: All smoke but no fire? The Plain Packaging case

All smoke but no fire? The Plain Packaging case

Simon Kozlina and Nikki Bromberger

In the recent High Court of Australia decision of JT International v Commonwealth of Australia [2012] HCA 43 (‘The Plain Packaging Case’), the Court upheld the constitutional validity of the Tobacco Plain Packaging Act 2011 (Cth). The Act requires that tobacco packages be devoid of any trademarks, colours or finishings associated with individual tobacco companies. The plaintiff tobacco companies argued that, in not also providing compensation for the intended loss of revenue associated with these packaging requirements, the Act offended the ‘acquisition of property on just terms’ clause of the Commonwealth Constitution (s 51(xxxi)).

In reaching its decision, a 6:1 majority confirmed that trademarks and other intellectual property rights come within the ambit of property for the purposes of s 51(xxxi). The majority also held that the Act’s packaging requirements represented a ‘taking’ of these proprietary rights. However, it rejected the further argument that the Commonwealth had itself acquired any of the ‘benefits’ normally associated with proprietary interests. In particular, it found reducing government smoking-related health costs is not a ‘benefit’, much in the same way as requiring compliance with general law is not a ‘benefit’.

Due to the Court’s finding on proprietary interests, it has left largely unanswered the broader question of the legitimate scope of public policy in determining the validity of legislation. Yet, the narrow interpretation of ‘acquisition’ appears to leave the door open for parliament to pass similar legislation that restricts companies’ use of intellectual property rights in other areas of public health concern, such as alcohol and food.

Nevertheless, despite its now confirmed domestic validity, any World Trade Organisation (WTO) member can sue any other member through the WTO dispute settlement system to challenge (and change) domestic legislation and other measures, if they are inconsistent with WTO trade obligations.

Honduras, Ukraine and the Dominican Republic (all tobacco manufacturing companies to some extent) have commenced an action at the WTO in relation to whether the Australian plain packaging laws breach Australia’s WTO promises over intellectual property and technical barriers to trade. There is still the very real possibility that the upcoming litigation brought by Honduras, the Dominican Republic and Ukraine against Australia will find the Act to be inconsistent with Australia’s international trade obligations. If successful, This will require Australia to make changes to the Act.

SIMON KOZLINA and NIKKI BROMBERGER both teach law at the University of Western Sydney.

(2012) 37(4) AltLJ 283
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