Tobacco brands challenge plain packs

Christian Kerr
The Australian
April 16, 2012

THE plain packaging laws have handed control of tobacco companies’ property to the government without any compensation in violation of a key clause of the constitution, the High Court will be told tomorrow.

British American Tobacco Australia, Japan Tobacco International, Philip Morris and Imperial Tobacco are all challenging the legislation in a case that is attracting international attention and will shape laws worldwide.

From the end of the year, all cigarette packaging in Australia will be drab green, with graphic health warnings and generic fonts. Tobacco companies will argue in three days of hearings the laws rob them of their logos, trademarks and pack designs and other intellectual property without heed to the “just terms” promised under Section 51 of the Constitution.

The government says plain packaging is an important public health measure.

But The Australian understands the tobacco companies will argue that the case is strictly a matter of constitutional definitions of property.

The government has claimed property rights are not involved.

It has said in its defence that it has not interfered with trademark laws that simply exclude other companies from using brand names without the owner’s permission.

But the tobacco companies will argue that plain packaging confers comprehensive control of what goes on cigarette packets and individual cigarettes themselves to the commonwealth.

They will claim the laws mean the commonwealth will acquire effective ownership of their intellectual property by denying them the right to use it as they otherwise would on their packaging and products.

The tobacco companies are set to argue that the ability to sell clearly branded products is central to their business model.
They will say it is vital for them to be able to differentiate the individual products they manufacture, the product lines of their competitors and illegal counterfeit tobacco products.

Their counsel will argue plain packaging will transform their businesses from ones that deal in branded products to business for commoditised products.

They will claim the laws destroy the value of their intellectual property, with implications for other businesses, such as the alcohol industry.

The High Court will be asked to rule if plain packaging represents an acquisition of property other than on the just terms promised by the Constitution.

The Cancer Council will also seek to become involved in the matter as a “friend of the court”.

The High Court case is one of three challenges to the plain packaging laws.

Philip Morris, which has its regional headquarters in Hong Kong, is undertaking action under the bilateral trade agreement between Australia and the Chinese autonomous region, saying the laws violate the terms of the treaty. Ukraine and Honduras have also lodged official complaints with the World Trade Organisation, claiming plain packaging constitutes “an unnecessary obstacle to trade”.