Tobacco wars

The recent High Court ruling on the the packaging of cigarettes is not the last word ... The tobacco companies have turned to international fora in three parallel proceedings ... Potential downside is huge ... Mary Ayad argues that the Australia's sovereign interests should trump an argument about intellectual property rights 

Health Minister Tanya Plibersek. Tobacco companies won't lie down on packaging law

THE Australian government is in a difficult situation following the High Court's decision in the plain packaging case.

Three different legal proceedings have been initiated against the government under three parallel dispute resolution bodies - ICSID, WTO and the Singapore arbitration centre.

Essentially, the claims are for breaches of intellectual property rights which, if successful, would cost in the hundreds of millions of dollars.

Arguably, this is the most important legal matter facing the government, with serious implications for the Australian economy.

The nexus of the convergence of IP rights with the interests of the public good is an area of law that is in its infancy. 

In its modern application IP law seeks to embrace industrial or commercial property, as well as literary and artistic property.

In this way the law would be applied to extend to protect the marketing of goods and services.

The evolution of IP law from the protection of literary and artistic creations to industrial or commercial property is of paramount relevance to the current case. 

The issues raised by the tobacco cases form a nexus with intellectual property rights on one hand, and aspects of the Australian Constitution on the other, for instance the exercise of the Commonwealth's legislative power with respect to copyright etc. under s.51(xviii), the acquisition of property on just terms under s.51(xxxi), and the external affairs power under s.51(xxix). 

The arbitral proceedings and dispute settlement proceedings brought against the Australian government could undermine state sovereignty in the right to pass domestic legislation that serves the public good.

The New York Convention allows arbitral awards to be set aside on the basis of public policy - which in practice is interpreted as domestic public policy and not transnational public policy.

It boils down to balancing IP rights against the right of states to pass domestic legislation relevant to the public good.

Implications 

The matter of "unfair competition" was brought up as a partial justification for the claims against Australia.

Notwithstanding that suggestions have been made in common law countries for the development of a similarly broad prohibition of unfair trading, it has been rejected by the High Court.

In Moorgate Tobacco Co Ltd v Philip Morris Ltd Deane J, with whom Gibbs CJ and Mason, Wilson and Dawson JJ agreed, set out the threshold for unfair competition's application ... 

"to describe what is claimed to be a new and general clause of action which protects a trader against damage caused either by 'unfair competition' generally or, more particularly, by the 'misappropriation' of knowledge or information in which he has a 'quasi-proprietary' right."   

Justice Deane added that it is ...

"in an Australian context simply mistaken in that 'unfair competition' does not, in itself, provide a sufficient basis for relief under the law of this country. It is in that third and mistaken sense that 'unfair competition' was called in aid of Moorgate's case in the present appeal."

My view is that the tobacco companies' do not have a case grounded in intellectual protection, because the Australian legislation does not infringe their IP rights or create unfair competition.

The Australian government is not using the intellectual property of these companies for any monetary gain.

Australia has the right to regulate the types of advertising that occurs within its jurisdiction on the basis of public policy and state sovereignty and these rights are well established and well protected under international law. 

Mary Ayad is a law lecturer and PhD candidate in law at Macquarie University