A federal appeals court Friday largely upheld a landmark ruling which found that the tobacco industry violated federal racketeering laws by engaging in a decades-long scheme to deceive the public about the dangers of smoking.

The court affirmed most remedies that a trial judge imposed against tobacco companies in 2006, which included restrictions on tobacco marketing and a requirement that the industry make corrective public statements about the health effects and addictiveness of smoking.

The appeals court, however, rejected the government's request for additional penalties against cigarette makers.

Among other things, the government and anti-smoking groups wanted to force the tobacco industry to fund a national smoking-cessation campaign.

The appeals court also affirmed an earlier ruling that the government could not obtain hundreds of millions of dollars in disgorgement from the tobacco companies.

In a unanimous 92-page ruling, the U.S. Court of Appeals for the District of Columbia Circuit said there was ample evidence to conclude that the tobacco industry intended to deceive the public about the dangers of smoking.

The court said the tobacco companies "knew about the negative health consequences of smoking, the addictiveness and manipulation of nicotine, the harmfulness of secondhand smoke, and the concept of smoker compensation, which makes light cigarettes no less harmful than regular cigarettes and possibly more."

The court also said the government had adequately proven that the tobacco industry was likely to commit future racketeering violations unless restrictions were imposed.

Defendants in the case included Altria Group Inc.'s (MO) Philip Morris subsidiary, Reynolds American Inc. (RAI), British American Tobacco PLC (BTI) and Loews Corp.'s (LTR) Lorillard Inc.

Murray Garnick, an Altria senior vice president, said the company disagreed with the ruling and would appeal it further.

"PM USA and Altria Group continue to believe that the court's conclusions are not supported by the law or the evidence presented at trial, and we believe the exceptional importance of these issues justifies further review," Garnick said.

A U.S. Justice Department spokesman said government lawyers were reviewing the decision.

In her 2006 opinion, U.S. District Court Judge Gladys Kessler ordered a variety of marketing, sales and advertising restrictions on the tobacco industry, including an order that barred cigarette makers from promoting brands as "light" or "low tar."

Kessler also required cigarette makers to issue corrective statements about the dangers of their products, which would appear on television, newspapers, product packaging and countertop displays in retail outlets.

The appeals court largely affirmed those remedies, though it said Kessler should reconsider her order on countertop displays to take into account the impact on retailers.

In rejecting the government's bid to have the industry fund a national smoking-cessation program, the appeals court said federal law gave the courts no power to order such a remedy.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com