What good is a logo?

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Australia, which has already banned the public display of tobacco products in retail outlets, wants to outlaw logos on cigarette packs and force them to be sold in plain dark-olive packaging, carrying health warnings instead of company logos. Cigarette brand names will appear on the packages in the same size and style of printing. The legislation, if passed by Parliament, would come into force in 2012.

“The forced removal of trade marks and other valuable intellectual property is a clear violation of the terms of the bilateral investment treaty between Australia and Hong Kong,” Anne Edwards, a spokeswoman for Philip Morris Asia, said in the statement. “We believe we have a very strong legal case and will be seeking significant financial compensation for the damage to our business.”

Questions:

1. How are trademarks valued?

2. Where do trademarks appear on the financial statements? Where will costs regarding this litigation be reported in the financial statements of Philip Morris?

3. Do you agree or disagree with Australia’s approach? Discuss.

Source:

Bloomberg News Staff. (2011). Philip Morris Sues Australia Over Cigarette Packaging. The New York Times, June 26 (Retrievable online at http://www.nytimes.com/2011/06/27/business/27tobacco.html?ref=business)