(Adds Imperial Tobacco barrister, EU legal challenge)
By Martinne Geller
LONDON, Dec 10 (Reuters) - Big Tobacco took the Britishgovernment to court on Thursday, arguing that the UK's "plainpackaging" law, which will take effect next May, unlawfullytakes away its intellectual property.
Companies including Philip Morris International,British American Tobacco, Japan Tobacco International and Imperial Tobacco Group are challenging thelegislation because it will prohibit all forms of branding ontobacco packaging, including colours and logos.
The rule, known as "plain packaging," aims to reducesmoking's death toll by making the packs less attractive.
"Smoking is catastrophic for your health and kills over100,000 people every year in the UK," said a spokesman for theDepartment of Health. "Standardised packaging is an importantpublic health measure aimed at discouraging children fromsmoking and helping smokers to quit."
What happens in Britain will be closely watched by othercountries considering or planning such moves.
The companies failed in their bid to overturn a plainpackaging law in Australia, but have said they are moreconfident this time because they only have to prove under UK lawthat their intellectual property was illegally taken but hadfurther hurdles under Australian law.
The case will be heard in a six-day hearing at London'sRoyal Courts of Justice. The claimants hope a verdict will behanded down early next year.
BIG TOBACCO PUTS FORWARD ITS CASE
Tobacco companies argue that the plain packaging lawrepresents the seizure of their property without compensation.
"Our trademarks have a capital value ... and that value hasbeen effectively removed," said David Anderson of law firmFreshfields, representing Japan Tobacco International in court.
"Since there is no compensation at all .... They must beconsidered unlawful for that reason alone," he also said.
Barrister Dinah Rose, speaking on behalf of ImperialTobacco, argued that by preventing the use of intellectualproperty in Britain, the UK was violating European Union lawthat gives trade marks a "unitary character" that appliesthroughout the community.
In Australia, the only country to have so far implementedplain packaging, the companies say there has been an increase inblack market tobacco and sales of lower-priced cigarettes, whichcould ultimately hurt their profit margins.
In separate EU court proceedings, the companies arechallenging an article in the revised EU Tobacco ProductsDirective that gives member states the right to introduce theirown regulations. If they succeed, the UK's plan would fail.Further guidance from the EU is expected later this month.
Aside from Australia and Britain, plain packaging has beenapproved in Ireland, Hungary and France, while over a dozenother countries -- including Belgium, Canada and Pakistan --have either proposed or are talking about proposing, similarmeasures.
"In total we count 20 countries with some level of interestor focus on pursuing some type of plain packaging regulation,"said Wells Fargo analyst Bonnie Herzog in a recent note. Shesaid those countries represent 30 percent of cigarette retailsales, excluding China and the United States. (Reporting by Martinne Geller; Editing by Elaine Hardcastle)
British American Tobacco (BATS)