Plain packaging gets green light in the UK as court dismisses legal challenge 19 May 16
The High Court in London has rejected a challenge to legislation introducing plain packaging for tobacco products. The decision was handed down just a day before the new regime makes effect, meaning that the UK will shortly become the latest country to implement plain packaging.
In January 2015 the UK government announced that it would proceed with plain packaging legislation, and two months later MPs voted to approve the Standardised Packaging of Tobacco Products Regulations, due to take effect on May 20 2016 (at the same time as the second Tobacco Products Directive). Following the vote, a challenge was launched by tobacco companies at the English High Court. In the meantime, as we reported earlier this month, the European Court of Justice (ECJ) ruled that the aforementioned EU directive on tobacco products is valid, meaning that the extensive standardisation of packaging, the future EU-wide prohibition on menthol cigarettes and upcoming special rules for electronic cigarettes are lawful. Reflecting on that decision, a number of commentators were at pains to stress that the ECJ’s ruling did not necessarily give the green light to plain packaging. However, it did open the door to such regimes and, as we noted, meant that the battle over plain packaging will continue at Member State level. Today’s decision of the High Court of England and Wales was therefore keenly awaited.
Justice Green’s decision is a lengthy one, coming in at 386 pages, due to the 17 different grounds of opposition lodged by companies including British American Tobacco, Philip Morris, JT International and Imperial Tobacco. In essence, though, he has paved the way for the introduction of the new rules from tomorrow by rejecting the request for review.
On the claim that the process by which the government collected evidence led to only “limited” weight being afforded to the evidence submitted by the tobacco industry, the court concluded that the evidence in question fell significantly below internationally accepted best practice, with the government correctly affording it limited weight.
Turning to the challenge to the proportionality of the regulations the court rejected all submissions that they are unsuitable and would be counter‐productive, and that the balance struck between the right to use trademarks and other intellectual property, on the one hand, and public health interests on the other hand, is unfair. In summary, the court found that “there are no other equally effective measures which could have been adopted” to “achieve an important public health objective”.
The court then considered the argument that the regulations violated the fundamental right to respect for property (ie trademarks, copyright and goodwill), amounting in essence to an unlawful expropriation of their property rights without fair compensation. However, the court again sided with the government, finding that the regulations do not take away from the tobacco industry
their rights. The judgment states: “I accept that their trademarks and other relevant intellectual property amount to ‘possessions’ or ‘property’ which in principle are capable of falling with the protective principles involved. I also accept that in principle certain types of goodwill can also amount to a protectable interest…. [but] Title to the rights in issue remains in the hands of the tobacco companies; the regulations curtail the use that can be made of those rights but they are not expropriated. Indeed, the rights remain important in the hands of the tobacco companies because the word marks can still be used on packaging and will serve their traditional function as an identifier of origin. I accept that the figurative marks cannot be used in this manner but they still have certain, admittedly very limited, vestigial uses, which the regulations do not curtail.”
As to compensation, it noted: “There is no precedent where the law has provided compensation for the suppression of a property right which facilitates and furthers, quite deliberately, a health epidemic. And moreover, a health epidemic which imposes vast negative health and other costs upon the very State that is then being expected to compensate the property right holder for ceasing to facilitate the epidemic… [I therefore] reject the claim for compensation. It is ‘fair’ not to compensate the tobacco companies for requiring them to cease using their property rights to facilitate a health epidemic. In my judgment it would not be right to expect the state to pay any compensation.”
Responding to the court’s decision to reject all of the applications for judicial review, JTI immediately announced its intention to appeal, arguing that “other consumer goods industries must now worry that their branding is under threat from political opportunism, rather than examining the evidence”. Daniel Sciamma, UK managing director, stated: “We will continue to challenge the legality of plain packaging. The fact remains that our branding has been eradicated and we maintain that this is unlawful.”
However a different tone was taken by Philip Morris International. Marc Firestone, senior vice president and general counsel, argued that the court’s reliance on “a 2006 decision by a judge in the United States in a case about US law to which PMI was not even a party, and did not concern plain packaging” provided “strong grounds” for appeal. However, he added: “The broader question is what actions make the most sense for the seven million adult smokers in the UK. Despite the important principles in this one case, we’ve decided not to appeal. We will instead maintain our focus on efforts to develop and commercialise scientifically substantiated reduced-risk products that we firmly believe will ultimately benefit UK smokers and public health much more than plain packaging.”
This statement is a significant one, Philip Morris clearly feeling that it is time to refocus its efforts in the UK. It remains to be seen how an appeal progresses but as it stands, plain packaging in the UK has received the green light and comes into effect tomorrow (although there is a one year transitional period to allow for the sell-through of old stock).
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