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Public health groups sue FDA on graphic cigarette warning labels

Oct 5th, 2016
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A group of anti-tobacco and public-health groups sued the Food and Drug Administration on Tuesday in an attempt to compel it to establish graphic warnings labels on cigarette packaging and marketing.

It’s been more than 3½ years since there’s been legal or regulatory movement on graphic warnings, particularly on what they will look like and when they will appear.

The 2009 federal Tobacco Control Act required graphic warnings covering the top half of the front and back of cigarette packs and on 20 percent of cigarette advertising.

The FDA was given until June 22, 2011, to issue a final rule requiring such warnings.

The governments of more than 90 countries require similar graphic warning labels. Australia, which was among the first to introduce the labels and has some of the most graphic images, is perhaps the most noteworthy.

The FDA chose nine labels in June 2011, which were scheduled to debut in September 2012. The labels included smoke coming out of a tracheal hole, diseased lungs and gums, and a man who appears deathly ill.

A group of tobacco manufacturers that include R.J. Reynolds Tobacco Co. and Lorillard Inc. filed a lawsuit in September 2011 against the FDA regarding the labels.

Two parallel legal cases with differing judicial opinions have put the initiative on hold.

The anti-tobacco and public health groups argue that the federal Administrative Procedure Act, which governs federal agencies, gives federal courts the power to “compel agency action unlawfully withheld or unreasonably delayed.”

“The FDA is in violation of its nondiscretionary statutory duty,” according to the plaintiffs’ lawsuit.

The plaintiffs contend that one of the legal tracks gives the FDA clearance to implement its final rule on the warning labels. Some plaintiffs argue that the lack of warning labels “makes it more difficult” for them “to educate and counsel members of the public not to smoke.”

In August 2012, a panel of the U.S. Court of Appeals for the D.C. Circuit voted 2-1 that the proposed specific warning labels violated the First Amendment. That ruling did not address the law’s underlying requirement.

The FDA said in March 2013 that it declined to further appeal the D.C. Circuit ruling and would create new warning labels.

In March 2012, the U.S. Court of Appeals for the Sixth Circuit upheld the law’s requirement for graphic warnings, finding that this provision did not violate the First Amendment. The U.S. Supreme Court declined in April 2013 to hear an appeal of the Sixth Circuit ruling.

“The FDA is undertaking research to support a new rulemaking consistent with (the Tobacco Control Act),” spokesman Michael Felberbaum said Wednesday.

While the industry and advocacy groups await the next FDA warning label proposals, several studies have been published that found mixed smoker reactions to the initial nine proposed labels.

In December 2010, an FDA study found putting graphicwarning labels on cigarette packs may stir emotions, but not lead to quitting.

UNC Chapel Hill researchers said in June that 40 percent of participants in their study said they were more likely to consider quitting after exposure to the graphic images, compared with 34 percent with the text warning.

A February 2016 study published by University of Illinois researchers at the journal Communication Research suggests graphic images strike some people as manipulative, a reaction that could backfire on the attempt to steer individuals away from smoking.

Lawsuit plaintiffs

The lawsuit was filed by the American Academy of Pediatrics, the Massachusetts Chapter of the American Academy of Pediatrics, the American Cancer Society, the American Cancer Society Cancer Action Network, the American Heart Association, the American Lung Association, the Campaign for Tobacco-Free Kids, Truth Initiative, and several individual pediatricians.

Transparency, Yes. Interference, No.

Oct 5th, 2016
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http://www.huffingtonpost.com/vera-luiza-da-costa-e-silva/transparency-yes-interfer_b_12351906.html

Vera Luiza da Costa e Silva Head of the Secretariat of the WHO FCTC

There was a time when public health discussions on tobacco were an extraordinarily open process. Government officials met a wide range of people and listened to their concerns and ideas as they formulated policy.

Among the “contributors” were representatives of the tobacco industry, which offered assurances about its earnest intentions. The tobacco industry had access to policy-makers and infiltrated public health forums and because everyone involved was open the industry gained access to internal government documents listing a wide range of ways of regulating the industry.

All that changed when courts, particularly in North America, began considering cases from tobacco victims. Judges ordered – as is normal in such matters – that the tobacco industry discloses internal documents to plaintiffs. It became clear that the industry lied when denying the harms caused by their products, disputing scientific findings, and luring millions, including the world’s youth, into addiction, in a drive to build its business.

The publication of this mountain of paperwork (the documents are now numbered in the millions) from the late 20th and early 21st centuries was a watershed moment, providing incontrovertible evidence that the tobacco industry could not be trusted. There was no sign of the earnest partner the industry claimed to be.

Documents show how the industry worked behind the scenes successfully lobbying policy makers to discontinue or water down tobacco control measures. The documents mapped efforts to delay and confound policy initiatives and to create vast new markets in the developing world. They also show how the tobacco industry created or co-opted front groups to defend their interests and used tobacco farmers to prevent governments pushing on with public health policies.

As British American Tobacco’s (BAT) chairman noted in an internal memo in 1990: “We should not be depressed simply because the total free world market appears to be declining… There are areas of strong growth, particularly in Asia and Africa… it is an exciting prospect.”

The revelations kept on coming, including the disclosure that industry research was suppressed or secretly moved to other countries to put material beyond the reach of the courts. Other documents showed how the industry conspired in attempts to raise the proportion of women smokers to the levels of men.

The tobacco industry documents had a significant effect – firstly on the court cases to which they related, but just as importantly in creating a resolution among policy-makers. If the tobacco industry was now a global industry seeking to expand to new markets, the response must be equally global.

The UN Tobacco Control treaty itself, the WHO Framework Convention on Tobacco Control (WHO FCTC), was a response to the transnational nature of the business and the need for a global response to curb the epidemic. It entered into force in 2005 becoming the first global health treaty, an attempt to strongly regulate the trade in this noxious product.

The Convention brought together various government sectors with public health experts, researchers and others in the certainty that unified action was required to counteract the industry’s behaviour. This, we fervently hoped would save millions of lives.

We have been successful in doing so, even as we recognise that the tobacco industry is expanding its markets, placing many more people at risk of premature death.

The tobacco industry is targeting Parties’ delegations attending the world’s largest intergovernmental meeting solely dedicated to tobacco control. At the last Conference of the Parties in 2014, letters were sent representing tobacco industry interests petitioning finance officials on taxation.

We cannot sit at the negotiating table with the people who caused this global disaster because one thing is crystal clear – this industry lies. Publicly it speaks in a mild voice, while behind the scenes it executes policies in absolute opposition to its public statements, ultimately killing one in every two regular users of its products.

So when we meet in Delhi in November for the WHO FCTC’s seventh session of the Conference of the Parties (COP), we will be making documents available, we will be briefing journalists and we will publicize our decisions.

We will also guard against tobacco industry interference, this most untrustworthy of businesses. It would be a dereliction of our duty to do otherwise.

That means some sessions will be held in public and some behind closed doors, normal in international meetings and as provided by the rules of the FCTC Conference of the Parties. We will be as open as possible, but we are not naive. We have learned a critical lesson – this industry can never be trusted and will try to disrupt and confound the tobacco control process.

COP7 will, I believe, send an unequivocal message to the tobacco peddlers. The world understands who you are and what you do, and is determined to stamp out the global plague which you do so much to spread.

Follow Vera Luiza da Costa e Silva on Twitter: www.twitter.com/@vera_dacosta

As world awaits WTO plain packaging decision, legislation spreads across the globe

Sep 6th, 2016
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http://www.worldtrademarkreview.com/blog/detail.aspx?g=919e2f30-9a11-4e07-82cd-da32ddd18752

The long-awaited decision of a World Trade Organisation panel on Australia’s decision to enforce standardised packaging on tobacco products has been ‘imminent’ for years. While the wait goes on, governments across multiple continents – including Africa, Asia and Europe – are introducing plain packaging legislation at an increasingly swift rate. While this suggests that the tobacco industry’s fight to hold back the spread of plain packaging is on the ropes, the anti-plain packaging lobby has not given up yet.

A major development in the last few months, which may have spurred on recent legislation announcements, was the World Bank dispute settlement body’s dismissal of a case brought by Philip Morris International against Uruguay’s implementation of enlarged label warnings on tobacco products. While this follows lawsuit losses against similar regulations in the UK, Norway and Australia, the Uruguay case has long been viewed as a test case, as it was the first time a tobacco group had taken on a country in an international court on this issue. The dismissal was therefore dubbed by commentators as “more than just a local triumph”, with one law lecturer suggesting it “may make it more difficult for tobacco companies to use lawsuits to produce a ‘chilling effect’ and so discourage countries from introducing tobacco control policies”.

In the months since that decision, a slew of national governments have announced or signed through plain packaging legislation. The push is now truly global. For instance, Gambia looks set to be the first African country to implement plain packaging, as the country seeks to maintain its award-winning anti-tobacco credentials. In Asia, both Malaysia and Thailand are well on their way to introducing a brand-free environment for tobacco, with pushes to introduce it in India and China too. Finally, following the European Court of Justice’s ruling in May that the new EU directive on tobacco products is valid, plain packaging laws came into effect in Hungary last month (with legislation that goes further than the current EU directive).

These recent developments follow similar moves in the last 12 months in Canada, New Zealand, Norway, and France. That’s not forgetting the UK following Australia’s lead by implementing its own standardised packaging laws in May (the same legislation in Ireland was delayed at the last minute). All told, the Canadian Cancer Society lists 14 countries where plain packaging is either now implemented or being formally considered (not including the aforementioned China, Gambia, India, Malaysia and Thailand).

But despite the tide appearing to turn, tobacco conglomerates are refusing to give up just yet. For example, Japan Tobacco International (JTI) recently commissioned research into the views that people hold of uniform packaging in Canada (following the Canadian government’s three-month consultation period about its possible implementation, which began in May). Some of the results were published in an op-ed in the Toronto Sun last week. They suggest low awareness of the consultation, with the results showing that “one in five Canadians had heard of the government’s intention to introduce plain packaging” and “only one in 10 understood what it was about”.

Of course, it is probable that a high proportion of citizens will be unaware of most government consultations – so those results are hardly a surprise. Additionally, plain packaging proponents will argue that this doesn’t have a bearing on the pros and cons of the regime itself. What it does show is, despite the repeated lawsuit losses, tobacco companies are refusing to give up the fight (and, as this very publication’s trip to the Dominican Republic in May demonstrates, cigar companies remain confident that the fight remains winnable).

Of course, this isn’t just a tobacco sector issue and trademark associations have long argued that plain packaging severely impairs the function of trademarks, makes counterfeiting easier and is in violation of international treaties. They have also warned that governments may decide to require plain packaging for other products or industries whose impact on public health is being scrutinised. On the latter, a ‘world first’ study released last week promotes the benefits of plain packaging on sugary products – suggesting that the predicted ‘domino effect’ could soon become reality.

Associations are therefore intent to keep fighting the spread of plain packaging. In June, for instance, INTA wrote to the Swedish government to register its opposition over the country’s decision to consider plain packaging for tobacco products.

The fight, then, goes on. However, as more countries line up to implement plain packaging regimes, it is getting harder to see how a comeback is possible – that is, unless the WTO panel delivers an upper-cut to Australia’s plain packaging regime early next year.

European fund firms largely resist tobacco divestment campaign

Sep 5th, 2016
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http://www.reuters.com/article/us-europe-funds-tobacco-divestment-idUSKCN11C1PW

Eighteen months after the launch of a global campaign to persuade money managers to black-list tobacco stocks, just one major European investor has answered the rallying cry.

Others are largely sticking with an industry that remains lucrative despite tightening restrictions on smoking and a series of lawsuits in the United States, saying they are duty-bound to seek the best returns for their clients.

Even a United Nations-backed treaty which aims to cut tobacco consumption by almost a third within 10 years is failing to deter many investors in the likes of Philip Morris International (PM.N), British American Tobacco (BATS.L), Japan Tobacco (2914.T) and Imperial Brands (IMB.L).

“We are firmly of the view that profits, cash and dividends from tobacco stocks have many years of strong growth ahead,” said Stephen Lamacraft, fund manager at Woodford Investment Management.

Still, the Global Taskforce for Tobacco Free Portfolios, backed by the Union for International Cancer Control, has scored one big victory since it began campaigning in March 2015 for financial institutions and pension funds to divest an estimated $60 billion from the industry.

In May this year, French insurer and fund manager Axa agreed to ditch its tobacco holdings, becoming the first major European investor to sign up to the campaign, although others had already opted out of tobacco before it was launched.

Axa said its role as a health insurer meant it could no longer justify investing in something that had such a “tragic” impact on public health. At the time it held 200 million euros in tobacco stocks and about 1.6 billion euros ($1.8 billion) in bonds issued by the cigarette makers.

Even then, the process is lengthy. Axa has almost completed selling the shares but will keep the bonds until they mature. Only in 2027 will the bulk – 97 percent – be off its books.

Many other investors appear reluctant to discuss the issue. Reuters contacted 24 large fund managers which hold tobacco stocks, and all but seven declined comment or did not respond.

INVESTMENT APPEAL

According to the World Health Organization (WHO), tobacco kills around 6 million people each year, including 600,000 non-smokers exposed to second-hand smoke.

Many of the passive victims are children.

The Taskforce’s global Project Manager, Melbourne-based Bronwyn King, has persuaded more than 30 Australian superannuation funds to ditch tobacco but the campaign faces a tougher challenge in Europe.

The same goes for the United States, where one influential investor, the California Public Employees’ Retirement System is reviewing a 16-year investment ban on tobacco after a study estimated the policy had cost it $2 billion to $3 billion in returns.

Campaigners reject the fiduciary duty argument – that funds must seek the best returns for their clients. They note that about 180 countries have signed up to the WHO’s Framework Convention on Tobacco Control, which aims to cut consumption by 30 percent by 2025 through new regulations and tax increases that will make tobacco less affordable.

Currently just a handful of countries fully comply with the treaty, implying a significant future hit to the value of tobacco stocks when others follow suit.

“Over the longer term, (the treaty) has to decrease the validity of the product – you will have fewer people wanting or being able to buy tobacco and that has to impact the investment appeal of the producers,” said Rachel Melsom, UK director of campaign group Tobacco Free Portfolios.

Philip Morris International, Imperial Brands and BAT declined to comment. Japan Tobacco did not immediately respond to a request for comment.

ONE BILLION SMOKERS

The tobacco industry sells about 5.6 trillion cigarettes a year to the world’s 1 billion smokers, many of whom live in low and middle-income countries. Here consumption is expected to keep rising due to growing populations and income.

More people are quitting smoking or cutting down in developed countries, but overall revenue and profit margins are consistently buoyed by companies’ ability to raise prices.

International players have also largely shielded themselves from direct exposure to the U.S. market, which has a history of litigation against big tobacco companies. For instance, Philip Morris has been separated from Altria (MO.N), which sells its Marlboro cigarettes in the United States.

In the 10 years to 2015 – a period that included the crisis of 2008-09 – the MSCI World Tobacco Index rose 10.4 percent compared with just 2.64 percent on the MSCI World Index.

All this appeals to many fund managers. For instance, the 9.2 billion pound ($12.3 billion) CF Woodford Equity Income Fund managed by veteran fund manager Neil Woodford holds BAT and Imperial Brands – makers of the Lucky Strike and Gauloises brands respectively – among its top 10 positions.

“(Tobacco’s) dependable dividends are increasingly highly-prized and still represent attractive yields,” said Lamacraft.

The dividend argument doesn’t always hold water. London-listed British American and Imperial reported dividend yields of 3.2 percent and 3.78 percent respectively, compared with an average 4.06 percent across the FTSE 100 index. New-York listed Philip Morris International has a 4.01 percent dividend yield.

Louise Dudley, portfolio manager at Hermes Investment, said she has barred tobacco stocks because she believes returns are unsustainable in the long-term.

“The industry has faced and continues to face increased regulation and consumers are becoming more aware of the health impacts of tobacco. The general trend is towards more healthy lifestyles. Tobacco products don’t tend to fit within that.”

CLIENT ATTITUDES

A spokeswoman for Standard Life Investments (SLI) said its decision not to black-list tobacco reflected the needs and views of its clients. But Melsom said ordinary savers didn’t always know where their money was being invested.

“If every individual who has a pension fund could see their level of investment in tobacco and the costs associated with that, I think that would make a difference,” she said.
Client attitudes towards tobacco varied widely, according to Iain Richards, Head of Responsible Investment, EMEA, at Columbia Threadneedle Investments. “We are satisfied that, for our mainstream funds, our approach is measured, works well and serves our clients’ best interests. We therefore don’t intend to adopt a blanket divestment policy on tobacco,” he said.

Amra Balic, Head of BlackRock’s EMEA Investment Stewardship team (BLK.N), said her firm did not make social, ethical or environmental values judgments on behalf of clients, and company engagement was critical in addressing the health and social risks of tobacco.

“I don’t think that we will end up, by divestment, in a world where tobacco won’t exist, therefore engagement by responsible investors is key to holding companies to account on ESG (environmental, social and governance) issues”.

A spokeswoman for M&G, another investor in the sector, said it regularly discussed environmental, social and ethical risks with tobacco company management, and encouraged improvements where it considered performance to be poor.

SLI, BlackRock, M&G, Columbia Threadneedle, Handelsbanken and Aberdeen Asset Management all said clients could bypass tobacco with their socially responsible investment (SRI) funds. Handelsbanken said about 40 percent of the assets that it manages are in funds that exclude tobacco investments.

The performance of SRI funds, which often also avoid industries such as armaments and alcohol, is typically benchmarked against indexes that exclude tobacco firms.

But mainstream funds are benchmarked against indexes that usually include them. Any that chooses to drop tobacco stocks is likely to underperform its benchmark index, putting pressure on managers to stick with the status quo.

“You need to benchmark against other funds that don’t include tobacco and see how you how perform in other investments you have put in its place,” Melsom said.

The following firms declined to comment or didn’t respond to a Reuters request for comment:

JPMorgan Asset Management, Nordea Asset Management, Invesco Perpetual, Morgan Stanley Investment Management, Vanguard, Franklin Mutual, Capital Group, RBC, Legal & General Investment Management, Credit Suisse Private Banking, SEB Investment Management, Andra AP Fonden, Forsta AP Fonden, Oppenheimer Funds, Gabelli Funds, Capital Research and Reinet Investments.

($1 = 0.7482 pounds)
($1 = 0.8965 euros)
(additional reporting by Martinne Geller; editing by David Stamp)

Big Tobacco’s controversial, ailing crusade against plain packaging

Aug 6th, 2016
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http://www.economist.com/news/business/21703424-big-tobaccos-controversial-ailing-crusade-against-plain-packaging-no-logo

THREE years ago, the government of Togo, which has a gross domestic product of $4 billion, received a letter from Philip Morris International, a tobacco giant which last year earned revenues of $74 billion. The country had been mulling bringing in plain packaging for cigarette boxes. It would risk “violating the Togolese constitution”, the firm’s subsidiary explained, “providing tobacco manufacturers the right to significant compensation.” It then outlined how plain packaging would violate binding global and regional agreements. Togo was in no position to anger its international partners, it suggested.

For health advocates, such tactics are the last refuge of firms they have long denounced. But tobacco companies will do what they can to protect their packaging. They detest warnings with repulsive images of decaying body parts. In 2010 Philip Morris sued Uruguay, claiming that big warnings on boxes violated a trade deal. Then two years later Australia became the first country to go further, banishing iconic trademarks from tobacco packs. Its law mandates that brand names—such as Marlboro, Winfield or Dunhill—appear in grey type against a background of Pantone 448C, a putrid green deemed the world’s ugliest colour by a market-research firm.

Reprints

So tobacco firms sued—in Australian courts, before a UN tribunal and by supporting countries that challenged the rule before the World Trade Organisation (WTO) on the ground that banning trademarks represents an expropriation of intellectual property (IP). Less formally, they and allies have lobbied against warnings and plain packaging in places ranging from Namibia to New Zealand. It has all been surprisingly effective. Until very recently, Australia has been the only country to ban tobacco trademarks from cigarette packs.

Such avenues may be closing. Although the WTO’s decision is still pending, firms lost their other suits against Australia. Last month arbitrators at the World Bank threw out the lawsuit against Uruguay. In May the European Court of Justice upheld a rule on big warnings and Britain’s High Court confirmed one for plain packaging. It seems likely that more governments will in future prioritise public health over IP. Canada, France and Ireland are already moving towards plain packs.

If so, ugly packaging could become the most damaging rule tobacco firms have faced in years. To date many laws have hurt firms in some ways but also, strangely, helped them in others. Bans on advertising lower their costs. Small competitors, unable to advertise, struggle to grow. High excise taxes can be another boon: when taxes are fixed and large, a big increase in the underlying price of a pack amounts to a relatively small rise in the pack’s total price. High prices have sustained tobacco firms, even as smoking rates decline. “They probably have the best pricing power of any industry,” says James Bushnell of Exane BNP Paribas, a broker.

But plain packaging clamps down on one of their last bits of advertising. The design of the box is where they must convey not only the name of the brand but abstract qualities, such as masculinity or the idea that a product is “premium”, and worth an extra outlay. If such traits are stripped from packs, consumers may choose cheaper brands. That is particularly worrisome in emerging markets, says Mr Bushnell, where standard packs would threaten the aspirational appeal of smoking. Other “sin” industries are worried. The International Trademark Association frets that governments might strip trademarks from junk food and liquor.

It may become pointless for cigarette firms to start legal proceedings. The Trans-Pacific Partnership (TPP), a pending free-trade agreement among 12 countries, shields governments from lawsuits over tobacco rules. It may unravel, but future pacts could have similar terms. Only America, where the right to free speech makes standard packs highly unlikely, may remain an anomaly (though it is a signatory to the TPP). In the past investors often viewed a new wave of rules on tobacco as a chance to buy tobacco stocks inexpensively, before they resumed their steady rise. This time may be different.

Philip Morris Gets Its Ash Kicked in Uruguay; Where Will It Next Blow Smoke?

Aug 4th, 2016
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http://www.truth-out.org/opinion/item/37106-philip-morris-gets-its-ash-kicked-in-uruguay-where-will-it-next-blow-smoke

Philip Morris International just lost a six-year battle to block Uruguay’s strong cigarette warning labels, which cover 80 percent of the front and back of cigarette packs, including graphic photos of the damages of smoking.

The decision was made by the World Bank’s trade tribunal, the International Centre for Settlement of Investment Disputes (ICSID), the world’s the leading body to settle international investment disputes.

Philip Morris became the first tobacco company to take on a country in an international court, and it took on one of the smallest. The company argued that Uruguay had violated terms of an investment treaty with Switzerland by enforcing anti-smoking laws. The operational headquarters for Philip Morris International is in Lausanne.

Philip Morris, with gross revenues of US $64 billion in 2010, sued Uruguay, with a GDP of US $32 billion that year, under the investor-state dispute settlement (ISDS) provisions of international trade deals. The tobacco company claimed Uruguay’s health warnings reduced the value of its investment and trademark rights to sell cigarettes in Uruguay. The ICSID trade tribunal upheld Uruguay’s right to protect its people’s health.

Small Country, Easy Prey

Uruguay, nestled between the southern tip of Brazil and the northern part of Argentina, has a small population — 3.4 million — but a big desire to cut tobacco usage. Its president, Tabaré Vázquez, is an oncologist.

Among other anti-smoking efforts, it bans tobacco advertising and smoking in public places.

Such efforts have paid off. A study published in 2012 in The Lancet praised Uruguay’s “substantial, unprecedented decrease” in adult cigarette smoking. The number of adults who smoke in Uruguay fell from 35 percent in 2005 to 22 percent in 2014.

At one level, Uruguay’s win seems to contradict opponents of trade deals like the proposed Trans-Pacific Partnership Agreement (TPP) and Transatlantic Trade and Investment Partnership (TTIP). These opponents say the pending trade agreements would give multinational corporations, such as Philip Morris, the ability to directly challenge public health, worker safety and environmental laws through ISDS provisions.

In this case, however, Uruguay was able to resist Philip Morris because of financial help from Michael Bloomberg in faraway New York. Indeed, before international health groups appeared, Uruguay was considering weakening the health warnings to avoid an even longer battle with Philip Morris.

Neither Bloomberg nor Uruguay disclosed the amount of Bloomberg’s financial help. It is safe to say that Uruguay would have not prevailed without this financial and international political support.

A History of Bullying

Philip Morris’ legal bullying of Uruguay is nothing new. It has bullied other countries, states and cities for years. It does this by filing lawsuits that exhaust the resources of governments that enact anti-smoking laws.

Tobacco companies routinely sued US communities in the 1980s and 1990s to deter them from enacting smoke-free laws, despite the companies almost always losing in court. This strategy often succeeded by using the mere threat of litigation to deter localities from adopting similar laws.

Although tobacco companies almost always lost in court, most localities did not go to court for fear of being sued. Few have the money and ability to hire the expensive lawyers — some of whom are paid as much as $1,000 an hour — to stay in a legal battle with tobacco companies. The threat of legal action was powerful to stop localities. More importantly, the threat of incurring expensive legal fees was enough to deter other cities from enacting laws that ban smoking.

Laurent Huber, the executive director for Action on Smoking and Health, the oldest anti-smoking group in the US, hinted at the effectiveness of this strategy in his post-trial comments. Phillip Morris “will no doubt shed some public crocodile tears, but their main goal in launching the suit has been realized, six years and millions of dollars have been spent defending a nondiscriminatory law that was intended purely to protect public health,” Huber said.

Likewise, in the 1990s when Australia and Canada first started thinking about requiring cigarettes to be sold in plain generic packaging, tobacco companies threatened to sue them. Standardized plain packaging, as Simon Chapman notes, removes the emperor’s clothes. The companies claimed that these proposals violated their trademark rights, one of the same claims Philip Morris made against Uruguay.

This was despite their own lawyers privately telling them that international treaties permitted governments to require such packaging. The tactic worked; both countries dropped their efforts for two decades. Canada has resumed its efforts, and Australia implemented plain packaging in 2012.

In response, Philip Morris sued Australia in domestic and international trade courts. After a four-year battle, Australia prevailed. The country still faces an industry-inspired challenge in the World Trade Organization, however.

Uruguay’s and Australia’s victories provide some legal precedent about a country’s sovereign right to implement public health regulations for other countries. Indeed, it is just these kinds of precedents that Philip Morris was trying to block. As then Philip Morris Vice President Hugh Cullman observed in 1985, “a sneeze in one country today causes international pneumonia tomorrow.”

He was right to be worried. UK, Ireland and France recently enacted plain packaging, and New Zealand, Canada, Norway, South Africa, Malaysia, Turkey, India and Chile are moving forward.

US Lagging Behind Other Countries

Uruguay’s and Australia’s wins against Big Tobacco are important reminders of how much the United States is lagging. Despite being required by the 2009 Family Smoking Prevention and Tobacco Act, we still do not have pictorial health warnings, much less plain packaging, on tobacco products.

The FDA issued a rule requiring pictorial warnings (albeit smaller than Uruguay’s) in 2011. The tobacco industry blocked this rule in court. That was in no small part because the Obama administration grossly underestimated the benefits and overstated the cost of including the pictorial warnings, including the “pleasure” that smokers would lose if they broke their addictions to nicotine or never started.

The FDA still has not issued new graphic health warnings despite the fact that 91 countries have pictorial health warnings on cigarette packages.

The administration is still pushing the TPP and TTIP, both of which will provide new avenues for Big Tobacco and other corporate interests to sue governments over strong public health policies. It also opposed excluding tobacco, also known as a tobacco “carve-out” in the TPP, and was willing to support only mild limits on Big Tobacco’s ability to use ISDS provisions to directly sue governments over their tobacco control policies.

TPP members would still need to “elect to deny” the ability of tobacco companies to sue directly, creating a loophole for them to continue intimidating governments with potential ISDS challenges.

With both the Republican and Democratic presumptive nominees for president opposing the TPP, it is time for the next president to start removing provisions of trade agreements that empower big companies to sue governments over health and environmental protections.

And, in the meantime, the administration should follow Uruguay, Australia and the rest of the world and require 21st-century warning labels on tobacco products.

Disclosure statement: Eric Crosbie receives funding from the National Institute of Health, and Stan Glantz receives funding from the National Institutes of Health and Truth Initiative. He is the president of the University of California Council of Faculty Associations.

$45M Settlement Proposed in Arkansas Tobacco Lawsuit

Aug 1st, 2016
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Attorneys for cigarette smokers and for tobacco manufacturer Philip Morris USA have agreed to a $45 million settlement of a lawsuit over the marketing of Marlboro Lights in Arkansas.

The settlement was submitted to Pulaski County Circuit Judge Tim Fox on July 29, three days before the start of an estimated six-week trial in a class-action lawsuit, the Arkansas Democrat-Gazette reported. The lawsuit alleged that Philip Morris violated the Arkansas Deceptive Trade Practices Act in its marketing of Lights and Ultralights, which are now sold as the Silver and Gold.

The estimated amount of the payments to individual smokers was not clear. Plaintiff’s attorney Tom Thrash said there could be more than 1 million people eligible. The funds also will be used to pay attorney fees, which are to be decided by the judge.

Philip Morris spokesman Brian May said the company is glad to resolve the now 13-year-old case.

“After over a decade of litigation in this case, we’re pleased to put it behind us and believe the agreement is in the best interest of the company,” he said.

Lawyers now will begin establishing a process for how potential claimants can apply for payments, how their claims of tobacco use will be validated and the time frame for paying out the money.

Thrash said he did not expect any payments to be made until early next year.

Those eligible for payments are smokers who bought the Lights brands in Arkansas between Nov. 1, 1971, when the Lights brand was introduced, and May 29, 2003, the effective date of the lawsuit.

Smokers who filed the lawsuit said the company, a subsidiary of Virginia-based Altria Group, misled consumers about the safety of the cigarettes by leading smokers to believe the brands had lower levels of tar and nicotine.

Company officials said Lights did what they were advertised to do — deliver less tar and nicotine — if they were smoked correctly. The Lights filters were specially ventilated to reduce tar and nicotine, but smokers could get more by inhaling more deeply or more often, the company stated.

MPAA: Cigarette ban in movies in an infringement of free speech

Jul 21st, 2016
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http://www.local8now.com/content/news/MPAA-Cigarette-ban-in-movies-in-an-infringement-of-free-speech-387810002.html

(WVLT) — According to the Hollywood Reporter, the Motion Picture Association of America is reponding to a lawsuit, saying the restriction of tobacco imagery in movies is an infringement on free speech.

You can read the original report on hollywoodreporter.com.

The plaintiffs want any movie with tobacco imagery to be rated R.

According to the CDC, the more smoking young people see on the screen, the more likely they are to start smoking themselves. The CDC cited a Surgeon General’s Report that showed an industry-wide standard of rating movies that show tobacco use as R-rated could result in reductions in youth smoking. It could reduce the number of teen smokers by nearly one in five and prevent 1 million deaths from smoking among children alive today.

You can read the full CDC report on cdc.gov.

The Significance Of Uruguay’s Win Over Philip Morris International

Jul 21st, 2016
by Editor.
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http://www.ip-watch.org/2016/07/21/the-significance-of-uruguays-win-over-philip-morris-international/

The tobacco industry’s global efforts to use bilateral and multilateral agreements to challenge the spread of tobacco control measures such as trademark-minimising plain packages were dealt a significant blow last week when the World Bank dispute settlement body dismissed a case brought by Philip Morris against the government of Uruguay.

The decision is seen a landmark for those who view the company as using test cases to continually challenge and delay public health protection measures and discourage other countries, particularly those with fewer resources, from strengthening their health regulations. Additionally, the case reasserted that trademarks are subject to government regulations and also illustrated the role that international organisations and actors can play in support of national governments defending their health measures.

Facts & Arguments

Philip Morris initiated legal proceedings through its Swiss subsidiary against Uruguay at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) early in 2010. Among many firsts, this was the first time a tobacco group challenged a state in front of an international court and the first investment arbitration concerning tobacco control.

ICSID aims to support voluntary conciliation and arbitration of international investment disputes upon consent of both the investor and state. Once such consent is given, it cannot be withdrawn unilaterally and it becomes a binding undertaking. Independent arbitrators and conciliators appointed to each case hear the evidence and determine the outcome of the dispute.

Philip Morris claimed that the health measures imposed by the Uruguayan Public Health Ministry infringed on its intellectual property rights and breached Uruguay’s obligation under the bilateral investment treaty (BIT) between itself and Switzerland.

The case and related documents can be found here.

Two specific measures were contested. The first was the Single Presentation Requirement introduced by the Uruguayan Public Health Ministry in 2008, where tobacco manufacturers could no longer sell multiple varieties of a brand. In having to pull 7 out of its 12 products, Philip Morris alleged that only being able to market one variety substantially affected its company value.

The second measure concerned the so-called “80/80 Regulation.” Under a presidential decree issued in 2009, the graphic health warnings on cigarette packages should cover 80 percent instead of 50 percent, of the packaging, leaving only 20 percent to the tobacco companies’ trademarks and other information.

Uruguay was the first to go beyond the 50 percent surface requirement, but since the proceedings began, 58 other countries have also increased the requirement for the size of graphics. Nepal even calling for 90 percent of a cigarette package to be covered. The claimants contended that this further deprived them of their IP rights, causing further loss to their investments.

In its defence, Uruguay countered that “both regulations were applied in a non-discriminatory manner to all tobacco companies, and they amounted to a reasonable, good faith exercise of Uruguay’s sovereign prerogatives.”

The case moved to examine whether Uruguay had failed to observe its commitments on the use of trademarks under the BIT and the scope of such commitments.

Upon submitting a registration application and being granted trademarks, Philip Morris argued that an investor should be able to hold and exercise the full range of rights available to trademark holders and that Uruguay would be committed observe these rights. Within these rights was notably the right to use its trademarks.

Ruling

The tribunal found that “under Uruguayan law or international conventions to which Uruguay is a party the trademark holder does not enjoy an absolute right of use, free of regulation, but only an exclusive right to exclude third parties from the market so that only the trademark holder has the possibility to use the trademark in commerce, subject to the State’s regulatory power.”

This reflects and falls in line with the general concept that trademarks confer their holders only the right to prevent others from using their marks and are still subject to state regulations.

Furthermore, with regard to the scope of commitments, it was held that “a trademark is not a unique commitment agreed in order to encourage or permit a specific investment” and that Uruguay had no commitment nor obligation in relation to an investment under the BIT.

Ultimately, “a trademark gives rise to rights, but their extent, being subject to the applicable law, is liable to changes” subject to a state’s decided health measures. With no commitment to enable Philip Morris to use its trademark and with trademarks being subject to national laws and regulations, the tribunal found that Uruguay had not violated the BIT and dismissed the case.

Implications of the Decision

The case is highly significant given the polarity between actors and the debate on the use and application of domestic and international intellectual property laws.

Many hail this case as a significant victory in a series of tobacco companies fighting control measures, and others such as former New York Mayor Michael Bloomberg applauded Uruguay for standing up to the tobacco industry and showing others they can win.

The decision reinforces that states have a sovereign right to decide on their laws and regulations to protect their population.

Philip Morris General Counsel Marc Firestone, meanwhile, said the company “never questioned Uruguay’s authority to protect public health,” but sought to clarify international law.

Some critics, such as Laurent Huber, executive director for Action on Smoking and Health, contend that this was a public relations case for Philip Morris, aimed at discouraging other countries from imposing stronger public health regulations with the threat of a lengthy lawsuit by an opponent with deep resources. The annual revenue of Philip Morris in 2013 was reported at $80.2 billion, in contrast to Uruguay’s GDP of $55.7 billion.

Already in 2010, international lawyer and practitioner in investment treaty arbitration Todd Weiler stated in a legal opinion that:

“PMI’s BIT claim against Uruguay is emblematic of its long standing strategy to vehemently oppose the adoption of measures that might some day lead to plain paper of their products, or other measures that substantially interfere with the use and enjoyment of its crucial investment in its tobacco brands.” He added that “the claim is nothing more than the cynical attempt by a wealthy multinational corporation to make an example of a small country with limited resources to defend against a well-funded international legal action….”

The Bloomberg Foundation lent substantial financial support to Uruguay’s legal expenses.

Overall, given the definitive outcome of the present case in addition to cases where domestic, regional and international courts upheld measures to impose plain packaging and new tobacco regulations (see United Kingdom, European Union and Australia), other countries will perhaps no longer feel pressured and act on their own accord with regards to strengthening their public health measures.

International Organisation Support

Another significant aspect of the case is that the World Health Organization and the WHO Framework Convention on Tobacco Control (WHO FCTC) secretariat submitted an amicus brief during the proceedings which provided “public health on Uruguay’s tobacco packaging and labelling laws and detailed state practice in implementing similar measures.” Further details can be found in the WHO’s press release.

According to the FCTC, “The Tribunal accepted submission of the amicus brief on the basis that it provided an independent perspective on the matters in the dispute and contributed expertise from ‘qualified agencies’.”

This is not only affirmative that the FCTC provides legal backing to states who seek to provide protective health measures, but illustrates the success of international organisations in supporting national governments in their health efforts.

Lastly, in view of the place of arbitration some might question the existence of investor-state dispute settlement bodies such as the ICSID.

In Karen Hansen-Kuhn’s view as international program director at the US-based Institute for Agriculture and Trade Policy, these bodies empower companies to sue governments in private tribunals over measures that undermine their expected profits. In doing so, companies gain a chance for a “second bite at the apple,” which also “undoubtedly sends strong political signals to other local or national governments considering new programs.”

Hansen-Kuhn argued that rather than allowing investor-state dispute settlement bodies to decide, global governance rules should be given priority to lead the way on public health discussions.

As an attorney general, I sued the tobacco companies. ExxonMobil is nothing like them.

Jul 14th, 2016
by Editor.
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https://www.washingtonpost.com/opinions/as-an-attorney-general-i-sued-the-tobacco-companies-exxonmobil-is-nothing-like-them/2016/07/14/b5e04f82-492f-11e6-acbc-4d4870a079da_story.html

I was one of 46 state attorneys general who signed the tobacco Master Settlement Agreement in November 1998. On behalf of New York’s taxpayers, I filed one of the suits that eventually pushed the cigarette makers to settle. I can tell you from experience that our fight against the tobacco industry has almost nothing in common with today’s campaign by several state attorneys general against ExxonMobil — despite what supporters of the effort would like you to believe.

In the case of tobacco, we made a powerful argument that decades of lying by the companies had led to intractable addiction of millions of Americans who suffered devastating illnesses and death, all of which cost the states billions every year in Medicaid expenses. In the current action, a group of Democratic attorneys general, acting as part of a campaign launched by well-heeled special interest groups and financial backers of alternative energy companies, have a different goal: using the power of state attorneys general to curb honest debate. (Disclosure: My law firm is representing two New York state municipalities that are challenging the siting of wind turbine projects on the shore of Lake Ontario.)

The tobacco campaign was highly successful. The settlement agreement included not only direct payments to the states (currently $9 billion a year) but also imposed severe marketing restrictions to limit outreach to young smokers. Largely as a result, the proportion of high school student smokers dropped from 36 percent in 1997 to just 16 percent in 2013; adult smokers, from 25 to 17 percent. I was proud to play a major role in holding tobacco companies responsible for the damage they caused and in setting America on a healthier path. We had a clear, convincing legal case and a noble cause. The same cannot be said for attorneys general involved in the current crusade.

It’s unlikely they will be successful in their legal actions, and their actions may have already chilled free speech in this country.

ExxonMobil was subpoenaed last fall by New York Attorney General Eric Schneiderman (D) in an effort to find out whether the company misled investors and the public on the impact of climate change. Massachusetts joined in. Then, in March, the Virgin Islands, a U.S. territory, started investigating ExxonMobil, as well as think tanks and other institutions that received the company’s support, under an anti-racketeering law. Later that month, 16 state attorneys general, all Democrats, held a news conference under the banner, “AGs United for Clean Power,” to announce they too will pursue energy companies that challenge the global-warming orthodoxy.

But increasingly, Schneiderman appears to be on his own. Last week, Claude Walker, the attorney general for the Virgin Islands who opened a racketeering probe of ExxonMobil, withdrew his subpoena. And Maura Healey, attorney general for Massachusetts, delayed action on her own subpoena of ExxonMobil, meaning that case has paused.

It is important to note that the fight against the tobacco industry was bipartisan and that never, during our battle to require the tobacco companies to meet their obligations, did we align ourselves with the industry’s business competitors. In the current campaign, the attorneys general have linked up with investors in renewable energy in an unseemly alliance that presents serious conflicts of interest. As a June 15 letter signed by 13 AGs critical of their colleagues noted, “The media event [in March] featured a senior partner of a venture capital firm that invests in renewable energy companies. If the [AGs’] focus is fraud, such alignment by law enforcement sends the dangerous signal that companies in certain segments of the energy market need not worry about their misrepresentations.”

Attorney General Schneiderman’s theory is apparently that ExxonMobil pulled the wool over America’s eyes by manipulating public opinion. “There is confusion,” he said, “sowed by those with an interest in profiting from the confusion and creating misperceptions in the eyes of the American public.” One could argue that the same confusion and misperception has been caused by alternative energy proponents. Causing confusion — if that’s what happened — is hardly a crime, but to hold one party to a national debate to a higher standard tilts the debate unfairly in the other direction.

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Notably, the attorney general is pursuing his investigation under the Martin Act, a sweeping New York law that I know well. It gives the attorney general broad subpoena power, and it allows charges to be filed even without evidence that the defendant intended to commit fraud. It is a powerful tool to protect investors but can have unintended negative implications to the very investors it seeks to protect.

In the case of tobacco, we found that the companies knew about the life-threatening, addictive nature of smoking but covered up that knowledge. In the case of global warming, ExxonMobil began research as early as the 1970s and was open about what it found in more than 50 papers published in scientific journals between 1983 and 2014, according to company documents. ExxonMobil’s scientists have participated in the U.N. Intergovernmental Panel on Climate Change since its inception and were involved in the National Academy of Sciences review of the third U.S. National Climate Assessment Report.

In its news pages, even the New York Times, a forceful environmental advocate, has drawn a clear line between the tobacco and energy industries. Reporters Justin Gillis and Clifford Krauss wrote in a Nov. 5 article, “In the 1950s and ’60s, tobacco companies financed internal research showing tobacco to be harmful and addictive, but mounted a public campaign that said otherwise. . . . The history at ExxonMobil appears to differ, in that the company published extensive research over decades that largely lined up with mainstream climatology.”

The tobacco companies were deceivers. ExxonMobil has been open. But that doesn’t seem to matter to the politicized attorneys general pursuing the company. A chilling impact on public debate is not in our collective interest.

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