Philip Morris Sues Australia Over Cigarette Packaging

By Kirk Maltais 06/30/11

Aussies accused of confiscating cigarette maker’s “intellectual property.”

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Cigarette makers still have money to burn.
Photo via thinkstockphotos

How many people will continue smoking if their packs of cigarettes have a picture of a cancerous mouth on them?

That is the proposition the Australian government plans to test starting in January of 2012, when a ban on cigarette manufacturers showing logos, branding, colors, and promotional text on packaging begins. However, if tobacco giant Philip Morris has its way, the ban will never become a reality. Philip Morris International has begun a lawsuit against the Australian government for billions of dollars, saying that the packaging proposal violates the corporation’s intellectual property rights. “The Australian government does not have an unfettered right to confiscate [our] valuable intellectual property. Moreover, the government has failed to demonstrate that plain packaging will reduce smoking prevalence," said a spokesperson for Philip Morris.

It seems like an uphill argument to us, but according to Philip Morris, the Australian plan violates the terms of Australia’s Bilateral Investment Treaty with Hong Kong. The agreement, signed in 1991, is part of a free trade agreement between the two countries, which is why Philip Morris Asia, as part of PM International, has sprung into action.

The Australian government plans to standardize cigarette packaging by selling packs in plain olive-green color, which research has shown to be visually unappealing to smokers. The boxes will also depict the health risks of smoking, with both text and pictures. This plan is winning the government, meaning primarily Australian Prime Minister Julia Gillard, praise from anti-smoking groups all over the world. “[Gillard is] saying, ‘We don’t care who or how big you think you are; a business that causes death is not as big as a country that prevents it,’” said Dr. Prudence Stone, director of the Smokefree Coalition, a New Zealand-based anti-smoking group. Politicians in other countries, such as Britain, Canada, and New Zealand, are watching how this battle plays out, as variations of this approach are being considered. In the United States, new packaging rules are set to begin in 2012, and while nowhere near the severity of the Australian rules, still emphasize the health risks of smoking tobacco products. (See our earlier post.)

For its part, the tobacco industry is fighting these new packaging rules tooth and nail. Last year, pressure from Philip Morris International forced Uruguay to soften their rules on cigarette packaging. By all accounts, the tobacco industry is investing tremendous amounts of money into delaying the implementation of these new rules. Advertising really does work, and the tobacco industry, even at this late date in its history, is still unwilling to relinquish control over it.

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Kirk Maltais is a New York-based reporter.  Find out more about him on Linkedin and Twitter.