On 15 August 2012 the Australian High Court ruled that the much-discussed legislation that requires tobacco companies to sell their products in unbranded packages, the Tobacco Plain Packaging Act 2011, is constitutional. The legislation, which kicks in on 1 December 2012, is highly controversial, because it requires all brands of cigarettes to be sold in identical olive green packs featuring graphic images of mouth ulcers and other consequences of smoking – these health warnings must, in fact, cover 75% of the front of the pack, and 90% of the back. The brand name (without the logo) and the variant (like menthol) may appear in very small print, presumably so that the shopkeeper can in fact provide the customer with the brand they want.
Although the court's reasons have not yet been published, it's known that the court rejected the argument of the two tobacco companies who brought the case, JT International and British American Tobacco (BAT), that the legislation was inconsistent with the constitutional requirement that any acquisition of property must be 'on just terms.' It seems that the tobacco companies had argued that the Government would unfairly benefit from the law as it would be using cigarette packs as a platform to promote its anti-smoking message, without compensating the tobacco companies.
The Australian government was delighted with the result, with Health Minister Tanya Plibersek saying this: 'No longer when a smoker pulls out a packet of cigarettes will that packet be a mobile billboard.' Tobacco companies, on the other hand, were outraged, claiming that the ruling would simply promote the sale of counterfeit cigarettes, with packs being easier to copy. Said a BAT spokesman: 'At the end of the day, no one wins from plain packaging except the criminals who sell illegal cigarettes around Australia.' The South African Health Minister, Aaron Motsoaledi, said that he was 'very excited' about the ruling, and made it clear that South Africa would follow suit: 'We will do it definitely' said Motsoaledi.
So we can safely assume that the government will be introducing unbranded cigarette legislation in the not-too-distant future. When that happens, it's very likely that the tobacco companies will challenge this legislation in court. Certainly if BAT's spirited attack on the law that bans tobacco advertising, section 3(1)(c) of the Tobacco Products Control Act 1993, is anything to go by. In that case BAT basically wanted confirmation that it could engage in indirect marketing activities like approaching smokers in restaurants, and it asked the court for an order declaring the section to be inapplicable to what it described as 'one-to-one communications between tobacco manufacturers, importers, wholesalers and retailers on the one hand, and consenting adult tobacco consumers on the other.' In the alternative, BAT wanted an order declaring the section to be unlawful on the basis that it detracted from the constitutionally protected right of freedom of expression. BAT's application was turned down by the North Gauteng High Court in 2011, which pointed out that one of the objects of the Tobacco Products Control Act was to encourage people to quit smoking, and which held that the limitation on freedom of expression was reasonable and justifiable. BAT then appealed to the Supreme Court of Appeal, but this appeal was turned down in 2012. BAT has since filed a further appeal to the Constitutional Court.
So the stage is set for an interesting battle. In some ways it will be similar to the dispute between SAB and Laugh-It-Off Promotions (Justin Nurse) about the Black Label spoof t-shirt (Black Labour / White Guilt), where the court was faced with the question of which right is the more important: the right of free expression (which includes the right to comment on or lampoon corporations), or the right of a corporation to control the use of its trade mark. In the case of unbranded cigarette legislation, health rights (and corresponding government duties to promote health) may well compete with property rights.
It's likely that the tobacco companies will argue that a law requiring them to use unbranded packs contravenes section 25 of the Bill of Rights, which says that no-one can be deprived of property, and that, in the case of an expropriation, compensation must be paid. The tobacco companies may well take the position that, because such legislation will prevent them from using their trade marks, and because the law says that a registered trade mark that isn't used for five years is vulnerable to cancellation, the legislation will be tantamount to expropriation. And, they may argue, that will entitle them to significant compensation, because trade marks are very valuable assets.
The government, on the other hand, may argue that legislation of this nature simply restricts the way in which tobacco companies can use their trade marks, whilst not depriving them of ownership. It may argue that, because the brand names can still appear on the packs, the trade mark registrations don't become vulnerable to cancellation for non- use. It may argue that, in any event, the law excuses a failure to use caused by external factors. And the government may argue that, even if the legislation does constitute expropriation, the purpose of the expropriation must be considered. And, as the purpose is the promotion of public health, compensation should be modest.
Watch this space!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.