JT International SA v Commonwealth - [2012] HCA 43

HIGH COURT OF AUSTRALIA
FRENCH CJ,
GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ
Matter No S409/2011
JT INTERNATIONAL SA  PLAINTIFF
AND
COMMONWEALTH OF AUSTRALIA  DEFENDANT
Matter No S389/2011
BRITISH AMERICAN TOBACCO AUSTRALASIA LIMITED & ORS  PLAINTIFFS
AND
THE COMMONWEALTH OF AUSTRALIA  DEFENDANT
JT International SA v Commonwealth of Australia
British American Tobacco Australasia Limited v The Commonwealth
[2012] HCA 43
Date of Order: 15 August 2012
Date of Publication of Reasons: 5 October 2012
S409/2011 & S389/2011
ORDER
Matter No S409/2011
1.The demurrer by the plaintiff to the defence of the defendant be overruled.
2.Judgment be entered in the action for the defendant.
3.The plaintiff pay the defendant's costs in this action, including the demurrer.

Matter No S389/2011

The questions reserved on 28 February 2012 for determination by the Full Court under s 18 of the Judiciary Act 1903 (Cth) be answered as follows:
Question 1

Apart from s 15 of the Tobacco Plain Packaging Act 2011 (Cth), would all or some of the provisions of the Tobacco Plain Packaging Act 2011 (Cth) result in an acquisition of any, and if so what, property of the plaintiffs or any of them otherwise than on just terms, of a kind to which s 51(xxxi) of the Constitution applies?
Answer
No.
Question 2

Does the resolution of Question 1 require the judicial determination of any and if so what disputed facts following a trial?
Answer
No.
Question 3

If the answer to Question 1 is "yes" are all or some, and if so which, provisions of the Tobacco Plain Packaging Act 2011 (Cth) in whole or in part beyond the legislative competence of the Parliament by reason of s 51(xxxi) of the Constitution?
Answer
Does not arise.
Question 4

Are all or some, and if so which, provisions of the Tobacco Plain Packaging Act 2011 (Cth) in whole or in part beyond the legislative competence of the Parliament by reason of the matters raised in pars 10-12 of the statement of claim?

Answer
No.
Question 5
What order should be made in relation to costs of the questions reserved?
Answer
The plaintiffs pay the defendant's costs.

Representation
G Griffith QC with G A Hill and C O H Parkinson for the plaintiff in S409/2011 (instructed by Johnson Winter & Slattery)
A J Myers QC with M F Wheelahan SC, N J Owens and M J O'Meara for the plaintiffs in S389/2011 (instructed by Corrs Chambers Westgarth Lawyers)
S J Gageler SC, Solicitor-General of the Commonwealth with R Merkel QC, S B Lloyd SC, J K Kirk SC, A M Mitchelmore and J S Cooke for the defendant in both matters (instructed by Australian Government Solicitor)
Interveners
W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar intervening on behalf of the Attorney-General of the State of Queensland in both matters (instructed by Crown Law (Qld))
M P Grant QC, Solicitor-General for the Northern Territory with R H Bruxner intervening on behalf of the Attorney-General for the Northern Territory in both matters (instructed by Solicitor-General for the Northern Territory)
P J F Garrisson, Solicitor-General for the Australian Capital Territory with M A Perry QC intervening on behalf of the Attorney-General for the Australian Capital Territory in both matters (instructed by ACT Government Solicitor)
A C Archibald QC with C P Young intervening on behalf of Philip Morris Limited in S389/2011 (instructed by Allens Arthur Robinson)
B W Walker SC with C L Lenehan intervening on behalf of Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Limited in S389/2011 (instructed by King & Wood Mallesons)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS
JT International SA v Commonwealth of Australia
British American Tobacco Australasia Limited v The Commonwealth
Constitutional law (Cth) – Legislative power – Section 51(xxxi) – Acquisition of property on just terms – Plaintiffs hold registered and unregistered trade marks and other intellectual property rights in relation to tobacco product packaging – Tobacco Plain Packaging Act 2011 (Cth) regulates appearance of tobacco product packaging and use of trade marks on such packaging – Whether plaintiffs' intellectual property rights, goodwill and rights to determine appearance of tobacco products constitute "property" for purposes of s 51(xxxi) – Whether Act effects an acquisition of plaintiffs' property otherwise than on just terms.
Words and phrases – "acquisition of property", "intellectual property", "just terms", "trade marks".
Constitution, s 51(xxxi).
Tobacco Plain Packaging Act 2011 (Cth), ss 15, 18-27, 30-48.
Competition and Consumer (Tobacco) Information Standard 2011 (Cth), ss 1.5, 3.1, 4.1, 9.13, 9.19-19.20.
Tobacco Plain Packaging Regulations 2011 (Cth), Divs 2.1-2.4, 3.1.

FRENCH CJ.
Introduction

The Tobacco Plain Packaging Act 2011 (Cth) ("the TPP Act") imposes significant restrictions upon the colour, shape and finish of retail packaging for tobacco products. It prohibits the use of trade marks on such packaging, other than as permitted by the TPP Act, which allows the use of a brand, business or company name for the relevant tobacco product. Pre-existing regulatory requirements for health messages and graphic warnings remain in place and include, under a recent Information Standard, a requirement for the inclusion of the Quitline logo of the Victorian Anti-Cancer Council and a telephone number for the Quitline service.
In two proceedings which were heard by this Court in April this year, the plaintiffs, tobacco companies JT International SA ("JTI") and members of the British America Tobacco Group ("BAT")[1] argued that, subject to a reading down provision, the TPP Act effected an acquisition of their intellectual property rights and goodwill on other than just terms, contrary to s 51(xxxi) of the Constitution.
[1]British American Tobacco Australasia Ltd, British American Tobacco (Investments) Ltd and British American Tobacco Australia Ltd together referred to as BAT.
On 15 August 2012 the Court made orders reflecting the rejection of the plaintiffs' contentions, by majority, on the basis that there had been no acquisition of the plaintiffs' property within the meaning of s 51(xxxi) of the Constitution. I publish my reasons for joining in those orders.
The TPP Act
The TPP Act regulates the retail packaging and appearance of tobacco products[2]. The Act is superimposed upon pre-existing regulatory requirements for health warnings and safety and information standards applied to tobacco products and their packaging. Its stated objectives include the improvement of public health by discouraging people from taking up smoking, encouraging people to give up smoking, discouraging people from relapsing if they have given it up, and reducing people's exposure to smoke from tobacco products[3].
[2]A "tobacco product" is defined in s 4(1) as "processed tobacco, or any product that contains tobacco, that: (a) is manufactured to be used for smoking, sucking, chewing or snuffing; and (b) is not included in the Australian Register of Therapeutic Goods maintained under the Therapeutic Goods Act 1989."
[3]TPP Act, s 3(1)(a).
Substantive requirements for the physical features, colours and finish of retail packaging are imposed by ss 18 and 19 of the TPP Act and by the Tobacco Plain Packaging Regulations 2011 (Cth) ("the TPP Regulations") made under that Act. Embellishments on cigarette packs and cartons are proscribed[4]. Packs and cartons are to be rectangular[5], have only a matt finish[6], and bear on their surfaces the colour prescribed by the TPP Regulations[7]. Absent regulation, the colour of the package must be a drab dark brown[8]. The use of trade marks on retail packaging of tobacco products is prohibited other than as permitted by s 20(3) which provides:
"The following may appear on the retail packaging of tobacco products:
(a)the brand, business or company name for the tobacco products, and any variant name for the tobacco products;
(b)the relevant legislative requirements;
(c)any other trade mark or mark permitted by the regulations."
Section 26 imposes a similar conditional prohibition on the use of trade marks on tobacco products. The term "relevant legislative requirement" in s 20(3)(b) includes a health warning required by the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 (Cth) ("the TPCPI Regulations")[9] or a safety or information standard made or declared under the Competition and Consumer Act 2010 (Cth) ("the CCA").
[4]TPP Act, s 18(1)(a).
[5]TPP Act, s 18(2)(b)(i).
[6]TPP Act, s 19(2)(a).
[7]TPP Act, s 19(2)(b)(i). Regulation 2.2.1(2) of the TPP Regulations currently prescribes the colour Pantone 448C.
[8]TPP Act, s 19(2)(b)(ii).
[9]TPP Act, s 4(1). A "relevant legislative requirement" also includes a fire risk statement, a trade description and a measurement mark.
Brand, business, company and variant names for tobacco products which appear on retail packaging must comply with the TPP Regulations[10]. They must not obscure any "relevant legislative requirement" or appear other than once on any of the front, top and bottom outer surfaces of the pack[11].
[10]TPP Act, s 21(1).
[11]TPP Act, s 21(2). The TPP Act also imposes requirements relating to wrappers, s 22; prohibits inserts and onserts, s 23; the use of noises or scents, s 24, and changes in appearance after sale, s 25.
The relevant prescriptive provisions of the TPP Act, ss 18 to 27, are declared by s 27A to have "no legal effect other than to specify requirements, and provide for regulations specifying requirements, for the purposes of the definition of tobacco product requirement". The term "tobacco product requirement" is a defined term which relevantly means a requirement specified in Pt 2 of Ch 2 or in the TPP Regulations made under that Part[12].
[12]TPP Act, s 4(1).
The registrability of trade marks and designs whose use is subject to constraints imposed by the TPP Act and the TPP Regulations is not to be prejudiced by those constraints. Neither the TPP Act nor the TPP Regulations deprive a trade mark of registrability for non-use, or because the use of the trade mark in relation to tobacco products would be contrary to law[13]. Neither the TPP Act nor the circumstance that a person cannot use a trade mark in relation to the retail packaging of tobacco products or on tobacco products is a circumstance making it reasonable or appropriate to refuse or revoke registration of the trade mark, to revoke acceptance of an application for registration, or to register the trade mark subject to conditions or limitations[14]. There is a somewhat less elaborate protection for registered designs under the Designs Act 2003 (Cth)[15].
[13]TPP Act, s 28.
[14]TPP Act, s 28(3).
[15]TPP Act, s 29.
It is an object of the TPP Act to give effect to obligations that Australia has as a party to the Convention on Tobacco Control[16]. The Act thereby relies upon the power of the Commonwealth Parliament to make laws with respect to external affairs. Part 3 of Ch 1 of the TPP Act entitled "Constitutional provisions" provides for the Act's additional operation in reliance upon the corporations power, the trade and commerce power, and the Territories' power. Section 15(1) provides for the non-application of the TPP Act to the extent (if any) that its operation would result in an acquisition of property from a person otherwise than on just terms[17]. Section 15(2) provides that if, apart from s 15, the TPP Act would result in such an acquisition of property because it would prevent the use of a trade mark or other sign on or in relation to retail packaging of tobacco products, the trade mark or sign may be so used. The validity of that subsection was challenged by BAT. It is sufficient to say that I agree with Gummow J[18] that the challenge fails, s 15(2) being a valid severability provision akin to s 15A of the Acts Interpretation Act 1901 (Cth).
[16]TPP Act, s 3(1)(b).
[17]TPP Act, s 15(1). By s 15(3) specific examples of that non-application would allow a trade mark or other sign to be used in relation to retail packaging of tobacco products or on tobacco products despite any other provision of the Act.
[18]Reasons of Gummow J at p 32 [97]-[99].
Chapter 3 of the TPP Act creates offences and provides for civil penalties[19]. A summary of its terms appears in the judgment of Gummow J[20].
[19]TPP Act, ss 30-50.
[20]Reasons of Gummow J at p 30 [90].
The TPP Regulations
The TPP Regulations specify physical features of retail packaging of tobacco products[21], including their dimensions[22], their colour and finish[23], and the permitted use of trade marks or marks[24]. The only permitted marks are origin marks, calibration marks, a measurement mark and trade description, a bar code, a fire risk statement, a locally made product statement and a name and address[25]. Division 2.4 provides for the appearance of names on retail packaging of cigarettes, and Div 2.5 for marks and tear strips on wrappers. Part 3 relates to the requirements for the appearance of tobacco products.
[21]TPP Regulations, Div 2.1.
[22]TPP Regulations, reg 2.1.1.
[23]TPP Regulations, Div 2.2.
[24]TPP Regulations, Div 2.3.
[25]TPP Regulations, reg 2.3.1.
The Tobacco Plain Packaging Amendment Regulation 2012 (No 1) (Cth) ("Amendment Regulations") provides that retail packaging of tobacco products may include an adhesive label bearing a health warning that complies with either the TPCPI Regulations or the Competition and Consumer (Tobacco) Information Standard 2011 ("the Tobacco Information Standard")[26].
[26]Amendment Regulations, Sched 1 [15] inserting reg 2.6.1.
The Tobacco Information Standard
The Tobacco Information Standard was made pursuant to the CCA[27]. It came into partial effect on 1 January 2012 and will apply to all tobacco products on and after 1 December 2012[28]. Apart from the health warnings which it mandates, it will require the "Quitline" logo which consists of the registered trade mark, in respect of health education services, of the Anti-Cancer Council of Victoria comprising the word "Quitline" and the Quitline telephone number to overlay most graphics[29].
[27]CCA, Sched 2, s 134.
[28]Tobacco Information Standard, s 1.5.
[29]Tobacco Information Standard, ss 1.3(6), 3.1(2), 4.1(2); subs (3) of each of ss 3.2-3.8 and 4.2-4.8; subs (2) of each of ss 5.3-5.6; ss 9.4(3), 9.4(4).
Pre-existing health warnings
The placement of health warnings on cigarette packets is mandated by the TPCPI Regulations. Those Regulations were made under the Trade Practices Act 1974 (Cth), which has been replaced by the CCA. They predated the enactment of the TPP Act. Indeed such warnings have been required since the 1970s.
The TPCPI Regulations provide for "a system of warnings, explanatory messages and graphic images to increase consumer knowledge of health effects relating to smoking, to encourage the cessation of smoking and to discourage uptake or relapse."[30] A package in which tobacco is sold at retail ("a retail package")[31] and which is manufactured in Australia, or imported into Australia[32], must be labelled in accordance with Pt 3 or Pt 4 of the TPCPI Regulations[33]. Warning and explanatory messages and photographs and their layouts are prescribed[34]. The CCA also provides for safety standards[35] and information standards[36] required of tobacco products.
[30]TPCPI Regulations, reg 3A.
[31]TPCPI Regulations, reg 6(1).
[32]TPCPI Regulations, reg 4.
[33]The TPCI Regulations, Sched 1, sets out the requirements for labelling for the purpose of Pt 3 relating to retail packaging manufactured or imported before 1 March 2006. Schedule 2 sets out the requirements for labelling for the purpose of Pt 4 relating to retail packaging manufactured or imported after 1 March 2006.
[34]TPCPI Regulations, Scheds 1 and 2.
[35]CCA, Sched 2, s 104.
[36]CCA, Sched 2, s 134.
The TPCPI Regulations and the safety and information standards made or declared under the CCA prevail to the extent of any inconsistency with the TPP Act[37]. That paramountcy does not change the legal effect of those regulations and standards. It does no more than preclude any operation of the TPP Act which is inconsistent with them.
[37]TPP Act, s 10.
The JTI proceedings
By a writ of summons and statement of claim filed in this Court on 15 December 2011 naming the Commonwealth of Australia as defendant, JTI sought a declaration, relying upon s 15 of the TPP Act, that the TPP Act does not apply and has no operation in its application to trade marks and get-up used on tobacco products sold by JTI. In the alternative, JTI sought a declaration that the TPP Act is invalid in its application to the trade marks and the get-up.
It was not in dispute that JTI is the registered owner or exclusive licensee of registered trade marks which it is entitled to use in the retail packaging and appearance of the Camel brand of cigarettes and the Old Holborn brand of handrolling tobacco ("the tobacco products") currently sold in Australia. JTI said that, until the commencement of ss 17-27A and ss 30-48 of the TPP Act, it would have the right to determine the appearance of these tobacco products and the form and appearance of at least 70 per cent of the front and at least 10 per cent of the back of the packaging of the tobacco products.
JTI alleged that its tobacco products used distinctive trade dress and get-up, including arrangements of words, colours, designs, logos, lettering and markings which distinguish them from other tobacco products. It claimed to have rights of use of this "Get-up" capable of being enforced by an action for passing off or for misleading or deceptive conduct.
JTI asserted that its rights in the trade marks and their get-up are "property" for the purposes of s 51(xxxi) of the Constitution. It claimed that the provisions of the TPP Act constituted an acquisition of its property otherwise than on just terms and, but for s 15, would be wholly invalid and of no effect.
The Commonwealth admitted that the trade mark was property but denied that characterisation with respect to the get-up and rights said to be associated with it. It pleaded that both the trade mark rights and the get-up rights were, in any event, susceptible to regulation including, in particular, under Commonwealth laws of the kind in the TPP Act. The Commonwealth denied that any of the matters alleged in JTI's statement of claim established that the TPP Act effected or would effect an acquisition of property otherwise than on just terms to which s 51(xxxi) applied.
The Commonwealth pleaded that the consumption of JTI's tobacco products and the tobacco products of other manufacturers, importers and distributers is harmful to the public and to the public interest[38]. The Commonwealth also asserted the existence of "a rational and/or cogent basis" for concluding that the plain packaging of tobacco products would reduce their appeal to members of the public and increase the effectiveness of health warnings on the retail packaging of the products[39]. It was also asserted that such packaging would also reduce the ability of the retail packaging of tobacco products to mislead members of the public about the harmful effects of smoking.
[38]A contention said to be supported by factual allegations set out in Sched A to the defence. The Commonwealth referred to, inter alia, addiction, mechanisms that brought about addiction, and diseases said to be derived from tobacco use.
[39]A contention said to be supported by various papers, studies, reports and other documents set out in Sched C to the defence.
The JTI demurrer

In its reply to the defence, JTI demurred on the following grounds:
1.Its trade marks and the get-up constitute "property" within s 51(xxxi) of the Constitution.
2.The TPP Act would, apart from s 15, result in an acquisition of that property within s 51(xxxi) of the Constitution.
3.That acquisition would be otherwise than on just terms.
4.Factual matters alleged in various parts of the defence were irrelevant to the constitutional validity of the TPP Act.
JTI sought judgment by way of declaration if the demurrer were upheld. In the event that the demurrer were overruled, it sought to have the matter remitted for trial and further orders.
The BAT proceedings
BAT commenced proceedings against the Commonwealth by a writ of summons issued out of this Court on 1 December 2011. They claimed a declaration that the TPP Act would not apply to their tobacco products and packaging and, alternatively, a declaration that the TPP Act is invalid.
In its statement of claim, BAT identified a number of categories of property rights which may be paraphrased as follows:
(a)Registered and unregistered trade marks which it is entitled to use for tobacco products and the packaging of tobacco products in Australia and to authorise others to carry out such acts.
(b)Copyright in artistic and literary works which it is entitled to reproduce for tobacco products and the packaging of tobacco products.
(c)Distinctive trade dress and get-up for tobacco products which use the trade marks and/or reproduce the copyright works.
(d)Substantial reputation and goodwill arising from the use in Australia by British American Tobacco Australia Ltd of the trade marks, the copyright works and/or the get-up in conjunction with tobacco products and the packaging of tobacco products.
(e)A design registered under the Designs Act 2003 (Cth).
(f)Two patents registered pursuant to the Patents Act 1990 (Cth).[40]
(g)Packaging rights:
(i)to manufacture, import, sell and use tobacco products and packaging of tobacco products in such shape or design as BAT may choose; and
(ii)to print or to use on the tobacco products and packaging of tobacco products such trade marks or copyright works or designs or patents or messaging as BAT might choose.
(h)Goodwill attaching to the exploitation in Australia of the packaging rights.
(i)Intellectual property licence rights held by British American Tobacco Australia Ltd in relation to the use of the trade marks in Australia, reproduction and publication of the copyright works, use of the get-up, and to manufacture and sell packaging embodying the design and/or exploiting one of the patents.
The registered trade marks took the form of words, package get-up and colour used in relation to the Winfield brand of cigarettes. The unregistered marks were of the same kind. The literary and artistic works were embodied in the text and colour of Winfield cigarette packs. The registered design related to the features of shape and configuration of a ribbed pack for cigarettes. The patents related to inventions claimed for the way in which cigarettes are sealed within a pack and the provision of increased internal surface area which could be utilised for printing information or graphics.
[40]The design and patents are said to be owned by the second plaintiff, British American Tobacco (Investments) Ltd.
BAT alleged that the provisions of the TPP Act would, but for the operation of s 15 of that Act result in an acquisition of BAT's property comprising the trade marks, the copyright works, the get-up, the licensing goodwill, the design, the patents, the packaging rights, the packaging goodwill and the intellectual property licence rights otherwise than on just terms. It thereby alleged that, by reason of s 15, the provisions of the TPP Act do not apply to and have no operation with respect to BAT's tobacco products and packaging of tobacco products. In the alternative, BAT asserted that the TPP Act is invalid as conferring legislative power on the judicial branch of government by reason of the fact that the extent to which conduct is rendered criminal by the TPP Act is determined by the extent to which s 51(xxxi) of the Constitution would, but for s 15 of the TPP Act, be engaged. It further alleged that the TPP Act is invalid because it does not provide for a rule of conduct or a declaration as to power, right or duty and also because its purported enactment thereby did not involve an exercise of the power to make "laws" conferred by the Constitution upon the Commonwealth Parliament.
The reserved questions
On 27 February 2012, Gummow J reserved questions in the BAT proceedings under s 18 of the Judiciary Act 1903 (Cth) for consideration by the Full Court. The questions were:
"(1)Apart from s 15 of the TPP Act, would all or some of the provisions of the TPP Act result in an acquisition of any, and if so what, property of the plaintiffs or any of them otherwise than on just terms, of a kind to which s 51(xxxi) of the Constitution applies?
(2)Does the resolution of question (1) require the judicial determination of any and if so what disputed facts following a trial?
(3)If the answer to question (1) is "yes" are all or some, and if so which, provisions of the TPP Act in whole or in part beyond the legislative competence of the Parliament by reason of s 51(xxxi) of the Constitution?
(4)Are all or some, and if so which, provisions of the TPP Act in whole or in part beyond the legislative competence of the Parliament by reason of the matters raised in paragraphs 10-12 of the statement of claim?
(5)What order should be made in relation to costs of the Questions Reserved?"
The affected rights
JTI and BAT contended that the TPP Act would effect an acquisition of their property on other than just terms contrary to the guarantee provided by s 51(xxxi) of the Constitution. The categories of property rights said to be affected appear from the pleadings. In the case of JTI, they are its registered trade marks and get-up. In the case of BAT, they are its registered and unregistered trade marks, copyright, get-up, licensing goodwill, design, patents, packaging rights, packaging goodwill and intellectual property licensing rights.
Section 51(xxxi) confers upon the Commonwealth Parliament the power to make laws with respect to:
"[t]he acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws".
It uses the term "property" which appears in a number of places in the Constitution[41]. As used in s 51(xxxi) it has long been construed broadly by this Court[42]. It extends to property rights created by statute although the terms of such statutes and the nature of the property rights which they create require examination to determine whether and to what extent that property attracts the protection of s 51(xxxi). As the plurality cautioned in Attorney-General (NT) v Chaffey[43], further analysis is imperative where the asserted "property" has no existence apart from statute[44].
[41]Constitution, ss 51(xxxi), 85, 98, 104 and 114.
[42]Wurridjal v The Commonwealth (2009) 237 CLR 309 at 359-360 [87]-[89] per French CJ and cases there cited; [2009] HCA 2.
[43](2007) 231 CLR 651; [2007] HCA 34.
[44](2007) 231 CLR 651 at 664 [23] per Gleeson CJ, Gummow, Hayne and Crennan JJ.
There are and always have been purposive elements reflecting public policy considerations which inform the statutory creation of intellectual property rights. The public policy dimensions of trade mark legislation and the contending interests which such dimensions accommodate were referred to in Campomar Sociedad, Limitada v Nike International Ltd[45]. The observation in that case that Australian trade marks law has "manifested from time to time a varying accommodation of commercial and the consuming public's interests"[46] has application with varying degrees of intensity to other intellectual property rights created by statute. Intellectual property laws create property rights. They are also instrumental in character. As Peter Drahos wrote in 1996, their proper interpretation does not depend upon "diffuse moral notions about the need to protect pre-legal expectations based on the exercise of labour and the creation of value."[47] The statutory purpose, reflected in the character of such rights and in the conditions informing their creation, may be relevant to the question whether and in what circumstances restriction or regulation of their enjoyment by a law of the Commonwealth amounts to acquisition of property for the purposes of s 51(xxxi) of the Constitution. That is not to say that such rights are, on account of their instrumental character, inherently susceptible to variation and, on that account, not within the protection of s 51(xxxi)[48]. In Chaffey the plurality said[49]:
"a law reducing the content of subsisting statutory exclusive rights, such as those of copyright and patent owners, would attract the operation of s 51(xxxi)." (footnote omitted)
On the other hand, that statement is not to be taken as support for the proposition that the extinguishment or restriction of a statutory exclusive right, without more, would constitute an acquisition for the purpose of s 51(xxxi). That statement was made in a context of a rejection of the broad proposition that the statutory extinguishment of statutory rights is excluded from the scope of s 51(xxxi)[50]. The question whether there has been an acquisition of all or any of the plaintiffs' asserted property rights directs attention to their source and nature and the consequences of the restrictions imposed by the TPP Act upon their use or enjoyment. The property said to have been the subject of acquisition under the TPP Act comprises a mixture of statutory and associated or derivative non-statutory rights. It is useful to make brief generic reference to them.
[45](2000) 202 CLR 45 at 65-68 [42]-[49]; [2000] HCA 12.
[46](2000) 202 CLR 45 at 65 [42].
[47]Drahos, A Philosophy of Intellectual Property, (1996) at 220, see also at 203.
[48]The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 16-17 [16] per Brennan CJ, 38 [86] and 56-57 [145]-[146] per McHugh J, 73-74 [198] per Gummow J; [1998] HCA 8; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634-635 per Gummow J, Toohey J relevantly concurring at 560 and Gaudron J at 561; [1997] HCA 38; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 237 per Mason CJ, Deane and Gaudron JJ, 243‑244 per Brennan J, 256 per Toohey J; [1994] HCA 8.
[49](2007) 231 CLR 651 at 664 [24] per Gleeson CJ, Gummow, Hayne and Crennan JJ, citing The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 70-71 [182]-[187] per Gummow J.
[50]See also the reference in the plurality judgment in Chaffey at 663 [21] to the Industrial Relations Act case (1996) 187 CLR 416 at 559; [1996] HCA 56 requiring some consequential benefit or financial gain before extinguishment of a cause of action could be characterised as an acquisition.
At common law, the property interest associated with a trade mark was derived from the goodwill of the business which used it[51]. However, the rights conferred by successive Commonwealth statutes on the holders of registered trade marks have always been "a species of property of the person whom the statute describes as its registered proprietor"[52]. Those rights are the exclusive rights to use the trade mark and to authorise other persons to use the trade mark in relation to the goods and/or services in respect of which the trade mark is registered[53]. They are capable of assignment and transmission and attract equities which "may be enforced in the like manner as in respect of any other personal property."[54] Their existence is conditioned upon satisfaction of requirements for registration. They can cease to exist by operation of statutory mechanisms such as rectification, removal from the register, or failure to renew[55]. As pointed out in the 5th edition of Shanahan's Australian Law of Trade Marks and Passing Off[56]:
"the property in a statutory trade mark is not permanent."
[51]AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273 at 284 per Lord Parker; Erven Warnink Besloten Vennootschap v J Townsend & Sons (Hull) Ltd [1979] AC 731 at 741 per Lord Diplock; Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 366-367 per Gummow J; French J agreeing at 377.
[52]Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 68 [48], quoting with approval Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34 per Windeyer J; [1968] HCA 50. See also Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 477-478 per Stephen, Mason, Aickin and Wilson JJ; [1980] HCA 32.
[53]Trade Marks Act 1995 (Cth), s 20.
[54]Trade Marks Act 1905 (Cth), ss 49(3), 58-60; Trade Marks Act 1955 (Cth), ss 57 and 82; Trade Marks Act 1995 (Cth), s 21.
[55]Trade Marks Act 1995 (Cth), ss 85-87, 92; Designs Act 2003 (Cth), ss 51, 52, 65, 66, 120; Patents Act 1990 (Cth), ss 82, 85, 101, 101F, 101J, 134, 137, 138.
[56]Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed, (2012) at 78.
Registered designs are a species of personal property, capable of assignment and transmission by operation of law[57]. The registered owner of a registered design has a number of exclusive rights relating to the making, importation, sale and use of products embodying the design and the right to authorise another to do any of those things[58]. The rationale for the statutory protection of registered designs has been variously stated. Professor Ricketson observed in 1984[59]:
"The principal object of the registered designs system is to give protection, through the grant of a monopoly right, to the visual form of articles which are commercially mass-produced. Concern with questions of design and appearances has had a long history, as it has been seen for many hundreds of years that good design is an integral part of the manufacture and marketing of all kinds of useful articles."
[57]Designs Act 1906 (Cth), s 16; Designs Act 2003 (Cth), s 10.
[58]Designs Act 1906 (Cth), ss 12 and 15; Designs Act 2003 (Cth), s 10.
[59]Ricketson, The Law of Intellectual Property, (1984) at 445.
The Patents Act 1990 (Cth) provides that a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention[60]. Those exclusive rights are "personal property and are capable of assignment and of devolution by law."[61] The origin of patents for inventions can be traced back to the Statute of Monopolies of 1623[62], declaring all monopolies void, subject to the exception in s 6 of that Statute that:
"any letters patents and grants of privilege for the ... making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures, which others at the time of making such letters patents and grants shall not use".
That provision still forms part of the definition of "patentable invention" in the Patents Act 1990 (Cth)[63]. Its purpose was succinctly stated by Cornish, Llewellyn and Aplin[64]:
"the terms of the section make it plain that an act of economic policy was intended: the objectives were the encouragement of industry, employment and growth, rather than justice to the 'inventor' for his intellectual percipience."
[60]Patents Act 1990 (Cth), s 13(1).
[61]Patents Act 1990 (Cth), s 13(2).
[62]21 Jac 1 c 3.
[63]Patents Act 1990 (Cth), s 18.
[64]Cornish, Llewellyn and Aplin, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 7th ed (2010) at 125.
Copyright is defined by reference to exclusive rights of, inter alia, reproduction and publication of works and subject matter other than works. It is classified in the Copyright Act as "personal property" which is transmissible by "assignment, by will and by devolution by operation of law."[65]
[65]Copyright Act 1968 (Cth), s 196.
Registered trade marks, designs, patents and copyright in works and other subject matter give rise to, or constitute, exclusive rights which are property to which s 51(xxxi) of the Constitution can apply. They are all rights which are created by statute in order to serve public purposes. They differ in their histories, their character and the statutory schemes which make provision for them. It is important in that context to bear in mind the adoption by this Court in Campomar[66] of the statement by Dixon J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor[67] that:
"the exclusive right to invention, trade marks, designs, trade name and reputation are dealt with in English law as special heads of protected interests and not under a wide generalisation."
[66](2000) 202 CLR 45 at 54 [4].
[67](1937) 58 CLR 479 at 509; [1937] HCA 45.
It is a common feature of the statutory rights asserted in these proceedings that they are negative in character. As Laddie, Prescott and Vitoria observed[68]:
"Intellectual property is ... a purely negative right, and this concept is very important. Thus, if someone owns the copyright in a film he can stop others from showing it in public but it does not in the least follow that he has the positive right to show it himself."
In Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation[69], Windeyer J spoke of the essential nature of a copyright:
"It is not a right in an existing physical thing. It is a negative right, as it has been called, a power to prevent the making of a physical thing by copying."
To similar effect, in relation to patents, was the observation of Lord Herschell LC in Steers v Rogers[70], quoted with approval by the plurality in The Grain Pool of Western Australia v The Commonwealth[71]:
"The truth is that letters patent do not give the patentee any right to use the invention — they do not confer upon him a right to manufacture according to his invention. That is a right which he would have equally effectually if there were no letters patent at all; only in that case all the world would equally have the right. What the letters patent confer is the right to exclude others from manufacturing in a particular way, and using a particular invention."
[68]Laddie, Prescott and Vitoria, The Modern Law of Copyright and Designs, 4th ed (2011), vol 1 at 3 [1.1].
[69](1970) 121 CLR 154 at 167; [1970] HCA 36.
[70][1893] AC 232 at 235.
[71](2000) 202 CLR 479 at 513-514 [84]; [2000] HCA 14. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 220 per Brennan J; [1982] HCA 44 cited in The Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 514 fn 158.
The Commonwealth submitted that the property rights associated with the registered trade marks, design, patents and copyright asserted by JTI and BAT involve "a statutory assurance of exclusive use, not a positive right or authority to use." On that basis the imposition of restrictions on their use would take nothing away from the rights granted. Therefore, it was submitted, no property had been taken by the TPP Act. BAT stigmatised that argument as formalistic, observing that rights of exclusion are of the essence of all proprietary rights[72]. Plainly, not all property rights are defined only by rights of exclusion. In law the term "property" generally refers to "a legal relationship with a thing"[73] and in many cases is helpfully described as "a bundle of rights"[74]. However, BAT correctly submitted that rights to exclude others from using property have no substance if all use of the property is prohibited.
[72]Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17]-[18] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; [1999] HCA 53, citing Gray, "Property in Thin Air", (1991) 50 Cambridge Law Journal 252 at 299.
[73]Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17] per Gleeson CJ, Gaudron, Kirby and Hayne JJ.
[74]Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 230-231 [44]; [2008] HCA 7. See also White v Director of Public Prosecutions (WA) (2011) 243 CLR 478 at 485 [10] per French CJ, Crennan and Bell JJ; [2011] HCA 20; Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17] per Gleeson CJ, Gaudron, Kirby and Hayne JJ.

The Commonwealth's submission points to a characteristic of the plaintiffs' asserted rights which may be relevant in determining, inter alia, whether or not they can be said to have been the subject of acquisition in terms of any benefit that could be said to have accrued to the Commonwealth. That consideration does not involve an acceptance of the proposition that rights were not taken in the sense that JTI and BAT were deprived of their ability to enjoy the fruits of their statutory monopolies.
BAT complained of acquisition of its goodwill. The concept of goodwill as property, and its characterisation as property or a proprietary right, arise in different contexts, discussed at length in the joint judgment in Federal Commissioner of Taxation v Murry[75]. As their Honours pointed out[76]:
"Goodwill is correctly identified as property, therefore, because it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it." (footnote omitted)
Goodwill is derived from the use of the assets and other elements or attributes of a business. It may have different aspects or components corresponding to its sources. Goodwill derived from the use of a trade mark, registered or unregistered, or from a particular get-up, may be protected by an action for passing off. Lockhart J observed in Conagra Inc v McCain Foods (Aust) Pty Ltd[77]:
"It is now beyond argument that the plaintiff's right which the law of passing off protects is a proprietary right in the goodwill or reputation of his business likely to be injured by the defendant's conduct."
That cause of action serves the purpose, which is its "underlying rationale", of preventing commercial dishonesty[78].
[75](1998) 193 CLR 605; [1998] HCA 42.
[76](1998) 193 CLR 605 at 615 [23] per Gaudron, McHugh, Gummow and Hayne JJ.
[77](1992) 33 FCR 302 at 340.
[78](1992) 33 FCR 302 at 308.
It has rightly been said that "[t]here is no 'property' in the accepted sense of the word in a get-up"[79]. The rights associated with a particular get-up, which may also be viewed as a species of common law trade mark, are the rights to protect goodwill by passing off actions or the statutory cause of action for misleading or deceptive conduct where another has made unauthorised use of the get-up in a way which satisfies the relevant criteria for liability. The get-up rights asserted by JTI and BAT and the other non-statutory rights are, like their statutory equivalents, exclusive rights which are negative in character and support protective actions against the invasion of goodwill.
[79]Reckitt & Colman Products Ltd v Borden Inc (1990) 1 WLR 491 at 505 per Lord Oliver of Aylmerton; [1990] 1 All ER 873 at 885.
Whether there is an acquisition of property
Section 51(xxxi) embodies a constitutional guarantee of just terms "and is to be given the liberal construction appropriate to such a constitutional provision."[80] Broad constructions of "property" and "acquisition" were linked by Dixon J in the Bank Nationalisation case[81]. Section 51(xxxi) was said to extend to "innominate and anomalous interests" and to include "the assumption and indefinite continuance of exclusive possession and control for the purpose of the Commonwealth of any subject of property."[82] There is, however, an important distinction between a taking of property and its acquisition.
[80]Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; [1984] HCA 65; see also Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509 per Mason CJ, Brennan, Deane and Gaudron JJ; [1993] HCA 10; Minister for the Army v Dalziel (1944) 68 CLR 261 at 276 per Latham CJ; [1944] HCA 4; The Commonwealth v New South Wales (1923) 33 CLR 1 at 20-21 per Knox CJ and Starke J; [1923] HCA 34.
[81]Bank of NSW v The Commonwealth (1948) 76 CLR 1; [1948] HCA 7.
[82](1948) 76 CLR 1 at 349.
Taking involves deprivation of property seen from the perspective of its owner. Acquisition involves receipt of something seen from the perspective of the acquirer[83]. Acquisition is therefore not made out by mere extinguishment of rights. In an observation quoted and approved by the majority in Australian Tape Manufacturers Association Ltd v The Commonwealth[84], Mason J said in the Tasmanian Dam case[85]:
"To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."
Importantly, the interest or benefit accruing to the Commonwealth or another person must be proprietary in character. On no view can it be said that the Commonwealth as a polity or by any authority or instrumentality, has acquired any benefit of a proprietary character by reason of the operation of the TPP Act on the plaintiffs' property rights. In this respect I agree with the reasons of Gummow J[86] and the reasons of Hayne and Bell JJ[87].
[83]Georgiadis v Australian Overseas Telecommunications Corporation (1994) 179 CLR 297 at 304-305 per Mason CJ, Deane and Gaudron JJ, 315 per Dawson J, 320-321 per Toohey J; [1994] HCA 6.
[84](1993) 176 CLR 480 at 499-500 per Mason CJ, Brennan, Deane and Gaudron JJ.
[85]The Commonwealth v Tasmania (1983) 158 CLR 1 at 145; [1983] HCA 21.
[86]Reasons of Gummow J at pp 48-52 [144]-[154].
[87]Reasons of Hayne and Bell JJ at p 59-62 [180]-[189].
It may also be observed that the negative character of the plaintiffs' property rights leaves something of a logical gap between the restrictions on their enjoyment and the accrual of any benefit to the Commonwealth or any other person. Unlike the Newcrest case[88], there is no expansion in rights, interests, or benefits accruing to the Commonwealth that corresponds to or bears any relationship to the restrictions imposed on the use of the plaintiffs' intellectual property rights. The fact that the restrictions and prohibitions imposed by the TPP Act create the "space" for the application of Commonwealth regulatory requirements as to the textual and graphical content of tobacco product packages does not constitute such an accrual. Rather, it reflects a serious judgment that the public purposes to be advanced and the public benefits to be derived from the regulatory scheme outweigh those public purposes and public benefits which underpin the statutory intellectual property rights and the common law rights enjoyed by the plaintiffs. The scheme does that without effecting an acquisition.
[88]Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513.
In summary, the TPP Act is part of a legislative scheme which places controls on the way in which tobacco products can be marketed. While the imposition of those controls may be said to constitute a taking in the sense that the plaintiffs' enjoyment of their intellectual property rights and related rights is restricted, the corresponding imposition of controls on the packaging and presentation of tobacco products does not involve the accrual of a benefit of a proprietary character to the Commonwealth which would constitute an acquisition. That conclusion is fatal to the case of both JTI and BAT.
Conclusion
For these reasons, I joined in the orders made by the Court on 15 August 2012.
GUMMOW J. These cases in the original jurisdiction of the Court present challenges by the plaintiffs to the validity of the Tobacco Plain Packaging Act 2011 (Cth) ("the Packaging Act"). The plaintiffs invoke the restraint upon legislative power found in s 51(xxxi) of the Constitution. For the reasons which follow the challenges should fail and I joined in the orders pronounced on 15 August 2012.
That failure illustrates the propositions that s 51(xxxi) gives protection against acquisition of property without just terms but "not to the general commercial and economic position occupied by traders"[89] and that to treat this commercial and economic position as if it had a distinct proprietary character would be to repeat what in Truax v Corrigan[90] Holmes J identified in a similar context as the fallacy of "delusive exactness". His Honour said:
"Delusive exactness is a source of fallacy throughout the law. By calling a business 'property' you make it seem like land, and lead up to the conclusion that a statute cannot substantially cut down the advantages of ownership existing before the statute was passed. An established business no doubt may have pecuniary value and commonly is protected by law against various unjustified injuries. But you cannot give it definiteness of contour by calling it a thing."
[89]British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270 per Dixon J; [1949] HCA 44.
[90]257 US 312 at 342 (1921).
Previous federal legislation
Tobacco advertising is controlled by the Tobacco Advertising Prohibition Act 1992 (Cth), but s 9(2) thereof provides that words, signs or symbols that appear on a tobacco product or its packaging do not constitute a tobacco advertisement.
However, the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004[91] ("the 2004 Regulations"), made under the Trade Practices Act 1974 (Cth), require that a prescribed graphic health warning must cover at least thirty percent of the front surface of tobacco packaging and ninety percent of the back surface[92].
[91]Regulation SR 2004, No 264.
[92]Regulation 35(1), Sched 2, Div 2.1.1, Item 102A.
In respect of tobacco products to be supplied after 30 November 2012, the Competition and Consumer (Tobacco) Information Standard 2011 ("the 2011 Regulations"), made under the Competition and Consumer Act 2010 (Cth)[93], will require that a prescribed graphic health warning must cover at least seventy‑five percent of the front of the packet[94], and at least ninety percent of the back outer surface[95].
[93]Section 134 of Sched 2.
[94]2011 Regulations, Section 9.13(1).
[95]2011 Regulations, Sections 9.19, 9.20.
The prescribed health warnings include an invitation to call the "Quitline" service; the "Quitline" logo with the number "13 7848" is the registered trade mark, in respect of health educational services, of the Anti‑Cancer Council of Victoria.
Section 10 of the Packaging Act provides that the 2004 Regulations and the 2011 Regulations prevail to the extent of any inconsistency with the Packaging Act.
No challenge is made in these proceedings to the validity of the 2004 Regulations or the 2011 Regulations. What primarily is at stake is the utilisation of the remaining space on the front of tobacco packages for the display of trade marks and product get‑up without the restraints imposed by the Packaging Act.
The parties
In matter No S409 of 2011 ("the JTI Matter") the plaintiff, JT International SA ("JTI"), is incorporated in Switzerland. JTI is the registered owner of one trade mark and exclusive licensee of four trade marks, all registered under the Trade Marks Act 1995 (Cth) ("the TMA"). The registrations are in respect of tobacco products falling within class 34 of the international trade mark classification[96].
[96]World Intellectual Property Organisation, International Classification of Goods and Services for the Purposes of the Registration of Marks (Nice Classification), Pt 1, 10th ed (2011).
Registered trade marks numbers 339477 and 348139 have respective priority dates in 1979 and in 1980[97]. The earlier registration comprises "Camel" in fancy script and the latter "Camel" in plain script. Registered trade marks numbers 1276704 and 1351189 have later priority dates respectively in 2008 and 2010. The first of these trade marks uses the representation of "Camel" in fancy script, the subject of the 1979 registration, together with additional graphic material including a desert scene with a camel, palm trees and a pyramid. The most recent registration is a drawing of a camel in silhouette.
[97]Section 232 of the TMA repealed the Trade Marks Act 1955 (Cth), but s 233 rendered all marks registered in Part A or Part B of the old register, registered trade marks for the purposes of the TMA.
JTI is exclusive licensee of these four trade marks. JTI is registered owner of the remaining registration, number 1007693, which has a priority date in 2004, and comprises the words "Old Holborn" displayed upon what appears to be fancy packaging in the shape of a tobacco pouch. Tobacco products are distributed and sold in Australia in packaging featuring the registered trade marks and the brand names "Camel" and "Old Holborn".
In the second matter, No S389 of 2011 ("the BAT Matter"), the first plaintiff, British American Tobacco Australasia Limited ("BAT Australasia"), is a trading corporation, incorporated under the Corporations Act 2001 (Cth) ("the Corporations Act"); the second plaintiff, British American Tobacco (Investments) Limited ("BAT Investments"), is incorporated under the laws of England and Wales; the third plaintiff, British American Tobacco Australia Limited ("BATA"), is a wholly owned subsidiary of BAT Australasia and is a trading corporation, incorporated under the Corporations Act. BATA carries on the business of manufacturing or importing and of marketing, selling, distributing and displaying packets of cigarettes under the "Winfield" brand and the "Dunhill" brand. Since July 2010 BATA has sold in Australia hundreds of millions of packets of Winfield cigarettes and tens of millions of packets of Dunhill cigarettes.
BAT Australasia is the registered owner under the TMA of trade marks numbers 270845, 752287, 917043 and 1326870 ("the BAT Trade Marks"). All feature the brand name "Winfield" with additional material and are registered in class 34. The registration of the second and third of these trade marks bears endorsements as to colour. The trade marks were first registered respectively in 1973, 1998, 2002 and 2009.
The BAT Matter also involves other species of intellectual property. It is accepted by the Commonwealth that BAT Australasia is the owner of original artistic works pursuant to the Copyright Act 1968 (Cth) ("the Copyright Act") comprising the material (excluding health warnings) on the packaging for the products marketed as "Winfield Optimum Night", "Winfield Blue", "Winfield Red", "Winfield Silver" and "Winfield Gold" ("the BAT Copyrights").
BAT Investments is the owner of registered design number 323481 under the provisions of the Designs Act 2003 (Cth) ("the Designs Act"). The design ("the BAT Design") is registered with lodgment date of 31 October 2008, in respect of a "ribbed pack". The newness and distinctiveness of the design is said to reside in the features of shape and configuration of a ribbed pack illustrated in the representations accompanying the registration. BAT Investments also is grantee of Patent No 2001258572 under the Patents Act 1990 (Cth) ("the Patents Act") for an invention titled "Smoking article packaging" ("the BAT Patent") which claims a method of re‑sealing the contents in that packaging. The Dunhill branded cigarettes referred to above were sold in packaging which utilised the BAT Patent and applied the BAT Design.
The plaintiffs in both the JTI Matter and the BAT Matter assert common law rights of goodwill in the get‑up of their products in addition to their statutory rights.
The JTI Matter
JTI complains of the effect upon these trade mark registrations of the Packaging Act and of the Tobacco Plain Packaging Regulations 2011 ("the Packaging Regulations") made under the Packaging Act. JTI contends that the effect is, under pain of offence and civil penalty provisions contained in the Packaging Act, to require the elimination of all distinguishing features of its tobacco packaging and to permit, on the area of packaging remaining after the health warnings, the use only of the brand or business name or variant name (eg "Camel") in small plain font[98] against a background in a drab colour known as Pantone 448C[99].
[98]Regulation 2.4.1.
[99]Regulation 2.2.1(2).
JTI seeks declaratory relief that in its application to the JTI registered trade marks the Packaging Act (and thus the Packaging Regulations made thereunder[100]) is invalid. JTI also complains of the effect of the Packaging Act upon what it claims are its common law rights in the get‑up of its products. To the defence, in which the Commonwealth pleads that s 51(xxxi) is not engaged with respect to the Packaging Act, JTI pleads and demurs[101], and its demurrer is set down before the Full Court.
[100]Wotton v Queensland (2012) 86 ALJR 246 at 252‑253 [22]‑[23]; 285 ALR 1 at 8; [2012] HCA 2.
[101]As permitted by r 27.07.4 of the High Court Rules 2004.
On the hearing of the demurrer there were interventions by Queensland, the Northern Territory and the Australian Capital Territory. Each intervener supported the submissions by the Commonwealth as to the absence of any "acquisition" as required by s 51(xxxi).
The BAT Matter
By order of a Justice of this Court made on 28 February 2012 questions have been reserved for determination by the Full Court in the BAT Matter pursuant to s 18 of the Judiciary Act 1903 (Cth). The effect of Qu (1) is to ask whether all or some of the provisions of the Packaging Act result in an acquisition otherwise than on just terms of the BAT trade marks and the BAT Copyrights, the BAT Design and the BAT Patent, and the common law rights of BAT Australasia and of BATA. Question (2) asks whether the resolution of Qu (1) requires the determination at trial of any disputed facts. Question (3) assumes an affirmative answer to Qu (1). Question (4) raises the validity of s 15 of the Packaging Act; the text of s 15 is set out later in these reasons[102].
[102]At [97].
There were interventions in the BAT Matter by Philip Morris Ltd ("Philip Morris") and by Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Ltd (together "Van Nelle") in support of the plaintiffs and interventions in support of the Commonwealth by the Northern Territory and the Australian Capital Territory. The demurrer in the JTI Matter and the questions reserved in the BAT Matter were heard consecutively.
It is convenient to begin with some consideration of the relevant intellectual property legislation, beginning with the trade mark legislation.
The TMA
The issues which are presented in these cases respecting the "taking" and "acquisition" of proprietary interests are to be approached with an appreciation that trade mark legislation, in general, does not confer a "statutory monopoly" in any crude sense. Rather, the legislation represents an accommodation between the interests of traders, in the use of trade marks in developing the goodwill of their businesses and turning this to account by licensing arrangements, and the interests of consumers, in recognising trade marks as a badge of origin of goods or services and avoiding deception or confusion as to that origin[103].
[103]Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 65‑66 [42]; [2000] HCA 12; Health World Ltd v Shin‑Sun Australia Pty Ltd (2010) 240 CLR 590 at 599 [29]; [2010] HCA 13; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 348‑349; Mattel Inc v 3894207 Canada Inc [2006] 1 SCR 772 at 780, 788.
The term "trade mark" is defined in s 17 of the TMA as a "sign"[104] which is used or intended to be used to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. A trade mark must be capable of graphic representation (s 40).
[104]The term "sign" includes any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent, or any combination thereof (s 6(1)).

The Registrar is obliged by s 68 to register a trade mark which is accepted for registration and in respect of which there has been no successful opposition. A trade mark may be registered with limitations as to colour, in respect of the whole or part of the trade mark. Examples are the "Winfield" registration numbers 752287 and 917043. To the extent that a trade mark is registered without limitations of the exclusive right of use as to colour, the trade mark is taken to be registered for all colours (s 70).
Section 21 states that a registered trade mark "is personal property" and that equities in respect of it "may be enforced in the same way as equities in respect of any other personal property". It is important to note that a registered trade mark may be assigned or transmitted, with or without the associated goodwill and for all or some only of the goods or services for which it is registered (s 106). From the date of registration (s 20(3)), the registered owner is given by s 20(1) "the exclusive rights" (a) to use the trade mark and (b) to authorise others to do so, in relation to the goods or services in respect of which the trade mark is registered (emphasis added). Use by an authorised user is taken for the purposes of the Act to be a use by the owner (s 7(3)).
The exclusive right of use in respect of the goods or services for which there is a registration is given effect and extended by the infringement provision in s 120. Under the chapeau "When is a registered trade mark infringed?", s 120 gives three distinct answers. The first appears in sub‑s (1), the second in sub‑s (2), and the third in sub‑ss (3) and (4). Section 120, excluding the appended Notes, reads:
"(1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
(2)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(a)goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or
(b)services that are closely related to registered goods; or
(c)services of the same description as that of services (registered services) in respect of which the trade mark is registered; or
(d)goods that are closely related to registered services.
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
(3)A person infringes a registered trade mark if:
(a)the trade mark is well known in Australia; and
(b)the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(i)goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services); or
(ii)services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and
(c)because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and
(d)for that reason, the interests of the registered owner are likely to be adversely affected.
(4)In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason." (emphasis in original)
The remedies for infringement include an injunction and damages or an account of profits (s 126). An authorised user who brings an infringement action must join the registered owner as a defendant (s 26(2)).
Regulations made under the Act may provide that a specified sign is not to be used as a trade mark or as part of a trade mark; but the regulations may not affect an already registered trade mark (s 18).
A trade mark is subject to removal from the Register for non‑use, as provided in Pt 9 (ss 92‑105). In particular, s 92(4)(b) specifies a non‑use period of three years ending one month before the filing of the application for removal. Part 8, Div 2 (ss 85‑90) provides for rectification of the Register by curial order if a ground in s 87 or s 88 is made out. These grounds include the loss of distinctiveness after registration whereby the trade mark becomes the "generic" description or name of an article, substance or service (s 87) and the presence of circumstances at the time of the rectification application which made the use of the trade mark likely to deceive or cause confusion (s 88).
Threshold propositions
In oral submissions the Queensland Solicitor‑General submitted, essentially with the support of the Commonwealth Solicitor‑General, that, (i) absent some prohibitions elsewhere in the common law or in statute, there was at common law a freedom to use any word or device in association with the provision of goods or services, (ii) that common law freedom was not proprietary in nature, (iii) it was this common law freedom of traders, whether the plaintiffs or others, which the Packaging Act restricted, (iv) the "exclusive" rights of a registered owner identified in s 20(1) of the TMA, to use and to authorise use, were directed to the imposition in favour of the registered owner of a duty or obligation upon others, thereby restricting what otherwise was their freedom of use, (v) it was this right to exclude which constituted the personal property in a registered trade mark spoken of in s 21 of the TMA, (vi) the Packaging Act in no way impinged upon the rights of exclusion of others conferred by the TMA upon registered owners.
These propositions may be accepted, but, as will appear[105], are not decisive of the operation of s 51(xxxi) in the JTI Matter and the BAT Matter.
[105]At [79].
It also is true, as another threshold proposition, that while the TMA facilitates the exploitation of registered trade marks in trade and commerce, trade mark registration systems ordinarily do not confer a liberty to use the trade mark, free from what may be restraints found in other statutes or in the general law. The point was made with respect to the Trade Marks Act 1955 (Cth) by Deane J in New South Wales Dairy Corp v Murray Goulburn Co‑op Co Ltd[106] where he referred to:
"the availability of ordinary criminal or civil procedures to prevent dishonesty, fraud and passing‑off and by the fact that registration of a trade mark does not ordinarily constitute a licence for what would otherwise be unlawful conduct: see, eg, Lyle and Kinahan Ltd's Application[107]; Van Zeller v Mason, Cattley & Co[108]; and note the narrowness of the trade mark exception in s 51(3)(c) of the Trade Practices Act 1974 (Cth)".
[106](1990) 171 CLR 363 at 396‑397; [1990] HCA 60. See, further, Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 67 [45]; Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed (2012) at [100.540].
[107](1907) 24 RPC 249 at 262.
[108](1907) 25 RPC 37 at 41.
In particular, the TMA does not immunise the use of a registered trade mark from the law of passing‑off. Rather, s 230 makes special provision on the subject. The use of a registered trade mark may be enjoined at the suit of a third party who makes out a case of passing‑off; however, damages may not be awarded if the defendant was unaware of the plaintiff's common law rights and had no reasonable means of finding this out when the defendant began its activity and this activity ceased immediately upon the defendant becoming so aware.
But while all these threshold propositions should be accepted, they do not foreclose submissions that there has been a sufficient degeneration of property rights brought about by the Packaging Act to engage s 51(xxxi). Rather, the threshold propositions do not cover the relevant field of property rights.
The rights given to registered trade mark owners to assign their marks with or without goodwill, to license authorised users, and to bring proceedings against other parties for infringement may be of great commercial value. So also the generation of goodwill derived from the distinctiveness of the registered trade mark which flows from its use. It will be necessary shortly to return to these matters[109].
[109]At [88].
The Copyright Act, the Designs Act and the Patents Act
Much the same may be said of the other items of statutory intellectual property relied upon in the BAT Matter.
Copyright is "personal property" which is transmissible by assignment as provided in the Copyright Act and by will and by devolution by operation of law (s 196)[110]. Section 31(1)(b) of the Copyright Act specifies that copyright in relation to an artistic work is the exclusive right "(i) to reproduce the work in a material form; (ii) to publish the work; (iii) to communicate the work to the public". The effect of s 13(2) is that exclusive right includes the authorisation of another to do the acts specified in s 31(1)(b).
[110]The phrase "devolution by operation of law" refers to the legal consequences flowing from an involuntary act such as intestacy, insolvency and bankruptcy: O'Brien v Komesaroff (1982) 150 CLR 310 at 320‑321; [1982] HCA 33.
It is an infringement of the copyright in an artistic work, without the licence of the owner of the copyright, to do any of these acts in Australia or to authorise the doing of any of these acts in Australia (s 36(1)).
The Designs Act confers upon the registered owner of a registered design the "exclusive right" during the term of the registration, among other things, to make a product which embodies the design and to use such a product in any way for the purposes of any trade or business, and to authorise any person to engage in those activities (s 10(1)). These exclusive rights are "personal property" which are capable of assignment and devolution by will and by operation of law (s 10(2)). It is an infringement of a registered design, without the licence or authority of the registered owner, to engage in any activity in respect of which exclusive rights are conferred by s 10 (s 71). There are provisions for compulsory licences (s 90) and the revocation of registration after grant of a compulsory licence (s 92).
Section 13(1) of the Patents Act confers upon the patentee the "exclusive rights" to exploit the invention and to authorise that exploitation. These exclusive rights are "personal property" which are capable of assignment and of devolution by law (s 13(2)). The term "exploit" is defined as follows in Sched 1:
"exploit, in relation to an invention, includes:
(a)where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
(b)where the invention is a method or process – use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use."
Chapter 11, Pt 1 (ss 117‑123) makes detailed provisions for infringement. Chapter 12 (ss 133‑140) provides for compulsory licences and revocation if the reasonable requirements of the public with respect to the invention are not satisfied.
Conclusions respecting intellectual property legislation
The upshot is that (a) while the Commonwealth and supporting interveners are correct in their submissions that it would be wrong to approach the issues arising under s 51(xxxi) of the Constitution on the footing that registration under the TMA or the Designs Act, a grant under the Patents Act, or the subsistence of copyright, confers some unconstrained right to exploit those items of intellectual property or an immunity from the operation of regulatory laws, (b) that is not sufficient to dispose of the case presented for the application of s 51(xxxi).
The Packaging Act
The central provisions of the Packaging Act should now be indicated, with some reference thereafter to provisions thereof which deal with the intersection between that statute and the TMA and the Designs Act.
Chapter 3, Pt 2, Div 1 (ss 31‑36) of the Packaging Act creates a range of offences, with attached criminal and civil penalties. These offences include those for selling or supplying "tobacco products" in retail packaging which does not comply with a "tobacco product requirement" (s 31), purchasing such products other than for personal use (s 32), packaging such products for retail sale (s 33), manufacturing non‑compliant retail packaging of tobacco products (s 34) and manufacturing tobacco products that are so packaged (s 35). Part 2, Div 2 (ss 37‑39) creates offences with attached criminal and civil penalties for selling or supplying "tobacco products" which do not comply with a "tobacco product requirement" (s 37), purchasing such products other than for personal use (s 38), and manufacturing such products (s 39).
While Pt 2 of Ch 3 fixes upon "a person", Pt 3 of Ch 3 fixes upon the activities of "constitutional corporations"[111] but otherwise follows the scheme of the offences in Pt 2.
[111]This term means a corporation to which s 51(xx) of the Constitution applies (s 4(1)).
The term "tobacco product" is defined in s 4(1) so as to include processed tobacco and products of a non‑therapeutic nature which are manufactured to be used for smoking, sucking, chewing or snuffing. It includes cigarettes. The expression "tobacco product requirement" is central to the formulation of the offences created by Ch 3. The definition of that expression in s 4(1) refers principally to requirements which are specified in Ch 2, Pt 2 (ss 18‑29) or prescribed by the Packaging Regulations, which have been made under Ch 2, Pt 2. Accordingly, I now turn to Ch 2, Pt 2.
Section 18(1)(a) requires the outer surfaces of retail packaging not to have any decorative ridges, embossing, bulges or other irregularities of shape or texture. This would, it may be accepted, deny the application of the BAT Design. Regulation 2.1.1 of the Packaging Regulations requires that a cigarette pack not contain an opening, other than a fliptop lid, that can be re‑closed or re‑sealed after the opening is first opened. This, it may be accepted, denies the exploitation of the BAT Patent by the patentee or any licensee, as well as by an infringer.
No "trade mark" and no "mark" may appear anywhere on a "tobacco product" other than as permitted by the Packaging Regulations (s 26). The term "trade mark" is not defined and may be taken as including registered and common law trade marks. On the other hand, "mark" is defined in s 4(1) very widely so as to include "any line, letters, numbers, symbol, graphic or image". With respect to the appearance of trade marks upon retail packaging, the brand, business or company name for the tobacco products and any other trade mark permitted by the Packaging Regulations may appear, but otherwise no trade mark may appear (s 20(1), (3))[112]. No trade mark may appear on any wrapper (which must be plastic or otherwise transparent), other than as permitted by the Packaging Regulations (s 22). In the absence of other colour prescription by the Packaging Regulations, all outer and inner surfaces of the retail packaging of tobacco products, and both sides of any lining of a cigarette pack, must have a matt finish and be "drab dark brown", save for health warnings, requirements of other relevant legislation, and the brand, business or company name for the tobacco product (s 19).
[112]Section 20(3)(b) permits the appearance of "the relevant legislative requirements"; that term is so defined in s 4(1) as to include, in particular, the requirements of the 2004 Regulations and the 2011 Regulations.
Section 42(b) of the TMA requires rejection of an application if the use of the trade mark "would be contrary to law"; but s 28(2) of the Packaging Act stipulates that for the purposes of s 42(b) of the TMA the Packaging Act does not render the use of a trade mark contrary to law. Further, s 28(3) of the Packaging Act provides that the operation of that statute does not make it reasonable or appropriate not to register a trade mark, to impose conditions or limitations upon registration or to revoke its registration.
Section 29 of the Packaging Act provides that failure to utilise a registered design as a result of complying with the Packaging Act does not provide a basis for a compulsory licence under s 90 of the Designs Act or for revocation under s 92.
Section 15(2) of the Packaging Act is a distinct and important provision. It states that:
"if, apart from this section, this Act would result in [an acquisition of property from a person otherwise than on just terms] because it would prevent the use of a trade mark or other sign on or in relation to the retail packaging of tobacco products, or on tobacco products, then despite any other provision of this Act, the trade mark or sign may be used on or in relation to the retail packaging of tobacco products, or on tobacco products, subject to any requirements that may be prescribed in the regulations for the purposes of this subsection."
Section 15(3) confirms the continued operation of any tobacco product requirement that does not result in such an acquisition.
The plaintiffs in the BAT Matter challenge the validity of s 15(2). It is undoubtedly accurate to say that the Parliament may not confer upon courts exercising federal jurisdiction a choice as to the content of the law to be applied in adjudicating a "matter", if the result of doing so is that the Parliament has not made a law supported by a head of legislative power[113]. But s 15(2) is not of that character. Section 15(2) is a severability provision of a specific application but of the same genus as that of which s 15A of the Acts Interpretation Act 1901 (Cth) is another member. To apply s 15(2) would not be to "read up" the Packaging Act in the impermissible manner discussed in Pape v Federal Commissioner of Taxation[114].
[113]Western Australia v The Commonwealth (1995) 183 CLR 373 at 486; [1995] HCA 47; Momcilovic v The Queen (2011) 85 ALJR 957 at 1013 [169]; 280 ALR 221 at 280; [2011] HCA 34.
[114](2009) 238 CLR 1 at 93‑94 [248]‑[251]; [2009] HCA 23.
The issue on the demurrer and the questions reserved
The issue then posed by the demurrer and the leading questions reserved, in effect, is whether the tobacco product requirements of the Packaging Act do not amount to an "acquisition" of the property of the plaintiffs so that s 15(2) is not engaged. This presents two questions. The first is whether there is a "taking" or "deprivation" of the property of the plaintiffs and, if so, the second question is whether the Packaging Act effects an "acquisition" of property otherwise than on just terms as proscribed by s 51(xxxi) of the Constitution. The distinction between the two questions appears from the pithy statement of Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ[115] to the effect that rights of property may be extinguished without being acquired. The submissions of the plaintiffs, in some instances directly, and in others with more subtlety, sought to displace or diminish the importance of that second question. That attempt was contrary to established authority in this Court.
[115]R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; [1985] HCA 84.

The central question in the proceedings is whether the Packaging Act would result in an acquisition by the Commonwealth or any other person. The Commonwealth denies that this will occur, but its argument goes further. It contends that the Packaging Act is a law which, even if it has the effect of acquiring property, nevertheless stands outside s 51(xxxi). The argument the Commonwealth puts raises a number of questions.
The Commonwealth argues that there may be discerned a general approach to the characterisation of a law which infringes a constitutional limitation by which a court "may inquire into the proportionality of the means adopted by the law to achieve the postulated purpose or object"[470]. It says that the guarantee of just terms in s 51(xxxi) "invokes essentially the same method of analysis that is brought to bear on other constitutional guarantees" and refers to cases involving s 92[471], where the proportionality test of whether a legislative burden may be said to be reasonably necessary to the achievement of a legitimate, which is to say non-infringing, purpose is applied, and cases concerning the implied guarantee of freedom of political communication. In Rowe v Electoral Commissioner[472] I discussed some of these cases and the proportionality test applied in them.
[470]Cunliffe v The Commonwealth (1994) 182 CLR 272 at 324; [1994] HCA 44.
[471]North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 608; [1975] HCA 45, quoted in Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 477 [102]; [2008] HCA 11; see also Betfair Pty Ltd v Racing New South Wales (2012) 86 ALJR 418 at 444 [136]; 286 ALR 221 at 255; [2012] HCA 12.
[472](2010) 243 CLR 1 at 134-139 [436]-[455]; [2010] HCA 46.
The Commonwealth identifies a constitutional principle which is then said to apply. Stated shortly, it is that it is an acceptable justification for a law, such as will place it outside s 51(xxxi) and the requirement of just terms, that the acquisition of property is no more than a consequence or incident of a restriction on a commercial trading activity, where that restriction is reasonably necessary to prevent or reduce the harm that activity causes to public health.
The first question that the Commonwealth's argument raises is whether the cases relied upon, as evidencing the "general approach" to characterisation, may be explained upon the basis of a proportionality test. It may be accepted that s 51(xxxi) does not apply to every law providing for the acquisition of property[473]. However, it would not usually be said that a law providing for the sequestration of a bankrupt's property and the vesting of it in a trustee, an example often given of such a law[474], is a law to which s 51(xxxi) applies because its measures are reasonably necessary for the purpose of adjusting the claims of creditors. Acquisition of the debtor's property might be said to be incidental to that purpose, indeed so much so that the law's provisions respecting property have no independent character[475]. It may also be incongruous to characterise laws providing for exactions in the nature of penalties and forfeitures as providing for acquisitions of property[476]. But in neither case does characterisation depend upon notions of proportionality.
[473]Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 171 per Mason CJ.
[474]See Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 170 per Mason CJ, 188 per Deane and Gaudron JJ.
[475]Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 171.
[476]Theophanous v The Commonwealth (2006) 225 CLR 101 at 126 [60]; [2006] HCA 18.
This observation raises the question whether the principle for which the Commonwealth contends in truth involves a test of proportionality. It bears little resemblance to the tests of proportionality which are applied to the constitutionally guaranteed freedoms, and s 51(xxxi) may not require such a test.
A test of proportionality is necessary where a law purports to restrict constitutional freedoms, because although they cannot be regarded as absolute, the Constitution does not express the limits which may be placed upon them. Proportionality therefore tests the limits of legislative power. It proceeds upon an assumption that, given the existence of the freedom, the legislature could not intend to go further than is reasonably necessary in achieving the legitimate purpose of the law. Legislation which restricts a constitutionally guaranteed freedom within these bounds may therefore be said to be justified and not to infringe the freedom[477].
[477]Wotton v Queensland (2012) 86 ALJR 246; 285 ALR 1; [2012] HCA 2.
A test of proportionality necessarily looks to the measures employed, the level of the restriction they impose and the legislative purpose sought to be achieved, which is to say the proportion between means and ends. The test formulated by the Commonwealth would not undertake this analysis. It would merely say that an acquisition goes no further than reasonably necessary because it is incidental to its purpose of preventing public health. Most restrictions upon a freedom would qualify as incidental to a purpose, but they are not to be considered reasonably necessary on that account. To say that a restriction is "merely incidental" to a purpose is not a conclusion as to whether it goes too far in achieving its objects. It is to identify its connection to a purpose.
It might then be considered how a true proportionality test might be applied to s 51(xxxi), by analogy with the process undertaken respecting the constitutionally guaranteed freedoms mentioned.
First, it would be necessary to identify a freedom that is the subject of a constitutional guarantee. It might be said that s 51(xxxi) guarantees freedoms from acquisition other than on just terms, but this is to distort the notion of a constitutional freedom and detract from the true nature of the guarantee provided, which is directed to the provision of just terms[478]. Then there is an aspect of s 51(xxxi) which differs from s 92 and the freedom of political communication. Section 51(xxxi) contains its own limits and conditions. The requirement of just terms applies if the law is one which provides for the acquisition of property. That is the question to be addressed and it is not answered by a test of proportionality.
[478]Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276, 284-285; [1944] HCA 4; Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202; [1984] HCA 65; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509; [1993] HCA 10; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 184.
The Commonwealth's argument therefore elides two questions: that as to proportionality and that as to the characterisation of a law as providing for the acquisition of property.
On closer analysis, the Commonwealth's argument appears to rely simply upon the nature of the purpose pursued by the Packaging Act – the protection of public health – as justifying an infringement of s 51(xxxi) or setting the Packaging Act apart from it. This is borne out in part by the Commonwealth's reliance upon authority on the "takings clause" of the Fifth Amendment to the United States Constitution, which holds that a prohibition on the use of property which is declared by legislation to be injurious to the health, morals or safety of the community cannot be deemed a taking[479]. A more recent approach has been to examine the purposes and the magnitude or character of the burden imposed upon property rights[480], which looks more like a test of (strict) proportionality[481].
[479]Mugler v Kansas 123 US 623 at 668-669 (1887); Pennsylvania Coal Co v Mahon 260 US 393 at 417 (1922).
[480]Palazzolo v Rhode Island 533 US 606 at 633-634 (2001); Lingle v ChevronUSA Inc 544 US 528 at 542 (2005).
[481]Rowe v Electoral Commissioner (2010) 243 CLR 1 at 141 [460].
More directly, the Commonwealth's argument brings to mind an article of the Treaty Establishing the European Economic Community[482], by which prohibitions or restrictions on a freedom (relating to the movement of goods) may be justified, inter alia, on the ground of the protection of health. The article is strictly interpreted by the European Court of Justice so that a legislative measure may be justified only where the prohibition or restriction is reasonably necessary[483]. There is of course no similar provision in our Constitution.
[482](1957) 298 UNTS 11, Art 36. See also Treaty Establishing the European Community, OJ C 321E of 29 December 2006, Art 30; Treaty on the Functioning of the European Union, OJ C 83 of 30 March 2010, Art 36.
[483]Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein ("the Cassis de Dijon Case") (Case 120/78) [1979] 1 ECR 649.
What the Commonwealth's argument may really come down to is a proposition that some legislative purposes might justify infringement of, or the treatment of a law as standing apart from and not subject to the requirements of, s 51(xxxi). This is a large proposition, but one that it is not necessary to consider further. The fundamental question which arises from the Commonwealth's argument is whether the Packaging Act is to be characterised as one for the acquisition of property. Logically, the first question to be considered in that regard is whether it would have the effect of acquiring property. The answer to that question is determinative of these proceedings.
The plaintiffs' claims of property lost
In the BAT plaintiffs' statement of claim, BAT claims that the Packaging Act effects an acquisition of its property comprising its trade marks, copyright works and get-up, and BAT Investments claims that the Packaging Act effects an acquisition of its property comprising its registered design and patent. BAT and BATA also claim that there is an acquisition of property comprising goodwill associated with their other rights. JTI claims, as the relevant property lost, the registered trade marks of which it is the registered owner or exclusive licensee and the get-up in respect of which it claims to have rights of use.
Section 20(1) of the Trade Marks Act 1995 (Cth) ("the TMA") gives to the owner of a registered trade mark the exclusive right (a) to use the trade mark, and (b) to authorise others to do so, in relation to the goods or services in respect of which the trade mark is registered. Section 21 provides that a registered trade mark is personal property and that equities in respect of it may be enforced in the same way as equities in respect of other personal property. A trade mark may be assigned or transferred with or without goodwill and for all or some of the goods or services for which it is registered[484]. The TMA provides for when a trade mark may be said to be infringed[485], thus supporting the owner's exclusive rights in the use and authorisation of the use of the mark. It also provides for remedies for infringement[486].
[484]Trade Marks Act 1995 (Cth), s 106.
[485]Trade Marks Act 1995, s 120.
[486]Trade Marks Act 1995, s 126.
The Designs Act 2003 (Cth), the Patents Act 1990 (Cth) and the Copyright Act 1968 (Cth) provide, respectively, that a registered owner of a registered design, a patentee or an owner of copyright in an artistic work has the exclusive right to make a product embodying the design or to use such a product for trade or business[487]; to exploit an invention[488]; to reproduce the work[489]; to authorise others to do those things[490]; and to assign the property (which is personal property)[491]. Each of the Acts has provisions respecting infringement[492]. Plainly, therefore, each of the statutory intellectual property rights claimed by the plaintiffs is capable of transfer, assignment or licence. However, attention was directed in argument principally to the trade marks, no doubt because the prohibition upon their use has a greater impact upon the packaging of the plaintiffs' tobacco products.
[487]Designs Act 2003 (Cth), s 10(1).
[488]Patents Act 1990 (Cth), s 13(1).
[489]Copyright Act 1968 (Cth), s 31(1)(b).
[490]Designs Act 2003, s 10(1)(f); Patents Act 1990, s 13(1); Copyright Act 1968, s 13(2).
[491]Designs Act 2003, s 10(2); Patents Act 1990, s 13(2); Copyright Act 1968, s 196.
[492]Designs Act 2003, s 71; Patents Act 1990, ss 117-123; Copyright Act 1968, ss 36-39B.
Strictly speaking, the right subsisting in the owner of a trade mark is a negative and not a positive right. It is to be understood as a right to exclude others from using the mark[493] and cannot be viewed as separate from the trade in connection with which it is used. It is for the protection of that trade in goods that property is recognised in a trade mark[494].
[493]Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655 per Isaacs J; [1915] HCA 33; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 74-75 [65]; [2000] HCA 12.
[494]Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655.
The use of a trade mark and get-up in packaging is also likely to contribute to the goodwill of a business which distributes and sells tobacco products. Although goodwill is notoriously difficult to define[495], it may be said that central to the legal concept of goodwill is the attraction of custom[496]. Even if the modern view comprehends that anything which adds value to a business may be a source of goodwill[497], it continues to be described as the force which brings in custom and which must emanate from a source or sources[498].
[495]Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 519; [1992] HCA 3.
[496]Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 614 [20]; [1998] HCA 42.
[497]Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 235 per Lord Lindley, quoted in Box v Commissioner of Taxation (1952) 86 CLR 387 at 396-397; [1952] HCA 61, and in Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 613 [16].
[498]Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 224 per Lord Macnaghten; Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 613 [17], 615-616 [23]-[24].
It was acknowledged in Federal Commissioner of Taxation v Murry[499] that much goodwill may be derived from the use of trade marks, but it is not sensible to describe goodwill as composed of trade marks. It was said that it is more accurate to refer to goodwill as having sources than elements. There may be other sources of goodwill in the businesses of the BAT plaintiffs and JTI, including the method of operation of the business itself[500], but this is not to deny the importance of trade marks and get-up to the creation and maintenance of goodwill. Importantly for present purposes, goodwill is an attribute of a business, which is derived from using assets of a business or other sources within a business[501]. Whilst it has been recognised as property for so long that it cannot now be denied that it has that quality[502], as property it is "inherently inseverable from the business to which it relates."[503]
[499](1998) 193 CLR 605 at 616 [24].
[500]Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 616 [25].
[501]Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 615 [24].
[502]Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 617 [30] fn 44.
[503]Geraghty v Minter (1979) 142 CLR 177 at 193; [1979] HCA 42, quoted in Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 542 and Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 618 [30].
The inability to use a registered trade mark may result in it being lost. A trade mark may be subject to removal from the register in the event of non-use[504]. No doubt with this in mind, sub‑ss (1) and (4) of s 8 of the Packaging Act have the effect that an owner of a registered trade mark may not be subjected to an allegation of non-use of the mark arising by operation of the Packaging Act. This may be of little comfort to the plaintiffs. Whilst the Packaging Act is expressed not to render the use of a trade mark contrary to law for the purposes of s 42(b) of the TMA[505], it does not permit its use on the packaging of tobacco products.
[504]See Trade Marks Act 1995, Pt 9.
[505]Tobacco Plain Packaging Act 2011, s 28(2). Section 42(b) of the Trade Marks Act 1995 provides that an application for registration of a trade mark must be rejected if its use would be contrary to law.
As will be observed, the focus of the plaintiffs' arguments concerning acquisition shifted away from the property which they had identified in their pleadings as having been acquired. At the final point of their submissions, the property said to have been acquired was of quite a different nature.
Whether acquisition
A consideration of the practical and legal operation of the provisions of the Packaging Act is necessary where it is alleged that s 51(xxxi) has been infringed[506].
[506]Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 232 [49]; [2008] HCA 7.
The Packaging Act prevents BAT Investments from using the ribbed design on its packets and its patented method of sealing. Whilst that design and patent and the plaintiffs' trade marks are capable of acquisition, they have not been transferred to the Commonwealth or any other person, nor has the Commonwealth or any other person acquired any interest in them. Ownership of the trade marks and other intellectual property remains with the plaintiffs, albeit subject to severe restrictions on use. JTI submitted that the words of Rich J in Minister of State for the Army v Dalziel[507] are apposite and that it had been left with the "empty husk" of the rights in its trade marks. But it does not necessarily follow that there has been an acquisition within the meaning of s 51(xxxi).
[507](1944) 68 CLR 261 at 286.
Much debate has been generated in the past concerning the distinction between the regulation of proprietary rights and the taking of property, by reference to the takings clause of the Fifth Amendment to the United States Constitution[508]. But that clause has not been regarded as the source of s 51(xxxi) and the jurisprudence concerning takings has not been applied as relevant to its operation[509]. Dixon J said in Grace Brothers Pty Ltd v The Commonwealth[510] that s 51(xxxi) was provided as a specific power in the Constitution "not, like the Fifth Amendment, for the purpose of protecting the subject or citizen, but primarily to make certain that the Commonwealth possessed a power compulsorily to acquire property, particularly from the States. The condition 'on just terms' was included to prevent arbitrary exercises of the power at the expense of a State or the subject."
[508]As observed by Stephen J in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 414; [1979] HCA 47.
[509]The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 144 per Mason J; [1983] HCA 21. Although, it is noted, Stephen J in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 414-415 did consider that a passage from Corpus Juris Secundum, (1965), vol 29A, "Eminent Domain", §6 at 181-182, might be of guidance in the Australian context.
[510](1946) 72 CLR 269 at 290-291; but note earlier comments in Andrews v Howell (1941) 65 CLR 255 at 282; [1941] HCA 20.
The plaintiffs' arguments as to the effects upon the use of their property or the conduct of their businesses do not identify what is said to accrue to the Commonwealth or another. It may be accepted that some or much of the value of their intellectual property has been lost in Australia. A trade mark that cannot lawfully be used in connection with the goods to which it is relevant is unlikely to be readily assignable. The restriction on the use of the marks is likely to have effects upon the custom drawn to their businesses and upon their profits.

However, the mere restriction on a right of property or even its extinction does not necessarily mean that a proprietary right has been acquired by another[511]. The loss of trade or business does not spell acquisition. Although the protection afforded by s 51(xxxi) to the owner of property is wide, it is a protection directed to proprietary interests and not to the commercial position of traders[512].
[511]British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270-271; [1949] HCA 44; The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145, 181, 247, 283; R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; [1985] HCA 84; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 528; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 194.
[512]British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270.
The plaintiffs relied upon the decision in Dalziel. There, the Commonwealth did not take a transfer of the plaintiff's weekly tenancy in the property in which he conducted his business but, in the words of Rich J, it took "everything that made his weekly tenancy worth having"[513]. It was in this context that his Honour said that the plaintiff was left with "the empty husk" of his tenancy. His Honour's observation is understandable, for the Commonwealth seized the exclusive possession of the property for an indefinite period under the National Security (General) Regulations. It took all the rights of an owner in possession. This is not comparable with the position of the Commonwealth in this case.
[513]Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 286.
In the course of oral argument the plaintiffs shifted focus, to what was termed the appropriation by the Commonwealth of the space created on the packaging by the prohibitions and restrictions of the Packaging Act. Accepting that the prohibition of the use of property may not be sufficient to effect an acquisition, the BAT plaintiffs contended that the Commonwealth had gone further and taken control of the space itself. This assumption of control was said to be an indirect means of acquisition of the kind referred to by Dixon J in Bank of NSW v The Commonwealth ("the Bank Nationalisation Case")[514]. The control effected, combined with a denial of the plaintiffs' use, was said to result in a benefit to the Commonwealth.
[514](1948) 76 CLR 1 at 349.
In the Bank Nationalisation Case, provision was made by the Banking Act 1947 (Cth) to enable the Treasurer of the Commonwealth to set in motion machinery for the vesting of certain of the shares of the Bank of New South Wales (and other Australian private banks) in, and for replacing its directors with the nominees of, the Commonwealth Bank of Australia, which was then owned by the Commonwealth. The nominee directors were thereby provided with the entire conduct and management of the company, including the power to dispose of its business. As Dixon J observed, the legislation was aimed at enabling the Commonwealth Bank, by means of the nominees, to assume control of the business of the Bank of New South Wales, without invoking the power of compulsory acquisition[515].
[515]Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 344.
The legislation in the Bank Nationalisation Case did not transfer the business of the Bank of New South Wales to the Commonwealth or to its agent, yet it placed the Treasurer, through the nominee directors, in a position to do just that and at the same time deprived that Bank's own board of any control of the business. The effect, whilst not formally stripping the Bank of possession and control, was to deprive the Bank and its shareholders of "the reality of proprietorship"[516]. The legislation was regarded as "a circuitous device to acquire indirectly the substance of a proprietary interest"[517]. The Court would not permit the provision of just terms guaranteed by s 51(xxxi) to be avoided in this way.
[516]Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J.
[517]Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J.
The Bank Nationalisation Case is often referred to for what Dixon J said in relation to the notion of property for the purposes of s 51(xxxi)[518], but it seems to me that considerations of what might constitute an acquisition for the purposes of s 51(xxxi) were important to his Honour's decision. His Honour's emphasis upon the degree of control taken of the business of the Bank may be understood in this light. But the Bank Nationalisation Case cannot be compared with the operation and effect of the Packaging Act. The control it effects is in the form of prohibitions and restrictions on the use of marks and other distinctive features of packaging. It is not control effected with the clear purpose of, and only one step removed from, completing an acquisition of all the incidents of ownership. The Commonwealth obtains no such rights.
[518]To which reference is made at [366] below.
A closer analogy to the level of restriction placed upon the plaintiffs' use of the trade marks and other property is with restrictions which may be placed upon land for the purposes of town planning and other public purposes. Such restrictions, or even prohibitions, would not usually be said to result in an acquisition of land by a local authority. Even the sterilisation of land by regulation has not been said to have this effect[519].
[519]The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145-146 per Mason J, 181 per Murphy J; see also at 247-248 per Brennan J.
The plaintiffs further submitted that whilst the Commonwealth may not have acquired a proprietary interest, it had nevertheless benefited from the effects of the Packaging Act. More particularly, they relied on what was said by Deane and Gaudron JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth[520], that for there to be an acquisition "there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property."[521]
[520](1994) 179 CLR 155 at 185.
[521]Deane J had earlier used the phrase "identifiable and measurable advantage" in The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 283.
In my view, not too much should be read into their Honours' use of the words "relating to", as suggesting either that something less than an interest in the nature of property is necessary to be acquired for the purposes of s 51(xxxi), or that the "benefit or advantage" there spoken of need not have that quality. The statement followed upon their Honours' explanation that acquisition is required and that extinguishment, modification or deprivation is not sufficient. Their Honours had said that there must be an acquisition of property, a term which is to be understood broadly[522]. Moreover, in Georgiadisv Australian and Overseas Telecommunications Corporation[523], which was delivered on the same day as Mutual Pools, their Honours joined in a judgment with Mason CJ, which cited with approval what his Honour had said of s 51(xxxi) in TheCommonwealth v Tasmania (The Tasmanian Dam Case)[524], namely that:
"To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."
[522]Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 184-185.
[523](1994) 179 CLR 297 at 304; [1994] HCA 6.
[524](1983) 158 CLR 1 at 145.
This is not to say that the notion of property, for the purposes of s 51(xxxi), is not very wide. It must be in order that the objects of the provision can be achieved and compensation be provided for the taking of a State's or a person's interests. The term "property" in s 51(xxxi) is "the most comprehensive term that can be used."[525] Starke J said in Dalziel that for the purposes of s 51(xxxi), "property" extends to every valuable right or interest, including incorporeal rights[526], and in the Bank Nationalisation Case, Dixon J took Dalziel to mean that the term extended to "innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control"[527].
[525]The Commonwealth v New South Wales (1923) 33 CLR 1 at 20-21 per Knox CJ and Starke J; [1923] HCA 34, quoted in Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509.
[526]Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 290.
[527]Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349.
It is not necessary that a benefit or advantage, in the nature of property, which is received by or accrues to the Commonwealth or any other person correspond with what has been lost by the person claiming that there has been an acquisition otherwise than on just terms. Newcrest Mining (WA) Ltd v The Commonwealth[528] furnishes an example. There the mining company held interests in mining leases over land in the Northern Territory. The Commonwealth legislation in question prohibited the carrying on of operations for the recovery of minerals in Kakadu National Park, which came to cover the area of the mining leases. The advantages which accrued to the Commonwealth were the minerals freed from the rights of Newcrest to mine them, and the advantages which accrued to the Director of National Parks and Wildlife were the acquisition of the land freed from the rights of Newcrest to occupy it and conduct mining operations thereon[529].
[528](1997) 190 CLR 513; [1997] HCA 38.
[529]Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634.
In the case at hand, the benefit or advantage ultimately identified by the plaintiffs was the Commonwealth's ability to pursue and perhaps achieve the objectives of the Packaging Act, which were set out at the commencement of these reasons.
The control that the Commonwealth achieved over the space on the packaging, to which the plaintiffs referred, did not accrue to it a benefit or advantage other than the pursuit of its statutory objectives. The BAT plaintiffs' argument that the Commonwealth was saved the cost of acquiring the space for its own advertising takes the matter no further. It would not have had to pay for such advertising in any event, given that it could require warnings of any size to be displayed on the packaging.
It was also said that the Quitline service might be said to benefit from the provisions of the Packaging Act and the Packaging Regulations. It does not seem possible to identify a relevant benefit or advantage of a proprietary kind that has accrued to that service. Any increased promotion of the service, in part through the use of the Quitline marks, might result in its greater use, but this takes the argument no further than the possible attainment of the objects of the Packaging Act – to improve the health of present consumers of tobacco products by encouraging them to stop using these products.
The objects of the Packaging Act include the improvement of public health by discouraging persons from using tobacco products. The Packaging Act seeks to achieve that object by further reducing the attractiveness of the packaging of the products and the recall of brand name and other distinctive marks. Whether that object will be largely achieved cannot presently be known.
The Packaging Act and the Packaging Regulations, in conjunction with the 2004 and 2011 Information Standards, may be a rare form of regulation of the packaging of a harmful product, in that they require those distributing a product to place warnings on the product's packaging which might dissuade persons from using the product at all. However, the plaintiffs did not seek to argue that the measures were not appropriate to achieve the statutory objectives or disproportionate to them, or that the legislation was enacted for purposes other than those relating to public health. In the end result, their argument was only that the possible achievement of the statutory objectives of the Packaging Act was sufficient to amount to an acquisition for the purposes of s 51(xxxi). It is possible that there be a statutory objective of acquiring property, as there was in the Bank Nationalisation Case, but there is no such purpose evident in the present case. The central statutory object of the Packaging Act is to dissuade persons from using tobacco products. If that object were to be effective, the plaintiffs' businesses may be harmed, but the Commonwealth does not thereby acquire something in the nature of property itself.
Orders
As to the proceeding concerning the BAT plaintiffs, I agree with the answers to the questions reserved proposed by Gummow J, save that I would answer Question (4) "Unnecessary to answer".
As to the proceeding concerning JTI, I agree with the orders proposed by Gummow J.