The European Union and several governments, including the UK, are considering introducing legislation to ban branding on tobacco products. However, it is not certain whether such a law would be lawful.

The only country that has passed such a law to date is Australia. The legislation, which is due to come into force on 1 December 2012, will mean that tobacco products will be sold in plain packets. The only distinction between different brands will be the brand and product name, which will appear in a standardised font in a specified position. Graphic health warnings will also appear on all packets.

The Australian legislation has been challenged by four tobacco companies who claim that the law infringes their intellectual property rights by preventing them from using their brands and trade marks. They also argue that removing the logos and branding will lead to a significant cut in profits and an increase in counterfeit products. Their final argument is that it is unconstitutional for the Australian government to enforce the removal of the branding without providing compensation.

A decision of the Australian High Court is awaited, and this may have implications for the plans of other countries to implement similar rules.

In the UK, both the UK and Scottish Governments have recently launched consultations on their plans to introduce similar legislation, with the key question being whether cigarette packets should be changed to a plain standardised template, be packaged in a different way or remain as they are.

Analysts at Panmure Gordon have stated that there will “likely be strong arguments from both sides of the debate” during the UK consultation process. The analysts went on to say that the outcome of the Australian action will be a “key factor” in the process.

The purpose of the legislation is to lessen the appeal of tobacco products and improve public health. However, the Adam Smith Institute (a leading UK think tank) has said there is no evidence to suggest such a law would have this effect.

In addition to this, six of Europe’s largest trade mark groups have objected to the plans. They are concerned that legislation which precludes brand owners from making legitimate use of their trade marks “would amount to an indirect legislative expropriation of private intellectual property and, as a consequence, lead to the extinction of their property rights”.

The outcome of the Australian litigation will be closely monitored by the EU and governments who are considering implementing similar legislation. These bodies will have to consider whether such a law would be lawful in their own jurisdiction.