Law Times

Law Times • may 1, 2017 Page 5 www.lawtimesnews.com NEWS Does plain packaging legislation violate IP? BY DALE SMITH For Law Times A government bill intro- duced in the Senate aims to ensure that tobacco and vaping products are restricted to plain packaging as part of the ongo- ing battle to keep children and youth from smoking. With more bills on the order paper that would demand plain pack- aging for things such as rec- reational marijuana and even certain kinds of junk food that would be attractive to children, intellectual property lawyers are concerned that these restrictions on brands and trademarks could have broader consequences. "This is part of a worldwide phenomenon," says Cynthia Rowden, partner with intellec- tual property law firm Bereskin & Parr LLP in Toronto. "There are many countries that have now introduced leg- islation requiring plain packag- ing, and in some of those coun- tries, for example, Australia, there have been complaints to the World Trade Organization that the limitations are a restric- tion on trade that is contrary to international treaties that Cana- da has also signed." Rowden says lawyers must be aware of the potential legislation because the idea of plain pack- aging is a unique concept that affects specific products. She also says it's a fundamen- tal change in the rights of brand owners and anyone who advises them in terms of packaging, la- belling or advertising issues, and lawyers should be well aware of these restrictions if and when they come into effect. Bill S-5, An Act to amend the Tobacco Act and the Non- smokers' Health Act, has just completed study at the Sen- ate's Social Affairs, Science and Technology committee, and it is due to be reported back with amendments to the chamber on May 2. None of those amend- ments deals with the plain pack- aging aspects of the bill, which proposes to give government the regulatory authority to restrict what can appear on packaging. If passed, the bill will go to the House of Commons. Two other bills currently on the Order Paper also have plain packaging provisions — both Bill C-45, which is the govern- ment's bill to set up the legal- ized framework for recreational marijuana, as well as Bill S-228, a Senate public bill introduced by Senator Nancy Greene Raine that would prohibit food and beverage advertising directed at children. Rowden is a member of com- mittees that have drafted com- ments on behalf of the Canadian Intellectual Property Institute, the International Trademark Association with respect to to- bacco and the children's adver- tising draft bill. Rowden has also worked on submissions for the Trademark Legislation Com- mittee of the Canadian Bar As- sociation in the past. She says IP organizations are concerned that consumers will have issues identifying brands of a quality that they have come to know and expect. "From a consumer perspec- tive, they lose the ability to easily distinguish between the goods that they want and the goods that they don't want," says Rowden. "The other issue that has a big potential impact on con- sumers is counterfeiting, and that is an issue that has been identified by the tobacco indus- try as a problem. "If you permit packages to be sold that are extremely plain, then you increase the ease with which both counterfeits can be imported and exported and the ability of everybody along the chain, from the customs officials to the wholesalers to the retail- ers to the consumers, to eas- ily distinguish between what is counterfeit and what is not," says Rowden. "That brings with it potential health and safety issues along with the ability to control a criminal activity." The counterfeiting issue would also be a concern with plain packaging around food and beverages that Greene Raine's bill would also mandate. Rowden says that, from the trademark owner's perspective, there is also the potential for the loss of a tremendous amount of investment in branding, some of which has resulted in certain trademarks becoming iconic, along with protecting and en- forcing the rights. Some of that enforcement has meant litiga- tion going as far as the Federal Court of Appeal. "Use is the foundation of trademark law in Canada and, generally, clients should use the trademark as registered and register the trademark as used," says Paul Lomic of intellectual and social media law firm Lomic Law in Toronto. "The extent that the legisla- tion precludes use of the trade- mark puts those trademarks at risk." According to the Trade- marks Act, if someone suspects that a trademark has not been used for three years, a Section 45 notice could be drafted where the registrar can request proof that the trademark has been used. If no proof is provided, the trademark can be struck from the register. While the bill includes lan- guage that purports to protect brand owners from losing trade- marks from non-use due to the extraordinary circumstances of the plain packaging legislation, Rowden says its efficacy will depend on how that language is interpreted. "The longer the non-use, the less likely it would be seen as ex- traordinary," says Rowden, cit- ing issues such as the deprecia- tion of goodwill if someone were to try to infringe on the trade- mark on a completely different product, such as a T-shirt. "I don't know whether this could be considered to be aban- donment if you can no longer use a mark because of statutory restrictions," says Rowden. Lomic says companies "may be able to keep the trademark on the register. "The loss may be the com- mon law rights that only f low from the actual use of the trade- mark," he says. "That will be a challenge." Common law rights include use of branding that develops a reputation even if the branding is not registered with the gov- ernment, which can be difficult to prove if challenged. "It certainly is a slippery slope, but this is really a health policy issue — should the gov- ernment be entitled to restrict a substance that is known to be dangerous?" says Lomic. "I think the government has taken the position that it ought to be [taking]. The f lip side is that the tobacco companies will say this is clearly a legal product. It has trademark implications and they're certainly serious from the tobacco companies' point of view." Rowden adds that there are many questions that remain be- cause much of the details will be handled by the government reg- ulation after the bill passes. During committee testimo- ny, representatives of the tobac- co industry did raise the issue of their intellectual property rights. "These measures violate our trademark rights," said Eric Gagnon, director of govern- ment and regulatory affairs for Imperial Tobacco Canada. "As a business involved in the sale of a legal product, we have the fundamental right to use our trademarks." Gagnon stated that one of the reasons that companies invest in their packaging is to ensure that their products and trademarks are difficult to copy, and he reit- erated that contraband products are a major problem in their in- dustry. "If you remove that trade- mark, we're saying that illegal traffickers will take over this market," said Gagnon. "I know some people will say that contraband is not an issue in Canada. If you don't believe the tobacco companies, ask the RCMP, the SQ or the OPP. Ask the Department of Homeland Security in the U.S. They are on the front line and contraband is a problem." Gagnon also advised that Canada would be better off waiting for the conclusion of a World Trade Organization chal- lenge launched when Australia introduced its own plain pack- aging laws. Senators were not moved by Gagnon's arguments, however. "To date, there has been no finding of a breach of intellec- tual property rights in any of the other countries that have already implemented plain and standardized packaging," said independent Senator Chantal Petitclerc, the bill's sponsor, in an emailed reply to Law Times. "In [the] United Kingdom, the tobacco industry unsuc- cessfully challenged the Stan- dardised Packaging of Tobacco Products Regulations 2015, which was upheld by the United Kingdom's High Court of Jus- tice on May 19, 2016 and the decision of the High Court of Justice was subsequently upheld by the United Kingdom's Court of Appeal on Nov. 30, 2016. Petitclerc says "several coun- tries have implemented plain and standardized packaging." "There have been also no findings, to date, that plain and standardized packaging infring- es on any international trade agreement," she says. LT Cynthia Rowden says there are many coun- tries that have now introduced laws requir- ing plain packaging. Celebrating Women In Law WOMEN'S TR ANSFORMATIVE LEADERSHIP: JUNE 22, 2017 ARCADIAN LOFT EMPOWERMENT BY IMPROVING PARTICIPATION AND REPRESENTATION EARLY BIRD ENDS MAY 12 IN AUGUST COMPANY: Advancing Women's Leadership on the Bench TALES FROM THE FRONT: Lessons on How to Lead LESSONS LEARNED FROM OTHER INDUSTRIES: Ten Innovative and Effective Ways to Attract, Advance & Retain Women THE LONG AND WINDING ROAD: Developing a Career Toolkit SHOULD I STAY OR SHOULD I GO?: How In-House Counsel Are Zigzagging To the Top A SEAT AT THE TABLE: Defining Strategic Leadership for Women on Boards PROGRAM OUTLINE Call: Toll free 1-877-298-5868 or (416) 609-5868 | Fax: (416) 609-5841 | Web: www.lexpert.ca Email: For questions please contact lexpert.questions@thomsonreuters.com, for registration inquiries, please contact lexpert.registration@thomsonreuters.com CONTACT US SAVE THE DATE: Zenith Awards Gala June 22, 2017 | Arcadian Court CO-CHAIR: Bindu Dhaliwal, Associate General Counsel, BMO Financial Group CO-CHAIR: Shanin H. Lott, Managing Director, Talent, Stikeman Elliott LLP Untitled-4 1 2017-04-25 2:47 PM

• Cover