In the Land of Good Intentions

In the United States, the Fifth Amendment to the Constitution prevents government from taking property without just compensation. Courts have properly interpreted this as also precluding the government from taking action that destroys the value of property, including intangible property, without fair market compensation. In other words, the destruction of value through law without compensation is forbidden, regardless of whether or not the government actually seizes possession of anything.

Australia has a similar but more limited provision in its constitution, and Australia's Supreme Court has recently handed down a landmark ruling that it IS permissible for their government, through regulation, to destroy the value of property (in this case, intangible property) so long as the government isn't actually taking possession of the property.

Why would a government purposely destroy the value of property? Because, in this instance, we've travelled to the Land of Good Intentions.

You see, the property being destroyed in Australia belongs to tobacco companies-specifically, the value of their brands and trademarks. In order to discourage tobacco use, Australia passed a "plain packaging" law forbidding tobacco companies from using their logos, trademarks, and colors in the packaging of tobacco products. But this destruction of the value of trademarks and brands without compensation is okay, even though it clearly violates WTO rules and the Paris Convention, because Australian policy makers are in the Land of Good Intentions.

And now, despite WTO complaints filed against Australia by several countries, other nations, such as New Zealand, are considering their own plain packaging requirements.

Reducing deaths due to smoking is obviously a Good Intention, and there are many ways for governments to do it without violating treaties and destroying the value of trademarks and brands.

A traditional view of law and economics recognizes that property and other existing rights must be protected across the board, understanding that precedents protecting the currently disfavored ultimately protect us all.

But when policymakers travel to the Land of Good Intentions, protections can be easily cast aside, and precedents are set that weaken the rights of all.

So what does this mean for the trademarks of other products and services that might fall under the disfavor of future governments? If you sell something that might someday be viewed negatively, your rights are apparently not protected by law, but rather are subject to whatever breezes happen to waft through the Land of Good Intentions.