Australia wins approval for world's first plain-pack tobacco

A world-first Australian law requiring tobacco companies to sell cigarettes in uniform packaging was upheld by the nation’s top court, a ruling that may set a precedent for other countries to follow.

The High Court dismissed today claims by Japan Tobacco Inc., British American Tobacco Plc, Philip Morris International Inc. and Imperial Tobacco Group Plc that the Australian government illegally seized their intellectual property by prohibiting the display of trademarks on packs. The judges gave no reasons for the majority decision and said they would be published later.

The ruling is a victory for a government faced with A$31.5 billion ($33 billion) in annual health costs from smoking, a habit it estimates killed 900,000 Australians over six decades. The decision means the nation will become the first country to introduce plain cigarette packs when the law takes effect Dec. 1, with governments in Europe, Canada and New Zealand indicating interest in implementing similar legislation.

“The tobacco industry has battled furiously to prevent Australia from becoming the first country in the world to implement plain packaging,” Rob Cunningham, a senior policy analyst at the Canadian Cancer Society in Ottawa, said by e-mail today. “The industry knows that plain packaging is a massive threat and that if Australia implements plain packaging then other countries are sure to follow.”

No Logos

The Australian law requires cigarettes to be sold with no company logos and with the same font for all brands on a dark brown background. Graphic health warnings will cover 90 percent of the back of the package and 70 percent of the front.

“This ruling sets a precedent for other countries in the region, particularly Asia, that are looking to pass evidence- based public health laws,” John Stewart, senior international organizer at the lobby group Corporate Accountability International, said in an e-mailed statement today.

“Big Tobacco is looking toward Asia and the Pacific as a target market for expansion,” he said.

The tobacco companies sued the government in the High Court and sought to overturn the law, which they say deprives them of any use of their intellectual property.

“Any company in similar circumstances, when faced with the loss of brands worth billions of dollars, would challenge such laws,” Sonia Stewart, a spokeswoman for Imperial Tobacco, said in an e-mailed statement today.

Canada, Britain

Once a country implements a tobacco control measure, it becomes easier for other countries to do the same, Canadian Cancer Society’s Cunningham said. Canada was the first to make pictorial health warnings mandatory in 2001 and about 50 nations followed suit, he said.

Consultations on a British government plan to enforce standardized packaging for tobacco products ended last week, with the International Chamber of Commerce in the U.K. among bodies raising concerns. The plain-packaging requirements would probably breach a number of the U.K.’s international obligations, including World Trade Organization intellectual property agreements, said Andrew Wilson, director of policy at ICC.

“The United States and other nations must stand with Australia and reject tobacco industry efforts to challenge the law as a violation of international trade,” Matthew Myers. president of Campaign for Tobacco-Free Kids in Washington, said today in an e-mailed statement.

The government estimates that smoking led to the deaths of more than 900,000 Australians from 1950 to 2008. Still, almost one-sixth of the Australian population aged 14 years and older smokes cigarettes on a daily basis, the government said.

Black Market

“Today’s ruling literally changes the face of tobacco marketing,” Jorge Alday, associate director of policy with World Lung Foundation in New York, said in an e-mail. “Australia is adding a policy tool that will help other countries reverse decades of misleading messages.”

Bloomberg Philanthropies is a major donor to the World Lung Foundation. Bloomberg Philanthropies was set up by New York Mayor Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP.

The plain packaging law will be a boon to criminals who sell illegal cigarettes in Australia, Scott McIntyre, a spokesman for British American Tobacco, said in a statement today.

“The illegal cigarette market will grow further when all packs look the same and are easier to copy,” McIntyre said.
The size of the illicit tobacco market in Australia is equivalent to 13.4 percent of the legal industry, Deloitte LLP said in a May report on the cigarette industry.

International Case

The Deloitte report “substantially” exaggerates the size of the illegal market in Australia, the health department said in a submission to a Senate committee considering tougher penalties for tobacco smugglers. Still, the illicit trade remains “a public health concern in Australia, given its potential to undermine government action to reduce smoking rates,” the department said.

BAT makes Dunhill, Pall Mall and Australia’s best-selling cigarette brand, Winfield. Philip Morris is the maker of Marlboro cigarettes.

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.

Ukraine, Honduras

In April, Honduras complained to the World Trade Organization about the Australian plain-packaging law, claiming it contravenes WTO obligations on intellectual property rights and will have serious economic consequences to the central American country that relies on tobacco exports.

Ukraine had filed a similar complaint in March and the Dominican Republic followed last month.

“Big tobacco threw everything they could to try and stop this reform,” Australia’s Health Minister Tanya Plibersek and Attorney General Nicola Roxon (pictured above) said in a joint statement today. “The message to the rest of the world is that big tobacco can be taken on and beaten.”