Canada Fails to Protect Trademarks from Plain Packaging

In May, Canada imposed legislation that requires the removal of brands from tobacco packs. This “plain packaging” move represents nothing more than the trampling of essential intellectual property rights with unintended, yet highly predictable costs, to be borne by the health of Canadian consumers and trademark intensive-industries.

The politicians who pushed the measure claim it will increase public awareness of the health consequences of smoking and cause a reduction in smoking. But, the data shows plain packaging has failed in Australia, the UK, and France. Canada should expect the same results:

  • In Australia, the latest independent research concludedno statistically significant difference in effectiveness of the graphic health warning as a result of the policy being introduced—if anything that effectiveness declined.”
  • More troubling, the Australian government’s National Drug Strategy Household Survey (NDSHS) for the first time in 23 years found no statistically significant decline in the overall daily smoking rate between 2013 (12.8%) and 2016 (12.2%).
  • In France, Agnès Buzyn, the Minister of Health, stated to the National Assembly the “official sales of cigarettes increased in France, the neutral package [plain packaging] did not reduce the official sale of tobacco”
  • Studying plain packaging in the UK and France Europe Economics found “no statistically significant relationship” between plain packaging and consumption, even after a simultaneous equation model that accommodated price changes.

Plain packaging is government overreach and an infringement in intellectual property rights. In limiting the ability for businesses to protect their property, consumers are threatened with the introduction of fraudulent products by criminal enterprises that undermine health and safety initiatives.

By eliminating branding from the packaging, it becomes easier for consumers to be fooled by illicit counterfeit products. These actors, who around the world have often been tied to funding terrorism, only have to print the official packaging label from the government website.

Illicit and counterfeit packs are also dangerous to consumer health. Criminals don’t bother to comply with health regulations or protecting a positive brand reputation. Their illicit tobacco products have been found to contain varieties of arsenic and other toxic ingredients that pose detrimental threats to consumers.

Counterfeits also damage brand reputation, a crucial part of vibrant economies. In the U.S. and the EU, trademark-intensive industries are responsible for employing more than 88 million combined. Their IP-intensive industries together are responsible for 18.5 percent of global GDP.

Should Canada’s illicit tobacco market continue to increase, it will likely strain relations with its largest trading partner. Canada has an obligation to not distort trade by any means under the NAFTA agreement. The recent WTO dispute panel concerning plain packaging in Australia found that it does in fact “amount to special requirements that encumber the use of a trademark in the course of trade.” Canada is already on the U.S. Trade Representatives Special 301 Watchlist for failing to provide adequate protection of U.S. intellectual property.

The evidence is in the data, plain packaging doesn’t work. Protecting intellectual property, on the other hand, provides several benefits. IP rights provide incentives that grow the high-paying knowledge-intensive sectors of the economy and protect consumers from criminal actors who peddle harmful products.