Starting in December, packs will instead come in a uniformly drab shade of olive and feature graphic health warnings and images of cancer-riddled mouths, blinded eyeballs and sickly children. The government hopes the new packs will make smoking as unglamorous as possible.

"Many other countries around the world ... will take heart from the success of this decision today," Attorney General Nicola Roxon told reporters after the court ruling.

"Governments can take on big tobacco and win and it's worth countries looking again at what the next appropriate step is for them," she added.

British American Tobacco, Philip Morris International, Imperial Tobacco and Japan Tobacco International are worried that the law will set a global precedent that could slash billions of dollars from the values of their brands. They challenged the new rules on the grounds that they violate intellectual property rights and devalue their trademarks.

The cigarette makers argued that the government would unfairly benefit from the law by using cigarette packs as a platform to promote its own message, without compensating the tobacco companies. Australia's constitution says the government can only acquire the property of others on "just terms."

The court, which ordered the tobacco companies to pay the government's legal fees, withheld its reasons for the judgment on Wednesday. They'll be released later this year.

Philip Morris said it would continue to pursue compensation through the terms of a bilateral investment treaty between Australia and Hong Kong.

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