GEOGRAPHICAL INDICATIONS AND TRADEMARKS –
Implementing the TRIPS Agreement

Paper by Burkhart Goebel, Lovells Boesebeck Droste (Hamburg)
CIPR Conference – 1st Annual Conference of the Coalition for Intellectual Property Rights,
June 26-28, 2000

Geographic indications which form the subject matter of this panel are a colorful concept. There are international agreements in place for the protection of appellations of origin (the Lisbon Agreement), there is supranational law at EC level for the protection of designations of origin and geographical indications and there is a wealth of national legal systems protecting geographical indications through unfair competition law or trademark-like systems. Already are this highly confusing variety of different approaches to the protection of geographical indications shows that the concept is anything but clear cut. It is therefore highly welcome that in 1995 the TRIPS Agreement entered into force and provided some clarification on the protection of geographical indications in the world market.

As a comprehensive framework of intellectual property protection in the “global market place” the TRIPS has a fundamental advantage over the more specific international agreements relating to patents, trademarks, copyright, appellations of origin or other intellectual property rights. The relationship between and the scope of protection of the various intellectual property rights were negotiated and dealt with at the same time with a clear view to their economic importance in and impact on international trade. In contrast to previous agreements which had been prepared either by the trademark community, the agricultural community, or by other specific circles, the TRIPS Agreement took – from its very beginning – into account that the different categories of intellectual property rights are inter related and are best dealt with in a comprehensive framework.

Such framework is now provided by the TRIPS Agreement. It is the main piece of international law establishing what is required from any member of the global trading community in terms of intellectual property protection. This applies, in particular, to the protection of geographical indications. The TRIPS Agreement supercedes many previous agreements by prescribing new standards which reflect what was in place prior to the TRIPS Agreement, but takes due account of possibly conflicting intellectual property rights, such as trademarks.

Prior to going into detail on possible conflicts between trademarks and geographical indications and the requirements for setting up a system for the protection of geographical indications compatible with the TRIPS Agreement, I will briefly illustrate the meaning of the terms “geographical indications” and “trademarks”.

II. Conflicts between Trademark and Geographical Indications

It would not be worthwhile to talk about conflicts between trademarks and geographical indications if such conflicts were of a theoretical nature only. I am, however, convinced that this is not the case. In fact, there is serious potential for the collision of opposed interests and this potential is growing as both, geographical indications and trademarks are increasingly recognized as valuable property rights. Under supranational and international legislation enacted prior to the TRIPS Agreement, (i.e. the Lisbon Agreement and the EC Foodstuffs Regulation as well as the EC Wine Regulation (EEC) No. 23 92/89 of July 24, 1989) the trademark owner faces even the expropriation of its private trademark rights without any compensation if there is a conflict with a geographical indication.

Let me illustrate these possible conflicts by means of an example. There have been instances in the past where geographical indications and trademarks actually clashed and led to litigation and even the redrafting of an EC Regulation. However, for the purpose of this presentation, I prefer to let sleeping dogs lie and choose a purely hypothetical case instead.

My fictitious example is taken from the beer brewing industry. Most of you will be familiar with the Irish beer called GUINESSâ. In France there is an area by the name of “Guines” and a small town in Cuba carries the same name. Let us imagine that both, the French and the Cuban governments come up with the idea to provide protection for the local beer brewed in the respective Guines villages under the laws for the protection of appellations of origins and geographical indications. France might want to apply for protection of the geographical indication GUINES for beer under the EC Foodstuffs Regulation. Both, France and Cuba are Member States to the Lisbon Agreement and might therefore also want to register the name GUINES as an appellation of origin with WIPO.

Whereas the protection for GUINES as a trademark would be a clear-cut case of trademark infringement in which the owner of the GUINESSâ mark could easily enjoin the registration and the use of the designation GUINES for beer, the case is much less clear if GUINES is protected as a geographical indication/appellation of origin.

Assumed that GUINESSâ might not qualify as a famous mark in the country where protection is sought, the owner of the GUINESSâ mark will actually face a severe restriction if not the total loss of his rights. Under the EC Foodstuffs Regulation, a prior trademark would coexist with a later geographical indication. Thereby, the trademark owner will be deprived of a significant part of his trademark rights, namely its exclusivity. Exclusivity is an inherent part of the right to use a trademark.

The situation is worse under the Lisbon Agreement. Pursuant to Article 5 (6) of the Lisbon Agreement, the use of a conflicting trademark which had not been communicated within one year of the protection of the AO would have to be phased-out within two years. Hence, the trademark will be lost entirely.

This apparently unfair result clearly shows that the Lisbon Agreement and the more recent EC Regulations were driven by the interests of the agricultural lobby only, without taking into account the appropriate protection of the basic rights of trademark owners. These conflicts were probably not properly realized when adopting the EC Regulation and the Lisbon Agreement. Otherwise, it can hardly be explained that a well established principle of public international law whereby an expropriation without compensation is unlawful, had been neglected in a series of major international and supranational bodies of law.

The System Established Under the TRIPS Agreement

It was left to the TRIPS Agreement to attempt remedying these shortcomings of trademark protection in the case of conflicts with geographical indications. This does not come as a surprise. The TRIPS Agreement was the first comprehensive potentially global agreement that comprehensively deals with different types of intellectual property rights at the same time. It is for the first time that the scope of protection of trademarks and the scope of protection of geographical indications was negotiated together. This negotiation situation made conflicts possible and led to a system that safeguards the core features of both trademarks and geographical indications.

Prior to regulating specific intellectual property rights, the TRIPS Agreement establishes the principles of IPR protection under TRIPS. Article 2 (1) in particular, establishes the obligation of the members to adhere to Articles 1-12 of the Paris Convention (1967). The provisions of Articles 1-12 of the Paris Convention are clearly built on the concept of priority governing the relationship between conflicting intellectual property rights. The “first in time, first in right” principle constitutes the underlying structure of the trademark provisions in particular (Article 6 at seq) of the Paris Convention. As a result of Article 2 (1) TRIPS, this principle is applicable to the entire Agreement including conflicts between trademarks and other similar signs like geographical indications. Thereby the concept of priority was established as the backbone of the comprehensive system of intellectual property rights established by the TRIPS Agreement. As we will see below, this fundamental decision has an essential bearing on possible conflicts between trademarks and geographical indications.

The rights conferred to a trademark under the TRIPS Agreement are defined in Article 16 (1) which reads as follows:

“the owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in the respect of which the trademark is registered where such use would result in the likelihood of confusion.”

Pursuant to Article 16 (1), the trademark owner has the exclusive right to prevent the use of identical or similar signs for identical or similar goods. The term “signs” is very broad. It covers all sorts of designations including those that might be ineligible as geographical indications. Therefore the trademark owner is entitled under Article 16 (1) to enjoin the use of an identical or similar designation, even if such designation would qualify for protection as a geographical indication. Thereby, Article 16 (1) of the TRIPS Agreement provides the trademark owner with a “sword” to defend his rights against the use of similar designations. There is no such thing as the coexistence of confusingly similar signs for identical or similar goods or services. In our GUINESSâ example, the owner of the GUINESSâ mark could enjoin effectively a French or Cuban beer brewer from selling a “GUINES” beer in markets where GUINESSâ is a registered trademark.

The limit to such protection is what Article 17 TRIPS Agreement refers to as the fair use of descriptive terms. Of course, no manufacturer is deprived of the right to point out on a label that the beer was “brewed in Guines, Cuba”. If the beer is sold under a trademark such as “CERVEZA AFICCIONADO” it would not be unlawful to refer to the geographical origin of the product as long as it does not happen to be in a trademark like manner.

The scope of protection granted to trademarks under Article 16 (1) TRIPS is mandatory for all Member States of the TRIPS Agreement. National legislation, which diminishes these rights of the trademark owners by granting protection to confusingly similar indications for identical or similar products, is incompatible with Article 16 (1). Trademark rights may therefore only be limited in favor of geographical indications, if such restrictions are contained in the TRIPS Agreement itself.

The TRIPS Agreement provides for protection of geographical indications in Article 22. Article 23 grants additional protection to geographical indications for wines and spirits.

Article 22 (2) imposes the obligation on the Members to provide the legal means for interested parties to prevent:

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

Geographical indications are therefore protected from the use of any designations for goods originating in a geographical area other than the true place of origin which is actually misleading. The geographical indication is not protected against the use of confusingly similar designations per se, but only against misleading designations. Additional protection is provided in cases of unfair competition (Article 10bis) of the Paris Convention. Here, the TRIPS Agreement covers cases like the exploitation of the reputation of famous geographical indications such as “Champagne”.

Additional protection has to be provided for wines and spirits under Article 23 TRIPS Agreement. Pursuant to Article 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, event where the true origin of the goods is indicated or the geographical indication is used accompanied by impressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’, or the like.”

Geographical indications for wines and spirits thereby enjoy protection against the use of identical designations regardless of whether or not the public is actually misled as to the true origin of the product. In fact, wines and spirits are a special case for geographical indications. Of the 832 appellations of origin protected under the Lisbon Agreement, 61% are appellations for wines. A further 12% are appellations for spirits. This already shows that wines and spirits are products that traditionally have a strong relation to the geographical environment of their country of origin.

For that reason, Article 23 (2) contains an even more specific rule regarding a possible conflict between the use of a registered trademark for wines or spirits and a geographical indication:

“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 domestic legislation so permits or at the request of an interested party, with respect to such wines or spirits not having this origin.”

The question which has not been answered so far relates to the possible conflict between trademarks and geographical indications. Would it be compatible with the TRIPS Agreement if a national law on the protection of geographical indications provided for the coexistence of a trademark and a later geographical indication? Would it be compatible with the TRIPS Agreement to foresee a phase-out of conflicting trademarks as envisaged under the Lisbon Agreement? The answer to both questions should clearly be no. As a matter of fact, the TRIPS Agreement has fully recognized that geographical indications are by no means superior to trademarks only because they may be used by communities rather than individual trademark owners. Both rights are due to a commercial effort of those who are entitled to their use. For that reason, the prevalence of one right over the other could not have been an appropriate solution. The TRIPS Agreement sought a fair balancing of interests between the owners of trademarks and those who are entitled to use geographical indications. It thus came up with the following solution:

Trademarks are protected against any confusingly similar sign for similar or identical goods or services. Trademarks are protected against “likelihood of confusion”. This is due to the fact that trademarks still serve in the first place as an identifier of the manufacturer of a certain product. If the use of a similar sign gives rise to a likelihood of confusion as to the manufacturer of the product, such use may be enjoined by the trademark owner.

Geographical indications for products other than wine and spirits are protected against use of the designations which misleads the public as to the geographical origin of the good. This is an important difference. The registration and the use of a trademark on grounds of a conflicting geographical indication protected for products other than wine and spirits, cannot be enjoined on grounds of a “likelihood of confusion” or “risk of misleading” between the trademark and the geographical indication. In order to refuse a trademark application or invalidate a registered trademark, it must be proven that the consumers are actually misled as to the geographical origin of the product at issue.

If consumers do not even perceive the geographical indication as such, since they do not know that the designation refers to a certain geographical area (I trust that hardly any consumer in Russia will be familiar with a place called “Guines” in France or Cuba), such a geographical indication cannot be enforced against a similar trademark. Under the TRIPS Agreement, protection of geographical indications for products other than wine and spirits is firmly based on unfair competition law, a major root of current systems for the protection of geographical indications. It goes without saying that consumers cannot be misled as to the geographical origin of a product if they do not relate the product to a specific geographic location.

Consumers also cannot be misled if the true origin of the product is indicated. Even if the geographical indication “Guines” were protected with a better priority than GUINESSâ and perceived as a geographical indication by the public in the country of protection, it still would not justify an injunction against the use of the trademark IRISH GUINESS. In this case, it is crystal clear that GUINESSâ comes from Ireland. No consumer can be led into believing that this beer comes from France or Cuba.

This limited scope of protection of geographical indications other than wine and spirits is confirmed by a comparison of Article 22 TRIPS to Article 23 (1) TRIPS. The latter provision provides protection to geographical indications for wine and spirits “even where the true origin of the goods is indicated”. This clearly supports the conclusion that geographical indications for products other than wine and spirits are not protected against the use of these designations, if the true origin of the product is indicated.

The importance of the unfair competition element in the protection of geographical indications was recently stressed by Advocat General Jacobs, European Court of Justice, in his opinion delivered on May 25, 2000 in the so-called Warsteiner case. The case dealt with the question of whether beer called Warsteiner, which is a city in Germany, could be brewed in a city other than Warstein. The Advocat General stated that it was common ground that beer brewed in Warstein had no special features attributable to the locality. The reputation of Warsteiner brand beer is derived from the quality of the beer and the promotion of the mark, but not from any link to its place of origin.

Such a simple geographic indication can only be protected in the EC if an average consumer is actually misled. Since a market survey had shown that only 8% of the consumers gave any importance to the fact that Warsteiner beer was brewed in Warstein, the Advocat General concluded that the average consumer was not being misled by a Warsteiner beer brewed in a place other than Warstein.

If however, the average consumer was not being misled, it was “difficult to see what public interest is served by restricting the use of the indication of source”. Since such a law would unlawfully restrict the free movement of good within the European Community, the Advocat General suggests that it would be contrary to Article 30 of the EC Treaty if national law prohibits the use of a simple geographical indication even if the use of such designation is not liable to mislead a reasonably well-informed and reasonably observant and circumspect consumer.

These considerations apply equally to the TRIPS Agreement. If the consumers are not misled, there is no reason to restrict the use of a designation that theoretically may also serve as a geographical indication under the TRIPS Agreement.

Broader protection is only provided for wine and spirits pursuant to Article 23 TRIPS. But even in this case, the protection of geographical indications under TRIPS does not unduly prejudice the rights of the trademark owners.

The special protection provided for geographical indications for wine and spirits is the main practical case in which the grandfathering clause of Article 24 (5) TRIPS is applicable. Article 24 (5) of the TRIPS Agreement deals with the situation where a trademark has been applied for or registered in good faith, or where rights to a trademark have been acquired through use in good faith. Either:

before the date of application of these provisions in that Member State (as defined in part VI of TRIPS) or

before the geographical indication is protected in its country of origin.

In that case,

“...measures adopted to implement this Section shall not prejudice eligibility for or the validity of the registration of a trademark or the right to use a trademark, on the basis that such a trademark is identical with, or similar to, a geographical indication.”

Hence, the obligatory phase-out as a trademark as foreseen under the Lisbon Agreement is clearly unlawful under the TRIPS Agreement, which expressly grandfathers those trademarks that might have to be phased-out under the Lisbon Agreement.

Whereas we have now seen that the circumstances under which a trademark may be invalidated under the TRIPS Agreement because of conflicting geographical indications are limited to those trademarks that are actually misleading or used for wine and spirits and are not grandfathered under Article 24 (5) TRIPS, the rights of the trademark owner are not yet fully safeguarded. We mentioned earlier that exclusivity is an essential feature of any trademark right. The rights of the trademark owner would be severely restricted, if he had to tolerate the coexistence between his trademark and a confusingly similar geographical indication.

In our GUINESSâ example, it is obvious that the distinctiveness of the GUINESSâ mark will be severely diluted if brewers from the French and Cuban “Guines” villages were allowed to market a GUINES beer in countries where GUINESSâ is registered and used as a trademark. This was also clear to the negotiating parties of the TRIPS Agreement. For that reason, the TRIPS Agreement excludes the coexistence between a trademark and a confusingly similar geographical indication and resolves the conflict between such designations under the well-established priority principle, i.e. the principle “first in time, first in right”.

It would exceed the scope of this paper to show in detail how the priority principle has been implemented in the TRIPS Agreement as the conflict resolution for trademarks and geographical indications. I already mentioned, however, that Article 2 (1) TRIPS endorses Articles 1-12 of the Paris Convention and thereby confirms the priority principle as the underlying principle of the entire TRIPS Agreement. Also, when Article 24 (5) refers to a right to use a trademark, this does not appear to cover just the simple use (in that case it would not have been necessary to refer to the additional term “right”). Rather, it covers the trademark owner’s full legal position forming a trademark right. The right to use a trademark is not just use of a designation, but a legal position which is based on exclusivity. The right to use includes the right to exclude! (Florent Gevers, Conflicts between Trademarks and Geographical Indications.- the Point of View of the International Association for the Protection of Industrial Property, WIPO Symposium, Melbourne 1995). TRIPS confers the right of exclusive use to the trademark owner. He need not tolerate any conflicting sign even if such sign might theoretically be used as a geographical indication. As long as it is not proven that a trademark is misleading, or if the trademark is grandfathered under Article 24 (5) TRIPS, it prevails over any conflicting geographical indication.

Wherever the GUINESSâ mark was registered first, the owner of the GUINESSâ mark will therefore be in the position to enforce his trademark against any use of the designation GUINES in a trademark like manner, even if this is the actual brewing place of a French of Cuban beer.

It has been shown that the TRIPS Agreement may indeed be described as a quantum leap for the protection of geographical indications. It does not only provide for such protection at an almost global level, it also adequately safeguards the rights of trademarks owners in the case of a conflict. It thereby partially supercedes the older Lisbon Agreement as well as existing pieces of EC Law, such as the EC Foodstuffs Regulation. It is for the Member States of the WTO and all other states who wish to maintain TRIPS compatible IP laws to implement properly these rules into their domestic laws.

Guiding Principles for the Implementation of TRIPS

More than anybody else, it was the French who influenced the development of the protection of geographical indications internationally during the 20th Century. At the cusp of the 21st Century, it is against French legal principles that provide guidance for the implementation of the TRIPS Agreement, namely egalité, fraternité, and liberté.

It should be crystal clear for any national law implementing the TRIPS Agreement that both, trademarks and geographical indications, enjoy protection and that neither trademarks nor geographical indications enjoy a priori superiority over the other. Phasing-out a trademark because of the later protection of a geographical indication as envisaged under the appellation of origin system established by the Lisbon Agreement, or forcing a trademark owner to accept coexistence as envisaged under the EC Foodstuffs Regulation, amounts to confiscation of the private property of the trademark owner. Such a confiscation would be clearly unlawful and contrary to the TRIPS Agreement.

As with brothers in real life, neither trademarks nor geographical indications are superior to each other, however, they are not identical either.

Any implementing legislation must reflect the differences between trademarks and geographical indications. Trademarks serve as a reference to the manufacturer or provider of certain products or services. They may consist of any fanciful sign or designation and are protected against the use of any confusingly similar sign for similar goods or services.

In contrast, geographical indications serve as an indication of the geographical origin of certain goods. For that reason, geographical indications must consist of a geographical name. For instance, the word MERCEDES cannot serve as a geographical indication, even though the vast majority of consumers would presumably believe that Mercedes stands for cars coming from Germany. With the exception of geographical indications for wine and spirits, a protected geographical indication is protected only against use of such a designation which actually misleads the public as to the geographical origin of the good. Geographical indications are not protected as broadly as trademarks. The reason is that the protection of geographical indications for goods other than wine and spirits has its origin in unfair competition law. Any protection under unfair competition law requires proof that a distortion of competition has actually occurred, i.e. in the case of geographical indications that consumers are actually misled. If consumers do not relate a certain geographical indication to a specific area or if it is made clear to the consumers that the product comes from another area, by indicating the true origin of the goods, there is no reason to restrict the use of such a designation in a given market.

The registration and use of a trademark on grounds of a conflicting geographical indication can be enjoined only if it is proven that the use of a trademark would mislead the public in the country where it is used. Any implementation of the TRIPS Agreement must reflect these differences between geographical indications and trademarks.

In the world of global trade, freedom does not mean the absence of rules, but rather the existence of adequate and enforceable rules that give companies the freedom to offer their products in foreign countries. Freedom does not mean the absence of conflicts, but rather a reliable legal framework which provides a fair and balanced solution to such conflicts. For owners and users of trademarks and geographical indications alike, the TRIPS Agreement provides such a set of reliable rules, pursuant to which possible conflicts between trademarks and geographical indications may be resolved fairly. The TRIPS Agreement thereby provides freedom for trade.

The conflict solution provided by the TRIPS Agreement is even more appealing as it is particularly simple: it is the well-established principle of priority. In other words: first in time, first in right. Wherever the trademark is registered first, it can be enforced against the use of any confusingly similar sign in a trademark like manner. This includes conflicting signs that may serve as a geographical indication. The trademark owner need not accept coexistence of a confusingly similar geographical indication, but is entitled to enforce his right. The same is true for the user of a geographical indication. He also may enforce a prior geographical indication against a misleading use of this geographical indication in the form of a trademark. By resolving possible clashes between trademarks and geographical indications on grounds of priority, the TRIPS Agreement is firmly based on well-established principles of intellectual property law. It thereby provides a conflict solution which is exactly of the kind as conflict solutions in global trade should be: reliable and simple to apply in practice.

Moreover, the first in time, first in right principle is also fair. The user of a geographical indication is only enjoined from using his designation in a trademark like manner. Even in our GUINESSâ case, the brewery in the Cuban village of Guines would, of course, be entitled to sell its beer under the trademark CERVEZA AFICCIONADO and have a small print at the bottom of the label “brewed in Guines, Cuba”. Descriptive use of place names is not prohibited by trademark law. The TRIPS Agreement poses clear limits to the use of a geographical indication only if such indication is used in a trademark like manner. In such a case, the prior rights of the trademark owner prevail and must prevail.

Burkhart Goebel

15-June-2000