Kevin Rudd’s recent world-first move to ban brand labels and other marketing imagery on cigarette packaging by 2012 has provoked not only the expected eulogies from the good health lobby and tuts of resignation from smokers but also furious vows from the tobacco industry to fight the measure in court. How solid, then, is the legal ground on which the government is standing on the issue?

Gilbert + Tobin partner Lisa Lennon told ALB the government does have the power to legislate on this issue – indeed it has already taken analogous action in restricting brand use by pharmaceutical companies – but that the tobacco companies would nevertheless challenge the legislation. “The government will have to think carefully about how to craft the law so that it its valid,” she said.

The proposed legislation involves a government acquisition of property – here, the tobacco companies’ intellectual property – and under the Constitution they must be justly compensated. “Under the new laws, the tobacco companies can’t use and enforce packaging trademarks even though they have been registered for a number of years; they’re losing rights they’ve been granted in the past,” said Lennon.

If the law is passed, tobacco companies will therefore certainly demand compensation from the government. “Compensation will be quite substantial,” Lennon said, “but the government appears committed, and Australia has already led the way internationally in putting restrictions on tobacco advertising.”

Lennon told ALB the validity of the legislation could, however, be challenged in a second way: Australia has signed up to a number of intellectual property treaties involving cross-border recognition of intellectual property rights, and the proposed legislation may breach the terms of those international agreements. This kind of challenge, however, could only be brought if another country party to the treaty objected to the new law and sought to take the matter to an international process. “It would have to be a parallel lobbying effort where the tobacco industry gets another country behind them, and the chances of that are not high,” Lennon said.

From a legal services industry viewpoint, the government’s proposal is likely to be good news for IP lawyers: tobacco companies will need IP firms to advise them in potential litigation both initially and also later on once the law is passed.

Lennon said tobacco companies have two main trademarks: words and other packaging elements. Under the proposed legislation, from 2012 cigarettes will be sold with plain standardised packaging that can only display the brand name in small print. “There will be a flurry of activity in word branding,” Lennon said. “Tobacco companies will have to be a lot more creative with word branding to make the most of plain packaging.”