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Wines and Spirits Geographical Indications Register on Horizon

Home Insights Wines and Spirits Geographical Indications Register on Horizon

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Contributed by: Sarah Salmond and Laura Bacon

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Published on: November 11, 2015

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Last week, the Commerce Minister introduced a Bill to amend the Geographical Indications (Wine and Spirits) Registration Act 2006. If passed, it would enable local and foreign geographical indications for wines and spirits – such as ‘Marlborough Sauvignon Blanc’ and ‘Tequila’ – to be registered in New Zealand for the first time. Once registered, a GI user would benefit from additional legal protections against the misuse of their GI on the national market.

A national GI register would also have wider benefits. For example, it would help New Zealand’s exporters to improve and safeguard their access to lucrative export markets, and help to address and deter the fraudulent use of New Zealand’s GIs overseas. It may also aid the Government’s efforts to launch free trade agreement negotiations with the European Union. What remains unclear at this stage is whether the Government might one day consider allowing the registration of GIs for other food items, such as beers, dairy products and meats. Such a decision would have serious implications for the wider food and drink manufacturing and retailing industries.

This client alert explores the issues raised above and details the next steps in the decision making process.

What are GIs?

A geographical indication (GI) is a sign that identifies a product as originating from a particular location which gives that product a special quality or reputation or other characteristic. Well-known examples of GIs include ‘Central Otago Pinot Noir’, ‘Feta’, ‘Parma Ham’ and ‘Champagne’. GIs are typically perceived as indications of high quality. For this reason, they are capable of increasing product sales and improving product prices.

How are GIs protected?

World Trade Organisation (WTO) members are obliged to provide interested parties with the legal means by which to protect their GIs against misuse (i.e. use that misleads consumers as to the true origin of goods, or use that amounts to unfair competition). For wines and spirits, legal protection must be provided, even if the true origin of goods is indicated or the GI is accompanied by expressions such as ‘kind’, ‘style’ or ‘like’.

Different jurisdictions protect GIs in different ways. Some, like the European Union (EU) and China, maintain specific GI legislation and registration systems (“sui generis regimes”). Others, including New Zealand (NZ), confer protection by way of their fair trading laws, the common law tort of passing off, and trade mark law.

Problems with NZ’s current protection regime

At present, NZ provides protection for wines and spirits GIs via the Fair Trading Act 1986 (FTA), the common law tort of passing off, and the Trade Marks Act 2002. NZ‘s current legal framework provides a reasonable amount of protection for GIs, in theory. However, in practice, it is largely ineffective as:

  • the Government dedicates insufficient resources to monitoring compliance with the FTA and taking enforcement action, where necessary;
  • the costs, practicalities and evidential requirements associated with taking private legal action to protect a GI are generally prohibitive; and as
  • trade mark law does not enable parties to secure robust legal protection for most of NZ‘s GIs.

In the absence of effective legal protections, GI misuse goes largely unchallenged in NZ. This causes significant financial and reputational harm to legitimately registered GI users. It also harms consumers who rely on GIs to help them distinguish between competing products, and select quality products with special qualities and characteristics.

NZ’s current legal framework also complicates life for the country’s exporters. Generally speaking, it is difficult for NZ exporters to protect their GIs overseas, especially when they lack knowledge of the local regulatory regime or language. For that reason, it is preferable when an importing country operates a GI registration system and is charged with monitoring compliance and taking enforcement action on behalf of GI owners. Unfortunately for NZ, most countries that operate GI registration systems (including China and the EU countries) refuse to register foreign GIs unless they are registered in the country of origin, or there is a bilateral agreement that requires their registration. At present, NZ lies outside both pathways, thereby putting the country’s exporters at a notable competitive disadvantage.

The Amendment Bill

The Geographical Indications (Wine and Spirits) Registration Act 2006 (Act) – which has never been operational – establishes a mechanism for registering GIs, and outlines what requirements must be met for a wine or spirit to carry a registered GI on its label in NZ. The Amendment Bill proposes some changes to those requirements, as detailed below.

Origin of wine
First, it proposes that for a wine to be labelled with an NZ GI (e.g. ‘Marlborough Sauvignon Blanc’), 100% of the wine must come from grapes harvested in NZ, but up to 15% of the wine can come from grapes harvested in a NZ region other than that indicated by the GI.

Fixed terms for GI registrations
The Bill also proposes that GI registrations should expire after 10 years, and that upon expiry, GI users should be subject to renewal fees to facilitate the recovery of GI register’s maintenance costs.

Further minor amendments to the principal Act include:

  • a generic registration of the GI terms ‘New Zealand’, ‘North Island’ and ‘South Island’ for the benefit of GI users in foreign markets;
  • a permission for the Registrar to refuse a GI registration application that would be offensive to a significant section of society, including Māori;
  • a restriction that would prevent amendments to GIs that would substantially alter their character (while allowing amendments to the associated boundaries and conditions of use of GIs); and
  • a permission to enable the Registrar to award costs, and require security for costs, in proceedings brought to oppose registrations, or otherwise remove or alter a GI registration.

Benefits of Act implementation

At the basic level, a GI register would finally provide interested parties with accessible, affordable and effective legal means to protect their wines and spirits GIs against misuse on the NZ market.

A NZ GI registration system would also help the country’s exporters to protect their GIs overseas, in jurisdictions such as China and the EU. Foreign registrations would give NZ exporters comfort that any GI misuse would be monitored and dealt with by appropriate foreign government officials in a cost-effective and efficient way. In turn, that would reduce the scope for GI fraud, which is becoming increasingly prevalent in certain markets.  

From a strategic perspective, a NZ GI registration system may also aid the Government’s efforts to launch free trade agreement negotiations (FTA) with the EU. NZ has been trying to entice the EU to the FTA negotiating table for more than a decade. Unfortunately, the question has always been – what’s in it for the EU? Furthermore, a major bilateral sticking point has always been the extent of protection that should be afforded to GIs for all food products. Since 2006, the EU has been keen to see full implementation of the Act and the issue of GI protection has been a regular item on the agenda of the annual NZ-EU Agricultural Trade Talks

Implications for other food products in NZ

Securing enhanced legal protections for European-origin GIs will be a top priority for the EU in any forthcoming NZ-EU FTA negotiations. It is clear that the EU will push for the extension of enhanced GI protection beyond wines and spirits. In particular, history suggests that it may seek exclusive rights to use GIs such as ‘Feta’, ‘Edam’, ‘Mozzarella’, ‘Brie’, ‘Camembert’, ‘Havarti’, ‘Haloumi’ and ‘Gouda’. Whilst the Government could be expected to contest such requests vigorously, the outcome of such discussions would always depend upon what NZ is offered in return.

Legislative process and next steps

The Amendment Bill was introduced to Parliament on 3 November, and set down for its first reading on 4 November 2015. Cabinet has indicated that before the Act can be brought into force, Regulations setting out the procedures for registering GIs under the Act must first be developed, approved and Gazetted. Officials have estimated that the development of implementing Regulations is likely to take around six to nine months to complete once the Act has been amended. 

To this end, there has been no clear indication of when either the Act or its Regulations are likely to come into force, nor when applications for GI registrations are likely to be accepted.

Upon implementation, the NZ wine industry is anticipating an initial “burst” of approximately 30-40 applications for GI registrations, mostly from NZ producers, and has indicated that it is developing a list of 30 “priority” NZ GIs for which it will effect registration.

Further information about the Amendment Bill can be found here.

If you have any questions about any of the issues raised above, please contact one of the contributors identified below.

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This publication is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice.

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