Geographical Indications

ICTSD-UNCTAD Project on IPRs and Sustainable Development132. DOCTRINES FOR PROTECTING INDICATIONS OF GEOGRAPHICAL ORIGINSIt is useful to consider some of the rationales andprinciples that provide the legal and public policyfoundation for the protection of IGOs. Like otherinstruments of IPRs included within the TRIPSAgreement, such as patents, trademarks and copyright,the fundamental rationale for protection is a mixreflecting the public good properties ofknowledge/information and the harm resulting from‘free riding’ on reputation. IGOs share many featureswith trademarks; hence it is useful to consider therationale for protecting trademarks. 5 In the case oftrademarks it is argued that firms invest in establishingproduct standards and quality that through repeatedpurchases by (satisfied) consumers generates goodwilland reputation. The ‘mark’ on the good allowconsumers to easily identify it, since in the mind of theconsumer ‘mark’ and ‘quality’ of the good are stronglyassociated. It thus follows that the accumulatedgoodwill of the firm should be protected frommisappropriation, as suggested in the following quote,“Trademarks allow consumers to identify the productsof companies that have satisfied them in the past. Thus,a trademark becomes an asset of the firm, embodyingits accumulated goodwill. When governments grantfirms exclusive property rights to their marks, theyprotect firms’ investments. Without such protection,firms would find it difficult to appropriate the benefitsfrom maintaining the quality of their products andwould have less incentive to do so.” (Grossman andShapiro, 1988a, p60)The misappropriation of trademarks through theproduction of counterfeit goods is said to harm thereputation of a firm and dilute their market power 6 .This is easily apparent in the context of ‘status goods’,viz. goods that are associated with prestige because oftheir label. The presence of counterfeit goods in themarket for ‘status goods’ is striking in that purchasersare not necessarily deceived into purchasing acounterfeit, as they may knowingly purchase the fake soas to deceive observers who are duly (thoughmistakenly) impressed. Moreover, the counterfeitproduct, which may or may not be of qualitycomparable to the original, allows some consumers topurchase the ‘status’ associated with the label withouthaving to pay the premium price associated with theoriginal. The wider consumption and display of thestatus good dilutes the ‘snob value’ of the label.Moreover, the original firm also has to confront pricecompetitionfrom the counterfeit producer.It is with the above background that the rationale forand the legal foundation of protecting IGOs can beaddressed. A useful starting point is the followingquote,“Geographical indications are understood by consumersto denote the origin and the quality of products. Manyof them have acquired valuable reputations which, ifnot adequately protected, may be misrepresented bydishonest commercial operators. False use ofgeographical indications by unauthorised parties isdetrimental to consumers and legitimate producers. Theformer are deceived and led into believing to buy agenuine product with specific qualities andcharacteristics, while they in fact get a worthlessimitation. The latter suffer damage because valuablebusiness is taken away from them and the establishedreputation for their products is damaged.” (WIPO –International Bureau, 2002)Identifiable in the above quote are two doctrines thatform the legal infrastructure for the protection of IGOs:Protection Against Misleading Use of IGOsThis principle expresses a consumer protection element.Protection is offered against the use of the IGOs onproducts not originating in the geographical area towhich the indication refers, where such use of theindication misleads the public. For the use of anindication to be considered ‘false’ – and hence misleadthe public – it must be the case that the public perceivethe (original) IGO to refer to a certain geographicalarea 7 . Naturally, denominations which have becomegeneric do not meet this requirement. Under the ParisConvention 8 this principle, which equally applies toappellations of origin and indications of source(Escudero, 2001, p9), is applied in instances where thedenomination may be either ‘directly’ (i.e. explicitwords) indicated or ‘indirectly’ (i.e. symbols andemblems) imputed (cf. article 10). A variety of border