An arbitration panel of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) handed a major victory to the proponents of restricting the packaging of tobacco products. The case involved a claim by Philip Morris International (“PMI”) that the government of Uruguay violated a bilateral investment treaty with Switzerland by enacting measures that included an increase in the size of graphic health warning appearing on cigarette cartons, tax increases, advertising bans, and barring tobacco manufacturers from promoting more than one variety of cigarette brands. PMI argued that these measures breached international treaties by prohibiting the use and enjoyment of investments, denying fair and equitable treatment under the law, and expropriating valuable trademarks. Uruguay responded that it acted in good faith, in the interest of promoting public health and in accordance with its international treaties and obligations. On July 8, 2016, the ICSID ruled in favor of Uruguay, ordering PMI to cover Uruguay’s legal fees, in excess of $7 million.
This decision bolsters arguments that a state has sovereign authority to weigh the public interest over the usage and protection of trademarks and other forms of intellectual property. Further, the tribunal posited that there is no “positive right to use” a trademark and that trademark owners have an exclusive right in order to prevent third parties from using the same mark in the course of trade. Moreover, the ICSID decision may be a harbinger of the long-awaited decision by a dispute resolution panel of the World Trade Organization (“WTO”) on whether Australia’s plain packaging legislation violates the Agreement on Trade-related Aspects of Intellectual Property Rights. The WTO panel’s decision, expected next year, may determine the fate of not only packaging and trademark use on tobacco products, but of other products that become the target of health policy activists.