Trademark Is a Privilege in Australia, Government Says

Trademark use by companies in Australia is a privilege that the government can curtail, Queensland state’s solicitor-general said in defending the country’s plain-packaging legislation for cigarettes.

“Privilege is not property,” Walter Sofronoff, Queensland’s solicitor-general, told the seven-judge panel of Australia’s High Court today during the second day of a hearing on the legality of the plain-packaging law. “It’s a liberty to act unless regulated by law.”

British American Tobacco Plc (BATS), Europe’s biggest cigarette maker, and Japan Tobacco Inc. (2914) were joined by Philip Morris International Inc. (PM), the largest publicly traded tobacco manufacturer, and Imperial Tobacco Group Plc (IMT) in a challenge to the Australian law requiring cigarettes to be sold in uniform packages. The tobacco companies are seeking a ruling deeming the Australian law unconstitutional for seizing their intellectual property without adequate compensation.

Australia’s trademark law is in place to ensure companies’ logos are protected from misuse by competitors or individuals, Sofronoff said.

The government crossed a line with the new rules that prohibit the use of logos and trademarks, moving from regulating tobacco sales by requiring warning messages to “commandeering people’s property,” Bret Walker, a lawyer for Imperial Tobacco, told the court today.

Government Demands

If upheld, the law could allow the government to impose all sorts of demands including potentially requiring Ford Motor Co. cars to be sold with signs proclaiming “I’d rather be driving a Holden,” Walker said, referring to the General Motors Co.’s Australian unit.

“It is wrong to hypothesize the extreme use of the power,” Stephen Gageler, the federal solicitor-general, told the court.

A more realistic example would be the requirement that all cars sold in Australia are required to be fitted with seatbelts, Gageler said.

Australia’s government is confident the law will be upheld, Attorney-General Nicola Roxon told reporters before the start of the hearing yesterday.

“Tobacco is the only legal product sold in Australia which if used as intended will kill you,” Roxon said. “No other product is in that category.”

Lawyers Challenged

Lawyers representing the tobacco companies were repeatedly challenged on their positions by six of the seven justices, with Chief Justice Robert French echoing Roxon’s concerns.

“You’re putting into the market a substance that causes serious disease or is fatal,” French said, adding that puts tobacco in a different category than cars or soft drinks.

The European Commission, New Zealand, Canada, Belgium, Iceland and France have all indicated an interest in implementing a plain-packaging law on cigarettes.

Smoking is estimated to have led to the deaths of more than 900,000 Australians from 1950 to 2008, according to the government. Still, almost one-sixth of the Australian population aged 14 years and older smokes cigarettes on a daily basis, the government said.

Under the plain-packaging law, cigarettes will be sold with no company logos and the same font for all brands on a dark brown background. Graphic health warnings will cover 90 percent of the back of the package and 70 percent of the front. The law was approved by the Australian Senate on Nov. 10.

The case is British American Tobacco Australia Ltd. v the Commonwealth of Australia. S389/2011. High Court of Australia (Canberra).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editors responsible for this story: Douglas Wong at dwong19@bloomberg.net

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