E-News No.46

E-News No.46

Tobacco trademarks in a smog

by Tougane Loumeau (GIDE LOYRETTE NOUEL – France)

Coty Germany GmbH v. Philip Morris Benelux BVBA and Philip Morris Products SA, French Supreme Court, Commercial Chamber, February 2, 2016, No. 14-17404, ECLI:FR:CCASS:2016:CO00111

Ministerial Decree No. 2016-334 and Ministerial Order of March 21 , 2016 on plain cigarette packets

Tobacco trademarks have experienced highs and lows lately in France. Among the highs, Philip Morris has scored a judicial victory that should make it easier for the tobacco industry to find available names for their products. Winning this battle may however go unnoticed while they are facing the greater threat of losing a war as new legislation on plain packaging is coming into force this May 20, 2016.

The context of the Supreme Court case is the following:

Tobacco advertising has been prohibited in France since 1976. The tobacco industry had found a means to circumvent this ban by launching non-tobacco products or services marketed and advertised under a brand already known for tobacco products. To prevent such a practice, a provision was enacted in 1991, which prohibits advertising in favor of any type of product marketed under a brand which is reminiscent of tobacco products.

Such provision does not distinguish between cases where the non-tobacco trademark was registered after the tobacco trademark and cases where it was registered before the tobacco trademark. In order to protect owners of earlier non-tobacco trademarks from having their advertising rights unfairly restricted by the later registration of a tobacco trademark, case-law has recognized them the right to claim for the invalidation of similar later tobacco trademarks. This has made the finding of a trademark for tobacco products quite a difficult task since it has to be available for all products and services. This explains that tobacco trademark applicants sometimes choose to register trademarks even if such signs are not fully available. They avoid putting them to use in order not to harm the earlier marks and wait for an opportunity to have the latter cancelled (notably through non-use cancellation actions). The risk for the tobacco operators is to become at risk of facing a cancellation action for non-use themselves, when that wait lasts more than five years.

In the commented case, Philip Morris had registered the name “Manhattan” as a tobacco trademark several decades before, while there already existed such a trademark for fragrances and cosmetics. Around 10 years ago, Philip Morris decided to claim for cancellation of that former trademark on the ground of non-use. Such action was successful. As a counterclaim, the cosmetic company claimed for the cancellation of the tobacco Manhattan trademark, also on account of its never having been put to use. The court of appeal rejected that claim. It ruled that Philip Morris should be able to rely on the defense that the existence of the former mark prevented its using its own trademark, as such use would have put it at risk of being sued for harming the former trademark. The good news for the tobacco industry is that the Supreme Court upheld such judgment.

The bad news for them is that the date is looming when they will no longer be able to use their logo trademarks in France. Last January, a law was enacted which introduces tobacco plain packaging in France. The enforcement ministerial Decree and Order were published on March 21, 2016. Like in Australia, the packets will all be similar: kaki green with sanitary warnings and pictures designed to shock. The only trademark admissible will be the verbal one and its presentation will answer stringent rules as to font, color and size. The new legislation will come into force on May 20, 2016: from that date, manufacturers will only be allowed to produce plain packets but they will be able to sell their stocks to tobacconists up to  November 20, 2016. Tobacconists must stop selling non-conforming packets by January 1, 2017.