What's the issue?
The proposed new EU Packaging & Packaging Waste Regulation could restrict the ability of brand owners to use distinctive and fanciful product packaging. It risks leading to very valuable 3D shape trade mark rights becoming cancelled for non-use.
If enacted, the Regulations will impose packaging minimisation requirements on all packaging manufacturers whose products are placed on the EU market (irrespective of where they are produced). More specifically, packaging that is not necessary to comply with certain "performance criteria" is prohibited, as is packaging with characteristics only aimed at increasing the perceived volume of the product.
At present, the performance criteria are drafted narrowly and do not include criteria based on the need to differentiate a product from other products on the market. The only carve out is for packaging designs protected by geographical indications (GIs). Although the EU Council and Parliament are both considering amendments to the Regulation that would carve out packaging protected by other IP rights, the amendments arguably do not go far enough to secure the use of the types of fanciful packaging currently on the market.
Brand owners should consider lobbying on this issue now to ensure that their ability to use distinctive packaging in the EU is not curtailed. This is particularly so for those in the luxury (perfumery, cosmetics, high-end alcoholic drinks) and FMCG sectors where products are often presented in exotic-shaped bottles and other fanciful packaging.
What's the aim?
As part of the European Green Deal and the new circular economy action plan, the EU Commission proposed a new Packaging and Packaging Waste Regulation in November 2022. The draft Regulation amends Regulation (EU) 2019/1020 (market surveillance) and Directive (EU) 2019/904 (single use plastics), as well as repealing the current Packaging and Packaging Waste Directive. As the new provisions are contained in a Regulation, rather than a Directive, they will be directly applicable in every EU Member State.
The aim is to ensure that all packaging is reusable or recyclable in an economically feasible way by 2030 across the EU market and to avoid fragmented rules.
What type of packaging is covered?
Packaging is defined broadly. Article 3(1) says that ‘packaging’ means items of any materials that are intended to be used for the containment, protection, handling, delivery or presentation of products and that can be differentiated into packaging formats based on their function, material and design.
It specifically includes items that are necessary to contain, support or preserve the product throughout its lifetime, items designed and intended to be filled at the point of sale (provided that they perform a packaging function) and tea or coffee bags and system single-serve units necessary to contain a tea or coffee product and intended to be used and disposed of together with the product.
There are currently no exemptions to the packaging minimisation requirements for particular industries or product categories.
What does the draft Regulation actually say?
The key provision on packaging minimisation is Article 9. It provides that:
(1) Packaging shall be designed so that its weight and volume is reduced to the minimum necessary for ensuring its functionality taking account of the material that the packaging is made of.
(2) Packaging not necessary to comply with any of the performance criteria set out in Annex IV and packaging with characteristics that are only aimed to increase the perceived volume of the product, including double walls, false bottoms, and unnecessary layers, shall not be placed on the market, unless the packaging design is subject to geographical indications of origin protected under Union legislation.
(3) Empty space shall be reduced to the minimum necessary for ensuring the packaging functionality as follows:
- For sales packaging, in relation to the total volume of the packaged product and its characteristics
For the purpose of assessing the compliance with this paragraph, space filled by paper cuttings, air cushions, bubble wraps, sponge fillers, foam fillers, wood wool, polystyrene, styrofoam chips or other filling materials shall be considered as empty space.
(4) Compliance with the requirements set out in paragraphs 1 and 2 shall be demonstrated in the technical documentation referred to in Annex VII, which shall contain the following elements:
- An explanation of the technical specifications, standards and conditions used to assess the packaging against the performance criteria and methodology set out in Annex IV
- The identification of the design requirements which prevent further reduction of the packaging weight or volume, for each of these performance criteria
For reusable packaging, the assessment of compliance with the requirements set out in paragraph 1 shall take into account the function of reusable packaging as referred to in Article 10.
What carve outs are there?
As currently drafted, Article 9(2) contains the only express exemption, where the packaging design is protected by a GI. GIs are distinctive signs that identify a product whose quality, reputation or other unique characteristic relates specifically to its geographical origin (such as Cornish pasty). So, the exemption applies if the more wasteful packaging is essential for the goods to comply with the GI rules.
There are no exemptions for packaging designs protected by other IP rights or used to differentiate the product from others on the market. Only if such packaging also meets the performance criteria in Annex IV would it be permissible. It is not even clear whether the performance criteria in Annex IV allow consideration of the shape of the product chosen or whether they prohibit "wasteful" shapes per se.
What are the Council and Parliament proposing?
It is possible that the wording of Article 9 will change since both the EU Parliament and Council have proposed significant amendments to it. The Parliament has proposed that packaging elements protected by Registered and Unregistered Community Designs (as well as GIs) should be exempted. Meanwhile, the Council has proposed that the following be exempted:
- Packaging elements protected by Registered and Unregistered Community Designs, national member state designs falling under Directive 98/71/EC, and designs falling under international agreements in any EU member state.
- Packaging shapes protected as EUTMs, as national member state trade marks falling under Directive 2017/1001 and under international agreements in any EU member state.
However, the Council proposal is limited to designs and trade marks of the type specified that are in existence at the date the Regulation enters into force (and not future rights). The exemption would also only apply where the requirements of the Regulation affect the novelty and/or individual character of the design (for packaging protected by designs) or the ability of the trade mark to distinguish the marked goods from those of other undertakings (for packaging protected by shape trade marks).
Do the amendments go far enough?
The revised proposals should safeguard a wider variety of packaging designs. However, some brand owners might argue that they do not go far enough. In particular:
- Under the Council's proposal, only rights of the type specified that are in existence/protected when the Regulation comes into force confer the exemption. Future packaging designs would not be exempted, irrespective of whether they are protected by designs, trade marks or GIs. This would not only limit the ability of incumbents to update their packaging and innovate but would penalise new market entrants whose packaging would not be able to benefit from any exemption.
- This is particularly relevant for packaging protected by designs. A registered design is only registered for a maximum of 25 years and an unregistered design is only protected for 3 years. Under the Council's proposal, the packaging minimisation exemption would fall away for those packaging elements protected by such rights on expiry.
- Given how difficult it is to secure registered trade mark protection for product and packaging shapes (which usually require evidence of acquired distinctiveness through use), only a small number of established entities would be able to benefit from this particular exemption. If the provision is interpreted narrowly to cover pure shape marks (as opposed to those shapes registered because of distinctive words or other elements), it will be even narrower in scope. Again, this would appear to advantage the market incumbents and unfairly restrict new market entrants from launching new products with attractive, unusual and distinctive packaging.
- Seemingly, the exemption proposed by the Council only applies if changing the packaging so as to comply with the Regulation would affect the validity of the relevant trade mark or design. This leaves open the possibility of certain changes to packaging being required despite that packaging being protected by a relevant right.
If brand owners are to be certain of their ability to use the type of product packaging currently on the market, then arguably a broader carve out for characteristics covered by existing and future IP rights is required. Alternatively, a carve out for characteristics that differentiate the product or conform to consumer's expectations would safeguard the position.
Will this result in standardisation for certain packaging?
While the requirements in Article 9 are broad, they are clearly not so prescriptive as to impose product packaging standardisation. However, the Regulation certainly opens the door for member states to develop harmonised standards to provide a framework for manufacturers to achieve compliance with the Regulation.
Typically harmonised standards are voluntary but can lead to the presumption of conformity with the associated regulation. Many manufacturers therefore opt to follow the frameworks set out in these standards for ease – which could increase standardisation. Many more opt to do their own thing and demonstrate that they still comply.
What about artificial inflation of product size?
Article 9(2) also contains a prohibition on "characteristics that are only aimed to increase the perceived volume of the product…". This requirement is broad and difficult to assess objectively. It is not the case that manufacturers are having to ensure that packaging does not include more than 20% empty space, for example, which would be far more quantifiable. Manufacturers are likely to interpret these requirements in different ways and still have a reasonable argument that they are compliant (and - subject to any enforcement action - they will be assessing compliance themselves).
Neither the EU Parliament nor Council has proposed any amendments to this aspect of Article 9. We expect national member state authorities to be particularly focused on it when it comes to enforcement. This provision mirrors the UK's equivalent scheme, where there is an increased focus from the authorities on ensuring that consumers are not misled by packaging design.
What else does the Regulation cover?
The Regulation covers a wide range of issues apart from packaging minimisation. These include requirements relating to excess packaging, the use of certain packaging formats, re-useability of packaging, plastic carrier bags, the full lifecycle of packaging, labelling, extended producer responsibility, and the collection, treatment and recycling of packaging waste. It also sets out the minimum required amounts for plastic packaging containing a certain minimum level of recycled materials and harmonised labels to reflect this information.
What are the sanctions under the Regulation?
Packaging subject to the new Regulation will need to undergo a conformity assessment and technical documentation will need to be drawn up to demonstrate compliance. The EU's conformity assessment procedure has typically been reserved for products and so its extension (wholesale) to packaging represents a significant step change. However, it should be noted that this will be a self-certification conformity assessment by the manufacturer so no third-party involvement or approval will be needed.
Enforcement and penalties have been left to Member States to implement (except that breaches of Articles 21 to 26 are to be sanctioned by an administrative fine imposed on the relevant economic operator). Penalties provided for "shall be effective, proportionate and dissuasive." An enforcement action could originate from a customer and/or competitor complaint or an investigation by a national regulator (which may focus on packaging in particular industries as a whole).
Where are we in the process?
It is expected that the Regulation will go to the trilogue negotiation stage for agreement on the final wording of the provisions shortly. The intention is that it will be voted upon before the end of the EU Parliament's term at the end of April 2024.
What does this mean for you?
Brand owners may wish to consider lobbying to ensure that the new Regulation safeguards their ability to use fanciful and distinctive product packaging. They might also want to consider what trade mark and design protections they might need to put in place to safeguard their ability to continue using existing packaging, at least in the short to medium term.
Please contact a member of the Taylor Wessing team if you would like to discuss this in greater detail.
