Philip Morris International (PMI) and British American Tobacco (BAT) have sued the British government over plain-packaging legislation passed in March. The law, which would take effect from May 2016, requires cigarettes to be sold in packages of uniform shape and size that feature only the brand name and contain prominent graphic health warnings. England is the third and most populous country to introduce plain-packaging laws, following Australia and Ireland.
PMI argues that England’s plain-packaging regulations “unlawfully deprive PMI of its trademarks” and should therefore be overturned, according to an article in The New York Times. London-based BAT stated that the British government had left the company “with no other choice” and released a statement saying that “any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.” Japan Tobacco International has also indicated it would challenge England’s legislation. The tobacco companies are seeking unspecified damages, which could total billions of dollars if granted.
A statement released by the English Department of Health said it would “not allow public health policy to be held to ransom by the tobacco industry” and that it “would not have gone ahead with standardized packaging unless we had considered it to be defensible in the courts.”
Ukraine has suspended the legal proceedings it brought against Australia through the World Trade Organization (WTO) in 2012, which claimed the country’s plain-packaging laws were trade-restrictive. Instead, the Eastern European nation—which received financial support from British American Tobacco to pursue litigation—has stated it will attempt to seek a mutually agreed-upon solution with Australia to resolve the issue.
Ukraine was the first of five countries to challenge Australia’s plain-packaging laws at the WTO, despite the fact that Ukraine does not currently export tobacco to Australia. The other countries who have launched lawsuits against Australia—Indonesia, Cuba, Honduras and the Dominican Republic—have not announced any plans to drop their lawsuits challenging the strict packaging laws banning company logos and requiring cigarettes to be sold in olive-colored packages with brand names printed in standardized fonts.
According to WTO rules, Ukraine’s suspension could last one year, after which time its right to return to the panel proceedings will lapse. The WTO adjudication panel is expected to rule on the remaining plain-packaging lawsuits in the first half of 2016.
The U.K. House of Lords on March 16 approved a bill requiring cigarettes to be sold in standardized packaging.
The House of Commons on March 11 voted 367 to 113 in favor of the law, which passed through the House of Lords without a vote. Starting in May 2016, cigarettes must be sold in packages of the same shape, size and design, with the only difference between packages being the name of the brand and the graphic health warning displayed on the cartons. The U.K. is the third country to introduce plain-packaging legislation; Ireland introduced a similar bill earlier this month, and Australia implemented plain packaging in 2012.
While various health organizations have championed the legislation in the belief that standardized packaging will render cigarettes less appealing to smokers, particularly minors, tobacco companies—who fear a significant loss of profits once the law is implemented—have threatened legal action against the U.K. government. Opponents of plain packaging also point to the potential uptick in cigarette smuggling and illicit trade that could occur as a result.
Ireland may become the second country to require standardized packaging for cigarettes, reports the Kildare Nationalist.
Health Minister James Reilly announced government approval for his controversial plans, which he hopes to have enacted early next year. Plain packaging made its global debut late last year in Australia.
An Irish retail group cautioned the move would help criminals and fuel cigarette smuggling. Retailers Against Smuggling accused the minister of “not giving a damn” about independent retailers. Tobacco companies claimed plain packaging would do more harm to the economy by making smuggling easier rather than stopping children from taking up the habit.
Reilly said while many arguments will be made against the move, he is confident the legislation will be justified and supported purely by the fact that it will save lives.
Ireland has been at the forefront of tobacco control. It was the world’s first country to enforce a workplace smoking ban, which included pubs and restaurants, in March 2004, and the first EU country to remove all tobacco advertising from retail outlets.
The U.S. Supreme Court denied a writ of certiorari filed by the tobacco companies challenging the advertising regulations promulgated pursuant to the Family Smoking Prevention and Tobacco Act.
While the Court’s cert denial allows a previous 6th Circuit decision to stand, the contested rules may never be enforced. The Solicitor General declined to file a writ of certiorari in the D.C. Circuit case and in a letter from U.S. Attorney General Eric H. Holder Jr. noted that the FDA plans to engage in “new rulemaking consistent with the Tobacco Control Act.”
Because the FDA has indicated that it plans to engage in new rulemaking, the tobacco companies have effectively avoided compliance with the stringent new rules.
The tobacco companies made two separate challenges to the rules. In the U.S. District Court for the District of Columbia, R.J. Reynolds, Lorillard, and Liggett Group, among others, sought an injunction against the enforcement of the new requirements. The U.S. District Court agreed that the “mandatory graphic images unconstitutionally compel speech” and that the tobacco companies would “suffer irreparable harm absent injunctive relief pending a judicial review of the constitutionality of the FDA’s rules.” The FDA appealed, but the D.C. Circuit Court of Appeals affirmed.
At the same time, another group of tobacco companies filed a facial First Amendment challenge to the rules in their entirety – and got an entirely different result. A federal court judge in Kentucky upheld the rules, and the U.S. Court of Appeals for the Sixth Circuit affirmed, holding that “the Act’s warnings are reasonably related to the government’s interest in preventing consumer deception and are therefore constitutional.”
The defendants then filed cert with the U.S. Supreme Court, which the justices denied in late April.
Cuba has become the latest country to launch a legal attack on Australia’s landmark plain packaging rules for tobacco at the World Trade Organization (WTO).
The laws came into effect last December and mean cigarettes can only be sold in brown packages with graphic health warnings. The WTO says Cuba has requested consultations with Australia on the legislation, which covers all tobacco products, not just cigarettes. Under the 159-nation WTO’s rules, requesting consultations is the first step in an often complex trade dispute settlement process which can last for several years.
The laws have already been challenged at the WTO by Cuba’s fellow cigar-producing nations Honduras and the Dominican Republic. In addition, the Ukraine has filed a suit at the Geneva-based body, which oversees its member nations’ respect for the rules of global commerce, according to the Australian news company ABC.
All the plaintiff countries maintain that Australia’s packaging law breaches international trade rules and intellectual property rights.
In the event that the WTO’s disputes settlement body finds in their favor, it would have the power to authorize retaliatory trade measures against Australia if the country failed to fall into line. The dispute with Australia marks the first-ever challenge by Cuba against a fellow member since it joined the global body in April 1995, four months after the WTO was founded in its current form.
The plain packaging laws have won wide praise from health organizations which are trying to curb smoking. But the government has faced a string of court challenges from tobacco firms.
Besides trade and intellectual property concerns, tobacco companies say there is no proof that plain packaging reduces smoking and have warned that the law sets a precedent that could spread to products such as alcohol.