruguayan relevant rules.
Furthermore, the nature of a trade mark is not an absolute property right. Instead, it aims to seek a balance between private interests of right holders and public interests. Also, Article 20 of the TRIPS Agreement only prohibits the unjustifiable limits imposed on the use of trademarks by national laws[23].
Nevertheless, in principle, without the above concerns, there is no rational underlying the single presentation requirement under each brand. Likewise, without the justified grounds mentioned above, the effect of the single presentation under the same brand would force the plaintiff to discontinue the use of the other registered trademarks and thus eventually lose their rights[24]. Therefore, without the above justifications, this measure would lead to indirect expropriations under Article 5 of the Switzerland-Uruguay BIT.
3.2 The Excessive Health Warning Requirement
3.2.1 The Plaintiff’s Claim
Since 1982, Uruguay imposed written health warnings on tobacco cigarette packages. In 2005, the size of the health warnings was increased to cover 50 per cent of the surface of the both sides of cigarette packages. On 25 June 2009, a Decree was issued to further increase the size of the health warnings to cover 80 per cent of the surface of the both sides of cigarette packages[25].
The plaintiff claimed that, the excessive 80 per cent health warnings requirement has effectively curtailed the room the right holders can use to display its marks on the surface of its product packages. To obtain the goal of health protection, the old 50 per cent requirement is sufficient and less restrictive. The old 50 per cent requirement is even over the minimum 30 per cent health warning requirement provided by Article 11.1(b)(iv) of the WHO Framework Convention on Tobacco Control. Therefore, the new 80 per cent requirement is not necessary.
3.2.2 The Issue of Constituting an Indirect Expropriation
Article 5.1 of the Switzerland-Uruguay BIT provides that, neither of the Contracting Parties shall take, either directly or indirectly, measures of expropriation, nationalization or ‘any other measure having the same nature or the same effect against investments’ belonging to investors of the other Contracting Party, unless the measures are taken for the public benefit as established by law, on a non-discriminatory basis, and under due process of law, and provided that provisions be made for effective and adequate compensation.
Before discussing whether the excessive health warnings requirement is a lawful indirect expropriation, first, we shall examine whether the excessive health warnings requirement constitutes indirect expropriation under the BIT.
Recalling the original function of a trade mark is to identify the origin of goods or services[26], as long as there is still enough room for the plaintiff to show Marlboro on its packages, it is sufficient for the plaintiff to use its own registered trademarks. Since the right holders could still use the rest space of surface of packages to display its own marks, the main function of the trademarks at issue did not virtually impaired by the Uruguayan measure. Also, in the present case, neither counterfeiting the marks nor destroying the marks exist in the given contexts, there is no trade mark infringement under both the domestic and international relevant rules.
In addition, the plaintiff may argue that, this requirement would significantly limit free speech[27]. Although, free expression is the basis for the right holders to develop its own marks by combing signs, voices, colors. It is also noteworthy that trademarks as a means of advertising, belongs to the low value of speech. Unlike the political speech, it would be subject to the stricter regulations on the ground of consumer protections.
3.2.3 The Issue of Constituting a Lawful Expropriation
According to Article 5.1 of the Switzerland-Uruguay BIT, in determining a lawful expropriation, four cumulative elements need to be fulfilled:
l measures are taken for the public benefit as established by law;
l on a non-discriminatory basis;
l under due process of law;
l provided that provisions be made for effective and adequate compensation[28].
With regard to the first element, first, the World Health Organization on Framework Convention on Tobacco Control has set up a cognitive and normative consensus to control tobacco consumption for promoting global public health[29].
Second, graphic warnings have been effective in helping people who are illiterate. Third, in GATT Thailand-Cigarettes, the Panel confirmed that the priority of public health over free trade[30].
Therefore, public health can be seen as the legitimate ground for the host state to regulate investments.
With regard to the second element, the factual context reveals that, Uruguayan laws applied equally to both domestic and foreign producers.
In The Queen v. Secretary of State for Health, the ECJ stated that, the right to property forming part of the general principles of Community law can be exercised in a restrictive manner, in order to fulfill the objective of general interest[31]. The Court ruled that the contested measures did not prejudice the substance of trade marks, but only constituted a proportionate restriction on the use of the right to property, in order to ensure a high level of health protection. The restrictions did virtually correspond to an objective of general Community interests and did not constitute a disproportionate interference[32]. Since light cigarettes are as harmful as normal cigarettes, the use of health warnings on the cigarette packages would offer consumers correct information when purchasing cigarettes[33].
In Anheuser-Busch Inc. v. Portugal, the ECtHR has confirmed that trademarks are protected by the property rights clause of First Protocol of the European Convention. In this regard, an important public interest will overweigh the control of the use of property without compensation. In examining whether a fair balance of public and private interests has been involved, the Court takes a look at the characteristics and proportionality of the interference and at the legitimate expectations of the private owners[34].
In Pinnacle Meat Processors Co. v. United Kingdom, the Commission observed that protecting people against a fatal disease was a preeminent interest. The Commission thus declared the loss of the applicants was not expropriation[35].
Recently, the Annex B of the US Model Bilateral Investment Treaty 2004 further provides that, except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as ‘public health’ and the environment, do not constitute indirect expropriations[36].
Finally, Article 11 of the Switzerland-Uruguay BIT provides that, either Contracting Party shall constantly guarantee the observance of the commitments it has entered into with respect to the investments of the investors of the other Contracting Party. This provision can be used to include the other norms of international rules which are relevant to investments at issue[37]. It is therefore important for the Arbitral Tribunal to take those relevant international norms including provisions of international health agreements into account when interpreting the investment provisions[38]. By doing so, there would be a balance between trademarks protection and public health under the BIT through interpretation.
4. Conclusion
Due to the deadlock of Doha negotiation, countries turn to choose bilateral approach to gain more TRIPS-plus benefits by engaging in Bilateral Investment Agreements. The flourishing of BIAs also brings more conflicts between investment protection and the other social values, while normally the BIA model lack the exceptional clause like GATT XX to solve this problem. However, by invoking Article 31.3 (c) of the VCLT or the commit provisions (Article 11 of the Switzerland-Uruguay BIT) found in some BIAs, the Arbitrators still can invoke some legal resources to remedy these imbalances.
If we go back the starting point of protecting trade mark, the original function of trade mark is to help consumer to identify the origin of goods. Therefore, a trade Marks only grants its holder a monopoly over the use of the mark in conjunction with the goods for which it is registered. Therefore, excessive health warnings do not constitute indirect expropriations. While, with respect to single presentation requirement, there is no rational underlying single presentation under the same brand. Nevertheless, considering the importance of human health, as long as the host State can demonstrate that the plaintiff attempts to create a false impression that light cigarettes are less harmful than regular ones by using several different colors of marks under the same brand, the defendant’s measure can be justified on the ground of public health and consumer protection. In some circumstances, those measures even would not be seen as indirect expropriations.
Bibliography
Books
Holyoak & Torremans, Intellectual Property Law, (Oxford 2010)
MacQueen, Waelde & Laurie, Contemporary Intellectual Property-Law and Policy, (Oxford 2006)
Matthews D., Globalising Intellectual Property Rights: The TRIPS Agreement, (Routledge 2006)
Sornarajah M., The International Law on Foreign Investment, Cambridge 2010
Van den Bossche P., The Law and Policy of the World Trade Organization-Text, Cases and Materials, (Cambridge 2008)
Articles
Helfer, ‘Toward a Human Rights Framework for Intellectual Property’, 40 UC Davies L Rev (2006-2007)
Helfer, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’, 29 Yale J Int’l L (2004)
Mountfield, ‘Regulatory Expropriation in Europe: The Approach of the European Court of Human Rights’, 11 NYU Environmental LJ (2002-2003) 136
Raustialia, ‘Density and Conflict in International Intellectual Property Law’, 40 UC Davis L Rev (2006),
Vadi V., ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3
Van Harten, ‘The Public-Private Distinction in the International Arbitration of Individual Claims Against the State’, 56 ICLQ (2007)
Under the Bilateral Investment Agreement
—A Case Study of Tobacco Control—
Wen-Cheng Huang
1. Introduction
This contribution aims to explore the potential conflict between trade mark protection and public health under the Bilateral Investment Agreement (BIA). Normally, the protection of trade mark would contribute to consumer protection. However, in some circumstances, the excessive protection of trade mark would lead to the impairment of public health. Furthermore, the traditional BIT model normally lacks an exceptional clause to strike a balance between investment protection and the maintenances of the other public interests.
This article would first start to ask two primary questions: why does the BIA include trademarks and how does the BIA protect trademarks. After analyzing the main features of trade mark protection under the BIA, this article would move to a case study of tobacco control. The author attempts to point out the functions of trade mark and its corresponding monopoly rights. The author tends to point out that, in some circumstances, tobacco control does not constitute indirect expropriation.
2. The Regime of Trade Mark Protection Under the Bilateral Investment Agreement
2.1 Why does the Bilateral Investment Agreement include Trade Mark?
Initially, only tangible property has been recognized as investment under the Bilateral Investment Agreement (BIA). However, on the one hand, the inclusion of intellectual property rights (IPRs) within the scope of foreign investment under the BIA is due to the widespread violations of IPRs created in developed countries. To protect trade mark under the BIA would create an incentive for multinationals to invest in developing countries by establishing a commercial presence within the territory of the host state. On the other hand, the ground for the BIA to protect IPRs is to promote more technology transferred to developing countries[1], and here more specifically, protecting trade mark under the BIA would keep the income in the hands of the local firms and avoid counterfeiting[2].
The difficulty of protecting IPRs under the BIT is because those IPRs depend on the extent to which the law of the host state itself recognizes. In other words, any IPRs including trade mark only has territory effect[3]. While now it becomes widely acceptable that, once IPRs has been acquired by the alien under the national law of the host state, the acquired IPRs could be converted into IPRs protected by international law through the application of BITs[4]. The condition that the host state can absolutely control the property it had created can no longer keep, as a result of the application of the BIT. Therefore, any state interference with IPRs may violate the BIT which amounts to an expropriation and needs to be compensated[5].
2.2 How does the BIA Protect Trade Mark
Basically, most of the BIAs start from the minimum protection provided by the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS Agreement), and go further beyond the TRIPS.
Frist, The TRIPS Agreement requires Member States of the WTO to apply the Paris Convention standards concerning trade mark[6], and in some points, it imposes its own additional obligations on Member States[7].
Nevertheless, Article 7 of the TRIPS provides that, the protection of IPRs should contribute to the mutual advantage of producers and users of technological knowledge and in a manner conductive to social and economic welfare, and to a balance of rights and obligations. Article 8.1 entitles Members to adopt measures necessary to protect public health, as long as such measures are consistent with the provisions of this Agreement. Therefore, when applying the TRIPS standards, countries are still entitled to strike a balance between trade mark protection and public health[8].
Second, due to the deadlock of Doha negotiation, more and more countries choose to gain more IPRs protection from the other countries by engaging in BIAs[9]. The so-called TRIPS-plus approach adopted by the BIAs aims to provide more IPRs protection beyond the level of the protection of the TRIPS, while there is no fixed definition of TRIPS-plus, since the investment provisions are produced on an ad hoc basis[10].
Third, it is increasingly acceptable that the property value of trade mark becomes more important for investors and needs to be protected under the BIA, other than the original function of trade mark as identifying the origin of products. Therefore, the importance of property value of trade mark has been overemphasized under the BIA, while original function of trade mark aiming to promote consumer protection has been overlooked.
Finally, the BIA prevents trade mark from unlawful expropriation and confers the trade mark holder a direct access to an international arbitral tribunal[11]. By giving their consents to investor-state arbitration under the BIAs, states waive their immunity and grant arbitrators a broad jurisdiction over investment issues regarding domestic public law[12].
3. A Case Study: Philip Morris v. Uruguay
In this case, I would like to discuss two contested measures imposed by Uruguay. First, Uruguayan regulation requires each cigarette brand to keep only one presentation, and thus this leads to the prohibition of different presentations for cigarettes sold under a given brand[13]. Second, Uruguayan regulation increase the size of health warnings on cigarette packages to 80 per cent of the surface of the front and back of the packages[14].
3.1 Single Presentation Requirement
3.1.1 The Plaintiff’s Claim
On 6 March 2008, Uruguay first passed a law prohibiting the use of description which may directly or indirectly create an incorrect impression that a specific tobacco product is less harmful than another. Therefore, the purpose of this law is to prevent consumers from misunderstanding the quality of the cigarette. As long as the presentations of certain trade marks have such effect, they shall be prohibited by this law.
Subsequently, on 18 August 2008, the Ministry of Public Health of Uruguay issued an Ordinance to implement this law. This Ordinance effectively prohibited all tobacco companies from the sale of different products under the same brand. As a result, the plaintiff was only allowed to sell one of the five presentations under the same brand.
Philip Morris asserted that the single presentation requirement for each brand by the Uruguayan Ordinance constituted an unreasonable measure under Article 3.1 of the Switzerland-Uruguay BIT[15], since this Ordinance went beyond the purpose of the original to include some presentations which do not convey a wrong impression to consumers. In addition, there is no rational relationship between the single presentation requirement and the goal pursued by the law.
3.1.2 The New Forms of Expropriation
In early days, expropriation involved the direct seize of physical property. While, later identifying indirect expropriation becomes more difficult, since it is not visibly recognized as expropriations or as creeping expropriation[16]. In Middle East Cement Shipping and Handling Co. v. Egypt, indirect expropriation was described as ‘measures taken by a state the effect of which is to deprive the investor of the use and benefits of his investment even though he may retain nominal ownership of the respective rights[17].’
3.1.3 The Multiple Functions of Trade Mark
In modern society, a trade mark may have several roles. Initially, the basic function of a trade mark has been used to give the consumer a guarantee of the identity of the origin of the marked product or service by enabling him to distinguish, without any confusion, that product from others of a different provenance[18]. The second important function of a trade mark is to indicate to the consumers the quality of the specific goods or services sold with a registered mark[19]. The third function of a trade mark is to be a means of advertising[20]. Finally, a trade mark can also be seen as an investment vehicle[21].
However, all functions of a trade mark lie in the basic presumption that conveys correct information to consumers. Therefore, in the present case, as long as Uruguay can demonstrate that several trademarks containing the word ‘Marlboro’ plus several colors leads to the false impression that the contested measures aim to prevent, Uruguay can justify its measure. A trade Marks only confers its holder a monopoly over the use of the mark associated with the goods for which it is registered[22]. Therefore, even under the international protection provided by the BIT, the plaintiff is still not entitled to convey incorrect information to the consumers.
Article 3.1 of the Switzerland-Uruguay BIT provides that, each Contracting Party shall protect within its territory investments ‘made in accordance with its legislation’ by investors of the other Contracting Party. It is therefore legitimate for the plaintiff’s trade makes to be subject to Uruguayan relevant rules.
Furthermore, the nature of a trade mark is not an absolute property right. Instead, it aims to seek a balance between private interests of right holders and public interests. Also, Article 20 of the TRIPS Agreement only prohibits the unjustifiable limits imposed on the use of trademarks by national laws[23].
Nevertheless, in principle, without the above concerns, there is no rational underlying the single presentation requirement under each brand. Likewise, without the justified grounds mentioned above, the effect of the single presentation under the same brand would force the plaintiff to discontinue the use of the other registered trademarks and thus eventually lose their rights[24]. Therefore, without the above justifications, this measure would lead to indirect expropriations under Article 5 of the Switzerland-Uruguay BIT.
3.2 The Excessive Health Warning Requirement
3.2.1 The Plaintiff’s Claim
Since 1982, Uruguay imposed written health warnings on tobacco cigarette packages. In 2005, the size of the health warnings was increased to cover 50 per cent of the surface of the both sides of cigarette packages. On 25 June 2009, a Decree was issued to further increase the size of the health warnings to cover 80 per cent of the surface of the both sides of cigarette packages[25].
The plaintiff claimed that, the excessive 80 per cent health warnings requirement has effectively curtailed the room the right holders can use to display its marks on the surface of its product packages. To obtain the goal of health protection, the old 50 per cent requirement is sufficient and less restrictive. The old 50 per cent requirement is even over the minimum 30 per cent health warning requirement provided by Article 11.1(b)(iv) of the WHO Framework Convention on Tobacco Control. Therefore, the new 80 per cent requirement is not necessary.
3.2.2 The Issue of Constituting an Indirect Expropriation
Article 5.1 of the Switzerland-Uruguay BIT provides that, neither of the Contracting Parties shall take, either directly or indirectly, measures of expropriation, nationalization or ‘any other measure having the same nature or the same effect against investments’ belonging to investors of the other Contracting Party, unless the measures are taken for the public benefit as established by law, on a non-discriminatory basis, and under due process of law, and provided that provisions be made for effective and adequate compensation.
Before discussing whether the excessive health warnings requirement is a lawful indirect expropriation, first, we shall examine whether the excessive health warnings requirement constitutes indirect expropriation under the BIT.
Recalling the original function of a trade mark is to identify the origin of goods or services[26], as long as there is still enough room for the plaintiff to show Marlboro on its packages, it is sufficient for the plaintiff to use its own registered trademarks. Since the right holders could still use the rest space of surface of packages to display its own marks, the main function of the trademarks at issue did not virtually impaired by the Uruguayan measure. Also, in the present case, neither counterfeiting the marks nor destroying the marks exist in the given contexts, there is no trade mark infringement under both the domestic and international relevant rules.
In addition, the plaintiff may argue that, this requirement would significantly limit free speech[27]. Although, free expression is the basis for the right holders to develop its own marks by combing signs, voices, colors. It is also noteworthy that trademarks as a means of advertising, belongs to the low value of speech. Unlike the political speech, it would be subject to the stricter regulations on the ground of consumer protections.
3.2.3 The Issue of Constituting a Lawful Expropriation
According to Article 5.1 of the Switzerland-Uruguay BIT, in determining a lawful expropriation, four cumulative elements need to be fulfilled:
l measures are taken for the public benefit as established by law;
l on a non-discriminatory basis;
l under due process of law;
l provided that provisions be made for effective and adequate compensation[28].
With regard to the first element, first, the World Health Organization on Framework Convention on Tobacco Control has set up a cognitive and normative consensus to control tobacco consumption for promoting global public health[29].
Second, graphic warnings have been effective in helping people who are illiterate. Third, in GATT Thailand-Cigarettes, the Panel confirmed that the priority of public health over free trade[30].
Therefore, public health can be seen as the legitimate ground for the host state to regulate investments.
With regard to the second element, the factual context reveals that, Uruguayan laws applied equally to both domestic and foreign producers.
In The Queen v. Secretary of State for Health, the ECJ stated that, the right to property forming part of the general principles of Community law can be exercised in a restrictive manner, in order to fulfill the objective of general interest[31]. The Court ruled that the contested measures did not prejudice the substance of trade marks, but only constituted a proportionate restriction on the use of the right to property, in order to ensure a high level of health protection. The restrictions did virtually correspond to an objective of general Community interests and did not constitute a disproportionate interference[32]. Since light cigarettes are as harmful as normal cigarettes, the use of health warnings on the cigarette packages would offer consumers correct information when purchasing cigarettes[33].
In Anheuser-Busch Inc. v. Portugal, the ECtHR has confirmed that trademarks are protected by the property rights clause of First Protocol of the European Convention. In this regard, an important public interest will overweigh the control of the use of property without compensation. In examining whether a fair balance of public and private interests has been involved, the Court takes a look at the characteristics and proportionality of the interference and at the legitimate expectations of the private owners[34].
In Pinnacle Meat Processors Co. v. United Kingdom, the Commission observed that protecting people against a fatal disease was a preeminent interest. The Commission thus declared the loss of the applicants was not expropriation[35].
Recently, the Annex B of the US Model Bilateral Investment Treaty 2004 further provides that, except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as ‘public health’ and the environment, do not constitute indirect expropriations[36].
Finally, Article 11 of the Switzerland-Uruguay BIT provides that, either Contracting Party shall constantly guarantee the observance of the commitments it has entered into with respect to the investments of the investors of the other Contracting Party. This provision can be used to include the other norms of international rules which are relevant to investments at issue[37]. It is therefore important for the Arbitral Tribunal to take those relevant international norms including provisions of international health agreements into account when interpreting the investment provisions[38]. By doing so, there would be a balance between trademarks protection and public health under the BIT through interpretation.
4. Conclusion
Due to the deadlock of Doha negotiation, countries turn to choose bilateral approach to gain more TRIPS-plus benefits by engaging in Bilateral Investment Agreements. The flourishing of BIAs also brings more conflicts between investment protection and the other social values, while normally the BIA model lack the exceptional clause like GATT XX to solve this problem. However, by invoking Article 31.3 (c) of the VCLT or the commit provisions (Article 11 of the Switzerland-Uruguay BIT) found in some BIAs, the Arbitrators still can invoke some legal resources to remedy these imbalances.
If we go back the starting point of protecting trade mark, the original function of trade mark is to help consumer to identify the origin of goods. Therefore, a trade Marks only grants its holder a monopoly over the use of the mark in conjunction with the goods for which it is registered. Therefore, excessive health warnings do not constitute indirect expropriations. While, with respect to single presentation requirement, there is no rational underlying single presentation under the same brand. Nevertheless, considering the importance of human health, as long as the host State can demonstrate that the plaintiff attempts to create a false impression that light cigarettes are less harmful than regular ones by using several different colors of marks under the same brand, the defendant’s measure can be justified on the ground of public health and consumer protection. In some circumstances, those measures even would not be seen as indirect expropriations.
Bibliography
Books
Holyoak & Torremans, Intellectual Property Law, (Oxford 2010)
MacQueen, Waelde & Laurie, Contemporary Intellectual Property-Law and Policy, (Oxford 2006)
Matthews D., Globalising Intellectual Property Rights: The TRIPS Agreement, (Routledge 2006)
Sornarajah M., The International Law on Foreign Investment, Cambridge 2010
Van den Bossche P., The Law and Policy of the World Trade Organization-Text, Cases and Materials, (Cambridge 2008)
Articles
Helfer, ‘Toward a Human Rights Framework for Intellectual Property’, 40 UC Davies L Rev (2006-2007)
Helfer, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’, 29 Yale J Int’l L (2004)
Mountfield, ‘Regulatory Expropriation in Europe: The Approach of the European Court of Human Rights’, 11 NYU Environmental LJ (2002-2003) 136
Raustialia, ‘Density and Conflict in International Intellectual Property Law’, 40 UC Davis L Rev (2006),
Vadi V., ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3
Van Harten, ‘The Public-Private Distinction in the International Arbitration of Individual Claims Against the State’, 56 ICLQ (2007)
[1] M. Sornarajah, The International Law on Foreign Investment, Cambridge 2010, at pp. 12-13.
[2] V. Vadi, ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3, at p. 775.
[3] MacQueen, Waelde & Laurie, Contemporary Intellectual Property-Law and Policy,(Oxford 2006), at p. 686.
[4] M. Sornarajah, The International Law on Foreign Investment, Cambridge 2010, at p. 193.
[5] M. Sornarajah, The International Law on Foreign Investment, Cambridge 2010, at p. 13.
[6] Art. 2.1 of the TRIPS Agreement.
[7] D. Matthews, Globalising Intellectual Property Rights: The TRIPS Agreement, (Routledge 2006), at p. 46.
[8] Peter Van den Bossche, The Law and Policy of the World Trade Organization-Text, Cases and Materials, (Cambridge 2008), at pp. 744-745.
[9] Helfer, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’, 29 Yale J Int’l L (2004) 1.
[10] V. Vadi, ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3, at p. 778.
[11] V. Vadi, ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3, at p. 779.
[12] Van Harten, ‘The Public-Private Distinction in the International Arbitration of Individual Claims Against the State’, 56 ICLQ (2007) 371.
[13] Philip Morris v. Uruguay, Request of Arbitration, available at http://ita.law.uvic.ca/documents/PMI-UruguayNoA.pdf, para. 3.
[14] Philip Morris v. Uruguay, Request of Arbitration, para. 5.
[15] Article 3.1 of the Switzerland-Uruguay BIT provides that, each Contracting Party shall protect within its territory investments made in accordance with its legislation by investors of the other Contracting Party and shall not impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment, extension, sale and, should it so happen, liquidation of such investments.
[16] Judge Fitzmaurice in Barcelona Traction Case [1971] ICJ Report 3.
[17] ICSID Case No. ARB/99/6 (2002), at para. 107.
[18] Centrafarm v. America Home Products [1996] FSR 225.
[19] SA Cnl-Sucal NV v. Hag GF AG, Case C-10/89 [1991] FSR 99 at pp. 129-130.
[20] Souza Cruz SA v. Hollywood SAS, R283/1999-3 [2002] ETMR (64) 705, para. 7.
[21] Parfums Christian Dior and Parfums Christina Dior BV v. Evora BV, Case C-337/95 [1998] RPC 166.
[22] MacQueen, Waelde & Laurie, Contemporary Intellectual Property-Law and Policy, (Oxford 2006), at p. 540.
[23] It is only ‘unjustifiable’ encumbrances that are covered by Article 20 of the TRIPS Agreement. See Peter Van den Bossche, The Law and Policy of the World Trade Organization-Text, Cases and Materials, (Cambridge 2008), at pp. 777.
[24] It is essential to ensure the actual and genuine use of a trade mark, including the need to put a registered mark to genuine use to retain it on the trade mark register, see MacQueen, Waelde & Laurie, Contemporary Intellectual Property-Law and Policy, (Oxford 2006), at p. 541.
[25] Philip Morris v. Uruguay, Request of Arbitration, paras. 33-38.
[26] Holyoak & Torremans, Intellectual Property Law, (Oxford 2010), at pp. 388-389.
[27] Macan-Markar,’Thai Authorities Have Marlboro Man Fuming’, Asia Times, 14 May 2002.
[28] Similar provision, see article 1110 of the NAFTA.
[29] V. Vadi, ‘Trade Mark Protection, Public Health and International Investment Law: Strains and Paradoxes’, EJIL (2009), Vol. 20 No. 3, at p. 786.
[30] GATT Panel Report, Thailand-Cigarettes, adopted on 7 Nov. 1990, BISD 375/200, at para. 73.
[31] Case C-491/01, The Queen v. Secretary of State for Health [2002] ECR I-11453, at para. 149.
[32] Case C-491/01, The Queen v. Secretary of State for Health [2002] ECR I-11453, at paras. 149-153.
[33] Helfer, ‘Toward a Human Rights Framework for Intellectual Property’, 40 UC Davies L Rev (2006-2007), at p. 1017.
[34] Mountfield, ‘Regulatory Expropriation in Europe: The Approach of the European Court of Human Rights’, 11 NYU Environmental LJ (2002-2003) 136, at p. 142.
[35] App No 33298/96, Pinnacle Meat Processor Co. v. UK, 27 EHRR (1998) (Commission Report), at p. 223.
[36] Available at http://www.state.gov/documents/organization/38710.pdf . Also, see Article 20.8 of Common Market for Eastern and Southern Africa Investment Agreement for the COMESA Common Investment Area.
[37] Also see Article 31.3(c) of the VCLT.
[38] Raustialia, ‘Density and Conflict in International Intellectual Property Law’, 40 UC Davis L Rev (2006), at p. 1021.
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