Plain packaging: Ireland vs Big Tobacco

February 25, 2015

New Zealand, France, Norway and Finland are all considering plain cigarette packaging legislation

The government is facing down legal threats from Big Tobacco over plans to introduce standardised packaging for cigarettes, with Japan Tobacco International (Ireland) threatening the government over it immimnent plans.

The tobacco industry has already demonstrated its ability to inflict expensive litigation in Australia, which is fighting tobacco giant Philip Morris over similar restrictions to those planned by the Irish government.

The Australian government has faced a number of separate legal challanges – domestically and internationally.

The World Trade Organisation is expected to rule on a legal challenge against Australia in 2016, according to a statement from Philip Morris.

That will have implications for Ireland, which may also face international challenges. Of more immediate concern to the Irish government is the expected domestic challenge. The tobacco industry has already claimed that standardised packaging tramples over intellectual and other property rights. This is expected to form the basis of its legal challenge.

Barrister James Bridgeman, an international arbitrator who specialises in intellectual property law, said: “There are strong arguments on both sides of this. On the one hand, the Trademarks Act protects the property right in registered trademarks. That is reinforced by Article 43 of the Constitution, which expressly protects the right to private property. On the other hand, the Constitutional right to private property is not absolute and it must be exercised in accordance with social justice and the exigencies of the common good.

Brand Down Under

The Irish government’s attempt at regulating cigarette packaging follows a landmark bill in Australia, which passed in 2012.

The Australian legislation is the strictest in the world, and has become the subject of a major onslaught by tobacco companies desperate to hold on to some vestige of brand control.

In Australia, all packs are a drab brown-green colour, with prominent health warnings and graphic images of carcinogenic doom. Brand names are in tiny lettering that is barely visible without close scrutiny

“Much of this industry is about image. It is not about tobacco,” said Robert Stumberg, a US professor of law who has analysed tobacco regulation and litigation around the world.

The Australian government’s move infuriated tobacco companies like Imperial Tobacco Group, Philip Morris and British American Tobacco, which put forward an array of arguments in response.

They argued that the move violated free speech; encouraged illegal, unregulated sales; expropriated the value of trademarks; and went against international free trade agreements. They also claimed that standardised packaging merely persuades smokers to switch between brands and that advertising does not affect overall consumption.

Anti-smoking groups like Ash (Action on Smoking and Health) have disputed this. They argue that tobacco packaging is the industry’s “silent salesman” – especially as advertising and sponsorship is prohibited in so many countries.

While the Australian government won the initial legal battle in its domestic courts, its legal challenges have not ended there. Philip Morris is suing it for extensive damages, basing its case on Australia’s bilateral investment treaty with Hong Kong. Without its branding, Philip Morris is arguing that “its products will not be readily distinguishable to the consumer from the products of its competitors”.

A number of countries, including Indonesia, Cuba, Ukraine, Honduras and the Dominican Republic, are also challenging Australia’s cigarette packaging legislation at the World Trade Organisation. They argue that Australia’s legislation is a barrier to trade and restricts intellectual property. Some of these challenges are partly financially supported by Big Tobacco.

The battle of David and Goliath

Australia was the first country in the world to introduce such restrictive laws, but Uruguay had already made huge strides. Since 2009, cigarette packages in the South American country must be 80 per cent covered by health warnings, including graphic photos of cancer sufferers.

Uruguay, however, is also facing a major legal challenge.

Philip Morris, whose brands include Marlboro, launched a legal action claiming that the law violated Uruguay’s 1988 bilateral investment treaty with Switzerland, where Philip Morris is headquartered. Philip Morris is demanding $25 million in compensation for damage to its brands. It claims that these damages “are the direct result of Uruguay’s decision to disregard its commitments to investors, and its failure to respect and protect investments in intellectual property in accordance with the treaty”.

Stumberg said expensive litigation was a “key element” in the tobacco industry’s strategy to “create a chilling effect on progressive tobacco measures.

“The industry has a history of litigating theories that will lose just to inflcit pain on the defending country,” he said.

Silvina Echarte Acevedo, the legal advisor leading the Uruguayan case, likened it to David and Goliath. Uruguay’s annual gross domestic product is dwarfed by the $80 billion that Philip Morris took in last year. Uruguay has stated that it would not have been able to fight the legal case if the foundation of Michael Bloomberg, the former mayor of New York, had not provided financial support.

Many nations have been frightened off by Big Tobacco’s wealth and legal muscle. Many developing countries are at a disadvantage as they did not have the resources or special legal expertise to fight.

Even developed countries like Canada and New Zealand have backed away from planned changes in the face of investment treaty claims, although a number of countries are revisiting the idea again. In January, the British government said it would offer MPs a free vote on standardised packaging before May’s general election.

New Zealand, France, Norway and Finland are also considering plain packaging legislation.

Free trade agreements often exempt rules meant to protect public health.

Professor Stumberg and others believe the claims could turn on whether plain packaging rules can be shown to reduce tobacco use. That could also be important in a domestic court case here.

Does plain packaging reduce consumption?

Unsurprisingly, health officials and anti-smoking activists differ from the tobacco industry’s viewpoint when it comes to assessing the impact that plain packaging has on consumption.

The Australian Institute of Health and Welfare, a government body, published a report in July 2014 which found that daily smoking rates had fallen at their fastest pace for two decades between 2010 and 2013. The survey found that young people were delaying taking up the habit, and that the number of cigarettes smoked per week had fallen.

It is difficult to establish a direct causal link to standardised packaging. Smoking has been declining in Australia for more than two decades, and tobacco taxes rose recently.

A study published in the British Medical Journal in 2013 found that smokers who bought plain packs were more likely than branded pack smokers to perceive their cigarettes as of lower quality, and more likely to think about quitting the habit.

Last week, the scientific journal Addiction published a collection of peer-reviewed research papers and reports on standardised packaging, in which the researchers concluded that standardised packs were likely to reduce smoking rates.

What transpires in Ireland will be closely oberved by other countries. If the onslaught in Australia is anything to go by, the battle has barely begun.

Source: Susan Mitchell, Southeast Asia Tobacco Control Alliance (February 24, 2015)