In May 2016, the UK’s new laws about “plain packaging” for cigarettes will take effect. They are similar to laws Australia has had for a few years now, and part of an international trend to reduce tobacco smoking by eliminating attractively branded cigarette packaging. Since I wrote the following essay one year ago, the UK laws have been challenged by tobacco companies. But, they were previously challenged in Australia, to no avail. This essay will give you the background on the Australian policy, an evaluation of its effectiveness, and an understanding of the international context driving this policy trend. This essay appears in the book Tobacco and Fluoride, available in paperback and Kindle.
Leading the Pack:
Australia’s Plain Packaging Laws and Tobacco Control Measures Define the Growing International Conflict between Public Health Policy and Intellectual Property Rights
II. Origins of Australia’s’ Plain Packaging Laws
III. Resistance to Australia’s Plain Packaging Laws
IV. Ethical Considerations of Plain Packaging Laws
V. Evaluating Australia’s Tobacco Control Measures
The global response to Australia’s tobacco control measures reveals the complexity of international politics where trade agreements about intellectual property come into conflict with public health policy. The Australian measures taken to fulfill its commitment as a signatory party to the World Health Organization’s Framework Convention on Tobacco Control gave tobacco companies occasion to sue the federal government for infringement on their brands. As more and more FCTC signatory countries begin to adopt measures like Australia’s, tobacco companies and nations where they have major operations have brought disputes to the World Trade Organization. Certain trade restrictions brought about in the name of public health, they claim, violate various articles of TRIPS, the international agreement on Trade Related aspects of Intellectual Property Rights. The outcome of these disputes remains to be seen, with the World Trade Organization expecting to issue a decision on a major dispute in 2016. However, Australia’s highest federal courts have supported these measures and denied claims to tobacco companies. It comes as little surprise, since these measures originated from advocates at the federal level from nations federally committed to the Framework Convention on Tobacco Control. Will the World Trade Organization similarly uphold tobacco control policies at the international level?
This paper will review the political and judicial history of the Australian tobacco control measures, specifically with regards to “plain packaging” laws but including related measures of their comprehensive policies. This paper will highlight the strong support for the effectiveness of Australia’s measures by the national and international research teams publishing analytical evaluations of them. The effects these measures have had on other nations include a wave of trade agreement disputes, but the United Kingdom’s recent adoption of similar plain packaging laws scheduled to take effect in 2016 suggests a confidence the World Trade Organization will not be an unconquerable obstacle to the wave of nations fulfilling their commitments to the Framework Convention on Tobacco Control and radically changing the face of tobacco sales around the world.
Origins of Australia’s Plain Packaging Laws
Three years ago, the BBC News reported on “new” restrictions on cigarette packaging in Australia. Packs of cigarettes, they revealed, would come in a drab, dark brown color without any tobacco company logos or colors. The Australian federal government set this public health policy as part of a larger effort to reduce the number of smokers in their country to less than 10 percent by 2018 (Kennedy, 2012). But the story of the graphic health warnings and drab brown packaging now sold in Australia at a heavily taxed price go back to 2003, when the World Health Organization’s Framework Convention on Tobacco Control opened for ratification by nations who become signatories to it. The USA signed the WHO’s Framework Convention on Tobacco Control in 2004 (UN, 2015). Joining USA and Australia were 166 other nations who signed the Framework Convention on Tobacco Control between its opening in May, 2003 and its closing on June 29, 2004, though its ratification by additional nations since then brings the total to 180 (WHO FCTC, 2015). Nations can still join today, through a one-step process of ratification.
The recent Australian policies continue a trend of increasing federal restrictions on tobacco advertising in Australia. Australia began with a ban on TV and radio tobacco ads in 1976, continuing with a ban on tobacco sponsorship of sporting events in 1992 (Kennedy, 2012). But with the advent of the Framework Convention on Tobacco Control, even more push for tobacco control has come from the Australian federal government.
In 2011, the Cancer Council of Australia provided research which “suggested that packaging plays an important part in encouraging young people to try cigarettes” (Kennedy, 2012). The Australian government calculated 15,000 Australian smokers died annually at a cost of AU$30 billion (Kennedy, 2012). Bolstered by these reports, Attorney-General Nicola Roxon introduced plain packaging legislation during her service as Health Minister, backed by strong advocacy from health groups like the Australian Medical Association (Hambleton, 2012, p. 199). The plain packaging policies, with such strong federal support, became law in 2011 and began sweeping the states in 2012. But soon enough, resistance from multinational tobacco companies began at the national level, spreading quickly into litigation and arbitration affecting many nations around the world.
Resistance to Australia’s Plain Packaging Laws
British American Tobacco Australia, Japan Tobacco International, Philip Morris, and Imperial Tobacco Australia challenged the plain packaging policy in the Australian High Court (Hambleton, 2012, p.199). These companies argued “the new measures amounted to the acquisition of their brands by the Government without just compensation, and should be ruled unconstitutional.” But, while the High Court admitted the policy “regulated the plaintiffs’ intellectual property rights and imposed controls,” the Commonwealth of Australia gained no “proprietary benefit or interest” from them (Hambleton, 2012, p. 199). The court ruled the new laws constitutional.
The American Journal of Law & Medicine explained the judicial response to the tobacco company claims of trademark infringement. It is worth considering the legal reasoning in the High Court’s ruling on the constitutionality of the plain packaging laws, because Philip Morris International will be objecting to the World Trade Organization with similar intellectual property arguments. The High Court heard arguments which hinged on the “bedrock principle” which defines acquisition, and reviewed whether or not the Commonwealth of Australia had acquired (as legally defined) anything in the process of regulating cigarette packaging. Australian law holds that no acquisition of property takes place without the acquiring party gaining an interest in the property, “however slight or insubstantial” that interest may be (Liberman, 2013, p. 370). The resulting legal arguments focused on whether or not the Commonwealth had acquired any interest in the intellectual property (trademarks) and the property (the packages) of the tobacco companies in the new packaging. Tobacco lawyers claimed many interests gained by the Commonwealth, such as free advertising for Quitline now that the smoking cessation hotline’s number must appear on all cigarette packs (Liberman, 2013, p. 371). The High Court did not acknowledge any of the interest claims and granted the tobacco companies nothing.
In fact, the High Court used none of the many arguments it had proposed in a preliminary document, arguments in favor of the public health benefits of plain packaging, the government’s power to restrict intellectual property rights in the service of the greater public good, and the obligations Australia has now as part of the Framework Convention on Tobacco Control (Liberman, 2013, p. 377-9). Instead, The High Court ruled the government had gained no interest in the intellectual property, specifically the brands and trademarks of the tobacco companies, and therefore could regulate their packaging as they liked. Case closed.
The simplicity of the High Court’s rejection of the claims may or may not foreshadow impending decisions from the World Trade Organization. But they do shine a spotlight on the battle for supremacy between public health and intellectual property rights in courts. Much like the Australian Federal Court’s recent ruling on patenting human DNA sequences in Myriad Genetics, decisions may hinge on interpreting the legal definition of a phrase or even a single word. In Myriad, the phrases were “artificially created state of affairs” and “matter of manufacture” (Darcy, 2014). Here, the word in question was acquisition. One might expect that, as the court did in their preliminary documents, cases affecting public health will depend on evaluating the benefits they provide to people. But in reality, the argument over the definition of a single word can mark the turning point in who wins: public health policy as envisioned by the World Health Organization or the corporate intellectual property rights enshrined in the World Trade Organization.
In today’s globalized political environment, the legal questions do not end at the federal level. Australia’s ruling has resulted in litigation at the international level. Tobacco-exporting nations the Dominican Republic, Ukraine, and Honduras have challenged the plain packaging laws through disputes registered with the World Trade Organization (Hambleton, 2012, p. 199). Ukraine’s involvement in the dispute may seem odd, because it does not currently export tobacco into Australia (Morran, 2015). Why does Ukraine suddenly care about the Australian market?
Philip Morris International, one of the defeated plaintiffs in the Australian High Court, has had operations in Ukraine since 1994 when it “acquired a majority share of the JSC Kharkiv tobacco factory. In 1996 the factory started manufacturing the first international PMI brands in Ukraine: Chesterfield and Bond Street. In 2000, the factory began producing Marlboro” (PMI, 2015). Philip Morris International created the Philip Morris Ukraine entity which in March, 2013 joined the US-Ukraine Business Council (USUBC), a group of “over 200 companies and organizations” with business and investment interest in Ukraine, including “five other Fortune 500 type companies: Amway, DuPont, Ecolab, Intel, and Visa” (USUBC, 2013). With fourteen regional offices and 1400 employees, Philip Morris Ukraine has a significant interest in keeping Ukrainian tobacco exports financially viable.
Begun in 2012, the Ukrainian dispute, numbered by the World Trade Organization as Dispute DS434, has not reached a conclusion. A panel requested by Ukraine formed in May, 2014. In October, 2014, the panel announced it would issue a final report “not before the first half of 2016” (WTO, 2014). Ukraine’s dispute pits Australia’s Tobacco Plain Packaging Act against specific articles of the TRIPS agreement and two other trade agreements: first, GATT, the General Agreement on Tariffs and Trade, with its original 1947 provisions still in effect as modified under the World Trade Organization which replaced it in 1994; and second, the international treaty called the Agreement on Technical Barriers to Trade (or more simply, TBT Agreement) which also coincides with the 1994 creation of the World Trade Organization and became effective in 1995 (WTO, 2014).
Philip Morris has even more fronts where it fights its private war for rights to sell an addictive and dangerous product. Reports in the press accuse Philip Morris International of “shifting control of its Australian cigarette operations to Hong Kong-based Philip Morris Asia” for the express purpose of, less than a year later, suing “the Australian government through an international court, saying the government’s plan to force all cigarettes into plain non-branded packaging violated a decades-old trade agreement with Hong Kong” (Morran, 2015). In response, Philip Morris International openly confirms their position that “Australia’s plain packaging policy is an unprecedented destruction of brands and breaches Australia’s treaty with Hong Kong” (PMI, 2014). The Hong Kong question is one of two Investor State Dispute Settlements now in arbitration and publicly defended in statements by Philip Morris International. The other involves Uruguay.
Uruguay joined the numerous national parties now requesting a consultation on Australia’s laws from the World Trade Organization in DS434 (WTO, 2014). But Uruguay’s problems with Philip Morris pre-date Australia’s plain packaging laws. Philip Morris International dragged Uruguay into arbitration in 2010, claiming that Investor State Dispute Settlement (ISDS) provisions of international trade agreements protected their intellectual property in the forms of branded packaging with trademarks (PMI, 2014). Philip Morris International’s public statement on its ISDS cases against Australia (via Hong Kong) and Uruguay are “about governments destroying our… intellectual property. In doing so, both governments violated their pledge under binding international treaties not to deprive investors of their property without fair compensation in return” (PMI, 2014).
Uruguay developed its own policy about graphic warnings on cigarette packages, mandating coverage of 80 percent of the entire package with these warnings. But in addition to this policy which is even more aggressive than Australia’s, Uruguay introduced a “ban on selling more than one variant of each cigarette brand,” thus preventing Philip Morris from offering a wide range of their brands. And this measure, claims Philip Morris, “violates Uruguay’s treaty with Switzerland” (PMI, 2014).
In Uruguay, the potential legal victory for Philip Morris would not be changing the laws. It would be a cash payoff. The treaty with Switzerland is the UruguaySwitzerland Bilateral Investment Treaty (BIT). Philip Morris International claims Uruguay’s laws “caused a substantial decrease in sales and a deprivation of intellectual property rights” which entitles PMI to compensation under the treaty (Sahin, 2014). If Australia’s High Court has dashed Philip Morris International’s hopes of regaining branded packaging, the company remains steadfastly determined to bilk entire nations for payments to compensate for its reduced sales. After their utterly unconvincing arguments about intellectual property infringements in the Australian High Court, the Philip Morris legal team may have nothing left to do but salvage as much cash money as possible on the way down.
It may not be entirely wasted effort. Philip Morris International and its subsidiaries have products for sale in 180 countries, a number now exactly equal to the number of nations ratifying the WHO Framework Convention on Tobacco Control (USUBC, 2013). Philip Morris International could easily spend decades as a parasite on the public funds and resources of nation after nation. Philip Morris could easily pay its lawyers to keep wasting the time and resources of international organizations while attempting to keep its cash flow positive and its markets as open to exploitation as possible.
Ethical Considerations of Plain Packaging Laws
Government Investment in Tobacco Companies.
Aside from the litigation and trade disputes from tobacco-producing companies and tobacco-exporting nations, no one in the public voices any strong ethical objections to these laws. Neither academic journals nor the current events media have tales of citizen groups seeking to reclaim their freedom to enjoy colorful tobacco packaging with interactive advertising promotions and distinctive brands. The only ethical questions from scholars and health advocates involve the consistency of these measures with other government activities.
For example, the Australian government has a “$73 billion Future Fund set up to offset future public servant superannuation liabilities” (Hambleton, 2012, p. 200). These liabilities are merely a type of tax payment made by Australian companies based on their employee’s earnings, per the Australian Taxation Office (ATO, 2015). The government makes investments to cover its future tax payments on its employees. What do they invest in? Recently, the fund invested “almost $38 million… in tobacco company shares between December, 2010, and February, 2012” (Hambleton, 2012, p.200). Clearly, different offices of the same federal government can pursue conflicting policy goals. It would not be surprising to see future guidelines developed by the Conference of Parties to the Framework Convention on Tobacco Control to ensure governments are not investing in the same companies parasitizing them for cash payments through lengthy and costly litigation.
More Regulation, Not Less.
Tobacco’s well-documented links to disease and death, facts the tobacco industry no longer bothers to deny, make it a cause to which not even avid smokers can enthusiastically rally. Few come out in support of “the multinational cigarette companies that have created a virtual money-printing machine” by using “trademarks to compete on image rather than price.” True, “governments, the broader business community, and members of the public” do have concerns about losing the tobacco industry as a source of revenue (Sweanor, 2011, p. 683). From the Australian government’s Future Fund to the owners and franchisees of small retail shops, to the peddlers of black market chop-chop, tobacco is a proven source of revenue. But the public wants still more restriction on tobacco, not less.
In the United States, anti-smoking groups such as Action on Smoking & Health have criticized their federal government’s level of response to its commitment to the Framework Convention on Tobacco Control, accusing it of “sitting on the sidelines of this historic and vital effort” (ASH, 2012). While the USA has not taken such drastic control of packaging at the federal level, it has made other recent restrictions that are in compliance with the established guidelines of the FCTC, and it has done so despite powerful political lobbies from major tobacco companies with historical power bases in the states. For example, what happened to Camel Lights? Now, they are Camel Blue. Marlboro Lights? Now Marlboro Gold. This shift complies with a Framework Convention on Tobacco Control guideline about not allowing packaging that promotes lighter cigarettes as a potentially healthier or less dangerous option than a “full flavored” cigarette.
But for the most part, the US federal government seems content to let states take the initiative. Arizona and other states have begun to follow California’s lead in banning smoking in public places, with many cities like Boston working to ban even eCigs which contain no tobacco and do not create smoke. It would not be surprising to see American state initiatives similar to Framework Convention on Tobacco Control commitments evolving at their own pace just as Australia’s different states adopted their smoking cessation signs at their own pace, and with different severity levels to the warnings.
Evaluating Australia’s Tobacco Control Measures
Conference of Parties.
Nations who have ratified the Framework Convention on Tobacco Control make up the Conference of Parties. Members of this group evaluate and establish guidelines for tobacco control, including “a set of policy options and recommendations on economically sustainable alternatives to tobacco growing” (WHO FCTC, 2015). To date, the conference has determined eight solid guidelines they believe will further the FCTC’s goals, with the full text of each guideline published at http://www.who.int/fctc/guidelines/adopted/en/. Generally, the eight guidelines are:
- Protection of public health policies with respect to tobacco control from commercial and other vested interests of the tobacco industry.
- Price and tax measures to reduce the demand for tobacco.
- Protection from exposure to tobacco smoke.
- Regulation of the contents of tobacco products and regulation of tobacco product disclosures.
- Packaging and labelling of tobacco products.
- Education, communication, training, and public awareness.
- Tobacco advertising, promotion, and sponsorship.
- Demand reduction measures concerning tobacco dependence and cessation.
The Conference of Parties has addressed questions about tobacco as a revenue source from the agricultural and production perspective in addition to the retail and point of sale perspective. Their recent report Policy Options and Recommendations on Economically Sustainable Alternatives to Tobacco Growing attempts to answer the question, “What will farmers grow when tobacco control measures reduce global tobacco demand?” In fact, the report says that time is now, and it calls the need to find income alternatives for farming and processing facilities “urgent” (WHO, 2015).
The Conference of Parties is far, far ahead of the pack in evaluating the global effects of Framework Convention on Tobacco Control measures and plain packaging. The Conference of Parties concludes the efforts are demonstrably working. The Conference of Parties is already collaborating on a solid, workable set of guidelines to minimize economic disruption, reclaim the environment from the harmful effects of tobacco farming, and protect sustainable alternatives from being bullied by the interests of tobacco companies. These are outlined in the principles of the report. The report also recommends educational and training programs to be developed after study of community groups by gender, age, education, and ethnicity to help target the programs to them. At the level of the World Health Organization, the contentious twentieth-century debates about potential harm to health and environment from the tobacco industry have been settled long ago. Their only question is, “What next?”
Joint Efforts at the National Level.
This forward-thinking attitude of the Conference of Parties is consistent with other published research on plain packaging laws and related tobacco control measures. Evaluations of the plain packaging laws took place before they even began, as research groups sought to predict whether or not they would work in practice. A UK-based research team funded by the Department of Health presented a predictive analysis of whether or not plain packaging would meet the “the guidelines for the International Framework Convention on Tobacco Control: reduced appeal, increased salience and effectiveness of health warnings, and more accurate perceptions of product strength and harm” (Stead, 2013, p.1). By using the FCTC guidelines, the research team reveals the international community’s interest in seeing how well Australia’s efforts play out on the global stage. This team predicted that plain, dark, standardized packaging would meet all of the FCTC guidelines.
At the national level, the academic community and public health agencies collaborate to evaluate other aspects of tobacco control. For example, research into controlling black market tobacco brought the School of Economics, Finance, and Marketing from RMIT University in Melbourne together with the Center for Population Health, MacFarlane Burnet Institute for Medical Research and Public Health. Working together, these two groups provided empirical evidence about smokers’ decisions to smoke chop-chop, a black market form of tobacco which has often been cured and processed outside of the regulatory oversight mandated for legal tobacco production for health reasons. Policy about black market tobacco plays a small but noteworthy role in supporting the broad goal of the plain packaging policy: reducing smoking to less than 10 percent nationally.
The team challenged the prevailing belief that smokers choose chop-chop based on its lower price. The researchers concluded lower price is not the dominant factor in choosing chop-chop over legal tobacco. Instead, their survey suggests availability of black market tobacco was the primary factor in choosing it over legal tobacco. Most former chop-chop smokers now smoking legal tobacco cited lack of availability as their primary motivation for the switch. The researchers concluded with a prediction: Policies aimed at curbing illegal tobacco use through price controls will not be successful, but policies which can reduce the illegal supply will be (Pellegrini, 2011, p. 387).
International Tobacco Control Policy Evaluation Project.
National public health departments and university researchers are not the only ones examining Australia from an international guidelines perspective. The International Tobacco Control Policy Evaluation Project exists precisely to study measures like the ones in Australia. Its International Tobacco Control Four Country Survey, or ITC-4, examined one of the supporting measures of Australia’s comprehensive polices: point of sale signage warning about tobacco’s health risks and posting a smoking cessation hotline in big, bold text. The research team behind the ITC-4 compared mandates about the size, color, text, content, and placement of these signs within various Australian states. The team concluded the anti-smoking signs at retail outlets in Australia correlated to a significant, upward, linear trend in awareness of the signs. The team further correlated this increased awareness with increased interest in quitting smoking, and with increased attempts to do so (Li, 2012, p. 429).
The authors of the study proposed the effectiveness of the signs depends on more than their large size, clear text, simple message, and unmistakable presence in shops. The signs work in tandem with a whole set of policies in different media, and the point of sale warnings are reinforced by the packaging warnings (Li, 2012, p. 430). The researchers also pointed out that individual Australian states had their own timetables for rolling out the signs, with their policies going into effect at different times and with the requirements for the signs varying in intensity from state to state, though strengthened by the less severe states over time (Li, 2012, p. 428).
Though it is too early to have a vast body of published peer-reviewed research on all the long-term effects of plain packaging laws, a wide body of research supports the policies at the academic level, the federal level, and the international level. Australia may soon have data showing whether or not they have reached their stated policy goal of fewer than 10 percent of the population smoking. The most recent statistics on tobacco use from the Australian Department of Health were released in 2014, covering 2013 data. The trend of smoking reduction continues year over year in Australia, down now to 12.8 percent of the population aged 14 or over being daily smokers, and 13.3 percent of people aged 18 or over. These numbers are roughly half the figures from ten years prior (25 percent and 26.1 percent, respectively) (DOH, 2015). Australia’s comprehensive efforts and unified federal front have nearly succeeded. Perhaps 2015’s data published in 2016 will show they already have.
Australia has paved the way by acting as a case study for other Framework Convention on Tobacco Control signatory nations. The United Kingdom voted on March 16, 2015 to adopt plain packaging laws similar to Australia’s and plans to introduce plain packaging in May, 2016 (WHO FCTC, 2015). Ireland voted to implement plain packaging laws early in March, followed shortly by England, with more United Kingdom members announcing they will, too. The widespread majority support for these measures is apparent from the overwhelming parliamentary approval in England where “The House of Commons voted 367 to 113 in favour of packaging which is uniform in shape, size and design, featuring only the brand name and the usual graphic health warnings. The bill passed through the House of Lords without a vote” (Richardson, 2015).
As one public health advocate noted at the inception of Australia’s plain packaging policy, “Contextual factors and the lack of opportunity to undertake controlled experiments mean that one can never predict with certainty what the effect will be” (West 2011, p. 681). But now, four years later, the international community has a good idea of the litigation that will follow in federal and international courts. Nations now have an example of the way such litigation will hinge on questions of intellectual property rights defined by international trade agreements. Nations might expect tobacco companies to spend resources pursuing compensation instead of offering outright resistance to infringement as country after country adopts similar measures.
Plain packaging has gained nearly unilateral support from the academic and research communities, public health agencies, politicians and federal officials, advocacy groups, the medical community, the 180 signatory nations to the Framework Convention on Tobacco Control, and the highest courts in the land. The only serious objectors to plain packaging and other FCTC-based measures to control tobacco remain the companies which profit from tobacco sales, and nations exporting it for sale, especially those where said companies have significant overseas operations despite their origins as US-based corporations. Australia has successfully implemented these policies on a widespread basis with cooperation from its states. Australia has successfully prevented, so far, its public funds from being parasitized by compensatory payments to multinational tobacco companies.
All of this bodes well for other nations seeking similar policy measures to achieve a statistical reduction in tobacco use, leaving the tobacco companies with little recourse but to go to the World Trade Organization. By the end of 2016, the signatory nations of the Framework Convention on Tobacco Control will know whether or not the WTO will favor public health over intellectual property rights, and just what form that legal reasoning will take. The World Trade Organization’s position on tobacco control through packaging restrictions on brand and trademark usage will set yet another precedent in the ongoing political power struggle between corporate profit interests and people’s health on an international level.
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