Presentation by

Kasturi DasCentre for WTO Studies, IIFT, New Delhi

Workshop on Opportunities and Challenges of Geographical Indications (GIs) Protection in West

Bengal

Kolkata, 25 July 2008

GIs generally refer to any indication that identifies a good as originating from a particular place, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.

A GI should be able to indicate the geographical origin of the product:

- Either, directly [Place names, like ‘Darjeeling’]

- Or, indirectly [Symbols/other indications, like ‘Basmati’]

• Either of the following three should be essentially attributable to the geographical origin of the product:

• A given Quality

• Reputation

• Other Characteristics.

For producers, GIs serve as a tool, which helps them

differentiate their products from competing products in the

market.

GIs enable them to build a reputation and goodwill around their

products.

GIs often help them fetch a premium price out of the goodwill

and specific quality, characteristics unique to the product. ◦ Various studies have quantified the price premium associated with

certain GI-products.◦ Though anecdotal, these studies bear testimony to the fact that GIs

do have the potential to fetch premium price.

From consumers’ point of view, GIs act as a signaling

device, in the context of ‘information asymmetry’

between producers and consumers in the market. ‘Information asymmetry’ describes a situation where

buyers are not able to observe all the characteristics

they consider relevant in a product (e.g. taste, flavour)

before purchase, while sellers have better information

about those characteristics.

=> Hence, before purchasing the good, no buyer can accurately

assess the value of the product through examination, whereas sellers

can assess the value of the product more accurately prior to sale.

In such a situation, GIs can help the consumer in

identifying quality products, by way of identifying

products from specific regions that are known to

produce quality products.

GIs can also protect consumers from counterfeit

products.

It is widely believed that effective protection of a GI-product, by way of preventing loss of value through copying or free-riding, could go a long way in increasing the inflow of cash income to the community involved in its production. ◦ Hence, GI is often cited as a tool that has the potential to

contribute to rural development — though indirectly — through a reduction in income poverty.

GI is also regarded as a potential means for protecting ‘Traditional Knowledge’ (TK).

GI as an instrument of Intellectual Property Right

(IPR) protection has some peculiar features, which in

contrast to other IPRs, are considered to be relatively

more suitable for TK protection:

◦ Collective right and not individual right.

◦ Knowledge remains in the public domain.

◦ Rights are (potentially) held in perpetuity.

◦ The scope of protection is relatively circumscribed compared

to patents and trademarks.

GIs can provide the much-needed leverage to the

TK holders to operate in the market economy.

Thus GIs can protect and reward traditions.

However, TK-holders need the necessary

wherewithal to reap the potential benefits out of

protected GIs.

GIs do not protect the knowledge embodied in

the products and/or the associated production

processes.

Neither is protection of GIs a guarantee against the

misappropriation of TK nor are other strategies to

protect TK precluded by the use of GIs.

At the global level, prior to the advent of the TRIPS Agreement of the WTO, there was no multilateral agreement dealing with the protection of GIs as such.

However, certain international conventions established before the TRIPS Agreement, did contain provisions on the protection of related concepts like ‘Indications of source’ or ‘Appellations of origin’.

‘Indication of source’ was covered under two multilateral

agreements:

◦ Paris Convention for the Protection of Industrial Property

(1883)

◦ Madrid Agreement (1891)

‘Appellation of origin’ was covered by:

◦ Lisbon Agreement for the Protection of Appellations of Origin

and their International Registration (1958).

Indication of SourceAny symbol or geographical nameNot conditional on link between

geographical origin and product characteristics

Geographical IndicationAny symbol or geographical name

Conditional on link between geographical origin and quality/reputation/other

characteristics of the product

Appellation of OriginOnly geographical names

(not other symbols)Conditional on link between

geographical origin and quality/other

characteristics(not reputation) of the product

First, it provided the ‘minimum’ standards of protection for GIs which all WTO Members were bound to comply with in their respective national legislations.

Second, it was backed by an enforcement mechanism in the form of the Dispute Settlement System of the WTO.

Given such wide-ranging applicability and enforceability, the TRIPS Agreement did open up significant scope for adequate protection for GIs.

However, there remains a problem of a hierarchy in the levels of protection based on an arbitrary categorization of goods under the TRIPS Agreement.

This is because, although TRIPS contains a single definition for all GIs, irrespective of product categories, it mandates a two-level system of protection for GIs:

(i) A general protection applicable to all GIs (under Article 22), and

(ii) An additional protection applicable only for the GIs denominating wines and spirits (under Article 23).

22.2 In respect of geographical indications, Members shall provide the legal means for interested parties to prevent:

(a) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good;

(b) any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention (1967).

22.3 A Member shall, ex officio if its legislation so permits or at the request of an interested party, refuse or invalidate the registration of a trademark which contains or consists of a geographical indication with respect to goods not originating in the territory indicated, if use of the indication in the trademark for such goods in that Member is of such a nature as to mislead the public as to the true place of origin.

… … …

It is applicable to all GIs, irrespective of product categories.

It aims at preventing misuse of GIs, only when it is likely to mislead the public as to the true place of origin of the product, or constitutes an act of unfair competition => Conditional protection.

It aims at preventing misuse of a GI on any category of products and not necessarily on similar category of products => e.g. even when ‘Darjeeling’ is misused on say, garments.

It aims at preventing misuse of a GI in a trademark, when it is likely to mislead the public as to the true place of origin of the good.

23.1 Each Member shall provide the legal means for interested parties to prevent use of a geographical indication identifying wines for wines not originating in the place indicated by the geographical indication in question or identifying spirits for spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as "kind", "type", "style", "imitation" or the like.

23.2 The registration of a trademark for wines which contains or

consists of a geographical indication identifying wines or for spirits

which contains or consists of a geographical indication identifying spirits

shall be refused or invalidated, ex officio if a Member's legislation so

permits or at the request of an interested party, with respect to such

wines or spirits not having this origin.

… … …

23.4 In order to facilitate the protection of geographical indications for

wines (and spirits), negotiations shall be undertaken in the Council for

TRIPS concerning the establishment of a multilateral system of

notification and registration of geographical indications for wines eligible

for protection in those Members participating in the system.

It is applicable only for GIs designating wines and spirits and no

other GIs.

It aims at preventing misuse of GIs designating wines/spirits on

same category of products, i.e. wines/spirits, respectively.

It does not cover the cases where the GIs designating wines/spirits

are misused on any other category of products => E.g.

‘Champagne’ is used on say, fruit juice. It would be covered by

Article 22.

Protection is not conditional on whether the public is misled or

whether the misuse constitutes an act of unfair competition =>

Unconditional Protection.

It prevents misuse even when-

(i) the true origin of the product is indicated, or

(ii) the GI is used in translation, or

(iii) the GI is accompanied by expressions such as,

“kind”, “style”, “type”, “imitation” etc.

It provides for protection against misuse of a GI designating

wines/spirits in trademarks pertaining to wines/spirits, not

originating therein, irrespective of whether it is misleading the

public.

The additional protection granted under Article 23

coupled with the basic protection granted under

Article 22 of TRIPS amounts to a very stringent

protection for GIs associated with wines and spirits

from any kind of misappropriation.

Such high level of protection is not available for

other GIs, due to the inapplicability of Article 23 for

them.

Unlike the unconditional protection of Article 23 in order for a right

holder of a GI to prevent misuse of his GI under Article 22, it has

to be proved that the undue use of it is misleading the public as to

the true place of origin of the product or constitutes an act of

unfair competition. This may lead to misuse.

Example: A producer of aromatic rice from America might use

the GI ‘Basmati’ on the packet of his rice, and engrave the

true origin of the rice on the back of the packet in an

insignificant manner and still claim that he is not misleading

the public as to the true place of origin of the rice.

The use of accompanying expressions such as “style”,

“type”, “kind”, “imitation” or the like in connection with

wines and spirits is prohibited under Article 23.1. No such

protection is available for GIs associated with other

products, under Article 22. This may lead to misuse.

Example: Kenyan tea may be marketed as “Darjeeling tea,

produce of Kenya” or as “Darjeeling type tea”, with the true

origin of the product indicated elsewhere.

The misuses indicated in the above two examples put the GIs (excepting those designating wines/spirits) at the risk of becoming ‘generic names’ (like French fry or Bermuda shorts) over time.

The requirement of the ‘misleading test’ also leads to legal uncertainty regarding the protection and enforcement of an individual GI at the international level.

Another disadvantage of the ‘misleading test’ is that, it is up to the right holders of the GI to prove that the public has been misled. No such burden of proof has been put on the producer (the plaintiff) in the domain of GIs for wines and spirit.

Convinced of the vulnerability of the GIs of Indian origin in the international arena, India, along with a host of other like-minded countries [the EU, China, the Czech Republic, Hungary, Liechtenstein, Kenya, Mauritius, Nigeria, Pakistan, Sri Lanka, Switzerland, Thailand and Turkey etc.] has been vouching for an ‘extension’ of the ambit of Article 23 to cover products other than wines and spirits, since 2000.

These countries question the logical and legal basis of the existing differential treatment to GIs identifying products other than wines and spirits and points out the inadequacy of the Article 22 protection.

However, countries like the United States, Australia, New Zealand, Canada, Argentina, Chile, Guatemala, Uruguay etc. are strongly opposed to the 'extension'.

They consider Article 22 protection to be adequate and provide a number of arguments against ‘extension’ of Article 23.

The issue is a part of the Doha Work Programme. However, as a result of profound divide among the

WTO Members, not much progress could be achieved in the negotiations so far.

The issue has again been flagged at the ongoing WTO Mini-Ministerial in Geneva.

The Indian GI Scenario: A Few Observations

While the Article 23 of TRIPS relates to wines and spirits alone, under the Indian GI Act, the Central Government has been given the discretion to accord similar (higher level of) protection to other categories of goods also, by notifying such goods in the Official Gazette. [Section 22(2) of GI Act]

Product category Number of GIs

Handicrafts 32

Textiles 23

Paintings 4

Embroidery 1

Total TK-related GIs Registered 60

Agriculture/Horticulture 13

Tea/Coffee 4

Others 5

Total GIs Registered 82

Indian GIs belong to a range of product categories.

This is in sharp contrast with the European scenario, where most of the GIs pertain to agricultural and food products and beverages.

Majority of European GIs relate to wines and spirits:

=> Out of the 4,800 registered GIs in the European Union, 4200 (87.5%) relate to wines and spirits and the rest 600 belong to other food/agricultural product categories.

Around 73% of GIs registered so far in India belong to handicrafts, textiles or other Traditional Knowledge-based products.

This is certainly attributable to the rich heritage of Traditional Knowledge base of our country, particularly in handlooms and handicrafts.

There is a strong case for GI protection in these TK-based products for preventing the TK and crafts from being extinct in face of competition from cheaper imitations (often from within the country).

The predominance of these TK-based products also indicate the huge potential ingrained in GIs in India to improve the economic condition of the communities who have been the custodians of the TK related to these products for generations.

While registration is a necessary condition for reaping benefits

out of potential GIs, it is in no way a sufficient condition.

Actual realization of commercial benefits is contingent upon

many factors, including:

- Marketing and distribution

- Brand building and promotion

- Foreign Registration and Enforcement

It is an uphill task and would require a lot of home-work and

appropriate strategizing.

Products need to have access to appropriate marketing and

distribution channels to secure premium price from GI status.

Distribution channels may be different for different products.

Information is not always easily available, especially about

export markets - some support services may be needed.

Lower-end of the supply chain is often controlled by higher

layers:

=> Benefits may not percolate down to the lower layers, which

include actual producers.

Commercial potential for this ‘niche’ is contingent on the consumer recognizing and valuing the product-place link.

Hence, success in exploiting the commercial potential of a GI is, to a great extent, dependent on effective brand-building and promotional efforts to develop consumer perceptions about the product and its quality.

Building up reputation about a GI-product is a difficult and time-consuming task. Some essential prerequisites include:◦          Well-crafted strategy (for short, medium and long run)◦          Patience◦          Sincere efforts◦          Significant investments

Brand building initiatives are being undertaken in case of many Indian GIs, which is a positive sign.

However, given the extent of misuse within and outside country, these initiatives are quite late.

Misuse of ‘Darjeeling’ GI is rampant in the global tea market.

For instance, tea produced in countries like Kenya, Sri Lanka or

even Nepal has often been passed-off around the world as

‘Darjeeling tea’.

According to a rough estimation, around 40 million kgs of tea is

being sold worldwide as ‘Darjeeling tea’ every year, whereas the

actual production of authentic Darjeeling tea hovers around 9

million kgs only.

Country Nature of misuse and product category

France DARJEELING - perfumes, articles of clothing and telecommunication

Germany Device applications with Darjeeling logo

Israel DARJEELING - agricultural & horticultural products

Japan DIVINE DARJEELING- coffee, cocoa, tea

Norway DARJEELING with India map

Russia DARJEELING Logo - serving tea, coffee, soft drinks

Sri Lanka DARJEELING - telecommunication

USA DARJEELING - Tea

Misuse of ‘Darjeeling’ Opposed by the Tea Board

Source: Darjeeling Tea Association

Registration in the domestic market is a relatively manageable task. Registration in various foreign countries as per the legal

requirements of those countries is a much more challenging task. Involves technicalities and costs. In Europe, for instance, such one-time effort could cost

around US$20,000, as per some estimation. Appointment of a Watchdog Agency is expensive. Fighting cases is time-consuming and tedious. Employing foreign law firms is often exorbitant. Success is not guaranteed even after incurring those high

expenses.

Year Expenses (US$ 000)

1999 - 00 26.23

2000 – 01 54.6

2001 – 02 54.44

2002 – 03 77.08

2003 – 04 85.43

2004 – 05 130.09

No guarantee, unless appropriate mechanism is set in place. It is obvious that different layers within a supply chain would be

differentially endowed in terms of economic and bargaining power. The weakest link in this chain is more often than not the people

located at the lower end, e.g. the actual producers/artisans. Layers with superior bargaining powers may appropriate a

disproportionate share of the economic benefits out of protection. Thus benefits may not get percolated down to the weaker sections

of the chain downstream, thereby nullifying to a large extent, the development implications of GI-protection.

However, it is essential to ensure that the any benefits accruing out of GI-status of a product percolates down to the actual producers/artisans, not only because it is their legitimate right, but also to ensure the survival of the age-old products in future.

Because, in absence of adequate returns, new generations will prefer to move into alternative professions - a tendency which is already visible.

This may over time make the TK-based products extinct.

Identify items worthwhile for GI protection. Create/facilitate creation of Association to be the

‘Registered Proprietor’ of a GIs. Create/facilitate creation of an effective inspection

structure for quality control. Provide technical support for registration in India and

abroad. Extend support for marketing and promotional ventures. Facilitate enforcement, particularly in foreign countries. Ensure the benefits accruing from GI-status percolates

down to the actual producers/artisans.

Appropriate strategies to deal with the aforesaid challenges, along with others, would go a long way in exploiting the commercial and socio-economic potentials ingrained in GIs.

It needs to be underscored that GI is a new concept to India and its people.

The legal system and its implementation is still at a nascent stage.

Awareness and understanding is very poor as of now.

Hence, the significance of workshops of this kind.

Contact: kasturi@iift.ac.inkasturi.das@gmail.com