What the WTO Appellate Body decision on plain packaging means for intellectual property and public health – Suzanne Zhou

In June 2020, the World Trade Organization (‘WTO’) Appellate Body ended a decade of litigation against Australia’s tobacco plain packaging laws when it dismissed the last remaining legal challenge against the measure by rejecting the appeal brought by the Dominican Republic and Honduras to an earlier decision of a WTO panel. The Appellate Body affirmed that plain packaging was apt to, and did, contribute to its public health objectives, was no more trade-restrictive than necessary to achieve that objective, and did not breach any intellectual property obligations under the WTO Agreements.

The Appellate Body decision has important systemic implications, particularly for the relationship between intellectual property rights and public health under the Agreement on Trade Related Aspects of Intellectual Property Rights (‘TRIPS’). This post examines what some of those implications may be beyond tobacco control, such as for the regulation of other unhealthy commodities or for access to medicines. 

Four findings of the Appellate Body have particular significance for the relationship between intellectual property and public health: 

  • its confirmation that trademarks are negative rights that do not prevent regulation of unhealthy commodities marketing;
  • its recognition of regulatory autonomy under TRIPS article 20;
  • its approach to interpreting TRIPS in public health contexts; and
  • its findings on the role of non-WTO treaties within the WTO agreements.

Trademarks are negative rights to prevent infringement, not positive rights to use

First, the Appellate Body makes clear that a trademark does not prevent regulation of the use of that trademark. Like other decisions on this issue (including those of domestic courts in the UK, France, and Uganda, the WTO panel, and the investment tribunal in Philip Morris v Uruguay), the Appellate Body found that a trademark is a negative right to prevent infringement by third parties, not a positive right to use a trademark despite regulation by the state. This aspect of the decision makes clear that states may regulate the display of trademarked design elements in marketing and advertising (on packs or otherwise), including by prohibiting their use.

The Appellate Body also confirms the implications of a trademark being a negative right. Honduras and the Dominican Republic had argued that despite the absence of a general right to use a trademark, trademark holders should have rights to use trademarks for particular purposes linked to other rights in TRIPS, such as registering the trademark or maintaining its distinctiveness so it can be infringed in the future. The panel had rejected this argument, and the Appellate Body confirms that a consequence of there being no right to use a trademark at all is that there is also no right to use it for a particular purpose.

Regulatory autonomy and the standard of review under TRIPS article 20

The Appellate Body also affirms the panel’s interpretation of TRIPS article 20, which requires states not to ‘unjustifiably encumber’ ‘the use of trademarks in the course of trade’ by ‘special requirements’ – all phrases which had not previously been interpreted before the panel’s decision. The Appellate Body confirms that this provision encompasses public health considerations, while further clarifying that the term ‘unjustifiable’ in article 20 should be interpreted to allow significant autonomy to states to adopt public health policies.

The key finding of the panel in terms of the term ‘unjustifiable’ had been that it involved an assessment of:

  1. the nature and extent of the encumbrance;
  2. the reasons for the special requirements, including any societal interests they were intended to safeguard (such as public health); and
  3. whether the reasons provided sufficient support for the encumbrance.

The Appellate Body clarifies this test by explicitly confirming that the term ‘unjustifiable’, and the standard of ‘sufficient support’, should be interpreted in a way that preserves WTO members’ regulatory autonomy and that grants wider discretion to states than other public health exceptions in the WTO Agreements. The Appellate Body also confirms that it is not necessary to consider whether any less trademark-encumbering alternatives could have been adopted by the state.

Public health in the interpretation of TRIPS

The Appellate Body also clarifies a number of systemic issues in the interpretation of TRIPS in public health cases. 

First, it found that paragraph 5(a) of the Doha Declaration on the TRIPS Agreement and Public Health reflects customary international law rules of interpretation. Paragraph 5(a) restates the Vienna Convention on the Law of Treaties (‘VCLT’) rule that a treaty should be interpreted in line with its object and purpose, and  identifies TRIPS’s object and purpose as being contained in the ‘objectives’ and ‘principles’ provisions (TRIPS articles 7 and 8). Articles 7 and 8 state respectively that ‘[t]he protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations and that ‘[m]embers may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition … provided that such measures are consistent with the provisions of this Agreement’.

The Appellate Body’s confirmation that articles 7 and 8 constitute the object and purpose of the treaty and that the Doha Declaration is a restatement of the approach under customary international law is a welcome clarification – it makes clear that intellectual property rights under TRIPS are not protected for their own sake, but for particular policy ends which need to be balanced against other goals.

The panel had also found that the Doha Declaration was a ‘subsequent agreement’ which had to be considered in interpretation under VCLT article 31(3)(a). Honduras had appealed this finding. The Appellate Body rejected Honduras’ appeal, on the basis that ‘regardless of the legal status of the Doha Declaration’, paragraph 5(a) reflects customary principles of interpretation. It therefore does not itself weigh in on the status of the Doha Declaration. However, the panel’s decision on this point was not modified by the Appellate Body, and at the panel level, the decision that the Doha Declaration is a subsequent agreement therefore still stands, even if it has not been further reinforced through an Appellate Body decision.

Non-trade instruments in the trade context

Finally, the Appellate Body also rejected Honduras’ challenge to the use of the World Health Organization Framework Convention on Tobacco Control’s Implementation Guidelines (‘WHO FCTC Guidelines’) to determine whether or not plain packaging ‘unjustifiably’ encumbered the use of trademarks in the course of trade. As I have discussed in a previous ILA Reporter post, Honduras had challenged this on the grounds that the panel could not consider non-WTO laws in its decision. The Appellate Body, however, confirms that the panel’s consideration of the guidelines was part of a factual assessment, and that it therefore was within the scope of the panel’s discretion to consider the evidentiary support provided by the WHO FCTC Guidelines.

What does it mean?

The Appellate Body’s decision makes clear that measures to regulate marketing for public health reasons don’t fall within the scope of TRIPS’s provisions on the legal rights of trademark holders. It will therefore further reassure states looking to regulate how harmful products may be advertised and promoted and looking to require consumer information such as warning labels.

It also offers helpful if more limited guidance in relation to areas such as access to medicines, where the concern is the economic impact of exclusivity rather than the ability to regulate. The Appellate Body’s findings on the status of TRIPS articles 7 and 8 and the panel’s decision on the status of the Doha Declaration both provide support for public-health sensitive interpretations of TRIPS. These clarifications are not a substitute for negotiated solutions on access to medicines, including those currently under discussion as a result of the COVID-19 pandemic. However, they provide certainty about the scope of flexibility under the current agreements, and thus give WTO members confidence in making the maximum use of public health flexibilities in practice. 

Suzanne Zhou is the Manager for Prevention at the McCabe Centre for Law and Cancer. The McCabe Centre is the WHO FCTC Secretariat’s Knowledge Hub on Legal Challenges to Tobacco Control Measures and the World Health Organization Collaborating Centre on Law and Noncommunicable Diseases, and receives funding from the Australian government for its activities in these capacities.