Running through the various detailed justifications for intellectual property is a grand promise. By enacting laws that confer some degree of exclusivity over intangibles such as knowledge, data, and information, a country is promised a better future. In the case of geographical indications (GIs) the promise is of rural development. The recitals to a 1992 Council Regulation of the European Community, which set up a framework for registering GIs relating to agricultural products and foodstuffs, imply this promise, suggesting that GIs could improve farmer income and help keep people in ‘less-favoured or remote areas’.Footnote 1
A regulatory tool that promises to improve the lot of the poor, especially the rural poor, deserves serious attention. With more and more of the world’s population moving into cities, governments everywhere are interested in policy ideas that will help keep some people in agricultural production. In the case of the European Union’s (EU) twenty-eight members, some 23 per cent of the population live in rural regions.Footnote 2 More and more people, and not just Europeans, are looking to participate in the economic life of cities. More of us are drawn to shopping malls than barns.
The EU’s advocacy for more international protection for GIs is well known. It was the EU that put forward draft text for the protection of GIs at the beginning of the negotiations of what became the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 1994.Footnote 3 Since then, the EU has continued to pursue protection for its GIs through preferential trade negotiations.Footnote 4
One of the first countries to negotiate with the EU over protection of its wine GIs was Australia. After long negotiations that began in the 1980s, Australia and the EU signed an agreement in 1994 to regulate the wine trade between them (1994 Agreement).Footnote 5 A replacement agreement was signed in 2008, coming into force in 2010.Footnote 6 These agreements were entered into because Australia needed better access to the EU’s wine market and in particular wanted to provide consumers with more information on wine labels relating to matters of vintage, variety, and production.Footnote 7 Australia enacted legislation in 1993 that would protect the wine GIs of EU countries, as well as allow Australian wine producers to apply for GIs.Footnote 8
At the time of the negotiations, many on the Australian side, especially those in government, saw national GI systems in Europe as part of the protectionist agricultural policies of the EU. During this time, Australia was one of the leaders of the Cairns Group, the group that was leading the charge to liberalize trade in agriculture in the Uruguay Round of multilateral trade negotiations.Footnote 9 The belief that GIs were examples of a larger picture of the over-regulation of the EU wine sector is understandable keeping in mind that since 1962 more than 2,000 directives, regulations, and decisions concerning wine in the EU have been published.Footnote 10 At the same time, the trade incentives for Australia to continue negotiating with the EU over GIs were and remain strong. For example, in 2007–2008 the European Community accounted for about 50 per cent of Australia’s wine exports, worth about $1.3 billion.Footnote 11
In any case, Australia’s enactment of a wine GI system did set up a natural experiment in which Australia’s wine regions would become test sites for whether or not GIs contribute to regional development. By definition, natural experiments are not run under laboratory conditions. Australia did not copy a European GI model but rather, taking into account the circumstances of the Australian wine industry, it developed its own model of protection. Perhaps the most important aspect of those circumstances was that an export boom had begun in the late 1980s, well and truly before Australia’s GI legislation came into operation in 1994.Footnote 12 As we will see, Australia’s wine GI system represents an experiment with a minimalist model of GI regulation: one that can be contrasted with a French command-and-control model.
Little attention has been paid thus far as to whether or not Australia’s wine GI system has contributed to Australia’s regional economies. One might argue that it was not designed to, but this does not necessarily mean that it has not had such effects in practice. In this chapter, I present the results of interview data with actors from the wine industry, including winemakers, wine associations, tourist associations, government officials (federal and state), and regulators. The interviews with winemakers took place in some of Australia’s premium wine growing regions (Tasmania and the Yarra Valley in Victoria) as well as regions that were generally not regarded as such (e.g. Southern Queensland). The data are part of a bigger project carried out with William van Caenegem and Jen Cleary that examined the issue of whether Australia should enact a GI system for food.Footnote 13 However, in this chapter I am concerned with the narrower question of whether there is evidence of regional developmental benefits that might be attributed to Australia’s wine GI system.
This is very much a micro-study, one grounded in the idea that there is merit in getting actors steeped in industry experience to exercise the wisdom of hindsight on critical issues such as the regional benefits of GIs. As with all micro-studies, there are limitations about its generalizability, but then I would argue that this is precisely the broader conclusion that one should come to about intellectual property. Its universal prescription as development medicine for countries sits at odds with the fact that it is an intervention into organic and local systems that respond very differently to the same medicine. The present case study does not point to regional development benefits, but rather it reveals the existence of mechanisms that explain how GIs might function to deliver regional benefits. Whether or not these mechanisms will operate is, as we will see, a matter of complex causal context. For example, lack of trust in a rural region can spoil the best-designed GI system. Wine has economic characteristics that many other products do not have, setting another potential limitation on what might be inferred from the present study.
The remainder of this chapter sets out the Australian GI scheme, including its costs and enforcement. If one were to summarize the Australian system in tweetable form, it is that ‘flexibility rules’. After the sections on the GI scheme, there follows a section on how various actors in the wine industry view GIs. The remaining sections discuss the link between GIs and regional development, identifying two mechanisms – reciprocal spillovers and group identity – that suggest how a GI might help regional development.
2 Australia’s System of Geographical Indications for Wine
The wine industry in Australia is the only industry that has the option of registering a GI under legislation specially dedicated to that purpose, namely Part VIB of the Australian Grape and Wine Authority Act 2013 (AGWA Act). Under the AGWA Act, the Geographical Indications Committee (GIC) has powers of determination to decide applications for GIs.Footnote 14 The Act lists organizations that may apply for a GI and it specifies that a winemaker or grower of grapes may make an application. The detailed criteria for determination are prescribed in the relevant regulations.Footnote 15 These criteria include geological, climatological, cultural, and historical factors.Footnote 16Lying at the heart of a GI system is the delineation of the boundaries of an area and the decision on the indication to be used in relation to that area. Boundaries have to be described as accurately as possible because these descriptions would be included in the Register of Protected GIs and would become the legal basis for deciding whether, for example, someone has made a false claim on a wine label.Footnote 17 By way of example, the description on the GI Register for ‘South Eastern Australia’ is as follows:
The beginning point of the boundary is located at the intersection of the Tropic of Capricorn and the eastern coastline of Australia and proceeds thence in a generally south west direction in a straight line to the intersection of the Queensland / New South Wales State borders with the State border of South Australia at the location identified on the map as ‘Cameron Corner’, and proceeds thence in a generally south west direction in a straight line to the intersection of the South Australia coastline with the Great Australian Bight (Southern Ocean) passing through the centre of the township of Ceduna in South Australia.
The area so enclosed includes all of the State of New South Wales, all of the State of Victoria, all of the State of Tasmania, all of the Australian Capital Territory, and those parts of the State of Queensland lying to the south and the east of the described boundary, and those parts of the State of South Australia lying to the south and the east of the described boundary, and all of those off-shore islands under Australian Government control lying to the south and east of the described boundary.Footnote 18
There is something else to note about this GI: its extraordinary size. It includes, for example, the State of New South Wales, a state bigger than France in terms of square kilometres (800,642 square kilometres compared to 549,087).Footnote 19 The State of New South Wales is itself a registered GI and within New South Wales there are a number of registered GIs, the most well-known being the Hunter Valley.Footnote 20 With GIs that enclose areas the size of large European countries, there is little plausibility to the claim that there is a distinctive set of qualities imparted by the locality to a particular wine. The system was not designed to bring terroir into a close regulatory association with the production of wine, but rather had a market-access goal. This is clear from the Explanatory Memorandum to the Australian Wine and Brandy Corporation Amendment Act 1993 when it states that in order ‘to enable wine labelled by region to be marketed in the EC, the boundaries of Australian geographical indications concerned must be defined’.Footnote 21 The fact that large country-like GIs of the size of ‘South Eastern Australia’ were created meant that no Australian wine producers would be left out of a GI region and therefore access to the EC market.
The rules that govern the use of a wine GI registered in Australia are straightforward compared to those found in many European systems, especially the French appellation system appellation d’origine contrôlée (AOC). The French system allows obligatory rules to be prescribed for many things, including allowable grape varieties within a region, minimum levels of alcohol, production methods, maximum yield levels, and methods of harvesting.Footnote 22 The purpose behind this detailed prescription is to ensure the production of a wine of good quality from grapes that best fit the terroir of the area. The regulation of yield in the French system is one important element of a scheme aimed at maintaining a standard of quality. Regulating yield was probably one of the last things on the minds of the Australian designers of the GI system in the boom years of the 1990s. The Australian wine GI system is a simple system concerned with the regional designation of grapes and is silent on processes about which the French system is vocal. The principal regulatory tool in Australia is a Label Integrity ProgramFootnote 23 (LIP) that includes GI labelling but with the GI system not specifying standards aimed at quality.
In Australia there is no obligation to use a GI, but where a single GI such as ‘McClaren Vale’ is used, at least 85 per cent of the wine must have come from grapes grown in the region defined by the registered GI.Footnote 24 Multiple GIs can also be claimed, though only up to a maximum of three in total.Footnote 25 In the case of multiple claims, the basic rule is that 95 per cent of the wine must have come from grapes grown in those regions, with at least 5 per cent of the wine coming from each region.Footnote 26The Australian GI system takes a strict bright-line approach to GIs, its aim being to contribute to the greater goal of ensuring ‘the truth, and the reputation for truthfulness, of statements made on wine labels’.Footnote 27 For example, the Australian Grape and Wine Authority’s guide to labelling with GIs makes clear that
[s]tatements such as ‘our winery is situated in McLaren Vale’ when the particular wine in question is not from McLaren Vale are not permitted, even if true and even if supplemented by clarifying information.Footnote 28
The 85 per cent rule means that there is some flexibility in terms of sourcing grapes since, if required, up to 15 per cent can come from outside the region. If so, there is no requirement for this to be mentioned on the label. Similarly, there is no obligation under GI rules to process the grapes in the region in which they are grown.Footnote 29
The Australian wine GI system, because it relies only on rules of origin and imposes no other standards, does set up a potential free-rider problem. A small group of winemakers within a region may work hard to create a reputation for quality through the adoption of best-practice methods and drawing on the strong innovation base of the industry. In the absence of detailed prescribed standards, there is nothing to stop someone from buying into the region, making a lower-quality wine, but being able to use the GI to market the wine because they have sourced 85 per cent of the grapes from the region. It is clear from the interviews that at least some winemakers see the reputation of a region as depending on a small pool of excellent producers: ‘Six out of 50 wineries are excellent [in the region], there are about 10 other wineries that are good’ (Respondent #16).At the time the rules of the Australian GI system were being talked about, the industry produced wines of varying quality and price. A number of interviewees pointed out that in order to accommodate this diversity a ‘keep it simple’ approach was adopted. The GI system was not intended to be a barrier to entry into the industry. Rather than using formal rules and sanctions to set a standard of wine production in a region, the industry has pursued quality in other ways. For example, the interviews showed that important to the drive for quality at the regional level have been informal social mechanisms such as tasting groups organized by winemakers – places where they can have an ‘honest conversation about the quality issue’ (Respondent #15). Such groups provide new entrants into a region with information, constructive feedback, support, and the opportunity to win recognition through competing for prizes. The aim has been to socialize those who are interested into a culture of quality production rather than prescribe it through law. According to our interviewees, the Australian approach to GIs has helped the industry to grow. A highly prescriptive system might have functioned as a deterrent. In the words of one interviewee:
Australia is increasingly recognised as an abundant source of regionally distinctive wines made from an array of both traditional and recently introduced grape varieties. Maintaining the integrity of region and variety claims has, therefore, never been more important.Footnote 30
This in turn raises questions about how compliance with the rules is best achieved, how breaches of the rules are to be detected, and what the strategies for enforcement should be. AGWA provides information and educational services to the wine industry about its labelling obligations. It also has responsibility for monitoring compliance with the LIP, GI claims forming part of that program.Footnote 31 The LIP imposes record-keeping obligations on those in the wine supply chain.Footnote 32 In addition, AGWA has a range of sanctions available under the law, including the suspension or cancellation of an export licence, as well as terms of imprisonment and/or fines.Footnote 33
Compliance with the LIP is monitored by a small group of auditors (a total of four at the time of the interviews).Footnote 34 This audit team aims to cover all Australian wine producers once every three to four years. Audits may be done via cold-calls or by appointment. Wine producers are obliged to keep detailed records that help to ensure full traceability because traceability is one of the things that compliance inspectors comment on in their audit reports. Auditors appear to follow what is known in the regulatory literature as an enforcement pyramid. The key idea behind the pyramid is that punishment and persuasion should be linked in a certain sequence that always begins with dialogue and persuasion at the base of the pyramid and ends with the most punitive sanction at the apex of the pyramid.Footnote 35 At the time of the interviews, approximately 400 audits were being carried out annually. Resorting to coercive levels of the enforcement pyramid by the regulator appeared to be rare, with few licence suspensions and only two prosecutions in the last fifteen years (Respondent #104). Only one of those prosecutions related to alleged breaches of provisions relating to GIs (Respondent #104). A lot of the effort invested in obtaining compliance takes the form of presentations, advice, and the provision of manuals and templates to wine producers and exporters.
There is a range of costs that accompanies the wine GI system: the costs of application, the costs of running the system, and the ongoing costs of compliance. The costs begin with a group’s time in putting together an application for the determination of a GI. These costs include a fee and those arising from assembling the evidence/information required as part of the application process. The application fee is currently set at $27,500, a fee that approximates the average cost of the GIC hearing an application (Respondents #103 and #104). The fees for wine GIs have changed over time. Initially they were met out of industry levies and then were kept at a low rate (Respondent #104). The potentially deterrent effect of the present fee was seen as a desirable consequence by many interviewees.
The real costs of application, however, lie in the evidence that is required to convince the GIC that it should determine the boundaries of a GI. The applicant has to provide evidence on matters such as the history of an area, its discreteness, and homogeneity by reference to attributes such as climate and geology, all of which require expert evidence (Respondent #94). Estimates from the interviews suggest that such costs amount to tens of thousands of dollars. Costs might rise to a six-figure sum if, for example, there is opposition to the GI from a trademark owner. This sum might be larger still if, as in the case of the dispute over the determination of the boundary for the Coonawarra GI in South Australia, the matter ends up before the Federal Court with many years of legal expenses having to be met.
The Coonawarra saga is a spectacular example of a bitter and prolonged dispute over a GI boundary, but it is also something of an outlier.Footnote 36 Settling GI boundaries has been a story of consensus rather than conflict. Most other Australian GI boundaries were determined without recourse to battalions of lawyers and appeals to the Federal Court (Respondent #94). One reason may be that before the introduction of the formal GI system, some winemakers in Australia were organizing themselves on a regional basis and so perhaps there was, at least in some regions, a customary sense of boundaries. For example, there were about six regional wine associations in Victoria in the 1980s (Respondent #151). Also in the 1980s some winemakers had organized an appellation program in Tasmania (Respondent #128).
As the quote from AGWA in Section 3 suggests, many people in the wine industry believe that GI regions are important. How important turns out to be difficult to say, and the reasons vary among regions and participants. Two perspectives on wine GIs emerged from the interviews. One was a winemaker’s perspective that, not surprisingly, looked to the role of GIs in helping to define and communicate the connection between the region and the wine. The other was a marketing perspective in which assessing the value of GIs comes down to answering one simple question about them: ‘does the consumer care?’ (Respondent #128).
If we look to consumer preferences as a guide to the importance of GIs, separating the influence of region from a range of other purchasing influences such as age, awards, brand, expert or other recommendation, price, previous experience, and so on, it is not clear where region sits in a ranking exercise. Studies suggest that region is probably recurrently important, but how important is difficult to isolate.Footnote 37 The answer is likely to vary depending on which segment of the consumer market is being studied.
Those interviewed tended to think that GIs were needed above a certain price point: ‘From $15.00 onwards you need a region’ (Respondent #158). Others nominated higher price levels. GIs had a ‘halo effect’ that ‘helped 5%–10% of the export market’ for Australian producers (Respondent #151). The importance of GIs in export markets was linked to the increase in value of the Australian dollar: ‘[We] got priced out of the low-end market because of the rise in the dollar. [We] make more on a £10 bottle and there the “Yarra Valley” region makes the difference’ (Respondent #163).
The interviews with those in the wine industry who took a marketing perspective on GIs tended to confirm the difficulty of isolating the effects of regions on consumer purchasing decisions. Some interviewees made the point that industry surveys showed that the recall by Australian consumers of even high-profile GIs, such as the Barossa, the Hunter Valley, and Coonawarra, is weak and essentially non-existent for many lesser Australian GIs. Amongst consumers in international markets there is also very little recall of Australian GIs. The survey results reported by interviewees (internal and not published) would have many winemakers reaching for antidepressants. There is ‘massive ignorance and confusion out there’ when it comes to GIs with consumers, according to one survey, thinking that Chardonnay and Jacobs were GIs (Respondents #103, #104, and #171). In Europe, consumer awareness of the European GI scheme was also reported as being very low, with only 8 per cent of consumers recognizing the relevant symbols.Footnote 38 This is a telling example, as it shows how difficult it is to familiarize consumers with new GI label categories (in this case, the protected designation of origin (PDO) and protected geographical indication (PGI) symbols). Extolling the virtues of GIs is much easier if one is growing one’s grapes in Burgundy.
The interviews also suggested that the export success of Australia’s wine industry in the 1990s was built around the application of modern brand-building techniques that allowed the winemakers of the New World to communicate with European consumers in ways that caused the Old World to sniff with disdain. At the core of this marketing success was the image of Australia itself: a place that could pour sunshine into wine bottles from where it could be released like a genie to brighten the gloomiest European day.Footnote 39 The marketing of Yellow Tail wines is a good example of the kind of creative strategy that was employed. Yellow Tail is reported to sell more in the US market than all French producers combined.Footnote 40
Australian GIs were not central to this marketing strategy. The Australian wine export figures for the period 1989–1998 show remarkable growth, with an average increase of 26 per cent per year.Footnote 41 They also show that Australia’s export success was occurring well before the introduction of the GI system. GIs functioned as a Trojan horse allowing the Australian industry to gain greater access to European consumers. Once in the market, the combination of quality, price, and marketing of Australian wine did the rest.
It is probably also fair to say that GIs became progressively more important in the wine industry’s thinking as it considered its future. One interviewee, a winemaker and leader within the wine industry, referred to the 1996 publication Strategy 2025, describing it as a long-term vision for the Australian industry that included an important role for GIs. In his words, ‘We didn’t want to be the wool industry. If we’d taken the path of the wool industry we’d be shipping tankards of fermented grape juice’ (Respondent #151).Some eleven years later, the growing emphasis on GIs and regions can be seen in the AGWA’s 2007 publication Directions to 2025:
Today, Australian wine is rightly best known for its Brand Champions. We will be able to consider the job near-done when we can say the same for our Regional Heroes – wines which reflect the remarkable number of successful combinations of classic grape varieties with Australian wine regions.Footnote 42
And even more recently, AGWA, outlining its strategic plan for 2015–2020 in a discussion paper, indicated that ‘increasing the demand and premium paid for Australian wine’ was a key strategic priority to be underpinned by research into ‘Australia’s unique terroirs’ and compliance with its labelling laws.Footnote 43
There was a strongly held view amongst interviewees that having too many new GIs could create marketing problems. Australia’s well-known GIs were reputable wine regions before they became GIs. The Barossa Valley, McLaren Vale, the Hunter Valley, the Yarra Valley, and Rutherglen grew in prominence as wine regions throughout the twentieth century. These regions progressively changed from an exclusive reliance on producing cheap fortified wine and bulk wine to making improved quality table wine, particularly as better grape varieties were developed and the industry placed more emphasis on technological innovation of all kinds.Footnote 44 When Australia adopted the GI system, these regions had the benefit of sunk reputational costs. Taking a largely unknown region and turning it into a consumer brand is a much more difficult and expensive exercise irrespective of whether or not the region is defined by a GI. Some GIs were described as ‘unwieldy and impossible’ (Respondent #171). Thinking about how to lift some of Australia’s GIs out of anonymity remains a marketing challenge for the wine industry.
Interviewees, whether speaking from a winemaker’s perspective or a marketing perspective, were generally not in favour of a further sub-delineation of Australia’s existing wine GIs. For example, Tasmania has been a registered GI since 1994 with no sub-regions appearing on the register. The Tasmanian winemakers interviewed saw no gains in the creation of GI sub-regions. They saw Tasmania as a strong and recognizable brand. They characterized their industry as a small industry that had to work together in order to grow and keep the focus on producing quality wines. Their worry was that sub-regional GIs might have a splintering effect on an industry that could not at this point in its evolution lose the cooperation it had achieved: ‘At this stage of our maturity we’ve got more to lose than to gain by going our own separate ways’ (Respondent #128).
The wariness about sub-regional GIs was not confined to Tasmania. The view that Australia had enough wine GIs was reported by our interviewees to be a general view within the industry. That said, some interviewees in Tasmania and elsewhere did hint at the desire of some smaller winemakers to have their own identity, suggesting that there is at least some debate within the industry about sub-regional GIs. An overall view from the interviewees was that while sub-regions could certainly be identified, something not surprising given the size of Australia’s wine GIs and the diversity of soils within those GIs, at this stage of the industry’s growth it was better not to formalize those boundaries. Many winemakers saw themselves as still being in a learning and experimental phase: ‘There’s a lot of learning to identify the perfect single vineyard for growing grapes – it can take 100 years to work it all out.’
The more general lesson here is that if an industry is to work successfully with a GI system, it will have to arrive at a general consensus about its use, avoid its potentially destabilizing effects, and make it an ongoing part of its planning conversations. The Australian wine industry has many levels and institutional actors from the public, private, and research sectors that produce internal circles of deliberation and debate about its future.Footnote 45 From those internal circles it has been able to forge common strategic objectives that at first did not heavily prioritize GIs in the export boom years of the 1990s, but now with the boom well and truly over, do include a greater emphasis on GIs.
Even if, as seems likely, GIs will come to play a more important role in the Australian wine industry in terms of marketing, more sales will not necessarily translate into significantly more income or benefits for a wine GI region in Australia. The test of the development benefits of a GI system, as the Council regulation referred to in the introduction makes clear, is encouraging people in rural areas to stay and improving their income. In the case of the Australian wine GI system there is no obligation to process the wine within the region. Continued mechanization and automation in the Australian wine industry will also affect local employment opportunities. Industry structure matters to the likelihood of regional benefits. Australia’s wine companies are export-oriented, as well as part of global ownership structures.Footnote 46 Investment decisions by large wine companies are likely to be determined by a global-market perspective rather than a regional perspective. For example, Accolade Wines, Australia’s largest wine company, has a presence in 115 countries and a business model based on brand investment and contracting with grape growers.Footnote 47
The extent to which a GI improves the income of a wine region will also be deeply affected by market structures concerning distribution. For example, two supermarkets in Australia, Coles and Woolworths, dominate the retail grocery market and together account for some 70 per cent of domestic wine sales.Footnote 48 This structure makes for hard bargaining when it comes to winemakers selling their wine to these supermarkets. In the words of one of Australia’s largest winemakers, ‘they just taste and check with their calculators’. These retailers are also creating their own private label wines, placing even more pressure on the capacity of winemakers to improve their margins.Footnote 49 Even if some wine GIs result in a willingness by consumers to pay more for the wine, players other than individual winemakers may end up capturing those greater margins.
The Australian GI system was designed so as not to disturb the flexibility and diversity of the industry. Australia’s GIs are, as pointed out earlier, like a set of very large Russian nesting dolls giving large wine companies a lot of flexibility when it comes to sourcing grapes and using GIs to indicate the source of the grapes. Large wine companies in Australia own about 20 per cent of the national vineyard estate, with the remainder in the hands of specialist grape growers and some small wineries.Footnote 50 In a recent submission to the Australian Senate, the Wine Grape Growers Association of Australia argued that the returns to their industry, which is most directly involved in regional employment, were affected by their members’ relative lack of bargaining power with large wine companies.Footnote 51 GIs, one suspects, have made little impact on who gains how much out of the wine supply chain.
On the question of GIs and regional benefits, the interviews suggested two possible mechanisms that might help to answer the question of how a region might benefit from a GI. For convenience we can label these the reciprocal spillover mechanism and the group identity mechanism. The next two sections discuss each in turn.
One wine region in which a number of interviews took place was in the Granite Belt (a registered GI), Queensland. Wine GIs do not commonly occur in Australia’s north, but the Granite Belt, because of its elevation (600–1,000 metres) and soils, is quite suitable for viticulture. Centred on the town of Stanthorpe in Southern Queensland, the Granite Belt case study suggests that a registered GI may create regional development benefits beyond that of other more generic, region-specific, provenance branding options.
Queensland does not have a great or even good reputation for wine because its tropical and sub-tropical climate and soils are largely unsuitable for growing wine grapes, with the granite soils around the Stanthorpe area being an exception. The problem for the winemakers in the region was the reputation of Queensland wine; as long as they were under the banner of ‘Queensland wine’, success was limited. Queensland was simply not known as a traditional grape-growing area. Winemakers had to be skilled in creating interest in their product first and not mentioning Queensland in their marketing. One winemaker described how they explained the location of their winery in the Granite Belt to customers, commenting, ‘notice how I don’t use the word Queensland’ (Respondent #18). The registration of the Granite Belt GI in 2002 was seen as an important breakthrough: ‘it’s given us our own identity’ (Respondent #18).
In the interviews, the winemakers were very clear that it was the registration of a GI that had been crucial to their success. It created the opportunity for them to escape the poor reputation of Queensland wines. The Granite Belt GI became the basis for a marketing strategy for wine that allowed winemakers to distinguish their wine from the rest of Queensland. It also became the basis for creating a broader identity for the region as a tourist destination. Importantly, there was an organizational vehicle that helped to back the promotion of the Granite Belt in the form of Granite Belt Wine and Tourism (GBWT), a peak local body representing wineries and other tourist operations.
According to interviewees, the GBWT works with the GI boundary as a guide for its promotional activities. These activities are funded from member levies and fees, with businesses being able to buy different promotional packages. Critical to the stability of the GBWT has been finding a fee structure acceptable to the different types of businesses involved. Establishing a regional identity was described as a ‘slog’ (Respondent #20). The challenges include settling on an identity, since there are always options, alternatives, and a diversity of views.
The Granite Belt wine GI seems to have played an important role in the region’s growth by helping winemakers gain an independent identity and allowing them the opportunity to forge a reputation for the quality of their wines that was not distorted by an association with Queensland. As the region’s wines began to achieve recognition for their quality, tourists became more interested in visiting the region. This in turn generated demand for food and accommodation services, services that both drew on the success of the wine industry and contributed to its drawing power. In this particular case, the GI was integral to a process of reciprocal spillovers in which the benefits of the wine GI spilled over into various other food and tourist ventures, which in turn created benefits for the local wine industry. This process of reciprocal spillovers has continued to intensify with the establishment of the Queensland College of Wine Tourism in the region, a specialist education and training provider relating to the wine tourism industry.
The Granite Belt case suggests that a GI may, under a set of conditions, help a region gain the benefits of reciprocal spillovers that might not otherwise occur. In the case of the Granite Belt two conditions emerged as crucial: distance to a large urban centre (Brisbane is three hours away by road) and the creation of an owner-operated regional marketing organization (the GBWT). In terms of the proximity to Brisbane, what emerged from the interviews was that the marketing focused upon the Granite Belt as a weekend destination rather than a day-trip destination. This had important implications for the accommodation businesses in the region. Without a regional marketing body the Granite Belt region would have enjoyed much less success. As one non-wine producer who was paying $1600 to GBWT pointed out, ‘where would $1600 go if we had to market ourselves?’ (Respondent #12).
Proximity to tourism was mentioned as a factor in other interviews in other regions. In the Yarra Valley one winemaker pointed out that Yarra Valley Shiraz grapes commanded a higher price than Grampian Shiraz grapes (the difference being in the range of $400–$600 per tonne), despite the excellence of the Grampian grapes (Respondent #164). He attributed this to the fact that the Grampians did not get the tourist exposure of the Yarra Valley. Conversely, if we consider the situation where no Granite Belt GI was registered and the winemakers in the region continued to operate under a Queensland identity, then on their own account they would have continued to struggle and the region would have attracted fewer tourists. The GI was important rather than some other marketing strategy based on a certification mark because of the precise in/out group effect of the GI, which is discussed in the next section.
The Granite Belt case study points to the possibility of a GI triggering or accelerating a process of reciprocal spillovers. It is not the only case study where the spillover process was observed. In the Yarra Valley an interviewee from a dairy observed that the success of Yarra Valley wine in China had also triggered an interest in other Yarra Valley products such as cheese.
One important issue is whether a product other than wine can trigger this spillover process. Wine is a complex cultural product. It can be a bulk commodity (beverage wine), as well as a Veblen good (a wine of excellent or superexcellent reputation), a term used by economists to describe the purchase of goods that are linked to social status. In the case of goods with Veblen attributes, consumers are prepared to pay more because these goods have status and cultural effects. More is being satisfied in the consumption of such goods than simply thirst or hunger. People are prepared to pay for wine-tour holidays and tell their friends about them, whereas apple-eating tours would perhaps not generate the same pattern of social reporting. The number of food products like wine that can generate strong reciprocal spillover effects may be quite restricted. The interviews revealed that the Granite Belt region does have a reputation for producing good apples, but it would be unlikely that a GI for Granite Belt apples would generate a process of reciprocal spillovers of the same intensity as one for wine. The mechanism of reciprocal spillovers, which explains how other businesses in a region both benefit from and contribute benefits to a GI area, depends critically on the possession of a signature or iconic GI.
The certainty that GIs bring to the placement of boundaries appears to be playing an important contributory role in attracting investment into a GI region. Wine GIs in Australia, as they are subject only to rules of origin and not additional quality standards, do not of themselves trigger an interest in the production of quality wines. As indicated earlier, investment in quality in Australia’s traditional wine-growing areas was occurring well before the advent of the GI system. A GI by virtue of its precise delineation creates a simple group identity based on geographic lines. For example, the Barossa Valley GI enables one to claim the identity of being a Barossa Valley winemaker. The GI can be thought of as creating a minimal group identity: a formal right to be counted as part of a group. But, of course, groups once constituted may evolve in all sorts of ways; this evolution itself is affected by variables such as trust and leadership. In those GI regions where a sufficient number of winemakers have committed to investing in quality and in improvement, the GI does not simply define a geographical group but also defines who is potentially a part of a community of shared commercial fate. A winemaker who produces a poor-quality wine and who is in a region known for its quality wine generates a negative externality for the region. A winemaker who wins prizes generates a positive externality for their region. The interviews with winemakers from regions with a reputation for premium wines indicated that all were sensitive to the negative and positive effects that individuals could have on a region’s reputation.
Informal mechanisms and practices have evolved amongst winemakers to try to ensure that the production of wine in a GI region that is associated with wines of a particular quality continues to meet or improve on those standards of quality. A common practice is the use of tasting groups or clusters in which winemakers bring along samples for evaluation by their peers. The goal is constructive criticism aimed at improving the wine prior to bottling (Respondents #18 and #123). Wine competitions also seem to play a role in creating a culture of quality. Winemakers care about winning prizes. The esteem in which they are held by their peers and the broader industry matters to them. There are also the more obvious benefits that accrue from winning prizes – the capacity to price accordingly. Wine competitions are important networking sites where they can find out from judges in informal conversation why they did not win a place and how they might improve. The leadership of more established wineries in a region, such as a Josef Chromy in Tasmania, is also important. These wineries keep a weather eye out for newcomers, finding ways to give them advice about what works best in the region. The response is generally positive: ‘nobody wants to make bad wine – they jump on board immediately’ (Respondent #123).
Where a region has committed to quality, the GI boundary creates certainty for future investors. They know precisely where they must buy in order to gain the benefit of the GI. Winemakers who want to expand their business into premium wines benefit from having precisely defined regions that are associated with quality winemaking. A wine company such as De Bortoli, which has its headquarters in Griffith (an area not associated with premium wines), has expanded into the Yarra Valley as part of a strategy to increase its production of premium wines. The Yarra Valley GI is seen as generating an important halo effect.
The group identity that a GI system creates through its precise boundary delineation function helps winemakers who are interested in investing in quality to identify those who they must work with if they are to create a community with a sense of shared commercial fate within a region. If a group of winemakers makes the transition to quality wine production, then other effects such as greater investment in the region are likely to follow. The group-identity mechanism that operates as a result of the Australian wine GI system makes a modest but important contribution by defining who is in an area and who is not. This is simply a start. What happens after that depends heavily on leadership and the inclinations of people to work together.
There are two points that come from the negotiating phase of Australia’s experience with GIs that are worth emphasizing. Australia’s 1994 Agreement with the EU was an agreement that was specific to trade in wine. In other words, unlike in the case of a preferential trade deal that covers many industries and therefore sets up many possible trade-offs and complexities, the negotiations focused solely on the wine industry. This does raise the issue of whether it is better to negotiate GIs outside of a preferential trade agreement. The answer to this question will depend on whether one is negotiating with the EU or some other major trading partner such as the United States or China, but the point here is that the option of attempting to negotiate a specific agreement on GIs outside of a preferential trade agreement should at least be evaluated.
At the time of Australia’s introduction of a wine GI system, the relationship between trademarks and GIs in Australia did not prove a problem, one reason being that Australia was not party to preferential trade agreements that contained provisions on the issue. Like other countries, Australia has gone down the preferential trade agreement path concluding in 2004 the Australia-United States Free Trade Agreement. Amongst other things, this agreement led to provisions in Australian law that allow for objections to the determination of a GI based on pre-existing trademark rights.Footnote 52 For example, Rothbury Wines were able to use these provisions to object successfully to the determination of a ‘Rothbury’ GI, citing the existence of a suite of registered, pending, and common-law trademarks.Footnote 53 As countries become parties to more and more preferential trade agreements, they will have to introduce much more procedural complexity into the design of any domestic GI scheme. At a more fundamental level, if a trademark office has allowed many trademark registrations over the country’s valuable agricultural place names to creep onto the register, it may have created a huge practical obstacle to introducing a GI system.
Turning now to the issue of regional development, Australia’s GI system was introduced at a time when the Australian wine industry was in the greatest export boom period of its history. The dominant regulatory principle of this system was truth in labelling, but it was also a principle that was bent to serve the interests of the wine industry in flexibility. Truth had to accommodate the demand for flexibility in production and processing. A consumer buying a bottle of wine with the GI ‘South Eastern Australia’ on it is being told that the grapes come from an area the size of several large European countries. The Australian industry is now in one of its bust cycles, and there is much more talk about concentrating on quality, suggesting that the GIs linked to Australia’s premium wine regions will perhaps gain more attention from marketers. It is also important to keep in mind that Australia’s experience with GIs is a little more than two decades old, whereas the Australian wine industry itself has a history of boom–bust cycles going back to the 1850s. It would be fair to say that the industry is still in something of a learning period with GIs. The future of wine GIs in Australia and globally is more likely to be influenced by decisions in the designer boardrooms of multinationals than in the cramped offices of the many hundreds of small wine producers in Australia, 75 per cent of whom crush less than 100 tonnes per year.Footnote 54 Of Australia’s 2,573 wine companies, the top four account for 48 per cent of the national crush.
The Granite Belt GI does point to the mechanisms of reciprocal spillovers and group identity that help to explain how a GI could contribute to regional growth. However, for reciprocal spillovers, the case of the Granite Belt shows that proximity to a large city (Brisbane) matters. The same is true for the Yarra Valley with its close proximity to Melbourne. A wine GI may help a region in terms of jobs and growth by being able to entice city dwellers to visit. Regions with iconic GIs need cities to tango. Wine has that allure. Apples do not. For those interested in a GI system that truly serves poor and remote regions, the Australian wine GI model is almost certainly not the answer. But then perhaps no GI model could serve in that way.
The concept of a geographical indication (GI) as a badge of origin that performs the function of identifying the geographical source of a product and its unique characteristics or quality that results from its geographical origin is a fairly recent development in the landscape of Malaysian intellectual property law. GIs were only formally recognised in Malaysia as a distinct type of intellectual property right when the Geographical Indications Act 2000 (GIA 2000)Footnote 1 was enacted. The Act, which came into force on 15 August 2001, was Malaysia’s response to its international obligations to protect GIs under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).Footnote 2 At that time, there was relatively little understanding of the benefits and potential impact of a system of protection of GIs on the socio-economic development of the country, particularly with regard to sustainable rural development. Even though there is currently no specific study that has been conducted in Malaysia on the impact of GI protection on the country’s socio-economic development, it is safe to say that at the present moment there is a general perception among stakeholders of intellectual property rights that GIs have a potentially positive impact on the generation of income, creation of local employment and, implicitly, the country’s social and economic development.Footnote 3 This is because consumers often place value on products that they associate with a certain geographical origin and GIs are potentially effective marketing tools of great economic value.Footnote 4 GIs are able to link products to their geographical regions, which oftentimes are in rural areas, and connect consumers to the producers.
As GIs were not perceived as a distinct form of intellectual property prior to the GIA 2000, it is not surprising that no applications were made to the Intellectual Property Corporation of Malaysia for the registration of geographical indications until the year 2003. Even then, there was only one application for registration made in that year.Footnote 5 The number soon escalated, and in the year 2015 alone there were thirty-one new applications filed to register GIs in Malaysia.Footnote 6 Of these, twenty-nine applications were by Malaysian applicants while two were by foreigners. Needless to say, not all applications were successful because they lacked the necessary requirements, but it suffices to note that by the end of 2015 there were in total fifty-nine registered GIs on the Register of Geographical Indications set up under the Act.Footnote 7 These registered GIs belong primarily to products related to agriculture-intensive industries as well as to producers in the handicraft and food sectors, which possess historical and cultural links between the geographical area of the GI-denominated products and the respective groups of producers.Footnote 8 For example, in the agriculture industry, producers of pepper, tea, coffee, rice, ginger, mangoes, groundnuts and durians have obtained registration of their GIs under the Act.Footnote 9 Producers of handicrafts such as songket (a handwoven fabric), batik and wood-carving have also registered their GIs for protection.Footnote 10 Similarly, GIs have been registered by producers of food items such as belacan (shrimp paste), cheese and biscuits.Footnote 11 The increase in the number of applications for registration of GIs over the relatively short span of time suggests that producers are aware of the importance of adequate legal protection of GIs in contributing to the commercial success of their products.
Starting from the premise that GIs play an important role as a tool in marketing strategies to advance the commercial and economic interests of GI producers,Footnote 12 this chapter discusses whether the current legal protection of GIs in Malaysia is adequate to prevent third parties from free-riding on the reputation of a GI. Adequate legal protection is necessary to prevent the unauthorised use of a GI by a third party for the purpose of misleading or confusing the public as to the geographical origin of a product, particularly when the product does not comply with the specific conditions of manufacture or does not originate from the geographical area. Apart from that, widespread unauthorised use of a GI could eventually result in the GI becoming a generic term. The unauthorised use of a GI in trade is detrimental to the legitimate interests of consumers and producers and, ultimately, will negatively impact the economic success of the industry that markets its products using the GI. In particular, the first part of the chapter provides an overview of the importance of GIs in the marketplace and describes two scenarios, both at a supranational level involving Malaysia, where GIs were at issue. The second part of the chapter discusses the scope of protection conferred on GIs pursuant to the GIA 2000 and the extent to which the Act promotes the use of GIs in trade. This is then followed by a discussion of the role played by the law of passing off in protecting GIs, particularly prior to the enactment of the GIA 2000. Subsequently, the provisions of the Trade Marks Act 1976 (TMA 1976),Footnote 13 the Consumer Protection Act 1999 (CPA 1999)Footnote 14 and the Trade Descriptions Act 2011 (TDA 2011)Footnote 15 that are relevant to the protection of GIs are briefly mentioned. Finally, the chapter analyses whether the current regime for protection of GIs in Malaysia creates a suitable legal environment that enables holders of GIs to prevent their unauthorised use by third parties in the marketplace.
The notion of a GI hinges on the link that exists between the product, its geographical origin and its quality or other unique characteristics that are attributed to the geographical source. The particular quality, trait or unique characteristics result from natural geographic advantages such as climate, soil, raw materials, manufacturing skills or food processing techniques local to a region. Essentially, the reputation that is associated with a GI is the intrinsic element that sells the product and contributes to the success of the industry that uses the GI. The geographical area of origin is therefore at the heart of all GIs and represents the normative basis for GI protection.Footnote 16
As mentioned earlier, the increase in the number of applications for GI registration in Malaysia suggests the growing importance of GIs for trade in the country. A number of reasons may be proffered for the increase in the number of GIs registered each year with the Intellectual Property Office of Malaysia (IP Office). First, with the public awareness campaigns conducted by the IP Office, the relevant industries and stakeholders, there is now a significant conscious awareness among the public in Malaysia of the functions of GIs and their utility in the course of trade, as well as the legal benefits of seeking GI registration. Second, with a clearer understanding that GIs enable producers to differentiate their offerings from those of other producers because of the unique quality and characteristics that are attributed to production in a particular location of the country, producers are better equipped to use their GIs as a basis for branding and promotion of their products. Accordingly, GI producers are able to gain competitive advantages in the marketplace, thanks to the value added by identifying their products with GIs. Third, with the perceived or actual quality differences imbued in the public mind between GI-denominated products and generic products, GI producers are able to command premium pricing for their products.
The importance of GIs as assets of great value in trade may be demonstrated through the following two illustrations: The first illustration concerns disputes that arose between Malaysia and Indonesia a few years ago over allegations that Malaysia had asserted ownership of some GIs and cultural icons that Indonesia claimed it owned.Footnote 17 For instance, Indonesia had claimed ownership over the textile art of batik, which involved the practice of dyeing cloth through wax-resistant methods. At the same time, the batik industry is also an important part of Malaysian cultural heritage, which has garnered widespread popularity. In Malaysia, the batik industry is a bustling commercial activity and an important source of commercial income for those involved in the industry.Footnote 18 Another example is the registration of Bario rice under the GIA 2000 by an agency of the Sarawak state government. Indonesia claimed that the rice was originally known as Beras Adan and had originated from the local rice area of Malinau in East Kalimantan.Footnote 19 During the same period of time, tension had also arisen over Indonesia’s claim that Malaysia had asserted ownership of some of their cultural icons, such as the sacred Balinese temple dance known as the pendet dance, the shadow puppet theatre known as the wayang kulit, the folksong Rasa Sayang, the ceremonial dagger known as the kris and the meat dish known as rendang.Footnote 20 While these cultural icons are not registered as GIs, the disputes show that the controversies over the geographical origin of a product, which also embodies an important part of national or local cultural heritage, can potentially create barriers to trade and raise issues regarding the importance of elements of national culture, as disputes over these elements can result in creating tension in international relations.
The second illustration concerns the inclusion of issues related to GI protection in free trade agreements, namely those signed by Malaysia with other countries. In particular, in the Malaysia-Chile Free Trade Agreement, which was concluded in 2010, Malaysia was required to recognise the Chilean Pisco GI, but without prejudice to Malaysia’s right to also recognise the Pisco GI from Peru. Similarly, the ASEAN-Australia-New Zealand Free Trade Agreement requires signatory parties to recognise that GIs may be protected through a trademark system. In addition, parties are also to recognise that where a trademark predates a GI within the jurisdiction, parties are required to continue to protect that trademark over the GI.Footnote 21 Currently, Malaysia is engaged in negotiations with the European Union (EU) on the Malaysia-European Union Free Trade Agreement (MEUFTA), whose negotiations started in 2010. One of the issues at the negotiating table amongst other intellectual property rights is precisely the legal protection of GIs.Footnote 22 Although the final content of the agreement has yet to take some form, it is likely that insofar as GI issues are concerned, Malaysia’s obligations on the protection of GIs will closely resemble that found in the European Union-Singapore Free Trade Agreement (EUSFTA).Footnote 23 To a large extent, the EUSFTA shares many similar obligations with the South Korea-European Union Free Trade Agreement.Footnote 24 Assuming that the MEUFTA’s provisions on GIs will parallel that of the Singapore and South Korea counterparts, it would appear that the enhanced level of protection currently granted to wines and spirits under the GIA 2000 will be extended to a broader category of goods in Malaysia, such as agricultural products and foodstuffs. In addition, it is likely that the MEUFTA will include specific provisions in the event of conflicts between trademarks and GIs, namely it may require that a GI is not to be protected if such protection would result in conflict arising with an existing well-known trademark, and consumers would be misled as to the true identity of the product. Apart from that, rightholders may be obliged to maintain minimal commercial activity of their GIs for continued protection and also to put in place control provisions for production of the goods.
Since the TRIPS Agreement does not mandate any specific system for the protection of GIs, Malaysia had opted to adopt a sui generis regime for the protection of GIs rather than make changes to its existing intellectual property laws. Although the notion of GIs as a distinct type of intellectual property right with its own content and characteristics was statutorily embodied in Malaysia only fifteen years ago with the adoption of the GIA 2000, prior to that date a patchwork of different laws existed that could be invoked to protect GIs. The more significant laws in this respect are the law of passing off, the TMA 1976,Footnote 25 the CPA 1999Footnote 26 and the law on trade descriptions.Footnote 27 Nevertheless, the only reported court decision prior to the enactment of the GIA 2000 where a GI was contested was The Scotch Whisky Association & Anor v. Ewein Winery (M) Sdn Bhd,Footnote 28 and it was argued solely on the basis of the law of passing off without reference to any of the other areas of law. The case demonstrates that GIs, though not a defined category of intellectual property right at that time, were already perceived by industries as meriting some form of legal protection.
The GIA 2000Footnote 29 was enacted for the express purpose of providing protection for GIs in Malaysia. A ‘GI’ is defined in section 2 of the GIA 2000 as ‘an indication which identifies any goods as originating in a country or territory, or a region or locality in that country or territory, where a given quality, reputation, or other characteristic of the goods is essentially attributable to their geographical origin’.Footnote 30 This reproduces the definition of a GI in Article 22(1) of the TRIPS Agreement and underscores the triple association between the goods, their quality or other characteristics and the geographical origin.Footnote 31 Section 2 of the GIA 2000 defines ‘goods’ as ‘any natural or agricultural product or any product of handicraft or industry’. It follows from this definition that services do not fall within the meaning of a GI and are accordingly excluded from the protection of this regime.
The GIA 2000 also creates a system for the registration of GIs, but it does not make registration mandatory as a precondition for entitlement to the protection afforded by it. Instead, the GIA 2000 provides that the same scope of protection is conferred on both registered and unregistered GIs. This is made clear in section 3(1)(a), which states that protection under the Act shall be given to a GI regardless of whether or not it is registered.Footnote 32 However, although registration is not a prerequisite for protection, there are benefits a proprietor of a registered GI enjoys that are not available in the case of unregistered GIs. Pursuant to section 20(1), a registered GI shall, in any proceeding, raise a presumption that the indication is a GI within the meaning of the Act.Footnote 33 Apart from this, section 20(2) provides that a certificate of registration shall be prima facie evidence of the facts stated in the certificate and of the validity of the registration.Footnote 34 Also, pursuant to section 21(1), only producers carrying on their activity in the geographical area specified in the Register shall have the right to use a registered GI in the course of trade.Footnote 35
Overall, the GIA 2000 deals with two main aspects of GI protection: First, Parts II and VI of the GIA 2000 translate Malaysia’s obligations under Articles 22,Footnote 36 23Footnote 37 and 24Footnote 38 of the TRIPS Agreement into domestic law. Second, Parts III, IV, V and VII of the GIA 2000 deal with the registration of GIs and matters pertaining to GI registration, such as the administration of the registration system, the procedure for registration and opposition, renewal of registration, cancellation and rectification of the Register, and exceptions to the right to use a GI. In this respect, the GIA 2000 effectively created a sui generis system for GI protection in Malaysia, which paved the way for many GI registrations and for the growing acceptance of GIs as important tools to secure exclusive rights on geographical names for producers in various sectors of the Malaysian economy.
The GIs that are protectable in Malaysia are specified in section 3 of the GIA 2000,Footnote 39 and include all GIs that satisfy the definition of a GI in section 2.Footnote 40 In addition, section 3(b) provides that protection is also granted to a GI as against another GI which, although literally true as to the geographical area of origin, falsely represents to the public that the goods originate in another geographical country, territory, region or locality.Footnote 41 With regard to homonymous GIs for wines, section 7(1) states that protection shall be accorded to each indication, but the Registrar of Geographical Indications shall determine the conditions under which the homonymous GIs will be differentiated from each other so as to ensure the producers enjoy equal treatment and the public is not misled.Footnote 42
Section 4 excludes four types of GIs from protection under the GIA 2000, although these may in appropriate cases be protected by other areas of law such as the law of passing off.Footnote 43 These are GIs that do not correspond to the meaning of a ‘GI’ as defined in section 2,Footnote 44 GIs that are contrary to public order or morality,Footnote 45 GIs that are not or have ceased to be protected in their country or territory of originFootnote 46 and GIs that have fallen into disuse in their country or territory of origin.Footnote 47
The administration of the registration system in Malaysia is overseen by the Registrar of Geographical Indications who is assisted by Deputy Registrars of Geographical Indications and Assistant Registrars of Geographical Indications.Footnote 48 For the purpose of registration of GIs, a Central Geographical Indications OfficeFootnote 49 was set up and a Register of Geographical Indications was created to record relevant particulars pertaining to registered GIs.Footnote 50
Pursuant to section 11(1) of the GIA 2000, an application for the registration of a GI may be made by any person (or group of persons) who is a producer of goods in the specified geographical area, a competent authority or a trade organisation or association.Footnote 51 In this respect, the term ‘producer’ encompasses a number of different entities. Section 2 defines a ‘producer’ as any producer or trader of agricultural products, any person or trader exploiting natural products and any manufacturer or trader of products of handicraft or industry. A ‘competent authority’ is defined as ‘any government or statutory body carrying out the functions of, on behalf of, or sanctioned by, the Government’.Footnote 52
When applying for registration, the applicant submits his personal particulars,Footnote 53 the GI for which registration is sought,Footnote 54 the geographical area and goods for which the GI applies,Footnote 55 and the quality, reputation or other characteristic of the goods for which the GI is used.Footnote 56 If the applicant complies with these formality requirements and the Registrar is satisfied that the GI is not contrary to public order and morality, the Registrar shall advertise the application in the Gazette.
Any ‘interested person’, who is defined as a person entitled to file an application for the registration of a GI laid down in section 11(1), may oppose the application only on one of the following four grounds: where the GI does not fall within the meaning of a GI under the GIA 2000,Footnote 57 where the GI is contrary to public order or morality,Footnote 58 where the GI is not or has ceased to be protected in its country of originFootnote 59 or where the GI has fallen into disuse in its country of origin.Footnote 60 The GIA 2000 lays out a procedure for reply by the applicant and a subsequent response to that reply by the opponent. Based on the parties’ submissions, the Registrar makes a decision either to refuse the registration or to register the GI with or without conditions or limitations imposed.Footnote 61 The GIA 2000 provides an avenue of appeal to the High Court from the Registrar’s decision,Footnote 62 and no further appeal is allowed from the High Court’s decision.Footnote 63
The period of registration of a GI is ten years from the date of filing,Footnote 64 and registration is renewable for a period of ten years each.Footnote 65 There is no limit to the number of renewals that may be made, which endorses the function of GIs as identifiers that link a product to a particular origin and, accordingly, the right of producers in the geographical region to use the GI in perpetuity. However, the failure to renew a GI will result in its removal from the Register.Footnote 66 But this does not diminish the right of the producers to use the GI concerned. The removal from the Register simply means that the GI will not be accorded the rights accrued to registered holders of GIs under the Act – namely the endorsement that the identifier used by the producers is a GI and the evidential benefit of registration. Nevertheless, the Registrar may restore a GI that has been removed from the Register if an application for restoration is made within twelve months from the date of expiry.Footnote 67 The application for restoration will only be granted if the Registrar is satisfied that there has been no use in bad faith of the GI during the year immediately preceding its removal, and no deception or confusion is likely to arise from the use of the GI by reason of its previous use.Footnote 68
The Act also provides for the possibility of cancellation and rectification of a registration. Any ‘interested person’ may request the cancellation of a GI on the ground that it does not qualify for protection because it is excluded from protection under section 4.Footnote 69 An application for the rectification of the registration of a GI may be made on the ground that the geographical area specified in the registration does not correspond to the GI, the indication of the products for which the GI is used is missing or the indication of the quality, reputation or other characteristic of the products is unsatisfactory.Footnote 70 In its plain and ordinary meaning, ‘cancellation’ refers to the expungement of the whole of a GI from the Register, while ‘rectification’ denotes the varying or correcting of an entry or the imposition by the Registrar of limitations.
Upon registration, section 21(1) of the GIA 2000 provides that only producers carrying on their activity in the geographical area specified in the Register shall have the right to use a registered GI in the course of trade.Footnote 71 In this respect, GIs do not grant a monopoly right akin to that of a patent, a registered trademark or a registered industrial design because the right to use a registered GI belongs jointly to the producers carrying on their activity in the geographical area specified in the Register and is not limited to any particular enterprise. Essentially, GIs grant an exclusive right that aims at protecting the collective reputation that is embedded in the GI and is shared by, as well as accrues to, all enterprises in the geographical area that meet the requirements for use of the indication. It is this reputation revolving around a GI that helps to reduce consumers’ search costs. This is because in a market marked by asymmetry of information, the valuable information intrinsic in a GI sends signals to consumers about the quality of a product. While benefiting consumers by providing them with accurate information that links a product with its qualities and geographical origin, GI protection also benefits the producers of the goods by protecting them against the unauthorised use of GIs by third parties.Footnote 72
Pursuant to section 21(2) of the GIA 2000, the right to use a GI is confined to the products specified in the Register in accordance with the specified quality, reputation or characteristics.Footnote 73 Section 20(1) states that a registered GI shall raise a presumption that the indication is a GI within the meaning of section 2, which provides the rightholder with some degree of certainty.Footnote 74 In addition, by section 20(2), a certificate of registration shall be prima facie evidence of the facts stated in the certificate and of the validity of the registration.Footnote 75
The rights conferred upon registration are circumscribed in the situations mentioned in sections 27(2), 28 and 29 of the GIA 2000.Footnote 76 Essentially, these are defences that may be raised in an action against any person who infringes the rightholder’s exclusive right. Pursuant to section 27(2), no legal proceedings shall be brought under the Act against another person in respect to his/her use of a GI prior to the commencement of the GIA 2000, that is, 15 August 2001.Footnote 77 Section 28 provides for the right to the continued use of a GI in respect of winesFootnote 78 and spirits where the use had commenced prior to certain specified dates.Footnote 79 According to section 28(1), where a GI of another country identifying wines or spirits has been used in connection with goods or services by any national or domiciliary of Malaysia and that use has been in a continuous manner with regard to the same or related goods or services in Malaysia either for at least ten years before 15 April 1994,Footnote 80 or in good faith before that date, the user has the right to continue with the use in Malaysia.Footnote 81 Apart from this, section 28(2) allows for the continued use or registration of a trademark that is identical with or similar to a GI where the use of the trademark or its registration took place before the commencement of the GIA 2000 (that is, 15 August 2001) or before the GI became protected in its country of origin.Footnote 82 This is consistent with the ‘first in time, first in right’ principle, which is supported by countries such as the United States (US) and provides that pre-existing trademarks should not be cancelled due to the subsequent registration of a foreign GI. Pursuant to section 28(3) of the GIA 2000, where a GI is identical with a generic word in Malaysia for the goods concerned, no protection will be granted to the GI under the Act.Footnote 83 A final exception to the rights given upon registration is provided in section 29, which allows any person to use his name in the course of trade unless the use is in such a manner as to mislead the public.Footnote 84
According to section 5(1) of the GIA 2000, any ‘interested person’ may institute proceedings in the court to prevent the unlawful use of a GI, irrespective of whether the GI is registered or otherwise.Footnote 85 As mentioned earlier, an ‘interested person’ is defined in section 11 as either a producer of the goods in the geographical area concerned, a competent authority or a trade organisation or association.Footnote 86 From a commercial perspective, by explicitly providing for the institution of legal proceedings to curb the unauthorised use of a GI, section 5(1) ensures that the authenticity of the origin of a product is preserved. In some cases, the producers of a GI product become members of a trade association or society that is entrusted with the promotion of their rights and interests and protects them against the unauthorised use of the GI by third parties. For instance, in The Scotch Whisky Association & Anor v. Ewein Winery (M) Sdn BhdFootnote 87 and Chocosuisse Union des Fabricants Suisses de Chocolat & Ors v. Maestro Swiss Chocolate Sdn Bhd & Ors,Footnote 88 which are discussed later in this chapter, the actions were instituted by the respective trade associations together with a few other producers having the right to use the GI to defend the reputation of the respective GIs.
Section 5(1) of the GIA 2000 spells out four situations in which the use of a GI, whether registered or otherwise, is deemed to be unlawful. First, under section 5(1)(a), the use of a GI is unlawful if in the course of trade its use in the designation or presentation of any goods suggests that the goods originate in a geographical area other than the true place of origin and this has the effect of misleading the public.Footnote 89 This is a basic level of protection conferred on all GI products. Second, under section 5(1)(b), it is unlawful for any GI to be used in the course of trade if the use constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention for the Protection of Industrial Property (1967).Footnote 90 Third, pursuant to section 5(1)(c), it is unlawful to use in the course of trade a GI which, although literally true as to the geographical area in which the goods originate, falsely represents to the public that the goods originate in another geographical area.Footnote 91 Fourth, in the case of wines and spirits, section 5(1)(d) provides that it is unlawful in the course of trade to use a GI if the wine or spirit does not originate in the place indicated by the GI in question. The use remains unlawful even where the true origin of the wines or spirits is indicated or the GI is accompanied by expressions such as ‘kind’, ‘type’, ‘style’ or ‘imitation’.Footnote 92 There is no necessity to demonstrate that consumers might be misled or that the use constitutes unfair competition. A distinction is thus made between the levels of protection accorded to goods generally on the one hand and wines and spirits on the other. Wines and spirits enjoy an enhanced level of protection compared to other GI products. This is in line with the requirement laid out in Article 23 of the TRIPS Agreement.Footnote 93
Pursuant to section 7(1) of the GIA 2000, in the case of homonymous GIs for wines, protection shall be accorded to each indication.Footnote 94 In such a case, section 7(2) requires the Registrar to determine the practical conditions under which the homonymous GIs in question will be differentiated from each other.Footnote 95 This would entail taking into account the need to ensure equitable treatment of the producers affected and the concern that the public not be misled.
The court may grant an injunction to prevent any unlawful use of a GI, award any damages or grant other legal remedy as it deems fit.Footnote 96 Where a legal proceeding brought under section 5 is to prevent the use of a trademark which contains or consists of a GI, a time limit to commence the action is set by section 6.Footnote 97 Pursuant to section 6, unless bad faith is involved, no action shall be brought after the expiry of five years from the date the use of the trademark containing the GI has become generally known in Malaysia or from the date of registration of the trademark under the TMA 1976, whichever is earlier.Footnote 98 In the case of bad faith use or registration, no time limit for bringing an action is imposed.Footnote 99
Where a GI exists before the coming into force of the GIA 2000, section 27(2) provides that no legal proceedings shall be brought for anything done before the coming into force of the Act.Footnote 100 Section 27(2) was applied recently in the Federal Court case Maestro v. Chocosuisse.Footnote 101 In this case, the plaintiffs, who were the respondents before the Federal Court, were Swiss chocolate manufacturers (except for the first respondent who was a trade association for Switzerland-based chocolate manufacturers). The respondents sued the appellants for passing off and infringement of GIs because the latter had used the mark ‘Maestro Swiss’ on the packaging of their chocolates and chocolate products. Both the Federal Court and Court of Appeal allowed the respondents’ claim for passing off. However, the Federal Court disagreed with the Court of Appeal’s finding that the respondents’ claim under the GIA 2000 should be dismissed. The Federal Court opined that the Court of Appeal had erred when it held that section 27(2) of the Act applied in the case and therefore precluded any action brought for anything done prior to the commencement of the Act. The arguments based on passing off are discussed below, but insofar as the arguments based on the Act are concerned, the Federal Court held that the word ‘Swiss’ for chocolates and chocolate-related products satisfied the definition of a GI under section 2 of the GIA 2000 in that it signified that the chocolates were made in Switzerland and of high quality. According to the Federal Court, the purpose of the respondents’ claim was to prevent the appellants from continuing to use the mark after the GIA 2000 came into force and ‘not so much for “anything done before the commencement of the Act.” ’.Footnote 102 The Federal Court held that if the decision of the Court of Appeal in allowing the application of section 27(2) was upheld, it would mean that the appellants could continue to use the mark despite the court’s finding that there had not been a bona fide use by the appellants of the respondents’ mark.Footnote 103 Another matter made clear by the case was that although there is a certain degree of overlap between an action brought pursuant to section 5(1) and one that is commenced under the law of passing off, section 5(1) does not preclude the application of the law of passing off.Footnote 104 Indeed, as Chocosuisse Union demonstrates, an action may be brought concurrently for passing off and infringement of GIs.
3.2 Other Forms of Legal Protection for Geographical Indications
Even with the enactment of the GIA 2000, passing-off law remains available to prevent the unauthorised use of a GI. Indeed, it is usual for a plaintiff to invoke the law of passing off and the protection under GIA 2000 in an action to prevent the unauthorised use of a GI. To demonstrate the continued importance passing-off law plays in protecting GIs, two decided cases that were argued primarily on passing-off law are discussed in this section.
The first case, The Scotch Whisky Association & Anor v. Ewein Winery (M) Sdn Bhd,Footnote 105 was decided before the enactment of the GIA 2000 and was argued solely on the basis of the law of passing off. The second case, Maestro v. Chocosuisse,Footnote 106 was decided after the GIA 2000 came into force and was argued largely on the basis of the law of passing off as the main contention and, to a lesser extent, on infringement of a GI under the Act. The latter case is useful to demonstrate the continued relevance of the law of passing off as a form of protection for GIs even after the enactment of the GIA 2000.
In The Scotch Whisky Association, the second plaintiffs were distillers, blenders and exporters of Scotch Whisky, being whisky distilled and matured in Scotland. The first plaintiff was a trade association that was concerned with the protection of the interest of the Scotch Whisky trade worldwide. The phrase ‘Scotch Whisky’ had acquired considerable international reputation and goodwill because of the intrinsic quality and characteristic of the product. The plaintiffs claimed that the defendants, who carried on the business of processors and bottlers of liquor in Penang, had passed off their spirits, which were not distilled in Scotland, as and for Scotch Whisky. The alleged acts of passing off included the defendants’ use of features of get-up with visual representations and labels suggesting Scottish origin, such as the prominent use of the words ‘Compounded Scotch Whisky’ and ‘Imported Scotch Whisky Distilled in Scotland under British Government Supervision’ on the packaging of their products. In determining whether the defendants had committed acts of passing off, the court applied the test laid down by Lord Diplock in Erven Warnink BV v. Townend & Sons (Hull) Ltd.Footnote 107 In this case, it was held that the plaintiff in a passing-off action was required to show, first, the existence of a misrepresentation; second, that was made by a trader in the course of trade; third, to prospective customers; fourth, that is calculated to injure the business or goodwill of another trader; and finally, that causes actual damage to a business or goodwill of the trader by whom the action is brought. In applying this test, the court found against the defendant for extended passing off and, accordingly, granted an order for an injunction and account of profits.
The factual matrix of the second case, Maestro v. Chocosuisse,Footnote 108 bears many similarities with the decision in The Scotch Whisky Association.Footnote 109 As mentioned earlier, the respondents, who were entities interested in the ‘Swiss’ GI when used in relation to chocolates or chocolate products, sued the appellants for using the name ‘Maestro Swiss’ on the packaging of their chocolates and chocolate-related products. In addition, the word ‘Swiss’ appeared in bold white colour against a red rectangular box emulating the white and red colours of the Swiss flag. The respondents argued that the appellants had deliberately used the word ‘Swiss’ together with the red and white colours to deceive or mislead the public into thinking that the appellants’ products originated in Switzerland.Footnote 110 At first instance, the trial judge rejected the market survey evidence conducted by the respondents, which indicated that there was confusion among members of the public that the words ‘Maestro Swiss’ denoted chocolates that originated in Switzerland. The reasons for the rejection were that the survey failed to represent a true cross-section of the chocolate-buying public in Malaysia, the questionnaire contained leading questions and the survey was conducted only four years after the filing of the action. The trial judge found that the appellants’ use of the words ‘Maestro Swiss’ instead of ‘Swiss chocolates’ did not create any false impression that the chocolates were made in Switzerland.Footnote 111 In addition, the trial judge opined that the appellants’ packaging was sufficiently distinctive so much so that no reasonable person would be led to think that the chocolates were made in Switzerland.Footnote 112 On appeal, the Court of Appeal, while agreeing that the court should be cautious in accepting survey evidence, held that the trial judge had erred in not giving any consideration at all to the results of the survey.Footnote 113 Contrary to the trial judge’s decision, the appellate court relied on the outcome of the survey and concluded that there was likelihood of confusion in the minds of some members of the public that the appellants’ chocolates were made in Switzerland.Footnote 114 This point on the admissibility of survey evidence was affirmed by the Federal Court. Importantly, the Federal Court emphasised that the case was one of extended passing off instead of passing off in its classical form because the respondents had misrepresented that their products were of the kind that enjoyed the reputation and goodwill attached to chocolates made in Switzerland.Footnote 115 Unlike extended passing off, passing off in its classical form is concerned with the protection of the goodwill of a particular trader’s business.
A final important point, which the Federal Court clarified, concerned the locus standi of the first respondent in bringing a passing-off action against the appellants. The first respondent was a trade association that, inter alia, had the responsibility of protecting the designation ‘Swiss Chocolates’ or words that indicated that the chocolates had Swiss origin. The trial judge held that since the first respondent neither sold nor manufactured chocolates, they did not have any goodwill in the chocolate business and, accordingly, did not have any locus standi to bring the passing-off action.Footnote 116 However, the Court of Appeal overturned this finding and instead held that the first respondent, being a trade association, shared a common interest with its members in protecting the designation ‘Swiss chocolate’ and the goodwill associated with chocolates of Swiss origin.Footnote 117 The court also found support from two earlier decisions, the English case of Chocosuisse Union des Fabricants Suisse de Chocolat and Others v. CadburyFootnote 118 and the above-mentioned case The Scotch Whisky Association,Footnote 119 which accepted without controversy, the locus standi of trade associations to bring passing-off actions to protect the interests of their members. The Federal Court disagreed with the Court of Appeal and found that the trial judge was correct in holding that the first respondent did not have any locus standi to commence the passing-off action because it did not have any business interest or goodwill which it was entitled to protect by way of passing off in Malaysia.Footnote 120 The position differs with regard to the action under the GIA 2000. The Federal Court agreed with the Court of Appeal that the first respondent qualified as an ‘interested person’ within section 11 of the GIA 2000 and fell within the categories of persons entitled to register a GI. Accordingly, the Court held that the first respondent had locus standi to bring an action under the GIA 2000.Footnote 121
The importance of the law of passing off in resolving disputes that essentially are attempts to protect the geographical origins of products continues even after the enactment of the GIA 2000, as is evident from the case of Maestro v. Chocosuisse.Footnote 122 Passing-off law prevents misrepresentation to be made to third parties in the course of trade as to the geographical origin of a product and, as such, is aptly suitable to be added as a cause of action in legal proceedings apart from that provided under the GIA 2000.
There are provisions under the TMA 1976Footnote 123 that are sufficiently broad to offer some degree of protection of GIs, even though some of these were not enacted for the specific purpose of protecting such indications. Section 56 of the TMA 1976 provides that a mark is registrable as a certification mark if it is used in relation to goods or services for the purpose of distinguishing in the course of trade such goods or services in respect to origin, material, mode of manufacture, quality, accuracy or other characteristics from goods or services not so certified.Footnote 124 Certification marks thus indicate that the goods or services that use the marks have specific characteristics or originate from certain geographical regions.
Sections 14(1)(f) and 14(1)(g) were inserted by the Trade Marks (Amendment) Act 2000 in response to Malaysia’s obligations under the TRIPS Agreement to protect GIs.Footnote 125 Pursuant to section 14(1)(f), the registration of any trademark that contains or consists of a GI with respect to goods not originating in the territory indicated is prohibited if its use in Malaysia is of such a nature as to mislead the public as to the true place of origin of the goods.Footnote 126 Section 14(1)(g) prohibits the registration of a mark for wines or spirits that do not originate in the place indicated by the GI even if the mark does not mislead the public.Footnote 127 Exceptions to section 14(1)(f) and section 14(1)(g) are made in the case of good-faith use or where the registration of the trademark took place either before the commencement of the GIA 2000 or before the GI was protected in the country of origin.Footnote 128
Apart from the above provisions, section 14(1)(a), which prohibits the registration of a trademark that is likely to deceive or cause confusion to the public, has also been successfully invoked to remove from the Register a registered trademark comprising a GI.Footnote 129 In The Agricultural and Processed Food Products Export Development Authority of India (APEDA) & Ors v. Syarikat Faiza Sdn Bhd,Footnote 130 the respondent had applied for registration of the word ‘Ponni’ for rice prior to the coming into force of the GIA 2000. The application was successful and the word ‘Ponni’ was registered in the respondent’s name. Subsequently, the applicants applied to expunge the respondent’s trademark on the ground that ‘Ponni’ denoted a particular variety of rice cultivated in the Ponni region in Tamil Nadu, India. The rice is known for its benefits to diabetic patients. The court held that the word ‘Ponni’ was not a distinctive mark that denoted that the rice originated from any particular trader but rather was a word that denoted a particular variety of rice from the Tamil Nadu region. Accordingly, the court held that the respondent was not entitled to the registration of the ‘Ponni’ trademark.Footnote 131 In addition, relying on section 14(1)(a) of the TMA 1976, the court held that the use of ‘Ponni’ as a trademark for rice not originating in the Tamil Nadu region was likely to mislead the public. The respondent’s mark was held to be an entry wrongly made and wrongly remaining in the Register and, thus, was ordered to be removed from the Register.Footnote 132
The TDA 2011 states that it is an offence to use false trade descriptions in relation to the supply of goods.Footnote 133 As a trade description is defined to include an indication of the place of production of any goodsFootnote 134 and the TDA 2011 makes it an offence to apply a false trade description to any goods,Footnote 135 the TDA 2011 is an additional mechanism to protect GIs.
Section 10(1)(l) of the CPA 1999 prohibits any person from making a false or misleading representation that concerns the place of origin of the goods.Footnote 136 A representation that a product originates from a geographical area when it does not is a criminal offence under section 25.Footnote 137 Nevertheless, in the light of the fact that the purpose of the Act is to protect consumers and not the producers of goods,Footnote 138 it would appear that the applicability of the CPA 1999 in the context of protection of GIs is of incidental relevance only.
As discussed above, the principal area of law that protects GIs is the GIA 2000, which provides for a registration system but does not make registration mandatory for protection in Malaysia. Nevertheless, GI registration is beneficial because only producers carrying on activities in the geographical area specified in the Register are entitled to exclusively use the GI in the course of trade. By the same token, producers of the same type of product from another geographical region are not permitted to use the same GI. Moreover, registration raises a presumption that the indication is a GI, thereby giving producers more confidence when using their distinguishing indicia as a marketing tool. Likewise, consumers can confidently place their trust in a product bearing a GI mark since they are assured of the geographical origin of the product. Further, registration is prima facie evidence that the registered GI is indeed a GI, which also means that in legal proceedings the burden lies with the party challenging the legitimacy of the GI to prove his case.
Overall, the framework of the GIA 2000 provides a satisfactory scope of protection for GIs in Malaysia, particularly with respect to the provisions regarding the types of GIs that may be registered, the persons who qualify to apply for registration, the rights acquired by the registered holder upon registration, the procedure for registration, the institution of legal proceedings for the unlawful use of a GI, the defences in an action for the infringement of a registered GI and the rectification of the Register. In fact, the framework closely mirrors the general layout of the other, more established intellectual property statutes, such as the TMA 1976,Footnote 139 the Patents Act 1983Footnote 140 and the Industrial Designs Act 1996.Footnote 141
Be that as it may, it is suggested that there is scope for further improvements to the GIA 2000 in order to have in place a more robust regime for the protection of GIs in Malaysia.
First, as consumers have come to expect that GIs connote a certain level of product quality, it is proposed that provisions be inserted in the Act to preserve the producer-quality-geographical region link by requiring rightholders to maintain a minimum level of quality in their products. Second, rightholders should be required to ensure that at least a minimal level of commercial activity is carried out in relation to the registered GI. Third, pursuant to section 13 of the GIA 2000, in an application for registration, the Registrar is currently only required to conduct an examination of the formal requirements of the Act. The formal requirements are spelt out in section 12(1), and these include stating the particulars of the applicant,Footnote 142 the GI and geographical area for which registration is sought,Footnote 143 the goods for which the GI applies,Footnote 144 the quality or other characteristic of the goods for which the GI is usedFootnote 145 and any other particulars which may be prescribed by the Minister under section 32 of the Act.Footnote 146 If these requirements are complied with and the GI is not contrary to public order or morality, the Registrar shall advertise the application. In addition to this formal examination, it is recommended that the Registrar additionally conduct a substantive examination of the application, particularly to ensure that the indication applied for meets the definition of a GI and genuinely embodies the characteristics claimed for a product originating from the geographical region. This may require the assistance of expert assessors, which may be costly. However, a substantive examination is increasingly important to guarantee the actual quality and quality control of the GI-denominated products. Also, through a substantive examination, the examiner should check for possible conflict with existing trademarks, whether registered or not.
Fourth, under the TMA 1976, there are provisions for border enforcement measures to combat trademark-counterfeiting activities at the borders of the country through the seizure of counterfeit goods.Footnote 147 A parallel system could be put in place for GI protection for the same purpose. The final suggestion relates to an ambiguity that arises from a reading of section 3 of the GIA 2000. As mentioned earlier, section 3 states that protection under the GIA 2000 shall be given to a GI regardless of whether or not it is registered under the Act.Footnote 148 Yet, section 21(1), which spells out the exclusive right of a rightholder, states that ‘[i]n the case of registered geographical indications, only producers carrying on their activity in the geographical area specified in the Register shall have the right to use a registered geographical indication in the course of trade’.Footnote 149 This section is amenable to two possible interpretations: On the one hand, by section 3 extending the protection granted under the Act to all unregistered GIs, it may be argued that the exclusive right under section 21(1) applies equally to unregistered GIs. On the other hand, the opening words of section 21(1) appear to qualify the applicability of the section only to registered GIs, which would mean that only registered GIs enjoy the exclusive right under the section. This apparent ambiguity should be addressed by Parliament, which should clarify that only registered GIs enjoy the exclusive rights provided under the Act.
It is not an exaggeration to explicitly state that a GI is a singular marketing tool that encapsulates important information about the triple association that exists between a product, its quality or other unique characteristic, and its geographical origin. As GI products often command premium prices, they play an important role in the development of rural areas, which are usually the regions that produce such products and, by extension, are able to contribute to the social and economic development of a country. The valuable information embodied in a GI renders it a valuable commercial asset, which merits legal protection against the unauthorised use by third parties. The discussion above has examined the scope of protection of GIs in Malaysia, emphasising the sui generis protection under the GIA 2000 and outlining the protection under the common law of passing off as well as the statutory protection under the TMA 1976, the TDA 2011, and the CPA 1999. Based on the earlier discussion, it may be surmised that as a whole, the overall scope of protection for GIs in Malaysia creates a suitable environment for the protection of GIs. Nevertheless, as recommended above, there is room for improvement of the GIA 2000 in order to provide a more comprehensive scope of GI protection under the law in Malaysia.
This chapter seeks to investigate the way in which the system of protection of geographical indications (GI) has developed in the legal, policy, and socio-economic context of an emerging country such as Vietnam. Vietnam has over fifteen years of experience in GI protection, and GIs are considered an important tool for socio-economic development in the country. Vietnam also recently completed the negotiations of two international free trade agreements, which include specific provisions on GIs: one with the European Union, the European Union-Vietnam Free Trade Agreement,Footnote 1 and the other one with twelve countries of the Pacific (including the United States), the Trans-Pacific Partnership Agreement (TPP).Footnote 2 Our analysis in this chapter aims at providing useful insights on the law and practice of GIs in Vietnam, which could also be relevant with respect to other countries in the region, as several countries in South East Asia are currently considering reforms to their existing laws or are implementing new provisions in the areas of GIs.
First established in 1995 through the system of appellations of origin brought by the French, the Vietnamese legal framework for the protection of GIs provides for a State-driven, top-down management of GIs that is supported by strong public policies. Indeed, beyond the strict legal scope, GIs have recently attracted an increasingly growing interest within the country as a promising tool for ‘socio-economic development … to eliminate hunger and reduce poverty’Footnote 3 and for the preservation of the ‘cultural values and traditional knowledge of the nation’.Footnote 4 Yet despite the political will to promote GIs, the impact of GIs for socio-economic development in Vietnam in practice is facing two challenges. First, the number of registered GIs is still very low compared to that of geographical names registered as trademarks (TMs). Second, the use of the registered GIs on products for sale in Vietnam is still very limited. As this chapter will uncover, the reasons for the limited registration and use of GIs in Vietnam are due to a range of institutional, socio-economic, and organizational factors.
The existing literature, referring to origin labelling as ‘branding from below’Footnote 5 or ‘development from within’,Footnote 6 has embraced GIs as an instrument of socio-economic development owing to the link with the origin. Indeed, while the primary functions of GIs relate to competition rules and market regulation,Footnote 7 a large body of scholarship has built upon the market utility of GIs to claim that they may also contribute to local development by advancing the economic and commercial interests of local farmers, producers, and other stakeholders along the supply chain. In line with the economics of product differentiation,Footnote 8 it is contended that GIs – by exhibiting the very characteristics of a specific terroirFootnote 9 – help producers get out of the ‘commodity trap of numerous similar and undifferentiated products trading primarily on price’.Footnote 10 Pursuant to this, a number of food sociologists have described the emergence of a ‘wider Renaissance of “alternative agro-food networks” and “quality discourse” ’Footnote 11 in which GIs fit in reaction to the hyper-industrialization, mass production, and standardization of ‘placeless’ food, as well as the failure to impose safety criteria, as illustrated by the spread of mad cow disease.Footnote 12
In this context, it has been argued that the successful marketing of a product based on the link between its specific origin and its unique quality, characteristic, or reputationFootnote 13 may allow GI producers to increase their access to new or existing markets, gain a competitive advantage, and make a profit from the product differentiation.Footnote 14 The capturing of price premiums by producers is ‘often one of the first aims of supporting a strategy for an origin-linked product’.Footnote 15 It is further suggested that the economic benefits derived from the successful marketing of GIs may also foster trust, social cohesion, and solidarity since operators need to cooperate and exchange information.Footnote 16 This is particularly true in Europe, where there is a long history of producer-led GI collectives. There, the sui generis system of protected designations of origin and protected geographical indications requires the formation of a producers’ association and a code of practice at the application stage. This arguably fosters collective action and collaboration among local stakeholders.Footnote 17
In contrast, a number of authors have pointed out that in developing and emerging countries, GI initiatives are often driven by outside actors such as the State or development agencies. Hence, not enough GI-related activity, leading to the organization of producers and registration of GIs, is developed at the local level and within local producers.Footnote 18 Yet, as recalled by Biénabe and Marie-Vivien, what makes GIs peculiar and valuable instruments from a social development standpoint is the capacity of GIs to embody the link with the geographical origin where the product’s reputation is built, which accounts for public considerations by the State and national governments, while still retaining private considerations insomuch as GIs are used by private stakeholders to identify products destined to consumers.Footnote 19
However, while the literature holds promises of GIs as tools for socio-economic development, it has been noted that empirical data in this respect are lacking, especially from emerging and developing countries.Footnote 20 In particular, it has been noted that some context-specific factors may facilitate or hinder the ability of GIs to effectively promote such development.Footnote 21 This conclusion seems to be reflected also in the existing empirical research conducted so far. This research has in fact yielded inconclusive results of the effect of GIs on economic development and demonstrated that the impacts of GIs essentially vary on a case-by-case basis.Footnote 22 Even with respect to successful GIs, particularly in Europe, economists such as Belletti and Marescotti have drawn attention to the risk that only the largest processing and distribution firms that sell in international markets or use modern and long marketing channels might capture the additional earnings that can be obtained due to GIs.Footnote 23 Overall, it remains difficult to measure the extent to which the price premium that is commanded often by GI products is directly attributable to the legal protection granted to GIs only or whether other factors can also contribute to such premium, for example, the long-established reputation of certain products or the existence of subsidies and private investments in certain sectors of the economy.Footnote 24 Ultimately, what has emerged as a consensus among researchers is that GI legal protection alone is a necessary but insufficient condition to bring the desired effects.Footnote 25 In this regard, Hughes contends that ‘[t]he argument that substantially stronger GI protection will benefit developing countries simply mistakes the piling up of laws for the piling up of capital investment’.Footnote 26
Yet there is a need for research as to what an enabling legal and institutional GI framework is, or should be, in the context of an emerging country. In addition, it seems that a combination of other enabling factors is required for a GI framework to positively impact socio-economic development.Footnote 27 For example, commentators have pointed to the need for substantial investments in advertising and marketing to develop a product’s image and reputationFootnote 28 as well as to establish quality control, monitoring, and enforcement mechanisms aimed at building consumer trust in the product’s quality.Footnote 29 However, while Albisu cautions that ‘marketing of many OLPs [Origin Labelled Products] is often one of the weakest links in the chain’,Footnote 30 Zografos notes that the costs involved might be considerable for small farmers in developing countries, especially given the low reputation of many GI products.Footnote 31 Notably, the collective action dynamics involved in the GI initiatives, which tie local actors ‘in a lattice of interdependence’,Footnote 32 have also emerged as critical factors for directing their effects.Footnote 33 According to Barjolle and Sylvander, the effectiveness of the collective action depends on the ability of each local actor to ‘appropriate the collective process’Footnote 34 – an act that may be undermined by dominant market positions, local power relations, and supply chain inequalities.Footnote 35 In this regard, Larson stresses the need for an enabling institutional environment and collective organization with strong institutional mechanisms and governance systems.Footnote 36
This chapter offers additional insights on GIs and socio-economic development from the perspective of an emerging country, namely Vietnam. In particular, our study seeks to identify some of the factors that are limiting the use of both the GI registration system and the registered GI labels on the products themselves. In this respect, our chapter seeks to provide useful empirical data that could assist in better understanding the use of GIs in practice in an emerging country in Asia. The chapter proceeds as follows. After a description of the methodology in Section 2, we provide a thorough analysis of the legal and policy framework for the protection of GIs in Vietnam in Section 3. Subsequently, we present two GI case studies – the fried calamari from Hạ Long and the star anise from Lạng Sơn – with a particular focus on the commercial and marketing strategies of these GI initiatives in Section 4, which will lead to our discussion in Section 5.
To conclude, we highlight the following three points: first, despite the increasing number of registered GIs in Vietnam, which is explained by a strong top-down involvement by the State in the identification and registration of GIs, the success of the registration process remains mixed due to the extremely strict criteria for demonstrating the link with the origin. Second, the commercial and marketing aspects have an impact on whether the use of GI labels is promoted or hindered. These factors determine the success of GIs from a socio-economic development perspective; it depends especially on whether it is a domestic or an export-marketing channel, and a processed or raw product. Third, the commercial and marketing channels also influence the negotiation skills of local farmers and producers, which in turn affect the way the GI labels are used in trade, as well as the extent to which they may contribute to building the product’s reputation and fostering local economic development.
Our methodology in this chapter is primarily qualitative. We used a variety of methods to generate data. First, in order to provide a thorough understanding of the Vietnamese legal and policy framework for GIs, secondary data were generated through the analysis of legal and policy documents, including the Vietnamese Intellectual Property LawFootnote 37 (Vietnam IP Law), its circulars and decrees, and other sources of law such as GI codes of practice. Second, we conducted a number of interviews with officials of the National Office of Intellectual Property (NOIP) and experts on intellectual property law to strengthen our analysis of legal documents. Third, we adopted a comparative case study approach to assess the impact of the commercial and marketing channels, and compared two GI initiatives with contrasting commercial and marketing strategies. This approach led us to study the fried calamari from Hạ Long, which has a very strong local market, and the star anise from Lạng Sơn, which is an export-oriented product. The contrast between these two GI initiatives allows us to analyse whether, and why, different marketing strategies may affect the success of GIs from a socio-economic development perspective.
For the purposes of the two case studies, we collected primary data through a combination of semi-structured interviews with public authorities and stakeholders in the supply chain, including farmers and processors; distributors and traders; and leaders of farmers’ associations and cooperatives. The interviews were conducted in Vietnam between March and May 2014. Overall, we conducted 6–8 semi-structured interviews for each GI product under investigation. Furthermore, official documents relating to the establishment and organization of the GI initiatives, including charters, bylaws, and board regulations, and internal documents, such as meeting reports, project reports, and annual statements collected from the interviewees, have provided valuable information on the operation and management of the GI initiatives under study. Finally, data were also sourced from development projects funded by international agencies in which we had previously been involved.
3 Limited Number of Registrations Despite a Complete Legal and Policy Framework for Geographical Indications in Vietnam
The actual sui generis legal framework for protecting geographical names that designate the origin of products in Vietnam was created in 1995 with the introduction of the protection of ‘appellation of origin’ in the Civil Code of Vietnam,Footnote 38 which contained all provisions regarding intellectual property, following a cooperation between France and Vietnam.Footnote 39
According to Article 786 of the Civil Code of Vietnam of 1995, an ‘appellation of origin is a geographical name of a country or locality that is used to indicate the origin of the goods as being in that country or locality, provided that the goods have characteristics or qualities that reflect the specific and advantageous geographical conditions of a natural or human character or the combination of thereof’. Interestingly, the Vietnamese definition does not seem to provide for the combination of ‘human and natural factors’ that could be said is included in the definition of ‘appellation of origin’ as provided by the 1958 Lisbon Agreement for the Protection of Appellation of Origin.Footnote 40 Still, the definition requires proof of a strong link between a product’s quality or characteristics and its origin for the definition of a geographical name to be an ‘appellation of origin’ under the Civil Code.
In 2001, with technical assistance from France, Vietnam registered the first two appellations of origin for Phu Quoc fish sauceFootnote 41 and Moc Chau Shan Tuyet teaFootnote 42 following the definition in the Civil Code.Footnote 43 In January 2007, Vietnam joined the World Trade Organization (WTO) and, as part of the accession process, adopted a new Intellectual Property Law (IP Law) in 2005. In this new IP Law, Vietnam introduced the same definition of GIs as in Article 22 of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).Footnote 44 This definition is partially less strict than the previous definition of appellation of origin under the Vietnam Civil Code of 1995. In particular, Article 79 of the IP Law provides that a GI product must originate from the area, locality, territory, or country corresponding to the related GI and must also have the reputation, quality, or characteristics essentially attributable to the geographical conditions of the area. According to Article 81 of the IP Law, this criterion of reputation is based on consumer trust in the product. However, in practice, the criterion of ‘reputation’, or reputation-based GIs, has not been used on its own so far in Vietnam. Instead, the registration of all forty-nine GIs that are currently registered in Vietnam was granted upon demonstration that the relevant geographical area conferred on the product specific quality and characteristics as defined by one or several qualitative, quantitative, or physical, chemical, microbiological perceptible norms. These characteristics had to have the ability to be tested by technical means or by experts with appropriate testing methods.Footnote 45
Moreover, Article 82 of the IP Law requires that the characteristics of the GI-denominated products that are derived from geographical conditions include both ‘natural factorsFootnote 46 andFootnote 47 human factors’.Footnote 48 This language directly suggests a mandatory combination of human and natural factors to justify GI registration in Vietnam,Footnote 49 which is much stricter than the definition of GIs that is provided in TRIPS regarding the strength of the link between a product and its geographical origin.Footnote 50 Ultimately, it can be said that GIs in Vietnam are still considered ‘appellations of origin’ under the original definition that is provided in the Vietnam Civil Code since the criterion of proving the link between the quality of products and their respective geographical environments must still be met. Evidence of this is the length of the GI dossiers – around twenty pages each – including the demonstration of the link between the products and their geographical origins. As mentioned earlier, so far no GI registration has been issued in Vietnam based on the criterion of reputation alone.
Table 13.1 lists all registered GIs in Vietnam as of March 2017. It lists the GIs and divides them per type of products. As the readers may easily notice, GI-designated products in Vietnam are currently still primarily raw materials, including fruits, vegetables, and materials used in processed products (79 per cent of registered GIs). These materials tend to have low economic value despite the economic and cultural importance for the country of processed products and handicrafts. In turn, this may account for the limited impact of GI protection on socio-economic development in Vietnam.
|Registration certificate No||GI||Product||Date of issuance|
|00001||PHÚ QUỐC||Fish sauce||01.06.2001|
|00002||MỘC CHÂU||Tea shan tuyet||06.06.2001|
|00004||BUÔN MA THUỘT||Coffee||14.10.2005|
|00006||BÌNH THUẬN||Dragon fruit||15.11.2006|
|00010||PHAN THIẾT||Fish sauce||30.5.2007|
|00011||HẢI HẬU||Eight oval rice||31.5.2007|
|00019||HẬU LỘC||Shrimp paste||25.6.2010|
|00020||HUẾ||Conical leaf hat||19.7.2010|
|00021||BẮC KAN||Kaki Seedless||8.9.2010|
|00024||TIÊN LÃNG||Pipe tobacco||19.11.2010|
|00025||BẢY NÚI||Eight oval rice||10.10.2011|
|00032||BẢO LÂM||Red Seedless||14.11.2012|
|00034||YÊN CHÂU||Mango round||30.11.2012|
|00037||HẠ LONG||Fried squid||12.12.2013|
|00040||YÊN TỬ||Yellow apricot flowers||18.12.2013|
|00041||QUẢNG NINH||Ngan (a type of shellfish)||19.3.2014|
|00044||VĨNH KIM||Fruit milk||28.10.2014|
|00047||VAN DON||Peanut worm|
|00048||LONG KHÁNH||Rambutan fruit||Unknown|
|00049||NGỌC LINH||Medicinal herb||Unknown|
|00050||VĨNH BẢO||Pipe tobacco||Unknown|
|00055||HƯNG YÊN||Longan fruit||Unknown|
The governance of GIs in Vietnam is characterized by the State’s top-down registration and management process. In particular, Vietnam’s GI system is characterized by the division of rights between (a) the right to own the GI; (b) the right to register the GI, which means the right to decide on the content of the code of practices, including the geographical area; (c) the right to manage the GI, which relates to managing the granting of the right of use and of control procedures; and (d) the right to use the GI.Some of those rights can be delegated to others as shown below:
(a) In Vietnam, geographical indications are owned by the State.Footnote 52 Therefore, this ownership cannot be transferred as GIs are considered a part of Vietnam’s national heritage.
(b) The State, as owner of GIs, has the right to register GIs. This right may be delegated to
– producers, organizations, and individuals;
– collective organizations representing individuals; or
– administrative authorities of the locality.
(c) As the owner, the State has the right to manage GIs. It may delegate this right toFootnote 53
– the People’s Committee of the province or city where the product comes from;
– any agency or organization assigned by the People’s Committee of provinces and cities if it represents all organizations and individuals using the GIs, and if that agency or organization represents all other organizations or individuals granted with the right to use geographical indications.Footnote 54
(d) Producers have the right to use the GI,Footnote 55 including organizations and individuals authorized by the managing authority (point (c) above).
In practice, GIs are always registered by local authorities, such as the provincial Departments of Science and Technology (DOST), or People Committees (PC) of provinces, districts, or cities.Footnote 56 Even though they are legally permitted, no applications or registrations of GIs are made by producers or collective organizations representing individuals.Footnote 57 Once the GI is registered by the relevant authority, the latter promulgates a regulation for its management, where either the same authority or a different one (either a sub-department or a sub-region) is designated to manage the GI. In very rare cases (such as the conical hat from Hué GI),Footnote 58 the management agency is not a public authority but an association (the Women’s Union).Footnote 59
Legal use of GIs has been slow, with many GIs completing the ‘experimental period’ of the distribution and use of stickers and labels on the packaging of the products. For example, in the case of the GI Moc Chau Shan Tuyet Tea,Footnote 60 the association of producers launched a special packaging with the name of the GI. Additionally, in the case of the Nuoc Mam Phu Quoc fish sauce,Footnote 61 no fewer than eighty-three out of eighty-six producers are members of the association, among whom sixty-six have been granted the right to use the GI, but only eight are actually using the GI label.Footnote 62
As we elaborate below, for example, with respect to one of the case studies below (the Lang Son star anise GI),Footnote 63 the management of GIs also includes quality-control activities, which are supposed to be carried out by STAMEQ (Standards, Metrology, and Quality Department) at the provincial level.Footnote 64 However, in practice, these activities are not always implemented.Footnote 65
3.4 Strong Public Policies to Aid in the Identification and Registration of Geographical Indications
Since 2005, several programs have been launched in Vietnam to support the protection of GIs. According to Decree 122/2010/ND-CP,Footnote 66 the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade shall assume prime responsibility for, and shall coordinate with People’s Committees of provinces or centrally run cities in, identifying specialties, features of products, and processes of production of specialties bearing GIs that are managed by ministries, branches, or localities.Footnote 67 In this context, the Ministry of Sciences and Technology launched the first phase of the national ‘Program 68’ in 2008 aimed at identifying specialty products that could benefit from intellectual property protection, either as a GI or as a collective/certification TM.Footnote 68 Program 68 runs throughout Vietnam on a quota system of three products per province. The Program includes one product to be protected as a GI, the second product as a collective TM, and the third product as a certification TM.Footnote 69 While the first phase of Program 68 led to the registration of GIs and TMs, the second phase dealt with the management of GIs, i.e., post-registration issues and the issuance of regulations for the management and control of the use of GIs.
A number of programs that run at the provincial and district levels also aim to support the registration of GIs and TMs, such as the program run by the Province of Quang Ninh, which has aided in registering nine GIs/TMs since 2010.Footnote 70 International projects funded by the International Fund for Agricultural Development (IFAD) or the French government have supported particular GIs with the aim of reinforcing the value chain and small producers.Footnote 71 For all those programs, the Vietnamese authorities enlisted the expertise of national research institutes such as CASRAD, the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), and private consulting agencies to develop the GI application dossier and prepare the management documents and regulations.Footnote 72
Vietnam has also been very active in the GI debate at the international level. The Government of Vietnam represents the interests of GI producers when negotiating bilateral agreements in order to get international protection for their GIs. In particular, Vietnam has negotiated FTAs with Europe and several countries in the Pacific, including the United States, notwithstanding the fact that the European Union and the United States do not share the same vision for GIs.Footnote 73
The Government of Vietnam has also acted to facilitate the registration of national GIs outside Vietnam. For example, the denomination Nuoc Mam Phu Quoc fish sauce was registered as a protected denomination of origin in the European Union in 2012.Footnote 74 In October 2012, Vietnam and the European Union signed the Framework Agreement on Comprehensive Partnership and Cooperation between Vietnam and the European Union in order to promote the mutual recognition of their respective GIs.Footnote 75 In 2015, Vietnam and the European Union also completed the negotiations for an FTA providing, among other provisions, for the mutual recognition of 39 Vietnamese GIs in the European Union and the protection of 171 EU GIs in Vietnam.Footnote 76
In conclusion, the concept of appellation of origin was certainly first introduced into the Civil Code of Vietnam as a result of the collaboration between Vietnam and the French government. Later, Vietnam introduced the concept of GIs as part of Vietnam’s obligations in order to join the WTO. Still, Vietnamese policy-makers at both national and regional levels have gone far beyond the mere enactment of a legal framework establishing the protections of GIs as an international obligation. In particular, Vietnam has actively promoted a series of public policies for increasing the number of GI registrations and educating GI producers and stakeholders to correctly manage GIs. This has led to a positive dynamic and an increase in GI protection of four to five GIs per year in Vietnam over the past several years.
Yet, while this State-driven process has led to the registration of forty-nine GIs so far and has resulted in the promulgation of forty regulations for the management of GIs in Vietnam, there has been little use of GIs in practice so far, as illustrated by the two case studies in the following section. This again indicates the partial dichotomy between the existing legal protection of GIs in Vietnam and the actual (still limited) impact of these GIs on socio-economic development in Vietnam.
4 Case Studies on the Use of Geographical Indications and Their Contribution to Socio-economic Development in Vietnam
Bearing in mind the stated development policy goals attached to GIs,Footnote 77 this section reviews two cases studies. First, it presents the case study of the GI-denominated fried calamari from Hạ Long, a product that is characterized by a strong local market and local consumption in Vietnam. Second, it presents the case study of the GI-denominated star anise from Lạng Sơn, a product that is instead primarily export-oriented. By presenting these two case studies, we seek to show the extent to which the actual use of GI labels on local products in Vietnam may be impacted by the commercial and marketing strategies of local actors and how such strategies may generate different socio-economic development outcomes.
The fried calamari from Hạ Long (Hạ Long fried calamari) is a typical product of Hạ Long City, in Quảng Ninh Province (Northeast Vietnam). Hạ Long fried calamari have been produced by traditional family units since 1946Footnote 78 and derive specific taste and characteristics from both the high quality of the calamari found in the Gulf of Tonkin and the technical know-how of the processors/producers. As a typical product listed among the fifty most delicious dishes in Vietnam in 2012 and the one hundred most delicious dishes in Asia in 2013,Footnote 79 Hạ Long fried calamari have long enjoyed a very good reputation among local consumers, and the producers benefit from the millions of tourists that the nearby Hạ Long Bay (a United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage Site) draws to the region every year.Footnote 80
Proof of the reputation of the fried calamari from Hạ Long is not only the mass consumption of up to 1,500 kg/day in Hạ Long City but also the widespread misuse of the name on squid products that do not come from Hạ Long, as it happened particularly in the Quang Yên Province.Footnote 81 Initially, the first objective of the calamari producers was in fact to stop, or at least counter, the misuse of the product name – Hạ Long – and promote the specific quality and characteristics of genuine products to consumers inside and outside the Hạ Long region. In December 2013, in order to protect the Hạ Long name, the People’s Committee of Hạ Long City (at the District level) registered the GI Hạ Long for fried calamari.Footnote 82 Subsequently the Committee delegated the right to manage the GI to the District’s Economic Department,Footnote 83 following the establishment of the association of producers/traders of fried calamari in the region. In order to use the GIs, producers have to become members of the association. As part of their obligations as members of the association, producers have to abide by the conditions set forth by the association and reflected in the GI specification. This includes, among others, the location of the processing and production facilities in Hạ Long City and a minimum of three years of experience in the production and trade of fried squid.Footnote 84
The whole project – including surveys, mapping activities, determination of the quality of the raw material, establishment of the association, and registration of the GI – benefited from public funding from the Quảng Ninh Province (80 per cent of the total budget amounting to about 90,000 USD) and the Hạ Long City District (20 per cent of the total budget). It is worth mentioning that the project initially involved educational trips to Phu Quoc Island for producers/traders of the Hạ Long fried calamari to learn from the experience of the producers/traders of the Phu Quoc fish sauce; however, this trip was cancelled due to lack of funding.Footnote 85 Interestingly enough, both the Phu Quoc fish sauce and Hạ Long fried calamari GI initiatives exclude the fishermen who provide the raw materials for the processing of the GI products even though the geographical area in which fish must be caught is strictly defined in both cases.Footnote 86 As a result, the association of producers/traders of the Hạ Long fried calamari is rather small and gathers producers/traders only, with a total membership of twenty-three trader families.Footnote 87 Among them, three ‘pilot families’, who have the largest processing facilities, have been testing the use of the GI label since its registration in December 2013. As of September 2015, a total of fifteen families were granted the right to use the Hạ Long GI by the District’s Economic Department upon payment of the prescribed use fees (around 53 USD for a three-year period).Footnote 88
Taking a closer look at the commercial and marketing aspects of the Hạ Long fried calamari, it is noteworthy that all members of the association are involved in short marketing circuits in the two markets in Hạ Long City (‘Hạ Long I market’ and ‘Hạ Long II market’, respectively). These markets are overwhelmingly and traditionally local, with about 95 per cent of the volume of traded fried calamari from Hạ Long being sold locally, either through direct sales to final consumers in the two main markets of Hạ Long City with no middlemen involved (50 per cent of the total trading volume) or to restaurants, hotels, and retailers located in Hạ Long City via short marketing channels involving middlemen (about 45 per cent of the total trading volume).Footnote 89 The remaining 5 per cent of the trading volume of Hạ Long fried squid is sold to final consumers in big cities of other provinces (such as Ho Chi Minh City and Hanoi, where two shops sell this product) through a number of middlemen and distributors such as supermarkets, food stores, and retailers in urban areas, which leads to lower profit margins for producers.Footnote 90
While the high concentration of traders in the two markets of Hạ Long City has led to fierce competition among producers – which has discouraged some producers who are not members of the association from conducting business thereFootnote 91 – direct sales and contact with consumers have contributed to building the reputation of the product while providing producers with more flexibility in setting selling prices. This is shown in the higher prices charged by the producers who sell directly on the markets with no middlemen (about 14–15 USD/kg in December 2014; up from less than 9 USD/kg in 2007) compared to the lower prices charged by the producers who are involved in longer marketing channels with middlemen (about 13 USD/kg).Footnote 92 Among those producers who sell directly on the market, it is of particular interest that the use of the GI label by the three pilot families has resulted in an increase in their selling price by about 15 per cent to 17 per cent USD/kg in December 2014, thereby contributing to higher incomes.Footnote 93 In contrast, the price of the fried calamari that incorrectly used the name ‘Hạ Long’ for calamari not produced in Hạ Long is about 9.5 USD/kg.Footnote 94
Besides, the GI initiative seems to have benefited from the communication strategy implemented by the Department of Culture, Sports, and Tourism at the provincial level in 2013.Footnote 95 This strategy intended to raise consumers’ awareness of the Hạ Long fried calamari by organizing tourist visits to the markets, mentioning fried calamari in guide books, participating in fairs and exhibitions, and broadcasting daily on local radio and TV promotion programs about the specific quality and characteristics of the Hạ Long fried calamari.Footnote 96
As a result, according to a number of interviewees, consumers’ demand for Hạ Long fried calamari has greatly increased over the past few years.Footnote 97 Although higher demand by consumers will undoubtedly be welcomed, as an increase in sales volume will lead to higher incomes for local producers/traders, it might also negatively impact the sustainability of primary raw material (i.e., calamari) from the Gulf of Tonkin, where, according to the GI code of practice, at least 70 per cent of calamari should be fished.Footnote 98 Indeed, a number of interviewees reported that the supply of calamari is quickly decreasing due to greater consumer demand and unsustainable fishing practices outside of the reproduction area.Footnote 99 Because of this, producers have been increasingly sourcing their calamari from Central Vietnam, China, Indonesia, and Malaysia, which may affect the quality of the fried calamari.Footnote 100 Yet if the 70 per cent minimum rule is not met, the fried calamari might be considered a fraud as it will not meet the requirements of the code of practice.
Star anise is a dark-grey spice that has six to eight equal, separate petals arranged in a star shape. The Province of Lạng Sơn in Northern Vietnam, located on the border of the Guangxi Province in China, is a very important production site of star anise, occupying a total of 35,575 hectares out of a total production area of 58,500 hectares within the whole country, about 60 per cent of the total cultivated area.Footnote 101 The total production output is estimated to be between 6,000 and 10,000 tons/year.Footnote 102 Additionally, there are two value chains: the production of dry star anise and star anise oil. The process of planting and harvesting star anise is based mainly on traditional know-how and experience, including manual techniques.
In February 2007, the appellation of origin was granted to the People’s Committee of Lạng Sơn Province with funding from the government program ‘Program 68’.Footnote 103 The Province later delegated the right to manage the appellation of origin to its Department of Science and Technology. Subsequently, in 2008, the association for the production and marketing of star anise from Lạng Sơn was established. In contrast to the association for the production of Hạ Long fried calamari, membership to the Lang Son star anise association is not a requirement for the right to use the GI.Footnote 104 Still, compared to the relatively small association for the Hạ Long fried calamari, the association for the Lạng Sơn star anise is open to farmers, processors, collectors, and traders and has a large membership; about 700 out of a few thousand households are engaged in the production and trade of star anise in the Lạng Sơn Province. However, its actual activities were reported to be very limited and most members are not even aware of the very existence of the GI.Footnote 105 Surprisingly, compared to the high number of households involved in the production and trading of the star anise, only two export companies have been granted the right to use the GI so far, Aforex Co., Ltd. and Vinaspaex Co., Ltd.Footnote 106 Moreover, only one of them has been using the GI label. Also, there has been no observable difference in the selling prices of star anise grown in GI-protected areas and non-protected areas (between 1.3 and 2.7 USD/kg in May 2014, depending on the quality of the star anise). Neither has there been proof of economic benefit from the use of the GI label.Footnote 107
The very limited use of the GI label in practice may be explained by a number of factors, including low awareness and lack of interest by local stakeholders in the GI value, as well as the absence of involvement by local authorities in the promotion of the GI and GI products.Footnote 108 All these factors seem to be connected to the lack of collective action, cohesion, and collaboration amongst the high number of farmers, processors, collectors, and traders involved in the production and trading of the Lạng Sơn star anise. But most impactful are the GIs’ marketing channels, as will be explained below.
In actual figures, only 15 per cent of the total production of Lạng Sơn star anise is sold on the domestic market. Instead, about 80 per cent of the products are estimated to be exported to China (as star anise oil) and India (as dry star anise). Both countries use star anise for culinary and medicinal purposes.Footnote 109 The remaining 5 per cent of the products are exported to other countries such as Indonesia, Malaysia, and Thailand. Star anise is also exported to European countries such as France, Germany, and Belgium, where the spice is used to improve the flavour of wine and other beverage products.Footnote 110 Therefore, the marketing channels for star anise are characterized by a very large number of middlemen and long chains of intermediaries at the regional and international levels.
There are a number of reasons for China and India’s prominent roles in the trade of the Lạng Sơn star anise. On the one hand, China and Vietnam are the two largest producers of star anise in the world. However, unlike Vietnam, where the domestic demand is very low and the majority of its production output is exported, China is the largest consumer of star anise in the world and exports only 5 per cent of what it produces.Footnote 111 Because its domestic production does not meet its domestic demand, China relies extensively on imports of star anise from Vietnam, which are estimated to be thousands of tons per year.Footnote 112 According to a number of interviewees, a large part of this trade takes place through unofficial exchanges at the border between farmers, where the transaction is completed without written contracts or certificates of quality.Footnote 113
On the other hand, star anise is widely used in Indian cuisine. It is a major component of garam masala: an aromatic mixture of ground spices used as a base in many Indian dishes. However, because the production of star anise in India is limited to a part of the Arunachal Pradesh State in the northeast, India has become the largest importer of star anise, accounting for 50 per cent of world imports from production countries, such as Vietnam and China.Footnote 114 Because the free trade agreement between India and Vietnam, which came into force on 1 January 2014, requires the removal of all import-export taxes (following the signing of the ASEAN-India Trade in Goods in 2009), Indian importers have become more interested in importing star anise from Vietnam rather than China, which still imposes a 30 per cent export tax duty.Footnote 115
Given this situation, the value and utility of the GI label is practically non-existent. According to the interviewees, importers who buy star anise from the two export companies with the right to use the GI seem to deliberately opt out of using the label for a number of interesting reasons: Chinese traders want their customers to think that the star anise was grown in China, so they re-package star anise from Lạng Sơn with a Chinese logo, and Indian traders want to hide the origin of star anise from their own competitors to keep their supply sources a secret.Footnote 116 The export companies with the right to use the GI label also explained that when they tried to negotiate the use of the GI label, their customers threatened to find other suppliers.Footnote 117 Thus, the use of the GI label is useful only within the domestic market.Footnote 118
However, between these two export companies, one exports its entire production to foreign markets and thus does not use the GI at all, while the other company exports about 90 per cent and sells the rest in its local shop, resulting in a very limited use of the GI label.Footnote 119 Ironically, when visiting this one shop, the GI logo had been affixed to not only the star anise’s packaging but also the cinnamon’s packaging. The sales manager of this company explained that the use of the GI logo on the cinnamon packaging was meant to identify the commercial origin of its products – regardless of whether the product was in fact cinnamon or star anise – and promote the image of the company as if the GI were owned solely by this company.Footnote 120
So far, our study has examined the use of the GI registration scheme and two particular GI labels in the context of an emerging country, Vietnam, which actively promotes GIs as a socio-economic development tool. The analysis in this section hopes to provide valuable insights into an important issue, namely identifying the legal and other contextual factors that may hinder the positive impact of a GI system in an emerging country. In particular, from the case studies above, our research suggests several impediments at three separate but interdependent levels: (a) the legal and institutional framework, (b) the commercial and marketing channels, and (c) the collective action of producers within the GI initiatives.
First, with respect to the legal and institutional framework, our analysis shows that the definition of GIs and its application in practice in Vietnam are more in line with the definition of the appellation of origin in the Lisbon Agreement than with the definition of GIs in TRIPS, as Vietnam law requires a very strong link to the origin of products. In other words, this criterion is a considerably demanding criterion for registering GIs in Vietnam.
Perhaps because of this stringent criterion, the overwhelming majority of registered names of local products are protected through a collective or certification TM comprised of the relevant geographical name. There were about 116 collective and 72 certification TMs registered as of May 2013, compared with only 43 GIs.Footnote 121 These trademarks were registered following the same top-down process with State agencies, which own the certification trademarks or, at the initiative of the creation of the associations, the collective trademarks.Footnote 122 Furthermore, while there is no need to demonstrate a link with the place of origin for TMs, and although in other jurisdictions such as the European Union, the scope of protection is weaker for TMs than for GIs, the law in Vietnam allows for the registration of geographical names as collective TMs and certification TMs.
Second, the quota system under Program 68 to support GIs and TMs has resulted in some geographical designations being registered as TMs and not GIs, even if the link with the origin is very strong. For example, Shan tuyết tea from Moc ChauFootnote 123 has been registered as a GI, but the Shan tuyết tea from Suối Giàng in the Province of Yen Bai,Footnote 124 though described with as many details as the GI Moc Chau Tea, is protected as a certification TM because there was already one GI in the same province as the cinnamon of Van Yen.Footnote 125
Third, and most importantly, the State-driven process has been successful in registering forty-nine GIs and in having them protected in the European Union. The government also remains in charge of enforcing GIs. In 2013, the Vietnamese government also successfully managed to obtain the cancellation of a Chinese trademarkFootnote 126 comprising the designation Buon Ma Thuot Coffee, a GI registered in Vietnam since 2005.Footnote 127
Yet this top-down approach may also negatively impact and ultimately jeopardize the initiative and involvement of the producers in seeking GI registration and later in managing the GI. This top-down approach also will inevitably impact various operators in the supply chain who use the GI (technically, the right to use the GI, as the State remains the holder of most rights related to the GI). This can also impact the management of GIs and GI-denominated products. Certainly, the rights that belong to the State can be delegated to the collectives of producers, as provided by the Vietnam IP Law.Footnote 128 But subsequent decrees have given more power to the State. For example, Article 4 of the Decree 122/2010/ND-CPFootnote 129 provides that ‘People’s Committees of provinces or centrally run cities shall file applications for registration and organize the management of GIs used for local specialties and license the registration of collective marks or certification marks for geographical names and other signs indicating the geographical origin of local specialties.’
Finally, even though the Vietnamese legal framework for GI protection certainly is on par with all other WTO countries, legal protection is not sufficient in itself to turn GIs into successful tools for socio-economic development. Legal protection is a necessary condition for the success of a GI system. However, so are a number of market- and product-specific conditions, as will be shown below. In other words, the success or failure of a GI-system to unleash the potential for GI protection for the purpose of socio-economic development remains heavily dependent on context-specific conditions.
A number of context-specific issues have emerged as particularly relevant in explaining both the ‘success’ and ‘failure’ of GI initiatives. At the operations level, by contrasting the cases of the Hạ Long fried calamari and Lạng Sơn star anise, we see the importance of taking the commercial and marketing channels into account when analysing the extent to which GI labels are actually used in an emerging country.
First, our empirical findings suggest that, especially in the case of the Hạ Long fried calamari, a strong local market with traditional short marketing circuits is important factors for building the reputation of a local product and empowering local producers who are able to set prices more easily. This is shown by the higher selling prices that the use of the GI label has allowed. In contrast, the domestic market for the Lạng Sơn star anise is virtually non-existent and the use of the label is very limited, thus not affecting selling price or sale volume. However, we do not suggest that the findings of this case study extend to other export GI products from emerging countries. For instance, both DarjeelingFootnote 130 tea and Café de ColombiaFootnote 131 are successful emblematic GI products with a strong export focus, which should thus lead us to make more nuanced considerations. In reality, the penetration into the market for a labelled GI product also depends strongly on the producers’ collective organization and its knowledge and skills about GIs, as will be shown in Section 3.5 below.
Second, we have found that the marketing channel that is adopted may be linked to the nature of the product. The Hạ Long fried calamari is a processed food product sold locally, whereas the star anise from Lạng Sơn is a raw product, usually processed into oil before being sold in export markets without the GI label. The case study of the Lạng Sơn star anise demonstrates the need to ‘decommodify’ this product, and other spices, at the global level in order to better value the spices’ origin, as has been done for coffee, tea, pepper, or more recently, salt.Footnote 132 A ‘de-commodification’ process would allow the GI value to increase in the international market, as the GI would gain recognition with customers, which would allow for price premiumsFootnote 133 as well as higher earnings due to the non-applicability of tariffs for commodity products.Footnote 134
Finally, we argue that the commercial and marketing channels of these two products have largely affected the opportunities for producers to take ownership of the GI initiatives. Whereas the producers of fried calamari sell their products to customers in traditional local markets at a price set by them, the producers of the Lạng Sơn star anise cannot control where the product is eventually sold nor its final packaging, considering that 85 per cent of the production is sold to traders who re-sell the product in their own country or to other countries. Moreover, the fact that the two export companies with the right to use the GIs have not managed to impose the use of the GI label clearly illustrates the one-sidedness of the negotiations and the Vietnamese producers’ lack of negotiation skills. To go deeper into the issue, even though the right to use the GI was granted by a State agency, it is, in reality, simply denied by importers at the transaction level. This leads to a situation in which importers expropriate the legal right from Vietnamese producers and traders to use the GI, which impedes the potential of the GI initiative to bring about economic benefits. Therefore, we argue that an intervention by the State to restore the right to use the GI would be welcomed.
By supporting the right to use the GI labels, producers would become more aware of the utility of the GI label and actually understand its implications. For example, while producers of fried calamari actively promote the GI label to get a higher selling price, most producers of the star anise are not aware of the very existence of the GI logo. Furthermore, the only company utilizing it in the domestic market affixes the GI logo on other products, such as cinnamon, in order to promote the image of the company. This clearly demonstrates a lack of understanding of the very meaning of a GI, not to mention the inefficiency or lack of quality control and product inspection due to a shortage of funding and equipment. Once again, some level of State intervention would be useful to increase awareness of the meaning of a GI and its value as well as to strengthen quality control of the GI product.
In conclusion, in light of the above, the highest priority in Vietnam should be to empower local farmers and producers to use the GI system and the GI labels beyond the current status quo. Undoubtedly, this is a challenge in the context of a State-driven economy in which GI policies are developed through top-down governance. Still, the law in Vietnam permits that the right to register and manage GIs can be delegated to collectives of producers. Such a management model could be applied more often in order for producers and producer associations to play a more prominent role in the GI landscape than they do today. Naturally, Vietnam continues to go through a learning process regarding the use of the GIs, after a first successful step of registration of GIs, as many other countries of the region. Still, GI protection can have a beneficial impact on economic development in many areas of the economy in Vietnam, and thus producers should learn to use the GI system to a fuller extent to capture more of its promises.
A walk through the narrow winding lanes of Bari Bazaar in India’s holy city of Varanasi (popularly known as Benaras or Kashi) is captivating for several reasons. Located in one of the oldest continually inhabited cities in the world, Bari Bazaar is a popular hub for producers and sellers of Banarasi silk sarees and brocades. The region represents an epitome of syncretism in India’s diverse cultural setting. As the river Ganges silently flows through the city, Varanasi today has emerged as a confluence of products protected by geographical indications (GIs) with five GI registrations assigned to this region alone.Footnote 1
But there is also a crisis of survival. Today, one of the most important challenges facing Banarasi saree producers is that cheaper synthetic imitations are produced in the textile city of Surat, which is located in the Western Indian state of Gujarat. It has also been reported that traders frequently import Chinese silk cloth and sell them in the Indian markets as Banarasi sarees.Footnote 2 This illegal trade negatively impacts Banarasi producers, since Surat-made synthetic sarees and Chinese-made sarees are regularly passed off as Banarasi products in different markets across India.Footnote 3 Not only are the motifs and patterns of Banarasi sarees ripped-off, and their best weavers poached by producers in Surat; much more problematically, these ‘Surat-made Banarasi-style sarees’ are produced at a fraction of the cost (due to the use of synthetic materials and polyester) in comparison to an ‘authentic’ silk Banarasi saree.Footnote 4 It is quite intriguing that Banarasi saree producers have, so far, not contemplated legal action against producers, or traders, of Surat-made or Chinese-made Banarasi-style sarees for infringing on their registered GI. Instead, several Banarasi weavers are also seeking access to cheaper raw materials for their sarees on the basis of and assumption that, by reducing their production costs, they could better fend off the competition by producing cheaper replicas of their sarees. Moreover, these producers seek to reduce costs to compete against the other legitimate producers of GI-denominated Banarasi sarees.
However, this situation begs several questions: Why are (several) Banarasi saree producers choosing to compete in a race to the bottom rather than turning to the legal enforcement of their GI and encashing the premium value of their products protected by the GI? Moreover, what implications will this strategy of lowering the quality of the authentic Banarasi sarees have on those producers who may continue to use silk fibres and not choose to compete by diluting the brand? In other words, what are the obligations of GI producers in India and does the Indian GIs system protect GI producers against those members of the GI producers’ community who decide to turn to a lesser quality relying on the historical reputation of the GI products, that is, those who become ‘free-riders from within?’
Overall, the existence of a GI registration on a product is meant to enable producers within a collective group to capture a premium for their products by (also) preventing members of the group from arbitrarily changing the product quality. In this respect, a GI registration also aims at preventing members of the collective group from deciding to lower the quality of the products to compete with other GI producers, or producers of similar products outside the GI-denominated market, especially when consumers are agnostic or unaware about those distinctions. Hence, the case of Banarasi sarees reveals that (at least a considerable number of) GI holders are often not concerned about the loss of combined reputation of their GIs resulting from compromise on the distinctive quality. Unfortunately, such instances are not unique to Banarasi sarees in India.Footnote 5 This sense of lack of agency among GI holders highlights the collective action problem that goes deep into the ambiguity surrounding what makes a particular GI unique and the lack of adequate quality control on the ground amongst many GI producers in India. Interestingly, some may argue that changing the composition of raw materials by a few entrepreneurial members of a GI club could be seen as innovation. Yet, when that innovation includes turning to cheaper materials and to synthetic fabrics for sarees historically woven with silk, it should more likely be regarded as a compromise of GI-product quality and a (self)dilution of the GI’s distinctiveness.Footnote 6
Essentially, this debate comes down to the quality and characteristics that GI-denominated products are supposed to possess and that GIs are supposed to purport to consumers. Presently, however, almost all of the GI awareness campaigns in India seem to be focused only on the registration component of GIs.Footnote 7 Even though the branding and promotion of GI products has started receiving some attention both on the domestic and international fronts,Footnote 8 the Indian government and the surrounding legal and policy discourse on Indian GIs have, at least until now, completely ignored the introduction of quality-control and maintenance measures for goods produced under the GI tag. In many ways, it could be said that the Indian GIs regime promotes a system of ‘Vanity GIs’ where the registration of GIs is seen as an end in itself and a measure for brand promotion, with little attention being paid to the deep linkages between the registration of GIs and the quality control that should follow the registration. Instead, quality control – and in turn the function of GIs as guarantors of and symbols assuring product quality – is central to the success of the Indian GIs regime, and this chapter seeks to fortify this claim by identifying how the consumer perception of quality has a sharp influence on the economics of GIs.
Accordingly, this chapter focuses on the post-registration quality-control regulatory measures for GIs in India. First, this chapter identifies the problem involving the interface between GIs as collective intellectual property (IP) rights and their linkages with quality and product/process standards. Second, it briefly discusses the experiences of two comparative jurisdictions – the United States (US) and the European Union (EU) – regarding the linkages between the GIs framework and the corresponding regulatory framework for quality control. Third, the chapter explores the missing regulatory framework in India and discusses the limitations of Indian GI law in this regard. A few short case studies are presented to highlight the various combinations of statutory and self-voluntary mechanisms associated with different GI products in India. The objective is to show how different mechanisms for quality control have led to either preservation or dilution of the collective reputation of GI. This chapter concludes by elaborating on the reasons for failure of the Indian GIs regime on issues of quality control and suggests that decentralized mechanisms for different GIs, which are nevertheless governed by a uniform statutory framework, are the way forward to restore the credibility of many GIs and promote a successful system of GI protection in India.
GIs do not serve merely as indications of their origin. In their simplest form, GIs also signify a connection between ‘a product’s reputation, quality or characteristic and its geographical origin’.Footnote 9 In the marketplace, consumers often find it difficult to assess product quality without searches or experience and normally possess limited information about the valuable attributes of the product.Footnote 10 The producers, however, possess full information about the product’s attributes and quality relative to other goods in the market.Footnote 11 This results in the ‘natural chaos’ of asymmetrical information. Such information asymmetry can negatively impact the market, or the purchasing choice of consumers, when it is exploited by certain producers who may be inclined to lower the quality of the goods supplied precisely because consumers lack complete information, as is often the case.Footnote 12 In such a scenario, GIs can help restore the symmetry in information by offering consumers additional information on the products’ quality and reputation so that they are not adversely placed against producers. In his model on reputation, Shapiro suggested that reputation operates as a signalling device, which transmits information about a certain quality to the consumers, thereby reducing the consumer’s search costs.Footnote 13 The operation of GIs is quite similar and therefore GIs could have a direct impact on consumer welfare by leading consumers towards goods of a higher quality.Footnote 14
One of the prime motives behind obtaining a GI registration is in fact to create a distinct reputation for the product bearing the GI label so that consumers will eventually move from the point of brand awareness, in this case GI-awareness, about the product to brand preference, in this case GI preference, where they are willing to pay a higher price (‘premium’) for the GI-denominated product and, at the same time, refuse to accept other alternatives.Footnote 15 In this regard, surveys conducted by the United Nations Conference on Trade and Development (UNCTAD) among EU consumers provide good insights. These surveys show that for GI-registered agricultural products consumers are willing to pay a premium of up to 10 to 15 per cent, whereas for non-agricultural products the premium could range anywhere between 5 and 10 per cent.Footnote 16 In particular, most consumers expect GI products to be of a higher quality than non-GI products.Footnote 17 The findings of certain empirical studies show that in case of foodstuffs. Even though labelling of GIs does not operate as the most important quality attribute,Footnote 18 GIs are frequently associated with higher quality control and consumers highly value food safety inspection. Thus, GIs remain an important indicator of quality in the marketplace.Footnote 19 Consumer perception regarding GI labels thus has important economic implications as it directly influences consumer preferences for the product.Footnote 20 For example, Louriero and McCluskey have concluded that Spanish consumers are more inclined to pay a premium for fresh meat products labelled with a protected geographical indication (PGI) label – Galician Veal, which is regulated by the European Union – because the consumer perception associates the certification directly with food safety in addition to quality.Footnote 21
But it would be incorrect to claim that the association of reputation with quality is unique to GIs. Trademarks also operate as useful information tools for consumers by allowing them to equate the quality of a good with a distinct brand and business, thereby reducing consumer confusion and their search costs.Footnote 22 Consequently, trademark protection offers a natural incentive for every business to produce and maintain a ‘consistent quality over time and across consumers’.Footnote 23 This encourages the firm to invest in quality (as expected by the customers) and brand value, lest it lose customer loyalty and of course sales.Footnote 24
Despite these similar tendencies, unfortunately, the incentive to maintain quality does not arise in the case of GIs in the same way it does in the case of trademarks. GIs are collective public or ‘club’ goods and, as such, are more prone to the classic ‘free-rider’ problem compared to other distinctive signs like trademarks.Footnote 25 In particular, the link between the GI as a collective mark and its owners (i.e. association of producers) is not as direct as in the case of trademark owners protecting their marks. Moreover, not only do GIs identify the quality and the characteristics of the GI-denominated products, but they also embody the collective reputation that consumers place on the association or group of producers in a certain region (who participate in the production of the GI product) and which is carried forward through tradition over time.Footnote 26 Therefore, while conducting a realistic assessment of GIs one must take into account and tackle the possibility of free-riding from within, i.e. by insiders.Footnote 27 These insiders are individual producers that operate within the collective group of GI producers, are legally entitled to produce GI-denominated products (as a registered proprietor or authorized user), but have succumbed to producing goods of inferior quality in a bid for higher profit margins. In order to prevent this unwelcome phenomenon, the regulation structure that is at the basis of GI protection needs to provide for specific procedures, which must account not only for the verification of the geographical origin and manufacturing source of the products but also for specific quality certification to ensure that the GI-denominated products ascribe to the registered GI specifications.
Presently, there are two dominant models of formal regulatory mechanisms for quality control and maintenance for GI-denominated products operating in different socio-economic and political contexts across the world: (a) the European-style sui generis quality scheme; and (b) the American-style quality scheme based on certification marks, which is not specifically a sui generis system for GIs but nonetheless includes relevant provisions with respect to quality control.
It is not surprising that the European Union, which was among the demanders of GI protection during the Uruguay Round TRIPS negotiations, has robust mechanisms for issues pertaining to quality control of GI products. The European Union maintains a distinct approach and position on the issue of GI protection when compared with the United States on the other side of the Atlantic. Unlike the United States, European national laws and the European Community’s IP law recognize GIs as sui generis rights.Footnote 28 The European Union has passed a number of regulations to govern the grant and operation of GIs, the most significant of which is the Council Regulation 2081/92 ‘on the protection of geographical indications and designations for agricultural products and foodstuffs ’ and its subsequent amendments.Footnote 29 The Regulation was then repealed in 2006 and replaced by Regulation 510/2006. The 2006 Regulation was later amended and replaced in 2012 with Regulation 1151/2012, which is the current community legal instrument that governs the protection of GIs for agricultural products and foodstuffs in the European Union.Footnote 30 In addition, there is a separate set of Regulations that governs the regulation of GIs for wines and spirits.Footnote 31
Presently, the European Union only grants GI protection for agriculture-related products, even though the European Commission is currently contemplating extending such protection to non-agricultural products.Footnote 32 The EU Green Paper published in 2014 on this possible extension of GI protection highlights the difficulties that one may encounter in cases of the protection of non-agricultural products, which base their claims on given reputations derived by virtue of long usage rather than more specific product characteristics.Footnote 33 A study commissioned on the same topic and published the previous year specifically notes that a given reputation is ‘only quoted in the definition [of GI] and there is no specific criteria established to determine whether or not a product has acquired a specific reputation’.Footnote 34 Yet, the European Union has been careful not to sideline quality in its drive to expand GI protection and continues to require, in its various Regulations, conformity with the quality schemes for each product and compliance with the specifications.
In this respect, the EU standards go far beyond the protection envisaged for GIs under the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS Agreement). Notably, Article 22 of the TRIPS Agreement envisages a basic level of protection for a GI and does not require a particular standard or quality control to be associated with a GI-denominated product.Footnote 35 Rather, the provision only contemplates an intrinsically higher-than-generic quality level for which the supply is limited due to the geographical confinement of production. It is not surprising that the European Union has adopted stringent standards because the GI provisions in the TRIPS Agreement arose largely due to the efforts and insistence of the European Union.Footnote 36
In particular, EU law lays down stringent standards under quality schemes for guaranteeing the quality of all European products.Footnote 37 These standards are enforced through competent authorities designated by Member States (Competent Authorities) responsible for official controls carried out to verify compliance with the legal requirements relating to the quality schemes.Footnote 38 Reports of the control activities of these Competent Authorities must be included within the multi-annual and annual national control plans submitted by every Member State to the European Union.Footnote 39 At the time of registration of a protected designation of origin (‘PDO’) and a PGI, the applicant group is required to identify one or more certification bodies, which will ensure that the product specifications associated with the GI products are met before the goods are placed on the market.Footnote 40 They are required to comply with and, as of 1 May 2010, be accredited in accordance with European standard EN 45011 or ISO/IEC Guide 65.Footnote 41 The operation of certification bodies is, in turn, scrutinized by the Competent Authorities.Footnote 42 Thus, a system of checks and balances has been integrated within the GI mechanism of the European Union.
The United States provides a different approach owing to the fact that they lack penchant for GIs. Yet, the regulatory model for quality certification and enforcement is notable. Under the current US law, there is no sui generis protection available for products on the basis of their geographical origin.Footnote 43 The only exception to this is the protection afforded to appellation for wines, which are protected both at the federal and state levels under a system that could be defined as a sui generis system.Footnote 44 Hence, the principal method by which geographical indicators can be protected under US law is by means of trademark protection, namely certification marks under the aegis of the Lanham Act, the federal trademark law currently in force in the United States.Footnote 45 Trademarks also form part of US unfair competition law, within which the Lanham Act is the primary statute governing GIs protection of agricultural produce and foodstuffs.Footnote 46 Under the US Lanham Act, Certification Trademarks are used to indicate ‘(1) regional or national origin; (2) material, mode of manufacture, quality, accuracy or other characteristics of the goods/services; or (3) that the work or labour on the goods/services was performed by a member of a union or other organization’.Footnote 47 In general, geographic indicators would not pass muster as trademarks or collective marks in the United States because they are geographically descriptive. However, an applicant can still register them as certification trademarks without showing any sign of acquired distinctiveness.Footnote 48 Several other kinds of distinctive names, which are otherwise protected under the rubric of sui generis GIs in different countries, are protected through several mechanisms, including certification trademarks, trademarks or by way of a common law remedy of passing off.Footnote 49
Even though there is no separate recognition granted to geographical indicators under US law, the US government plays an active role in ensuring that the value of the quality associated with a certified product is not diluted due to ‘insiders’. Notably, in most instances, the authority that registers and consequently exercises control over the use of a geographical term as a certification mark is a governmental body or a body operating with governmental authorization.Footnote 50 The US government has separate inspectors for various agricultural types of food and beverages in order to ensure quality maintenance and control post-registration for geographical Certification Trademarks.Footnote 51 Consumers and competitors are presumed to have the highest interest in maintaining accuracy and certified standards and therefore can file an opposition or cancellation proceeding against the certification mark or bring an action in the federal court if the prescribed standards are not met.Footnote 52 Overall, even though the United States remains different, at large, from the EU system of protecting GIs, the two systems are not so opposite and, in both systems, quality control represents one of the most important components of the systems in order to safeguard consumers and the long-term quality of the products. The US approach focuses on promoting competition and innovation based on the premise that GIs could be harmful to the economy ‘as they are deemed to be untradeable, collective and conserve old-fashioned production methods’.Footnote 53
In India, GI protection is available through a sui generis system operationalized through the Geographical Indications of Goods (Registration & Protection) Act of 1999 (‘GI Act’).Footnote 54 The GI Act was followed by the Geographical Indications of Goods (Registration and Protection) Rules of 2002 (‘GI Rules’).Footnote 55 The Intellectual Property Office in Chennai is in charge of the GI Registry for India. As of today, the Registry has been able to successfully register around 237 Indian GIs involving agricultural products, handicrafts and manufactured products.Footnote 56Under the GI Act, the definition of ‘geographical indication’ adopted states that a GI is
an indication which identifies such goods as agricultural goods, natural goods or manufactured goods as originating, or manufactured in the territory of a country, or a region or locality in that territory, where a given quality, reputation or other characteristic of such goods is essentially attributable to its geographical origin.Footnote 57
But under the Act, names that do not denote the name of a country or region or locality can still be considered for registration as long as they relate to a specific geographical area and are used in relation to goods originating from that region.Footnote 58 This provides the leeway for extending protection to other famous symbols such as ‘Alphonso mangoes’Footnote 59 and ‘Basmati Rice’.Footnote 60 It is emphasized that this is not unique to India and the same practice is used in several other countries, including the European Union – Feta is not a region of Greece, for example.
Several scholars have suggested that the collective-action problems that can derive from the misuse of GIs with regard to quality maintenance can be alleviated to a certain extent by the adoption of ‘some regulatory process that polices quality and technique among producers within the GI’.Footnote 61 However, despite the stakes involved for consumers in this respect, not much attention has been paid to post-registration quality-control measures exclusively for Indian GIs under the current system of GI protection under Indian law. A recent empirical study by an Indian scholar notes the absence of an inspection mechanism on the ground in the GI-denominated regions and calls for ‘a stringent quality control mechanism in place to assure the consumer of the authenticity and quality for which she pays a premium price’.Footnote 62 The study notes that among the selected sample of GI producers, only 40 per cent indicated that quality checks were carried out for their GI products before these products were distributed to consumer and after.Footnote 63
Still, despite the lack of quality control for GI-denominated products in practice, Indian law does provide for some measures guaranteeing quality control in language similar to that of European law. Notably, at the time of the application to register a GI under the GI Act, a combined reading of Section 11(2) of the Act and Form GI-1 suggests that the applicant group should identify an ‘Inspection Body’, which is responsible for quality control of the products within the GI.Footnote 64 In fact, Rule 32(1)(g) of the Geographical Indications of Goods (Registration and Protection) Rules, 2002 specifically requires ‘particulars of the inspection structure, if any, to regulate the use of the geographical indication in respect of the goods for which application is made in the definite territory region or locality mentioned in the application’.Footnote 65 Still, it is important to note that the non-existence of an inspection structure will ultimately not be considered as a sufficient ground for demonstrating the inadequacy of an application to register a GI for the final granting of the GI under Indian law.Footnote 66
Moreover, in addition to referring to the Inspection Body suggested by the collective group, the law in India could be strengthened by also requiring that an independent neutral agency is also appointed to maintain the quality standards of the GI-denominated products post-registration of the GI.Footnote 67 It should also be noted that the current legislative framework has no teeth as there is no statutory liability imposed on Inspection Bodies under the current GI Act in the event that they fail to conduct periodic verification of compliance with the product specifications of the associated GI.Footnote 68 At present, if members of the collective group entitled to use the GI, or consumers, want to hold a member of the group accountable for not complying with the quality standards of the products, the only course of action available is under Section 27 of the GI Act, which provides the cancellation of registration of the non-complying member from the list of authorized GI producers.Footnote 69 This mechanism is not sufficient, however, and the fact that additional preventive regulatory mechanisms may be needed to ensure the quality control of the GI-denominated products in India is accentuated by reports that popular GI-denominated products are losing their markets to adulterated products that are sold by ‘insiders’. Further, the availability of cheaper raw material imports is promoting the sale of inferior-quality products. These products are handed to the unaware consumers who still rely on the name of the GI-registered products and thus are lured into paying premium prices for products that no longer carry the same characteristics of the genuine GI-denominated products.
In the following sub-sections, this chapter reviews four case studies of Indian GI-denominated products for which it seems that ‘free-riding’ by insiders has become the norm. As we elaborate in the reminder of this chapter, this has negatively impacted the market for other producers within the respective collective groups.
Since the Mughal era Banarasi sarees have enjoyed a distinguished reputation on account of their fine silk, gold or silver brocade or zari, and opulent embroidery.Footnote 70 Even today, they continue to be a popular item among the womenfolk in India. To protect the authenticity of the weaving tradition of the Banarasi sarees, several organizations – Banaras Bunkar Samiti, Human Welfare Association (‘HWA’), joint director industries (eastern zone), director of handlooms and textiles Uttar Pradesh Handloom Fabrics Marketing Cooperative Federation, Eastern UP Exporters Association (‘EUPEA’), Banarasi Vastra Udyog Sangh, Banaras Hath Kargha Vikas Samiti and Adarsh Silk Bunkar Sahkari Samiti – filed an application for GI registration for ‘Banarasi’ in 2007. They finally secured the GI in 2009.Footnote 71
However, despite the considerable reputation that the industry enjoys in both the domestic and international markets,Footnote 72 and the GI registration, the weavers have been facing stiff competition from cheap silk fabric imports from China and Surat.Footnote 73 Notably, known for its unique gold-bordered designs and improvisations of medieval artistic patterns on its sarees and brocades, Banarasi sarees have been witness to fast changes and rapid industrialization. Particularly, power looms have scaled-up production and have been responsible for bringing intense competition to suit pockets of the highly segmented Indian consumer market.Footnote 74 Power-loom-based manufacturers are now seeking parity with producers of handloom in the Banarasi region.Footnote 75 Initially, handloom-based producers of Banarasi sarees hoped not to be affected by this competition as they cater to the higher-income markets – markets in which consumers still appreciate the techniques and materials that go into a handwoven saree. Still, new ideas have emerged in the attempt to popularize handloom Banarasi sarees as ‘green products’ to capture newer markets abroad.Footnote 76
More problematically, studies show that, in order to compete with power-loom-based manufacturers, master weavers and artisans have also started to resort to strategies such as passing off synthetic fibres for silk and power-loom fabric as handloom. This, in turn, has compromised the quality of dyes and designs of the traditional sarees.Footnote 77 To date, the penetration of the markets by these inferior-quality products has reached a point where the ordinary Indian consumer can no longer be sure of the quality of the Banarasi saree she is buying. This uncertainty raises transaction costs for the consumer and unfortunately operates against the collective group of producers that have seen the sales of their artisans’ products greatly reduced.Footnote 78 The tragedy of the situation is such that some Banarasi saree producers are now advocating that the government must support new spinning mills in Banaras that produce Banarasi sarees using synthetic materials, so as to compete with Surat-made Banarasi sarees. As an alternative, these producers are advocating that they should have access to cheaper imported silk yarns, which are still natural fibres.Footnote 79
In theory, five inspection bodies were identified by the applicant group of producers in Banarasi in the GI application that was submitted to the GI Registry. These Inspections Bodies are the Department of Handlooms (Government of Uttar Pradesh), the Development Commissioner (Handlooms), the Weavers’ Service Centre, Master Weavers’ Self-Regulation and the Textiles Committee. The role of the Textiles Committee is arguably the most prominent in this respect, as the Committee is a statutory body whose main objective is ‘to ensure the quality of textiles and textile machinery both for internal consumption and export purposes’.Footnote 80 The Export Promotion and Quality Assurance division of the Textiles Committee is an Accredited Inspection body in India under ISO 17020Footnote 81 and provides a host of inspection services for importers/traders/exporters/manufacturers for textiles.Footnote 82 The Textiles Committee is also the implementation agency for the Handloom Mark, which certifies that the product being purchased is genuinely handwoven.Footnote 83 This presents a picture quite similar to the European model, where the certification bodies for agricultural produce are accredited in accordance with European standard EN 45011 or ISO/IEC Guide 65.Footnote 84
However, until the present day, the Textiles Committee has focused its attention in the sphere of GIs almost entirely on the facilitation of the registration of GIs for unique textile products in India.Footnote 85 Besides facilitating the procedures related to GI registration, the Textile Committee does not oversee special quality or process certification schemes that are supposed to be in place for GI-denominated products, including those products which are listed as requiring an Inspection Body in the product specification, to ascertain whether the products are actually being produced in accordance with the registered specifications. Instead, at present, the Banarasi saree operates with a multitude of certification marks such as the Silk Mark and the Handloom Mark.Footnote 86 The Silk Mark Organization of India (SMOI), the registered owner of the SILK Mark, recently introduced a high-security nano-particle-embedded fusion label as a mark of purity for Banarasi silk to enable customers to verify the authenticity of the source of silk.Footnote 87 Beyond these external agencies, quality control internally among the GI producers is especially difficult. Despite being aware of the negative impact of inferior-quality sarees, stakeholders in the industry are unable to take action due to the complex market dynamics involved.Footnote 88 It is also noteworthy that legitimate users of the Banarasi GI for sarees are not in the financial position to bear the cost of protracted litigation against traders involved in non-compliance with the product specification, which in turn diminishes the premium value that a consumer of Banarasi sarees would have ordinarily paid for the Banarasi GI due to inferior alternatives.
One of the most popular and sought-after craft items associated with Kashmir, the Kashmir Pashmina refers to the extremely soft woollen fabric with fibres spun out of the Pashmina goat called ‘Capra Hiracus’.Footnote 89 The Kashmir Pashmina is known for its ‘fineness, warmth, softness, desirable aesthetic value, and timelessness in fashion’.Footnote 90 The application for GI registration of the Kashmir Pashmina was an initiative undertaken by the Craft Development Institute (CDI) to secure protection for local artisans against the mushrooming power looms and fake pashminas flooding the markets in India (and abroad). The CDI only acted as a temporary registered proprietor of the GI since the GI was assigned to TAHAFUZ, an association that comprises a diverse group of Kashmiri artisans, when TAHAFUZ was registered under the Societies Act.Footnote 91 Similar to the Banarasi sarees, however, the traditional weavers in Kashmir are under severe strain due to the machine-made Semi Pashmina Shawls and imitations of the Kashmiri name that are being spun in Amritsar, located in the Indian province of Punjab (geographically close to the Indian state of Jammu and Kashmir), and China and that are sold to consumers, who are not aware of the geographical significance of the name Kashmir Pashmina and the traditional qualities associated with the authentic products.Footnote 92
Unfortunately, when the application for the GI was filed, the identification of an Inspection Body for the compliance of the products with the specification was suspended until a later time.Footnote 93 Eventually, the responsibility for ensuring quality control for the Kashmir Pashmina products was handed over to the Pashmina Testing and Quality Certification Centre (‘PTQCC’) in 2013.Footnote 94 The purpose of this body is to certify the quality of the products. Procedurally, authentic Kashmir Pashmina Shawls will receive the Kashmir Pashmina Mark (GI) by the PTQCC after verification of the weaving technology, the spinning method and the genuineness of the raw materials.Footnote 95 In order to ensure greater authenticity, a micro-chip known as the Secure Fusion Authentic Label (‘SFAL’) would be attached to the product with a unique number that could be read under infrared light.Footnote 96 To date, the effectiveness of the PTQCC in guaranteeing the quality of the GI-denominated products still needs to be proven, as the system is in a nascent stage. Yet, as a matter of policy, the creation of a more detailed system of control for the stages of production as well as the application of a tracking system for the products is believed to be a step in the right direction in order to guarantee product compliance with the standards required as per the GI specification.
In this respect, it is interesting to note that, unlike several other prominent GIs in India, there is no certification mark associated with the Kashmir Pashmina. This again may be due to the initial lack of organization of the group of producers in setting up a quality control system for their products, as certification marks also require a dedicated certifying authority that guarantees the conformity of the marked products with the standards set for the certification.
Whether you are from India or abroad, if you are a tea-drinker, it is almost certain that you would have heard of the famous Darjeeling tea. Darjeeling tea contributes just over one per cent to the total tea production in India (10.85 million kilograms of Darjeeling tea as compared to 981 million kilograms of total tea production).Footnote 97 But the reputation of Darjeeling tea remains unparalleled due to its distinctive quality and flavour and in turn has made the region a hallmark for tea, underscoring the fact that the incomparable quality of the tea is largely attributable to its geographical origin.Footnote 98 Almost synonymous with Indian tea in foreign markets, Darjeeling tea is cultivated, grown and produced in the Darjeeling district of West Bengal. Interestingly, the tea has been produced in the region by the local population for over one and a half centuries and continues to remain one of the most coveted black teas in the world.Footnote 99
In the sphere of GIs, the Darjeeling tea industry has set a milestone in Indian history. Darjeeling tea was the first GI to be registered in India after the enactment of the GI Act in 1999.Footnote 100 Even though the tea industry in India lies in the hands of the private sector, the Ministry of Commerce has exercised statutory control in maintaining the quality of Darjeeling tea since 1933 under various legislations (that culminated in the Tea Act in 1953) and the Tea Board.Footnote 101 The Tea Board, a statutory authority established in 1953 under the Tea Act, has administered the use of the Darjeeling logo for many years to maintain quality and ensure that the Darjeeling logo is applied only to the tea that has been certified by the Tea Board as conforming to the prescribed characteristics of Darjeeling tea.Footnote 102 Certification services are provided to the Tea Board by Intertek Agri Services, a private entity that conducts testing and possesses inspection expertise for agricultural commodities, foods and related products.Footnote 103
To ensure genuineness in the exports of Darjeeling tea, a system of certification for the authenticity of the exported Darjeeling tea by the Board was made mandatory under the Tea Act in 2003.Footnote 104 All dealers of Darjeeling tea are bound to enter into a licensing agreement with the Tea Board, which includes the payment of an annual licence fee. Under the agreement, dealers are required to furnish information regarding the production and manufacture of Darjeeling tea and its sale, through auction or otherwise.Footnote 105 On the basis of the information supplied, the Tea Board is thus able to track and compute the total volume of Darjeeling tea produced and sold in a particular period.Footnote 106 Certificates of origin are issued for export consignments under the Tea (Marketing and Distribution Control) Order of 2000 as read in conjunction with the Tea Act of 1953. These certificates are to be compulsorily cross-checked at all customs checkpoints in India.Footnote 107 This detailed series of measures to control the origin and characteristics of the tea ensures that the sale-chain integrity of Darjeeling tea is maintained until the consignments leave the country.Footnote 108 Under the authentication process that is supervised by the Tea Board, 171 companies dealing in Darjeeling tea have registered with the Tea Board, seventy-four of which are producer companies and ninety-seven of which are trader/exporter companies.Footnote 109
As per the licensing agreement, every licensee is required to submit a sample of the tea sold by him to the Tea Board, to enable the Board to monitor the legitimacy and quality of Darjeeling tea produced by the licensees for exports and domestic markets.Footnote 110 Further, the Board reserves the right to inspect, prior to and after the grant of license, the premises of any licensee where tea is being processed, manufactured, packed or stored, to ensure that the standards laid down by the proprietor are being adhered to and complied with.Footnote 111 The Tea Board has also registered the ‘Darjeeling Logo’ and the word ‘Darjeeling’ as certification trademarks. These marks may be used by any of the dealers of Darjeeling tea as long as they have been granted licensee rights by the Tea Board.Footnote 112
The initiatives taken by the Tea Board in the field of monitoring and quality assurance, in collaboration with the Darjeeling Planters’ Association (which is the only producers’ forum in Darjeeling), are the reason why Darjeeling tea continues to enjoy an untarnished reputation not just in India but across the globe. However, it has been noted that cheaper tea from Nepal is sourced by Indian blenders (due to open trade and porous borders with Nepal). This tea is very similar, in quality and characteristics, to the Darjeeling tea and unfortunately it can find its way into Indian markets sold as Darjeeling tea by traders that are not associated with the Tea Board.Footnote 113 Hence, only 100 per cent Darjeeling tea can be identified with the Darjeeling tea GI and all other tea mixtures have to be identified as blends. In this respect, it should be noted that the transitory norm that was applicable in the European Union, which allowed EU importers to blend 51 per cent Darjeeling tea with 49 per cent of any other tea, and still sell the final products as Darjeeling tea, has finally been repealed in 2016.Footnote 114 This may give an additional boost to Darjeeling tea exports from India into the European Union.
Alphonso mango is a popular export variety mango grown in the coastal districts of Maharashtra, Goa, Karnataka and Gujarat.Footnote 115 In 2014, the European Union had imposed a temporary ban on the import of Alphonso mangoes and four other vegetables from India, causing a major upheaval in the EU-India bilateral trade ties because of the impact of this decision on the Indian farmers’ annual estimates of profits.Footnote 116 The decision was taken by the EU Standing Committee on Plant Health because 207 consignments of Alphonso mangoes and the other vegetables, which had been imported from India into the European Union, were found to be contaminated by pests such as fruit flies and other quarantine pests.Footnote 117 The ban was successively lifted by the European Union in January 2015.Footnote 118 At present, Alphonso mangoes are not formally registered as a GI in India, but an application to register the GI is pending before the GI Registry.Footnote 119 The news of the ban imposed by the European Union underscored the importance of quality certification for agricultural products. Accordingly, as a soon-to-be-registered GI with immense export potential,Footnote 120 the Alphonso mango certainly deserves our attention in this chapter.
The mandate of inspection and certification for agricultural food products in India has been entrusted to the Agricultural and Processed Food Products Export Development Authority (‘APEDA’), a statutory body established by the Government of India in 1986.Footnote 121 APEDA fixes standards and specifications for agricultural products for the purpose of exportsFootnote 122 and also has powers to carry out inspection at storage houses where such products are kept to ensure quality.Footnote 123 In this respect, state-of-the-art packaging houses have been set up in major production zones to ensure a uniform quality across export consignments in order to maintain the highest quality standards in mangoes.Footnote 124 APEDA has additionally put in place internationally recognized treatment facilities, like hot water treatment, vapour heat treatment and irradiation facilities at various places along the production belt.Footnote 125 These facilities are supplemented by a unique product identification system, supplemented by the traceability networking and Residue Monitoring Plan, which have been developed for consumer safety wherein APEDA can even issue a product recall in case of exigencies.Footnote 126
Once the Alphonso mango would be registered as a GI, it would be important that, in addition to the requirement already in place under the system supervised by APEDA, all consignments of mangoes be subject to another layer of verification based on the quality control that would be required as part of the GI specification. In particular, the group of producers that has applied for the GI for Alphonso mango, Dr Balakrishna Sawant Konkan Krishi Vidyapeeth (‘BSKKV’) has stated that the BKSSV and the Department of Horticulture, College of Agriculture, will decide on a Standards and Quality Committee, which will operate as the Inspection Body and maintain high standards in the quality of the mango.Footnote 127 The success of this model of self-regulation can only be assessed once the GI is registered and the Committee begins to operate. However, the long-term success of the GIs and the producers of Alphonso mangoes certainly require a high level of product quality control and traceability of products from the producers to the market.
Moreover, even though quality control for export products has been successfully managed by regulators in certain cases,Footnote 128 the EU ban on Indian mangoes indicates that internal quality control mechanisms to protect a GI product have to be carefully coordinated with the specific requirements of applicable Sanitary and Phytosanitary (‘SPS’) measures in the country where the exports are destined. However, SPS measures may also be used in a discriminatory manner. For example, the abnormally high number of fruit flies present in the Alphonso mango shipments that arrived in the European Union turned out to be 22, as compared to 102 from Pakistan, 27 from Dominican Republic, 22 from Jamaica, 19 from Ivory Coast, and 16 from Kenya, which contained the same fruit flies.Footnote 129 Accordingly, the European Union may even have violated her obligations under the WTO Agreement on SPS in banning the mangoes from India.Footnote 130 Further, the European Union imposed a blanket ban on Indian mangoes, when it could have approved the mangoes sourced and authenticated by APEDA, thereby imposing a more restrictive trade measure.Footnote 131 Similarly, a trade ban could not exclude GI-denominated products, despite stronger quality control and inspections, even though such inspections may contribute to avoiding possible bans since these bans negatively impact the collective reputation of the GI producers.
GIs must be able to create value for their products in order to be valuable to registered producers. The GI regime in India borrows heavily from the regulatory framework of trademarks. Consequently, it is highly trader-centric, focusing primarily on protecting GIs against the misuse of the names by unauthorized users. The GI Act does not account, however, or accounts considerably less for the producer-centric need to maintain the quality and reputation of the GI-denominated products. Perhaps, due to the lack of awareness and lack of enough incentives, producers have not been able to assure themselves of a premium market. Legitimate interests of consumers cannot, and should not, be ignored; providing quality assurance and promoting consumer welfare have been found to be central to the success of any GI regime across the world, especially the European model.
This chapter presented four different case studies highlighting both the successes and pitfalls of post-registration quality control of GIs in India. The case study of Banarasi sarees highlights the need for collective action among the traditional producers who are choosing to compete with the synthetic fabric producers – those who sell sarees made from synthetic fabrics under the GI names – and by producers belonging to the collective group who are entitled to use the Banarasi GI. However, by choosing to compete with subpar products, producers will only dilute the premium value of the GI-denominated products. The case study of Pashmina highlights how voluntary regulatory mechanism with the support of the government has the potential to strengthen quality control and provide assurance to consumers about the origin and characteristics of the products. The use of technology to track the products and certify quality throughout the manufacturing chain may assist producers in monitoring the production of the GI-denominated products. The world-famous Darjeeling tea GI is an interesting case study, where due to the establishment of inspection structures governed by the Tea Board, the supply chains have been foolproof. But this is only on account of historical factors responsible for the establishment of the Tea Board and subsequent strict compliance with quality norms by authorized users. And yet, it is only since 2016 that Darjeeling tea producers can take legal action against blended tea sellers in the European Union. Finally, the Alphonso mango case study, after the EU ban, highlights the need to incorporate the SPS standards of importing destinations into inspection structures by authorities in India. Due to the weak link in the GI Act, where inspection structures are not linked with compliance by GI authorized users, it remains to be seen how market dynamics will play out in this sector.
The Indian experience thus highlighted how the different mechanisms of regulation currently associated with some of the most prominent Indian GIs showcase a fragmented framework of quality-control structures across the country. This could perhaps be an advantage as GIs across the country face different issues. Yet, even though a decentralized mechanism with different approaches to the implementation of a system of quality control could be the way forward, it is also crucial that the legislature consider either the inclusion of a chapter on the responsibilities of Inspection Bodies within the GI Act or enact a separate statute altogether for the same purpose. Certainly, Indian policymakers can no longer afford to ignore quality-control debate in the policy discourse surrounding GIs as quality control is a key element to preserve the premium value of GIs as it ensures compliance with quality. To the contrary, the Indian GIs system, with its several registered GIs, will be called out for its vanity!
Intellectual property (IP) protection is nothing new to Taiwan. Prior to the 1980s, Taiwanese IP laws were criticized for their limited recognition and protection of intellectual property rights (IPRs), inadequate deterrence for infringements, and protectionist provisions. Foreign entities were denied the same treatment as nationals, and unrecognized foreign entities were often denied protection for their IPRs as well as the standing to seek redress for infringement.Footnote 1 Under the threat of trade retaliation by the United States (US), Taiwan began a major IP law reform in the 1980s.Footnote 2 The “crucial turning point” in the development of Taiwanese IP law occurred when Taiwan realized the political and economic importance of its accession to the World Trade Organization (WTO) and its accompanying obligation to protect IP.Footnote 3 This particular goal drove Taiwan to implement more IP reforms. By 1998, one commentator was able to proudly claim that “Taiwan’s statutory regime for intellectual property protection now by and large complies with the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).Footnote 4 In some areas, the regime reaches beyond the TRIPS Agreement’s threshold.”Footnote 5 Others also found no difference between Taiwan’s IP law and the standards under the TRIPS Agreement.Footnote 6However, it is a completely different picture when it comes to geographical indications (GIs). GI protection officially originated in 2002 when Taiwan became the 144th member of the WTOFootnote 7 and it has been viewed as a new IP issue. One commentator even described GIs as a “purely transplanted norm for Taiwan.”Footnote 8 The Taiwan Intellectual Property Office (TIPO), the government agency in charge of policymaking and administration of IP,Footnote 9 claims that GIs are a brand-new legal norm introduced into Taiwan as a result of the implementation of TRIPS obligations:
After having joined the WTO, we have to implement the TRIPS obligations regarding geographical indications, but geographical indication is brand new norm that our people are not familiar with. What is a geographical indication? What is the scope of protection? How to claim the protection? These are all foreign to us.Footnote 10
However, unfamiliarity did not prevent Taiwanese policymakers from promptly developing a legal regime for the protection of GIs. In its 2004 Communication to the TRIPS Council,Footnote 11 the Taiwanese government enumerated the three elements of the Taiwanese GI regime as the Trade Mark Act,Footnote 12 the Fair Trade Act,Footnote 13 and the Tobacco and Alcohol Administration Act.Footnote 14 While the Fair Trade Act and the Tobacco and Alcohol Administration Act provide administrative regulation prohibiting the false or misleading representation of GIs, the heart of the Taiwanese GI regime is the Trademark Act. Apart from “negative protection,” which prevents geographical terms from being registered as trademarks, the Trademark Act also provides for the “positive protection” of GIs, namely, the registration of geographical terms as certification marks.Footnote 15 Later in 2007, collective trademarks were added as a means of positive protection.Footnote 16
Taiwan has also been an active participant in international GI negotiations. The inclusion of GIs in the Uruguay Round Negotiations was initiated by the EU and resisted by the United States, Canada, Australia,Footnote 17 and some Latin American countries.Footnote 18 This disagreement was described as the “North-North division,”Footnote 19 “New World v. Old World,”Footnote 20 or “immigrant v. emigrant countries.”Footnote 21 This struggle continues even after the conclusion of the TRIPS Agreement.
In 2002, Taiwan joined Argentina, Australia, Canada, Chile, the Dominican Republic, El Salvador, Guatemala, New Zealand, Paraguay, the Philippines, and the United States in opposing the extension of the higher level of GI protection for wines and spirits to all goods.Footnote 22 According to TIPO, the reason for this was that “after thoughtful review, we have concluded that extension will not provide meaningful benefits but will instead create new difficulties.”Footnote 23 Furthermore, on March 11, 2005, Taiwan joined the New World countries, including Argentina, Australia, Canada, Chile, Ecuador, Mexico, New Zealand, and the United States, in supporting the establishment of a nonbinding and voluntary multilateral register for wine GIs.Footnote 24 This group of countries proposed that the TRIPS Council set up a voluntary system where GI holders could register their GIs in a database. The governments who choose to participate in the system would then have to consult the database when making decisions regarding GI protection in their own countries. Nonparticipating members would be “encouraged” but “not obliged” to consult the database.Footnote 25
Judging from the façade, Taiwanese GI law seems to represent just another successful example of legal transplantation. However, as it will be revealed in this chapter, this tranquility is misleading, if not deceiving. The truth is that GI-protection issues have been a legal conundrum for Taiwanese policymakers and the history of Taiwanese GI law has been characterized by dereistic policy premises, perennial overhauls, doctrinal dilemmas, and atavistic evolution. This chapter aims to reveal and decipher Taiwan’s GI conundrum and provide strategies to turn this conundrum into a tool for policy development.
Dereism is a psychological term that refers to mental activities that do not accord with reality or logic.Footnote 26 This term is used here, in the abstract, to describe the nature of the policy premises on which Taiwanese GI law has been based. This section identifies and explores three such policy premises, including the misidentification of policy context in which GIs are protected, misinterpretation of the GI–trademark relation, and opportunistic distortion of the meaning of protection.
As we have seen, Taiwanese GI law was enacted in response to a new IP obligation imposed by the TRIPS Agreement. This IP-centered premise has not changed since 2003. The policy interests for GIs becoming a separate form of IP at the national and regional levels, thus causing international problems, have not been considered by Taiwanese policymakers. Problems with such a premise for policymaking are twofold. At the general level, it contravenes the economic rationales behind IP protection. It has been argued that IP protection is a form of government intervention in the economy. Such an intervention is not the end per se but rather an instrument for the achievement of other policy goals.Footnote 27 Thus, protecting IP simply for the sake of doing so, without identifying the proper policy context in which it operates, as the Taiwanese GI law has done, is to put the cart before the horse. More specifically, failing to identify the specific policy interests that GIs are intended to address, such as rural development or food quality control,Footnote 28 has turned the development of Taiwanese GI law into a Hamlet without the Prince of Demark.Footnote 29
Another policy premise that has guided the development of Taiwanese GI law is that GIs are equivalent, or at least similar, to trademarks. According to TIPO, the adoption of this “trademark approach” was inspired by existing international paradigms. Taiwan’s policymakers and commentators identified two types of GI protection: the EU’s sui generis model and the trademark model in the United States. The former recognizes GIs as a form of intellectual property in its own right and protects GIs through the sui generis legislation, whereas the latter views GIs as a subset of trademarks and thus protects them under existing trademark law.Footnote 30 Taiwan’s reasons for adopting the trademark approach are twofold. First, in the eyes of Taiwan’s policymakers, GIs are similar to trademarks. This is because GIs, as “commercially valuable source-identifiers,” are similar to trademarks in terms of function and value. They are also similar in terms of the rationales behind their legal protection – consumer protection and the prevention of unfair competition. In the case of GIs, misuse may be detrimental to the interests of consumers and thus constitute unfair competition between producers. Secondly, subsuming GIs under existing trademark law is easy and convenient.Footnote 31 Therefore, to Taiwanese policymakers, the two GI protection models differed on a technical basis rather than substantive basis.
However, this interpretation completely disregards the fact that under the TRIPS Agreement, GIs and trademarks are two separate categories of IPR. Under the TRIPS Agreement, GIs are “indications 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 geographical origin.”Footnote 32 As the WTO explained, GIs are names of places or words associated with a place “used to identify the origin and quality, reputation or other characteristics of products.”Footnote 33 Moreover, differences between GIs and trademarks are obvious as the TRIPS Agreement defines trademarks as “[a]ny sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings.”Footnote 34 The ability to distinguish goods and services of undertakings is the universal requirement for a sign to be protected as a trademark.Footnote 35
As to the rationales behind protection, the TRIPS Agreement provides two levels of protection for GIs. TIPO’s interpretation only acknowledges protection for GIs for all goods, which is based on consumer protection and the prevention of unfair competition rationales. It ignores the additional level of protection for wine and spirits. Furthermore, although they claim to have been inspired by both the United Statess and EU’s models, TIPO’s interpretation is in fact a faithful reflection of that of the United States Patent and Trademark Office’s (USPTO)Footnote 36 regime, and a total ignorance or misunderstanding of the EU’s concept of GIs. Under EU law, a GI is “the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product or a foodstuff.”Footnote 37 Such terms would normally be considered generic or descriptive under the trademark doctrine.Footnote 38
Since GIs are treated as trademarks, the policymaker’s task has been to absorb GIs into the existing trademark law. This approach faces an immediate challenge because under the trademark doctrine GIs are normally not considered distinctive and thus they are not protectable.Footnote 39 Hence, Taiwanese policymakers have adopted an opportunistic strategy to overcome this apparent and inherent difficulty by widening the meaning of trademark protection to include “negative protection.”
Trademark protection under the Taiwanese Trademark Act is based on the “registration protection principle.” This means that “protection” refers to the acquisition of trademark rights through registration.Footnote 40 In order to be registered and protected, the mark in question must meet three statutory requirements. A failure to comply with any of the requirements will result in registration being refused and thus no protection for the mark. The requirements are that (i) the mark in question must “be composed of a word, figure, symbol, colour, sound, three-dimensional shape or a combination thereof,”Footnote 41 (ii) the mark in question must be capable of being “expressed in a visually perceptible representation,”Footnote 42 (iii) the mark must be “distinctive enough for relevant consumers of the goods or services to recognize it as identification to that goods or services and to differentiate such goods or services from those offered by others.”Footnote 43 However, nondistinctive elements may be included in a registered trademark on the condition that “the applicant disclaims the exclusive right for using the said feature.”Footnote 44
A registered trademark confers on its proprietor the right to exclude others from using that particular sign in relation to specified commercial activities.Footnote 45 This exclusive right may be infringed by someone using the trademark in Taiwan without the proprietor’s consent.Footnote 46 The proprietor of a registered trademark may also license,Footnote 47 assign,Footnote 48 create a pledge over,Footnote 49 or abandonFootnote 50 his trademark rights. Additionally, the proprietor has the rights to customs and border measures.Footnote 51 Upon successful registration, the trademark is protected for ten years, starting from the date of publication.Footnote 52 Thereafter, registration may be renewed for another ten years.Footnote 53 However, the proprietor’s exclusive right to a registered trademark may not be infringed by use in Taiwan without his consent in the following instances: (i) bona fide and fair use of one’s own name or title or the name, shape, quality, function, place of origin, or other description of goods or services, provided that the use is for non-trademark purposes;Footnote 54 (ii) a three-dimensional shape of a good or package “indispensable for performing its intended functions”;Footnote 55 (iii) bona fide use prior to the filing date of a registered trademark;Footnote 56 (iv) if the goods bearing the registered trademark are traded or circulated in the marketplace by the proprietor or an authorized person, or are offered for auction or disposal by a relevant agency, then the proprietor shall not claim infringement of his trademark on the said goods.Footnote 57
Interestingly, the concept of “negative protection” was previously unheard of in Taiwanese trademark jurisprudence. According to TIPO, the basis for “negative protection” for GIs can be found in Articles 23.1(11) and 23.1(18) of the Trademark Act 2003. Article 23.1(11) provides for the refusal of an application for trademark registration if the proposed mark is “likely to mislead the public with respect to the nature, quality, or place of origin of the designated goods or services.”Footnote 58 Additionally, Article 23.1(18) provides for the refusal of a mark “that is identical or similar to a geographical indication of wines and spirits of a country or region that mutually protects trademark with Taiwan, and is designated for use on wines and spirits.”Footnote 59 Thus, negative protection actually refers to the refusal of registration. However, by distinguishing negative protection from positive protection, TIPO is now able to claim that GIs are protected as trademarks under Taiwanese trademark law. Thus, the sophistry of negative protection is not only a euphemism for the refusal of protection but also a form of deception to allow the policymaker to ignore the obvious incompatibility between GIs and trademarks.
3 Positive Protection: Perennial Overhauls, Doctrinal Dilemmas, and Atavistic Evolution
Positive protection, which is the registration of GIs as certification marks and collective trademarks, has been characterized by perennial overhauls, doctrinal dilemma, and atavistic evolution. Although the Trademark Act 2003 was the first official response to the GI-protecting obligations, it simply added the words “place of origin” to the categories of qualities certifiable by certification marks. Later in 2004, TIPO introduced a whole new administrative mechanism for “the registration of geographical indications as certification marks.”Footnote 60 It incorporated the TRIPS Agreement’s definition of GIs and established procedures to ensure the existence of a required link between the product and the place of origin.Footnote 61 It also introduced a decision-making process through which the decision to grant GI protection was a joint decision by TIPO and the relevant government authorities in charge of the products identified by the GI, such as Ministry of Agriculture and Ministry of Treasury.Footnote 62 However, this mechanism was abolished in 2007 when TIPO introduced the registration of “geographical certification marks” and “geographical collective trademarks.” At the heart of this new mechanism was the requirement of distinctiveness of the geographical term – a link between the product and place was no longer required. The TIPO was now the sole authority for granting GI protection. Further change came in mid-2011 with the enactment of the Trademark Act 2012 (TMA 2012),Footnote 63 which codified the terms “geographical certification mark” and “geographical collective mark.” In doing so, the TRIPS definition of GIs was formally incorporated into the definition of “geographical certification marks” and “geographical collective marks.” Surprisingly, the requirement of distinctiveness was abolished and a joint decision-making process was reintroduced – not to qualify the product but to qualify the applicant.
The Trademark Act 2003, the first official response to GI obligation, simply added “place of origin” to the categories certifiable by certification marks. Under Taiwanese trademark law, a “certification mark is used to certify the characteristics, quality, precision, place of origin or other matters of another person’s goods or services shall apply for certification mark registration.”Footnote 64 This means that, unlike general trademarks, a certification mark is not used to indicate a single business source. Instead, it is “used by multiple people who comply with the labelling requirements in connection with their respective goods or services.”Footnote 65 Only “a juristic person, an organization or a government agency capable of certifying another person’s goods or services” is eligible to apply for a certification mark.Footnote 66 However, the owner of a certification mark is not allowed to use the mark. Rather, he is obliged to “control the use of the mark, supervise the authorized users’ use, and ensure that the certified goods or services meet the articles governing use.”Footnote 67 Also, the owner of a certification mark must allow any person who complies with the requirements to apply to use the certification mark.Footnote 68 The year 2003 saw the registration of what the TIPO claims to be the first geographical certification mark:“池上米” (Chinese characters for “Chi-Shang rice”).Footnote 69 This certification mark was registered by the Chi-Shang Township Office of Taitung County to certify rice originating from the Chi-Shang Township of Taitung County, and that its quality met the “Criteria Governing Chi-Shang Rice quality rice logo” that was established by the owner of the mark.Footnote 70
The main effect of registration of a geographical certification mark is that, after such registration, any application to register the same “geographical name” as a trademark would be rejected pursuant to Article 23–1(11) of the Trademark Act 2003 because the latter application might mislead the public with respect to the quality, nature, or place of origin of the goods that the second mark would identify, if registered. In other words, after “池上米” is registered, another person’s application to register the same geographical name as part of a trademark, which is likely to mislead the public with respect to the place of origin, shall be rejected. However, any registered trademark acquired prior to the registration of the corresponding geographical certification mark is not affected. Furthermore, the owner of the geographical certification mark would not have the right to prohibit the owner of the trademark from using that geographical name in good faith and in a reasonable manner.Footnote 71
However, it is noteworthy that TIPO’s narrative does not entirely align with reality. Certification marks were first included under TMA 1993. Under the TMA 1993, certification marks are used to certify characteristics, quality, precision, or other matters of goods or services.Footnote 72 It has been pointed out that this provision is broad enough to cover even the “place of origin.”Footnote 73 Moreover, a survey of TIPO’s trademark register also confirms that there were certification marks registered before the TMA 2003 came into force on November 28, 2003, which may certify the place of origin of products. Some examples include the following: the mark “CALIFORNIA” with a device to certify that the cling peach products it identifies originated from California, US, and that they comply with the quality standards set by the proprietor of the mark (the certifier);Footnote 74 the mark “QUALITY USA” with a device that certifies “the certified peanut products are absolutely originated in the USA and comply the relevant US Federal standards and regulations”;Footnote 75 the mark “IQF EDAMAME OF TAIWAN” with a map of Taiwan to certify that their edamames originate from Taiwan and that their quality and sanitation methods comply with the standards set by the certifier;Footnote 76 and the mark “JAMAICA BLUE MOUNTAIN” that certifies that the coffee beans identified by the mark originate from the Jamaican Blue Mountain area and that their storage, processing, and packaging comply with the requirements of the certifier.Footnote 77
Thus, it is argued that listing the words “place of origin” in the TMA 2003 does not create a new legal right. It is only a declaratory gesture used to express Taiwan’s determination to implement its TRIPS obligations.Footnote 78
In September 2004, TIPO adopted the “Main Points for the Registration of Geographical Indications as Certification Marks” (GI Registration Points 2004).Footnote 79 The GI Registration Points 2004 established a whole new administrative mechanism for the registration of GIs as certification marks and has three main features.
First, the GI Registration Point 2004 incorporated the TRIPS Agreement’s definition of GIs.Footnote 80 TIPO further refined this definition into three elements: (i) the indication must be a geographical name, a picture, or word related to that geographical term which identifies the nexus between a particular good and that geographical area; (ii) the geographical area in question may encompass a WTO Member’s entire territory, or a single administrative unit, a combination of several administrative units, or a specific area where the raw materials grow or processing takes place; and (iii) there must be a nexus between a given quality, reputation, or other characteristic of the good and that geographical area.Footnote 81
Second, it established procedures to verify the existence of a link between the product and the place of origin. TIPO set out three alternative criteria to determine the existence of the product–place nexus. First, all stages of production (growth of raw materials, processing, and packaging) must take place within the designated area. Second, the main raw materials (tea leaves, for example) must originate from the designated area and only a small portion of raw materials may be supplied from other areas; or, third, the production stage which gives the product its distinctive feature must take place within the designated area.Footnote 82 The applicant must also submit a product specification with the following information: (i) definition of the geographical area; (ii) raw materials and their place of origin; (iii) description of the raw materials, including physical, chemical, microbiological, sensual characters and evidence of such characters; (iv) description of methods of production, including the local conventional or unvarying methods; and (v) description and evidence of the specific facts or factors in relation to the geographical environment, such as the soil, climate, wind, water quality, altitudes, humidity, and their connection to the product.Footnote 83
Third, it also introduced a joint decision-making process by the TIPO and relevant government authorities in charge of the products identified by the GI, such as Ministry of Agriculture and Ministry of Treasury, for the granting of GI protection. Generally, an application to register a GI as a certification mark will be examined by TIPO under the normal procedures for certification marks. However, the GI Registration Points indirectly indicated that TIPO might not be in the best position to judge the product–place nexus. Hence, the “Main Points” obliged TIPO to seek professional opinion from the Council of Agriculture where the agricultural product in question was not wine or alcohol, or the Treasury of the Ministry of Finance if the product concerned was wine or alcohol.Footnote 84
In 2007, the GI Registration Points 2004 were abolished when TIPO introduced the “Examination Guidelines on Certification Marks, Collective Trademarks and Collective Membership Marks” (the Examination Guidelines 2007). The Examination Guidelines marked the beginning of a new phase of Taiwanese GI law. Instead of using the term “geographical indications,” it adopted the terms “geographical certification mark” (產地證明標章)Footnote 85 and “geographical collective trademark” (產地團體商標).Footnote 86 Most importantly, “distinctiveness” of the mark was now the sine qua non condition for the registration of geographical certification marks and geographical collective trademarks. The product-place nexus was no longer required and TIPO became the sole authority in charge of the examination of registration applications for geographical certification marks and geographical collective trademarks.Similar to individual trademarks, distinctiveness is an essential condition for the registration of geographical certification marks. TIPO expounds the meaning of distinctiveness of a geographical certification mark as follows:
A “geographical certification mark” mainly comprises a geographical name and differs from a generally descriptive “indication of source.” A general “indication of source” only describes the place where the goods or services are manufactured, produced or provided, for instance, “台灣製造” (meaning “made in Taiwan”) and “made in Taiwan.” On the other hand, a “geographical certification mark” is used to certify that one’s goods or services originate in a certain geographical region and the certified goods or services have a certain quality, reputation or other features attributed to the specific natural or human factors of its geographical environment. In other words, because the geographical name has garnered certain reputation due to its use over time, consumers would immediately associate the geographical name with the certified goods or services as soon as they encounter it; therefore, the geographical indication may be granted registration because of distinctiveness.Footnote 87
A collective trademark is “mainly used by the members of a collective group in order to identify the goods or services operated or offered by its members.”Footnote 88 This means that a collective trademark allows the consumer to distinguish goods or services provided by a member of a collective group from those offered by nonmembers. Only a “business association, social organization, or any other group that exists as a juristic person” may be eligible to apply for a collective trademark.Footnote 89 Furthermore, it was also mentioned that “[c]ollective trademarks are still trademarks by nature. While ordinary trademarks are used to identify a single source of goods or services, collective trademarks are used by the members of a given group on the goods or services provided by the members of that group.”Footnote 90 Thus, a collective trademark is similar to a general trademark in the sense that both are used to indicate the business source of goods or services.Footnote 91
According to TIPO, the main difference between these two categories of marks lies in their respective relations to their users. A general trademark is only used by the owner himself, if he does not license it out. However, a collective trademark is jointly used by the members of a group on the goods or services of the respective members. But if the owner wants to launch advertising campaigns for its members, it may use the collective trademark to promote the goods or services offered by its members.Footnote 92 Under Taiwanese trademark law, the main difference between a collective trademark and a certification mark is that the former is exclusive to the owner, but the latter is open to the public. In other words, whereas a collective trademark is used only by the members of its collective group, anyone who complies with the prescribed requirements to use a certification mark must be allowed to use it.Footnote 93Like trademarks, a geographical collective trademark is not registrable if it is considered descriptive.Footnote 94 However, a geographical collective mark becomes registrable if it “has acquired distinctiveness as specified in Article 23–4 of the Trademark Act.”Footnote 95 TIPO envisaged the process in which a geographical name may acquire distinctiveness as follows:
Unlike an “indication of source” with a general descriptive nature, a “geographical collective mark” not only denotes the place where the goods or services are manufactured, produced or provided, but also signifies that the goods or services identified thereunder have certain quality, reputation or other characteristics attributable to the natural or human factors of that geographical region. Therefore, a geographical collective trademark identifies the goods or services originating in a particular region that has certain quality or characteristics. In other words, as the geographical name has acquired certain reputation after a long-term use, consumers can immediately associate it with the designated goods or services. Such geographical collective trademark may be registered because it meets the distinctiveness requirements of a geographical collective trademark.Footnote 96
Given the importance of distinctiveness, TIPO provided a series of definitions to clarify the concept of distinctiveness under the Trademark Act of 2003. For individual trademarks, “distinctiveness of a trademark relates to how it denotes the source of goods or services and distinguishes such goods or services from those of others.”Footnote 97 A general collective trademark is deemed distinctive “if it is able to distinguish the goods or services of the members of a collective group from those goods or services of non-member parties.”Footnote 98 In TIPO’s definition, the “distinctiveness of a general certification mark refers to the characteristics, quality, precision or other matters that is/are used to certify one’s goods or services; the use of which on the certified goods or services is sufficient to distinguish them from the goods or services that are not certified.”Footnote 99 However, this definition is ambiguous and elusive.
Thus, the Examination Guidelines 2007 represented a new approach to incorporate GIs into the existing trademark law. For this purpose, TIPO created a new concept of distinctiveness for geographical certification marks and geographical collective trademarks, which incorporated the TRIPS Agreement’s definition of GIs.
Similar to that of certification marks, TIPO’s narrative of adding geographical collective trademarks as a protective measure for GIs originated in some specific events. Collective trademarks, in general, were first added to Taiwan’s trademark law in 2003.Footnote 100 However, the registration of “geographical collective trademarks” was not formally provided for under the TMA 2003. It was, instead, recognized under the Examination Guidelines 2007.Footnote 101 According to TIPO, in 2007, the government decided to enhance the protection of GIs by allowing the registration of “geographical collective marks”Footnote 102 as a response to the 2005 incident that the names of seven well-known Taiwanese tea production districts were registered as trademarks in China. In particular, TIPO treats the “geographical collective trademark” as a special type of collective trademarks. Section 3.1 of the 2007 Examination Guidelines states: “In addition to a general collective trademark, the applicant may apply to register a geographical name as a geographical collective trademark, which is jointly used by the members of a collective group incorporated within the defined geographical region to denote the source of goods or services they offer.”Footnote 103 Therefore, the registration of geographical collective trademarks was only officially allowed under the Examination Guidelines 2007.
However, there were collective trademarks registered prior to 2007, which appear capable of performing the same functions as “geographical collective trademarks.” For instance, the following marks were registered: YAMAGATA SAKE BREWERY ASSOCIATION (Japan) (山形縣酒造合作社日本) registered the collective trademark “山形讚香YAMAGATA SANGA” for Japanese wine and sake on December 16, 2005;Footnote 104 the Italian company CONSORZIO PRODUTTORI MARMO BOTTICINO CLASSICO registered “MARMO BOTTICINO CLASSICO” for marble products on September 1, 2006;Footnote 105 the Italian company CONSORZIO DEL PROSCIUTTO DI PARMA registered “PARMA” for ham as a collective trademark on July 16, 2007;Footnote 106 the Goat Farmer Association R.O.C. registered the collective trademark “國產優質生鮮羊肉TAIWAN FRESH GOAT MEAT (with picture)” for goat meat on October 1, 2006.Footnote 107
Further amendments to Taiwanese GI law were made in mid-2011 with the adoption of the Trademark Act 2012 (TMA 2012).Footnote 108 The TMA 2012 codifies the terms “geographical certification mark”Footnote 109 and “geographical collective mark.”Footnote 110 Article 80.1 defines certification marks as a mark used by its proprietor to certify the specific quality, precision, materials, method of production, place of origin, or other matters of others’ goods or services, and to distinguish the certified goods or services uncertified ones.Footnote 111 Article 80.2 further states that the good or service certified by a geographical certification mark must have “a given quality, reputation, or characteristic.” However, there is no requirement for the essential nexus between the product and place of origin. For example, the place name “Taipei” (台北) cannot be registered as a geographical certification mark for rice noodles because it has no connotation of a given quality, reputation, or characteristic for rice noodles and simply describes the place of origin. On the other hand, since “Meinong” (美濃) is famous for the quality of its rice noodles, it fits the definition of a geographical certification mark.Footnote 112
Article 88.2 defines a “geographical collective trademark” as a collective trademark, which “serves to indicate a specific place of origin of goods or services of a member, such goods or services from that geographical region shall have a given quality, reputation or other characteristic.”Footnote 113 Applicants for registration of a collective trademark, including geographical collective trademark, must submit to the Registrar Office the regulations governing the use of the geographical collective trademark.Footnote 114 Article 89.3 requires the proprietor of a geographical collective mark to allow anyone whose good or service complies with the regulationsFootnote 115 to become a member. As a result, the distinction between the geographical collective trademark and the geographical certification mark was eliminated and the former simply became the latter but with a different name. Articles 80.2 and 88.2 allow “a sign containing that geographical term or a sign capable of indicating that geographical area” to be registered as a geographical certification mark or geographical collective trademark respectively.Footnote 116 Interestingly, the distinctiveness requirement does not apply to the “geographical name” used in geographical certification marks or geographical collective trademarks.Footnote 117 More intriguing is the fact that it is not necessary to disclaim the geographical name in question.Footnote 118
The TMA 2012 also contains provisions that explicitly deal with the effects of GI registration. As mentioned, TMA 2012 waives the requirement of distinctiveness for the registration of geographical names as geographical certification marks or collective trademarks. It further provides that it is not necessary to disclaim such geographical names.Footnote 119 The general rule for trademarks is that nondistinctive elements may be included in a registered trademark on the condition that “the applicant disclaims the exclusive right for using the said feature.”Footnote 120 This seems to suggest that the registration of a geographical certification mark or geographical collective mark will confer on its owner exclusive rights despite the lack of distinctiveness. This becomes especially ambiguous when one reads the provision providing that the “proprietor of a geographical certification mark is not entitled to prohibit the use of the signs to indicate the geographic origin of their goods or services in according with honest practices in industrial or commercial matters.”Footnote 121 On closer inspection, this provision is merely a reiteration of the fair use doctrine to trademark rights.Footnote 122 Under the fair use doctrine, the proprietor’s exclusive rights to a registered trademark are not infringed by the use of the trademark in Taiwan without his consent if the use includes the use of one’s own name or title, or the name, shape, quality, function, place of origin, or other description of goods or services.Footnote 123 The purpose of adding this provision was to “safeguard the freedom of one’s right to describe his goods or services.”Footnote 124 As a result, no one’s right to use the registered geographical name would be affected. Thus, the owner could not exclude anyone from using the registered geographical name to indicate the geographical origin of his goods or services.
Therefore, the evolution of Taiwanese GI law is an atavistic one.Footnote 125 By requiring the proprietor to admit anyone whose product complies with the set criteria as a member, the TMA 2012, in practice, makes geographical collective trademarks geographical certification marks. This means that under the TMA 2012, geographical collective trademarks are no different from geographical certification marks except in name, and thus Taiwanese trademark law ultimately only protects GIs as certification marks. As to the effect of protection, the emphasis on safeguarding the freedom of competitors to describe the origin of their products through the fair use doctrine represented the trademark doctrine’s absolute victory. Thus, the enactment of the TMA 2012 actually brings Taiwanese GI law status quo ante 2003 and all the efforts and struggles have added nothing but new terminology.
Given what we have seen in the past, it is time to end the chaos and emancipate Taiwanese policymakers from their Sisyphean mission of designing an ideal positive protection mechanism for GIs under the existing trademark law. Surprisingly, the manumissioFootnote 126 required is actually rather obvious and straightforward. While Taiwan’s GI conundrum is a result of perennial overhauls, doctrinal dilemmas, and atavistic evolution, the heart of the problem lies in its dereistic policy premises. Taiwanese policymakers’ immediate task should be to escape the GI–TM confusion. To accomplish this task, policymakers must stop seeing GIs through the lens of the trademark doctrine, and acquire a genuine understanding of the long-ignored EU sui generis paradigm. Once the GI–TM muddle is cleared, there will no longer be a need to employ the sophistry of “negative protection” to belie the incompatibility between GIs and trademarks. Only then can the Sisyphean effort of designing an ideal “positive protection” mechanism for GIs within the Trademark Act be stopped.
Another matter left to be considered is whether it is advisable for Taiwan to shift from the trademark approach to a GI regime modeled on the EU sui generis paradigm. In order to answer this question, policymakers must first ask themselves what they want GIs to do for Taiwan. An example would be the name “阿里山” (Ali Shan, meaning Ali Mountain), one of the most prestigious tea production regions in Taiwan as well as in the Chinese-speaking world. The Chia-Yi County Council registered “嘉義縣阿里山高山茶” (Chia Yi County Alishan High Mountains Tea) as a geographical certification mark on December 16, 2006.Footnote 127 This certification mark is used to certify tea produced in six towns located around the Ali mountain area and that complies with government safety regulations in relation to the use of chemicals. Furthermore, the name “Ali Shan” is not disclaimed.Footnote 128 But despite the registration, a search of TIPO’s database on April 10, 2011, displayed 104 entries containing the name “阿里山.” Among the 104, 12 were pending applications and 92 were registered. Among the 92 registered, 37 were for tea products, and of the 37, 24 were registered after December 16, 2006, after the “阿里山” mark was registered. A search not too long ago revealed that registration of the name “阿里山” still continues despite the vicissitudes of law. A search of TIPO’s trademark registry database on September 5, 2015, displayed 171 entries containing the name“阿里山.” Among these results, 15 were pending applications and 156 were registered. Of the 156 registered, 43 were registered for tea products and among the 15 pending applications, 4 were for tea products.Footnote 129For those who are skeptical of the value of GIs as a form of IP in its own right and who seek to subsume GIs under trademark law, the coexistence of multiple applications and registrations is in line with the economic rationale behind trademark law and its doctrinal principle. On the contrary, for those who view GI as a valuable policy tool for rural development because of its potential to provide “measurable economic benefits to a wide portion of its stakeholders while enhancing, or at least not compromising, the social and environmental conditions there,”Footnote 130 this state constitutes a lamentable case of what Gangjee describes as the “hidden consequences” of protecting GIs as collective or certification marks:
Protecting GIs as Collective or Certification marks is certainly a pragmatic compromise in countries where a separate protection regime does not exist, but there are hidden consequences. For a start, the US “Tequila” Certification mark … has to coexist with 263 other live applications or registrations which include “Tequila,” making the ability to communicate a clear message of Mexican origin doubtful.Footnote 131
Thus, the proposition of constructing a meaningful GI regime is the predetermination of an unambiguous policy goal. Therefore, it is necessary for the policymaker to recontextualize Taiwanese GI law. By doing so, GIs will no more be merely an exogenous IP obligation imposed by the TRIPS Agreement. Instead, GIs will become a policy issue that has a real connection to Taiwan. It is in this new policy context that the policymaker will be able to adopt, after in-depth cost–benefit analyses, as components of Taiwanese GI law, legal measures not because they are IP but because they are necessary to achieve the policy goal.
Taiwan has been facing a GI conundrum, which is symptomized by the perennial overhauls, doctrinal dilemmas, and atavistic evolution. Roots of the conundrum lay in its dereistic premises, that is, the misidentification of policy contexts, misinterpretation of the GI–trademark relation, and the opportunistic distortion of the meaning of protection. To terminate the chaotic state the policymaker must stop seeing GIs through the lens of the trademark doctrine and acquire a genuine understanding of the long-ignored EU sui generis paradigm. To turn GIs into a policy tool for development, the policymaker must determine a clear policy goal in the first place.
China is a nation with a large population and vast territory with numerous products originating in specific parts of the country. The introduction of a geographical indication (GI) regime in China can assist in preserving the authenticity of these products, both in terms of their geographical origin and the characteristics.
The history of GI protection in China can be traced back to the mid-1980s when China joined the Paris Convention for the Protection of Industrial Property (Paris Convention).Footnote 1 Under the obligations of the Paris Convention, China started to protect indications of source and appellations of origin by way of administrative decrees. In 1989, the State Administration for Industry and Commerce (SAIC)Footnote 2 issued an administrative decree to protect the French GI ‘Champagne’ from being misused as a generic term for a type of sparkling wine in Chinese markets.Footnote 3 This was probably the first significant event in China regarding GI-related administrative protection. Since then, several legislative efforts have been made in this respect, and different government agencies have been involved in protecting GIs in China.
Still, China does not adopt a uniform approach in protecting GIs. In particular, both trademark protection and a sui generis regime are available for GI protection today. In addition, these types of protection are complemented by laws on unfair competition, consumer protection, and product quality. However, as this chapter elaborates, the parallel and sometimes conflicting different legal systems under which GIs can be protected in China today may also hamper the creation of a healthy and efficient system of GI protection.
Notably, this chapter offers an overview of how the GI legal system has evolved in China. It also compares the advantages and disadvantages of the different regimes currently available for GI protection, and concludes with specific suggestions for improvements to the existing arrangement.
The philosophy of using trademarks to protect GIs is that GIs function quite similarly to trademarks. In particular, the primary purpose of a trademark regime is to protect the interests of consumers by way of the trademark’s source-identifying function and the quality guarantee function. Moreover, trademark protection extends to protect the business interest of trademark owners, namely the trademark goodwill and the investments that trademark owners have in the marks, and the products. Generally speaking, a trademark is an identifier of one single producer or service provider.
Similar to trademarks, GIs also designate source, even though a geographical source guarantees specific qualities of the products that derive from the natural and human factors within the given geographical area, and protect the investment made by generations of local producers on the reputation that is associated with the GIs. In this sense, GIs can be understood as a subset of trademarks.Footnote 4 More specifically, a GI usually serves to identify a group of producers who share something in common, that is, the producers’ products possess a certain quality, reputation, or other characteristics which are essentially attributable to their geographical origin.Footnote 5
Generally, GIs are protected as certification or collective marks in China, the two types of marks that best accommodate GI protection within the trademark system.Footnote 6 Notably, both certification marks and collective marks identify groups of users, instead of one single business entity, which best reflect the nature of GIs as collective rights and signs that guarantee specific (and certified) product quality and characteristics. Moreover, the ownership of certification marks or collective marks is for applicants which have a collective legal nature, usually in the form of an association of producers.Footnote 7 Again, this best corresponds to the collective nature of a GI registrant. Therefore, both certification marks and collective marks can be used to protect GIs under the trademark system in China.
Before 1993, it was not possible to protect GIs within the trademark system in China. However, Rules for the Implementation of the Trade Mark Law (1993 Revision) (TM Implementing Rules 1993)Footnote 8 introduced provisions for the protection of certification marks and collective marks. This made it possible to protect GIs as trademarks. In December 1994, based on the Trade Mark Law of 1993 (TM Law 1993)Footnote 9 and the TM Implementing Rules 1993, SAIC formulated and promulgated the Procedures for the Registration and Administration of Collective Marks and Certification Marks,Footnote 10 which provided that certification marks could be used to certify the place of origin, raw materials, method of production, quality, accuracy, or other characteristics of the said goods or services. This was the first administrative rule regarding the protection of a GI in the national legal system in China.Footnote 11
Less than a decade later, in 2001, China made a commitment to introduce specific GI protection in its Trade Mark Law as part of its accession to the World Trade Organization (WTO). As a result, the concept of ‘geographical indication’ was officially introduced in the revised Trade Mark Law of 2001 (TM Law 2001).Footnote 12 This legislation elevated the legal basis for GI protection from administrative rule to national law.Footnote 13 However, the 2001 revision to the Trade Mark Law did not provide for a specific procedure to register a GI in China. Thus, a year later, in 2002, the State Council promulgated Regulations for the Implementation of the Trade Mark Law (TM Implementing Regulations 2002)Footnote 14 in order to create a system of registration.
In particular, Article 6.1 of the TM Implementing Regulations 2002 stipulates that ‘for geographical indications referred to in Article 16 of the Trade Mark Law, applications may be filed to register them as certification marks or collective marks under the provisions of the Trade Mark Law and these Regulations’. Article 3 of TM Law 2001 was later confirmed in the same provision in the Trade Mark Law of 2013 (TM Law 2013),Footnote 15 which defines a collective mark as ‘a mark registered in the name of a group, association, or any other organization and used by its members to indicate membership’.Footnote 16 It also goes on to define a certification mark as ‘a mark which is owned by an organization that exercises supervision over a particular product or service and which is used to indicate that third-party goods or services meet certain standards pertaining to place of origin, raw materials, mode of manufacture, quality, or other characteristics.”Footnote 17
In 2003, SAIC issued the Measures for the Registration and Administration of Certification and Collective MarksFootnote 18 in response to the revised Trade Mark Law, making detailed provisions about the registration and administration of GIs. As a result, GIs can be registered and protected as collective marks or certification marks under the trademark regime with the Trade Mark Office under SAIC.
2.2 Current Protection under the Chinese Trademark System
Article 16 of the TM Law 2013 provides that geographical indication ‘means that it is the place of origin on the goods at issue and that the special qualities, reputation or other characteristics of the goods are primarily determined by the natural conditions or other humanistic conditions of the geographical location involved’.Footnote 19
2.2.1 What May be Registered as a Geographical Indication under the Trademark System
Under Chinese trademark law, a GI registered as a collective mark or a certification mark may be the name of the geographical region indicated or any other visual signs capable of indicating that a good originates from the region. The area of the region designated as the region from which GI products originate is not required to be fully consistent with the name or boundary of the administrative division of the same region.Footnote 20 In this respect, the scope of trademark protection is much wider than that of the sui generis protection for GIs, as the latter only allows for the registration of geographically accurate names.
(1) a document issued by the people’s government which has jurisdiction over, or the competent authority of, the concerned industry approving the applicant’s registration of the GI in question, for example, agricultural or fishery authorities;Footnote 21
(2) a description of the GI including (i) the given quality, reputation, or any other characteristic of the goods indicated by the sign, (ii) the relation between the given quality, reputation, or any other characteristic of the goods and the natural and human factors of the region indicated by the GI, and (iii) the boundary of the region indicated by the GI;Footnote 22
(3) detailed information of the professionals and special testing equipment of the applicant or of any other organization authorized by the applicant to show its capability of supervising the particular quality of the goods indicated;Footnote 23
(4) the regulation governing the use of a collective mark or certification mark.Footnote 24 The registrant of a GI imposes control over the use of the GI mainly through the implementation of this regulation.
Foreign applicants should appoint a trademark agent to act for them in China,Footnote 25 and further present documents certifying that the GI being applied for is protected also in the country of origin, in addition to the documents mentioned in (2), (3), and (4) above.Footnote 26
Anyone within the specified geographical area who satisfies the prescribed standard can ask for permission to use the GI and the owner cannot refuse it. Therefore, the trademark system makes it possible that even small producers can share the benefits of the exclusive rights granted by GI protection.Footnote 27 If a qualified product meets the standards set by the owner of the certification mark, the producer must be permitted to use the mark fairly. Generally, certification trademarks are not held by private businesses but by certification bodies, who should be impartial towards producers.Footnote 28 These bodies must exercise legitimate control over the use of the marks, but may not discriminate against a producer who actually meets the standards. Therefore, collective use is open to all producers in the specified region who comply with the rules or specifications of the certification trademarks.
The difference between GIs as collective marks and certification marks lies in that only the members of the association that has registered the mark can use the former.Footnote 29 The bodies eligible for collective mark GI registration should be composed of members located within the regions designated by the GIs.Footnote 30 Anyone whose goods satisfy the conditions under which the GI is used may request membership from the collective mark registrant, and the registrant must accede to this request in accordance with its articles of association.Footnote 31 For those who do not request membership, fair use of the geographic name of the said GI must be allowed to describe the origin of their products.Footnote 32 This use constitutes a type of fair use exemption of a geographical mark under the trademark system in China.
2.2.4 Control and Supervision over Certification and Collective Marks
The registrants/trademark owners in accordance with the control and supervision system that is set for the products to which the collective or certification marks apply exercise the control of the use of GIs as certification or collective marks. This control and supervision system is specifically articulated in the regulation governing the use of the said marks, and is a required component of the application documents of these types of trademarks.Footnote 33 If the registrants/trademark owners of a collective or certification mark fail to exercise effective control over the use of the mark and, as a result, the goods to which the said mark applies fail to meet the requirements of the regulation governing the use of the mark, causing damage to consumers, the administrative authority for industry and commerce can order them to rectify the situation within a time limit. If the registrants/trademark owners refuse to do so, they will be imposed a fine.Footnote 34
Protecting GIs as certification or collective marks follows the general rule of ordinary product or service marks. Article 3.1 of TM Law 2013 provides that ‘[a] trademark registrant shall enjoy an exclusive right to use the trademark, which shall be protected by law’.Footnote 35 The statute also provides a list of the acts that constitute infringements of the exclusive right to use a registered trademark, which are also applicable to a registered certification or collective marks (used to protect the GIs).Footnote 36
Under the Chinese trademark system, there is a twin-track system to enforce trademark rights. In particular, right holders may either institute legal proceedings in the people’s court or request the administrative authorities for industry and commerce (AICs) to take action. The AICs are empowered by the TM Law 2013 to investigate and handle trademark infringement cases. The AICs can order the infringer to immediately stop the infringing act. Additionally, the AICs can confiscate and destroy the infringing goods and the tools that are used to manufacture the goods. The AICs can also impose a fine for counterfeiting the registered trademark.Footnote 37 If the case is so serious as to constitute a crime, the AICs shall transfer the case to the judicial authority for determination.Footnote 38 Alternatively, the interested party may directly bring a lawsuit to the people’s court for trademark infringement.
Meanwhile, there are two independent sui generis systems available in China for GI protection. These systems implement the ministerial rules on GIs by the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ)Footnote 39 and the Ministry of Agriculture (MOA) respectively.
Under a sui generis system, the legal recognition and protection of GIs is based on a ‘unique’ approach, which is specifically dedicated to this type of intellectual property. With its close links to the specific geographical area, GIs belong to the region itself and not to individual producers located therein. Because GIs grant collective rights, GI protection also sees a deep involvement of the public authorities. In particular, under a sui generis system, the definition of the GI area, the eligible users of the GIs, and the ability to enforce regulations often are driven, at least in part, by the public authorities. Moreover, governments intervene in terms of control and supervision on the quality and specific characteristics of the products marketed under GIs.Footnote 40 In this respect, sui generis protection puts more emphasis on the quality of GI products, which requires strict controls over their production processes.
3.1 First Sui Generis Regime: General Administration of Quality Supervision, Inspection, and Quarantine Practice
The AQSIQ rules in China have been heavily influenced by the appellation d’origine controlée (AOC) system of France. The former State Bureau of Quality and Technical Supervision, in close cooperation with the French Ministry of Agriculture, the Ministry of Finance, and the Bureau National Interprofessionnel Du Cognac, promulgated China’s Provisions on Protection of Designations of Origin Products in 1999. This was also the first administrative regime specifying protection for designations of origin.Footnote 41 Two years later, the former State Administration for Entry-Exit Inspection and Quarantine promulgated the Provisions on the Administration of Marks of Origin in 2001. These two agencies then merged to form the AQSIQ in 2001. AQSIQ proceeded to promulgate the Provisions on the Protection of Geographical Indication Products (PPGIP)Footnote 42 in 2005, which replaced the above-mentioned two rules. All the rules mentioned above are administrative rules.
According to PPGIP, GI products are ‘products that originate from a particular geographical region with the quality, reputation or other characteristics substantially attributable to the natural and human factors of the region, and denominated with the name of the region upon examination and approval’.Footnote 43 Products of GIs include (i) those grown or cultivated in the region; and (ii) those made, wholly or partially, of the raw materials from the region and produced or processed with the particular techniques in the region.Footnote 44 The coverage of GI products under PPGIP is rather wide and includes agricultural products, handicraft works, spirits, and other products protected under the trademark regime.
As a starting point, there is a two-tier process for applicants to apply for registration of the GI products. First, registration of the GI needs to take place with provincial quality and inspection departments, then with the AQSIQ. After the GI has been registered, producers who intend to use the GIs for their products have to go through a similar two-tier process to get the approval to use the GI. The applicants can either be entities designated by local governments, enterprises, or associations accredited by local governments.Footnote 45 For GI products of exporting enterprises, applications should be made to entry-exit inspection and quarantine departments of the prescribed area. For other GI products, applications should be made to the local (that is at or above county level) quality supervision departments.Footnote 46
Provincial quality supervision departments or entry-exit inspection and quarantine departments conduct the first level of examination for registering a GI. These departments draw up preliminary opinions on the application and then submit their report and application documents to AQSIQ.
At the second level, AQSIQ first conducts formal checks on the application, and will then publish a notice of acceptance in the AQSIQ Gazette, as well as on its website if the application satisfies the formality requirements.
If the application fails to meet the formality requirements, the AQSIQ will notify the applicant in writing.Footnote 47 Anyone who objects to the registration can file an opposition within two months after publication.Footnote 48
For an application without opposition or where the opposition is unsuccessful, the AQSIQ will set up an expert examination panel according to the features of the products in question. The expert panel will then conduct a technical examination on the application and the AQSIQ will publish its approval of the application, if it passes the technical review by the expert panel.Footnote 49
Any producer within the geographical limits of the origin region who wishes to use the GI sign on its product first has to file an application with the local (provincial) quality supervision department or entry-exit inspection and quarantine departments. Successful applications will then be subject to review by the AQSIQ.
After the AQSIQ approves its application and publishes it in the AQSIQ Gazette, the producer will be eligible to use the sign in question.Footnote 50 The application process for hopeful users of GI products is quite similar to the registration system.Footnote 51
Local quality inspection authorities exert routine control on the quality of the GI products and do so in a very detailed way. Their scope covers almost every aspect of production. This includes raw materials, production techniques, quality features, classifications of quality, quantity, packaging and labelling of GI products, as well as the printing, distribution, quantity, and use of the special signs of the product, manufacturing environment, production equipment, and conformity with standards of the product.Footnote 52
The approved GI products are protected in accordance with PPGIP. There are three types of acts that can be categorized as infringing the legitimate rights of registrants:Footnote 53 (i) use without authorization or forging a GI and its specific marks; (ii) unauthorized use by producers within the protected regions who cannot obtain approval because their products fail the requirements; and (iii) use of signs that are so similar to the protected signs that consumers will be misled into believing the products are protected GI products.
According to PPGIP, the quality supervision and entry-exit inspection and quarantine departments are responsible for investigating the above-mentioned acts.Footnote 54 Similar to the trademark regime, interested parties can either lodge complaints with local quality supervision departments or bring lawsuits to the people’s court. The quality supervision departments rely on China Law of the People’s Republic of China on Product Quality,Footnote 55 Standardization Law of the People’s Republic of China,Footnote 56 and Law of the People’s Republic of China on Import and Export Commodity InspectionFootnote 57 to impose administrative penalties in dealing with cases of GI products.Footnote 58
PPGIP provides that separate provisions are to be formulated for the registration of foreign GIs in China.Footnote 59 Yet, there are no such provisions available to date. In 2007, the European Union (EU) initiated a ‘10 plus 10’ pilot project with AQSIQ, under which both sides presented a list of ten agricultural GIs, respectively, to seek protection in each other’s territories – that is, ten GIs from China were protected in EU and ten GIs from the EU were protected in China under the pilot project.Footnote 60 In addition, AQSIQ accepted an application from the French GI ‘Cognac’ in June 2009. AQSIQ approved the application in December 2009 pursuant to the Memorandum of Understanding on Geographical IndicationsFootnote 61 signed by AQSIQ of China and the European Commission DG Trade, with reference to the PPGIP. ‘Cognac’ is the first foreign GI product protected by AQSIQ in China.
In addition to AQSIQ, the MOA has also promulgated a set of administrative rules, namely the Measures for the Administration of Geographical Indications of Agricultural Products (MOA Measures),Footnote 62 in 2007 according to the Agriculture Law of the People’s Republic of China and Law of the People’s Republic of China on Agricultural Product Quality Safety. The MOA Measures entered into force in February 2008.
Article 2 of the MOA Measures defines ‘agricultural products’ as ‘primary products sourced from agriculture, namely, plants, animals, microorganisms, and the products thereof obtained in agricultural activities’.Footnote 63 Among the three types of protection regimes (under Trade Mark law, the PPGIP, and MOA Measures), the scope of protected products under MOA Measures is the narrowest, only covering agricultural products.
The MOA Measures is quite similar to PPGIP in that the registration procedures also involve a two-level process – provincial and national – for an applicant to obtain registration.
Under the MOA Measures, agricultural product GIs are regarded as a collective right; accordingly, individuals or enterprises are not eligible to make applications. Eligible applicants include professional cooperative organizations of farmers and industrial associations determined by governments at or above the county level.
After receiving the application, provincial agricultural authorities will conduct on-site verification and propose their preliminary examination opinion. For applications that meet the requisite conditions, the authorities will send the filing documents and preliminary opinion to the Centre for Agri-food Quality and Safety (the Centre), operated under the MOA. For those that do not, the authorities will notify the applicant of their opinion.Footnote 64
Within twenty working days after receiving the documents, the Centre will examine the application and organize expert examination. The expert committee will then undertake the appraisal of the registration of GIs of agricultural products, work out appraisal conclusions independently, and be responsible for the conclusions.Footnote 65 If the expert committee is in favour of the application after appraisal, the Centre will publish an announcement approving the application on behalf of the MOA. Anyone who has an objection to the approval can file their opposition within twenty days with the Centre. If there are no objections, the MOA will make an announcement, issue a Certificate of People’s Republic of China on the Registration of Geographical Indications of Agricultural Products, and publish the relevant technical regulations and standards. If the expert committee does not approve of the application, the MOA will make a decision not to register it and notify the applicant of the decision in writing.Footnote 66
Any producer who satisfies the following conditions may apply to the registration certificate holder for uses of the GI on suitable agricultural products. In particular, applicants will need to (1) have the capability to supervise and administer the GIs of agricultural products and the products thereof;Footnote 67 (2) have the capability to provide guidance for the production, processing, and marketing of agricultural products with GIs;Footnote 68 and (3) have the capacity to bear civil liabilities independently.Footnote 69
Unlike GIs registered as collective marks or certification marks, which have to be renewed every ten years, the MOA registration of a GI for an agricultural product will remain valid permanently without need to be renewed.Footnote 70
3.2.5 Control and Supervision
Moreover, the MOA sui generis regime emphasizes administrative supervision and control over the quality and source of products. Competent local agricultural authorities will be responsible for conducting regular inspections and administering the use of GI signs, as well as evaluating the boundary requirement of geographical origin.Footnote 71 The producers of agricultural products with GIs also shoulder some responsibility by establishing a quality control tracing system.Footnote 72
3.2.6 Protection and Enforcement
Forgery, use of GIs without authorization, or false claims regarding any registration certificates are considered to violate the MOA Measures.Footnote 73 Like the PPGIP, there is no direct provision in the MOA Measures concerning any administrative penalty. Rather, administrative punishment will be imposed according to the Law on Agricultural Product Quality Safety.Footnote 74
3.2.7 Protection of Foreign Geographical Indications for Agricultural Products
Article 24 of the MOA Measures provides that the ‘Ministry of Agriculture accepts applications for the registration of geographical indications of agricultural products from foreign countries, and protects them once they have been registered in China’.Footnote 75 However, the specific measures as to the application and registration of foreign GIs for agricultural products are yet to be formulated. As no such specific measures have been promulgated, no foreign GIs of agricultural products have been registered under the MOA regime so far.Footnote 76
4 Protecting Geographical Indications under Other Laws in China
In addition to be protected under the trademark system and a sui generis system, GIs can be protected in China (at least to a certain extent) under other laws. In particular, the Anti-Unfair Competition Law,Footnote 77 Product Quality Law,Footnote 78 and Law on Protection of Consumer Rights and InterestsFootnote 79 were enacted to protect producers and consumers. They only stipulate general rules, but can serve the purposes of GI protection.Footnote 80
Under the Anti-Unfair Competition Law of China, falsely indicating the place of origin of commodities is a prohibited unfair competitive activity.Footnote 81 The Anti-Unfair Competition Law also prohibits business operators from using any false advertising or other means of false publicity in business activities regarding the origin of products.Footnote 82
Accordingly, it is clear that the Anti-Unfair Competition Law does protect the concept of place of origin from the perspective of consumer and producer. However, the protection afforded to GIs under this law is directly finalized at safeguarding not GIs per se, but rather consumers and fairness in competition.Footnote 83
The Law on Protection of Consumer Rights and Interests stipulates that consumers have the right to obtain genuine information on commodities or services, including information on place of origin. Business operators are therefore under the obligation to provide this information.Footnote 84 Providing false information on place of origin constitutes an offence under the Law.
The Product Quality Law forbids the inaccurate use of the place of origin on products.Footnote 85 However, the products mentioned in the Product Quality Law refer to products processed and manufactured for the purpose of marketing.Footnote 86 A great number of GI products, namely primary agricultural products such as vegetables and fruits, are excluded from protection under this Law. Therefore, the scope of protection accorded by Product Quality Law to GI is rather inadequate.Footnote 87
In conclusion, there are three parallel ways in which one may seek protection for GIs in China’s legal system – within trademark law, under the PPGIP regimes administered by AQSIQ, and the MOA regime. Each of them is administered by different governmental agencies, with a distinct legal basis. There are also more general legal regimes which target misleading conduct in the marketplace and can thus protect GIs, namely, unfair competition regime (Anti-Unfair Competition Law), consumer protection regime (Law on Protection of Consumer Rights and Interests), and product quality regulation regime (Product Quality Law).
Still, GI protection in China faces many challenges. The most controversial issue is the concurrent operation of trademark and sui generis models, and this is made more complicated by the fact that there are two parallel sui generis models operated by AQSIQ and the Ministry of Agriculture. As previously noted, trademark protection falls within the jurisdiction of the SAIC, while protection of GI products in general and protection of agricultural products in particular come under the administration of AQSIQ and the Ministry of Agriculture respectively. Since there are three independent and parallel systems of GI protection in China, the same GIs may be simultaneously protected, potentially obtaining three independent kinds of protection.
Simultaneously, the possibility of registering place names qualified to be GIs as ordinary trademarks causes conflicts between individual trademarks and GIs-as-trademarks within the trademark regime. Therefore, there are two principal challenges: one is the conflict between ordinary trademarks containing geographical terms and geographical indications by means of certification or collective marks; and the other is the overlap and ensuing conflict arising from the co-existence of trademark and sui generis mechanisms.Footnote 88
5.1.1 Causes of Conflicts
In general, geographical terms, which are descriptive, cannot be registered as trademarks on the ground of lack of distinctiveness as they are unable to distinguish the goods or services of one undertaking from those of others, a fundamental function of trademarks.Footnote 89 Meanwhile, this also prevents the possibility of the monopolization of geographical terms by a single entity.Footnote 90 Moreover, if the goods or services are not offered within the designated region, the geographically descriptive term could be misleading to consumers.
However, the Trade Mark Law in force before 1993 allowed registration of geographical names (even administrative place names at or above the county level) as ordinary trademarks. Today, even misleading trademarks indicating a false place of origin continue to be valid if they were previously registered under this law in good faith.Footnote 91 The 金华(JINHUA) trademark for ham is one such example. Notably, the proprietor of JINHUA for ham does not produce ham originating in Jinhua City. Rather, the proprietor of the mark is located in another city within the same province. Accordingly, the mark actually indicates a false origin for the products that it identifies, but remains valid because it was a bona fide registration before 1993. Moreover, it becomes a rather famous trademark due to the heavy long-term investments made by the trademark owner.
Another issue is that the TM Law 2013Footnote 92 only regulates the registration of geographical terms consisting of administrative regions as ordinary trademarks. However, geographical boundaries are determined by natural environment and human skills, which makes them not necessarily identical to administrative regions. The same is true with administrative place names under the county level. Such geographical terms, following Article 10.2 of the TM Law 2013, cannot be prevented from being registered as ordinary trademarks. As a consequence, many geographical names below the county level, or non-administrative place names, have been registered as ordinary marks and these privately held trademark rights may be used to prohibit the use of such place names by local producers situated within the indicated place.Footnote 93
Thus, if there were a causal link between the geographical place and the quality, reputation, or other characteristics of goods originated from this place, such a geographical name would be eligible for GI protection. However, a prior registered trademark may obstruct the registration of such a GI.
5.1.2 Proposed Solutions
The conflict between ordinary trademarks containing geographical terms and GIs applied for as certification or collective marks may be solved within the trademark regime itself. The ‘first in time, first in right’ principle is often proposed as an optimal solution to addressing the problem.Footnote 94 But sometimes it is not as clear-cut an issue in practice.
The Jinhua Ham case is an exemplary case study of a situation where a rigid application of the priority principle would not produce satisfactory results. As mentioned above, JINHUA is a trademark used on ham owned by Zhejiang Jinhua Ham Co. Ltd.Footnote 95 After becoming aware that Jinhua Ham could qualify as a protected GI, the Office for Protecting Jinhua Ham Certification Trade Mark filed an application for Jinhua City Jinhua Ham as a certification mark with the Trade Mark Office in 2003. Normally, in accordance with the principle of priority, a subsequent confusingly similar sign (as is the case here) should be refused registration based on the prior registration of a mark which is used on identical or similar goods. However, sometimes one needs to settle such conflicts by taking historical factors as well as the interests of producers and consumers into consideration. While the proprietor of JINHUA is a company outside the boundary of Jinhua City, local Jinhua ham producers want Jinhua City Jinhua Ham to be registered as a GI so that its hams can be adequately protected. After difficult and lengthy negotiations and mediation, Jinhua City Jinhua Ham was published in the Trade Mark Gazette in 2009 and registered as a certification mark GI.Footnote 96 This has created a de facto co-existence of quite similar marks under the trademark system. Although co-existence is one solution for such conflicts, it should be subject to strict control and only allowed in exceptional cases. After all, intellectual property rights are generally subject to the principle of priority, which ensures exclusivity. Co-existence should be treated as an exception to this principle, only allowed under very limited circumstances because it has certain adverse effects on the right holders. If the system allows co-existence, the holder of a GI sometimes has to tolerate the use of the GI by third parties provided that the parties use it in accordance with honest practices in industrial and commercial matters. Otherwise, the owner of a prior trademark would need to take the risk of trademark dilution.
There is a suggestion that the TM Law 2013 be amended to allow for the cancellation of ordinary trademarks containing GIs or to disallow renewal of such trademarks. As a consequence there would not be any prior trademarks that could potentially conflict with a subsequent GI application.Footnote 97 However, it seems unrealistic to revise the TM Law 2013 along these lines because it will result in legal uncertainty and deprive the trademark holders of their investment, and probably lead to more confusion among consumers. This is particularly true for famous individually owned geographical trademarks, which are also eligible for GI protection. In such cases, it may be better to maintain the status quo because the trademark has earned itself a good reputation in the marketplace at the owner’s expense. The owner has already considerably invested in the brand, so the potential cancellation of such famous regular trademarks or even co-existence between them and subsequent GIs would negatively impact upon the trademark owner. Furthermore, in the minds of consumers, after powerful presence of the brand in the marketplace for so many years, the geographical term would point to a specific producer rather than a region. Therefore, continuing to recognize the geographical term as an ordinary trademark would better serve the interests of consumers.
One case decided by the Trade Mark Review and Adjudication Board (TRAB)Footnote 98 reveals that the ‘first in time, first in right’ principle may not apply if the registered trademark has a GI nature, and the use of the trademark by the registrant might mislead the public as to the origin of its goods. In 2003, XIANG LIAN (literally meaning Hunan Lotus Seed) was registered by a Fujian-based company as an ordinary trademark on lotus seeds and other products. The Hunan Xiangtan Xianglian Association filed an application with TRAB to cancel this registration on the ground that Xianglian was in fact a GI, referring to lotus seeds produced in Hunan Province. In that caseFootnote 99 the trademark owner defended itself by arguing that the disputed trademark has distinctiveness as an ordinary trademark. According to the evidence filed by the appellant, TRAB found that Xianglian is mainly produced in Hunan Province, and the lotus seeds have distinctive qualities, which are essentially attributable to the local temperature, humidity, soil, as well as the planting methods. ‘Xianglian’ had been in use for over 1400 years to refer to the lotus seeds produced in Hunan Province. It thus satisfied the conditions established in Article 16.2 of the TM Law 2001.Footnote 100 Furthermore, TRAB found that the trademark owner engaged in lotus seed trade with producers in Hunan Province before its registration. The trademark owner thus knew that Xianglian referred to lotus seeds produced in Hunan Province but still applied for trademark registration, which was liable to mislead the public as to the quality and origin of its product. This act was in violation of the provision of Article 16.1 of the Trade Mark Law (providing ‘where a trade mark contains a geographic indication of the goods in respect of which the trade mark is used, the goods are not from the region indicated therein and it misleads the public, it shall be rejected for registration and prohibited from use; however, any trade mark that has been registered in good faith shall remain valid’).Footnote 101 Accordingly, TRAB cancelled the registration of the disputed trademark. In this case TRAB established that unregistered GIs in China could also be protected.Footnote 102 This is the first case where TRAB recognized and protected an unregistered GI in a trademark dispute case.
5.2.1 Causes for Conflicts
Conflicts will presumably not arise if GIs are owned by the same entities under different protection systems, though it might be regarded as a waste of time, money, or energy to seek parallel avenues for protecting the same GI. However, if the same GIs are pursued by more than one unrelated entity via different protection systems, it is likely that conflicts will occur.Footnote 103 Moreover, the co-existence of the systems confuses applicants as to which avenue to take. In the absence of clarification regarding their differences, many of them have opted for cumulative registrations in all three of the relevant agencies. If conflicts arise out of different ownership decided by different authorities, the parties have to go to court to resolve them, which could be expensive and time-consuming. The current regime is thus ineffective and creates uncertainty for GI stakeholders.
A given geographical name associated with a product may be protected as a GI under criteria set by one administration, but the same geographically significant term may be considered as having acquired distinctiveness under the TM Law 2013 and be eligible for registration as an ordinary trademark.Footnote 104 At present there are no explicit rules in either the TM Law 2013 or its related regulations, or the sui generis administrative rules of the AQSIQ and Ministry of Agriculture, which can resolve the conflict between rights granted under the trademark system and those granted under the sui generis systems.
The case of 金华火腿 (Jinhua Ham) is a milestone regarding the resolution of the conflict between sui generis GIs and trademarks in China.Footnote 105 As noted above, the trademark JINHUA and the GI ‘Jinhua City Jinhua Ham’ (registered as a certification mark) are concurrently valid under the trademark system. Yet, before the Jinhua City Jinhua Ham was able to obtain GI protection as a certification mark from SAIC, the Jinhua municipal authorities applied for a designation of origin (which later became a GI) for its ham and successfully obtained approval from the predecessor of AQSIQ. When the defendant, a company located in Jinhua, which is authorized to use the designation of origin, put Jinhua Ham on the packages of its products, the individual trademark proprietor sued him for infringement. So the dispute is in fact a conflict arising out of two protection systems, namely, trademark protection versus designations of origin (sui generis GIs). After a trial, the court decided that the trademark owner of Jinhua had the exclusive right but was not entitled to prohibit the fair use of a third party. The fact that the defendant was authorized to use the designation of origin Jinhua Ham, which was approved by another government agency, granted the defendant the fair-use exemption. Both parties enjoyed independent IP rights, namely a trademark right and a sui generis GI right, both of which were protected by law. The court also ruled that in order to guarantee that their acts were legal and justifiable both parties should respect each other’s intellectual property rights and exercise their respective rights within the scope of protection, strictly following the relevant provisions.Footnote 106 Although the court decided the case by allowing co-existence of both sets of rights and the two parties accepted the judgment, the potential for clashes between the two systems remains the same.
5.2.2 Proposed Solutions
From the JINHUA judgment, one can see that clashes between trademark rights and GI rights could be settled based on principles of honest concurrent use. For historical reasons relating to permissive legislation, many place names with potential GI significance have been registered as individual trademarks. The trademark owners have made tremendous efforts to enhance the reputation of the marks. On the other hand, the efforts and investment made by generations of local producers cannot be denied, either. Under such circumstances the law should protect both rights, provided that separate right holders use them fairly and honestly in the course of industrial and commercial activities.Footnote 107 However, co-existence is achieved at the price of compromises made by both trademark and GI right holders.
5.3 Conflicts between Sui Generis GIs and GIs Registered as Trademarks
Different administrative authorities may confer the same GI right on different entities, define different geographical boundaries, and enforce different quality standards. Take Shanxi Laochencu (literally meaning Old Vinegar in Shanxi) for example. AQSIQ recognized it as a protected product of designation of origin (now product of geographic indication) in 2004.Footnote 108 Then the Trade Mark Office registered it as a certification mark in 2010.Footnote 109 However, the production boundaries as well as the production standards determined by the two systems are so different that conflicts among the two right holders, as well as producers, would be unavoidable. Under such circumstances, it is difficult to coordinate the systems to achieve efficient GI protection.
As mentioned before, the most prominent problem is the co-existence of the trademark and sui generis systems for GI protection. By weighing the advantages and disadvantages of the two systems respectively, and taking into consideration the conflicts precipitated by the co-existence of the two systems, it is suggested that in China it would be better to maintain only one system. This should preferably be the trademark mechanism because it accommodates the rationale of GI protection better than sui generis mechanisms, bearing legal and economic considerations in mind.
The trademark system is already in place to conduct GI examination (as collective or certification marks), whereas the sui generis system does not provide for protection for foreign GIs due to lack of procedural rules. It would be expensive to build up a comprehensive sui generis system to address international GI protection.
Despite the fact that in China it is usually government departments that set up the relevant association as the applicant to initiate the registration of a certification or collective mark GI, under the trademark regime it is the right holder who makes further decisions in seeking protection without government actions. On the international level, GIs as certification or collective marks can be applied for directly by the interested parties without an official government action being necessary, as is required under the Lisbon Agreement.Footnote 110 Trademark registration also involves less government intervention, as the standards for inspection and verification are set by the certification or collective mark owner, rather than the competent authorities. These government agencies are not expected to take on many roles that are supposedly taken on by private parties, such as market functions like defining the production or operating standards, managing verification of compliance, or controlling output.Footnote 111 Sometimes government agencies tend to be bureaucratic and demand complex procedures to be satisfied. The two-level examination and approval processes under both AQSIQ and MOA practices mirror the complexity of the procedures. From the producers’ point of view, it is far more complicated to obtain sui generis GI registration.
6.3 Enforcement of Exclusive Rights
In cases where the use of a GI is not well regulated and monitored, or where misappropriation and abuses of GIs have become rampant, GI protection can hardly achieve its goal of protecting producers and consumers and promoting local development. In countries like China, the available practical benefits of enforcement of GI protection are far more important than simply acquiring registered protection.
As far as the right holder is concerned, when facing misrepresentation or fraudulent use of GI, a private trademark owner can take immediate legal action to reduce the negative effect to a minimum. On the other hand, public authorities could be slow in reacting or responding due to bureaucratic procedures. Private owners will always try their best to maximize their profits and interests, whereas government agencies usually take other factors, such as political ends, into consideration when dealing with GI protection, and may not always treat the interests of producers as a top priority.Footnote 112 From the perspective of administrative enforcement, an expeditious and efficient means is already in place for trademark owners who want to lodge complaints against misuse and infringement of their exclusive right. Under the trademark regime, the nationwide administrative forces for industry and commerce (AICs) guarantee rapid, convenient, and effective enforcement against trademark infringement. In fact, the administrative protection enforced by AICs has an irreplaceable advantage in China.Footnote 113 Comparatively, AQSIQ administrative forces put more emphasis on product quality supervision in the production channels and inspection of imported or exported goods according to their defined functions by the State Council, mostly dealing with what happens in the workshops where processing and production take place and not in the circulation channel (market supervision is within the competence of SAIC).Footnote 114 Additionally, the Ministry of Agriculture does not have experienced forces to handle GI infringement issues.
The hierarchy of the Chinese national legal system, from the highest level, starts at the Constitution. The next tier would be national laws made by the National People’s Congress or its Standing Committee, after which are administrative regulations made by the State Council based on the Constitution and national laws, followed by regional laws made by the provincial people’s congress, and finally administrative rules made by ministries or provincial governments for the purpose of implementing national laws, administrative regulations, or regional laws.Footnote 115
According to the classification, the TM Law 2013 is a national law promulgated by the Standing Committee of the National People’s Congress. The PPGIP and MOA Measures are administrative rules promulgated and implemented by ministerial agencies, which are lower in the legal hierarchy than national laws.
Trademark systems have been established for an extended period of time and are well accepted in most countries. GI right holders have the option to apply for trademark registration in those countries where protection for GIs as collective marks or certification marks is available.Footnote 116 Even absent the possibility of collective or certification marks, they can often rely on regular trademarks to protect GIs. In contrast, there has been no harmonized international system regarding GI protection up to now. The Lisbon Agreement has only twenty-eight contracting parties, and China is not one of them.Footnote 117
Overseas GI protection can also be achieved by way of bilateral trade agreements or specific GI protection agreements via the provision of lists of protected GI terms in the annex, but this method relies heavily on the initiatives and efforts of governments and this takes time to negotiate and conclude. So far few such bilateral agreements have been reached between China and other countries.Footnote 118 By comparison, trademark protection is always available in other jurisdictions where GI producers have a market interest. While they can file the applications individually in these countries, the Madrid international registration system makes it much easier and cheaper to achieve the same goal. In particular, Rule 9(4)(x) of the Common Regulations under the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to that AgreementFootnote 119 stipulates that, where the basic application or the basic registration relates to a collective or certification mark, the international application should contain an indication to that effect.Footnote 120 Successful examples of Chinese GIs registered as certification trademarks include Zhangqiu ScallionFootnote 121 and Guanxi Sweet ShaddockFootnote 122 (also known as a pomelo). After commercial success on domestic markets, the trademark owners may exploit the commercial potential of the mark internationally by using the Madrid system to seek GI protection in overseas markets.Footnote 123
At present it is difficult to register foreign GIs in China under the sui generis systems. As there is a lack in procedural rules, neither the PPGIP nor the MOA Measures can be used to register foreign GIs. So far, the AQSIQ has put several foreign GIs in its recording list, but these have been based on the conclusion of bilateral agreements, which are time-consuming and costly. The easiest way available is to register them as certification or collective marks under the trademark regime.Footnote 124 Therefore, only the trademark mechanism fully complies with the TRIPS requirement in terms of national treatment and enforcement.
The TM Law 2013 allows judicial review of administrative decisions made by the TRAB on refusal of registration, opposition, cancellation, revocation, as well as the administrative penalties such as fines made by AICs.Footnote 125 This is particularly important for the fulfilment of the TRIPS Agreement. By contrast, neither the sui generis AQSIQ nor the MOA rules explicitly provide for the rights of administrative appeal or judicial review.Footnote 126 If the application fails to be accepted by the administrative agency, there is no remedy to correct the application form or any other administrative appeal procedures. Nor is there any judicial review for opposition, cancellation, or revocation decisions. The TRIPS Agreement requires Member States to provide for judicial remedies for any intellectual property in their legislation.Footnote 127 From this aspect, only the trademark regime enables China to fulfil its WTO obligations.
At present there are some Chinese scholars who advocate protecting GIs as an independent commercial sign in parallel with trademarks, certification marks, and collective marks under the Trade Mark Law.Footnote 128 As noted by other scholars,Footnote 129 this is also a common legislative practice adopted in some countries, such as Indonesia (Law on Marks)Footnote 130 and Russia (Federal Law on Trademarks, Service Marks and Appellations of Origin of Goods).Footnote 131 The advantages of such a model include granting a rather straightforward and definite protection on GIs without the necessity of framing a separate new law. In addition, it facilitates the determination of priority and classification of products if both trademarks and GIs are subject to examination under the Trade Mark Office,Footnote 132 which is not available under the current dual system.
The separation of GIs from certification or collective trademarks is certainly a big change which needs discrete analysis and scrutiny. In view of the fact that a sui generis system under AQSIQ and the Ministry of Agriculture is still in operation, it seems too early to categorize GI as an independent sign under the trademark system. Otherwise it may make GI protection more complicated and confusing. Nevertheless, it is a direction for Chinese legislators to undertake further consideration on the method of GI protection in China.
In conclusion, this chapter discusses various approaches of GI protection in China, compares their advantages and disadvantages, and presents the challenges. It concludes that the unique type of cocktail is not as tasty as imagined and changes are needed to achieve more effective GI protection in China.
In a country like Sri Lanka, the importance of obtaining protection for unique products can hardly be overstated. Sri Lanka is a small nation, both in size and in production capacity. Still, Sri Lanka is known globally for its tea, in particular, Ceylon Tea. Although China and Kenya produce more tea than Sri Lanka,Footnote 1 Sri Lanka remains one of the largest global exporters of tea.Footnote 2 This has been achieved partly due to the fact that the name of its famous tea, Ceylon Tea, is protected as a registered certification markFootnote 3 and under the regime for the protection of geographical indications (GIs),Footnote 4 as is the logo identifying the “Ceylon Tea.”Footnote 5 Sri Lanka is also famous for its “true cinnamon,” the Ceylon Cinnamon,Footnote 6 which is also widely exported, and which also enjoys protection as a certification mark and under the current GI regime.
But what if Sri Lanka could make better use of its existing protection for geographical names and protect additional products coming from specific geographical areas in the country? For example, Sri Lanka is famous for Ceylon Sapphires, Dumbara Mats, and Beeralu Lace – just to name a few products. Yet, the producers of these products have not been successful at marketing them internationally, or at least, to the extent of renown enjoyed by Ceylon Tea and Ceylon Cinnamon. The reason for this lies in both gaps in the legal protection for these products and the unawareness among many producers of the potential returns that might be yielded from the further sales that could be promoted by a higher degree of legal protection and marketing of the products.
In particular, there is one major hurdle in the protection of GIs in Sri Lanka to date, namely, there is no registration-based system for GIs under the Sri Lankan GI regime. Instead, producers have to turn to the trademark system to obtain a trademark registration through which they can protect their geographical names. Generally, this involves applying for a certification or collective trademark under Sri Lankan trademark law. The lack of a registration-based system under the Sri Lankan GI regime has attracted criticism and raised concerns about the functionality, enforcement procedures, and level of protection and has prompted a call for an update to ensure that Sri Lankan products enjoy fuller protection.
This chapter first examines the legal protection that is currently afforded to GIs and will proceed to analyze the deficiencies of the current system. It will then evaluate the international system of GI protection and assess Sri Lanka’s position within this system. Based on the findings gathered, this chapter will then offer some suggestions that could be undertaken in order to ensure that an effective regime for GI protection is put in place so that Sri Lankan producers may benefit meaningfully from GI protection. In particular, the primary suggestion offered in this chapter is that Sri Lanka could, and perhaps should, consider improving its current GI regime by implementing a national GI registry. In particular, creating a registration-based scheme for GI protection in Sri Lanka could offer additional certainty to GI producers, and in turn competitors and other interested parties who could be made aware of existing GI registrations. In turn, this greater certainty could lead to a greater willingness to invest in marketing and promoting the registered GIs. Still, this chapter concludes that, even with a GI registry, the actual success of any GI product in Sri Lanka would ultimately depend on wise management, product quality, and marketing.
The earliest mention of protecting signs indicating “source,” including geographical source, can be found in the 1883 Paris Convention for the Protection of Industrial Property (Paris Convention), even though the Paris Convention does not protect geographical names per se.Footnote 7 The first international agreement that mentioned and protected GIs was the 1981 Madrid Agreement for the Repression of False and Deceptive Indications of Source (Madrid Agreement).Footnote 8 The next international agreement to focus specifically on the protection of “appellations of origin” was the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration (Lisbon Agreement), which was adopted in 1958, subsequently revised in Stockholm in 1967, and most recently revised in 2015.Footnote 9 Neither the Madrid Agreement nor the Lisbon Agreement had a large membership, however, which made their impact limited at the international level.It was only in 1994 that GI protection became a more global, and globally contested, issue with the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS),Footnote 10 which was adopted as part of the creation of the World Trade Organization (WTO). In particular, TRIPS defines the term “geographical indications” as
[I]ndications 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 geographical origin.Footnote 11
TRIPS also provides for a minimum standard of protection for GIs that all WTO Members have to implement into their national laws,Footnote 12 even though TRIPS leaves WTO Members to implement this protection as they prefer – generally through existing unfair competition rules, trademark laws, or via the adoption of ad hoc sui generis protection.Footnote 13
As has been observed by several scholars, GI protection is generally justified by the fact that GIs perform the function of identifying goods, and they are used to distinguish goods as having certain properties or a reputation attributable to a particular geographic area.Footnote 14 In this respect, GI protection aims at protecting the information function of GIs with respect to these properties and reputation. In particular, the distinguishing qualities of the product may be due to local geological factors (such as climate and soil) and/or to human factors present at the location (such as a traditional manufacturing method or any particular manufacturing technique).Footnote 15 The GI may also consist of a combination of both these factors, that is, the geological and the human factors that contribute to the uniqueness of the GI products. The inclusion of the human factor as part of the definition of GIs is useful when considering the viability of GI protection for certain types of products such as artisanal products in addition to purely agricultural products. Because GIs identify local products, GI protection is commonly justified based on the assertion that GIs can promote and protect local and rural developments in the GI-denominated areas.Footnote 16
A survey conducted by the World Trade Organization (WTO) in 2003 established that WTO Members use any of the following three possible methods to protect GIs (intended as geographical names or names indicating products coming from a specific geographical region).Footnote 17 The first method is to protect GIs through laws focusing on business practices and consumer protection based on the template provided by the Paris Convention. The second is to achieve protection through the law which protects trademarks – a position supported by the United States (US) and several common-law countries. The third, and most significant, is to create a special sui generis system of protection for GIs.
It is important to note that TRIPS does not impose any system of protection for GIs for WTO Members. As mentioned in Section 2, TRIPS merely provides a minimum standard of protection that all WTO Members should implement with the legal means that they see most appropriate for their individual legal systems.Footnote 18
With respect to the first type of protection, the laws focusing on business practices are laws that have not been enacted with the specific purpose of protecting GIs but which nevertheless do so through the broader objective of regulating business practices or consumer protection. Some examples of such legislation are those which deal with unfair competition, consumer protection, trade descriptions, food standards, and the common-law action for passing off. These could be used to protect GIs when the misuse of a GI in a particular situation falls within the conduct regulated by such laws. For example, the false use of a GI that misleads consumers as to the origin or qualities of the goods would be actionable. Quite often these laws are a good alternative to a sui generis law because firstly these laws are available in most legal systems, and secondly they are usually familiar to business lawyers. On the downside, these laws are not specifically geared for GI protection, and hence may not be useful in more complex situations involving GIs.
Under the second type of protection, trademark protection, GIs are generally protected and registered under a special category of trademarks – collective marks and certification marks. In particular, collective marks identify a mark as belonging to a group of enterprises, such as a union of producers in a particular area. Certification marks identify the goods of an enterprise as having met certain standards or having certain qualities, such as a particular geographical origin. Prominent scholars have observed that, of these categories, certification marks are the most suitable to protect GIs because they can underpin the requisite product origin and quality and/or characteristics that are embodied in the GI product.Footnote 19
A collective mark is usually owned by the association of enterprises, while a certification or guarantee mark is owned either by an association of enterprises or by a separate entity. In order to avoid a conflict of interest, it is usually provided that the owner of a certification or guarantee mark may not itself use the mark or carry on a business in the kind of goods or services certified. Registration of this type of mark has to be accompanied by registration of the conditions governing the eligibility of interested parties to use the mark. If the interested party meets the requirements listed in the certification, then that party may then use the mark. The mark owner is also obliged to monitor compliance with the conditions of use by mark users.Footnote 20 Compared to the first system (laws focusing on general business practices), trademark protection appears to be better suited to protect GIs as it contains more precise rules related to the geographical and quality standards of the products.
The third system of GI protection is that of a sui generis GI regime, that is, the adoption of a specialized regime for GI protection listing the specific requirements for and the rights granted as part of this protection. Frequently, a sui generis system for GI protection is also based on a national registration system under which GIs are registered in a national registry administered by the national authorities. In addition to the general rules set by TRIPS, individual countries may set administrative procedures for the national protection and registration of GIs.Footnote 21 In the EU, sui generis GI protection applies at the EU level, as GIs are protected and registered as a matter of EU law. Interestingly, countries that have traditionally opposed or been resistant to GI protection also protect some types of GIs with their own unique GI regime. This includes Australia and the US, which protects GIs for wines with sui generis protection, while other geographical names are currently protected under the trademarks regime, the unfair competition regime, or passing off.Footnote 22
Where a sui generis system includes the registration of GIs, the necessary criteria to be satisfied for such registration generally include the definition of the geographical area; the link between the geographical area and the product (e.g., that all stages of production, or a particular stage, take place in the particular geographical area); the indication of the particular quality, reputation, or other characteristic of the product; and the inspection requirements to be put in place, including the control bodies in charge of certifying and controlling the quality of the products. In addition, the applicant should be able to demonstrate that it has a legal interest in the GI or is in a position to control the use of the GI.Footnote 23 Overall, a sui generis GI regime certainly offers the most comprehensive protection for GIs, but also requires considerable investments – financially and administratively – from the applicants (the collective of GI producers).
As elaborated in the various chapters in this volume, the majority of WTO Members have adopted a combination of the three types of systems that have been described. Still, as noted by scholars, important differences continue to exist with respect to national eligibility requirements, and the scope of protection.Footnote 24 These differences undoubtedly make the international protection of GIs cumbersome and increase costs when an enterprise seeks to develop and manage international marketing strategies for their GI products, which may have a bigger impact on developing countries as compared to developed countries.
4 Protection for Geographical Indications Currently Available in Sri Lanka
The Sri Lankan legal framework for protecting GIs includes the three types of protection identified above. Each of these types of protection will be discussed briefly below.
In this category, there are four separate types of protection that can be used to protect GIs in Sri Lanka under different legal provision or doctrines.
First, is the unfair competition provision set out in section 160 of the Intellectual Property Act, No. 36 of 2003 (IP Act of 2003).Footnote 25 This provision defines acts of unfair competition as any acts that are contrary to honest practices,Footnote 26 and those that are misleading as to the GIs of the goods or services concerned.Footnote 27 In the case of infringement, possible remedies include injunction and damages.Footnote 28
Second, the consumer protection law, embodied in the Consumer Affairs Authority Act, No. 9 of 2003 (CAA Act of 2003),Footnote 29 is also applicable under this category. In particular, if a GI is used to mislead or deceive consumers by conveying a message that is not truthful about the origin or quality of the products, the State or the Consumer Affairs Authority has the right to sue the offender on the basis of a complaint lodged by the affected consumer.Footnote 30 Penalties in this case are more severe than under the unfair competition law and include the possibility of a fine and/or imprisonment for the offenders.Footnote 31
Third is the false trade descriptions law that is contained in section 186(1) (d) of the IP Act of 2003.Footnote 32 Under section 186(1) (d) of the IP Act of 2003, it is an offense to apply for a false trade description to goods, unless it can be proved that the act was committed without intention to defraud.Footnote 33 A false trade description includes, among others, any indication as to the origin of any goods, which is false or misleading in a material respect.Footnote 34 Therefore, this provision can be used to counter false or misleading uses of a GI. Affected parties should alert the authorities, who will initiate proceedings.Footnote 35 The infringer may be fined, imprisoned,Footnote 36 and/or may face an order for destruction or forfeiture of the offending goods.Footnote 37
Fourth, and last, the common-law action for passing off is also available and applicable to the misuses of GIs in Sri Lanka. The elements of the action, as outlined in the case of Reckitt & Colman v. Borden,Footnote 38 are as follows: (a) the claimant should have goodwill;Footnote 39 (b) the defendant should have made a misrepresentation that is likely to deceive the public;Footnote 40 and (c) the plaintiff must demonstrate that he has suffered or is likely to suffer damage due to the misrepresentation.Footnote 41 The passing-off action is used widely in the United Kingdom (UK), where GIs have often been protected through this avenue.Footnote 42 Additionally, the origin of Sri Lanka’s passing-off action derived from the UK legal system.Footnote 43 Under an action for passing off, the remedy is an injunction and/or damages for loss.Footnote 44
The relationship between the Sri Lankan trademark regime and its interaction with the protection of GIs is complex.
At the outset, section 102(3) of the IP Act of 2003 provides that a trademark may consist of, inter alia, geographical names.Footnote 45 Accordingly, it would seem that GIs can be registered as ordinary marks under the language of this section. However, section 103(1) (h) of the IP Act of 2003 states that a mark cannot be registered if it is, according to its ordinary meaning, a geographical name.Footnote 46 If we compare the two sections, it thus seems that, under the IP Act of 2003, a GI can be registered as a trademark only where the name no longer identifies the geographical origin of the good in that it has acquired a secondary meaning; in other words, it has become distinctive of the source of the products in terms of the products’ manufacturer rather than their geographical origin.Footnote 47Rather than registering GIs as ordinary trademarks, an easier option is to protect GIs as a certification mark or collective mark, as is the case in many other countries. In particular, the IP Act of 2003 allows the registration of geographical names as certification or collective marks. The relevant legal provision for certification marks is contained in section 142 of the IP Act of 2003,Footnote 48 and those which relate to collective marks are contained in sections 138–141.Footnote 49 The registration of a collective mark or certification mark grants the exclusive right of use of such mark to the applicants, who are generally a collective group of producers in the state. Notably, third parties, without the consent of the mark owners, are prohibited from the following:
Section 121(2) (a) – Use of the mark, or of a sign resembling it in such a way as to be likely to mislead the public, for goods or services in respect of which the mark is registered or for similar goods or services in connection with which the use of the mark or sign is likely to mislead the public.Footnote 50
Section 121(2)(b) – Use of the mark, or of a sign or trade name resembling it, without just cause and in conditions likely to be prejudicial to the interests of the registered owner of the mark.Footnote 51
Still, under Sri Lankan trademark law, third parties cannot be precluded from using a name that is a geographical name even when the name is registered either as a certification mark or a collective mark if (1) they are entitled to use the geographical name, and (2) they are acting according to honest practice.Footnote 52 Similarly, the rights of a registered owner of a mark that is comprised of a geographical name do not include the power to prevent other parties from using the name in good faith and descriptively to indicate the place of origin of their goods or services.Footnote 53
In addition to names that are purely geographical names, the following names can be registered as a collective mark under section 138(3) of the IP Act of 2003: “indication[s] which may serve in trade to designate the geographical origin of the goods.”Footnote 54 The same type of indications can also be registered as certification marks under section 142(2) of the IP Act of 2003.Footnote 55 This includes, as elaborated in the following paragraphs, the most famous Sri Lankan GIs – Ceylon Tea and Ceylon Cinnamon – which are registered as certification marks, even though the name “Ceylon” is no longer a geographical name in Sri Lanka. Notably, the word “Ceylon,” the name that the British had given to Sri Lanka when it was a British colony, is no longer officially used to describe the island nation, and Sri Lanka officially changed its name in 1972. Still, the name “Ceylon” clearly refers to the geographical origin of the products that it identifies – tea and cinnamon that originate from Sri Lanka – and thus can be validly registered as a certification mark under the IP Act of 2003.
However, differently than certification marks that are comprised of indications which are actual geographical names, certification marks that are comprised of indications which are no longer proper geographical names enjoy a broader scope of protection. In particular, the owners of these marks can prevent any use of these marks also where a third party seeks to use the name descriptively.Footnote 56 For example, the Sri Lanka Tea Board (SLTB), the owner of the certification mark “Ceylon Tea,” can prevent the use of any identical and similar signs sought to be used, even if the party who would like to use it would use the term “Ceylon” descriptively. Instead, every interested party would be entitled to use the term “Sri Lankan Tea” to indicate geographical origin.Footnote 57 Accordingly, the name Ceylon receives a stronger protection under Sri Lankan trademark law than the term Sri Lanka.
The provisions relating to Sri Lanka’s sui generis GI system are contained in Chapter XXXIII of the IP Act of 2003, which repeats and expands the definition of “geographical indications” provided in TRIPS.Footnote 58 In particular, unlike TRIPS, the definition of “geographical indications” under the IP Act of 2003 extends beyond goods to include services.Footnote 59 Moreover, the Chapter goes even further than TRIPS in its scope of protection and extends the higher level of protection granted by TRIPS to GIs for wines and spirits to GIs for all products in Sri Lanka.Footnote 60 The rationale for extending this enhanced protection to all GIs originates from the fact that Sri Lanka does not produce wines and spirits but rather other products. Protection for homonymous indications is also made available to all GIs, which under TRIPS is limited to GIs for wines. Any “interested party” is given standing to file action under this Chapter.Footnote 61 The relief available includes injunction, damages, and destruction of infringing goods.Footnote 62
However, one of the most problematic aspects of the GI regime in Sri Lanka is that, unlike most other GI regimes, Sri Lanka has not opted for a registration system. In turn, this has raised concerns about the effectiveness, enforcement procedures, and level of protection in practice for GIs under the current GI regime.Footnote 63 Instead, the enforcement of rights in relation to GIs in Sri Lanka is based on establishing the statutory eligibility criteria.Footnote 64
Still, section 191(b) of the IP Act of 2003 provides for a special prohibition against any use of the terms “Ceylon Tea” and “Ceylon Cinnamon.”Footnote 65 Notably, the provision states that “any person who makes a false declaration in respect of [a] geographical indication inclusive of Ceylon Tea and Ceylon Cinnamon” shall be guilty of an offense.Footnote 66 This provision was originally inserted into the IP Act of 2003 because, at the time of the enactment of the IP Act of 2003, neither Ceylon Tea nor Ceylon Cinnamon were registered as a certification mark. Accordingly, both terms were granted indirect GI protection under the IP Act of 2003, even in the absence of a GI registration system, because of their existing economic importance in Sri Lanka. Remedies for infringement of Ceylon Tea and Ceylon Cinnamon under the sui generis GI protection include a fine,Footnote 67 injunction, damages, and destruction of infringing goods.Footnote 68
As noted before, the system of sui generis protection contained in Part IX, Chapter XXXIII of the IP Act of 2003 applies to GIs that identify any type of product, including artisanal products and handicrafts.Footnote 69 In addition, special legislation regulating particular national, regional, or local industries or sectors often confer power on the relevant minister or statutory authority to adopt regulations for the purpose of carrying out the objects and purposes of the sui generis GI protection in the IP Act of 2003. This can provide a means for the implementation of ad hoc systems of protection for GIs in the particular industry or sector covered by these legislations.Footnote 70
As discussed above, the major flaw of the current sui generis GI regime in Sri Lanka is that it does not allow for the registration of GIs in a national registry. Accordingly, in order obtain a registration for a geographical name – or a name that indicates a geographical region – in Sri Lanka, producers have to still register that name as a certification or collective trademark. As also noted above, the protection of geographical names under the trademark system too has flaws, as it confers only a limited exclusivity and cannot prevent third parties from using these names descriptively. Only the names that are not a purely geographical term – as it is the case with respect to Ceylon Tea and Ceylon Cinnamon – are granted heightened protection under the trademark system in Sri Lanka.
5 Products Currently Protected in Sri Lanka: Ceylon Tea and Ceylon Cinnamon
Even though Sri Lanka has been famous for its spices from time immemorial,Footnote 71 the protection of these products’ geographical names is a recent phenomenon. As highlighted above, the most relevant examples of protection in Sri Lanka today are for the names “Ceylon Tea” and “Ceylon Cinnamon.” These names are registered as certification marks and are also protected under the current GI system.Footnote 72 The specific details of the protection granted to each of these products will be discussed in the following sections.
Considering the success and fame of Ceylon Tea, it may be remarkable to learn that tea is not a plant native to Sri Lanka. In fact, coffee was the main crop grown in the country for most of the 1800s. In the 1820s, experiments with the cultivation of coffee in Ceylon (the current Sri Lanka) began and by 1848 coffee cultivation was the backbone of the Ceylon economy. However, in the 1870s, a fungus devastated the coffee monoculture and the coffee industry in Ceylon turned bleak.Footnote 73 Eventually, and in response, tea was cultivated instead.Footnote 74 Since then, Sri Lanka has never looked back and has instead embraced the production of tea aided by the perfect climatic conditions of the hill country to grow this herb. Tea has since become synonymous with this tiny island nation.
Still, locals refused to work in the tea plantations, complaining that the conditions were hazardous, the work too strenuous, and the wages were too low. Accordingly, the British brought workers from South India to Sri Lanka to work in the tea estates.Footnote 75 It cannot, therefore, be stated that Ceylon Tea is a GI, in the sense that a GI reflects some local custom, culture, or tradition. Ceylon Tea is, instead, a commercial product that acquired a GI status because of its internationally recognized quality. Be that as it may, it is now an undeniable fact that Ceylon Tea is here to stay.
The SLTBFootnote 76 was at the forefront of the efforts to obtain exclusive protection for Sri Lankan tea. The term “Ceylon Tea” had been promoted by Sri Lanka globally for decades, and the SLTB had spent a substantial amount of funding on this exercise.Footnote 77 As Ceylon Tea became synonymous with high quality, counterfeiting and misuse of the term became rampant. It became imperative that these acts be stopped if the brand was to maintain its reputation. A year after the introduction of the IP Act of 2003, the SLTB attempted to register “Ceylon Tea” as a certification mark. However, it was not until 2010 that the SLTB managed to obtain Home Registration for “Ceylon Tea” as a certification mark.Footnote 78
The SLTB has also obtained a certification mark for a special type of tea grown in an ozone-friendly manner. Historically, the use of the chemical methyl bromide (MB) was widespread in the tea sector. The industry had set a target date of January 1, 2015, for the phase out of this chemical, which was harmful to the environment. The tea sector in Sri Lanka phased out the use of MB well before the target date. In 2011, the “Ozone Friendly Pure Ceylon Tea” logo was launched as a certification mark.Footnote 79 This logo certifies that the teas cultivated are grown or manufactured in tea gardens and factories in the tea growing districts of Sri Lanka without the use of any ozone depletion substances. The “Ozone Friendly Pure Ceylon Tea” logo is thus a valuable addition to the island’s best-known export product. It is also expected that the ozone-friendly logo will help Ceylon Tea gain a competitive advantage in the global markets, as environmentally responsible products are gaining value in markets all over the world. Through the new logo, the Ceylon Tea industry has marketed the tea as a premium product in and outside Sri Lanka.
Ceylon Cinnamon is also called “true cinnamon,” as there are many other types of cinnamon which originate from other countries. The spice found in the Ceylon Cinnamon is the dried bark of Cinnamomum zealanicum, which is indigenous to Sri Lanka (as denoted by the word “zealanicum,” which has reference to the word “Ceylon”). This spice has its origins in the central hills, in places such as Kandy, Matale, Belihuloya, Haputale, and the Sinharaja forest range. Today, the cinnamon plantations are concentrated along the coastal belt stretching along from Kalutara to Matara, but cultivations of cinnamon have made inroads also to the areas of Ambalangoda and Ratnapura – areas between the coast and mountain.
In 2013, land used for cinnamon cultivation in Sri Lanka had expanded to reach a total of 31,278 ha.Footnote 80 Sri Lanka is also the largest producer of Ceylon Cinnamon, with an estimated annual production of over 16,000 metric tons in 2013.Footnote 81 The unique method of processing and curing of cinnamon has resulted in a unique flavor, which results in a taste unlike any other variety of the same plant. A key part of the process is the preparation of the cinnamon quills. This involves a combination of art and skill unique to Sri Lankans, as the knowledge of these skills has been handed down from generation to generation over centuries. At present, Sri Lanka is the world’s largest exporter of true cinnamon, with 97 percent of the global market.Footnote 82
In order to ward off competition from inferior varieties of cinnamon such as Cassia, the Spice Council of Sri Lanka, together with the Sri Lanka Exports Development Board, has engaged in efforts to protect locally grown cinnamon. The result was the registration of the name “Pure Ceylon Cinnamon” as a certification mark. The mark can be used on any products made using cinnamon from Sri Lanka.Footnote 83 The Sri Lanka Export Development Board, which is the registered owner of the mark, has developed comprehensive guidelines for the mark’s use, including listing out product categories, as well as producers, who are entitled to apply for the mark.Footnote 84 The mark has also been registered in a few key foreign markets including the US, the EU, Peru, and Colombia.Footnote 85
6 Products that Could Benefit from Additional Protection for Geographical Indications in Sri Lanka
Boasting a long and proud history and a rich and diverse heritage, Sri Lanka is home to many products that could also benefit from stronger GI protection. A few of these products are outlined in the following paragraphs. To date, these products are not registered as certification or collective trademarks in Sri Lanka and, in the absence of a registration system for sui generis GI protection, cannot be registered as sui generis GIs. Thus, they can only be protected under the current language for GI protection in the IP Act of 2003 and with a possible action for passing off in the event of misuse of these names. Moreover, some of these products have also suffered from a lack of patronage, or have not been able to withstand the march of global development. Still other products have been noticed by the global markets and have been subsequently revived by producers that have managed to survive into the twenty-first century as small cottage industries.
17.6.1 Ceylon Sapphires
Sri Lanka has a proud and long history relating to gemstones in general and sapphires in particular.Footnote 86 Sapphires are part of the Corundum gem family and are reported to be a royal gem with extreme hardness. Ceylon Sapphires are mined in Sri Lanka and are known for their unique color.Footnote 87 Ceylon Sapphires are very famous among both locals and foreigners. Generally, the gem industry in Sri Lanka is heavily regulated by the government to ensure minimal environmental impact. This has the potential to become a point of concern because of the traditional mining methods that are still used.
Not surprisingly, the popularity of the Ceylon Sapphire has led to other types of sapphires being passed off as Ceylon Sapphires. In order to curb this problem, the Gem and Jewellery Authority of Sri Lanka has been engaged in efforts to register Ceylon Sapphires as a certification mark. Based on the success of Ceylon Tea and Ceylon Cinnamon in registering their respective certification marks, it is expected that this registration will be granted in the near future.Footnote 88 This would allow the producers of Ceylon Sapphires to protect their sapphires against others traders who misuse the name “Ceylon.”
Today, Ceylon Sapphires seems to have been recognized as a GI by the Intellectual Property Office of Sri Lanka.Footnote 89 However, if Sri Lanka would create a national GI registry, so that Ceylon Sapphires could be registered as a GI, this would promote greater certainty and hence better protection for this name due to the advantages of a system based on registration. The name “Ceylon Sapphires” could also be registered as a certification mark, as this could afford the same, stronger protection that Ceylon Tea and Ceylon Cinnamon enjoy today. In addition, it would be beneficial to protect the name “Ceylon Sapphires” in foreign jurisdictions either as a sui generis GI system or as a trademark to prevent misuse of the name outside Sri Lanka. Finally, it is important to note that the Ceylon Chamber of Commerce had been instrumental in advocating for the higher level of protection offered to GIs for wines and spirits under TRIPS to be extended to all products carrying the name Ceylon in Sri Lanka.Footnote 90 The IP Act of 2003 went a step further and granted the additional protection to all products. This heightened protection for the name “Ceylon Sapphires” can offer protection against confusing and misleading uses of the name as well as provide relief against misappropriation also in the absence of consumer confusion.
Ruhuna is the traditional name for the southern part of Sri Lanka. Historically, this area has been famous for its curd, made primarily from buffalo milk. Buffaloes were the traditional source of labor in the paddy fields; hence, buffalo milk was once plentifully available. However, changes in society and the times have brought this once-thriving industry to its knees.
A study done by Ulluwishewa of the University of Sri Jayewardenepura identifies several reasons for this decline. The replacement of buffaloes with tractors and modern farm equipment resulted in lowering the demand for buffaloes, which were then sold as meat instead of being retained for labor. Further, the reduction of grassland, as well as the reduction of female labor, required for curd production also contributed to the problem.Footnote 91 As far back as 2005, it was reported that the Ruhunu Curd industry was facing a downturn, with many cattle farmers deciding to leave the industry for good.Footnote 92 This is one of the examples of a traditional product from a specific region of Sri Lanka possibly disappearing due to changes in society and the modern economy.
Today, Ruhunu Curd can only be protected under the current language of the IP Act of 2003 as a GI. As illustrated extensively in the chapter, however, the IP Act of 2003, grants limited protection to GIs in the absence of a registration system. Still, in Sri Lanka, GIs are currently granted the higher level of protection provided by TRIPS, which implies that the name “Ruhunu Curd” can enjoy protection against confusing as well as misappropriating uses of the name in Sri Lanka. The name could also be registered as a certification mark, even though the protection for this mark could not extend to the descriptive use of the name “Ruhunu” as mentioned above. Hence, it is admitted that it cannot be affirmatively concluded that protecting Ruhunu Curd by registering it as a certification mark, or as a registered sui generis GI should a national GI registry be implemented in Sri Lanka, necessarily saves the industry from its current downfall. Given the experience of other traditional products, which are dependent on local culture, traditions, and raw materialsFootnote 93 and are protected as GIs or trademarks in other countries, it could nonetheless be argued that this protection (and in turn the possibly following extra attention to the product) could positively impact the Ruhunu Curd industry and help to keep it afloat.Footnote 94
Dumbara mats are woven in the village of Henawela, located in the Dumbara valley, in the city of Kandy, in the central province of Sri Lanka.Footnote 95 Weaving the mats is an activity performed mainly by women, though some men are also experts at mat weaving. The leaves used for these mats are found in the valley itself, and after the pulp of the leaf is stripped, the remaining fiber is boiled and mixed with local dyes to form the colorful strips used in these eye-catching mats.Footnote 96 The mats themselves are used more as ornaments than as utility items. In the past, mat weaving in the Dumbara valley was considered a necessary craft to be practiced by every female villager. Today, the region largely functions as a cottage industry with few established sales outlets. Weavers generally market their mats at festivals, fairs, and pilgrimage sites.
A recent article titled “The Waning Weave” highlights the problems faced by the Dumbara mat weavers. In the past, these weavers enjoyed royal patronage, but today only about ten to fifteen families are still engaged in this craft. The craft has declined due to several reasons. Firstly, the Niyanda leaf used to make the mats has reached near extinction, and weavers are forced to turn to the less delicate hemp leaf. Unfortunately, this leaf is also difficult to access. Secondly, this craft was passed down traditionally from parents to children, but it has found little favor with the younger generation, as this generation is not interested in the hard hours of labor required to turn out a single mat. Thirdly, and most importantly, the income derived from these mats is not sufficient for many people to sustain on mat weaving as a livelihood option. The National Craft Council of Sri Lanka has attempted to assist the weavers by advertising and marketing Dumbara mats, which has partially helped. The council has also advised the weavers on trying out new and more practical items such as book covers, bags, mobile phone covers, tablemats, cushion covers, and handbags, as opposed to the more traditional items such as mats and wall hangings that they were previously confined to.Footnote 97
As with the case of the Ruhunu Curd, the Dumbara Mat appears to be recognized as a GI, and thus enjoys, at least in writing, the higher level of protection granted to GIs under the IP Act of 2003, despite the absence of a GI registry.Footnote 98 Here again, the name Dumbara Mat could also be registered as a certification mark. However, protecting the name “Dumbara Mats” via the registration as a certification mark, or in the future possibly as a registered GI, may not necessarily assist this industry’s recovery due to the fact that the industry’s problems rest primarily on its need to modernize and find new customers that could support the industry and the weavers.
Ambalangoda is a coastal town in the Galle District, famous for traditional wooden masks and puppets. The traditional masks are carved from light balsa-like kaduru wood, the trees of which grow in the marshy lands that border paddy fields. Before being crafted on, the wood is smoke-dried for a week in preparation. The hand-carved and hand-painted masks are then used in traditional dance dramas that are both vibrant and colorful.
There are three different types of dancing rituals, and accordingly three different types of masks: the “Kolam” masks, the “Sanni” masks, and the “Raksha” masks. The “Kolam” masks are used in a Kolam, which is a comic folk play, set in a rural setting, with dances, mimes, and dialogues. The types of masks range from devils and animals to humans and human royalty.Footnote 99 The “Sanni” masks are used in the Sanni Yakuma, which is an exorcism ritual. The wearers of the “Sanni” mask would represent the different types of Sanni (diseases).Footnote 100 The belief was that the ritual would, as depicted in the ritual with the exorcists ridding the Sanni, rid people of diseases.Footnote 101 Finally, there are “Raksha” masks, which are used in festivals and processions. The Naga Raksha (Cobra demon) mask of the “Raksha Kolama” (demon dance) is particularly famous and consists of a ferocious face with bulging, popping eyes, a carnivorous tongue, and protruding hood-distended cobras.Footnote 102
These masks were highly popular for many decades, due to their attractive nature and perceived powers. The Kolam dances were the primary recreational outlet for villagers, and prior to the advent of television, highly popular in the villages. Belief in devils and other spirits persisted, and the Sanni masks were used in exorcism ceremonies, also termed as “devil dancing ceremonies.” The low-country tradition of dancing also uses masks, and the Raksha masks were used in this type of dancing as well as for the processions that were also an integral part of community life in the village. All this meant that there was a steady source of demand for the masks for many years.
In recent times, however, demand for the masks has changed. As television has changed viewer preferences, viewership of Kolam dances has also dropped. Similarly, festivals and processions are also not as popular as they used to be, and to add to these problems, the low-country dance form is practiced by very few. In addition, devil dancing is not perceived as the most efficient remedy for ailments, as it used to be in the past. Accordingly, demand for the masks has diminished.Footnote 103 Still, masks have become popular as ornaments in recent years, and both locals and foreigners seek them as decorations. Mask-making has thus become a cottage industry in Ambalangoda, though there are also a few large-scale mask-making enterprises in the region. There are also museums dedicated to this craft.Footnote 104 For all these reasons, Ambalangoda masks could benefit from protection, both as a certification mark and as a sui generis registered GI should a GI registry be created in Sri Lanka. Today, as with the other examples mentioned above, Ambalangoda masks can be protected as GIs under the current protection offered under the IP Act of 2003.
Moratuwa is a town to the South of Colombo, which is well known for its skilled wood craftsmen and beautifully crafted furniture. The town houses many furniture shops, and any online search on the term Moratuwa will inevitably yield information about these shops and furniture galleries. Moratuwa has been referred to as the “heart of quality furniture products in Sri Lanka.”Footnote 105 Moratuwa craftsmen are skilled in the manufacture of older Sri Lankan designs, which are characterized by intricate carvings, but they are also able to create the more modern pieces that the market craves.
Unlike some of the other products discussed in this section, the Moratuwa furniture industry has thrived and has managed to survive the ravages of time and changing tastes. To a large extent, this is due to the fact that the industry has been able to market their products effectively. Further, even though furniture designs may have evolved in modern society, the need for furniture is a basic need for most people, and furniture remains a useful and necessary item to purchase as opposed to other crafts that may not be equally necessary.
Perhaps also relevant is the fact that Moratuwa artisans are largely male, and thus the primary care providers for many families. In turn, this may have pushed these artisans to update their designs and business models in order to continue selling their products. As described below, the same has not been the case for other crafts such as Beeralu lace, which is almost exclusively carried out by women.
As in the case of the Ambalangoda masks and the other cases above, this industry could benefit from protection of the name “Moratuwa furniture” both as a certification mark and as a sui generis registered GI in addition to the protection that is granted to the name under the current GI provisions in the IP Act of 2003.
6.6 Beeralu Lace
Beeralu lace refers to the lace made in the southern region of Sri Lanka, most notably in the Galle District. Introduced originally by the Portuguese, lace-making flourished as an industry in the sixteenth and seventeenth centuries. Many women engaged in making lace for pleasure or profit. Traditionally, there was good local as well as foreign demand for Beeralu lace.Footnote 106 However, with the advent of the open economic policy in 1977, women began to abandon their homes and crafts for more profitable day jobs. In addition, the lace industry saw the rise of intermediaries, which resulted in reduced profits for producers.Footnote 107 These factors reduced Beeralu lace-making into a hobby practiced by very few. Today, a few organizations have sought to support the industry, at least as a cottage industry.Footnote 108 Still, many of the weavers are old, face poverty, and have difficulties in addressing the threat of competition from mass-produced items and cheaper imports.Footnote 109 Moreover, Beeralu lace-making is a time-consuming activity, which results in the final products being fairly expensive, which may, in turn, affect consumer demand.
Similar to Ceylon today, and unlike Ruhuna, Moratuwa, and Dumbara, the term “Beeralu” is not a geographical name. The word comes from the term used to describe the wooden bobbins that are used to weave a single piece of lace. However, the term has become synonymous with the region where the lace is made. Accordingly, the name “Beeralu” could be registered as a certification mark as well as could be registered as sui generis GI should Sri Lanka implement a national registry. Instead, today, the name “Beeralu” can only be protected under the current GI regime, which does not include a registration system. In particular, even though it does not seem that competitors are misusing the name to date, it cannot be excluded that producers of mass-produced lace may decide to use a similar name for their lace in order to create an association with the more famous Beeralu lace. Some producers of Beeralu lace have also called for the government to support the export of this product in order to protect the dying trade.Footnote 110 In this respect, Beeralu lace does appear to have global popularity, as can be seen by its showcase at the London Asia House Design 2016.Footnote 111 Thus, the possibility exists that getting protection for the heritage of Beeralu lace could increase the price and consequently the survivability of the Beeralu lace industry as well.
7 Comparative Analysis: Should Sri Lanka Adopt an Indian-Style Protection for Geographical Indications?
As I mentioned in Section 4, the current standard of protection for GIs in Sri Lanka, particularly with respect to the sui generis GI regime, is unsatisfactory and could be improved. In this respect, it could be useful to look at the approach adopted in India. India is Sri Lanka’s closest neighbor and shares many similarities with Sri Lanka in terms of culture and traditions. However, India has been more proactive than Sri Lanka in protecting its cultural and traditional items.Footnote 112 In particular, India enacted a sui generis system for GI protection in 1999, which includes a registration-based system – the Geographical Indications of Goods (Registration & Protection) Act (India GI Act) – after its accession to the World Trade Organization (WTO).Footnote 113 This law came into force with effect from September 15, 2003.
Notably, section 8 of the India GI Act provides that a GI can be registered for any of the goods listed in the GI registry.Footnote 114 The India GI Act extends GI protection to all types of goods and thus covers a spectrum of goods from handicrafts to agricultural products. The India GI Act further lists out the procedure to be followed. Interestingly, and unlike the case in Sri Lanka, section 25 of the India GI Act prohibits the registration of a GI as a trademark (other than a certification mark under the Indian Trade Mark Act, 1999).Footnote 115
The first GI registered in India was Darjeeling tea in 2004, and to date 236 GIs have been registered in India. Initially, GIs were registered primarily for handicrafts, but recent GI registrations have been made in favor of agricultural products, which include types of litchi, mandarins, and lemons.Footnote 116
At this time, it remains unclear if the system of GI protection in India and the GI registrations have, in fact, improved the financial viability of any of the industries for which GI protection was obtained. Still, it remains a fact that the large number of registrations have been granted, and that these registrations represent a vehicle that can help producers in advertising the GI products. Moreover, producers have to agree on common standards and product quality control as part of the application for GI registration. This process alone can assist in motivating producers in a particular area to invest in the quality of their products and in promoting their products in the national and international markets.
Thus, even though Sri Lanka may need some more time before it can implement a system of GI registration similar to India, it should be noted that the system in India does allow for GI registration and, in turn, GI producers can enjoy the full protection of a sui generis GI protection system. In contrast, the only avenue for producers in Sri Lanka to register their geographical names is through the trademark system.
As described above, the current status of GI protection in Sri Lanka is still a work in progress. To date, the strongest form of protection is found in the trademark system, as geographical names can be registered as certification and collective marks, as in the case of Ceylon Tea, Ceylon Cinnamon, and (likely) Ceylon Sapphires. In contrast, the sui generis Sri Lankan GI regime does not include a registration system; thus, it offers a less comprehensive level of protection. In particular, even though a system without registration still grants protection to the GIs, a registration-based scheme can provide additional certainty for producers (and competitors who can be made aware of GI registrations). In turn, this greater certainty may lead to a greater willingness to invest in marketing and promoting the registered GIs on the part of GI producers and other interested parties.
As indicated in this chapter, several products from Sri Lanka could benefit from a more comprehensive system of protection and the creation of a GI registry similar to the one operating in India and in several other countries today. As it has been the case with Ceylon Tea and Ceylon Cinnamon, the primary consideration in seeking protection for geographical names is to prevent the misuse of these names by third parties that are not authorized to use them and, in turn, ward off competition from cheap product imitations. Still, while Ceylon Tea and Ceylon Cinnamon are protected today through the trademark system, and also enjoy (the so far limited in Sri Lanka) GI protection, several other products do not enjoy any form of meaningful protection, as these products are not registered marks and so far enjoy only limited protection under the current sui generis GI regimes. Hence, the producers of these products also have concerns about cheap alternatives, as could become the case with respect to Beeralu lace.
Naturally, the creation of a GI registry would not become a panacea for protecting traditional products in Sri Lanka. In fact, the mere fact of having a system of GI registration may not help an industry that is already unprofitable or for which there is no consumer demand. However, if the industry at issue already has a good target market, and consumers are interested in the products, then GI registration has the potential to position the products more meaningfully within that market. In particular, granting exclusive rights through GI protection (and more meaningfully GI registration) would likely serve to incentivize producers to invest and capitalize in the GI name, which could potentially lead to greater returns. Moreover, many of the industries that rely on culture and traditions in Sri Lanka (such as Dumbara mats and Ruhunu Curd) could also benefit from some intervention and assistance, either by the State or by other public or private entities.
In this respect, it should be noted that the intervention of the State is an important component of the process of registering GIs under the current sui generis GI regime. Furthermore, the registration process requires identifying ad hoc entities in charge of controlling the quality of products. Again, this series of controls could benefit several traditional products in Sri Lanka. Finally, the State and these entities could further assist producers in marketing and managing the GI products in the national and international markets.
Finally, while repeating that a registration system could be beneficial from Sri Lanka, we must note that moving into a registration system and then maintaining it can be a relatively costly endeavor. Thus, in order for this to be a successful change in the current system, it would be important that a considerable number of products be registered as GI. It would also be important that, in addition to seeking GI registration, producers work toward maintaining the quality of GI products and managing the GIs wisely. For example, should a GI gain popularity, GI producers should be mindful and not try to increase production unsustainably. Product quality should not be sacrificed for quantity. Overall, it is important to remember that GI protection is a useful tool for local and rural development, but the proper managing of GIs remains the primary strategy for potential long-term success of these products in Sri Lanka, as it is with the rest of the world.