[Intl-tobacco] Philip Morris Blocks Yesmoke From Sale Of Cigarettes in U.S.

[robert weissman]

Philip Morris Blocks Yesmoke From Sale Of Cigarettes in U.S.
Wall Street Journal

By MARTON DUNAI
Staff Reporter of THE WALL STREET JOURNAL
August 25, 2004; Page B2

In the latest step in the tobacco industry's attempt to stop Internet
sites from
selling cigarettes to U.S. customers, Philip Morris USA last week took
over the
online address of one of the largest Internet-cigarette vendors in the
world, Yesmoke SA of Switzerland.

The takeover follows a ruling by the U.S. District Court for the Southern
District
of New York in Manhattan that gave Philip Morris, a unit of Altria Group
Inc., the
rights to the domain name Yesmoke.com -- the Internet address of Yesmoke's
shop,
which has drawn millions of customers. The tobacco company had contended
that Yesmoke infringed its trademarks and followed unfair market
practices.

It isn't clear how effective the seizure of the domain name will be, as
Yesmoke
vowed to continue operating through a domain name registered in
Switzerland. Visitors to the Yesmoke.com address already are automatically
redirected to a Swiss
address, Yesmoke.ch, where the company continues to operate. "We are in
the process
of taking full possession of Web site, in accordance with the judge's
order," says
Brendan McCormick, a spokesman for Philip Morris USA

Yesmoke mails cigarettes globally. Customers pay as little as $15 a
carton, avoiding
most tariffs and taxes. "We already appealed, and we continue to sell
everywhere,
including in America," said Gianpaolo Messina, who owns and directs
Yesmoke SA with
his brother, Carlo.

The domain name at the center of the U.S. suit was registered in the U.S.
with
Network Solutions Inc., of Virginia, allowing the court to seize it.
Yesmoke SA has
30 days to appeal that seizure.

"We are pleased Judge Lynch has ordered...continued protection of our
trademark
rights," said Jack Holleran, Philip Morris USA's senior vice president of
compliance
and brand integrity. "We believe this will send a message to all Internet
retailers
who sell our products unlawfully."

The tobacco company started a litigation campaign against online retailers
almost
two years ago, initiating 20 lawsuits in seven U.S. courts against 67
owners and
operators of online smoke shops. It has been successful in every case that
has been
decided, including one in February 2003 against Otamedia SA, the previous
name of
Yesmoke. The Swiss company and its two Italian owners, ignored that court
order and
never stopped selling cigarettes in the U.S. The Messina brothers, who
also face a
$395 million damages claim in the same New York court by Philip Morris,
say they
sell this way because there are no rules against it.