Today, Australia’s highest court upheld a law which effectively destroys the value of trade marks for tobacco companies in Australia.
The controversial law, brought in earlier this year, prevents tobacco companies from using their trade marks on the packaging of cigarettes. From 1 December this year, every pack of smokes in Australia will be in plain, olive-green, with a graphic health warning.
Big tobacco challenged and failed
In April this year, the High Court heard challenges by several international tobacco companies to the validity of the new law.
It was argued that the Tobacco Plain Packaging Act 2011 (Cth) (Act) was contrary to section 51(xxxi) of the Constitution, which empowers Parliament to make laws with respect to “the acquisition of property on just terms”. The line was that the Act amounted to an acquisition of property on other than just terms.
Today, we learned that a majority of the High Court rejected the tobacco companies’ argument in finding that the Act is not contrary to section 51(xxxi).
Everyone is happy (except big tobacco, retailers and libertarians)
The Gillard Government has welcomed the Court’s decision, describing it as a "victory for all those families who have lost someone to a tobacco related illness…Tobacco companies should now stop trying to stymie this reform internationally and get on with implementing this important change."
The Australian Medical Association "hailed the decision as a victory to common sense and public health", while advocacy group Action on Smoking and Health Australia wrote that the policy has "the strong backing of health, medical and child protection leaders.”
Obviously, the tobacco companies were critical of the decision. The Australian Retailers Association joined in the critique, saying that the law places a burden of compliance on Australian retailers who already face “significant market pressures, dismal trading conditions and costs associated with regulatory burdens.”
Although the High Court has frustrated big tobacco’s plans, Philip Morris maintains that the fight is not over yet. The law still faces World Trade Organisation (WTO) challenges from the Dominican Republic, Honduras and Ukraine, as well as a challenge from Philip Morris alleging Australia’s breach of its Bilateral Investment Treaty with Hong Kong.
So is your trade mark safe in Australia? Yes… unless we decide it’s not
As the Court has not yet published the reasons for its decision, the full extent of the implications of this decision are not yet known. It can be said though that this case will be of significant interest outside of Australia, as a number of jurisdictions consider their own plain packaging laws.
As for Australia, the case is surely significant for its treatment of the tobacco companies’ trade marks.
If these companies can be denied use of their trade marks through the operation of the Act, one wonders whether future legislation could limit the use of trade marks in other industries. The justification for the plain packaging law is that cigarettes hurt people. The protection of tobacco companies’ trade marks is contrary to the interests of public health.
Yet there are lots of things in society that are not good for us – alcohol and fast food being obvious examples. If the case could be made for plain packaging for cigarettes, why not for fast food? Adopting the Government’s reasoning, how can the law justifiably protect the Happy Meal?
At least for the moment, the Government has indicated that it will not be extending plain packaging regulation to these industries. Yet if it sought to do so in the future, this case is a strong precedent for denying companies’ use of their trade marks.