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IPC DISCUSSION PAPER: GEOGRAPHIC INDICATIONS

EXECUTIVE SUMMARY

(For the FULL DISCUSSION PAPER click here)

In the Uruguay Round of WTO negotiations, geographical indications (GI’s) on wines and spirits were granted protections beyond those for other products under Article Twenty-Three of the TRIPS Agreement. Some WTO members want to extend that level of protection to certain foods in the Doha Round. The debate over the protection of GI’s has become exceedingly heated and controversial, and the issues involved are complicated. This summary is based on a discussion paper prepared by the IPC Secretariat in an effort to clarify and explain some of these issues. The full paper is available at www.agritrade.org.

Rationale for Protecting Geographic Indications

Intellectual property is protected by a number of tools, most notably trademarks and patents, to insure that inventors and creators are rewarded for their work and financial risk. The rationale for protecting GI’s is similar. Many GI products have acquired valuable reputations, which if not protected, could be misrepresented by dishonest commercial operators. False use of GI’s is detrimental to consumers, as well as to legitimate producers: consumers are deceived into buying an item that does not meet their expectations, while producers can lose valuable business.

Protection of Geographic Indications under the TRIPS Agreement

Three treaties, the Paris Convention (1883), the Madrid Agreement (1891) and the Lisbon Agreement (1958) form the basis for the current definition of GI’s. The definitions and philosophies underlying these treaties have been integrated into Section Three of the TRIPS Agreement. Under the Agreement, to be considered eligible for a GI, a good must possess a quality, reputation or ‘other characteristic’ attributable to its geographic origin.

The TRIPS Agreement prohibits the use of GI’s and trademarks that include GI’s if they mislead or deceive the public, or constitute unfair competition. Under the TRIPS Agreement, remedies for the misuse of a GI are the same as for the misuse of a trademark or trade name, including seizure or prohibition of imports. Signatories are obliged to protect against unfair competition, and provide a non-exhaustive list of prohibited practices. But, the Agreement does not specify how members should protect GI’s.

Wines and Spirits: Article Twenty-Three of the TRIPS Agreement provides additional protection for wines and spirits. It enables countries to prevent the use of a GI identifying wine and spirits not originating in the place indicated, even if the true origin is provided, or if modifiers such as ‘kind,’ ‘type,’ ‘style’ or ‘imitation’ are used. It also enables countries to refuse to register or to invalidate trademarks for wines or spirits containing an inaccurate GI at the request of an interested party. Wines are further protected against ‘homonymous indications’ and by a yet to be finalized, multilateral system of notification and registration.

Exemptions: There are two key exemptions under the TRIPS Agreement. The first relates to terms that have become generic. If a term containing a GI has become a common name for the product in the member’s territory, then the term is considered generic and the member is therefore not required to extend protection to it. The second exception is a grandfather clause, which protects trademarks acquired in good faith prior to the registration of a GI or before the TRIPS Agreement was signed.

Issues in the Current Debate

Balance of Concessions in the Uruguay Round: GI protection for wines and spirits was strengthened in the Uruguay Round Agreement primarily at the request of European wine-producing members in exchange for concessions on export subsidies. For other WTO members, including important wine producing countries, this represented a significant concession. Members who advocate extension note that the distinction drawn between wines and spirits and foods is unlike any other in the TRIPS Agreement and want to remedy this by treating foods in the same manner as wines and spirits. Members opposing extension view this difference as an imbalance that exists only because of the concessions given for export subsidy reductions. These members feel that extending the protections given wines and spirits to food would only exacerbate this imbalance. They also believe that GI’s are an intellectual property rights issue and should therefore be discussed in the TRIPS negotiations rather than the agricultural negotiations.

Mandate for Negotiations on Foods: Members seeking extension argue that the language in TRIPS mandating further negotiations refers to all products, not only wines and spirits. Members opposing extension believe this assertion is an attempt to re-open the TRIPS Agreement, for which they claim there is no mandate. They argue that the agenda built into the TRIPS Agreement refers specifically to unresolved issues from the wines and spirits negotiations.

Nature of Problems Facing Foods with Geographic Indications: Opponents of GI extension see no evidence of systemic problems with the protection for foods under the TRIPS Agreement. They believe that GI’s can be protected under the TRIPS agreement and existing trademark laws. Those who support extension note that under the existing TRIPS language on foods, only the use of a GI that actually deceives consumers can be prohibited, even if the GI itself is false. They argue that this reliance on ‘deception’ creates uncertainty and inconsistent judicial decisions, and undermines trade in products bearing GI’s.

Legal Philosophy: Some members object to including GI’s in the definition of intellectual property rights altogether. They make a distinction between geographic endowments - which they believe should not be subject to such rights - and human creativity - which should. Others argue that transparent treatment of GI’s and the protection of existing trademarks are necessary first steps. Those opposed to extension also point out that many of the names now used to identify products are derived from names that originated in Europe and were disbursed throughout the world as a result of emigration and colonization. They argue that these names should not be proprietary to countries because they were the source of emigrants and colonies. For those who wish to expand GI protections, the geographic indication IS the product, and thus is not a form of intellectual property. They believe GI’s are intrinsic to the product, and their protection is properly discussed under the heading of market access in the agricultural negotiations.

Geographical Indications and Developing Countries: In the Doha Round, most developing countries oppose inclusion of GI’s in the agricultural negotiations. Few developing countries have products that would benefit from GI’s, and if an international agreement was negotiated, they fear they might be required to establish legal framework to protect other countries’ indications.

However, some developing countries advocate extending protection to GI’s on wines and spirits to other kinds of products, including genetic resources and traditional knowledge. They see GI’s as a way to develop their rural economies by moving away from raw commodity exports toward value-added local production. This is particularly relevant for developing country products like coffee and tea (and increasingly chocolate), where marketers (and consumers) are beginning to distinguish between products from different origins.

In principle, protecting GI’s should be valuable to countries whose economies are based on agriculture. While part of the food industry is becoming more global, a second, counter-trend is emerging, which emphasizes locally grown and artesanal foods. However, exploiting these niche markets requires not only protected product designations, but also extensive marketing and policing to protect against counterfeiting.

Geographical Indications vs. Trademarks: The relationship between trademarks and GI’s is complex. Generally, trademarks identify products from a specific manufacturer. GI’s do not identify a manufacturer (or producer), rather the product’s place of origin. Trademarks imply human creativity. GI’s, on the other hand, are linked to climate, soil and other factors that are largely independent of human ingenuity. GI’s apply to all producers in a country, region or locality. Trademarks can be used by only one entity. Trademarks are easier to protect, but protection requires the active role of the trademark’s owner. As a rule, trademarks that contain a GI cannot be protected if the use of the trademark misleads the public about the true origin of the product. The same rule applies to wine and spirits, but in the case of wines and spirits, members can refuse or invalidate the trademark whether or not the public is misled.

Some legal scholars in the United States advocate the use of certification marks rather than GI’s. As used in the United States, certification marks are similar to trademarks in that they indicate a certain quality and certify that the product meets standards established by the mark’s owner. They differ from trademarks in that they do not indicate source in a particular producer, but rather a group of producers who meet the established qualifications. Qualifications can include a particular source, production method or other quality. Roquefort cheese, among other products, is a protected certification mark in the United States.

Geographic Indications and Public Perception: It takes many years to create a reputation around a GI. Advertising is necessary, but not sufficient to create a public perception of quality. A GI cannot simply be declared, like a patent or a trademark. It can only enhance sales of a product if the term has a positive reputation in the mind of the consumer. In situations where a product is not already known, simply extending the level of protection afforded wines is not likely to result in immediate financial gains.

Proving infringement of GI’s on food can be more difficult than for trademarks, since the ‘owner’ of a GI must prove the public has been deceived with every accusation of misuse, and deceit is by nature a subjective judgment. The user of a GI on wine or spirits, on the other hand, need only demonstrate that the offending product does not originate in the area claimed by its label.

Costs and Benefits

Producers: Enhancing GI protection for foods would give WTO members legal means to prevent the use of any GI not originating in the member country itself by disallowing the use of modifying language, such as ‘like’ or ‘style.’ If producers have existing GI’s, other than wines and spirits, they can benefit from enhanced protection, assuming the country can afford to protect its domestic GI’s as well as all imported GI products.

However, the authorization of a GI does not bring immediate benefits. Producers must be prepared to invest considerable time and money creating a positive image for a GI product and continuously protecting against counterfeiting. The existence of a GI on a particular food only increases the incentive for others to counterfeit protected products. Moreover, developing countries that might gain some GI’s might lose others (for example Indian producers might gain a GI for Basmati rice, but lose on mozzarella made in India). Not only might this close off market access for current producers, it might hinder the development of future markets.

National Governments: Under international law, countries must protect GI’s within their home market in order to place their own under international protection. This provision is particularly significant for developing countries that may wish to protect a handful of GI’s but do not have an adequate system in place to protect the hundreds already in existence on foreign products. On the other hand, extending the type of protection afforded GI’s under the TRIPS Agreement could lower the legal costs of enforcement by making decisions less subjective.

Part of the administrative burden could also involve establishing a multilateral registry of GI’s similar to that being negotiated for wines and spirits. Advocates of enhanced GI protection argue that the trademark system is more expensive for small users than an international registry. However, since this system is still under negotiation for wines and spirits, it is difficult to assess the costs and benefits of extending it to other products.

Consumers: WTO members opposed to enhanced GI protection on foods argue that many terms consumers now use to identify products will disappear, thereby increasing their search and transactions costs. Proponents argue that consumers are entitled to real choice based on correct indications. Prohibiting the use of translated names or the use of the words ‘like’ or ‘style’ will allow consumers to quickly determine the authentic origin of a product. They maintain that very few products will be affected, due to the exemption for generic terms that applies to both foods and wines. It is likely that consumers would benefit from more clarity, but neither the benefits nor short-term costs have been evaluated.

Global Trade: Extending protection to foods would prevent other producers from ‘free-riding’ on some GI’s. In many cases, those prevented from using these terms will be countries where immigration, colonization and cultural diffusion led the use of similar names and production practices in use in the ‘home’ country. It is important to note, however, that even extending enhanced GI protection to foods will not prevent those products from being produced and sold.

Finally, many WTO members view the goal of the agricultural market access negotiations as to increase market access. They argue that including GI’s under these negotiations would result in reduced—not increased-- market access.

Full Paper (.pdf)

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