San Diego - Our friends down under are moving toward enforcing tougher anti-smoking laws. In response, the world's big four tobacco firms head to Australian high court to protect their trademarks and logos from Australia's warnings about lung cancer and the associated disturbing images.
Beginning in December, all cigarettes sold in Australia will have to be packaged in olive-green packs with stark health warnings, graphic images, and no brand logos. The manufacturer name will only appear in small, standard font.
This move has large tobacco companies such as Phillip Morris, Imperial Tobacco, Japan Tobacco International, and British American Tobacco fuming, claiming that the new laws which force them to sell their products in unbranded packaging is unconstitutional because it allows the Australian government in essence to acquire their intellectual property, trademarks and logos, without any compensation.
The move by the Australian government to only permit the sale of tobacco products in the unbranded packaging is expected to influence other countries to adopt the same laws. Last week, lawmakers in New Zealand agreed to introduce all tobacco products in unbranded packages with the same warnings, based on Australia's legislation.
Acting on behalf of Japan Tobacco International, the owner of Camel and Silk cut, Gavan Griffith stated that Australia's new laws would use one hundred percent of the back of each cigarette packet and seventy percent of the front for the warnings and lung cancer images. The company's trademark Camel would be reduced to a "bare husk," according to Griffith.
"We say our trademarks are extinguished," said Griffith in court.
The tobacco giants are basing their argument on a part of the Australian constitution which states that the "acquisition of property" by the state must be on "just terms", which means that compensation must be paid.
In response to the constitutional example presented by the tobacco companies, the Australian government said that it would be inappropriate for it to compensate companies for their trademarks for requiring them to market their products in a way that would prevent damage to public health. Adding insult to injury, Australia's high court chief justice, Robert French, said that this particular case was in a "different category" because of the risk of fatal health issues caused by smoking.
Regardless of tougher anti-smoking laws and campaigns in the U.S. and Australian markets, in 2010 British American Tobacco reported an increase in profits of 5%, while Phillip Morris International, the manufacturer of the Marlboro brand, reported a 15% increase in profits last year. The increase was largely due attributed to growth in the Asian market.