Tobacco Firms Fight Plain Packaging Rules

by Mary Swire, for LawAndTax-News.com, Hong Kong

03 May 2010

Australian free-market think-tank, the Institute of Public Affairs, (IPA) has warned that forcing tobacco companies to remove their trademarks from products was equivalent to compulsorily acquiring property.

According to the IPA, under the Australian constitution, the government would be obliged to pay the industry AUD3.4bn in compensation to tobacco companies if it succeeds in forcing through tough new anti-smoking laws.

"Stripping intellectual property from products is akin to stripping someone of their physical property and requires compensation under the Commonwealth Constitution and our free trade agreements," said Tim Wilson, Director of the IP and Free Trade Unit at the IPA.

"Risking taxpayer dollars because of poorly considered laws is an outrage. Worse, it's morally offensive that taxpayer dollars from smoking and non-smoking Australians may be gifted to big tobacco because Parliaments are governing in ignorance" Wilson remarked.

By stripping intellectual property from tobacco products, Australia may also breach a number of World Trade Organization and free trade treaty obligations, the IPA warns.

"Every government that has considered plain packaging to date has rejected it because of its questionable efficacy and the compensation risks," Wilson noted.

However, the International Union Against Cancer (UICC) has expressed confidence that imposing plain packaging on tobacco firms would not breach Australia's international legal obligations. "On the contrary, we would see this as Australia showing international leadership in implementing obligations under international law," Jonathan Liberman, senior legal policy adviser to the UICC, told ABC Radio.

Unsurprisingly, the tobacco companies have reacted strongly to the Australian proposals.

"The ability to show a trademark on the packaging of a product constitutes the very essence of trademark rights," says Phillip Morris, one of the world's largest manufacturer of tobacco products, on a website dedicated to fighting plain packaging laws around the world. "Plain packaging would effectively eliminate the use of trademarks in relation to tobacco products, constituting a violation of trademark rights protected by national and international law. Various legal experts and governments have recognized plain packaging amounts to a seizure of intellectual property."

Plain packaging laws were recently considered by the UK government, but the proposal was shelved after doubts were expressed on the impact they would have on the overall level of smoking, and in view of "the impact that plain packaging would have on intellectual property rights."

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