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Philip Morris Sues Australia Over Tobacco Law

Tobacco giant launched legal action against Australia's government less than an hour after Parliament passed legislation banning all logos from cigarette packages.

CANBERRA, Australia (AP) -- Tobacco giant Philip Morris launched legal action against Australia's government on Monday less than an hour after Parliament passed legislation banning all logos from cigarette packages.

Health and aging minister Nicola Roxon called the new law "an example for the world to follow."

The legislation, which takes effect in December 2012, bans the use of logos and brand imagery on cigarette packages, instead requiring that brand names be printed in a small, uniform font on dull olive green packets -- a color the government believes consumers will hate.

Cigarette packs will also include larger health warnings with graphic pictures of the negative health effects of smoking.

Tobacco companies have fought the legislation and threatened legal action since the government first announced its plan last year.

Philip Morris Asia, which is based in Hong Kong, quickly served a legal notice of arbitration under an investment treaty that Hong Kong has with Australia. The company said it also intends to pursue claims under Australian law.

It says that billions of dollars of valuable trademarks and investments in Australia are at stake.

"We are left with no option," Anne Edwards, a spokeswoman for Philip Morris Asia, said in a statement. "The government has passed this legislation despite being unable to demonstrate that it will be effective at reducing smoking and has ignored the widespread concerns raised in Australia and internationally regarding the serious legal issues associated with plain packaging."

Health minister Roxon called passage of the law a momentous event in Australian public health history.

"Plain packaging means that the glamour is gone from smoking and cigarettes are now exposed for what they are: killer products that destroy thousands of Australian families," Roxon said.

She said packaging is one of the last powerful marketing tools available to tobacco companies.

"Let there be no mistake, big tobacco is fighting against the government for one very simple reason -- because it knows, as we do, that plain packaging will work," Roxon said.

Tobacco advertising on billboards and in magazines has long been banned and restrictions on smoking in public places, including restaurants and bars, are common.

Smoking rates have been declining in Australia for years, but the government says cigarettes still kill 15,000 Australians a year and cost the country about $31.5 billion annually.

The government is required under the constitution to pay compensation to anyone from whom it takes or devalues property, including intellectual property such as trademarks. But opinions are divided on what the implications of those rules, and international trade laws, are in the case of cigarette packages.

Australia is following the lead of other countries. Uruguay's government requires that 80 percent of the front and back of all cigarettes packages be devoted to warnings. In Brazil, labels feature graphic images of dead fetuses, hemorrhaging brains and gangrened feet.

In the United States, a judge recently blocked a federal requirement that cigarette packs feature graphic warning images starting next year, saying it should be delayed until a lawsuit brought by tobacco companies is resolved.