By Helen Sloan
August 15 2012
In a keenly anticipated decision, Australia’s highest court has rejected an appeal by British American Tobacco, Philip Morris, Japan Tobacco and Imperial Tobacco against the Tobacco Plain Packaging Act, which was approved by the Australian senate in November last year. The cigarette companies had argued that removing all trademarks and branding from the packaging amounted to acquisition of their property by the government without due compensation. However, a majority of the court found that the Act was not contrary to the relevant part of the Australian constitution – adding that the reasons behind its decision would be published at a later date.
There is no further right of appeal, so by December, all tobacco products will be sold in branding-free packets with large and graphic health warnings. Attorney General Nicola Roxon, who first introduced the measure when she was health secretary, said in a statement: "The message to the rest of the world is big tobacco can be taken on and beaten. Without brave governments willing to take the fight up to big tobacco, they’d still have us believing that tobacco is neither harmful nor addictive." British American Tobacco’s statement on the result makes their feelings clear: “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 that it is one that will have many unintended consequences for years to come.” The company goes on to stress the fact that it is a legitimate commercial business selling a legal product.
But despite the tobacco companies’ understandable disappointment, the court had been expected to rule in favour of the government. “I don’t think it’s a surprising decision. It would have been more surprising had the tobacco industry had succeeded in their arguments,” says Sean McManis from Shelston IP in Sydney. He explains the particular constitutional points that were considered during this landmark case: “What the decision is about is Section 51, part 31, which allows the parliament to make laws to acquire property on just terms, for suitable purposes. I think there was a difficulty in arguing that there is an acquisition of property in a case like this. It certainly seems to be more of a regulation of their use of their intellectual property, rather than acquisition.”
The cigarette companies have expressed their concerns that plain packaging will lead to an increase in counterfeits – which will not only affect the tobacco companies themselves, but will reduce the tax income that the government receives from legitimate sales, and may also drive down prices, possibly encouraging more people to smoke. “If you are trying to copy packaging, then copying plain packaging is easier than packaging that’s got a lot of brands and designs on it,” McManis says. “I’m not sure of the extent to which counterfeiting would occur, so it’s going to be a case of wait and see how that develops.”
The debate has been keenly followed around the globe, and other countries including New Zealand and the UK will no doubt be increasingly confident about their plans to introduce similar measures. But while the tobacco industry is probably right to be concerned that more plain packaging laws may be on their way globally, is seems less likely that such laws will be introduced for non-tobacco items. “There are questions about other products that may have adverse health influences, whether they might be next in line - the alcohol industry is one that springs to mind,” McManis says. “But certainly the government has said that it does not intend to expand these laws into other types of products. Tobacco is an unusual product: the effects of smoking are so well documented, and it is difficult for that product to be used safely - whereas with most other products there is at least a safe level of use.”
But while the high court’s decision on this matter is final, BAT points out that the government still has to consider a number of other disputes relating to the issue, including the claim brought by Philip Morris Asia that Australia is breaching its bilateral investment treaty with Hong Kong. Outside of Australia, the big tobacco countries are unlikely to do nothing if, as expected, other jurisdictions introduce similar laws. While it now seems highly likely that plain packaging for cigarettes will come into force in December this year in Australia, the story is still far from over.
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