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Tobacco giant Philip Morris is threatening to take the Australian Government to an international court over plain packaging legislation.
Tobacco giant Philip Morris has initiated legal action over the Australian Government's plans to introduce plain cigarette packaging.
The company is threatening to take the Australian Government to an international court and says that removing brands from cigarette packs will lower the value of its trademark and intellectual property.
The federal Health Minister says the Government can withstand an attack from big tobacco, but legal experts say this is just the start of a global legal campaign.
John Stewart reports.
JOHN STEWART, REPORTER: Plain cigarette packaging is due to be phased into Australia from January 2012. It's a world first and the tobacco industry wants to stop it.
Philip Morris Asia says the new laws will breach Australia's investment treaty with Hong Kong, where the company is based. It argues that removing brands from packages will take away its intellectual property and unfairly reduce its cigarette prices and profits.
ANNE EDWARDS, PHILIP MORRIS: I think most people know that brands have value; it's essentially the same thing, anybody walks into the supermarket, you can choose between generic brands are brands with brands.
Everybody knows that generic brands are cheaper. And brands really do have value, and that's why we're pressing forth with this.
JOHN STEWART: The federal Health Minister says the Government is not intimidated by the legal challenge and that international laws allow nations to act in the interest of public health.
NICOLA ROXON, HEALTH MINISTER: The World Health Organisation makes clear and recommends in its tobacco control convention that states should consider taking this step of introducing plain packaging for the sale of tobacco products.
JOHN STEWART: The legal action by Philip Morris opens up a three-month negotiation period between the two sides. If that fails, an international court will hear the company's compensation claim.
ANNE EDWARDS: We estimate that it would be - it may be in the billions. We haven't got a final figure yet and ultimately it's going to be up to the UN trade law court that will hear this.
JOHN STEWART: The dean of Law at Sydney University, Professor Gillian Triggs, says the size of the cigarette market in Australia is tiny compared to other parts of the world and that Philip Morris is more concerned about other countries following Australia's lead.
GILLIAN TRIGGS, DEAN OF LAW, SYDNEY UNIVERSITY: Yes, it is a global matter because they are protecting their intellectual property and the brand globally in very big markets - China, Indonesia, India, Vietnam and other parts of the world, the Middle East, and parts of Latin America.
So, if they were to lose the fight - if they were to lose on the basis that Australia can impose its own health policy in this area, then that is a profound threat to their capacity to market the brand in other jurisdictions.
JOHN STEWART: Philip Morris has also launched a legal challenge against the small South American country of Uruguay for damaging its business prospects. Uruguay has a population of just three and a half million people and is a relatively tiny cigarette market, but it’s been tough on smoking and has placed health warnings on cigarette packs.
GILLIAN TRIGGS: They are currently bringing a very similar action against Uruguay on the basis of a similar treaty, a bilateral investment treaty in that case between Switzerland and Uruguay. But the argument is broadly the same.
JOHN STEWART: Other cigarette companies are also considering taking legal action against the Australian Government, but some legal experts see a problem with Philip Morris' challenge.
DON ROTHWELL, ANU: Philip Morris would have to be able to indicate that they are suffering damage or detriment as a result of the actions of the Australian Government through the enactment of legislation, and I don't believe that at this point in time they can conclusively point to that.
GILLIAN TRIGGS: I think the better part of this global debate is going to be that health policy will trump the rights to intellectual property protection and branding in this case.
JOHN STEWART: The new plain packaging legislation is due to be introduced into Parliament next month.
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