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Geographical name calling

Cognac will be free from pestering homonymous local brands by 2005. The ruling of a Brazilian court last January clearly went in favour of the Bureau National Interprofessionel du Cognac, in a case pressed by the French trade association after Brazil's adoption of a new law on intellectual property (IP) rights. Brazil, and all other developing members of the World Trade Organization (WTO), had to tighten up domestic protection of IP rights in the case of geographical indications (GIs) related to wine and spirits, in order to comply with the Agreement on Trade-Related Property Rights (TRIPs). Simultaneously, the EU has been engaging in a global exercise seeking to recapture GIs that have fallen into common usage outside its borders – as have Champagne, Chablis and Cognac - and, more controversially, traditional terms such as grappa and ouzo.

What the plaintiff did not get, though, was an outright ban of the use of the generic term conhaque. Article 24 of the TRIPS Agreement, the French were reminded in court, allowed for the presence, on the domestic market, of homonymous generic names so long they do not mislead consumers about the true origin of the drink (usually achieved by inserting it alongside that of the GI it mimics, as in 'Californian Chablis', thereby giving birth to 'semi-generics') and for as long as negotiations aiming at phasing out this practice are still going on. The TRIPS Council, which is holding these talks, is convening during the first week of April. Accordingly, if the agreed principle stated at article 23 of the TRIPS Agreement is that semi-generics should be scrapped eventually, then the exception is currently the rule.

It was on US insistence that the exception was included in the agreement back in 1994, but the belligerent attitude of the EU at that time shares responsibility for it: precedence of GIs over brand names - the capacity of a GI to drive out even an established brand - had been enshrined in EU legislation, despite the Torres family winning their case before the European Court of Justice. Could the European marketing efforts of the Gallos and Mondavis be scuppered by the mere presence of Italian villages bearing their names? In June 1999, the USA initiated proceedings at WTO's Dispute Settlement Body, because EU legislation 'does not provide sufficient protection to pre-existing trademarks that are similar or identical to a GI'.

As if to warrant US fears, the EU and particularly France have been showing their teeth again recently: witness the difficulties in wrapping up the agreement between the EU and South-Africa due to strong disagreement over the enmeshment of 'Port' and 'Sherry' in various trademarks, and the stripping of the rights of the wine growers from the small Swiss village by the name of Champagne, to feature their GI on their bottles of still white wines after 2002. It seems odd that the reputedly inalienable rights of a community, which has been growing vines at least since the 9th Century, should be so easily dismissed in the name of freeing up trade. Comforted by an apparently wide popular support in what they term a David and Goliath struggle, Champagne's vintners are determined to seek redress in a Strasbourg court. The fact that brandy producers of the French Champagne village situated in the Cognac region are allowed to affix the term 'Fine Champagne' on their labels on the flimsy grounds that 'this does not lend to consumer confusion' should help the Swiss in their plight.

No wonder, then, if progress at establishing a worldwide registration procedure for GIs seems desperately slow. The TRIPS Council is still pondering whether it should go for the compulsory and legally binding system put forward by the EU, or for the US-Japanese proposal which amounts to little more than compiling a list of the world's GIs. The stakes are high, as huge value can be added to wines produced in renowned GIs, which can be considered 'collective brands' in this context.

The increasing importance of GIs as a strategic tool for differentiating and positioning wines in the saturated markets of the developed world has been recognised for other goods too. Emboldened by recent events, last November Switzerland and some 11 developing countries asked the TRIPS Council to widen the scope of higher protection awarded to wines and spirits to other, mostly agricultural, goods ranging from Czech Pilzen beer and Darjeeling tea, to Bulgarian yoghurt and Swiss cheeses. The EU agrees that something should be done for the poorer nations. Only Cairns Group members are opposed to discussing extension on the grounds that this is not required by the Uruguay Round Agreement, but would need to be negotiated before inclusion in the agenda. One may thus entertain the reasonable hope that coverage will be extended to other agricultural goods before long. Then, the more successful the EU in pursuing its recapturing policy for Cognac and other GIs, the better the chances of bringing less powerful states to recover their embezzled rights and bring the production of Savoy's Emmental and the like to a fair and peaceful end. But will there be Champagne for everyone at toasting time? Sounds a bit like the Greeks' hope that the British Museum part company with the caryatid poached from the Acropolis.

© pierre spahni - first published in Harpers Wine and Spirit Weekly on March 30th, 2001.


Pierre Spahni - Economic Research & Consultancy for Wine - TTel  +41 22 800 1607 Fax 800 1608