By David Ingram and Anna Yukhananov

WASHINGTON (Reuters) - A U.S. appeals court on Friday struck down a law that requires tobacco companies to use graphic health warnings, such as of a man exhaling smoke through a hole in his throat.

The 2-1 decision by the court in Washington, D.C., contradicts another appeals court's ruling in a similar case earlier this year, setting up the possibility the U.S. Supreme Court will weigh in on the dispute.

The court's majority in the latest ruling found the label requirement from the U.S. Food and Drug Administration violated corporate speech rights.

"This case raises novel questions about the scope of the government's authority to force the manufacturer of a product to go beyond making purely factual and accurate commercial disclosures and undermine its own economic interest -- in this case, by making 'every single pack of cigarettes in the country mini billboard' for the government's anti-smoking message," wrote Judge Janice Rogers Brown of the U.S. Court of Appeals for the District of Columbia Circuit.

The FDA "has not provided a shred of evidence" showing that the graphic labels would reduce smoking, Brown added.

Her opinion largely echoed the complaints of five cigarette companies, including Lorillard Inc (LO) and Reynolds American Inc (RAI), that challenged the rules.

The FDA has argued the images of rotting teeth and diseased lungs are accurate and necessary to warn consumers -- especially teenagers -- about the risks of smoking.

The health agency was not immediately available to comment after Friday's ruling. The U.S. Department of Justice, which argued the case for the FDA, said it needs to review the ruling before deciding on next steps.

The Campaign for Tobacco-Free Kids, which has vigorously supported stricter cigarette laws, urged the government to appeal.

"Today's ruling is wrong on the science and law, and it is by no means the final word on the new cigarette warnings," said Matthew Myers, the group's president, in a statement.

Youth Epidemic

The Centers for Disease Control and Prevention estimates some 45 million U.S. adults smoke cigarettes, which are the leading cause of preventable death in the United States. And the World Health Organization predicts smoking could kill 8 million people each year by 2030 if governments do not do more to help people quit.

The U.S. Surgeon General warned in March that youth smoking has reached epidemic proportions, as one in four U.S. high school seniors is a regular cigarette smoker, paving the way to a lifetime of addiction.

Congress passed a law in 2009 that gave the FDA broad powers to regulate the tobacco industry, including imposing the label regulation. The law requires color warning labels big enough to cover the top 50 percent of a cigarette pack's front and back panels, and the top 20 percent of print advertisements.

The FDA released nine new warnings in June 2011 that were meant to go into effect this September, the first change in U.S. cigarette warning labels in 25 years. Cigarette packs already carry text warnings from the U.S. Surgeon General.

But the ruling against the FDA means tobacco companies will likely not have to comply with the requirements for now, especially given divergent court rulings.

The U.S. Appeals Court for the 6th Circuit, based in Cincinnati, upheld the bulk of the FDA's new tobacco regulations in March, including the requirement for warning images on cigarette packs.

Most countries in the European Union already carry graphic images to illustrate the health risks of smoking. Earlier this month, Australia took a further step to limit smoking advertising by banning company logos on cigarette packs, and the EU said it was considering a similar ban.

(Reporting by David Ingram and Anna Yukhananov; Editing by John Wallace, Lisa Von Ahn and Tim Dobbyn)

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Next, it will be anything that has sugar in it.
Then caffeine. Then cheese?? When will it stop?

August 28 2012 at 7:49 AM Report abuse rate up rate down Reply

If this passes, then they better start putting pictures of kidney stones on soft drink bottles and diseased hearts on eggs and pizza boxes, and liver damage on beer cans. When will it ever end? Cigarettes are bad, the sun is bad, sugar is bad. OK we get it....after you balance the budget, bring our troops home from wars we can't afford and straighten out the economy, then let's worry about petty things like smoking. All this talk about "helping people quit"...if they wanted to quit they would not light the next one. Also, the government cannot guarantee that every smoker will die of smoking related issues. We could be in a car accident tomorrow, probably from someone texting. I'm not going to quit smoking because there is an ugly picture on the box, I'll just cover the there!

August 28 2012 at 1:20 AM Report abuse rate up rate down Reply

Warning on cigarette packs mean litle to nothing really. On the other hand, educating people as to exactly how smoking effects and harms the various body organs, especially the lungs, heart and the brain, will be a great motivator to stop smoking.... This is exactly what motivated me to stop on 1 July 1964 after two packs a day and twelve years of smoking. Now at 73, I look back on my childhood buddies that couldn't kick the habit... Virtually all are now deceased. Make no mistake, cigarettes will diminish the quality.... and almost certainly, shorten one's life. But then, so will a whole host of other things.

August 28 2012 at 1:08 AM Report abuse rate up rate down Reply

I smoke. I know it is not good for me but it is my choice. If I wanted government to regulate everything then make people lose weight. Obesity is worse than cigarette smoking. Everything is a personal choice. Do we really want to give up our freedoms to the government?

August 27 2012 at 11:48 PM Report abuse rate up rate down Reply

Good decision. Watch out, people: when the government can protect us from ourselves (and we're on the brink), we are done with freedom. Period. The bar has become far too low for restricting freedom for the 'common good'.

August 27 2012 at 11:38 PM Report abuse rate up rate down Reply

The anti-tobacco fanatics are getting bolder and bolder. Will Turner Classic Movies be outlawed because of the smoking that commonly occurs in movies made in the 30's, 40's and 50's? What about old TV re-runs? I see more despotism just around the corner....

August 27 2012 at 11:19 PM Report abuse rate up rate down Reply

Big pork need their $ fix selling cancer "Styx"....Legalized suicide.
Courts been bought?

August 27 2012 at 10:28 PM Report abuse -1 rate up rate down Reply

Finally the voice of reason and common sense.

August 27 2012 at 10:16 PM Report abuse rate up rate down Reply

The bottom line is that they spend billions of dollars every year on cancer research but very little money on helping smokers quit. The drugs that they like to say help often cause health problems for the smoker and many insurance agencies won't cover the cost ot them anyway. It is an addiction and smokers know it is unheathly for them but like any addiction knowing this and doing something about it is another story.....and don't say they don't want to quit or that they should just do it. Lets put some money into finding a better way to help them fight the addiction and stop standing in judgement of them.

August 27 2012 at 9:13 PM Report abuse rate up rate down Reply

I wonder how many people in our Government that is Pushing the Smoking Ban, Smokes?
If a Kid wants to Smoke, He/she will do it Regardless of what kind of Law the Government passes.
If these Little goody two shoes that got this Smoking Ban Started don't like smoking, Stay away from it.
People that Smoke have just as Much Legal Rights as People that don't Smoke.
I'm going to Smoke, And I don't Care what kind of Law our Crooked Government Passes.

August 27 2012 at 8:40 PM Report abuse +1 rate up rate down Reply