The High Court of Australia has rejected a constitutional challenge to the validity of recent Australian legislation requiring plain packaging for tobacco products. Leaving aside the public health justifications for such measures, there can be no doubt that the legislation imposes sweeping restrictions on what tobacco IP owners can do with their rights in relation to the retailing of their products, including stringent positive requirements as to additional material that must be included on packaging by way of graphic health warnings and other material.
The constitutional challenge arose under s 51(xxxi) of the Commonwealth Constitution which provides that there can be no acquisition of ‘property’ by the Commonwealth unless this has been done on ‘just terms’. In the legislation in suit there was no provision for compensation to the tobacco companies with respect to their IPRs, notably registered trade marks: hence it was argued that the legislation was invalid as not complying with this requirement.
While all members of the court agreed that each of the IPRs affected was ‘property’ for the purposes of s 51(xxxi), by a majority of six to one they held that, even if the plain packaging legislation constituted a ‘taking’ or limitation of the tobacco companies' property, it did not amount to an ‘acquisition’ of property as required by s 51(xxxi). ‘Acquisition’ of property in this context meant that the Commonwealth or another had, as a consequence of the impugned legislation, acquired ‘an interest in property, however slight or insubstantial it may be’. In other words, there must be a transfer of some proprietary interest to the acquirer (the Commonwealth), and this requirement was not satisfied by the simple fact that the Commonwealth's actions had had the effect of limiting or even extinguishing the property of another – s 51(xxxi) was not a guarantee of protection of the general commercial interests of traders. In the present case, therefore, the Commonwealth Government had not ‘acquired’ any of the property rights of the plaintiffs. The tobacco companies still remained registered owners of their trade marks, and designs, and the Commonwealth had in no way assumed any of these rights for its own use. The various positive obligations now imposed on tobacco companies to display enhanced warning notices and other such material also did not constitute an acquisition of the companies' property rights, with members of the court drawing analogies here with legislative restrictions placed on manufacturers and retailers of other kinds of products or planning and other restrictions placed on land use.
The challenge therefore failed.