Philip Morris USA (PM USA) filed lawsuits today in federal court against eight retailers selling counterfeit versions of the company's Marlboro(R) brand cigarettes in the New York City area.

"The New York metropolitan area is the most lucrative market in the U.S. for counterfeit and contraband cigarette smugglers," said Joe Murillo, Vice President and Associate General Counsel, Altria Client Services, speaking on behalf of PM USA. "The highest cigarette excise taxes in the nation ($6.86 per pack in federal, state and city taxes), fuel this illicit trade, making New York the largest market for counterfeit and contraband cigarettes in the country. New York State's lack of effective enforcement on cigarettes sold to Native American retailers, makes the already significant problems in the New York area worse," added Murillo.

These lawsuits are the latest in a series of filings by Philip Morris USA aimed at combating the sale of counterfeit cigarettes in New York. Since May 2009, Philip Morris has filed lawsuits against 47 retailers in New York for selling counterfeit Marlboro(R) brand cigarettes.

In a related case, PM USA sued Tammy's Smoke Shop, a smoke shop on the Poospatuck Indian Reservation on Long Island in the U.S. District Court for the Eastern District of New York. On July 19, 2010, the judge in that case determined that PM USA is entitled to $100,000 statutory damages for trademark infringement based on the sale of counterfeit Marlboro(R) brand cigarettes. The judge noted in the decision that "the record indicates there are numerous other cigarette sellers in defendants' vicinity on the Poospatuck Indian Reservation (PM USA has filed actions against other smoke shops on the reservation for alleged sale of counterfeit Marlboro(R) brand cigarettes), [and] there appears to be a real need to deter others from such insidious conduct."

"New York is slated to begin collecting excise taxes September 1st on cigarette sales by New York wholesalers to Native American retailers for sales to non-tribal consumers," Murillo explained. "Effective tax collection could help stabilize the legitimate cigarette distribution channel in New York, which is increasingly under attack from counterfeit and contraband cigarette smuggling," said Murillo.

In addition to violating trademark laws, counterfeit cigarettes are almost always sold without the appropriate federal and state excise tax. The counterfeit cigarettes purchased from the retailers named in today's suits bore no tax stamp or a counterfeit tax stamp. As a result, the applicable excise taxes were not paid.

(Market Watch, 27/07/2010)