Tobacco Industry Expropriates Intellectual Property Rules

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Tobacco Industry Expropriates Intellectual
Property Rules

• Ellen R. Shaffer, PhD MPH
• Joseph Brenner, MA
• Sohil Sud, MD MA
• CPATH
• Center for Policy Analysis on Trade and Health
• Trans Pacific Partnership
• Jan. 31, 2012

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CPATH Mission

• Research, analysis and advocacy
• to advance global economic policies
• that improve and protect public health

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CPATH On Tobacco and Trade

• Shaffer, ER, JE Brenner and TPHouston.
  International trade agreements a threat to
  tobacco control policy. Tobacco Control
  20051419-25.
• Shaffer, ER, H Waitzkin, J Brenner, R
  Jasso-Aguilar. Global Trade and Public Health.
  American Journal of Public Health. January, 2005

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Tobacco Industry Expropriates IP

• Tobacco is a deadly product
• Countries are enacting increasingly strong and
  effective tobacco control policies that are
  proven to reduce tobacco use.
• Industry has long contested these measures as
  violations of trade agreement rules.
• To reduce worldwide tobacco consumption, tobacco
  must be carved out from all protections afforded
  under the TPP.
• AAFP, AAP, ACPM, ASAM, CPATH to Congress, 12/11

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Tobacco Is A Deadly Product

• Tobacco Consumption fast becoming the leading
  preventable cause of illness and mortality
• Annual death toll worldwide 5.2 million
• U.S. tobacco use still kills more than 400,000
  people each year
• Use of Tobacco Products
• Chile - 29 of population
• Singapore 15 of population, up from 12.6
• Vietnam 18 of population, down from 25

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Teen Smoking U.S.

• About 30 of youth smokers will continue smoking
  and die early from a smoking-related disease.
• People who start smoking before the age of 21
  have the hardest time quitting.
• Teen smokers are more likely to use alcohol and
  illegal drugs
• -Centers for Disease Control Prevention

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Framework Convention on Tobacco Control

• to protect present and future generations from
  the devastating health, social, environmental and
  economic consequences of tobacco consumption and
  exposure to tobacco smoke

• Established minimum standards in the areas of
• tobacco demand reduction
• passive smoking
• packaging and labeling
• health awareness
• advertising
• sale to minors
• smuggling

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Countries Are Enacting Protections

• Industry on the Run
• Countries limiting advertising on packaging
• Graphic warning labels Uruguay, US
• Plain packaging Australia
• Ban on point-of-sale displays Norway, Ireland

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• Canadian Cigarette Label

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Tobacco/Trade ThreatsLong History

• Tobacco added as a covered commodity in trade
  round 1986-94
• Thailand forced to open market, 1990
• Canada dissuaded from plain packaging, 1994

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Tobacco Control in Uruguay

• 2009 Uruguayan Tobacco Control Measures
• Increase health messaging on the bottom portion
  of cigarette packages from 50 to 80,
• Mandate the placement of one of six selected
  health images on packages.
• Prohibit the use of brand families in which the
  same brand name is used across various across
  product lines (e.g., Malboro Red, Malboro Green,
  Malboro Gold, etc).

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Lawsuit Philip Morris v Uruguay
Background In June 2009, Uruguayan government passed legislation to place larger pictorial warnings on cigarette packages and prohibit the use of brand families.
Basis of lawsuit Infringement on intellectual property without compensation
Trade Agreement 1991 Uruguay-Switzerland Bilateral Investment Treaty
Court of Arbitration International Centre for the Settlement of Investment Disputes (ICSID)
Status Currently undergoing procedural matters (e.g., jurisdiction)
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Australia
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Lawsuit Philip Morris v Australia
Background November 2011 legislation mandating uniform cigarette packaging, with brand names listed at the bottom, and with color, pictorial warnings covering the rest of the carton.
Basis of lawsuit Infringement on intellectual property without compensation
Trade Agreement 1993 Australia-Hong Kong Bilateral Investment Treaty
Court of Arbitration United Nations Commission on International Trade Law
Status Currently debating the merits and jurisdiction of the lawsuit
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Opposition from Big Tobacco
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Lawsuit Philip Morris v Norway
Background In January 2010, Norway instituted a ban on the point-of-sale display of tobacco products in retail outlets.
Basis of lawsuit Restriction of free movement of traded goods
Trade Agreement 1994 Agreement of the European Economic Area
Court of Arbitration Oslo District Court
Status Litigation ongoing advisory ruling submitted from the European Free Trade Association (EFTA) court
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Lawsuit Philip Morris v Ireland
Background In January 2010, Ireland instituted a ban on the point-of-sale display of tobacco products in retail outlets.
Basis of lawsuit Restriction of free movement of traded goods
Trade Agreement Violation of Irish constitutional law and EU law
Court of Arbitration High Court of Dublin
Status Ban still in effect litigation is ongoing
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Opposition from Big Tobacco

• How can a corporation file suit against a
  country?
• At stake the ability of sovereign states to
  safeguard the health of their own citizens.

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Trade Agreements

• Bilateral
• Multilateral (e.g., NAFTA)
• International (e.g., TRIPS)

Company A
Philip Morris
Investor-State Espousal
Expropriation
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Weak Cases Delay Implementation

• Trademarks protect companies from use of their
  brand by competitors
• They do not confer unlimited rights to advertise
  lethal products
• Trademark rights under TRIPS are rights to
  exclude third parties from using a trademark or
  mark that is sufficiently similar as to cause
  confusion concerning the source of the product. A
  WTO panel has confirmed that these are negative
  rights to exclude third parties and not positive
  rights of use (EC Geographical Indications).
  Hence, the purpose of the right is to protect the
  ability of the rights holder to identify the
  provenance of the product, and not to promote the
  product per se. Benn McGrady, Georgetown Law

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Problems Ahead Trademark

• TPPA can expand rather than limit trademark and
  other rights
• Can extend trademark protections in foreign
  markets

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Problems Ahead Expanding Corporate Rights to
Arbitrate TRIPS

• PMI claim Uruguay violates fair equitable
  treatment and WTO/TRIPS obligations
• Under the BITs umbrella clause
• Uruguay must observe the commitments it has
  entered into with respect to the investments of
  Swiss investors.
• Commitments include obligations under TRIPS

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Expanding Corporate Rights

• Most Favored Nation (MFN) and other clauses are
  designed to incorporate obligations from outside
  of the agreement, including from BITs. These
  include
• Minimum standard of treatment (fair and equitable
  treatment) Ensure compliance with customary
  international law (CIL)
• International law clauses Ensure treatment in
  accordance with international law not limited
  to CIL.
• Umbrella clauses Observe any obligation with
  regard to investments.
• More favorable treatment clauses If another
  agreement between the parties provides more
  favorable treatment of investments, it will
  prevail.
• Most-favored nation treatment Ensure the most
  favorable treatment provided to investors from
  any third country. - Analysis by Forum on
  Democracy

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Avoiding expansive investment clauses

• The US, Australia and New Zealand are using some
  or all these approaches
• Avoiding umbrella clauses
• Avoiding more favorable treatment clauses
• Limiting minimum treatment to CIL (not broader
  international law)

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These reforms are not enough

• Limiting minimum treatment to CIL does not
  restrain expropriation or expansive umbrella or
  more favorable treatment clauses.
• MFN treatment could incorporate expansive clauses
  from older BITs.
• 2 important limits on MFN in recent US FTAs do
  not affect
• Excluding arbitration and procedural treatment.
• Excluding differential treatment based on
  reciprocal trade concessions.
• - Forum on Democracy

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Effective Remedies IP

• Carve out tobacco trade and other industries
  that pose extraordinary threats to public health,
  food security, the environment, and public order

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Remedy 1. Tobacco Control

• Tariff and Nontariff Provisions Exclude tobacco
  products from all trade rules and in each
  relevant Schedule and Annex, including but not
  limited to Market Access, Most Favored Nation,
  National Treatment, Services, Intellectual
  Property, and tariff reduction schedules.

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Remedy 2. Tobacco Control

• Notwithstanding any language to the contrary,
  nothing in this agreement shall block, impede,
  restrict, or modify the ability of any party to
  take or maintain any action, relating to
  manufactured tobacco products that is intended or
  expected, according to the party, to prevent or
  reduce tobacco use or its harms and costs or that
  is reasonably likely to prevent or reduce tobacco
  use or its harms, including tariffs and
  restrictions on the marketing of tobacco or
  tobacco products.

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Remedy 3. Tobacco Control

• Add Provisions of the Framework Convention on
  Tobacco Control shall govern, in the event of any
  conflict with this Agreement

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Challenges To Excluding Tobacco

• Corporate opposition
• We havent done it so far so it cant be done.

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Mounting Action, Take Tobacco Out San Francisco

• Trans-Pacific Partnership

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Reps. Lewis, Ways and Means Members For Public
Health in TPP
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Major medical and public health associations in
U.S. and worldwide support tobacco carve
outhttp//www.cpath.org/id47.html
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Remedies Dispute Rules (Investor-State)

• Exclude investor-state remedies as in the
  Australia-US FTA.
• Limit MFN treatment without it, TPPA carve-outs
  and other reforms can be undermined by investor
  recourse to more favorable provisions of older
  FTAs and investment agreements.

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Public Health Objectives for Global Trade

1. To assure democratic participation by public
   health and transparency in trade policy
2. To develop mutually beneficial trade
   relationships that create sustainable economic
   development
3. To recognize the legitimate exercise of national,
   regional and local government sovereignty to
   protect population health

TPP
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CPATH
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Public Health Objectives for Global Trade

1. To exclude tariff and nontariff provisions in
   trade agreements that address vital human
   services
2. To exclude tobacco and tobacco products
3. To exclude alcohol products
4. To eliminate intellectual property provisions
   related to pharmaceuticals from bilateral and
   regional negotiations and promote trade
   provisions which enable countries to exercise all
   flexibilities provided by the Doha Declaration on
   Public Health

TPP
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CPATH
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CPATH on CAFTA and Access to Medicines in
Guatemala

• Shaffer, ER and JE Brenner. A trade
  agreements impact on access to generic drugs.
  Health Affairs, Web Exclusive. Aug. 25, 2009.
  w957-w967.

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Trade Advisory Committees 2005 Business 42
Public Health 0
Pharma 20 Public Health 0
Tobacco 7 Public Health 0
Alcohol 6 Public Health 0
Food 5 Public Health 0
Health Insurance 4 Public Health 0
TPP
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CPATH

• Center for Policy Analysis on Trade and Health
• Joseph Brenner
• Ellen R. Shaffer
• www.cpath.org
• ershaffer_at_cpath.org
• Phone [phone]
• Fax [phone]

TPP
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