Australian Cigarette Law Sterilizes Property Rights, BAT Says

Australian Cigarette Law
An Australian law prohibiting the display of tobacco companies’ logos, labels and trademarks sterilizes their intellectual property rights and must be declared unconstitutional, British American Tobacco Plc (BATS) said. “The Commonwealth has assumed control over a substantial aspect of the plaintiff’s property, business, goodwill and reputation,” British American Tobacco said in a March 26 filing to the High Court of Australia.

BAT, Philip Morris International Inc. (PM) and Imperial Tobacco Group Plc (IMT) are challenging the validity of the Australian law and will present their arguments against it in Canberra beginning April 17. Australia is the first country in the world to ban logos on cigarette packaging, with the law slated to go into effect in December.

The Australian Constitution, like its U.S. counterpart, was drafted recognizing the right of the state to acquire private property for public purposes only if “full indemnification” is provided to the former owner, rather than with the view based on the feudal notion that all property ultimately belonged to the sovereign, Imperial Tobacco’s Australian unit said in its submission to the court.

The tobacco companies have said if they lose the right to their trademarks, they will seek billions of dollars of damages from the Australian government.
BAT makes Dunhill, pall-mall and Australia’s best-selling cigarette brand, Winfield. Philip Morris is the maker of
Improper Acquisition
At the hearing scheduled for April, the companies will ask the High Court to declare that the plain-packaging legislation results in acquisition of property without proper compensation and that the law is unconstitutional, according to the filing posted on the court’s website yesterday.
The Australian government announced the plan to ban branding on cigarette packs in April last year, along with a 25 percent increase in tobacco taxes and an A$85 million ($88 million) advertising campaign to combat smoking.

Cigarettes will have to be sold in dark brown packages, with no company logos and the same font for all brands, according to a government statement.
The law passed through the Australian Senate on Nov. 10.
Smoking kills 15,000 Australians each year and costs the nation about A$31 billion annually in health and workplace expenses, according to the government. With 15.1 percent of the population aged 14 or older smoking daily, it is the country’s top drug and preventable health issue, the government said.

“We won’t be bullied by tobacco companies threatening litigation and we are prepared to fight them if they do,” then Health Minister Nicola Roxon said after the passage of the law.
Written Submissions
The government is to give its written submissions to the High Court by April 5.
Philip Morris is also pursuing the case in international arbitration. The Australian proposal violates a treaty with Hong Kong and may cause billions of dollars in damages, the maker of Marlboro cigarettes said.
Cigarette packs in Australia already contain graphic warnings including pictures of diseased lungs that cover half the back of a package.