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CANBERRA (Reuters) - Australia called on the world to match its tough new anti-tobacco marketing laws that will ban logos on cigarette packs, after its highest court on Wednesday dismissed a challenge from global manufacturers.
The decision means that from December 1 cigarettes and tobacco products must be sold in plain olive green packets with graphic health warnings, such as pictures of mouth cancer and other smoking-related illnesses.
Although the impact of Australia on their global business is small, the law could have a major effect if it is adopted as a precedent in other countries, especially the fast-growing economies that cigarette firms see as markets of the future.
The laws are in line with World Health Organisation recommendations and are being watched closely by countries including Britain, Norway, New Zealand, Canada and India, who are considering similar measures to help fight smoking.
British American Tobacco (BATS.L), Britain's Imperial Tobacco IMT.L, Philip Morris (PM.N) and Japan Tobacco (2914.T) challenged the laws in Australia's High Court, claiming the rules were unconstitutional because they effectively extinguished their intellectual property rights.
In a brief statement, the High Court said a majority of its seven judges believed the laws did not breach Australia's constitution. A full judgement will be released later.
The World Health Organisation estimates that more than 1 billion people around the world are regular smokers, with 80 percent in low- and middle-income countries.
Shares in tobacco groups dipped lower with BAT off 1.8 percent at 3,384 pence and Imperial Tobacco down 1.9 percent at 2,486 pence by 11:40 a.m. British time in a slightly lower London market.
Supporters of the measure hailed the legal victory as an important step for public health in Australia and any other countries that may copy it.
Australian Attorney-General Nicola Roxon hailed the ruling as "a watershed moment for tobacco control around the world".
"The message to the rest of the world is big tobacco can be taken on and beaten," said Roxon, whose father, a smoker, died of cancer when she was 10.
"Without brave governments willing to take the fight up to big tobacco, they'd still have us believing that tobacco is neither harmful nor addictive," she said after the ruling.
According to the global Tobacco Atlas, a report on smoking produced by the World Lung Foundation and the American Cancer Society, 17 percent of male deaths and 14 percent of female deaths in Australia are due to tobacco.
"We hope other nations follow Australia's lead and eliminate the use of tobacco packaging as a marketing tool, to help reduce the global tobacco death toll -- which is on track to reach half a billion people this century," said Australia's Cancer Council chief executive Ian Olver.
Countries with legal systems similar to Australia's may be among the first to try to copy the packaging logo ban.
New Zealand's Associate Health Minister Tariana Turia said the decision gave New Zealand more confidence to push ahead with similar measures. In Britain, which is also considering such steps, anti-smoking and health campaigners welcomed the ruling.
"This is a major victory not just for Australia but for the world and the first of many bloody noses for the tobacco industry on plain packaging. It should encourage the British government to go ahead with legislation," said Deborah Arnott, Chief Executive of anti-smoking lobby group Action on Smoking and Health.
Britain finished a four-month consultation process on plain packaging last week and will now analyse the thousands of responses it has received and is expected to make a decision on whether to push ahead with legislation later this year.
The Department of Health said no decision had been taken, although Health Secretary Andrew Lansley has been quoted as saying "we no longer see smoking as part of life" and that he wanted tobacco companies to have "no business in the UK".
Peter Hollins, Chief Executive at the British Heart Foundation charity said: "This decision should now be echoed around the globe to make it clear that plain packs protect, no matter what smoke and mirrors the tobacco industry employ."
However, lawyer Paul Medlicott, who advises consumer goods companies on plain packaging laws, said Britain might wait 2-3 years to gather data on whether the Australian measures succeed in cutting youth smoking before taking on tobacco firms.
A spread of plain-package laws to emerging markets such as Brazil, Russia or Indonesia could threaten cigarette firms' sales growth.
In Indonesia, the government said it would like to follow Australia's example: "That's excellent ... this is one way to protect the people," Health Minister Nafsiah Mboi told Reuters.
However, anti-tobacco campaigner Tulus Abadi, head of the national commission on tobacco control, said there had been little movement from the government on a draft law to include graphic warnings on cigarette packets like those in Australia.
Tobacco firms say plain packaging laws violate their intellectual property rights and will stimulate a black market in fake or illegally imported cigarettes.
"It's still a bad law that will only benefit organised crime groups, which sell illegal tobacco on our streets," British American Tobacco Australia spokesman Scott McIntyre said after the decision. However, he said the firm would comply.
Firms can also use free trade arguments against plan packaging laws. Australia is already fighting trade complaints in the World Trade Organization (WTO) from Ukraine, Honduras and the Dominican Republic, which claim the laws unfairly restrict trade, although their trade with Australia is negligible.
Philip Morris said it would launch a legal challenge against the laws under a bilateral Australia-Hong Kong investment agreement.
"There is still a long way to go before all the legal questions about plain packaging are fully explored and answered," Philip Morris spokesman Chris Argent said in a statement.
Additional reporting by Gyles Beckford in WELLINGTON, Olivia Rondonuwu in JAKARTA,; and Kate Kelland and David Jones in LONDON; Writing by Paul Tait and David Jones; Editing by Peter Graff