Philip Morris Claims Australian Cigarette Plain-Package Rule

Philip Morris International Inc., the leading privately-owned tobacco company in the world, stated Australian proposed cigarette plain-package law infringes a treaty with Hong Kong and could result in billions of dollars in financial damages.
The manufacturer of Marlboro and Parliament confirmed it notified Australian government of its intention to file a lawsuit in international arbitrary court. Philip Morris Ltd, the Australian unit of PMI, is owned by Philip Morris’s Asian unit which is based in Hong Kong, which in its turn, has signed an agreement with Australia in 1994, under which forced elimination of trademarks is prohibited, said Anne Edwards, spokesperson for Philip Morris International.

The measure introduced by Australian government is the first in the world to prohibit all branding and colors on cigarette packs. Other countries, like Canada and United Kingdom, have considered similar measures, but haven’t approved them, because of legitimacy concerns. “There’s a huge intellectual property argument in this case,” Wayne Condon, a lawyer at Griffith Hack, and specialist in intellectual property law, admitted in an interview. “The Australian government could face a multimillion dollar damage claim,” in case tobacco industry succeeds.”
In conformity with the constitution, Australian parliament can’t introduce regulations under which the government would take away property without providing sufficient compensation.

Brand names are Property
“Trademarks are property under the law,” Condon said about the brand names used on cigarettes packs by tobacco companies.
Australia has already prohibited the displays of cigarettes in most points of sale of tobacco products. The government intends to prohibit logos and require tobacco companies to sell their products in uniform dark olive packs, containing health warning labels instead of logos, while brand names will be written in standard size and style. The measure, if approved by parliament, will be implemented on Jan. 1, 2012.

Government won’t step back
Julia Gillard, the Prime Minister of Australia said the government is not intimidated by the tobacco industry. “We would not step back,” she said in an interview. “This is a right decision and we would support it.”  “We don’t think that protecting public health is a violation of any of our international commitments,” declared Health Minister Nicola Roxon. “We consider that we are capable, and the Australian nation I believe would like their government, to protect their health.”

Other tobacco companies
According to the market reports, British American Tobacco, is the leading tobacco company in Australia, holding 48 percent of the market, with its leading brand Winfield accounting for 31.7 percent of the market. Philip Morris, with 32 percent, is the second largest cigarette company in Australia, and its leading brand Peter Jackson’s holds 18 percent of the market. “What company would sit and do nothing when having its trademarks, taken away illegally?” stated Scott McIntyre, a senior communications manager at British American Tobacco. “Any company would fight this and we’re no different.”