British American Tobacco UK Ltd & Ors, R (on the application of) v The Secretary of State for Health

A registered trade mark confers primarily negative rights to prevent unauthorised use. Registration does not create a positive public-law right to use the mark on particular goods. Restrictions on branded tobacco packaging therefore did not deprive the proprietors of their marks, where legal title, exclusionary rights and residual uses remained.

A public-health measure which controls the use of intellectual property is lawful if it is proportionate. The court must objectively assess whether the evidence reasonably supports its suitability and necessity, but the state need not disprove every conceivable alternative. Under article 24(2) of Directive 2014/40/EU, a Member State need not produce direct comparative evidence of the health effects of the Directive and standardised packaging before adopting additional proportionate requirements.

Four groups of tobacco manufacturers and producers of cigarette tipping paper appealed against Green J’s dismissal of their judicial-review challenges to the Standardised Packaging of Tobacco Products Regulations 2015. The High Court decision is reported at [2016] EWHC 1169 (Admin).

The Regulations, made under Children and Families Act 2014, standardised the retail packaging and appearance of cigarettes and hand-rolling tobacco. The appeals challenged the Regulations on intellectual-property, compensation, EU competence, compatibility with the tobacco-products regime, proportionality and, specifically, the restriction on the colour and branding of cigarette tipping paper.

The central questions were whether the restrictions unlawfully interfered with trade mark and design rights, whether they were proportionate public-health measures, and whether Directive 2014/40/EU left the United Kingdom competent to impose them.

1. Appeals dismissed. The Regulations were lawful. The court upheld Green J’s dismissal of every ground pursued by the Tobacco Appellants and the Tipping Appellants.
2. A registered trade mark gives its proprietor exclusionary rights against third-party use. It does not, by registration alone, confer a positive right to use the mark. The recognised functions of a mark explain the interests protected by those exclusionary rights; they do not convert them into a right to use a mark free of public-law regulation.
3. The restrictions were a control of use, not a deprivation, for the purposes of A1P1. The national marks remained registered, saleable and enforceable against counterfeiters and certain other users; word marks retained permitted consumer-facing use. The Community marks and designs also retained substantial uses outside the restricted context. The Regulations therefore struck a fair balance without compensation. Article 17 of the Charter added no material requirement, and the common-law compensation principle for taking or destruction of property did not apply.
4. The Regulations were compatible with the trade-mark, design and TRIPs regimes. Compliance with a legislative prohibition could amount to a proper reason for trade-mark non-use. The EU trade-mark rules permitted domestic public-health rules restricting use of national and Community trade marks. The design rules did not give an absolute right to use a design for cigarette packaging.
5. Regulation of the internal market was an area of shared competence. Directive 2014/40/EU was only partially harmonising. Article 24(2) preserved Member States’ power to impose proportionate additional requirements for the standardisation of tobacco packaging on public-health grounds.
6. On proportionality, the evidence reasonably supported the suitability of standardised packaging. The Secretary of State did not have to show that no imaginable alternative could attain the objectives. The proposed alternatives, particularly taxation, did not achieve the full range of objectives directed at the promotional effects of packaging and product appearance. The public-health benefits and the prevention of smoking-related harm outweighed the commercial property interests affected.
7. Article 24(2) required the United Kingdom to take account of the high level of health protection achieved by the Directive. It did not require a direct, evidence-based comparison showing quantified incremental benefits over Directive-compliant packaging. The 2014 impact assessment and the evidence considered by the Government sufficed.
8. Although “packaging” in article 24(2) did not include the cigarette itself, article 13 did not occupy the field of regulating cigarette appearance. Regulation 5 was therefore within domestic competence and proportionate. The court refused a further reference to the CJEU.

• Court of Appeal (Civil Division): dismissed all appeals and affirmed the dismissal of the judicial-review claims.
• High Court, Administrative Court: Green J dismissed the claims challenging the Regulations: [2016] EWHC 1169 (Admin).