On 5 October 2012 the High Court made orders in two matters concerning the Tobacco Plain Packaging Act 2001 (Cth).

British American Tobacco Australasia Ltd (British American Tobacco) and JT International SA (Japan Tobacco International) (as applicants) had sought to challenge the Government’s legislation requiring plain packaging of tobacco products on the basis that the Commonwealth Government would be acquiring their intellectual property. 

The applicants argued that the Tobacco Plain Packaging Act breached section 51(xxxi) of the Constitution.  They argued that the Commonwealth Government was acquiring their property (including branding used for packaging) unjustly and for no consideration. 

The Court found against the applicants.  The Court held that the Tobacco Plain Packaging Act did not result in the acquisition of property of the tobacco companies.

This was on the basis that the Commonwealth Government was not using any property of the tobacco companies for its own proprietary benefit or interest - rather, the Commonwealth Government was restricting the manner in which the property of companies in the tobacco industry could be used.  The Court found that the legislation was not invalid for breaching the above provision of the Constitution.

What this means for your business?

This means that the High Court decision does not, as a general rule, affect the value of your brands and trade marks. 

However, in bringing their case the applicants had identified extensive intellectual property rights associated with their product packaging.

These serve as a useful checklist of intellectual property rights that may be evident in your business.

What property was considered by the Court?

British American Tobacco identified a number of property rights that it alleged were affected by the plain packaging laws - these were:

  1. registered and unregistered trade marks;
  2. copyright in artistic and literary works used for products and packaging;
  3. distinctive "trade dress" and "get-up" for products;
  4. substantial reputation and goodwill;
  5. a registered design;
  6. registered patents;
  7. packaging rights:
    1. to package products in such shape or design as may be chosen; and 
    2. to print or to use on products and packaging such trade marks, copyright works, designs, patents or messaging which may be chosen; and
  8. goodwill attaching to the exploitation of such packaging rights;
  9. intellectual property licence rights held from overseas licensors for:
    1. reproduction and publication of copyright works and get-up; and           
    2. use of design rights and patents.

British American Tobacco argued that by the plain packaging legislation, the Commonwealth was acquiring their "property" on unjust terms - that is, for no value.

The value of the intellectual property was the basis for the proceedings.

Take-away points and what should you do?

Intellectual property may be a valuable asset for your business.  It may arise in more circumstances than you realise.

There are a number of steps you can take in order to protect your brand and your legal rights in intellectual property used in your business.  These include by:

  1. Undertaking an “audit” of intellectual property to ascertain what is owned and/or licensed in connection with the business.
  2. Considering what confidential information and trade secrets are used in your business and ensuring their security and that you have confidentiality arrangements with key stakeholders.
  3. Ensuring that you actually have the right to use any material (such as copyright material) used for marketing your business and products - do you have ownership or rights under a licence agreement?  Is this recorded in writing?
  4. Determining whether any third parties have the right to use your intellectual property (for example, agents or distributors, which may have a need to use your materials).  Is there adequate documentation recording any rights and/or restrictions of use?
  5. Ensuring that where materials (such as trade marks or marketing material) are developed by external parties (such as creative agencies, design companies or third party contractors) that any "developed intellectual property" is actually assigned or appropriately licensed to your business – this may prove to be a particularly problematic issue to safeguard value upon the sale of a business or business asset.
  6. When embarking on a product launch or re-brand, considering legal issues including the impact of any competition or trade marks laws.  For example, are there any other competitors with a similar "get-up" or trade mark.
  7. Ensuring you protect your interests by keeping records of authors and developers of any copyrighted material, including marketing materials and trade marks.
  8. Registering the trade marks used in your business.

With legal issues surrounding intellectual property "an ounce of prevention is better than a pound of cure".