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International Trade Commission Blocks Illegal Internet Cigarette Sales
Philip Morris USA prevails against overseas Internet cigarette sellers
RICHMOND, VA (September 24, 2009) - The International Trade Commission (ITC) took action this week to stop illegally imported Marlboro®, Virginia Slims® and Parliament® cigarettes from entering the United States. The ITC issued a General Exclusion Order requiring U.S. Customs and Border Protection (CBP) to deny entry of these illegal goods, which infringe on Philip Morris USA's (PM USA) trademarks.
"We're pleased that the ITC has granted the General Exclusion Order, which should be a helpful tool for law enforcement in addressing illicit Internet cigarette sales and reinforces that preventing these imports is a priority," said Joe Murillo, vice president and associate general counsel, Altria Client Services, speaking on behalf of Philip Morris USA.
In March 2008, PM USA filed a complaint with the ITC to stop foreign-based Internet sellers from selling cigarettes bearing PM USA's trademarks in violation of section 337 of the Tariff Act of 1930. In the complaint, PM USA named 13 respondents who operate web sites and identified an additional 177 sites which sell to U. S. consumers Marlboro® and other PM USA brand cigarettes intended for sale overseas. The ITC instituted an investigation and an administrative law judge subsequently determined the foreign Internet sellers are unlawfully importing cigarettes into the U.S. As a result, the commission ordered CBP to stop all infringing cigarettes from entering the U.S. The order applies to all Marlboro®, Virginia Slims® and Parliament® branded cigarettes sold by the named Internet sellers and any other Internet sellers engaged in this activity.
PM USA has worked together with law enforcement, legislators and others in government to address the numerous problems caused by illegal Internet cigarette sales. These sales frequently do not occur where there is reliable age verification, such as in face-to-face transactions. Internet cigarette sales also often violate trademark laws; typically evade applicable taxes, depriving governments of millions in revenues; and can mislead consumers about their tax obligations.
Since 2002, PM USA has sued the owners/operators of 99 foreign-based Internet cigarette sellers resulting in the discontinuation of 82 sites. PM USA's actions, together with efforts by many in law enforcement and other government agencies, have helped curtail the volume of illicit Internet cigarette sales in recent years. Despite these actions, the volume of cigarettes purchased from Internet sellers remains large. According to market research studies commissioned on behalf of PM USA, the company estimates more than 800 million cigarettes were sold to U.S. consumers by Internet sellers in 2008.
To help put an end to illegal Internet cigarette sales once and for all, PM USA has been a strong supporter of H.R. 1676 and S. 1147, the companion bills known as the Prevent All Cigarette Trafficking Act of 2009 (the "PACT" Act). The PACT Act, which passed the U.S. House of Representatives with overwhelming bipartisan support in May 2009, is intended to prevent tax-evading sales of cigarettes and smokeless tobacco by remote sellers who operate via the Internet, mail or phone.
"The PACT Act is the result of years of bipartisan discussion and represents a real opportunity to address the problems caused by illegal Internet cigarette sales," Murillo said. "We applaud its sponsors for their efforts and encourage the Senate to take swift action."
If enacted, the PACT Act would make it a felony if appropriate state taxes on cigarettes and smokeless tobacco are not paid. It would also limit underage access to cigarettes and smokeless tobacco products by requiring remote sellers to establish age verification processes; prohibit remote sellers from shipping cigarettes and smokeless tobacco products through the U.S. Postal Service; and place significant restrictions on other package delivery carriers.
Philip Morris USA is an operating company of Altria Group, Inc. (NYSE: MO).
