On the 20 May 2016, standardised plain cigarette packaging became compulsory in the United Kingdom. On the second anniversary of this legislation, Albright IP has been considering the effect it has had on the trade marks traditionally associated with tobacco sales.
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Historically, tobacco companies have made extensive usage of advertising and sponsorship to promote their trade marks on everything from Formula One racing cars to TV shows. Possibly, the best example is Marlboro, a premium tobacco brand that has been the world’s bestselling cigarette brand since 1971. It was catapulted to success by the ‘Marlboro Man’, and until relatively recently they invested heavily in sports sponsorship.
As a trade mark is used it accrues goodwill; this goodwill can be accrued either through advertisement, endorsement, or by repeat purchase. Currently, Marlboro is the world’s 25th most valuable brand, and remains highly recognisable.
However, gradually as time moves forward from the introduction of the new regulations in 2016, the restriction on the tobacco companies’ ability to advertise and visibly promote their brands, is impacting upon their ability to accrue goodwill, and to induce purchases, as their brand recognition and options to promote an alluring image, diminishes.
In trade mark terms, perhaps, the most obvious impact of the plain packaging legislation is that it effectively restricts tobacco companies to relying upon their registrations of word marks, rather than the logos that they were associated with historically. Undoubtedly removing the figurative trade marks from packaging, will have an adverse effect on the value of the brands and the trade marks themselves, in turn impacting upon the asset value on the company balance sheets.
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Undoubtedly, the plain packaging legislation had the intention of portraying all cigarettes as being dangerous to health, but this legislation has had a knock-on effect of making tobacco products indistinguishable from one another, and essentially undermining the core function of a trade mark, namely to designate trade origin, and define an expected quality.
In a nutshell, the plain packaging legislation will eventually transform cigarettes into a homogenous product, which in turn will lead to consumers opting to purchase cheaper, and perhaps lower quality brands. Whilst we cannot comment on whether the plain packaging legislation will have the desired effect of reducing the number of smokers in the United Kingdom, the heavy restrictions on the use of advertising and branding in this sector makes a useful case study on the importance of trade marks and brand recognition.
If you require advice on future-proofing your trade mark protection, the experienced trade mark team at Albright IP will be happy to assist.