Australia's planned plain packaging tobacco law does not violate IP rights, rules court

Out-Law News | 15 Aug 2012 | 4:37 pm | 2 min. read

A proposed Australian law forcing tobacco to be sold in plain packaging will not violate tobacco firms' intellectual property rights, Australia's High Court has ruled.

Tobacco companies including British American Tobacco, Imperial Tobacco and Philip Morris reportedly claimed that the law would undermine constitutional rights not to have property acquired other than 'on just terms'.

They reportedly claimed that banning the use of tobacco brands would be an acquisition of that intellectual property.

Under the Australian constitution the Parliament has the "power to make laws for the peace, order, and good government of the Commonwealth with respect to ... the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws".

In a summary (1-page / 28KB PDF) of its judgment the High Court said that it had ruled that the Act was not unconstitutional in this respect. The summary did not contain any rationale behind the decision, but a full copy of the judgment is expected to be published later in the year.

"The plaintiffs argued that some or all of the provisions of the Act were invalid because they were an acquisition of the [tobacco companies'] property otherwise than on just terms," the Court's summary said. "At least a majority of the Court is of the opinion that the Act is not contrary to [the section of the constitution's rules on 'acquisition of property']."

The Tobacco Plain Packaging Act will now come into force in December. Under it, tobacco companies will not be able to display most brand information on cigarette packaging. The Act prohibits companies from displaying their branded logos and colours on tobacco packets, although the companies can display brand names in accordance with tight rules governing the size and position of the lettering. The Act further requires tobacco products to be sold in "drab dark brown" packets which display health warnings.

In a statement British American Tobacco said it was "extremely disappointed" with the ruling and described the Tobacco Plain Packaging Act as "not only a bad piece of law, but ... one that will have many unintended consequences for years to come."

"We fully support any form of evidence-based regulation but there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers," the company said. "In fact, plain packaging would only exacerbate an already significant illicit tobacco trafficking problem, and would have other significant adverse unintended consequences including driving down prices which would lead to increased smoking while reducing government tax revenue."

"British American Tobacco will continue to take every action necessary to protect our valuable brands and our right to compete in global markets as a legitimate commercial business selling a legal product, based on the full legal use of our intellectual property rights," it added.

Earlier this month a consultation period that was held to attract views on the UK Government's proposals to introduce plain packaging requirements for tobacco products ended. At the time of the launch of the consultation in April the Department of Health said that standardised packaging for tobacco products could feature "no branding; a uniform colour; standard font and text for any writing on the pack". The consultation did ask for views on "whether there might be other implications if standardised packaging requirements were introduced, including any potential effect on the illicit tobacco market."