Govt submissions filed in HCA tobacco packaging case (5 April 2012)

In Trademarks on 6 April 2012 at 19:26

British American Tobacco Australasia Limited and Ors v. The Commonwealth of Australia

The Australian government has filed written submissions in the case brought by British American Tobacco (‘BAT’) challenging the Tobacco Plain Packaging Act 2011.

The legislation received Assent on 1 December 2011 and  will require uniform packaging of tobacco products from December 2012. Cigarette packaging will have to be a standard olive green colour, devoid of logos and most other distinctive branding (brand names will be carried in a standard font), and carry graphic health warnings. For example, Section 20 of the Act states: “(1)  No trade mark may appear anywhere on the retail packaging of tobacco products, other than as permitted by subsection (3)... (3)  The following may appear on the retail packaging of tobacco products:  (a)  the brand, business or company name for the tobacco products, and any variant name for the tobacco products; (b)  the relevant legislative requirements; (c)  any other trade mark or mark permitted by the regulations.”  The Act prescribes the manner in which the permitted markings may be presented. An example of the prescribed packaging can be viewed here.

BAT argues that legislation denying the ability of an intellectual property proprietor to use its intellectual property amounts to an acquisition of property without compensation, and is thus constitutionally invalid.  Section 51(xxxi) of the Australian Constitution states: “The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (xxxi)  the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws“.

BAT’s submissions were filed on 26 March 2012 and their argument can be outlined as follows:

  • Cl.37: “For there to be an acquisition of property within the meaning of s 51 (xxxi), it is necessary, but not sufficient, for the owner of the property in question to demonstrate that legislation “adversely affects or terminates a pre-existing right that [he or she] enjoys in relation to his [or her] property”.* In this case… the plaintiffs will be unable to use or exploit their trade marks, patents, designs, copyright and get-up in connection with the sale of cigarettes or in any meaningful or substantive fashion, or to exercise any meaningful or substantive control over the appearance of cigarette packets and cigarettes owned by them.” [* Tasmanian Dam Case(1983) 158 CLR 1 at 145 per  Mason)].
  • Cl.39: “It follows that, even though the plaintiffs have not been formally deprived of their trade marks, patent, design, copyright, get-up, goodwill and rights in their packaging, they have been” in a real sense, although not formally, stripped of the possession and control” of their property.” The Commonwealth has, in other words, deprived the plaintiffs of the “reality of proprietorship”* or “everything that made [that property] worth having.”** The extent of the restriction on the plaintiffs’ use of their property is plainly, it is submitted, capable of characterization as an acquisition.***” [* Bank of NSW v.  Commonwealth {1948) 76 CLR 1 at 349 per Dixon J] ; ** Minister of State for the Army v Dalziel (1944) 68 CLR 261  at  286 per Rich J; *** See Trade Practices Commission v Tooth &  Co Ltd (1979)  142 CLR 397 at 415 per Stephen]
  • Cl.47: “In the result, the Commonwealth has assumed control over a substantial aspect of the plaintiffs’ property, business, goodwill and reputation. That description of the benefits accruing to the Commonwealth (and others) by reason of the prohibition of all practical uses of the plaintiffs’ intellectual property makes clear, however, that there is yet a further dimension to the benefit accruing to the Commonwealth. By securing the benefit of the plaintiffs’ rights to use their property by refraining from deploying it in particular ways or for certain purposes , the Commonwealth has been able to assume complete control over the get-up and appearance of BAT’ s cigarettes and their packaging.”

BAT’s submissions go on to explain its claim that this constitutes a taking that is not on just terms.

The Australian government’s 49-page submissions counter these claims, arguing that:

  • Cl.1;  Section 51(xxxi) protects property, not the general commercial and economic position of traders;
  • Cl2: the Act does not effect an unjust acquisition of property.
  • Cl.5: tobacco companies’ statutory rights to trademarks, patents, registered designs and copyright do not include a positive right to use the intellectual property. Further, these statutory rights are inherently subject to statutory modification or extinguishment without compensation.
  • Cl.6: the Act does not confer upon the Commonwealth, or anyone else, a benefit of a property-like nature.
  • Cl.8: “The TPP Act restricts the use of property no more than is appropriate and adapted to reduce harm to members of the public and public health. The TPP Act otherwise allows tobacco companies to continue to use their brand names and variant names on retail packaging to indicate trade origins of their tobacco products and not to use trade marks and registered designs through non-use.” It argues that this does not amount to acquisition on unjust terms.

The government’s submissions go on to elaborate on its arguments, characterising the Act as involving “regulation” not “acquisition” (Cl.79ff). Cl.36 argues that plain retail packaging will reduce the appeal of tobacco products, increase the effectiveness of health warnings, reduce the potential for retail packaging to mislead, and thus improve public health and comply with Australia’s obligations under the World Health Organization Framework Convention on Tobacco Control (“FCTC”).

The Hearing before the HCA is due to commence on 17 April 2012.

Useful documents:

  1. Thanks for sharing this update. I have been keenly watching this debate for some time now, and obviously it will continue for a while yet!

    From a trademark agent’s perspective, I have to agree with BAT for challenging the Act – even if they are ‘allowed’ to still have their brands on the packaging, in simple type font then if nothing else, this may mean the need to re-register trademarks in a number of cases. Where a logo or stylised ‘brand’ is already registered, the tobacco companies will need to re-register a ‘word’ mark to ensure they may continue to claim rights/registration – other than the above described arguments, the new Act could mean that companies incur additional expenses that would have otherwise been avoided..

    Again, thanks for posting, I look forward to following further. Jacqui

  2. Thanks for your comment!

    The parties have taken quite different approaches in their submissions, leaving much for the Court to consider. For example:
    * Following the BAT arguments: it will be interesting to see how the Court characterises the scope of the “property” allegedly being acquired: should the intellectual property to which the rights attach be construed narrowly or broadly?
    * Following the Commonwealth’s arguments: it will be interesting to see whether the HCA characterises intellectual property rights – either generally or individually – as negative (ie. rights to exclude) or positive (ie. rights to use).

    Whatever view is taken on such issues, the implications could go far beyond the issue of tobacco product packaging. At a time when arguably conservative views of ‘authorship’ and ‘originality’ in recent cases seem to have been reining in the scope of ‘property’ to which copyright attaches, it will be interesting to see whether the HCA prefers a more narrow or expansive view of what amounts to ‘property’ in the tobacco packaging case.

  3. […] in reading more of the particular submissions and arguments, I encourage you to read the posts at Australian Intellectual Property Updates […]

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