Moscow Arbitration court rules against Philip Morris

On March 22, 2017 Moscow Arbitration court delivers an award where Philip Morris Brands S.a.r.l.(“ Philip Morris”) was found wrong. Philip Morris filed a case against the Russian distributor of an Armenian-Canadian Grand Tobacco (“Grand Tobacco”) company in a ‘packaging case’.

The summary of the case

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In 2016 Grand Tobacco started exporting its products (‘Ararat’ branded cigarettes) to Russia. Philip Morris Brands S.a.r.l found that the packaging was too similar to its “Marlboro”  brand and therefore filed a case against Grand Tobacco in the Moscow Arbitration court saying that the packaging of ‘Ararat’ resembles ‘Marlboro’ and misleads the customers, and asked for a RUB 5 mln. (approx. USD 88 000) compensation and an immediate destruction of all ‘Ararat’ cigarettes.

Since Philip Morris was represented in this case via a Swiss entity and Grand Tobacco via its Russian importing entity, this case fell under the Russia-Switzerland Bilateral Investment Treaty(“BIT”) and  Philip Morris referred the article 8 of this BIT to file the case at the local arbitration court.

“Like products” vs commercial interest?

According to Grand Tobacco the argument of Philip Morris was more commercially driven, because customers would buy less Marlboro products and Ararat would take more market share.

The court found that the package of ‘Ararat’ cigarettes yet similar, but cannot be confused with ‘Marlboro’ , because the first one has 2 triangles instead of 1 (which actually symbolizes the mount Ararat, after which the brand is named) and the color and type of letters is different and therefore can be distinguished from the latter one. It shall be noted that Grand Tobacco has already won similar cases in other jurisdictions (Lebanon, Kuwait, UAE and Taiwan) and again the uniqueness of ‘Ararat’`s packaging was defended.

And for Philip Morris this one was yet another lost case on a ‘packaging’ issue. However this case can be seen more business orientated, since Philip Morris was merely trying to illuminate a competitor in the market, while in Uruguay or Australia cases, Philip Morris was trying to preserve its unique packaging and a market share.

Featured picture:, user id:mariagracia.silva

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