Big tobacco's challenge disappears in a puff of smoke

The Australian High Court has rejected a constitutional challenge by major tobacco company Philip Morris and others against the government's tobacco plain packaging legislation.

Cigarettes and other tobacco products sold in Australia after 1st  December 2012 must be in drab olive/brown packaging and brand names will be restricted to small, generic type. The packaging will also include large health warnings and may include disturbing graphics depicting the ill-health effects of smoking.

Understanding your IP rights
The companies have failed in their arguments that, with compulsory plain packaging laws, the government would acquire their intellectual property unjustly, and that the legislation deprives them of the right to use their intellectual property (mainly the trademarks and copyright associated with their branding). The High Court handed down its ruling on 15th August 2012, but its full reasoning for the decision will not be published until later this year.

The High Court ruling appears to confirm that a registered right to exclude others from using intellectual property (in this case a trademark) carries no guarantee that the proprietor has any right to use the intellectual property itself. This applies equally to patents and registered designs. For example, just because a party can obtain a granted patent for an improvement to a product or process does not necessarily mean that it can use the patent without risk of infringing an earlier patent for the original product or process.

This emphasises the importance of understanding the nature of IP rights. If an individual, company or organisation has any doubts as to what rights are conferred by its intellectual property, it should consult a specialist in management of intellectual property and other intellectual assets.

Consequences
This fight is unlikely to end yet. The major tobacco companies are likely to take up their case with the World Trade Organisation (WTO), arguing that the plain packaging legislation is contrary to international treaties, such as the Agreement on Trade-Related Aspects of IP Rights.

Australia currently has one of the lowest rates of smoking in the world (around 15%). The government is hopeful that the plain packaging laws will reduce this rate to about 10%.

Several other countries have been closely monitoring the tobacco companies' appeal and some, such as New Zealand and the United Kingdom, are expected to follow suit. However, they are likely to wait for the High Court's full reasoning to be published, as well as the outcome of any appeals to the WTO, before taking definite steps to introduce plain packaging legislation.