Australia: Tobacco Companies Hit out at Australian High Court Decision on Plain Packaging

Source from:  Newlegal Review 09/20/2012

Plans by the Australian Government to introduce plain, unbranded packaging on tobacco products cleared a significant legal hurdle on 15 August, with the country's High Court ruling that the scheme can proceed. The tobacco industry had rallied to counter the plans, primarily on the grounds that long-established and well-known trademarks tied up in their products would be effectively neutralised by the underlying legislation, the Tobacco Plain Packaging Act. As a result of legal challenges brought by the industry, the Court was required to decide on the following, constitutional points: i) that items including trademarks, copyright, designs, patents, goodwill, physical products and packaging constitute property; ii) that plain-packaging legislation would see British American Tobacco stripped of any right to this property; and iii) that a related benefit had been passed on to the Australian Government as a result of the legislation. While the Court found in favour of the Australian government, its decision has raised more questions than answers: publication of the full decision has been postponed until later this year, preventing wider analysis of the Court's thinking for the time being. British American Tobacco (BAT), one of the companies to challenge the legislation, commented: "We are extremely disappointed by the decision of the Australian High Court and remain convinced that the Tobacco Plain Packaging Act is not only a bad piece of law, but is one that will have many, unintended consequences for years to come. It is important to remember that the scope of the High Court proceedings was tightly focused on addressing whether plain-packaging legislation is contrary to a very specific point in the Australian constitution. As such, today’s decision only concerns Australian constitutional law." BAT added: "this decision is wholly separate from the various other investment and trade-related disputes which Australia is currently facing as a result of introducing the Act. These include Australia's World Trade Organisation (WTO) dispute with Honduras, Dominican Republic and Ukraine [over whether the government is in breach of its WTO obligations], and the claim that Australia is facing for breaching its Bilateral Investment Treaty with Hong Kong." As NewLegal Review reported in November last year, that treaty lawsuit emerged from industry heavyweight Philip Morris International (PMI) – purveyor of the Marlboro, Longbeach and Alpine brands – on behalf of two subsidiaries. In its view, the legislation contravened a 1993 free-trade deal between Australia and Hong Kong, with regards the company's international structure: the Hong Kong-based Philip Morris Asia (PMA) serves Australian consumers via the regional outlet Philip Morris Limited. In a statement, Philip Morris Limited spokesman Chris Argent said: "We will have to wait to read the Court's opinion to fully assess [the] decision. Regardless, the legality of plain packaging – including whether Australia will have to pay substantial compensation to Philip Morris Asia – remains at issue, and will be considered in other ongoing legal challenges." BAT, meanwhile, raised doubts over the Act's likely effectiveness. "We fully support any form of evidence-based regulation," it said, "but there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers. In fact, plain packaging would only exacerbate an already significant illicit tobacco trafficking problem." The company pledged that it would "continue to take every action necessary to protect our valuable brands, and our right to compete in global markets as a legitimate commercial business, selling a legal product, based on the full legal use of our intellectual property rights." Enditem