http://www.iht.com/articles/ap/2007/09/18/business/NA-FIN-US-Philip-Morris-Lawsuit.php
RICHMOND, Virginia: Philip Morris USA is suing two Internet-based cigarette vendors, alleging their operators are infringing on company trademarks by illegally importing Marlboros and other brands made for foreign markets and selling them in the United States.
"Philip Morris USA will protect our brands and the law-abiding businesses that sell them from unfair competition," Charlie Whitaker, the Richmond-based cigarette maker's vice president for compliance, said in a statement Tuesday.
Philip Morris USA, a unit of New York-based Altria Group Inc., filed the two lawsuits Monday against the operators of http://www.paylessmoke.com and http://www.cigmall.net, along with other related Web sites, in U.S. District Court for the Southern District of New York.
The lawsuits allege that the Internet sites are selling a variety of Marlboros, Parliament and Virginia Slims cigarettes that have been imported in violation of federal law, and in some cases their operators have made false statements on whether the sales are legal.
Over the last few years, the federal government and many state governments have increased taxes on cigarettes, raising their overall prices. So-called gray-market vendors typically import smokes intended for foreign markets and sell them to consumers more cheaply than domestic products because they're untaxed.
Cigarettes made and intended to be sold overseas are not subjected to the same quality-control measures as domestic cigarettes, and, as a result "may often be stale or otherwise inferior when the products reach U.S. consumers," the company said in both lawsuits.
"Consumers in the United States who purchase Philip Morris cigarettes intended for sale outside the United States are likely to be disappointed or confused by the differences between the illegally imported cigarettes and the products they have come to expect from Philip Morris USA," according to the complaints.
Philip Morris USA, the largest U.S. tobacco manufacturer, is asking the court in both cases to ban the Web site operators and affiliates from using Philip Morris trademarks, brands or logos, or advertising or selling imported Marlboros and other cigarettes. It also is asking for the Web site operators to turn over their profits from the illegal cigarettes, along with punitive damages and attorney's fees.
The complaints do not specify any dollar amount, and company spokesman David Sutton had no estimates. But Sutton said that the sites named in the complaints are among the highest-volume Internet cigarette vendors, according to online market researcher ComScore Inc., which estimated that the sites sell about 5.3 million cigarettes a month.
Philip Morris USA also alleges that the online cigarette vendors have failed to comply with U.S. laws that require Internet retailers to report all sales to the taxation authorities in purchasers' home states.
In the complaint against the operators of Cigmall Ltd., the cigarette maker alleges that the defendants reside or operate out of Russia, Moldova, Ukraine, Austria and the United Kingdom. The other complaint names Smartrade Ltd. and other defendants, and alleges Web site registrants have provided false or incomplete names and addresses.
"It's difficult to pin down where they are," Sutton said of the Web site operators.
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