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This article is written by Mahvish Siddiqui, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.com.

Introduction

The competitive markets in this globalised world have made it a struggle for the countries to get a big pie from the market. As geographical indications (GIs) are also Intellectual Property Rights, it consists of the name of the geographical origin or the name of the production place. In India, GIs are protected and governed by the Geographical Indications of Goods (Registration and Protection) Act 1999. Under this Act, the application can be made by producers or associations of people representing the interest of the goods concerned under Section 11 of the Act.

The controversy regarding GI arises when the name that is protected in one place has a common usage somewhere else like Feta cheese, Basmati Rice has a generic status in a market area. People argue and claim that such names should not be for a specific group of producers in a particular location as consumers expect that these names can be identified as a group of products that can be produced in many other locations except one while the others argue that these specific products have certain qualities which are derived from the geographic region and the specific process is used to make it. In this article, we will be covering how a GI can be used as a developmental tool in this growth-oriented society and how it can benefit rural areas and places that have a separate special identity for its products and use it to their advantage.

What is a geographical indication?

According to WIPO, geographical indication (hereinafter referred to as GI) means “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.” So, any goods that identify or indicate that the goods have originated from that territory or country being true to its ingredients being from that country only is understood as a GI.

According to Section 2(e) of the Geographical Indication of Goods (Registration and Protection) Act 1999 “geographical indication”, in relation to goods, mean an indication which identifies such goods as agricultural goods, natural goods, or manufactured goods as originating, or manufactured in the territory of a country, or a region or locality in that territory, where a given quality, reputation or another characteristic of such goods is essentially attributable to its geographical origin and in the case where such goods are manufactured goods one of the activities of either the production or of processing or preparation of the goods concerned takes place in such territory, region or locality, as the case may be.

The types of goods covered under its gambit are:

  • Agricultural (example basmati rice)
  • Natural (example Jabalpur marble)
  • Handicraft or of any industry
  • Foodstuff like Agra petha

Advantages of GI registration

Registering GI prevents others from using the authentic geographical indicating product. The proprietor by the virtue of Section 21 can seek recovery for damages or infringement of the registered geographical indication goods. It helps in promoting the economic prosperity of producers of goods produced in a geographical territory. It boosts exports as the Indian GIs are legally protected.

The rural developmental aspect of GIs

As in a more globalised world, the pace for international competition has brought increased varieties in response to the producers trying to add some value to their products so that it adds competition in the market. GIs have gained importance in terms of differentiating products from the ones that are similar. Effective protection of GI provides benefits to the local producers due to the established reputation of these products. Therefore, GIs is a way of marketing strategies like trademarks. While the composition of a well-known trademark requires a big investment, GI does not; hence GI directly benefits local small firms where their investment in marketing is too low.

Perception of acquiring better and higher quality products

As consumers know that GI-registered products are better and higher quality products it increases consumer awareness all over the world. These high-quality products are not only for food but for a lot of traditional products too. GI has a profit potential depending on the traditionality of the product and the quality of the product. The GI products obtain quality premium due to the reputation of the products and so because of this product differentiation a demand to pay a high price for the upper is created.

Considering the connection of GI products and rural areas, there is an income flow in those particular areas which creates employment opportunities. These products generally do not require big infrastructure or costly technologies due to their specialty and uniqueness and they do not even require big investments for marketing too so the producers create employment and increase their income too. Moran (1993) said that the local producers of agricultural products gain more profit out of selling to last customers directly than the ones who sell to big firms.

In the case of Argan Oil being produced in the Souss-Massa-Draa Region of Morocco in the national and international markets, the economic activities, as well as the product sales and tourism of that area, were increased. Hence, proper protection of GI can not only increase the recognition of the product but also increases the external factors like increase in economic activities of other sectors that have backward and forward linkages with the GI products. It also helps to increase the living standards of the rural areas.

Boosting the economic activities and preserving the cultural heritage of the land 

GI products not only boost the economic activities of rural areas but also preserve the cultural heritage of the land as it helps to reduce the migration from rural to urban areas as there are more job opportunities for the people. In India some examples of GIs are:

  • Kanchipuram silk sarees
  • Darjeeling Tea
  • Basmati Rice
  • Kolhapuri chappal
  • Malabar pepper
  • Bengal rasgulla
  • Alphonso mango
  • Bikaneri Bhujia

 If a geographical term is used as a designation of the kind of product rather than an indication of the place of origin then it does not function as a geographical indication. Geographical indications are used to indicate the regional origin of particular goods, whether they are agricultural products or manufactured goods; provided that those goods derive their particular characteristics from their geographic origin. Any producer who meets the standards set by the GI owner can use a GI. In the United States, the owner of a GI can be any legal entity be it a government, an association of producers, or even an individual.

Demand and growth in the market

“The stronger the link between the consumer valued qualities and the origin, for example in case of a necessary and sufficient link, the less the product is exposed to potential competitors.”

In the case of Penja pepper, the demand was already high on all markets, national and international because the characteristics were impossible to obtain. The quality of this particular pepper is recognized by experts on both national and international levels. Chinese pepper may be cheaper but by the end of the week you’ve used it up [because it is not as strong so more is used]. In blind tests, with panels of international experts, Penja pepper is always ranked first.

Penja pepper distributor, Douala Market

There is an information asymmetry, a risk of fraud

GI primarily signals quality because we resort to quality when the consumers are not observable themselves. Consumers would only know about the texture and quality of the product once they have purchased it and used it. So even if the consumer does not get the right product as promised, the purchase has already been made. This information asymmetry between sellers and consumers introduces risks of disappearance from the market of quality products. Indeed, when a consumer has no way to verify quality before their purchase, they will not be ready to pay more for a product that is described as “quality”. As producers anticipate that they will not be subsequently remunerated, they will not go ahead with the costly production of a quality good. It is necessary to find a mechanism to reduce this information asymmetry.

Case laws on GI infringement

  1. A very notable case for the infringement of GI was the Tea Board India v ITC Limited, where the Calcutta High Court denied an interim injunction to the Tea Board of India, the registered proprietor of the GI, ‘Darjeeling.’  The Tea Board sued ITC, inter alia, under the Geographical Indication of Goods (Registration & Protection) Act 1999, for infringement of its registered GI against the use of the name “Darjeeling Lounge, alleging such use amounted to an act of unfair competition including passing off.
  • Calcutta High Court made this assertion that GI rights shall only apply to goods and not services. In light of the facts of the case, the court held that the claim of infringement of provisions of the GI Act does not stand since the plaintiff had obtained registration of the term ‘Darjeeling’, only in relation to tea, and it is not a trademark, but a mere indication of origin of the goods. Since GI rights only extend to goods the defendant’s lounge does not qualify as goods.

2. Another case would be The Scotch Whisky Association v Golden Bottling Limited, where the plaintiff filed a suit for a permanent injunction restraining the defendant and those acting under the defendant from dealing, in any manner with whisky under the name ‘Red Scot’ or any other name containing the word ‘Scot’ or any word similar thereto so that the defendant cannot pass off its whisky as scotch whisky and after a great battle the plaintiff was granted the permanent injunction and also received damages to the extent of RS. 5,00,000/- and also costs which the plaintiff incurred for the litigation.

Establishing a connection between consumers and the geographical region 

GIs establish the connection between the product and the name of the geographical region where the product originated. Consumers are an effective marketing tool for attracting consumers. Most of the GI goods are from the rural areas and it provides crucial economic importance as it not only facilitates export it helps in increase in income and provide job opportunities for the people. While it is hard to obtain a competitive advantage based on technology in rural areas and that advertisement costs are high for the local producers. On the consumers’ side protection of GI decreases search cost and asymmetric information of the consumer and provides premium prices for the product due to higher willingness of payment.

Conclusion

Intellectual Property Protection is not always sufficient to protect export trade if it competes with the domestic interest of another country. Different countries may impose additional legal regulations to protect their domestic industry. For example, a country can enact a regulation to ban the import of rice of a certain type, and that regulation can impact Basmati imports. GIs exist solely to promote the goods of a particular area. Finally, for the purpose of the TRIPS Agreement, GIs are Intellectual Property Rights, eligible for relief from acts of infringement and/or unfair competition.

In 1997, RiceTec Inc and American company were given a patent by the US patent office to call the aromatic rice grown outside India “Basmati”, but India opposed it saying that it has been the major exporter of Basmati for several years along with Pakistan and such grant by the US office would affect its trade. It was opined that granting a patent to RiceTec would violate the GI Act under the TRIPS agreement.  RiceTec’s usage of the name Basmati for rice which was derived from Indian rice but not grown in India, and hence not of the same quality as Basmati, would have led to the violation of the concept of GI and would have been a deception to the consumers. Intellectual Property Law now considers this a very important arena which seeks to preserve the varieties in their natural habitat and let the geographical area where it is traditionally and originally grown have certain special rights over it and so the Geographical Indication Act plays a very vital role in safeguarding and preserving such natural habitat and its varieties and also acts as a development tool.

Reference


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