As you may have read or heard, a majority of the High Court of
Australia has rejected the constitutional challenge mounted by
several key players in the tobacco industry who strongly opposed
the passing of the Australian Government's Tobacco Plain
Packaging Act 2011 (Cth) (Act) on the basis that it
amounted to an acquisition of their statutory intellectual property
on "unjust terms".
Against the backdrop of Australia's longstanding engagement
in the regulation of tobacco, the introduction of the Act was
promoted by the Government as an integral part of a comprehensive
suite of measures adopted by Australia to respond to the public
health problems associated with and caused by tobacco. Given the
likely implications this would have for tobacco companies and their
brand marketing and advertising, it was not surprising that the
companies sought to challenge the Act's validity.
The Act was predominantly challenged on the basis that the
Government was misappropriating and acquiring the intellectual
property rights of tobacco company owners in contravention of the
section 51(xxxi) "just terms" provision of the
Constitution. The tobacco companies argued that their products'
use of distinctive trade dress and get-up, including words,
colours, designs, logos, letterings and markings, which help to
distinguish their products from those of other traders, were
"property" for the purposes of section 51(xxxi) and that
the provisions of the Act constituted an acquisition of property
other than on just terms.
In response, the Government argued that the Act contained
non-discriminatory regulatory measures designed to achieve a
fundamental public welfare objective and therefore did not confer
upon the Government any measurable benefits or advantages analogous
to proprietary rights. Other legal arguments raised by the tobacco
companies during the proceedings were that the act:
Was an illegitimate restriction in breach of the system of
international trade mark protection
Would constrain the free movement of tobacco products between
Australia and other countries and thereby constituted a breach of
various international trade and bilateral investment treaties.
The High Court published the full reasons for its decision on 5
October 2012. In short, it appears as if the crux of the tobacco
companies' claim was dismissed by the majority who held that,
while the imposition of the restrictions and prohibitions imposed
by the Act restricted the tobacco companies' rights with
respect to their intellectual property, the restrictions did not
involve the accrual of a benefit of a proprietary character so as
to amount to an acquisition of property on "unjust
The decision is expected to have significant global influence,
with countries such as the United Kingdom and New Zealand in
particular closely monitoring developments in Australia as a test
case for consideration of future policy discussions and decisions.
Further information on the immediate ramifications for tobacco
companies in Australia as they begin the transition to plain
packaging, and the potential ripple effect that this landmark
decision may have in other vice industries, can be found
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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