Tobacco giants fight Australia over labeling law

Tobacco companies accused the Australian government of destroying the worth of their trademarks by forcing them to strip logos off cigarette packs as a court battle over the world's toughest laws on cigarette promotion drew to a close Thursday. There was no immediate ruling following the three-day hearing in Australia's High Court over the constitutionality of the country's strict plain-packaging laws, which ban tobacco companies from displaying their distinctive colors, brand designs and logos on cigarette packs in a bid to make smoking less attractive.

Cigarettes will instead be sold in drab, olive green packs, featuring graphic health warnings and images of cancer-riddled mouths and bulging, blinded eyeballs. The law takes effect in December. British American Tobacco, Philip Morris International, Imperial Tobacco and Japan Tobacco International have all challenged the new rules on the grounds that they violate intellectual property rights and devalue their trademarks.

The companies are worried that the law will set a global precedent that could slash billions of dollars from the values of their brands. The tobacco companies' main argument is that the government would unfairly benefit from the law by using cigarette packs as a platform to promote its own message, without compensating the cigarette makers. Gavan Griffith, a lawyer representing Japan Tobacco International, said the government was attempting to appropriate 100 percent of the back of each packet and 70 percent of the front.

"We say our trademarks are extinguished," he told the court in the capital, Canberra. Commonwealth Solicitor-General Stephen Gageler, representing the government, rejected that argument. "The suggestion that tobacco packets will become little billboards for government advertising is wrong," Gageler told the court. The law is about public health, Gageler said — not about the government acquiring intellectual property.

"On that argument, the tobacco companies for the last 40 years or so have been frogs slowly boiling, with the gradual taking of their property," he said. "This is nothing more than the prospective regulation of conduct in the course of trade." Gageler said the law was simply a product standard, along the lines of regulations requiring other potentially harmful substances such as rat poison to carry warnings about safe handling. In response, Griffith held up a package of rat poison before the court and noted the warning on the poison was far more modest than the graphic warnings required on cigarette packs. The court is expected to rule on the challenge later this year.