Where there is smoke there is fire: plain packaging of tobacco products

Article  \  27 Aug 2014

In 2012, Australia became the first country in the world to legislate for plain packaging of tobacco. Cigarettes, pipe tobacco and cigar products sold in Australia must now be in plain, olive-brown packets.  Trade mark logos, colours and promotional text are removed and only the printed brand name can be displayed.

Fast forward to the present and Australia remains the only country with plain packaging legislation.  While other countries are actively considering similar laws, the removal of intellectual property rights is creating controversy that extends far beyond Australia and the tobacco industry.

The situation in Australia

When it became clear that plain packaging laws were on their way, members of the British American Tobacco group (BAT) and JT International SA (JTI) took Australia to court.[1]  The plaintiffs argued that the de-branding of tobacco was an unjustified acquisition of property which at the very least should be compensated and was a violation of constitutional rights.  

The court decided that an acquisition of property on other than just terms had not occurred.  Australia would have to receive a proprietary benefit for this to be the case. The court was unable to identify any such gain and, consequentially, decided that the laws and regulations merely deprived the plaintiffs’ of their property.  This was not enough to render the legislation constitutionally invalid. 

Despite Australia’s victory, plain packaging is still under fire.  Indonesia, Cuba, Honduras, Ukraine and Dominican Republic have filed a formal complaint with the World Trade Organisation (“WTO”).  These countries, who are heavily reliant on the production of tobacco, claim that the legislation contravenes international agreements that Australia is party to and restricts fair trade.  The WTO’s decision is expected in several months.

What’s going on here at home?

The New Zealand government is waiting for the outcome of the complaint before setting anything in stone here.  However, it supports plain packaging and the Smoke-free Environments (Tobacco Standardised Packaging) Amendment Bill was introduced into Parliament late last year.  The bill “seeks to amend the Smoke-free Environments Act 1990, so as to give effect to the Government’s decision of 18 February 2013 to introduce a plain packaging regime for tobacco products in New Zealand”.[2]  It is similar to Australia’s initiatives and will tightly control the design and physical appearance of any packaging used or intended for use with tobacco products, and of the tobacco products themselves.”[3] 

If the WTO finds in favour of Australia, it is likely that the bill will be passed.  This is especially so given a recent report from Parliament’s Health Committee on the bill, wherein it states that enforcing plain packaging is a crucial advance towards better public health.  The report includes statistics from Australia that indicate a decrease in tobacco consumption as a result of the plain packaging measures. 

Not everyone is happy, however.  There are strong opponents of the bill who believe it violates fundamental concepts of personal property, the New Zealand Bill of Rights Act and various international treaties.  Purveyors of food and alcohol are also fearful that it is only a matter of time before similar reforms spread to their industries.

Regardless of anyone’s personal stance on tobacco, plain packaging has hard hitting ramifications.  The Australian government has essentially extinguished property rights without compensation and other countries are looking to do the same. This begs the question: whose intellectual property is going to be taken away next?

This article was written by Sue Ironside.

[1]JT International SA v Commonwealth [2012] HCA 43.
[2] Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill(186 – 2) at 1.
[3] Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill, above n 2, at 2.