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Managing IP’s guide to Australia’s plain packaging ruling

The High Court of Australia will tomorrow rule whether a new law to introduce plain packaging for tobacco is constitutional. Here’s a guide to the case and what it could mean for brand owners around the world

Tobacco_plain_packWhat is the law?

Australia passed legislation requiring plain packaging for cigarettes in November 2011. From December this year, all tobacco products in Australia will be sold in plain, dark brown packs – with no industry logos, brand imagery, colours or promotional text. The cigarette brand will appear on the pack in a standard font size, colour and position. The law would also require that a certain amount of space on the package be reserved for anti-smoking messages.

What has been the reaction?

Unsurprisingly, tobacco companies launched legal action in Australia. Philip Morris, advised by Allens Arthur Robinson, also filed a notice for arbitration claiming that it violates the Australia-Hong Kong Bilateral Investment Treaty. In addition, Ukraine filed a request for consultations with the WTO on the grounds that the law violates the TRIPs Agreement.

What is the issue before the High Court?

The High Court will rule tomorrow in JT International SA v Commonwealth of Australia and British American Tobacco Australasia Limited & Ors v The Commonwealth of Australia on the tobacco companies’ argument that the new law amounts to an unconstitutional appropriation of their property.

In oral arguments, Gavan Griffith of Melbourne TEC Chambers, barrister for Japan Tobacco International (JTI), said that his client had separately registered numerous trade marks associated with Camel cigarettes, including the camel logo, but the law would prevent use of any of these marks except for the unadorned word “camel”.

Griffith also argued that tobacco companies had a separate property right when it comes to deciding how to use their packaging. By not allowing them to use their package as their “billboard”, they have been derived of a property right and forced to engage in “anti-advertising”.

Queensland solicitor-general Walter Sofronoff argued that the plain-packaging law left the companies’ property rights in their trade marks intact, but merely regulated use of this licence.

“While the licence may be in the nature of property, what is done under the licence is not”, said Sofronoff.

Corrs Chambers Westgarth is representing British American Tobacco.

How could the decision affect the rules on plain packaging elsewhere?

United Kingdom

Policy makers around the world will be watching the Australian case with interest, but perhaps nowhere more so than in the UK, where the consultation on plain packaging closed last week. The consultation was extended by one month after the government said it had received thousands of responses. One company, JTI, whose brands include Silk Cut and Benson & Hedges, said in July it would be spending £2 million on a marketing campaign against plain packaging.

If the UK government does decide to press ahead with a change in the law, tobacco companies’ legal spend will undoubtedly be far higher. Some of the potential beneficiaries could be Bird & Bird, Reddie & Grose and CMS Cameron McKenna, who count Philip Morris among their IP clients, and Simmons & Simmons and Baker & McKenzie, who have advised British American Tobacco.

New Zealand:

New Zealand also announced in April that it would draft a plain packaging law. Associate Minister of Health Tariana Turia acknowledged that the Cabinet intends to draft a law “in alignment” with Australia’s.

The New Zealand Ministry of Health opened its consultation period on the proposed law on July 25, and the public may submit comments until October 5.

Hong Kong
:

The Hong Kong Council on Smoking and Health, a government agency, is also advocating for a law that would remove all logos and marks from cigarette packages, to be replaced by the brand name displayed in a standard font, size, colour, and location on the pack.

Canada, France, Finland, and Guatemala are also possible candidates to adopt plain-packaging laws.

I’m not a tobacco company. Why should I care?

Rights holders of other so-called vice products are likely to be watching this case closely. While there are no concrete proposals for plain packaging laws for products such as alcohol, discussion has already started. In March, the House of Commons select committee on health requested evidence for an inquiry into UK government’s alcohol strategy, which raised the possibility of plain packaging and marketing bans.

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