(CNSNews.com) – The United Nations’ health agency has welcomed a court decision upholding a new Australian law mandating plain packaging for tobacco products – the world’s first – a move critics regard as government theft of intellectual property rights.

Wednesday’s High Court ruling came as a blow to an already beleaguered tobacco industry, which has argued that plain packaging will have unintended and self-defeating consequences, including boosting illicit trafficking of tobacco and driving down prices.

With effect from December 1 this year, cigarettes and other tobacco products sold in Australia will have to be presented in plain, olive-colored packs, with no branding, logos or promotional text.  The brand name will appear in plain text (size, font and positioning all standardized), while most of the packaging will be taken up with warnings and graphic pictures depicting health hazards.

Australia’s High Court rejected arguments by four major tobacco companies that the ban on using their brand logos would infringe their intellectual property rights. The court’s brief statement did not give reasons for the decision, saying they would be published “at a later date.”

The four companies, British American Tobacco (BAT), Imperial Tobacco, Philip Morris International Inc. and Japan Tobacco Inc., together account for around 45 percent of the global market.

The plaintiffs’ case dealt with a constitutional issue – restraints on the powers of parliament to make laws with respect to “the acquisition of property on just terms.” The companies argued that provisions in the new law were invalid since they entailed the acquisition of their property on terms that were not just.

A number of other countries, including Britain, France and New Zealand, are considering similar legislation but the plaintiffs disputed that the ruling sets a precedent.

“It is important to remember that the scope of the High Court proceedings was tightly focused on addressing whether plain packaging legislation is contrary to a very specific point in the Australian constitution,” BAT said in a response. “As such, today’s decision only concerns Australian constitutional law.”

“Our intellectual property rights are robustly supported by trade mark treaties and laws at an international, European and national level and we don’t believe the court’s decision in Australia will have any legal implications in other markets,” said Imperial Tobacco.

Nonetheless, World Health Organization (WHO) director-general Margaret Chan urged other countries “to follow Australia’s tough stance on tobacco marketing.”

“The lawsuits filed by Big Tobacco look like the death throes of a desperate industry,” said Chan. “With so many countries lined up to ride on Australia’s coattails, what we hope to see is a domino effect for the good of public health.”

“With Australia’s victory, public health enters a brave new world of tobacco control.”

Although the court statement gave no reasons for the ruling, and despite the narrow constitutional focus, Chan claimed that the decision boosted the arguments in favor of plain packaging.

“The evidence on the positive health impact of plain packaging compiled by Australia’s High Court will benefit other countries in their efforts to develop and implement strong tobacco control measures to protect the health of their people and to stand resolute against the advances of the tobacco industry,” she said.

“Plain packaging is a highly effective way to counter industry’s ruthless marketing tactics.”

In its response to the ruling, Australia’s Labor government said than 24 studies over two decades had backed plain packaging as an effective measure.

“Today we have taken away the tobacco companies mobile billboards – the billboards that were in every pocket of every smoker around Australia,” Health Minister Tanya Plibersek told a press conference, while Attorney-General Nicola Roxon said the importance of the ruling “is that governments can take on big tobacco and win.”

‘State-sponsored bullying’

The tobacco companies dispute that plain packaging will advance the public health objective – to reduce smoking.

“Tobacco packaging has never been identified as a reason why people start, or continue, to smoke, and there is no credible evidence to support the notion that plain packs will reduce smoking levels,” said Imperial Tobacco, while BAT said “there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers.”

Both companies raised concerns about illicit trafficking of tobacco, already a serious problem.

“This decision plays into the hands of the criminal gangs who profit from counterfeit tobacco; their job will be significantly easier now that all tobacco products will be sold in the same generic packaging,” said Imperial Tobacco.

“The illegal tobacco trade is a significant problem in Australia and we expect the situation to worsen considerably as a result of this legislation, placing further pressures on retailers and government tax revenues.”

Elaborating on the unintended consequences argument, BAT argued in a recent statement that, “Without branding, price will become the main factor in consumers’ purchasing decisions. This gives a big incentive to illicit traders who are able to supply the product at the cheapest price.

“And people who sell dodgy cigarettes don’t care who they sell to,” it said. “A policy designed to make tobacco less accessible to youth could end up having the opposite effect, by making the products cheaper and more accessible.”

Hands Off Our Packs, a campaign group in Britain, said the Australian court ruling would not affect its opposition to plans by the British government to pursue plain packaging.

“Putting cigarettes in standardized packs is tantamount to state-sponsored bullying,” said the group’s Simon Clark. “It is yet another attempt to denormalize a legal product and stigmatize those who consume it.”

Meanwhile, Australia faces World Trade Organizations from three countries that have challenged the law for potentially breaching international trade agreements. Philip Morris Asia is also suing the Australian government for breaches of a bilateral investment treaty with Hong Kong.