Replies

More in-depth:

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.

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.