Australian High Court Rejects Challenge By Big Tobacco And Determines Plain Packaging Laws Are Constitutional And Valid

Source from:  Mondaq  11/19/2012

As you may have read or heard, a majority of the High Court of Australia has rejected the constitutional challenge mounted by several key players in the tobacco industry who strongly opposed the passing of the Australian Government's Tobacco Plain Packaging Act 2011 (Cth) (Act) on the basis that it amounted to an acquisition of their statutory intellectual property on "unjust terms".

Against the backdrop of Australia's longstanding engagement in the regulation of tobacco, the introduction of the Act was promoted by the Government as an integral part of a comprehensive suite of measures adopted by Australia to respond to the public health problems associated with and caused by tobacco. Given the likely implications this would have for tobacco companies and their brand marketing and advertising, it was not surprising that the companies sought to challenge the Act's validity.

The Act was predominantly challenged on the basis that the Government was misappropriating and acquiring the intellectual property rights of tobacco company owners in contravention of the section 51(xxxi) "just terms" provision of the Constitution. The tobacco companies argued that their products' use of distinctive trade dress and get-up, including words, colours, designs, logos, letterings and markings, which help to distinguish their products from those of other traders, were "property" for the purposes of section 51(xxxi) and that the provisions of the Act constituted an acquisition of property other than on just terms.

In response, the Government argued that the Act contained non-discriminatory regulatory measures designed to achieve a fundamental public welfare objective and therefore did not confer upon the Government any measurable benefits or advantages analogous to proprietary rights. Other legal arguments raised by the tobacco companies during the proceedings were that the act:

Was an illegitimate restriction in breach of the system of international trade mark protection
Would constrain the free movement of tobacco products between Australia and other countries and thereby constituted a breach of various international trade and bilateral investment treaties.
The High Court published the full reasons for its decision on 5 October 2012. In short, it appears as if the crux of the tobacco companies' claim was dismissed by the majority who held that, while the imposition of the restrictions and prohibitions imposed by the Act restricted the tobacco companies' rights with respect to their intellectual property, the restrictions did not involve the accrual of a benefit of a proprietary character so as to amount to an acquisition of property on "unjust terms".

The decision is expected to have significant global influence, with countries such as the United Kingdom and New Zealand in particular closely monitoring developments in Australia as a test case for consideration of future policy discussions and decisions. Enditem