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This article is written by Anjali Baskar, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

This article has been published by Abanti Bose.

Introduction

Do you like Basmati rice or Alphonso mangoes? Many of us enjoy these delicacies but do not know that they are named after the place from which they originate. Similarly, you might have heard of the wine “champagne”, coming from a place with the same name in France. The use of this term has been legally protected for a long time through a type of intellectual property, known as a geographic indication (GI). It is a sort of recognition attached to goods that are unique to a specific territory, and have qualities because of it being originated in a geographical region. The features of these products are thus not incidental and should exist by virtue of the product being firstly produced in a location and its reputation of being associated from there. Internationally, GIs are governed by the WTO TRIPS Agreement and under the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications. There was an amendment under the Federal Russian Law No. 468-FZ introduced on December 27, 2019, titled “On Viticulture and Winemaking in the Russian Federation” that came into force on 2nd July, 2021. At the instance of the President of the Russian Federation, Vladimir Putin mandated that all foreign producers of sparkling wine should explicitly mention it on the back of the label on all imported bottles for commercial purposes or sale in the country. France felt that this law was discriminatory because of the fact that Russian producers were exclusively allowed to use the Russian word for champagne (“shampanskoye”) on their labels. 

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Significance of the Champagne tag in France

France designed a system that identifies GIs and protects it by making it unlawful to produce or sell a product similar to that word, which is known as the “Appellation d’Origine Contrôlée” or Appellation of Original Control (AOC). For champagne, this appellation is not only imposed within France but across 121 other countries where it is being sold, excluding Russia as a signatory. French champagne producers are allowed to write “champagne” in Latin on the label of their imported bottles, but not in Cyrillic. Even if they wrote in Latin, they had to add “sparkling wine” in the Cyrillic script on the back of their bottles.

The legal position of GIs in Russia

Article 1516.1 of Part IV of the Russian Civil Code lays down the definition for GIs, which is similar to Article 22.1 of the TRIPS Agreement. This emphasises that at least one of the stages of processing or production of the item should be carried out in that particular region. Appellations of origin of goods (AOG) are recognised under Section 76(3) and para 2 of Article 1516.1, which deals with the status of intellectual property in accordance with facets of individuality and intellectual activity. This is a type of GI that is protected on exclusive origin from a certain geographic environment and has special properties because of that place. They are not in high demand, because the procedures to register and use AOGs for domestic and foreign manufacturers can be difficult to complete. The process involves meeting certain procedures as prescribed by law. AOG, unlike the examples given at the beginning of the article, do not have to always have the place of origin attached to the term. Some examples of AOGs recognised and registered in Russia include “KURAI”, a wind musical instrument from Bashkortostan or “NARZAN”, which is mineral water native to the Stavropol region. If the designation is related to a certain type of good but is not related to the territory or place where it is produced, it is not considered an AOG, especially under Russian law. An example is Swiss cheese, because it is a certain type of cheese, but not associated with only being produced in Switzerland. Even feta cheese was granted AOG status from Greece after years of struggle in 2005 because it had to prove why it needed recognition when more volumes of the cheese were being imitated by other European countries. After it was recognised, the other countries had to change the name to “salad cheese” or “Greek-style cheese”, but those outside the EU and/or not bound by the Lisbon System still were allowed to use the term “feta”. Russia signed the Minsk Agreement related to “Measures for Preventing and Suppressing the Use of False Trademarks and GIs in 1999”, but GIs were still not governed in detail. AOGs were recognised way before all kinds of GIs were, but GIs finally got a legal framework on July 26, 2018, via the Federal Law Nr. 230-FZ, to boost regional and local brands in Russia. Only 229 GIs have been registered in Russia, out of which around 32 were from foreign applicants.

Why was the Russian Amendment enacted?

The Russian Federation had introduced this law back on October 16, 2019, but discussions by the Federal Assembly of Russia (the State Duma) lasted 3 years before it was enacted. The legislative intent behind amending this rule was to help protect the interests of local or indigenous wine producers, and further boost their exposure to the foreign producers. They wanted to eliminate obstacles in the way of domestic viticulture and the wine-making industry, encourage an increase in the number of native winemakers, support and promote Russian-made wines in domestic and foreign markets and introduce a Russian system for the protection of these products under GI and Appellation of Origin. 

Impact on foreign winemakers selling in Russia

EAmbrosia, an EU GI register, indicates that champagne has been a Protected Designation of Origin (PDO) with the number “PDO-FR-A1359” since 1973. PDO is a term used within the EU and encompasses one of the concepts of GIs as a whole. This appellation indicates that only those who produce sparkling wine from Champagne, France can use the GI tag “champagne” on their labels. This obviously differs from the Russian Amendment, which asks even these original manufacturers to relabel imported wines to “sparkling wine”. Russia has a long history of using brand names that translate to “Soviet Champagne” and “Russian Champagne” for wines that originate in the USSR. The latter is defined under Article 3, para 58.3 of the new law, to solely promote interests in development of regional makers. Under para 43.1 of the same Article, the definition of “Russian cognac” has been enumerated for the first time. Cognac again originates from France, registered in 1989 in eAmbrosia with the number “PGI-FR-02043”. The general rule is that products with GIs or their subsets like champagne and cognac need to comply with established standards of procedure and production to be named so. A problem arises because “Russian Cognac” and “Russian Champagne” contradict Article 1516.2(5), which does not grant GI or AOG status to a trading name that misleads consumers about where the product is manufactured, even if registered in Russia. They will also be illegal in other countries where a GI has already been granted for champagne and cognac. This is one of the major reasons why this new law is not fruitful to regional or foreign producers in Russia.

Conclusion

GIs are significant because they confer distinct and non-transferable rights to their owner, which is similar to what a trademark does in its essence. They facilitate a way for the right holder to market their products, thus increasing demand via exclusivity, for example, the Kancheepuram silk sarees or Portugal’s Port and Douro wines. In India, grants of GIs are currently regulated by the Geographical Indications of Goods (Registration and Protection) Act, 1999. As of November 2021, the current status of the dispute is that France has negotiated a postponement in Russian law until the end of 2021. The Associate Minister for Foreign Trade, Frank Riester, stated that even though this isn’t a permanent solution, it is certainly a better option than the original rule. Russia exports by French winemakers ranks at 15th, wherein 2 out of 150 million champagne and other wine bottles are sold there. Some argue that upper-class Russians do not confuse cheaper domestic wines with authentic champagne made in France, so the law is not adversely affecting French producers as much. The Director-General of the Champagne Committee, Charles Goemacre, called for a temporary ban (example: Moët Hennessy halted production there) on exporting French champagne to Russia, but removed it in September 2021 and agreed to relabel according to the rules after a compromise was made, but the dispute is still far from over.

References

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