Implications of the WTO Protections for Food Geographic Indications
I. Introduction
While it may seem strange for an agreement on intellectual property rights to affect food products, this is indeed the case with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights(1). TRIPS, signed on January 1, 1995, provides minimum standards for the protection of certain intellectual property types and the enforcement of intellectual property rights. Among the types of intellectual property protected by TRIPS are names of particular food products associated with specific geographic places ("Food Geographic Indications"). The assignment of intellectual property right to Food Geographic Indications means that TRIPS increasingly may become a factor in agricultural trade disputes. (TRIPS)
II. TRIPS Standards
TRIPS is based largely on two prior international conventions: (1) the Paris Convention for the Protection of Industrial Property (Paris Convention) and (2) the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention). Paris Convention Article 1(3) defines industrial property to include "all manufactured or natural products, for example, wines, grain, tobacco leaf, fruit, cattle, minerals, mineral waters, beer, flowers, and flour." Paris Convention Article 1(2) provides that the protection provided for industrial property includes "indications of source or appellations of origin." Thus, TRIPS continues a standing tradition of protecting Food Geographic Indications.
Section 3 of TRIPS contains the specific provisions that govern Food Geographic Indications. Under Article 22(1), geographic indications are defined as those names "which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation, or other characteristic of the good is essentially attributable to its geographic indication." Thus, the determinant of whether a product name is a geographic indication under TRIPS is whether the product has a specific quality, reputation, or other characteristic of the product that derives from the particular location in which the product originates. Examples of Food Geographic Indications therefore include "Scotch" whisky and "Parmigiano-Reggiano" cheese.
TRIPS contains two basic protection standards for geographic indications. First, Article 22(2) requires countries to provide a legal means to prevent the use of a geographic indication that "suggests that the good in question originates in a geographic area other than the true place of origin." Second, Article 22(3) requires countries to provide a legal means to invalidate the registration of a trademark "which contains or consists of a geographic indication with respect to goods not originating in the territory indicated." These provisions are applicable only if use of the geographic indication is of such as a nature as to "mislead the public as to the true place of origin" of the product.
TRIPS provides an even stronger level of protection for geographic indications for wines and spirits. Under Article 23, countries must provide a legal means to prohibit the inaccurate use of a geographic indication for wines and spirits regardless of whether the use of the indication on a similar product would be misleading. This provision applies even in the case where the geographic indication is "used in translation or accompanied by expressions such as 'kind', 'type', 'style' or 'imitation' or the like." Thus, this provision would prohibit the use of "Scotch-type Whisky".
TRIPS Article 24 contains some exceptions to these protection requirements. For instance, a geographic indication does not have to be protected when it is a generic term for a product or is identical to the customary name of a grape variety. Thus, a dairy farmer in the U.S. can label a product as "Cheddar cheese" despite the historical origination of this product in Cheddar, England. A geographic indication also does not have to be protected if it has not been protected in its country of origin. Thus, if EU or Italian law did not already protect the name "Prosciuto di Parma," this name could be used on pork product similar to the famous one produced in Emilia-Romagna.
In addition, a trademark that includes a geographic indication does not have to be protected if it has been obtained in good faith in one country either prior to the implementation of TRIPS in that country or prior to the protection of the trademark in the country of origin. Thus, if a producer had trademarked a seal similar to the Black Rooster symbol used by Chianti producers in a non-EU country prior to implementation of TRIPS in that country without knowledge of the protection of this name in the EU and Italy, the non-EU country would not be required to provide a legal means for Chianti producers to prohibit the use of this trademark. Finally, a geographic indication for wines and spirits does not have to be protected if it has been used in a country continuously and in good faith for at least 10 years prior to 15 April 1994.(2)
III. Implications for Agricultural Trade Disputes
TRIPS requires additional negotiations on two specific aspects of geographic indication protection: (1) creating a multilateral system for notifying and registering geographic indications for wines(3) and (2) increasing the general level of protection for geographic indications(4). While WTO members have begun to make some progress on both issues, it is not clear that they will make progress quickly enough to prevent disputes that may disrupt agricultural trade.
A. Wine and Spirit Registration System
WTO members began the work required under TRIPS Article 23(4) in 1997 by collecting descriptions of systems used to register geographic indications for wines and spirits.(5) The TRIPS Council used this information to help prepare a document that describes the existing registration systems (the "Background Note").(6) The Background Note states that there are two basic types of registration systems: 1) those (always multilateral) which establish an open-ended system for registering indications which meet certain specified criteria and 2) those (usually bilateral or regional) that contain lists of specific geographical indications that must be protected by all parties. Thus, the Background Note is useful in understanding how any future WTO registration scheme may work.
The main system of the first type was created by the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration (the "Lisbon Agreement"). The Lisbon Agreement, which entered into force 25 September 1966, is a special agreement under the aegis of the Paris Convention and currently has 18 members.(7) The agreement protects geographic indications not only for wines and spirits, but also for other beverages, fruits and vegetables, dairy products, meat products, fish, honey, handicrafts, and extracts such as salt and silica.
Article 2 of the Lisbon Agreement defines an appellation of origin as "the geographical name of a country, region, or locality, which serves to designate a product originating therein, the quality and characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors." Thus, the definition of an appellation of origin under the Lisbon Agreement is narrower than that of a geographic indication under the TRIPS because an appellation of origin cannot be based on the "reputation" of a product.
Under Article 3 of the Lisbon Agreement, parties to the agreement must protect against any imitation of a registered appellation of origin even when the true origin of the product is indicated or the appellation of origin is used in translation or is accompanied by terms such as "kind", "type", "make", "imitation", or the like. Thus, the protection provided to registered appellations of origin by the Lisbon Agreement is similar to that provided in TRIPS.
In order to become registered under the Lisbon Agreement, an appellation of origin must first be protected in its country of origin. Registration applications must be submitted to the International Bureau of the World Intellectual Property Organization by national governments.(8) As soon as an application is received, a notice of registration is sent to all the Lisbon Agreement parties.(9) Each party has one year from receipt of the notification to declare that it will not protect an appellation in its territory or else the appellation is deemed protected.(10) The Lisbon Agreement contains a notable hole, however, by not specifying the acceptable grounds for refusing protection.
The second type of registration system is best exemplified by the Agreement of 8 March 1960 Between the Federal Republic of Germany and France on the Protection of Indications of Source, Appellations of Origin, and Other Geographical Denominations (the "Franco-German Agreement"). The Franco-German Agreement contains a list of German geographic indications that are protected in France on the basis of German law and a list of French geographic indications that are protected in Germany on the basis of French law. Any addition of geographic indications to the lists requires a new negotiation under the agreement.(11)
There have been two basic proposals to create a WTO registration systems for geographic indications for wines and spirits. Both have been modeled after the Lisbon Agreement. The EU has proposed creating a system that imposes an obligation on WTO members to "fully and indefinitely" protect any wine and spirit geographic indications voluntarily registered under the WTO.(12) Under this proposal, a specific WTO member could refuse to protect a registered geographic indication within one year of registration based on four specific grounds.(13)
The other registration system (proposed by the U.S. and Japan) would create a system that only requires WTO members to "refer to" a WTO registration list when considering whether to provide domestic protection to geographic indications for wines and spirits in order to determine if there may be a conflict with the protection provided in another WTO member state.(14) Under this proposal, the WTO registration system would not, however, specify what a member state is required to do in the case of such a conflict.
Other WTO members have weighed in on these two proposals. Canada, Australia, Argentina, Brazil, New Zealand, Bolivia, and Chile are on record as supporting the U.S.-Japan proposal because it would not impose new obligations on WTO members and would take into account the wide range of different methods used to protect geographic indications.(15) On the other hand, Cuba, the Czech Republic, Iceland, India, Morocco, Nigeria, Turkey, and Venezuela support the EU proposal. These countries would also like to expand the registration system to include geographic indications on various other products including fish (e.g., Icelandic salmon), other drinks and handicrafts (e.g., Budweis beer and Bohemian crystal), and other agricultural products (e.g., Cuban cigars).(16)
A WTO registration system may provide rules that would prove useful in resolving trade disputes such as that which recently occurred between the EU and South Africa. The EU and South Africa signed a comprehensive free trade agreement in October 1999 that was to take effect beginning January 1, 2000. The implementation of the agreement was delayed until February 4, however, because of a dispute over the use of the names "grappa" and "ouzo" by South African spirits producers. Under the original terms of the agreement, South Africa had agreed to phase out the use of the names "port" and "sherry" over a 12 year period because of the claim by Portugal and Spain that these names were geographic indications native to their countries. Just prior to final approval of the trade agreement in the EU, Italy and Greece claimed that "grappa" and "ouzo" merited similar protection. After a month of negotiations, South Africa formally agreed to additionally phase out the use of these names even though South African production of grappa amounts to only 30,000 bottles a year and the production of ouzo is even less.(17) Thus, a very minor economic issue (but a large cultural one) nearly sidetracked a comprehensive trade agreement.
If the WTO had already had a geographic indication registration system in place, this dispute may have been settled legally rather than politically. Under the U.S.-Japan proposal, South Africa would only have been required to give consideration to the fact that grappa and ouzo are protected under EU law in deciding whether South African producers could use these names in South Africa. Nothing in this proposal would require South Africa to prohibit the continued use of these names because of their use in the EU. Under the EU proposal, however, South Africa would have been required to end the domestic use of the names grappa and ouzo because of their protection in the EU. Thus, the eventual form of the WTO registration system may have a significant impact on agricultural trade.
B. Enhanced Geographic Indication Protection
While TRIPS Article 24(1) requires WTO member states to work to increase the general level of protection for geographic indications, it does not specify how this should be accomplished. TRIPS Article 24(2), however, grants the TRIPS Council the power to review national regimes protecting geographic indications. The TRIPS Council has used this to develop a checklist of questions(18) that must be completed by all member states as they implement TRIPS.(19)
The collection of this information has revealed two basic methods used to protect geographic indications. The first method relies on existing intellectual property and competition laws. For example, South Africa provides protection for geographic indications through its general trademark and alcohol laws. Section 10(2)(b) of the South African Trade Marks Act No. 194 of 1993 (the "Trade Marks Act") defines a trademark to include "a sign or an indication which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, and geographical origin" of a product. Section 10(12) then provides that a trademark "which is inherently deceptive" shall not be registered as a trademark or shall, if registered, be capable of being removed from the trademark registry. Thus, these provisions are intended to meet TRIPS prohibition against the use of geographic indications in a misleading manner.
The higher level of protection required by TRIPS for geographic indications for wines and spirits is provided in South Africa by Section 12(1) of the South African Liquor Products Act No. 60 of 1989. This section provides that "no person shall use any name, word, expression, reference, particulars or indication in any manner either by itself or in coherence with any other verbal, written, printed, illustrated or visual material in connection with the sale of a liquor product in a manner that conveys or creates or is likely to convey or create a false or misleading impression as to the nature, substance, quality, composition or other properties, or the class, cultivar, origin, age, identity, or manner or place of production, of the liquor product." The "false or misleading" standard means that a geographic indication need not be misleading in order to be prohibited. In fact, even a statement that provides the true origin of the product may be unlawful under this provision.
The second method for protecting geographic indications is through legislation specifically designed for this purpose. The EU, for example, passed on 14 July 1992 Council Regulation (EEC) No. 2081/92 (the "Origin Regulation") to protect geographic indications and designations of origin for agricultural products other than wines and spirits. Article 2 of the Origin Regulation provides two classes of geographic indications. The first, the protected designation of origin (PDO), designates the name of a region, place, or country that is the origin of a product "whose quality is exclusively due to a particular geographic environment." The second, the protected geographical indication (PGI), designates a region, place, or country that is the origin of a product "which possesses a specific quality, reputation, or other characteristics attributable to the location or origin."
An example of a PDO is "Prosciutto di Parma" while an example of a PGI is "Scottish Lamb." Under Article 13 of the Origin Regulation, both PDO's and PGI's are protected against "any direct or indirect commercial use of the name registered in respect of products not covered by the registration in so far as those products are comparable to the products registered under that name." Thus, the Origin Regulation provides a stronger form of protection than that required by TRIPS because it even prohibits uses of PDO or PGI names that are not misleading.(20)
The increased transparency regarding national regimes protecting geographic indications has led countries to consider the scope of these regimes more closely, particularly with respect to the level of protection provided to foreign geographic indications. This may lead to a new type of agricultural trade dispute. For example, on June 1, 1999, the U.S. filed a complaint with the WTO Dispute Settlement Body claiming that the EU Origin Regulation discriminates against foreign geographic indications and does not provide sufficient protection to pre-existing trademarks that are similar or identical to those protected in the EU.(21) The U.S. complaint may be driven by a fear that the Czech brewer Budejovicky Budvar will use the Origin Regulation to claim protection for the Budweiser trademark once the Czech Republic joins the EU and thereby prevent American brewer Anheuser-Busch from using this name in the EU.(22)
Specifically, the U.S. claims that Article 12 of the Origin Regulation is discriminatory because it imposes more stringent conditions on foreign geographic indications seeking protection within the EU than is required for EU geographic indications. Article 12 provides that the protections provided in the Origin Regulation will apply to foreign geographic indications as long as (1) the foreign geographic indication meets the requirements regarding the connection between the product and the place of origin as required in the Origin Regulation (it does not specify whether the PGI or PDO standard applies), (2) the foreign country has inspection requirements to ensure the proper use of origin names as required in the Origin Regulation, and (3) the foreign country provides a level of protection for EU geographic indications equivalent to that provided in the Origin Regulation.
IV. Conclusion
If the U.S. complaint against the EU is not resolved politically through negotiation, it will be considered by a WTO dispute settlement panel. It is not clear how such a panel will approach the issue especially given the paucity of TRIPS litigation to date. However, given the fact that TRIPS may soon become applicable to many more WTO member states, such disputes may be more frequent in the future. Both this dispute and the EU-South African trade agreement dispute show that TRIPS may become a new frontier for agricultural trade disputes. Those concerned with such disputes, therefore, may need to pay close attention to the development of TRIPS and its related jurisprudence.
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About the Author:
Judson O. Berkey is a regulatory policy analyst at the Institute of International Finance and can be reached at jberkey@iif.com. He graduated from the University of Virginia (B.A. Mathematics, Economics) in 1995 and from Harvard Law School (J.D., cum laude) in 1998. All views expressed in this article are those of the author alone.
Endnotes:
1..Agreement Establishing the World Trade Organization, Annex 1C;
2. It is not clear if this provision is sufficient to support the continued use of the word "Champagne" on sparkling wines from California. The U.S. BATF continues to permit this use in the U.S. while the EU forbids its use on imports into the EU.
3. TRIPS Article 23(4). The scope of the requirement was broadened to include geographic indications for spirits at the 1996 Singapore WTO Ministerial.
4. TRIPS Article 24(1).
5. WTO document IP/C/W/76 and addenda.
6. WTO document IP/C/W/85.
7. Algeria, Bulgaria, Burkina Faso, Congo, Costa Rica, Cuba, the Czech Republic, France, Gabon, Haiti, Hungary, Israel, Italy, Mexico, Portugal, the Slovak Republic, Togo, and Tunisia.
8. Applications must contain the following information according to Rules 1(2) and 5(4) of the Lisbon Agreement regulations: (a) country making the application; (b) office competent to receive notification of registration; (c) owner of the appellation of origin; (d) name of the appellation of origin; (e) product to which the appellation applies; (f) area in which the product is produced; and (g) title and date of legislative or administrative decisions providing protection for the appellation in the country of origin.
9. 738 registrations were made prior to 1 January 1997 by the following countries: France (472); Czech Republic (70); Bulgaria (48); Slovakia (37); Hungary (28); Italy (26); Algeria (19); Cuba (18); Tunisia (7); Portugal (6); Mexico (4); Israel (1).
10. 90 refusals had been declared prior to 1 January 1997 by the following countries: Mexico (35); Israel (16); Cuba (11); Czech Republic and Slovakia combined (9); France (6); Haiti (6); Portugal (4); Hungary (2); Italy (1).
11. The Background Note lists three other agreements that created similar systems: 1) the 1993 Agreement between the European Communities and the Republic of Hungary on the reciprocal protection and control of wine names; 2) the 1992 Agreement concluded between the European Community and Australia on trade in wine and 3) the North American Free Trade Agreement which prohibits the sale of products under the names "Bourbon Whiskey", "Tennessee Whisky", "Canadian Whiskey", "Tequila", and "Mexcal" unless the product has been manufactured in the associated country of origin.
12. WTO document IP/C/W/107.
13. These grounds are the following: (a) the geographic indication does not meet the definitional requirements of an indication contained in TRIPS; (b) the geographic indication is not protected in the country of origin; (c) the geographic indication is a generic name; and (d) the geographic indication, although literally true as to the place of origin, falsely represents to the public that a product originates in another territory.
14. WTO document IP/C/W/.
15. TRIPS Council public update of 17 February 1999
16. TRIPS Council public update of 1-2 December 1998
17. "Dispute Over Spirit Names Clouds EU-South Africa Trade Agreement" 17 BNA International Trade Reporter 239 (February 10, 2000).
18. WTO document IP/C/13 and addendum.
19. Although the TRIPS took effect on January 1, 1995, different implementation deadlines were provided for different groups of countries. Developed countries were given one year to ensure that their domestic laws and practices conformed with TRIPS. Developing countries and transition economies, on the other hand, were given until January 1, 2000. One of the unresolved issues raised at the attempted Seattle Round of trade negotiations was whether this deadline should be extended. Least developed countries must comply with TRIPS by January 1, 2006.
20. Protection for wine and spirit geographic indications in the EU is provided by the national law of each EU member state. WTO document IP/C/W/76 Addendum 8. A list of the national laws that protect wine and spirit geographic indications is provided in EU Official Journal No. C 344 (15 November 1996).
21. WTO document WT/DS174/1. On June 30, 1999, Canada formally requested to be included in the ongoing talks between the EU and U.S. to resolve this issue.
22. Economist (July 10, 1999), p. 71.