The ruling said manufacturers must change the way they market cigarettes. It bans labels such as "low tar," "light," "ultra light" or "mild," since such cigarettes have been found to be no safer than others because of how people smoke them.
It also says the companies must publish "corrective statements" on the adverse health effects and addictiveness of smoking and nicotine.
The changes have not taken affect while the case has been under appeal.
Throughout the 10 years the case has been litigated, tobacco companies have denied committing fraud in the past and said changes in how cigarettes are sold now make it impossible for them to act fraudulently in the future.
The government filed the civil case under a 1970 racketeering law commonly as RICO used primarily to prosecute mobsters in cases in which there has been a group effort to commit fraud.
The suit was first filed in 1999 during the Clinton administration. The Bush administration pursued it after receiving early criticism for openly discussing the case's perceived weaknesses and attempting unsuccessfully to settle it.
During the nine-month bench trial, U.S. District Judge Gladys Kessler heard accusations that the companies established a "gentleman's agreement" in which they agreed not to compete over whose products were the least hazardous to smokers. That was to ensure they didn't have to publicly address the harm caused by smoking, government lawyers said. Tobacco lawyers denied the contention.
The defendants in the lawsuit were: Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A.; and the now-defunct Tobacco Institute.
Liggett was excluded from the ruling because the judge said the company came forward in the 1990s to admit smoking causes disease and is addictive and cooperated with government investigators.
The appeals court ruled that the Counsel for Tobacco Research-U.S.A. and Tobacco Institute be dismissed from the suit. Both are trade organizations for the cigarette manufacturers, but they did not manufacture or sell tobacco products.
The companies had no immediate response to the appeals court decision.
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