UPDATE 1-Tobacco companies win partial legal victory in Canada

* Industry wants federal government added to two cases

* Cases deal with the health damages of smoking (Adds Canadian Cancer Society comment)

By Allan Dowd

VANCOUVER, British Columbia, Dec 8 (Reuters) - Tobacco makers being sued in Canada over the health risks of smoking won a partial victory with a ruling on Tuesday that the Canadian government's role in developing some strains of tobacco should be considered in the upcoming trial.

A divided British Columbia Court of Appeals panel overturned part of a lower court's ruling that the federal government could not be drawn in by the industry as a third party defendant in cases over the health costs associated with smoking and the promotion of "light" cigarettes.

The appeals panel, ruling on two related cases, said the government may have to share in any possible liability related to Agriculture Canada's role in the development of strains of tobacco used to make "light" and "mild" cigarettes.

The first case brought by the province of British Columbia seeks to collect damages from several cigarette makers and their international parents for the cost of treating smoking-related diseases.

The second case is a class-action by smokers against Imperial Tobacco, who allege they were mislead into believing that cigarettes labeled "mild" or "light" were safer to smoke than regular cigarettes.

The tobacco industry has long argued that government should share in any responsibility for damages because they were "partners" in the sale of tobacco by keeping it legal and collecting tax revenue from it.

"The B.C. decision will demonstrate that the government of Canada has known about the risks associated with smoking for decades and that it instigated and promoted the development and sale of lower-tar tobacco products." Imperial Tobacco's vice-president, Donald McCarty, said in a statement.

By adding the federal government as third party defendant to the cases, the industry can argue that Ottawa should share in responsibility for a portion of any damages awarded when the cases eventually go to trial.

The rulings, which divided the panel 3 to 2 in both cases, allowed portions of the industry's appeal.

The appeals panel let stand a portion of the lower court ruling that the federal government should not be considered liable for a failure as a regulator to adequately warn about the dangers of smoking.

An anti-smoking group said the industry did not get much of what it wanted, and the debate over tobacco strains was a "side show" to the main issue that the industry knowingly covered up the dangers of tobacco smoke.

"The industry's strategy has always been to blame someone else," said Rob Cunningham of the Canadian Cancer Society.

Several of Canada provinces have sued the industry for billions in damages, but the British Columbia case was the filed first and is being used as the lead case in the courts.

The British Columbia case, which is modeled on legal action by U.S. states against the industry in the United States.

In addition to British American Tobacco's (BATS.L) Imperial Tobacco Canada Ltd, the cases involve Rothmans Benson & Hedges Inc, Philip Morris International (PM.N) and Rothmans Inc, and JTI-Macdonald Corp, owned by Japan Tobacco Inc (2914.T). Japan Tobacco is not named as a defendant. (Reporting by Allan Dowd; editing by Carol Bishopric)