Geographical indications – why is protection so patchwork?

Geographical indications are terms which serve to inform consumers about the geographical provenance of products. Yet this unassuming IP right is the cause of fierce debate. It has even been blamed for holding up trade deals such as the Transatlantic Trade and Investment Partnership.

EU member states have protected geographical indications for many years, in particular for wines and other agricultural products (eg, Champagne in France). In 1992 the European Union created the first harmonised framework for protecting geographical indications across all member states. Currently, EU Regulation 1151/2012 (together with its antecedent regulations, known collectively as the ‘GI Regulation’) regulates the use of geographical indications in respect of agricultural products and foodstuffs (wines and spirits being protected by a separate regulation).

The GI Regulation sets out three types of protection:

• protected designation of origin – this covers agricultural products and foodstuffs which are produced, processed and prepared in a given geographical area using recognised know-how;
• protected geographical indication – this covers agricultural products and foodstuffs that are closely linked to the geographical area. At least one of the stages of production, processing or preparation must take place in the area; and
• traditional specialty guaranteed – this highlights traditional character in either the composition or means of production.

In order to obtain EU-wide protection under the GI Regulation, an application must be made to the European Commission by the government of the member state in which at least one of the production, processing or preparation takes place. The scheme has been popular: there are currently more than 594 registered protected designations of origin and over 640 registered protected geographical indications. Traditional specialty guaranteeds have been available only since 2006 and to date just 50 products have been registered under that designation – although UK applications are pending for ‘Birmingham Balti’ curry, and ‘London Cure Smoked Scottish Salmon’, among others.

Yet for all the good of a single approach at the EU level, uncertainty remains as to the co-existence of similar rights at a national level. This has raised questions as to the extent to which the GI Regulation precludes other forms of geographical indication, in particular by member states. The exhaustive nature of the GI Regulation has been the subject of numerous cases in the courts of member states, as well as before the European Court of Justice (ECJ). Sadly, the debate continues and uncertainty remains as to whether a geographical indication that is incapable of registration under the GI Regulation can still be protected nationally. Several decisions point to an increasingly restrictive view of the ability of member states to adopt their own parallel protections for geographical indications. Moreover, the proposed text for the forthcoming EU Trademarks Regulation suggests further reinforcement of the exhaustive nature of the GI Regulation over and above national trademark registration systems. As noted below, this deference towards the EU-wide scheme has been anticipated in the new office practice of the Office for Harmonisation in the Internal Market (OHIM).

One of the longest-running disputes with a geographical indication protection element concerns the protection of the term ‘Bud’ for beer (Case C-478/07, Budějovický Budvar NP v Rudolf Ammersin GmbH [2009] ECR I-7721), where the ECJ stated that the aim of the GI Regulation is to provide a uniform and exhaustive system for protecting geographical indications which fall within its scope. However, geographical indications that fall outside the scope of protection of the GI Regulation may still be protected under the national laws of member states, such as consumer protection regimes and laws against unfair competition. Such geographical indications were deemed by the ECJ to be “simple geographical indications” – an interesting expression and not something that legislators seemed to think about before these cases came along. Those identifiers, according to European case law, serve to “highlight the geographical origin of a product, regardless of its characteristics”. However, uncertainty has persisted as to when a geographical indication could be deemed to be simply an identifier of origin, falling outside the scope of the GI Regulation. The approach taken by the English Court of Appeal in Fage v Chobani, which is discussed in detail later, is that any identifier which cannot achieve registration under the GI Regulation falls outside the regulation’s scope and is therefore protectable under the laws of individual member states. As is discussed below, such a narrow view of the scope of the GI Regulation is inconsistent with guidance from the ECJ, threatens to undermine the policy objective of harmonising protection across the European Union and deprives new market entrants of the legal certainty which a properly harmonised EU-wide system would provide. Indeed, the regulation is meant to stop protection by the back door for products that are incapable of qualifying for geographical indication protection at the EU level, yet still happens.

One of the longest-running disputes with a GI protection element concerns the protection of the term ‘Bud’ for beer

Picture: Darios/Shutterstock.com

Exhaustive nature of EU regime

Registration of ‘Portobello Road’ refused

The exhaustive nature of the EU regulations governing geographical designations has recently been acknowledged by OHIM, which has updated its practice for the examination of applications for Community trademarks. The Opposition Division, refusing an application to register a figurative mark including the term ‘Portobello Road’ for gin as a Community trademark (Opposition B 2 338 120), noted that the updated office practice for examination states that “the EU system of protection of Protected Geographical Indications’ (PGIs) for wines and spirits is exhaustive in nature and supersedes national protection for those goods” (emphasis added). While the Opposition Division’s decision has been the subject of mixed commentary, the deference shown to the EU regulation covering the protection of geographical indications for wines and spirits is indicative of the continuing trend towards curtailing any parallel system of protection for geographical indications.

Salame Felino

The decision of the Italian Supreme Court in the long-running saga concerning the designation ‘Salame Felino’ provides further guidance on the approach to protecting geographical designations at a national level. While ‘Salame Felino’ has been registered as a protected geographical indication since 2013, the case before the Italian courts and questions referred to the ECJ concerned the period before its registration.

The case was brought in 1998 by the association of producers of a pure pork salami sausage which takes its name from the town of Felino, in the Parma region of Italy. The association commenced proceedings in 1998 against an Italian subsidiary of Kraft Foods in the Parma court of first instance seeking to prevent Kraft from offering under the name Salame Felino a product which was made outside the Parma region where the city of Felino is located. The court held that while ‘Salame Felino’ was not registered under the GI Regulation in force at the time, the designation could be protected under a 1996 Italian law implementing provisions of the Agreement on Trade-Related Aspects of Intellectual Property and granting protection to geographical indications. The Parma court held that Kraft’s use of ‘Salame Felino’ constituted an act of unfair competition under the Italian law in force at the time. This decision was confirmed by the appellate court in Bologna; Kraft then appealed to the Italian Supreme Court, which referred questions as to the scope of the GI Regulation to the ECJ.

The ECJ in Salame Felino relied on its decision in Warsteiner (Case C-312/92) and confirmed that: “designations of geographical origin serving only to highlight the geographical origin of a product, regardless of its particular characteristics, do not fall within the scope of [the GI Regulation].” More importantly, the ECJ stated that any national rules adopted by member states must comply with EU law requirements – namely:

• they must not undermine the objectives of the GI Regulation; and
• they must not contravene the principle of free movement of goods.

In respect of the first criterion, the court elaborated that: “the protection granted by a national set of rules must not have the effect of guaranteeing to consumers that products which enjoy that protection have a particular quality or characteristic, but only of ensuring that those products do in fact originate from the geographical area referred to.”

The ECJ then noted, in respect of the second criterion, that national laws protecting geographical designations will necessarily be contrary to the free movement of goods; in order to be permissible, such laws must be justified by the overriding public interest requirement set out in ECJ jurisprudence in Warsteiner, among others. Summarising the position, the ECJ concluded:

It is for the national court to satisfy itself, first, that the application of the national legislation in question does not have the purpose or effect of guaranteeing to consumers that products marketed under a specific geographic designation have a particular quality or characteristic and, secondly, that the implementation of that legislation pursues an overriding requirement in the public interest, is carried out in a non-discriminatory manner, is suitable for securing the attainment of the objective pursued and does not go beyond what is necessary in order to attain that objective.

Following the ECJ’s decision, the Italian Supreme Court reversed the decisions of the lower courts and found in favour of Kraft. Although it was not relied upon by the claimants, the court noted that Kraft would have fallen foul of another unfair competition provision in the 1996 Italian law, as ‘Felino’ was used for a product which came from somewhere that was not ‘Felino’.

National versus pan-national

The rationale for a single European approach to geographical indications is to ensure that the internal market works and that nations do not create trade barriers. It ensures that there is a clear standard – for it to work to full effect, individual nations should not be creating their own local protections. Yet fears that the public needs protection from confusion persist and local protections still exist.

In the authors’ view, an example of protection for a geographical indication by the back door is the current status of the term ‘Greek yoghurt’ in England and Wales. In Fage v Chobani ([2014] EWCA Civ 5 – in which the authors represented Chobani), the Court of Appeal upheld the decision that various traders in the United Kingdom who imported and sold a particular style of yoghurt made in Greece were entitled to the exclusive use of the term ‘Greek yoghurt’.

The case was brought by Fage, a Greek company, and its UK subsidiary on the basis of the common law tort of extended passing off. What distinguishes such a claim from a classic passing-off action is that it protects goodwill owned by a number of traders rather than a single entity. Fage argued that Greek yoghurt in the United Kingdom had a special reputation and the public needed protection from other producers of yoghurt that were not sourcing their product from Greece. Fage accepted that there was no issue that the same product could be made anywhere in the world to the same standard, but argued that people wanted to know it came from Greece, regardless of what the label said about where it was actually made. Fage claimed that its product was unique as it had particular qualities of “thickness, creaminess, taste and satisfaction”. However, this definition could apply equally well to other products and so raised counter arguments as to the clarity of product description if there were to be a monopoly in favour of Greek producers.

The key facts and issues before the Court of Appeal were as follows:

• The term ‘Greek yoghurt’ is not used in Greece, either in English or in Greek, and it was accepted that the term had no reputation in Greece;
• The type of yoghurt for which protection was sought is referred to in Greece as straggisto, meaning ‘strained yoghurt’;
• The claimant’s product accounted for over 95% by value of the Greek yoghurt market in the United Kingdom;
• The defendant’s Greek yoghurt product had been produced in the United States and imported for sale in the United Kingdom; and
• The term ‘Greek yoghurt’ is used in many countries around the world – including Australia, the Netherlands, Sweden and the United States – to refer simply to yoghurt which has a thick and creamy consistency, some of which has been made using the straining method and others simply as a result of using thickening agents.

The ECJ, in Salame Felino, confirmed that “designations of geographical origin serving only to highlight the geographical origin of a product, regardless of its particular characteristics, do not fall within the scope of [the GI Regulation”

Picture: indigolotos/Shutterstock.com

As the Court of Appeal noted, it was clear that the term ‘Greek yoghurt’ did not meet the requirements of the GI Regulation – not least because it did not exist in Greece, where the style of yoghurt produced by the claimants was called straggisto, not ‘Greek yoghurt’. An application for registration under the GI Regulation would be rejected on the basis that the product sold as Greek yoghurt in the United Kingdom had no specific link to Greece – it being common ground that the same yoghurt could have been produced locally in the United Kingdom, or indeed anywhere, using only local ingredients. There was nothing uniquely Greek about the ingredients; nor was the method of production Greek.

In considering whether the term ‘Greek yoghurt’ fell within the scope of the GI Regulation, Lord Justice Kitchen noted that since it had never been used in Greece, in any language, to describe yoghurt sold there, it did not fall within the material scope of the GI Regulation. Accordingly, it was held that the national law of passing off in the United Kingdom could operate, in compliance with EU law, to “prevent confusion and deception of the public and so preserve the goodwill of legitimate traders” (see para 110). However, it is questionable whether this reasoning is consistent with the dicta of the ECJ in Salame Felino. The true basis of the court’s decision appears to have been the claimant’s success in convincing it that some part of the UK population would be misled and that it was irrelevant that the confused group was not a majority of people at large.

So while the ECJ made clear that any national law protecting a geographical designation must not undermine the GI Regulation, products such as Greek yoghurt are nonetheless receiving protection. The term, as applied to yoghurt sold in the United Kingdom, serves to guarantee to consumers not only that the yoghurt is produced in Greece but, based on the arguments in the case, tells them (whether they fully appreciate it or not) that the yoghurt is made by straining and contains no additives, and that it will have a thick and creamy texture with qualities of taste and satisfaction (these last two elements comprising the reputation which the court accepted had been acquired by the type of yoghurt imported by the claimants).

In order for a national law not to undermine the GI Regulation, it also must not contravene the principle of free movement of goods – although the ECJ did note that a national law will not contravene that principle provided that it “pursues an overriding requirement in the public interest, is carried out in a non-discriminatory manner, is suitable for securing the attainment of the objective pursued and does not go beyond what is necessary in order to attain that objective”. However, the main cause of the parallel case law problem comes from Warsteiner, where the ECJ said:

In that regard, it must be observed, first, that the purpose of Regulation No 2081/92 cannot be undermined by the application, alongside that regulation, of national rules for the protection of geographical indications of source which do not fall within its scope.

Second, Regulation No 2081/92 is intended to ensure uniform protection within the Community of the geographical designations which it covers and it introduced a requirement of Community registration so that they could enjoy protection in every Member State (see, to that effect, the judgment in Joined Cases C-129/97 and C-130/97 Chiciak and Fol [1998] ECR I-3315, paragraphs 25 and 26), whereas the national protection which a Member State confers on geographical designations which do not meet the conditions for registration under Regulation No 2081/92 is governed by the national law of that Member State and is confined to the territory of that Member State.

Yet the overarching aim of the EU approach seems to be lost, and courts are forgetting that the aim was and should be a single system. More importantly, with regard to consumer protection, judges need not be concerned that they are merely using the wrong tool to achieve their aim. Myriad tools are available to ensure protection of consumers without creating unnecessary monopolies that restrain free trade. National legislation protecting against unfair competition and the various rules on false advertising and deceptive practices can all be used to stop rogues without creating monopolies. As noted above, using the term ‘Salame Felino’ to designate a salame that was not made in Felino would have been actionable under Italy’s unfair competition laws – simple geographical indications need not have troubled anyone. At the EU level, there are also food labelling regulations which have direct effect in all member states. In the United Kingdom, local trading standards authorities receive complaints and enforce both EU regulations on food labelling and national consumer protection laws against misleading labelling and advertising. Thus, the law of passing off is not the only recourse to ensure the protection of consumers in the United Kingdom. However, unlike the alternative mechanisms, the law of extended passing off allowed the claimants to prevent the defendants from entering the UK market and also to secure a private right of action against any future potential market entrants producing yoghurt outside of Greece, including producers from other member states, even if those products are clearly labelled.

Conclusion

While every case has its reasons, it appears that the bigger picture is being overlooked. It is in the public interest for an effective internal market to function without unnecessary monopolies. The cure for these concerns is to be found in the laws governing advertising. We can safely abandon national GIs to a harmonised arrangement; the question is whether anyone will grasp the nettle and actually do it.