The world’s largest tobacco companies are smarting after losing out in a closely watched legal battle against plain packaging.

Judges in the Australian High Court rejected a challenge from British American Tobacco, Japan Tobacco International, Philip Morris and Imperial Tobacco Australia, who claimed that plans to force tobacco into plain packs amounted to a confiscation of their intellectual property.

In a brief statement issued today (15 August), the court rejected their arguments.

“At least a majority of the court is of the opinion that the Act is not contrary to Australia’s constitution,” it said. The full judgement will be published at a later date.

The law is set to come into force on 1 December and a spokesman for BAT Australia said it would reluctantly comply with the new rules.

“Even though we believe the government has taken our property from us, we’ll ensure our products comply with the plain packaging requirements and implementation dates,” the company said.

The judgement is a blow to manufacturers in the UK, who fear the government plans to follow a similar path to its Australian counterpart.

A four-month consultation on the issue closed this week and manufacturers had previously warned they were prepared to take legal action if the government moved to bring in plain packs.

Imperial criticised today’s ruling. “This decision plays into the hands of the criminal gangs who profit from counterfeit tobacco; their job will be significantly easier now that all tobacco products will be sold in the same generic packaging,” it said in a statement.

“The illegal tobacco trade is a significant problem in Australia and we expect the situation to worsen considerably as a result of this legislation, placing further pressures on retailers and government tax revenues. Tobacco packaging has never been identified as a reason why people start, or continue, to smoke, and there is no credible evidence to support the notion that plain packs will reduce smoking levels.”

It added: “Our intellectual property rights are robustly supported by trade mark treaties and laws at an international, European and national level and we don’t believe the Court’s decision in Australia will have any legal implications in other markets. We will continue to defend our legitimate commercial right to utilise our trade marks to differentiate our brands from those of our competitors.”

Paul Medlicott, fmcg partner at law firm Addleshaw Goddard, said: “The Australian court judgment on plain tobacco packaging does not set a legal precedent in the UK and was focused on the Australian constitution. But we can expect some other countries, such as New Zealand, to closely and quickly follow the Australian approach.

“However, there are more legal issues and obstacles to consider in the UK. Whilst similar IP issues apply, our membership of the EU raises issues around free trade, imports and protection of brand owners’ rights. There may also be Human Rights Act issues, as trade marks are property rights.”

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