Business Law & Compliance

Tobacco giants file biggest corporate damages claim in legal history to prevent loss of trademark

3 min read

26 May 2015

Two of the world's biggest tobacco companies have challenged the legality of the UK government's plain packaging regulations, and have filed what has been dubbed as "the biggest corporate damages claim in legal history" against the government.

According to British American Tobacco and Philip Morris bosses, stopping them from using their trademarks goes against both UK and EU property law.

“Legal action is not something we wanted to have to consider and is not something we undertake lightly, but the UK government has left us with no other choice,” said a British American Tobacco spokesperson. “Any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.”

This was echoed by Philip Morris senior vice president Mark Firestone, who said that though the companies respected the government’s authority to regulate in the public interest, plain packaging goes “too far”

He added that countries around the world have shown that effective tobacco control can coexist with respect for consumer freedom and private property.

The department of health countered that it would not be “held to ransom by the tobacco industry,” and that it would not have standardised packaging unless it was considered to be defensible in the courts. 

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The department claimed that legal challenges had been anticipated. The measures, which are planned for a 2016 introduction, with full roll-out expected by 2017, have been opposed by big tobacco firms “from day one”. Philip Morris had previously sued the Australian government, which implemented similar legislation. It led to an unsuccessful lawsuit

According to the Guardian, plain packaging was to thank for tobacco consumption falling 12.2 per cent, two years after the legislation came into effect.

Legal papers filed at the high court have claimed the proposed regulations do not provide Phil Morris, the parent company of Marlboro, with enough compensation. Firestone claimed that the government’s rushing out of new regulations has seen “many serious questions left unanswered”.

The Scottish government has claimed it will follow the lead of Westminster on the issue of plain packaging. The court claim has only been made in London, however, a British American Tobacco spokesperson suggested a claim would be presented in Scotland if they proved successful.

In March, Imperial Tobacco said that it intended to challenge the law in the UK courts.

“No one starts or continues to smoke because of the colour of the pack,” said Axel Gietz, director of corporate affairs. “We would regrettably be left with no choice but to defend our legal rights in court.”

Japan Tobacco International, which owns the Winston, Camel and Benson & Hedges brands, also intends to take the government to court.

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