The High Court today ruled in favour of the federal government, rejecting tobacco companies' claims that the world's first plain-packaging laws for cigarette packs were unconstitutional. The firms had argued that the government had effectively stolen their intellectual property. The cases, to be resolved over the next three years, will hinge on whether Australia has breached existing trade and treaty obligations. Phillip Morris and other tobacco companies will also press for compensation depending on how much the plain-packaging move cuts smoking. Wholesale tobacco generated revenues of $2.2 billion in the year to June 2012, according to IBIS World. Households, though, spent a combined $11.1 billion on tobacco, once taxes and other costs were added. 'Vampire heart' Trade and legal experts said, however, that today's verdict will likely influence international rules governing cigarette sales, as well as the thinking behind trade agreements.

Australian National University law professor Matthew Rimmer said the High Court of Australia has “driven a stake through the undead vampire heart of the tobacco industry” which had long used intellectual property cases in various jurisdictions involving trademarks "to frustrate regulation in regards to health." Mr Rimmer believes the decision in turn will embolden other countries considering the plain packaging of tobacco products, setting off a so-called “olive revolution” in reference to the olive-coloured plain packaging the government requires. Countries mulling similar rules include New Zealand, Canada, Britain, India and Norway. Discussions over intellectual property (IP) rights have become a sticking point in trade deals such as the Trans-Pacific Partnership, currently being nutted out between Australia, the US, and seven other nations. Under the terms of existing trade deals, IP lawsuits have given multinational companies the option of challenging governments in court over any regulation that threatens their revenues. Using investor-state dispute settlement provisions, governments can seek a court case outside of the country where the dispute occurs.

Precedent claim The Gillard government has already ruled out investor-state dispute settlement provisions in the Trans-Pacific Partnership in part because of the behaviour of tobacco companies. Nonetheless, the High Court's decision that plain packaging is lawful sets a precedent in the balance of commercial and public interest. University of Melbourne law school professor Andrew Mitchell said the ruling has global implications. "It's politically important because the High Court's orders now remove any doubt about the constitutional validity of the governments plain packaging law," he said. "So now the last domestic hurdle that the industry attempted to place to prevent this world-first health measure from coming into force has been cleared."

Loading Australian National University international trade lecturer John Tang said the case may influence future trade agreements. "Since every country is sovereign to make trade deals in its own interests, the question becomes whether its trade partners are willing to accept such deals or seek compromise to allow for case-by-case negotiations in future."