Sydney - British American Tobacco [JSE:BTI] (BAT) on Thursday launched a high court challenge against Australia's plain packaging law for cigarettes, claiming it infringes intellectual property rights.
The proceedings will act as a "test case" on the validity of the legislation relating to property rights of two of its brands, Winfield and Dunhill, the company said.
"If we’re successful the decision should apply to other property and brands sold by BAT," it said in a statement.
BAT believes it is both unconstitutional and invalid for the government to remove its trademarks and other intellectual property without compensation.
Under the ground-breaking law, all tobacco products sold in Australia will need to be in plain packaging from December 1 2012. Cigarettes will be sold in drab, olive-brown packets with large, graphic health warnings.
The government says tobacco use costs the country more than Aus$30bn a year in healthcare and lost productivity.
But the proposal to remove all logos and print company names in uniform font has angered tobacco firms, who say it will cut profits and see fake products flood the market because plain packaging is easier to reproduce.
Earlier this month, fellow global tobacco giant Philip Morris said it was seeking to suspend the law and wanted substantial compensation for the loss of trademarks.
BAT spokesperson Scott McIntyre said Canberra had left it no option but to take legal action.
"Obviously we’d rather not be in a situation where we’re forced to take the government to court, but unfortunately for taxpayers the government has taken us down the legal path," he said.
"Health Minister (Nicola) Roxon will now waste millions of taxpayers' dollars on legal fees defending plain packaging, even though she has said herself there is no proof it will reduce smoking rates.
"As a legal company selling a legal product we have consistently said we will defend our valuable intellectual property on behalf of our shareholders as any other company would."