Wine Law Expert: Geographic Indicators Should Be Treated as Separate IP Category

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SAN FRANCISCO--Geographical indicators are sufficiently different in scope and principles to be treated as their own category of intellectual property, distinct from trademarks, according to a participant in a May 12 discussion at the 2011 Spring Meeting of the American Intellectual Property Law Association.

Jay M. Behmke of Carle Mackie Power & Ross, Santa Rosa, Calif., speaking as part of a program on appellations of origin and trademarks in the wine industry, called for the creation of a “Lanham Act for geographic indications.”

Behmke described his personal experience of living in France and gradually realizing the meaning and significance of the geographical indicators appearing on wine labels.

“A light bulb went off, that it was a place and you could find it on a map and you could go there and see how the grapes were made,” he said. “Suddenly, another light bulb went off and I said to myself, 'There must be a rule' ” restricting use of the designations.

Behmke's increasing fascination with the minutiae of wines led him to enter the field of wine law and he eventually found himself living in Sonoma County.

The history of the use and legal status of geographic indicators has paralleled their history in France, he said. And he said that in the United States today, geographical indicators constitute a separate form of intellectual property that is “struggling to break free and struggling to be recognized.”

The nature of geographical indicators defines them away from protection under trademark law, Behmke said. Namely, at its base, a geographical indicator like “Napa Valley” when used by a Napa-area wine producer “is entirely descriptive of wine from the Napa Valley and, therefore, can't be a trademark.” Conversely, when the term is used by a wine producer that is not located in the Napa Valley, the term is geographically misdescriptive and also runs into trouble under trademark law, he said.

Trademarks, GIs Are Different Creatures.

Consequently, “In theory, no geographical indication should have ever been registered as a trademark,” he said, noting as an aside that “lots of things have slipped through the cracks,” but declining to foray further into that topic for the purposes of the discussion at hand.

Behmke then outlined the fundamental differences between trademarks and geographical indicators. The qualities of a trademark can be summed up as follows:

• The strongest trademarks are arbitrary and do not describe the goods in question.

• A trademark is a source identifier for a specific product by a specific producer.

• A trademark is chosen by its owner to distinguish his or her goods from all competitors.

• A trademark earns good will, which can be realized when the trademark is sold. In contrast, a geographic indicator has nearly the reverse characteristics.

• “One fundamental principal,” Behmke said, “is that no one can have exclusive use of a geographic indication.”

• A geographic indicator is derived from “a historical word for that place” and is not chosen by the user.

• It is the name of a region, not the designation of a specific product by a specific producer.

• Rights in a GI are shared with other producers.

• A GI develops good will and adds value to the users' goods, but it cannot be sold.

Behmke noted that there are many industries besides viticulture that can benefit from GI protection. He offered as examples Hog Island oysters, Idaho potatoes, Indian River grapefruit, Kona coffee, Penn Cove mussels, Vermont maple syrup, and Vidalia onions.

Overly Exclusive Indicators?

U.S. industries are still learning how to best make use of geographical indicators, according to Ray Johnson, director of the Wine Business Institute at Sonoma State University, Rohnert Park, Calif.

He began by noting key differences in the way that the wine producers of two California counties--Napa County and Sonoma County--approached the issue of wine labeling.

Early on, the Napa Valley American Viticulture Area, which was established in 1981, mandated that its members must include the designation “Napa Valley” on labels, in addition to any other trademark or designation used. However, the Sonoma Valley AVA, established at the same time, did not include such a mandate.

Among many wine producers, there is a perception that an aura of exclusivity and quality created by the use of names that apply to the smallest possible geographical designation, Johnson said.

After the establishment of the Sonoma Valley AVA, there was a process of “fragmentation,” as wine producers, seeking greater differentiation, chose multiple distinctive designations rather than emphasizing their “Sonoma” identity.

“They were losing some of the identity that was there,” he said. “In a way, the county itself became demoted.”

In exchange, the Sonoma wine producers hoped for the benefits they perceived that French wine producers were enjoying.

“They were persuaded … by the … bias [that suggests that] if you name the smallest possible place, you'll get the high dollar values,” he said.

For example, the vintner Domaine Georges Roumier of Chambolle-Musigny in east central France offers a series of wines, but the wine that is produced with grapes grown exclusively in one small area is priced 10 times higher than a wine that takes grapes from throughout the region.

Study Supports Use of Broader Designation.

Johnson, who resides in Sonoma County, noted that Sonoma Valley wines do not have as high a profile in the wine buyer's market, relative to Napa Valley's profile. However, wine production forms a significant component of Sonoma County's public image, and many wine aficionados visit the area to tour the wineries and try their products.

Theorizing that the use of the AVA designation on labels might be a factor, Johnson conducted a survey of about 600 wine aficionados, mostly from the San Francisco Bay area.

Johnson's results showed that for many Sonoma Valley wines, when the “Sonoma Valley” designation was included on the label, “highly involved” wine customers expressed “higher expectations” for the wine in question. In some cases, the increase in expectations was considerable, in the range of an 80 percent improvement.

He concluded that “ 'Sonoma' as a brand enhances the reputation of smaller appellations within” its ambit.

The reason for such results may be that the use of a name by some critical mass of wine producers creates sufficient prominence in the minds of interested consumers to draw interest, Johnson theorized.

“I think … that the wine industry was laboring under some myths,” he said, including:

• That the creation of increasingly exclusive AVAs “is a ticket to greater perceived quality,”

• That use of a regional AVA designation necessarily “would drag down” desirability of a wine that had access to a more exclusive designation, and

• That “highly involved consumers would want to buy wines from the smallest patch of dirt, but not necessarily, especially if they don't know where that patch of dirt is.”

This study and other data have actually persuaded the Sonoma Valley AVA to engage in “dual labeling” in the manner of Napa Valley producers, by pairing the “Sonoma Valley” designation with whatever other, more exclusive designation that a producer may choose to employ, Johnson said.

Jérôme Agostini of the National Interprofessional Committee of Wines with Appellations of Origin (the Comité National des Interprofessions des Vins à Appelation d'Origine, or CNIV), also participated in the discussion, offering a history of the development of GI law in France.

By Anandashankar Mazumdar