Due to advertising bans for tobacco products, tobacco manufacturers shall restrictively exploit their trademarks and new trademarks registrations are difficult to seek. This results from an unexpected consequence from the indirect advertising ban.
French anti-smoking law known as the Evin Act and adopted on January 10, 1991, has known various developments over these past years, both regarding the plain packaging (1) as well as rules applicable to non-tobacco trademarks revocation actions (2).
1. The plain packaging does not violate the property right
The Evin Act, now codified within the Public Health Code ("PHC"), prohibits advertising in favor of tobacco2, with the exception of small banners displayed at the point of sale.
A January 8, 1991, Constitutional Council decision approved such restrictions. It held that the existence of a validly registered trademark was not affected and that a restriction to the trademark rights' exercise was justified by public health protection.
So as to reinforce public health's protection, a new European Directive was adopted in 20143. It inter alia provides that the exterior of each tobacco products' packaging should carry health warnings covering 65% of both the external and back surface of the packaging. Actions pending before the European Court of Justice ("ECJ") against this Directive were rejected on May 4, 20164.
The French government decided to implement an even more restrictive framework. Article 27 of Act No. 2016-41 of January 26, 2016 introduces in the PHC a neutral and uniform packaging requirement for tobacco products. A State Council's decree dated March 21, 2016 provides that only text trademarks shall be used along with very restrictive conditions as to the color and texture of the packaging.
The Constitutional Council was seized to analyze the Act's compliance with the rights guaranteed by the French Constitution, such as property right and entrepreneurial freedom.
All such arguments were disregarded and Article 27 of the Act was held constitutional in a January 21, 2016 decision.
The Constitutional Council considered that trademarks could still be reproduced on the packaging, used and protected against infringement. It further ruled that the legislator was pursuing a public health objective by prohibiting advertisement for harmful and attractive products. Lastly, since manufacturing and sale of tobacco remain authorized, no disproportionate violation could be evidenced. The measure did also not qualify as an expropriation requiring a compensation for the trademark owners.
The Council implicitly reminded that the essential function of the trademark is to guarantee consumers the origin of the goods or services, implying that since the trademark can be displayed on the packaging and allows consumers to identify the product, the essential function of the trademark is preserved.
This decision is consistent with the Council case law, a Supreme Court decision5 and reflects an increased tendency to protect public health over private interests, such as trademark rights.
2. Trademarks designating tobacco products remain lawful and may more easily be subject to legitimate ground for non-use
The Evin Act also prohibits use of a trademark to advertise any type of products if such use may evoke tobacco products. Article L. 3511-4 of the PHC provides that: "Is considered as propaganda or indirect advertising any propaganda or advertising in favor of an organism, a service, an activity, a product or an article other than tobacco […] which, by its graphism, its presentation, the use of a mark, an emblem or any other distinctive sign evokes tobacco". A similar provision also exists for alcoholic beverages.
The legislator's intent was to prevent fraudulent tobacco advertising by tobacco manufacturers extensively promoting other products under their trademark. However such provision has been interpreted extensively and enables the owner of prior trademarks to oppose later trademarks designating tobacco despite the difference of products. Recently, DIPTYQUE, a company marketing candles, successfully opposed registration and use by Hennessy of a "DIPTYQUE" sign to designate alcoholic beverages6.
Courts also held that a trademark application designating tobacco infringed earlier trademarks covering a similar sign for beverages7. Like in the DIPTYQUE case, Courts held that a tobacco trademark registration paralyzed the ability to use the earlier trademark due to the Evin Act indirect advertising ban.
Therefore, new tobacco trademarks are difficult to register, since a complete clearance of all earlier rights in all classes of the Nice classification is required.
As a result of this framework, Philip Morris attempted to obtain the revocation of Dr. Scheller's prior "MANHATTAN" trademarks designating cosmetics so as to be in a position to finally exploit its identical trademarks filed in the 60's for tobacco. The case was presented for the second time before the Supreme Court which rendered its decision on February 2, 2016 (Case No. 14-17404).
To prevent the revocation action from succeeding, Dr. Scheller claimed that its trademarks could not be used due to the existence of Philip Morris' trademarks, which infringed its own prior rights and constituted a "legitimate ground for non-use". As provided by article L. 714-5 of the Intellectual Property Code, such legitimate ground shall consist in an impediment, whether factual or legal, that is not caused by a faulty act on the part of the trademark owner and which makes the use of the trademark impossible or unreasonable.
Following various contradictory decisions, the Paris Court of Appeal held on January 10, 2014 that, since Philip Morris never exploited its trademarks, risks that the use of Dr. Scheller's prior trademarks would evoke tobacco were nonexistent, and hence there existed no "legitimate ground for non-use" preventing the revocation of said trademarks.
Counterclaims raised by Dr. Scheller to revoke Philip Morris's trademarks for non use were dismissed, since in the event Philip Morris attempted to use its trademarks it would have been exposed to potential proceedings from Dr. Scheller based on the Evin Act.
Therefore, by relying upon the Evin Act, a tobacco manufacturer can avoid the risk of revocation for non-use of its registered trademark, which justifies the tobacco companies strategies to preventively file trademarks while attempting to clear the registries.
- This report reflects the personal views of the authors and should not be attributed to the authors’ Firm or to any of its present and future clients.
- Article L. 3511-3 of the PHC.
- Directive 2014/40/EU regulating the manufacture, the presentation and the sale of tobacco and related products in the European internal market.
- On December 23rd, 2015, the advocate general Kokott, issued an opinion on the C-547/14 case stating that the “desired high level of health protection” should prevail “over economic considerations” and that the principle of proportionality was not infringed. ECJ held in such case that the Directive was valid and that Member States may maintain or introduce further requirements solely in relation to aspects of the packaging of tobacco products that are not harmonised by the Directive.
- Supreme Court, January 7, 2014, No. 13-80073.
- Decision dated November 20, 2012, No. 12-11753
- Jan III Sobieski case, Supreme Court December 19, 2006.