Posted on 09/23/2002 3:11:13 PM PDT by GeneD
NEW YORK - Philip Morris wants to black out the online gray market for smokes. Only problem is, the company is tilting at ghosts.
On Sept. 19, Philip Morris USA, a division of Philip Morris, filed eight lawsuits in New York and California against Web sites Dfshop.org, cheapmarlboro.com, smoke.shop4all.net and others for the illegal sale of foreign-made cigarettes to United States and Canadian consumers. The company is also suing over trademark infringement and false claims that the sites make about the legality of their sales.
In two complaints released by Philip Morris, the company names defendants with WHOIS-registered addresses in Spain, Russia and Switzerland. But its efforts to contact the offending businesses has turned up empty, as did our own attempt to contact the defendants by e-mail.
The company says that these lawsuits are about brand and consumer protection. "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, a vice president for brand integrity, in a news release. A company spokesman also said that improper taxation and restricting youth access to online sales are broader issues that Philip Morris is addressing.
The offending Web sites sell gray market cigarettes, defined as the domestic sale of smokes made in the U.S. and labeled for export or those made internationally and shipped into the country. This is the company's first action against an online vendor for gray market sales. Competitor R.J. Reynolds Tobacco is currently engaged in a similar suit against Benicia, Calif.-based Cigarettes Cheaper. The company alleges that Cigarettes Cheaper is selling Camel and Winston brands produced overseas by Japan Tobacco. That case will be heard in Chicago early next year. The company has not yet taken any specific action regarding online vendors.
According to Philip Morris, there are more than 600 Web sites peddling tobacco and about 1% of smokers with Internet access have recently purchased online. In New York, a state with some of the higher tax rates, that figure jumps to 5% and looks to move higher given the recent hike in cigarette taxes in New York City. As of 2000, the Centers for Disease Control and Prevention estimated that there were 46.5 million adult smokers in the United States.
Even as big tobacco continues to be sued and chastised for misinformation on the health hazards of its products, it is now venturing into an alternately hazardous netherworld of Internet trade and regulation. E-commerce has had the major record labels scrambling to win back evaporating sales, usurped by music-swapping services like KaZaa and post-Napster ilk. The borderless Web also left U.S. legislators in a bind when trying to work up law on Internet taxation.
By filing the suit, Philip Morris is enlisting the help of U.S. federal and state officials to curb illegal online sales. But even if the company or its competitors achieve their goal of shutting down the rogue sites, chances are that ten more will pop up for every one shut down.
Looks like the prevailing champions of consumer misinformation are up against a formidable and elusive opponent: The viral proliferation of sin and vice through modern technology.
Improper taxation? Who are they to worry about taxes? And the lawmakers bumped up the taxes on cigarettes so high, a lot of smokers HAVE gone to the Net to be able to afford them.
Youth access? What parent is going to give their CC to their teens to buy cigarettes online? And if they do, who's business is it? PM is biting off the hands that fed it to make it the Empire it is today. Pity.
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