The legislation requires that tobacco products be sold logo-free in “plain, drab, dark brown packets.” The adoption of the Tobacco Plain Packaging Act 2011 (Commonwealth) (‘the Act”) marked implementation by Australia of the WHO Framework Convention on Tobacco Control. Plain packaging of tobacco products is an optional measure featured in the guidelines of that Convention.
Minister Roxon explained that when used for its intended purpose, tobacco is lethal, and that while progress had been made in reducing smoking, tobacco remains a leading cause of preventable death and disease, claiming more than 15,000 lives every year in Australia.
Validity of legislation questioned
The Australian Government successfully defended plain packaging of tobacco products in the High Court of Australia (JT International SA v Commonwealth of Australia  HCA 43 (5 October 2012). In that case, the plaintiffs argued that the Act amounted to an appropriation of the goodwill embodied in their brands and that by enacting it the Commonwealth of Australia had “acquired their intellectual property rights and goodwill other than on just terms.” However, by a majority of six to one, the High Court found that “although the Act regulated the plaintiff’s intellectual property (IP) rights and imposed controls on the packaging and presentation of tobacco products, it did not confer a proprietary benefit or interest on the Commonwealth or any other person.”
The Australian Government then prevailed in a challenge by Philip Morris (Philip Morris Asia Ltd v Australia, PCA Case No. 2012-12) in an arbitration claim under the investor-state dispute settlement regime of the Australia-Hong Kong Agreement on the Promotion and Protection of Investments 1993. The Tribunal found that Philip Morris Asia’s claim was an abuse of process.
Having prevailed in these disputes, the Government of Australia was confident that it would also succeed in the disputes over plain packaging of tobacco products brought before the Dispute Resolution Panel of the World Trade Organization (WTO) by the Dominican Republic, Honduras, Cuba, Indonesia and Ukraine. These countries – each large tobacco producers – claimed that plain packaging of tobacco products would have serious economic consequences for them and that such measures were counter to WTO rules governing IP rights (in particular, in relation to trademarks, which serve to allow consumers to distinguish products from different companies) and technical barriers to trade.
In 2012, Australian Trade Minister Craig Emerson said, “Australia will strongly defend its right to regulate to protect public health through the plain packaging of tobacco products,” noting that the Government was “confident that its plain packaging legislation is consistent with Australia’s WTO obligations.”