Why the tobacco court fight is like The Castle

20/04/2012 I've just left the High Court in Canberra after being fortunate enough to sit in on day three of the tobacco industry versus the Australian Federal Government (the Commonwealth) Plain Packaging Act. I've brought my two teenage daughters down for 24 hours to watch the case in court partly inspired by a professional colleague involved deeply in the case.

I have spent my career involved with brand creation, differentiation and promotion, but as importantly, my citizenship of Australia is perhaps the most affected by this landmark decision about unprecedented government intervention. This case is ground breaking on both issues and a global first.

The tobacco industry worldwide is watching Australia closely to see which way this extraordinary case falls. There are over 174 countries party to the Framework Convention for Tobacco Control which requires it's signatories to comprehensively ban all tobacco advertising. The Tobacco Plain Packaging Act is intended to implement Australia's obligations under that Treaty.

We have 21 of our best legal brains working on the case and have seen some of our best advocacy performances ever – you can check the transcripts if you Google 'High Court'.

I've just watched the seven judges retire with their judgement reserved. Although the Tobacco arguments were persuasive this morning, my guess is the outcome will favour the Commonwealth.

What are the real facts being argued?

At the crux of the argument lie two things: the understanding and claim by the Government that cigarettes kill. Nine out of 10 people who try cigarettes become addicted (more than cocaine) and 5.4 million people die from cigarettes every year. Tobacco harms every organ of the body. Despite the huge taxes Governments reap from the sale of cigarettes, the cost in health care is too big.

They have therefore proposed the removal of company logos from packs of cigarettes from December 2012. The packs will be packaged in drab brown with horrific pictures of the physical effects of tobacco on both sides without other distraction. The packs will list the name of the cigarette only with no company logos. Only 25 percent of the packet will be free of graphic photographs and health warnings for the company name to appear in plain text. I've handled the packs this morning – they are graphic. The Government wishes to stop the tobacco companies enhancing the buying process.

The tobacco industry is claiming the law leaves them with no way to distinguish their products from competitors. They are fighting the validity of the new Act on the grounds it fails to give them just terms – fair compensation for the removal of their trademark and brand. They argue that the Commonwealth is acquiring their property without compensation – in a similar way to how the government tried to take the home of Michael Caton in the movie The Castle.

In response, the Government claims that a trademark only protects exclusivity, not use. That the main value of a trademark is protection – to stop others using your brand. Until you trademark a logo or brand or mark, we all have the right and liberty to do whatever we please as long as it's lawful. Therefore the Government claims that by removing the logo, the trademark still exists. Nothing has changed. No other company can use the cigarette companies brand.

It is the difference between the property (the cigarettes) losing value or losing the property itself.

While the tobacco industry is fighting the law, imagine if we removed the brands on cars, or drink bottles, to put it into context.

The difference here is the Government claims it is not lawful to promote a product that causes so much harm and it is their role to protect citizens. If cigarettes were used, as the tobacco industry wants them to be used – in excess – then they will continue to kill people. This is different to alcohol, where the promotion is about relaxation and enjoyment. Alcohol companies don't promote the excess consumption of their product. There IS a way to drink alcohol responsibly and without harm. But there is NO way to consume a cigarette without harm.

The Government claims there is therefore no lawful need to compensate a person, or company that is marketing a product that blatantly causes devastation. The argument is that the Constitution was never intended to compensate people for being precluded from continuing to engage in a harmful activity and that activity here is the promotion of a product that if used the way it's intended to be used will cause harm and be potentially lethal. Therefore why should the government compensate a company for ultimately killing people?

This debate between the Government and tobacco companies will have a dramatic outcome for the law around brands, trademarks and probably most importantly, the extent of government intervention. The Tobacco companies are already preparing a separate case to the World Trade Organisation in the US. The fight is a big one, and on a global scale. What are your thoughts? For or against?

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