WTO rules against European Union in GI dispute

A World Trade Organization (WTO) panel has released its decision in the cases filed by the United States and Australia, which alleged that Council Regulation 2081/92 on geographical indications (GIs) impermissibly restricts the rights of trademark owners and discriminates against GIs originating in WTO countries outside the European Union.

The panel ruled that the regulation improperly prevents trademark owners from attacking the registration and use of GIs that create a likelihood of confusion with earlier trademarks.

The panel also ruled in favour of the United States and Australia on their assertion that the European Union improperly limits registration of GIs to applicants from countries with a registration system that mirrors that of the European Union. Although the European Commission contended that this "equivalence and reciprocity" requirement did not apply to GI owners in other WTO countries, the panel found such arguments unpersuasive. Additionally, the panel held that the requirement for governmental involvement in the process for registration of GIs in the European Union and in any oppositions to such registrations were discriminatory against nationals of other WTO countries.

The panel held that rights in registered GIs cover only the linguistic version actually registered and do not extend to any variations or translations of those terms. A particular case in point cited by the panel was the registration as GIs in the European Union of the Czech language names for three Czech beers, granted as part of the accession agreement of the Czech Republic to the European Union.

Despite these rulings, the European Commission issued a press release asserting that the panel had upheld the principle of coexistence of trademarks and GIs, which it regards as a key element of the disputed regulation. Although the panel found that principle to be inconsistent with the rights of prior trademark owners, the evidence submitted by the commission showed that actual conflicts were rare and there were a variety of legal safeguards for resolving potential conflicts without substantially impinging upon the rights of trademark owners. Based on that evidence, the panel ruled that this aspect of the regulation was a "limited exception" that allowed fair use of descriptive terms. Such exceptions are permitted so long as they do not result in a significant likelihood of confusion. However, the panel made clear that coexistence could not be allowed where there was a high likelihood of confusion with a prior trademark.

No immediate changes will result from this decision. The commission is entitled to appeal the panel decision and implementation of the ruling would require amendment of the EU regulation. The WTO procedures encourage consultation at every stage of the dispute resolution process. Therefore, any practical consequences of this decision may not take place for several years.

For a background discussion on the international dispute over GIs, see WTO issues interim decision against expansion of GI protection and Let the best ham win: reforming GI protection worldwide.

Virginia S Taylor, Kilpatrick Stockton LLP, London