Australia’s Cigarette Packaging and Trademark Owner’s Ability to Distinguish Themselves

I saw on the BBC a few days ago that Australia’s High Court had supported a new law requiring cigarette packs to be wrapped in some fairly revolting advertising.  Australia already had very restrictive cigarette advertising laws.  The packs will now have to carry have a picture around the middle, showing a wrecked mouth of pustulent lips and missing teeth, or an eye held open ala Clockwork Orange with a reference to eye disease.  A black banner above the picture has an informational message like “Smoking Causes Blindness,” and a small banner below the picture has an area for the cigarette brand to identify itself in plain letters.

The cigarette companies which do business in Australia, primarily three major international companies, have argued that the new law will damage business.  Obviously – isn’t that sort of the point?  Their arguments, as they appear in the media, rest somewhat on trademark grounds.  They claim that the inability to brand and package their cigarettes, to have to adhere to a standardized, defined label, will allow counterfeit cigarettes to stream into Australia.

In America, trademarks are about preventing consumer confusion with respect to the source of the product – a mark helps a consumer identify and distinguish one producer’s goods from another’s.  Protection against counterfeits plays a role in that goal – in most cases, a true counterfeit comes from a source other than the mark owner (ignoring grey goods-type counterfeits).  So the cigarette companies’ arguments may have some merit: reduce the ability for a mark owner to distinguish itself with branding on a product, and you may increase the potential for a counterfeiter to knock that product off.  In an extreme example, if the packaging was nothing but a brown wrapper with the brand written in a small, standardized font at the bottom, how well could a consumer pick out the brand he or she likes and how easy would be for a copy-cat to knock that packaging off?

One also wonders whether the cigarette companies are worried not just about cuts in profits, but a transfer of profits among the companies.  A law that requires limits the distinctions in brands by standardizing the appearance of packaging would likely contribute to a lessening of more powerful brands to control a market.  The brands become fungible without the ability to distinguish themselves, and profits would likely be more evenly distributed across the brands.