Tobacco giant sues over new cigarette packet rules

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The tobacco giant Philip Morris launched legal action against the Australian government yesterday over a law that will strip company logos from cigarette packages and replace them with grisly images of cancerous mouths and sickly children.

The government says the law – due to come into force next year – will make the packages less attractive to smokers and make Australia the toughest place in the world to advertise tobacco. But several cigarette makers have threatened lawsuits, arguing the move illegally diminishes the value of their trademarks. Philip Morris is the first to file a claim for compensation.

"We would anticipate that the compensation would amount to billions," said Philip Morris spokeswoman, Anne Edwards. The legislation would ban cigarette makers from printing their logos, promotional text or colourful images on packs. Brand names will be printed in a small, uniform font.

Hong Kong-based Philip Morris Asia Limited, which owns the Australian affiliate Philip Morris Limited, filed a notice of claim yesterday arguing the legislation violates a bilateral investment treaty between Australia and Hong Kong. The tobacco company says the treaty protects companies' trademarks.

Australia's government, however, denied the plan broke any laws. "Our government is determined to take every step we can to reduce the harm by tobacco," Nicola Roxon, the Health Minister, said. "We won't be deterred by tobacco companies making threats or taking legal action."

Prime Minister Julia Gillard also brushed off Philip Morris's threats. "We're not going to be intimidated by big tobacco's tactics," she said.