According to this, branding is worth up to half the value of a 7 to 8 billion dollar business. The Australian Government relies on the idea that, because it will derive no benefit from the trade mark rights that it is stripping from tobacco companies, they will not have grounds to sue it. Its Constitution gives it powers to expunge or otherwise regulate trade marks, and compensation only applies if it actually acquires these trade marks.
I have no idea what precedents exist but for the Government to wipe out trade marks on such a scale without the prospect of material benefit from the move seems such a whacky notion I am not surprised that there is no constitutional provision for it.
Writer Crispin Hull is anxious for the legislation to succeed, and the flaw he points out is in the wording regarding the Minister's powers to make regulations:
The new legislation provides the minister with a sweeping regulation-making power. It says, ''Regulations made for the purposes of [giving effect to the plain-packaging legislation]: (a) may be INCONSISTENT with this Act; and (b) prevail over this Act ... to the extent of any inconsistency.
But basic constitutional law tells you that a minister cannot make regulations inconsistent with an Act of Parliament. The minister, like everyone else, must obey the law. ...No Act can surely contain regulations that over-ride it. Hull's view seems to be that the Government is not sufficiently confident that the law is robust, and that they hope the regulations will allow it to make last-minute adjustments.
I find the rest of Hull's case rather odd ...
Other than the one legal point, the tobacco companies' submissions to the Senate inquiry have been contradictory and almost self-incriminating. They argue that plain packaging would result in tobacco companies only being able to compete on price, so they would have to lower their prices.
More people would then be able to afford to smoke more and this - the implication runs - would be a bad thing. They admit their product is bad.
They say plain packaging would make smuggling easier - again, lowering prices and causing greater consumption of their - by implication - bad product.
Their main argument against plain packaging is that it would ''lead to an increase in the uptake of smoking''. If their product is so bad why are they in the trade?The question 'why are they in the trade' lacks relevance to the issue. Tobacco companies point out that if brand packaging has no place in the market, price will become a far greater driver, and a price war is a likely outcome. This will militate against any health gains that might be expected from a lower smoking rate in the population. Not only will the Government gain no benefit from 'acquiring' tobacco company trade marks, but its claimed health goals – the whole point of the legislation – will not be met.
As to why they are in the trade: they wish to meet and exploit demand for tobacco on a commercial scale. They also probably wish to stimulate demand, which goes with the territory of being in business. Legitimate businesses have obligations in meeting safety standards. It would benefit nobody if demand for this product were met by people without any legal obligations who work in the black market and beyond the law.
Hull concludes rather ineffectively with a familiar piece of flawed logic beloved of many supporters of plain packaging legislation:
Then [tobacco companies] say, ''There is no real world data to demonstrate that the plain packaging of tobacco products will be effective in discouraging youth initiation, encouraging cessation by existing smokers, or increasing the salience of health warnings.''
Well, if plain packaging is so ineffective why are they so worried about it?This also fails to recognise the obvious point that branding is intellectual property and losing intellectual property will significantly diminish the value of their assets – and that the Australian Government will not gain from their losses, either financially or in terms of achieving policy goals.
Hull is all for improvements in the writing of this legislation before it becomes law. Whatever its state by that time, I hope it will be unravelled in court.