[Ip-health] New York Times: Tobacco Giants Sue Britain Over Rules on Plain Packaging

Thiru Balasubramaniam thiru at keionline.org
Wed Jun 3 05:20:18 PDT 2015



MAY 22, 2015

PARIS — Big Tobacco is pushing back against Europe’s effort to remove the
marketing allure from smoking.

On Friday, Philip Morris International and British American Tobacco, two of
the world’s biggest tobacco companies, sued the British government over new
rules, starting next May, that would require cigarettes to be sold in plain

Britain would be the first of the European Union’s 28 countries to impose
the regulation, which formed part of a broad new set of tobacco rules, also
governing electronic cigarettes, that the union approved last year but has
left up to member states to enact. Ireland and France are among others
planning to follow suit.

The tobacco industry has expressed alarm over a growing international move
toward laws mandating that colorfully branded cigarette boxes be replaced
with drab, uniform packages displaying prominent health warnings, including
pictures of diseased human tissues. The industry has responded with costly
lawsuits and threats to invoke trade treaties, particularly in less
developed countries.

On Friday, the fight moved to Europe as a suit was filed in the High Court
of Justice, one of Britain’s highest courts.

Philip Morris International, which is based in New York, said the
regulations should be overturned on the grounds that they “unlawfully
deprive P.M.I. of its trademarks,” in violation of both English and
European Union law. British American Tobacco, based in London, said the
British government had left it “with no other choice.’’

‘‘Any business that has property taken away from it by the state would
inevitably want to challenge and seek compensation,” British American
Tobacco said in a statement.

Philip Morris’s leading brand is Marlboro. British American’s brands
include Dunhill, Lucky Strike and Kool.

Japan Tobacco International, whose brands include Camel and Winston, also
“expects to challenge the legislation,” the company said on Friday,
referring to the British rules.

The companies are also seeking unspecified damages, which, if granted,
could total in the billions of dollars.

The English Department of Health said in a statement that it would “not
allow public health policy to be held to ransom by the tobacco industry,”
adding: “We would not have gone ahead with standardized packaging unless we
had considered it to be defensible in the courts.”

In the United States, tobacco companies sued the Food and Drug
Administration to block an order that would have required cigarette
packages to carry large, graphic warnings illustrating the dangers of
smoking. An appeals court ruled that the labels would violate the First
Amendment’s free speech protections, and the agency abandoned the plan in

Britain has taken a relatively tough line on tobacco. A pack of cigarettes
typically sells for around 8 pounds, or about $12.50, and taxes make up
more than three-quarters of that, according to the Tobacco Manufacturers’
Association. That compares with an average United States selling price of
$5.51 a pack (the price varies greatly by state). Since April, British law
has required that tobacco products be kept out of sight at retail shops.

Anti-tobacco activists noted that the highly profitable industry, with its
legions of lawyers, had often resorted to legal tactics to delay
legislation and intimidate opponents.

“They would do that, wouldn’t they?” Deborah Arnott, chief executive of
Action on Smoking and Health, a nonprofit public health advocacy group in
London, said of the lawsuits. “They always challenge everything.”

Ms. Arnott said she was confident that the British law would withstand any
challenge, but that that was not really the point.

“They’re pulling this out now, like they did in Australia, just to try to
discourage other governments from going ahead,” she said.

In 2012, Australia became the first developed nation to order the use of
plain packaging, making itself the target of numerous industry challenges,
all of which failed in the national courts. Philip Morris has responded by
suing Australia in Hong Kong, invoking the investor-state dispute
settlement clause of a trade treaty.

Australia is also facing challenges at the World Trade Organization brought
by Cuba, Ukraine, Honduras and the Dominican Republic. Those countries
claim the plain-packaging law acts as a so-called technical barrier to
trade and violates their intellectual property rights.

Philip Morris International was spun off from the Altria Group in 2008 to
sell products like Marlboro cigarettes outside the United States. It
operates independently of Altria, which still owns Philip Morris USA.

Philip Morris International reported an annual profit of $7.5 billion for
2014, on revenue of $29.8 billion. British American Tobacco had £3.1
billion profit on nearly £14 billion of revenue.

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