December 21, 2011

Philip Morris on Tuesday became the third tobacco giant to file a legal challenge against new Australian laws that will force tobacco products to be sold in dull, plain packaging from late next year.

The tough, world-first legislation cleared by parliament is being closely watched by governments considering similar moves in Europe, Canada and New Zealand. It has angered tobacco companies worried it may set a global precedent and infringe on trademark rights.

Under the laws, cigarettes, pipe tobacco and cigars have to be sold in olive green packs free from branding, but carrying graphic health warnings, from December next year.

Philip Morris, with a 37 percent market share in Australia for its brands including Marlboro and Alpine, said the government had passed a law that acquired its “valuable brands and intellectual property” without offering compensation.

“We believe plain packaging violates the Australian Constitution because the Government is seeking to acquire our property without paying compensation,” company spokesman Chris Argent said in a statement.

Argent said Philip Morris Asia was seeking a ruling from the Australian High Court, the country’s supreme judicial body, that the government could not prevent the firm from using branding on its cigarette packaging. Based in Melbourne, Philip Morris’s Australian manufacturing arm employs 800 people.

In recent weeks, British American Tobacco and Imperial Tobacco launched separate High Court challenges.

Philip Morris said last month it was seeking arbitration over the new laws, through its office in Hong Kong.

“Big tobacco just can’t give up their addiction to legal action,” said Attorney General Nicola Roxon. “They have fought governments tooth and nail around the world for decades to stop tobacco control.

“Big tobacco is fighting against the government for one very simple reason — because it knows…that plain packaging will work. While it is fighting to protect its profits, we are fighting to protect lives,” she said in an emailed comment to Reuters.

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In 2005, the World Health Organization urged countries to consider plain packaging, estimating more than 1 billion people are regular smokers, 80 percent of them in poor countries.

The Himalayan nation of Bhutan banned the sale of tobacco outright this year.

Industry analysts say tobacco companies are worried that plain packaging could spread to important emerging markets like Brazil, Russia and Indonesia, and threaten growth there.

Legal experts have predicted both legal and WTO challenges will fail because intellectual property rights agreements give governments the right to pass laws to protect public health.

Australia’s tobacco market generated total revenues of about A$10 billion in 2009, up from A$8.3 billion in 2008, although smoking generally has been in decline. About 22 billion cigarettes are sold in the country each year.

Britain decided last week to delay its consultation on plain packaging of tobacco products as it considers a series of issues after Australia introduced the new laws.

Source: Reuters (December 20, 2011)

December 16, 2011

Britain is to delay its consultation on plain packaging of tobacco products until the spring of 2012 as it considers a series of issues after Australia prepares to be the first nation to introduce such legislation by end-2012.

British Health Secretary Andrew Lansley said the government will kick off the process with an invitation for those parties with an interest to respond early next year, but it will need to take many relevant factors into account.

“In view of these requirements, the consultation will not be available prior to the new year. The consultation will be published in spring 2012 and I would encourage all those with an interest to respond,” Lansley said in a written ministerial statement on Thursday.

He is eager to cut the number of young people who take up smoking as 330,000 children under 16 in England each year first try smoking and the majority of smokers start regularly before they are 18. He is also looking to support those adults who want to quit smoking.

Last month, Australia approved laws to introduce plain packaging from December 2012 to reduce the attractions of smoking, but three global tobacco giants have launched lawsuits saying the laws infringe trademark rights.

Three of the world’s four largest tobacco group, Philip Morris International, British American Tobacco and Imperial Tobacco are challenging Australia’s new law in its High Court.

Under the new legislation, cigarette, pipe tobacco and cigars will have to be sold in branding-free olive green packs displaying the product name in a plain typeface along with graphic health warnings. Governments in Europe, Canada and New Zealand are watching the move closely.

In March this year, Lansley introduced his tobacco control plan to explore options to reduce the promotional impact of tobacco packaging and said then that this would include a consideration of a move towards plain packaging.

But he is having to look for expert legal advice on all aspects of a possible move, including the intellectual property right implications, the cost and public health benefits.

Britain is already introducing laws whereby tobacco products should be hidden from view in England, Wales and Northern Ireland from 2012 in large retailers and from 2015 in small retailers in a domestic market largely dominated by Imperial Tobacco and Japan Tobacco.

Source: Reuters (December 15, 2011)

December 16, 2011

Britain is to delay its consultation on plain packaging of tobacco products until the spring of 2012 as it considers a series of issues after Australia prepares to be the first nation to introduce such legislation by end-2012.

British Health Secretary Andrew Lansley said the government will kick off the process with an invitation for those parties with an interest to respond early next year, but it will need to take many relevant factors into account.

“In view of these requirements, the consultation will not be available prior to the new year. The consultation will be published in spring 2012 and I would encourage all those with an interest to respond,” Lansley said in a written ministerial statement on Thursday.

He is eager to cut the number of young people who take up smoking as 330,000 children under 16 in England each year first try smoking and the majority of smokers start regularly before they are 18. He is also looking to support those adults who want to quit smoking.

Last month, Australia approved laws to introduce plain packaging from December 2012 to reduce the attractions of smoking, but three global tobacco giants have launched lawsuits saying the laws infringe trademark rights.

Three of the world’s four largest tobacco group, Philip Morris International, British American Tobacco and Imperial Tobacco are challenging Australia’s new law in its High Court.

Under the new legislation, cigarette, pipe tobacco and cigars will have to be sold in branding-free olive green packs displaying the product name in a plain typeface along with graphic health warnings. Governments in Europe, Canada and New Zealand are watching the move closely.

In March this year, Lansley introduced his tobacco control plan to explore options to reduce the promotional impact of tobacco packaging and said then that this would include a consideration of a move towards plain packaging.

But he is having to look for expert legal advice on all aspects of a possible move, including the intellectual property right implications, the cost and public health benefits.

Britain is already introducing laws whereby tobacco products should be hidden from view in England, Wales and Northern Ireland from 2012 in large retailers and from 2015 in small retailers in a domestic market largely dominated by Imperial Tobacco and Japan Tobacco.

Source: Reuters (December 15, 2011)

December 14, 2011

International tobacco companies will stop the current packaging of products by July 2012 as the rollout process of pictorial warnings on tobacco products begins.

The first cigarette pack with the health warnings will hit the stands in August next year.

Major tobacco companies, mainly international, were on Monday given copies of the five approved pictures and printing specifications that will be compulsory on all tobacco products starting August next year as per the federal Anti-Tobacco Law. The meeting was the first in the series of awareness sessions with stakeholders.

By August, no product without an Emirates Standardisation and Metrology Authority (Esma)-approved certificate will be allowed into the country. Local companies will also be asked to stop the current packaging within this time frame. The Esma will meet with the companies after the deadline expires and assess the time required to clear existing stock with the current labels, said Mohammed Badri, Director-General of the Esma, while addressing the gathering. Other governing bodies such as municipalities will also be involved at a later stage.

Manufacturers also agreed to give samples to the Esma for approval before launching the new products in the market.

Majority of the representatives from the international companies refused to comment on the issue.

A local manufacturer who was not present in the meeting told Khaleej Times that adding pictures would mean increasing costs by at least 20 per cent. “We need special colour printers and scanning facilities,” said a representative of a Fujairah-based company manufacturing a brand available locally and for export as well. He also said that more than the printing costs, the annually increasing price of tobacco is a source of concern.

“Each year, tobacco prices go up by 30-35 per cent and if we are forced to increase even 25 fils per packet a year, the customers will feel the pinch,” said the representative. As per the specifications, the warnings and pictures will be printed on a white background and will cover 50 per cent of the pack.
Manufacturers raise issue of cigar packs

The current GCC-approved specifications for tobacco packaging and labelling do not include a provision for cigars that may have to be packaged differently.

Manufacturers said on Monday at the meeting that cigars were available in at least more than 50 types of packaging.

Cigars, they said, are valuable only after they age. Some cigars dated from 1950 can cost up to $5,000 per cigar. “We have a warehouse full of cigars that we have to age and hence we cannot stop production by July,” said a manufacturer. Esma Director-General Mohammed Badri, however, said that the law applies to all types of tobacco.

“This issue will be discussed with the GCC committee,” he said.

Source: Khaleej Times (December 13, 2011)

December 7, 2011

The government is to begin a wide-ranging consultation on plain packaging of tobacco products by the end of the year, informed by the legal challenges Australia has faced as the first nation to pass such legislation.

Australia’s parliament approved laws last month to introduce plain packaging from December 2012 to reduce the attraction of smoking, but three tobacco giants have launched lawsuits saying the laws infringe trademark rights.

Under the legislation, cigarette, pipe tobacco and cigars will have to be sold in branding-free olive green packs displaying the product name in a plain typeface along with graphic health warnings. Governments in Europe, Canada and New Zealand will be watching closely.

In March, Health Secretary Andrew Lansley announced plans to start considering a move towards plain packaging under a new tobacco control plan, but he gave no timescale.

“The tobacco control plan confirms a commitment to consult by the end of this year on options to reduce the promotional impact of tobacco packaging, including an option to require plain packaging,” said a Department of Health spokeswoman on Tuesday.

She added that the department was looking for expert legal advice on all aspects of a possible move, including the intellectual property right implications before it publishes a consultation document that would look at the costs as well as the additional public health benefits of policy options.

“Only after this work, and gathering views and evidence from public consultation, will we be in a position to know whether it will be possible to proceed and if so, how,” the spokeswoman said.

Earlier, Imperial Tobacco become the third tobacco group to challenge Australia’s new laws in its High Court following similar moves by Philip Morris International and British American Tobacco.

The government is already introducing laws whereby tobacco products should be hidden from view in England, Wales and Northern Ireland from 2012 in large retailers and from 2015 in small retailers in a domestic market largely dominated by Imperial Tobacco and Japan Tobacco.

Source: Reuters (December 6, 2011)

Dec 7, 2011

Imperial Tobacco launched a legal challenge in Australia’s High Court on Tuesday against new laws forcing tobacco products to be sold in plain packaging from next year, becoming the third tobacco giant to do so.

The laws, past by parliament last month, are being watched closely by governments in Europe, Canada and New Zealand, who see Australia as a test case. They have angered tobacco firms who fear they may set a global precedent and infringe on trademark rights.

“The High Court of Australia will now determine claims which include the validity of these unprecedented laws. Unchallenged, the Australian government would otherwise be able to simply take the intellectual property of legal entities,” Imperial Tobacco Australia General Manager Melvin Ruigrok said in a statement.

British American Tobacco launched a separate High Court challenge last week, while Philip Morris launched international action last month through its office in Hong Kong.

Philip Morris, the world’s largest cigarette maker measured by sales, said its action could trigger compensation claims worth billions of dollars.

Under the law, cigarettes, pipe tobacco and cigars have to be sold in olive green packs free from branding, but carrying graphic health warnings, from December 2012.

Tobacco export countries including Nicaragua, Dominican Republic and Ukraine have warned they may also challenge the laws under global trade rules.

Imperial Tobacco said it would test the validity of the laws using its well-known Peter Stuyvesant brand, which has been trade marked in Australia since 1958.

Source: Reuters (December 6, 2011)

Dec 2, 2011

British American Tobacco on Thursday launched a High Court challenge against a law that will require plain packaging on cigarettes in Australia, claiming it infringes intellectual property rights.

Days after fellow global tobacco giant Philip Morris sued Canberra over the controversial plan, BAT filed a constitutional challenge that it said would act as a “test case” on the validity of the legislation.

BAT’s claim relates to the property rights of two of its brands, Winfield and Dunhill, and, if successful, “should apply to other property and brands sold by BAT”, the company said in a statement.

BAT argues that it is a legal company selling a legal product and that it is both unconstitutional and invalid for the government to remove its trademarks and other intellectual property without compensation.

Under the groundbreaking law, passed last month, all tobacco products sold in Australia must be in plain packaging from December 1, 2012.

Cigarettes will be sold in drab, olive-brown packets with large, graphic health warnings showing diseased body parts and sick babies, while brand imagery and promotional text will be banned.

The government says that tobacco use costs the country more than Aus$30 billion (US$29 billion) a year in healthcare and lost productivity.

But the proposal to remove all logos and to print company names in a uniform font has angered tobacco firms, who say it will cut profits and result in fake products flooding the market because plain packaging is easier to reproduce.

Last week Hong Kong-based Philip Morris Asia launched a bid to suspend the law and said it wanted substantial compensation for the loss of trademarks and investments in Australia under a bilateral investment treaty with Hong Kong.

PMA expects damages to amount to billions of dollars and that the legal process will take two to three years, while its Australian affiliate Philip Morris Limited also intends to pursue action in the High Court.

BAT spokesperson Scott McIntyre said Canberra had left it no option.

“Obviously we’d rather not be in a situation where we’re forced to take the government to court, but unfortunately for taxpayers the government has taken us down the legal path,” he said.

“Health Minister (Nicola) Roxon will now waste millions of taxpayers’ dollars on legal fees defending plain packaging even though she has said herself there is no proof it will reduce smoking rates.”

BAT argues that the legislation would result in a black-market boom, leading to taxpayers missing out on billions of dollars in excise duties, while organised crime gangs would make a fortune.

“Worse still, cheaper, more accessible illegal tobacco will actually increase smoking rates, which is the opposite effect to what the minister is hoping to achieve,” said McIntyre.

But Roxon vowed that Australia would not cave in to the pressure.

“(Cigarette firms) have fought governments tooth and nail around the world for decades to stop tobacco control,” she said in a statement.

“Let there be no mistake, big tobacco is fighting against the government for one very simple reason — because it knows, as we do, that plain packaging will work.”

Although Australia would be the first country to mandate plain packaging, New Zealand, Canada and Britain have considered a similar approach and are watching developments.

Anti-smoking group Quit called BAT’s move “desperate”.

“What we are seeing is a tobacco industry completely on the ropes,” said Quit executive director Fiona Sharkie.

“It is pulling out any dirty trick or tactic in an attempt to undermine this important legislation which will prevent countless Australians from becoming addicted to their deadly products in the future.”

Source: AFP (December 1, 2011)

Nov 24, 2011

Tobacco giant Philip Morris today launched legal action against Australian laws forcing tobacco products to be sold in drab, plain packaging from late next year.

Australia’s parliament has passed laws compelling cigarettes, pipe tobacco and cigars to be sold in plain olive packs from December 2012.

Tobacco export countries including Nicaragua, Dominican Republic and Ukraine have warned they may challenge under world trade rules, while tobacco companies including British American Tobacco and Imperial Tobacco, have said they may challenge the law in Australia’s High Court.

Philip Morris said it had launched legal action that could trigger compensation claims worth billions of dollars.

“The Government has passed this legislation despite being unable to demonstrate that it will be effective at reducing smoking and has ignored the widespread concerns raised in Australia and internationally regarding the serious legal issues associated with plain packaging,” Philip Morris spokeswoman Anne Edwards said in a statement.

The action is being brought by Philip Morris Asia Ltd, Hong Kong, the owner of the Australian affiliate, through a notice of arbitration under Australia’s Bilateral Investment Treaty with Hong Kong.

The laws are being closely watched by governments considering similar moves in Europe, Canada and New Zealand, angering tobacco companies worried that they may set a global precedent and infringe on trademark rights.

The Himalayan nation of Bhutan banned the sale of tobacco outright earlier this year.

Australia’s Health Minister Nicola Roxon, speaking after parliament’s lower house approved laws already passed by the upper house Senate last week, demanded tobacco companies respect the will of the parliament.

“Plain packaging means that the glamour is gone from smoking and cigarettes are now exposed for what they are: killer products that destroy thousands of Australian families,” Roxon told reporters.

Roxon said while the tobacco industry was fighting to protect its profits, the government was “fighting to protect lives”.

The World Health Organisation in 2005 urged countries to consider plain packaging, and estimated more than 1 billion are regular smokers, 80 percent of them in poor countries.

Industry analysts say tobacco companies are worried that plain packaging could spread to important emerging markets like Brazil, Russia and Indonesia, and threaten growth there.

Legal experts have predicted both legal and WTO challenges to fail, as intellectual property rights agreements give governments the right to pass laws to protect public health.

Conservative opposition MPs, while backing the laws, urged Roxon to accept a three month moratorium on prosecutions and the enforcement of heavy fines for small tobacco sellers to give them time to adjust to the possible impact on sales.

Australia already bans tobacco advertising, smoking in public buildings and the public display of cigarettes in shops. In some states, it is illegal to smoke in a car if a child is a passenger.

Australia wants to cut the number of people who smoke from around 15 percent of the population to 10 percent by 2018. Health authorities say smoking kills 15,000 Australians each year with social and health costs of around $32 billion.

Australia’s tobacco market generated total revenues of around $10 billion in 2009, up from $8.3 billion in 2008, although smoking generally has been in decline. Around 22 billion cigarettes are sold in the country each year.

Source: The Age (November 21, 2011)

Nov 21, 2011

Australia has released draft regulations for new pictorial health warnings to be implemented in 2012. The draft regulations proposed two sets of seven health warnings for cigarette packages and five health warnings for cigar packages. The warnings would be required to cover 75% of the front and 90% of the back of cigarette packages. The proposal features warnings for blindness, death, lung cancer, mouth cancer, throat cancer, kidney and bladder cancer, gangrene, emphysema, gum and tooth damage, heart disease, stroke, harm to unborn babies, and harm to children from second hand smoke, as well as the benefits of quitting, and the “quitline” number on all packs. Images for the proposed warnings can be viewed here, while the complete Draft Regulations are available here.

Source: Product Safety Australia (November 14, 2011)

Nov 9, 2011

A federal judge on Monday blocked a Food and Drug Administration requirement that tobacco companies put big new graphic warning labels on cigarette packages by next September.

In a preliminary injunction, Judge Richard J. Leon of United States District Court in Washington ruled that cigarette makers were likely to win a free speech challenge against the proposed labels, which include staged photos of a corpse and of a man breathing smoke out of a tracheotomy hole in his neck.

The judge ruled that the labels were not factual and required the companies to use cigarette packages as billboards for what he described as the government’s “obvious anti-smoking agenda!”

The 29-page ruling was a setback for Congressional and F.D.A. efforts to bolster the warnings on tobacco packages. The agency has said they are the most significant change to health warnings in 25 years.

The Justice Department is reviewing the ruling, a spokesman, Charles S. Miller, said. The F.D.A. declined to comment, a spokeswoman said.

If the ruling is appealed – as both sides expect – it would join a different federal judge’s ruling on similar issues on appeal and raise the possibility that the issue will be decided by the United States Supreme Court.

Floyd Abrams, a New York lawyer and First Amendment specialist who argued the case for Lorillard Tobacco of Greensboro, N.C., praised the ruling. He said the companies had just objected to “grotesque” images, but not to new words of warning.

“It’s basically rooted in the notion that compelled speech by the government is presumptively unconstitutional,” Mr. Abrams said. “The only exception that could fit here is the one which says that the government can require warnings to be placed on products including tobacco products, but that the warnings must be factual and uncontroversial in nature.”

Five tobacco companies had challenged the selection of nine specific graphic warnings as an unconstitutional intrusion on commercial free speech. The judge agreed with them on almost every point, saying the companies would suffer irreparable harm if the provision were enforced before it was fully decided in courts, a process that is likely to take years.

“It is abundantly clear from viewing these images that the emotional response they were crafted to induce is calculated to provoke the viewer to quit, or never to start, smoking: an objective wholly apart from disseminating purely factual and uncontroversial information,” Judge Leon wrote.

“At first blush, they appear to be more about shocking and repelling than warning,” Judge Leon added in a footnote.

Antismoking activists called on the Justice Department to appeal immediately.

“This ruling presents a direct and immediate threat to public health,” Charles D. Connor, president and chief executive of the American Lung Association, said in a statement. “The tobacco industry’s efforts to halt the replacement of cigarette warning labels that are 25 years old, ineffective and hidden on the side of packages, will result in more lives lost to tobacco.”

Matthew L. Myers, a lawyer and president of the Campaign for Tobacco-Free Kids, a Washington advocacy group, said Judge Leon had sympathized with tobacco companies during oral arguments.

“The government has been expecting this decision and will appeal,” Mr. Myers said. “In addition, many of the same issues are now pending before a panel of the United States Court of Appeals for the Sixth Circuit because a federal judge in Kentucky reached a decision different than Judge Leon’s decision today.”

In that case, Judge Joseph H. McKinley Jr. ruled the cigarette makers could be forced to put graphic images and warnings on the top half of their packages, as Congress required. But Judge Leon noted that Judge McKinley had not seen the actual proposed images.

Judge Leon was appointed to the bench in 2002 by President George W. Bush. Last year, Judge Leon also ruled against the F.D.A. over e-cigarettes, an electronic device that looks like a cigarette and delivers nicotine, saying they should be regulated as tobacco products rather than under the stricter regimen as drug delivery devices. The government has not appealed that case.

The Family Smoking Prevention and Tobacco Control Act of 2009 gave the F.D.A. authority for the first time to regulate tobacco products. It included a provision directing the F.D.A. to require larger, graphic warning labels covering the top half of the front and back of cigarette packs by Sept. 22, 2012, as well as 20 percent of print advertising.

The F.D.A. had studied 36 images and narrowed them down to nine after surveys of effectiveness. The photos are similar to some included with cigarettes in Canada. But the tobacco companies argued, and the judge agreed, that the F.D.A. could not prove the images would make a statistically significant difference in smoking rates in the United States.

“We are pleased with the judge’s ruling and look forward to the court’s final resolution of this case,” Bryan D. Hatchell, a spokesman for R.J. Reynolds Tobacco of Winston-Salem, N.C., makers of Camel cigarettes, said after the ruling.

Other plaintiffs in the suit are Commonwealth Brands, the Liggett Group, and Santa Fe Natural Tobacco. The Altria Group, parent company of Philip Morris, makers of the dominant brand of Marlboro cigarettes, did not join the lawsuit. Altria was also the only major cigarette maker to support the new legislation.

Source: New York Times (November 7, 2011)

November 7, 2011

Labor’s legislation on plain packaging of cigarettes is set to pass parliament next week, but tobacco products won’t be sold in olive-brown packages until the end of 2012 – five months later than originally planned.

The federal government says it will ram the draft laws through the Senate next Thursday with a “limited” debate followed by a vote.

The coalition supports the main plain packaging legislation but not an associated trademarks bill.

However, both will pass the Senate with the support of the Greens.

Cigarettes were to be sold in plain packs from July 1 next year but Health Minister Nicola Roxon announced on Wednesday that implementation would be pushed back until December 1.

Ms Roxon said the delay was necessary because it had taken longer than expected for the upper house to pass the legislation after it sailed through the House of Representatives in August.

“(But) that’s a small setback,” she told reporters in Canberra.

“Having a few last gasps for the tobacco companies doesn’t stop the fact we are going to put an end to marketing of tobacco products in Australia.”

Ms Roxon said there had been a lot of shenanigans in the Senate “and a lack of enthusiasm on the part of the Liberal Party” to pass the bills.

But opposition health spokesman Peter Dutton rubbished that claim.

Mr Dutton said Labor had delayed its own bill because it had other priorities – namely passing the controversial carbon tax legislation which has dominated debate in the upper house this week.

“The government runs the agenda in the Senate,” Mr Dutton told reporters.

“We want to see a reduction of smoking rates in our country.”

Under Labor’s revised timeline, the preliminary provisions of the plain packaging legislation will now come into effect when they receive royal assent – rather than on January 1.

Manufacturers will have to produce plain packets from October 1 next year instead of May 20, while retailers will be banned from selling any branded stock from December 1 instead of July 1.

Big tobacco has welcomed the delay but says cigarette makers need more time still to prepare.

Imperial Tobacco insists it needs up to 17 months from when the legislation is finalised.

“December 1, 2012, remains an impossible deadline,” Imperial spokeswoman Sonia Stewart said in a statement.

British American Tobacco Australia (BATA) told a parliamentary inquiry in August that manufacturers and retailers should be given until 2014 to make the change to plain packs.

The company has also vowed to challenge the world-first legislation in court once it passes parliament.

BATA argues that the commonwealth is planning to unlawfully acquire its intellectual property rights.

Source: The Sydney Morning Herald (November 2, 2011)