Scotch whisky

Scotch whisky

1 scotch whisky accŕ4/*iati/>n Réponse de: ckauer@swa.org.uk Please find attached the response of the Scotch Whisky Association to the public consultation on a possible extension of GI protection to non-agricultural products. The Scotch Whisky Association is a registered organisation in the EU’s Transparency Register. Its identification number in the register is 9201911441-69. Please let me know should you have any problems opening the attachment. I’d be grateful if you could please acknowledge receipt.

Many thanks. Kind regards, Chris Kauer Chris Kauer European Affairs Manager European Affairs Scotch Whisky Association 20 Atholl Crescent, Edinburgh, EH3 8HF, United Kingdom t: (+44) 0131 222 9216 m: (+44) 07534 217 243 f: (+44) 0131 777 8080 w: www.scotch-whisky.org.uk

2 GREEN PAPER COM (2014) 469 FINAL Possible extension of Geographical Indication Protection of the European Union to non-agricultural products Response by the Scotch Whisky Association INTRODUCTION The Scotch Whisky Association (SWA) has extensive knowledge of the protection afforded to Geographical Indications ("GIs") worldwide, and has many years experience of protecting the GI "Scotch Whisky". The SWA has been protecting Scotch Whisky worldwide since the 1950s i.e. well before GIs were defined in the WTO TRIPS Agreement in 1994. Many non-agricultural GIs relate to names which are equally longstanding.

The following response is informed by the SWA's experience in the spirits sector. The SWA has no objection, in principle, to the extension of GI protection to non-agricultural products. The SWA advocates a sectoral approach to the protection of GIs, and believes that a "one system fits all" approach is not appropriate and could result in a diminution of protection in international trade for certain products. Question:- 1. Do you see advantages or disadvantages in the currently diverse levels and means of GI protection for non-agricultural products in the different Member States of the EU? Please explain your response.

Response:- The Green Paper does not accurately reflect the current legal position in the EU. In Section 1, paragraph 1.2.2 it is stated that "agricultural products and foodstuffs (wines, spirits) can enjoy unitary protection granted exclusively at EU level". (Emphasis added). In paragraph 1.2.2.1 it is stated that "the EU system for protecting them is exclusive and prevents Member States from running separate, parallel national or regional schemes (as in case with trademarks, for example)". (Emphasis added). Reference is made to cases C-478/07 Budejovicky Budvar and C- 35/13 Felino. Those cases are relevant only to the EU

3 Regulations protecting foodstuff GIs and do not apply mutatis mutandis to the entirely separate EU Regulations covering respectively, wines and spirits. Indeed, national legislation "in applying a quality policy for spirit drinks" is expressly provided for in Article 6.1 of Regulation (EC) No. 110/2008. Hence the system in respect of spirits is shared, rather than "exclusive". In the field of spirits there are no CJEU judgements to the contrary. A shared system could work equally well for non-agricultural products.

The existence of national rules alongside EU rules can be of important economic significance in international trade. Member states may have long standing bilateral arrangements with third countries which may depend on national legislation. For example in the case of Scotch Whisky, that product is defined in the legislation of many third countries by reference to UK legislation, and not to EU legislation. Separately, some 3 rd countries may interpret quite strictly the requirement in Article 24.9 of WTO TRIPS that "there shall be no obligation.... to protect geographical indications which are not or cease to be protected in their country of origin ( emphasis added). In 3 rd countries which have no bilateral arrangements with the EU and where national interests may outweigh foreign interests, judicial authorities may not regard the EU as a "country", with the result that the absence of national legislation (or EU rules providing that national legislation has no effect on intra Union or international trade) could be prejudicial to the interests of EU producers. An "exclusive" EU system, the consequence of which was that Member States' legislation should have no effect on international trade could accordingly have economic disadvantages for EU producers.

Questions:- 2. Do you think that enhanced and harmonised EU GI protection for non-agricultural products, at EU level, could have positive economic effects in the internal market as set out above? 3. Do you see adverse effects such protection could have on the EU economy? Response:- Provided that enhanced and harmonised EU GI protection at EU level does not prevent Member States from maintaining national legislation for the purposes of international trade, such harmonisation could have positive economic effects in the internal market. The SWA advocates a sectoral approach which respects the specificities of product sectors. If the effect of such enhanced and harmonised EU GI protection was to damage existing protection in third countries based on Member States national legislation (as opposed to EU legislation), that could have severe consequences for the protection of the GI in third countries. Questions:- 4. Do you consider that a harmonised EU GI protection for non-agricultural products could benefit consumers?

5. Do you see potential negative consequences for consumers? Response:-

4 As will be apparent from Section 1, paragraph 1.2.2.1 of the Green Paper there are currently some 3097 GIs registered in the EU for foodstuffs, wines and spirits. The SWA understands that the large number of EU GIs (some of which may be of only local significance and others of which may have become generic in certain third countries) is an obstacle in some bi-lateral negotiations. The number of such GIs is likely to increase significantly if non-agricultural products are added. This could result in GIs being "carved out" of some bi-lateral negotiations. The SWA does not wish to see an EU regime for the protection of non-agricultural GIs resulting in any loss of protection for wines and spirits in EU free trade agreements.

It must be observed that at a multi-lateral level, WTO Members are already obliged to protect GIs. Whilst the existence of an EU register would provide a measure of clarity as to whether or not a particular indication is a GI, such a register is not a pre-requisite for the protection of GIs. Question:- 6. Do you see potential benefits or disadvantages of harmonised EU GI protection for non- agricultural products on EU trade relations with third countries? If so, where? Response:- See answer to previous questions. Questions:- 7. Do you believe that harmonised protection for non-agricultural GIs at EU level would help preserve the traditional cultural and artistic heritage reflected in the eligible products? Please explain your response.

8. Would such protection contribute to building social capital in the areas of production? Response:- The SWA has no comment to make on the traditional cultural and artistic heritage of non- agricultural products or on social capital in their areas of production. Questions:- 9. Do you believe that harmonized EU GI protection for non-agricultural products could help producers defend themselves against imitations and abuse? Please explain your response. 10. How could competing producers protect themselves against an over reach of GI? Response:- There is no reason to believe that harmonized EU GI protection for non-agricultural products would not help producers defend themselves against imitations and abuse, as has been the experience of spirits producers. However, that should not be at the expense of protection in international trade based on national provisions.

The existence of rules at EU level is likely to increase measures taken against competing producers (administrative complaints, litigation). Whether or not such action constitutes "over- reach" by a GI holder is a subjective assessment which can ultimately only be resolved by the judicial authorities.

5 Question:- 11. What do you think of current alternatives to harmonised protection for non- agricultural GIs? Response:- The SWA has no experience of protecting non-agricultural GIs under existing alternatives and is therefore unable to answer this question. Questions:- 12. If a new system was developed at EU level should this protect GIs that cover non- geographical names which are unambiguously associated with a given place? 13. If so, how could the system ensure that such protection does not affect the rights of other producers?

14. Should similar protection also cover symbols such as the contours of a geographical area? If so, under what conditions? Response:- In part II paragraph 1, the Green Paper notes that the "EU legislation on agricultural GIs" provides criteria which are additional to those set out in TRIPS. It should be noted that this is currently not the case in respect of spirits, where the definition of a GI mirrors that set out in Article 22.1 of TRIPS. There is no reason why a similar approach should not be adopted for non-agricultural products.

Narrowing the TRIPS definition of a GI (e.g. by adding additional criteria) can result in a situation in which an indication may qualify as a GI under TRIPS, but not under EU legislation. That risks depriving producers of protection under TRIPS to which they would otherwise be entitled. That is especially the case if the EU system requires exclusivity. Any harmonised system for EU GIs should be based at the TRIPS level. If the EU wishes to grant additional protection within the EU, based on certain criteria, it may do so, but that should not be at the expense of international protection based on the national laws of Member States.

In the SWA's view it is not sufficient for a non-geographical name to constitute a GI, provided only that it is unambiguously associated with the place of origin. The definition of a GI in TRIPS also requires that it "identify a good". If the non-geographical name unambiguously identifies a particular good which is, in turn, unambiguously associated with a place of origin, it may qualify as a GI. It follows that non-text signs or symbols which are unambiguously associated to a certain region, specific place or country, such as for example, the contours of a geographical area, should not constitute a GI unless they also unambiguously identify a good. Thus, in the example in the Green Paper, a cartographic outline of Florida does not unambiguously identify a good and therefore should not qualify as a GI.

Question:- 15. Do you see a need to add any further exceptions to GI protection other than those already provided in TRIPS? Please explain your response.

6 Response:- The SWA is unable to make any assessment of the specificities of non-agricultural products and whether or not they would justify adding other exceptions to those set out in the TRIPS Agreement. Questions:- 16. Do you see a need to differentiate between various protection schemes depending on the categories of non-agricultural products involved (sectoral approach)? If so, please explain why. 17. Do you think some products should be excluded from GI protection at EU level? If so, please specify.

Response:- The Green Paper suggests that the current sectoral approach of GI protection at European level (where there are separate GI Regulations for wine, spirits, aromatised wines and agricultural products and foodstuffs), is "mainly for historical reasons". In fact, the SWA believes that the sectoral approach arises from the separate specificities of wines, spirits and other foodstuffs. In the case of spirits, this flows from the recognition of certain names in 1989 (i.e. before the concept of GIs was formalised in TRIPS). That recognition was "the result of the reputation which these products have acquired throughout the community and on the world marker"(emphasis added).

Where sectors have already established a reputation on the world market, it is essential that the specificities of that sector (including the national provisions on which that world reputation is based) be recognised and maintained, so as to avoid any diminution of international protection. The SWA therefore believes that a sectoral approach should be maintained. Questions:- 18. How strong should the link be between non-agricultural products and their place of origin, in order to qualify for GI protection in any new system?

19. Should a new system allow for two types of link (one stronger than the other) between non-agricultural products and their area of origin? 20. Should there be differences depending on different types of products? Please explain. Response: We have already noted that any harmonisation at EU level should be based on the definition of a GI in TRIPS and should not introduce additional criteria. The distinction between a PDO and PGI is artificial and as the Green Paper notes, could exclude some GIs from qualifying as PDOs. According to the Commission, there is no qualitative difference between a PDO and a PGI. There is accordingly no need for introducing any geographical criteria for GI protection going beyond those stated in TRIPS. That is already the approach in respect of spirits. Questions:- 21. Would a quality benchmark make sense for non-agricultural products?

7 22. How could such a benchmark be defined? 23. Do you agree that there would be a need to check whether the specific characteristics, quality and origin of a GI are maintained during the whole period of protection? Please explain. 24. How do you think specific characteristics of the product should be defined to ensure quality and geographic origin meets the required standards while not limiting innovation? Response:- The SWA does not believe that a quality benchmark is appropriate for GIs. GI products acquire a reputation because of their inherent quality. Registration as a GI does not confer quality. Indeed, the ability for a GI product to be produced in a range of qualities is important to competition and provided the product is produced in the prescribed manner, there is no need to set a minimum quality standard. In the case of spirit drinks, for example, it is quite normal to have entry level, standard, and deluxe products.

The guarantee for the consumer lies in the fact that the product has been produced in the traditional manner, and so the SWA supports requirements for checking that a product complies with the specifications for the GI. Such checks should be carried out at intervals during the period for which a GI is registered, the interval between checks being determined at Member State level on a risk basis. The Association believes that "the appropriate means of maintaining this quality standard is to define the products in question taking into account the traditional practices on which their reputation is based". (Preamble, Regulation (EEC) No. 1576/89. The successor regulation [Regulation (EC) No 110/2008] stipulates that traditional practice must continue to be taken into account).

The requirement to observe traditional practice does not exclude innovation but is a safeguard against the development of new (ie different) products which seek to make use of the reputation of existing GIs. Innovation which simply consists of efficiency measures and which does not change the characteristics of the product on whose reputation the GI is based, are not excluded. Questions:- 25. Should "quality, reputation and other characteristics" be required in order to obtain GI protection for non-agricultural products? If not all, which of these elements do you think should be required? Please explain your choice.

26. What should a product specification include? Should minimum requirements be set? (For example, relating to frequency, method for selecting products, and parties involved in different production and distribution stages). Response:- We refer to our previous response indicating that the EU should not attempt to elaborate on the definition of a GI in TRIPS. Indeed, the fact that a GI may be constituted by a quality or reputation or other characteristic of the good which is essentially attributable to its geographical origin, confirms that a broad sectoral approach is appropriate, allowing the specificities of Member States products to be respected.

8 Questions:- 27. Would harmonising national legislation be sufficient to effectively protect GIs for non- agricultural products across the internal market, or do you consider that a single EU level protection system is required? 28. If you are in favour of a single EU system should national systems of protection (e.g. the current sui generis national laws) continue to co-exist. Please explain. Response:- As previously noted, the exclusive and exhaustive EU level system referred to in the Green Paper as applying in the agricultural sector, is specific to foodstuffs. The wine and spirit sectors are governed by separate Regulations and the spirit drinks Regulation specifically recognizes Member States capacity to pass national legislation "in applying a quality policy". As already explained this has important implications for well-known GIs which have for many years had an international reputation based on Member States' national legislation. For example, in 3 rd countries which allow the registration of GIs for agricultural or non- agricultural products, those registrations may already be based on the applicable national legislation in the country of origin. If the national rules are replaced by legislation at EU level, the consequences for GI registrations based on defunct national laws could be serious. As the current sectoral approach in the spirits sector demonstrates, it is perfectly possible to provide for protection at EU level without interfering with Member States ability to maintain national legislation "in applying a quality policy". A single EU level protection system which excludes protection at national level is not required.

Questions:- 29. If a new system were to be developed, do you think there should be a registration process to protect a non-agricultural GI? 30. Do you think that the potential costs of a system of registering GIs outweigh the costs of a system without registration? 31. Do you think the registration process should involve a national element, e.g. checking compliance with product specifications, indicated geographical area, quality, reputation etc? Response:- As the Green Paper acknowledges, it is not necessary to have a registration system to protect GIs. On the other hand, a registration system removes the requirement to prove, in each case where protection is sought, that a particular indication is a GI and qualifies for protection. However, any registration system must make it clear that the GI is entitled to protection, and has priority, from the date the GI was established in the country of origin and not the date of registration at EU level. This is particularly important for internationally traded GIs with long standing reputations.

Registration costs should be no higher than those applicable to the registration of trademarks (indeed in many third countries GIs are registered by the Intellectual Property office).

9 Subject to the above, the SWA sees no objection to establishing a registration system. Systems for checking compliance with product specifications, indicated geographical area, quality, reputation etc. are not a pre-requisite of protection under TRIPS. If such a requirement is imposed in an EU system, the SWA believes that the necessary controls should be left to the national authorities at Member State level. However, such controls may involve considerable additional expense for producers. The SWA is not in a position to say whether such controls (and the attendant expense) are necessary or appropriate for non-agricultural products. Questions:- 32. If a new system is created, should producers and their associations be the only people allowed to apply to register non-agricultural GIs, or should other bodies be allowed to apply? If so, which ones?

33. Should individual producers be allowed to apply? Response:- GIs are a type of Intellectual Property. In the view of the SWA, therefore, only those producers who have developed the reputation in the GI are entitled to seek its registration, whether that be as a GI or as a collective or certification trademark. Where groups of producers are involved, their associations should similarly be so entitled. It would be appropriate to allow individual producers to apply where an individual producer was solely responsible for the production of a particular GI product.

Consumer associations and state bodies (excepting state sponsored producer associations), which have not developed the reputation on which a GI is founded, should not be involved in the registration process. Question:- 34. If a new system were to be created, would you agree that an objection process should be included and that it should be open to the same type of interested parties as under the agricultural GI rules? Response:- In the regulation applying to foodstuffs "legitimate interest" does not appear to be defined. In the case of spirits, by contrast, Article 14 of Regulation (EU) No. 716/2013 regulates the "admissibility of an objection". Whilst not exclusive, the main grounds for the admissibility of an objection in the case of a spirits GI is the existence of an earlier trademark of reputation and renown already used in the Union. Similar objections could be permissible in respect of non- agricultural GIs. In any event, the SWA recommends that the admissibility of an objection should be specifically regulated to avoid frivolous claims of "legitimate interest". Questions:- 35. Should protecting non-agricultural GIs at EU level by registration require the payment of a fee?

36. What level of registration fee would you consider to be fair? Response:-

10 As previously noted, a GI is entitled to protection under WTO TRIPS irrespective of whether it is registered or not. However, registration serves to demonstrate that a particular indication qualifies as a GI and removes the need to prove that fact when protection is claimed. Registration therefore confers a benefit, and a fee covering the administrative costs involved is appropriate. International experience suggests that official fees should be at the same level as those charged for trademarks. Questions:- 37. What scope of protection should be granted for non-agricultural GIs in the EU? 38. Should the protection granted to non-agricultural GIs match the safeguards already provided to agricultural GIs at EU level? If so, how closely? Response:- The SWA is not able to comment on the necessity for protection at the level of Article 23 of TRIPS in respect of non-agricultural products.

Questions: 39. Would you prefer a system to monitor and enforce non-agricultural GI rights that was exclusively private, public, or a combination of public and private? Please explain, taking into account, if possible, the effectiveness and costs of action to enforce rights. Response: See answer to question 31, final paragraph, and question 33. Questions:- 40. In your opinion, should GI protection for non-agricultural products be unlimited in duration, or limited with the possibility of renewal? If you suggest a limited duration, how long should this be?

Response: The SWA believes that GI protection should be for unlimited duration, subject only to loss of protection in the circumstances envisaged in TRIPS. Questions:- 41. Do you agree that there should be the possibility to cancel a GI after registration? 42. Who should be allowed to apply to cancel the GI? 43. If a new system were to be established, would you agree that a cancellation process should be introduced, with the same terms and conditions as agricultural GIs? Response: Given that a GI is a type of intellectual property, albeit one usually (but not inevitably) belonging to a community of producers, the possibility of cancellation should be limited to the original applicant or, alternatively, by a court.

The Green Paper suggests that in the agricultural GI field a GI may be liable to cancellation "where products do not meet the conditions set out in the relevant specification". That is not in fact the case and the SWA does not support cancellation on

11 that basis. Currently, in the agricultural GI field, cancellation is possible "where compliance with the conditions of the specification is not ensured" i.e. the measures required to ensure compliance with the product specifications have not been put in place. Cancellation on that basis will, of course, depend on whether such controls are thought necessary for non-agricultural products (see answer to question 31). Questions:- 44. Do you think that GIs and trademarks should be subject to the pure "first in time, first in right" principal (i.e. the prior right always prevails)?

45. Should GIs prevail, in certain circumstances, over trademarks? Please explain. Response:- The SWA supports the principle "first in time, first in right" (see also answer to question 31). This means that the date of protection of a GI (subject to the provisions in TRIPS) must be the date of its constitution in the country of origin and not the date of registration at EU level. The relationship between GIs and trademarks is already adequately provided for in WTO TRIPS.

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