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Philip Morris sues web smoke sites

Charges trademark violations and tax evasion

NEW YORK (CBS.MW) -- In a rare move to the plaintiff's table, food and tobacco giant Philip Morris USA has filed suit against a handful of online cigarette marketers, alleging trademark infringement and violations of federal law.

Early Monday, Philip Morris (MO : news , chart , profile ) said it had filed eight actions in federal district courts in New York and California. The actions charge that the defendants have "violated trademark and unfair competition laws by misusing Philip Morris USA's trademarks in an effort to attract Internet users to their websites."

Shares of Philip Morris were up 1 percent at $43.13 in Monday morning trading.

The sites targeted include cheapmarlboro.com, smokefarm.com, 18orless.com and freefags.com. Philip Morris claims its trademarks were "wrongfully used in Internet addresses, company names and promotional materials in violation of federal and state laws." The company said the sites had also broken various statutes about cigarette taxation and importation.

Philip Morris also said the vendors do not have "appropriate mechanisms" to verify the age of purchasers and could therefore harm efforts by public health groups, the government, and even the company itself, to prevent underage smoking.

"Philip Morris USA is committed to pursuing all available options to ensure that its products are sold in strict compliance with the law," said Jack Holleran, vice president of brand integrity. "We are also committed to taking appropriate action to protect our trademarks to ensure that adult smokers continue to receive the consistent high quality products they have come to expect from our brands."

Web sites selling cigarette are among the battered medium's few financial success stories. Operating from low-tax states, Indian reservations, or from overseas, web sellers can significantly undercut brick-and-mortar retailers by avoiding state taxes. Most of the sites named in the lawsuit are based in Europe.

Some sites have voluntarily complied with the company's request not to sell its products; others have ignored pleas. One site named in the suit -- 18orless.com -- is based in Switzerland sells a carton of Marlboro for $20, plus a couple bucks for shipping. That is less than half the price in most U.S. states.

These businesses operate in something of a legal gray area, but have begun to attract the notice of regulators and politicians. The sites have been around for years, but business has exploded recently with the imposition of a tax of $1.50 per pack in New York City. See full story.

Separately, on Friday Philip Morris and competitors, including R.J. Reynolds(RJR : news , chart , profile ) and the Carolina Group (CG : news , chart , profile ), got some bad news when a federal judge certified a new nationwide class action lawsuit against the industry. William Spain is a reporter for CBS.MarketWatch.com in Chicago.

Philip Morris also said the vendors do not have "appropriate mechanisms" to verify the age of purchasers and could therefore harm efforts by public health groups, the government, and even the company itself, to prevent underage smoking.

Can you believe this?  COULD THEREFORE HARM EFFORTS BY PUBLIC HEALTH GROUPS! 

I hate Phillip Morris.  Who the 'ell are they working for?  And the smokers are paying for this personal abuse.  This is mind boggling.

You don't suppose any government presure was applied here do you?

You don't suppose any government presure was applied here do you?

Something doesn't pass the "smell test" with this. PM is always helping "them" come after us! There is something in the wood pile and I don't think it's a chipmunk......

They're shooting themselves in the foot here.

Oh yeh. Help the states stick it to the smokers.
If I hadn't already started stuffing my own I'd be forced to start after THIS BS.
I used to smoke Marlboro mediums. If I still did I'd be forced to switch.
Phillip Morris can kiss am a$$.
Does anyone know what food products Phillip Morris puts out? I'd sure like to try to not buy them.

Does anyone know what food products Phillip Morris puts out? I'd sure like to try to not buy them.

I'd like to find out, as well, Joe. If 55 million smokers boycotted PM, it should put a little hurt on them, don't you think?

That statement they made about "hurting the health groups," really pissed me off.

I've go problem with them going after the internet suppliers that are infringing on their copyrights to brandnames and logos, particularly those that use brandnames in their web addresses.

Not that long ago an anti created a website using the PM name by adding an extra "L" to it. Protecting their name and brand names is in their best interest and I have nothing against it.



With that said - I am appalled they are attacking these sites because of tax issues. Had they done anything to protect their customers by fighting the HUGE tax increases the problem would not exist. They helped cause the problem and this is how they are trying to fix it??? I DON'T THINK SO.

As to the underage issue - I'm not sure where I stand about that, although I am sort of leaning toward their position, only because if they don'tdo something about it - the antis will blame the manufacturers for the shoddy business practice of others.

It's a complicated situation - but PM is just as culpable for causing the problems as are the antis and greedy money grubbing politicos.

They helped cause the problem and this is how they are trying to fix it??? I DON'T THINK SO.

Exactly. They fell to their knees in front of the Attorney Generals, and now they are back-tracking. They brought this all on themselves.

Let's not ever forget............

Does anyone know what food products Phillip Morris puts out?

Anything Kraft, Nabisco, Tombstone pizza - the list is endless. But I think all the brands are listed on the PM website.

I'm almost right there with you, Gabz. I'm not so pi$$ed about the brand name thing or the check age, but it really ticks me off when PM starts saying, "Hey, we're going to sue you if you don't charge state taxes or hand over the lists of buyers from each state."
That is going to set me off.

"Hey, we're going to sue you if you don't charge state taxes or hand over the lists of buyers from each state."

WHAT business is it of theirs about state taxes? And what's up with them taking the side of the health fanatics? Something doesn't ring true with this. Who REALLY owns Phillip Morris? The ANTI'S?

If PM is going to go after Internet sales, will the Reservations be far behind? If they are ripped because of taxes, will they be going after the Reservations next? Or try to?

That statement they made about "hurting the health groups," really pissed me off.

Me too, especially when you think of some of the food proucts they put out. You would think they would know better since they are being targeted next from the fat police.

I have a hard time with boycotting their food products, only because I believe in supporting local employers and Kraft is a major employer in my town.

I've also got a personal interest in it because if it wasn't for Walter Baker chocolate, my husband's father would never have been transfered here in the 60's and I would probably never have met my husband.

Baker's Chocolate, Jello, and Maxwell House coffee are also PM products.

It's the tax issue above everything that has my blood boiling.

It's the tax issue above everything that has my blood boiling.

And helping the Health Fanatics!! This really gets me going.

Bay State cigarette prices may become highest in US

This is in Mass when they raised the taxes so high. One rep from PM had the gall to say:

''It's a huge price increase for consumers,'' said Thomas Ryan, a spokesman for Philip Morris, the manufacturer of Marlboros.

See what I mean? PM talks out of both sides of their mouth.

I can tell you Phillip Morris pulls a lot of stunts from the retail level portion of it. They are the cig. Company that drives the car in the industry, and they are trying to outlaw ANY cig. signage and advertising because they know they are at the top. All the while the beer and alcohol signs are up everywhere. They have strong arm gestapo tactics with anyone who signs a contract with them. I don't know what is going on or where the industry is going, I just know people better start screaming NO!!

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