“Copyright infringement” and “Unfair competition”
A federal law, known as the Imported Cigarette Compliance Act of 2000, prohibits the importation of cigarettes into the United States bearing registered U.S. trademarks without the authorization of the trademark owner.
The absurd request of Big Tobacco
Philip Morris wanted Yesmoke to black out to American customers its online shop pages that offered Philip Morris products, just because they not destined by the manufacturer to his specific market. Yesmoke refused. The accusation is Copyright Offence and Unfair Competition.
There had always been rumours about “Mysterious” differences in the ingredients and in the taste of Marlboro cigarettes depending on the country where they were sold. Philip Morris believes it can use its customers as puppets, defining on the basis of top secret criteria, the greater or lesser dose of chemical cancer-inducing agents to serve to its worldwide smoker customers.
Moreover it was unreasonable to think that it must be the online sellers who had to disentangle themselves from the thousands of vetoes and prohibitions of manufacturers, to know which web page has to be censored for each specific country.
Prospects of progress
Mail-order sales, exalted and internationalised by the advent of electronic commerce, can improve the quality of life around the world, with the elimination of international boundaries (but not customs duties, of course).
So, we can all buy through email not only in our own country but also anywhere in the world. Today credit card payments can be made in any country regardless of the currency, and this has, in effect, abolished national commercial borders.
And it is based on these prospects of progress that the electronic commerce businesses reached stratospheric quotations on the market. See the 6 billion dollar quotation of Amazon.
- 23 June 2001: Philip Morris orders Yesmoke to stop selling Marlboros;
- 15 September 2001: the trial begins - Philip Morris accuses Yesmoke of “Unfair Competition” and “Copyright violation”;
- 29 January 2003: The first sentence is issued, Philip Morris wins on all points, but the American customs office and post office, not greatly concerned about Philip Morris’s “Copyright problems”, continue to deliver Yesmoke’s cigarettes to buyers;
- 3 August 2004: Philip Morris asks from Yesmoke 548 million dollars in damages;
- 12 November: The sale begins on the Yesmoke.ch site of the new “Yesmoke” cigarettes, made in Switzerland, the “Anti Big Tobacco” brand… and the site sells more Yesmokes than Marlboros;
- 16 November 2004: The J.F. Kennedy Airport of New York: an “Anti-contraband” Blitz - all the cigarettes are confiscated;
- 13 March 2005: The verdict - 548 million dollars, with the discount, it comes to 173 million…
Philip Morris won the lawsuit, but this did not stop Yesmoke
The sentence arrived on January 29th, 2003 and it was in favor of Philip Morris on all points. “Yesmoke must stop selling Marlboros”.
Both the USPS and the US Customs, in fact, didn't seem very much worried about the "Copyright" problems of the tobacco colossus and continued delivering cigarettes all over the United States.
In fact, in the home of the free market, U.S. federal law does not forbid citizens to import cigarettes for their personal use.
Besides, shipping cigarettes to the USA is legal, based on the Universal Postal Convention, dated September 15th, 1999. These provisions of international law have been ratified by the United States and by Switzerland and cigarettes are among the permitted products.
548 million dollars of “Damages of war”
Philip Morris, on the wave of its success in the lawsuit against Yesmoke, made another claim: 548 million dollars in damage compensation. In the history of United States legislation, this would have been the highest claim for damages for the alleged offence of Copyright Infringement and Unfair Competition.
548 million dollars was a disproportionate request that Yesmoke would never be able to pay. The judge, Gerard E. Lynch of the Southern District of New York, on March 11th 2005, lowered the sum to be paid to Philip Morris to only 173 million dollars.
For people following this battle in the news reports, there was nothing grotesque; the figures were normal: Yesmoke the "Tobacco Napster", was a company fighting against the "Mike Tyson" of the tobacco business. The mass media described the match, saying that Yesmoke had lost only by points.
The Big Tobacco attack – State by State
After winning the suit against Yesmoke for Copyright Violation and Unfair Competition, and after the victorious "blitz" at the JFK of New York, Big Tobacco decided to act State by State to make the Swiss invader pay.
It began in Oregon: the Attorney General Hardy Myer, on January 18, 2005, declares to the Associated Press that "Under the Imported Cigarette Compliance Act, approved by Congress in 2000, brand-name (Big Tobacco) cigarettes cannot be imported without permission from the manufacturer. Yesmoke is not just breaking the law in Oregon, they're breaking the law in many States, we are just the first to go after them".
For this reason, according to the Attorney General,, "the Oregon Tobacco Tax Compliance Task Force has aggressively investigated the illegal distribution of tobacco products via the Internet". Yesmoke's cigarette store has been charged also with: computer crimes, distributing cigarettes without a license, sales to minors, multiple allegations in violating federal law, by wire and mail fraud. These criminal charges are the first filed by a State Attorney General's office.
If all the American States took action against Yesmoke, the Swiss site could find itself with a record bill to pay of a billion dollars. A sum that everyone knows Yesmoke would not pay. To keep Yesmoke out of the States, in fact, 173 million dollars in damages will be sufficient; that sum will be fixed in the sentence of the State of New York, on March 10, 2005. In this way, the attack on Yesmoke of all the other States in the US would get lost along the way.
- Final judgment and permanent injunction – United States District Court - Southern District of New York, 10/03/2005
- Judgment for compensation of $ 173,734,291.62 – United States District Court - Southern District of New York, 11/03/2005
- A debut worth $548,900,000.00
- November 16, 2004 – JF Kennedy airport: Yesmoke under siege
- Oregon Attorney General Announces Indictment Of World's Largest Retailer Of Cigarettes On The Internet – Allamericanpatriots.com, 18/ 03/2005
- Net's top cigarette seller indicted on state charges – Bend.com, 18/03/2005
- Yesmoke like Cuban cigars?