Philip Morris Sues Uruguay Over Graphic Cigarette Packaging

Source from:  WUSF News  09/16/2014

Shopping for cigarettes in Uruguay isn't a pleasant experience. Photos of decaying teeth, premature babies and gruesome hospital scenes wrap around every pack. In fact, the country requires manufacturers to cover at least 80 percent of the packaging with medical warnings and graphic images.

Cigarette giant Philip Morris International sees this requirement as a violation of a treaty law. So it's suing the country of Uruguay for $25 million.

The lawsuit is based on a 1991 trade agreement between Uruguay and Switzerland, where the company is located. The cigarette manufacturer says Uruguay is violating its promise to respect intellectual property rights.

Studies have found that such gruesome packaging reduces smoking, particularly in pregnant women.

To better understand this case before it goes in front of the World Bank this month, NPR's David Greene spoke with Alexandra Hall, a reporter based in Uruguay's capital city, Montevideo.

Here are highlights from their conversation, which has been edited for clarity and length.

Exactly what kind of anti-smoking measures are we talking about here?

In 2006, the government says that cigarette makers have to cover cigarette packs 50 percent with health warnings and what are called pictograms, which are the graphic photos that show hospital scenes, what happens to a fetus when a pregnant woman smokes — really scary pictures of the negative health effects of smoking on the human body.

Then in 2009, the Uruguay government raised the required coverage to 80 percent. This is more than any other country had mandated before.

Uruguay also said you couldn't have any variation of a single brand sold in any store. You could have Marlboro, but you couldn't have Marlboro Light or Marlboro Gold. They said terms, like "light" and "gold," deceive consumers into thinking that those types are healthier than the average cigarette.

And in the end, Philip Morris had to take seven of its 12 products off the shelves. And that's when they decided to file the lawsuit.

You can see why Philip Morris wasn't happy with these measures. But what is its legal case here?

Philip Morris is saying that the percentage of warning labels that are required on cigarette packs in Uruguay goes beyond what is reasonable to protect people from the harmful effects of smoking. The company says that the warning labels leave no space for legally protected trademarks.

Is there evidence that these measures have been stopping people from smoking?

Uruguay's University of the Republic, in collaboration with a professor from Massachusetts Institute of Technology, did a study that showed that between 2005 and 2011 in Uruguay, smoking has gone down 4.3 percent annually.

They've also done studies that have shown that less pregnant women are smoking and that the birthrate has gone up because of it.

Actually, former New York City Mayor Michael Bloomberg donates millions of dollars to developing countries that are trying to stop smoking. His foundation has paid for these studies, as well as a big chunk of Uruguay's legal fees.

Michael Bloomberg is really helping to pay the legal fees for the Uruguayan government? Is that because the government doesn't have the resources to go to battle with this big tobacco company?

The amount of money that Philip Morris has at its disposal puts Uruguay's gross domestic product to shame.

Is there precedent for other places in the world?

The outcome of this case will set the tone for other countries. I spoke with Uruguay's former secretary of public health, who said that Philip Morris' intention was to make an example out of Uruguay.

There are a lot of other countries that are also in legal disputes with Philip Morris right now — Australia, for example. It was the first to adopt plain packaging in 2011. And Philip Morris has been suing them ever since. Philip Morris has also threatened in the last few weeks to sue the U.K.

STEVE INSKEEP, HOST:

The South American nation of Uruguay has enacted increasingly aggressive antismoking laws. They're now some of the toughest in the world. Now tobacco giant Philip Morris is suing the government there in international court, arguing that Uruguay's laws violate the terms of trade agreements the country has signed. Reporter Alexandra Hall has been following this legal battle from Uruguay's capital and spoke with our colleague David Greene about the case.

DAVID GREENE, HOST:

Tell me how this case began and exactly what kind of antismoking measures we're talking about here.

ALEXANDRA HALL, BYLINE: It started with prohibiting people from smoking in enclosed public areas - in bars, in restaurants, in the office.

GREENE: Those sound like things we're familiar with here.

HALL: Exactly, exactly. And that was fine. There was no legal action taken at that point. Not until 2009, 2010, the Uruguayan government decided to make cigarette companies cover cigarette boxes 80 percent with pictograms, which are the graphic photos that show the negative health effects of smoking on the human body. And this was more than any other country had mandated before.

And then at the same time, they also adopted the single presentation ordinance. And that said that you couldn't have any variation of a single brand sold in any store. So, for example, you could have Marlboro, you could have Camel cigarettes, but you couldn't have Marlboro Light, Marlboro Gold; you couldn't have menthol. And they did this because they said that terms like light and gold deceive consumers into thinking that those types are healthier than the average cigarette. And in the end, Phillip Morris had to take 7 of its 12 products off the shelves. And that's when they decided to file the lawsuit.

GREENE: OK, so you can sort of get an idea why Philip Morris was not happy with these measures. But what is their legal case here? What are they basically saying is the reasoning that they oppose these measures?

HALL: Well, they're saying that the percentage of warning labels that are required on cigarette packs in Uruguay go beyond what's reasonable to protect people from the harmful effects of smoking and that basically Uruguayans know - regardless of warning labels - that smoking is bad for their health. So these restrictions don't stop people from smoking; they just make them switch brands. They also say that the warning labels leave no space for legally protected trademarks, and these restrictions breach the protections of a bilateral investment treaty.

GREENE: Let me just follow up on something you said - that Philip Morris is arguing that people know that smoking is bad for their health anyway, that these measures, you know, are not actually having any impact. Is there evidence that these measures have been working and stopping more people from smoking?

HALL: Well, the Republic University of Uruguay, in collaboration with a professor from MIT, did a study that showed that between 2005 and 2011 in Uruguay, smoking has gone down 4.3 percent annually. And they've also done studies that show that less pregnant women are smoking and that birth weight has gone up because of it. It's worth noting here that Uruguay isn't doing this on its own. Actually former New York Mayor Michael Bloomberg, who donates millions of dollars to developing countries who are trying to stop smoking, his foundation is paying for these studies, plus a big chunk of Uruguay's legal fees.

GREENE: Michael Bloomberg? Are his foundations actually paying that Uruguayan government's legal fees here?

HALL: Yes.

GREENE: Is that because this government just doesn't have the resources to go to battle against this big tobacco company?

HALL: Well, I don't know if they don't have the resources. But Philip Morris is suing Uruguay for $25 million. And while that might not be a lot of money for Philip Morris, Uruguay is expected to pay at least the third is that - about $8 million - just to fight this lawsuit.

GREENE: Can you just tell me what's at stake, you know, if Phillip Morris wins this battle, if Uruguay wins? I mean, is there precedent here for other places in the world?

HALL: Well, yeah, the outcome of this case will definitely set a tone for other countries. I spoke to Uruguay's former secretary of public health, and she said that Philip Morris' intention was to kind of make an example out of Uruguay. There's a lot of other countries that are also in legal disputes with Philip Morris right now. Australia, for example, they were the first country to adopt plain packaging in 2011, and Philip Morris has been suing them ever since. Philip Morris has also threatened in the last few weeks to sue the U.K. after the British government consulted its health department. There was a study that showed that plain packaging could reduce the likelihood that children pick up smoking in the U.K. And so the British government is considering adopting similar legislation, and Philip Morris has said that if they do take such steps, then they're ready to sue the British government for millions of dollars.

GREENE: All right, we've been talking to reporter Alexandra Hall, who's in the capital of Uruguay, covering a legal battle between that government and Philip Morris, the tobacco company. Alexandra, thanks very much.

HALL: Thank you, David. Enditem