"The reason that we filed (the suit) is that if you can't show your products in stores, which is the case in Norway now, clearly it becomes pretty difficult to compete in the market ... with what in the end is a legal product," company spokeswoman Anne Edwards told AFP.
The case opened in the Oslo district court Monday and is set to last through June 13th.
Following in the footsteps of several other countries such as Ireland and Iceland, Norway in 2010 banned the display of cigarettes in stores in an attempt to cut impulse buys of tobacco products.
Cigarettes were banished to closed cases and cigarette dispensers do not show brand labels.
Philip Morris filed its lawsuit in March 2010 claiming the display ban was a violation of European Economic Area (EEA) rules and the Oslo district court requested an advisory opinion from the European Free Trade Association (EFTA) court before hearing the case.
That court said last September that the display ban could to a certain extent be seen as blocking the free movement of goods, thus violating EEA rules.
It also pointed out that Norway's aim to reduce tobacco consumption was in line with EEA regulations, thus leaving the final conclusion up to the Oslo court.
"The prevention of smoking is clearly the most important single initiative when it comes to preventing cancer and a number of other illnesses," said Anne Lise Ryel, who heads the Norwegian Cancer Society, which is representing Norwegian authorities in the case.
"The ban on displaying tobacco in stores is an effective initiative to reduce tobacco use because it blocks a normalisation of tobacco products, protects children and young people from marketing of tobacco products, reduces the risk of relapses for former smokers and avoids impulse buys," she told public broadcaster NRK.
Philip Morris meanwhile disputes the fact that the display ban has had an impact on tobacco consumption.
"What you have is a ban that is very restrictive on competition and at the same time there's been no impact on consumption," insisted Edwards, maintaining that Norway instead had seen a hike in "illegal and non-duty paid cigarettes.
"We think we have a good case, otherwise we would not have filed it," Edwards added.