Cheese Makers Fear EU Name Limits Curdle Profits

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By Anandashankar Mazumdar

European Union efforts to limit food names based on geography have left U.S. dairy farmers feeling sour.

The EU limits rights in geographic indicators, words that suggest a product was made in a specific location. The bloc is also trying to expand that regime to to other countries through trade agreements.

U.S. cheese-mongers fear they’ll be stripped of their ability to use names that they see as generic, such as feta or Gorgonzola.

“The issue is misuse of intellectual property tools to create barriers to trade,” Shawna Morris of the Consortium for Common Food Names, a U.S. food producers’ group, told Bloomberg Law. “If this were being done for patents or other IP, this would be viewed by other countries as absolutely appalling.”

U.S. exports of cheese rocketed 587 percent from 2005 to 2015, hitting $1.4 billion, the consortium told the Office of the U.S. Trade Representative. But industry associations say further growth is threatened by spreading protections of EU-based geographic indicators.

A draft trade agreement between the EU and Mexico would make it illegal in Mexico to sell certain food products, including cheese, named after specific EU regions.

The Office of the U.S. Trade Representative took note of the concerns in its 2018 Special 301 report, which focuses on intellectual property enforcement by America’s trading partners.

The EU imposes more geographic protections on food names than the U.S. In Italy, for example, a producer must be in a particular location—in addition to meeting quality controls—to sell cheese under the name Parmigiano Reggiano.

In the U.S., however, the word “Parmesan,” derived from the Italian name, is treated as a generic term for a type of cheese, and a producer can use that word on its label regardless of its location.

“It really is a stark difference in how we think,” trademark and brand management lawyer Donna A. Tobin of Frankfurt Kurnit Klein & Selz PC, New York, told Bloomberg Law. “GIs represent more of an agricultural subsidy, a governmental involvement in the business of the area.”

‘Fake Cheddar’

The dairy industry fears the EU’s trade strategy will lead countries outside of the EU which buy American cheese to start restricting food names.

U.S. cheese producers might find themselves unable to say their products are Asiago or mozzarella, because those names might be relevant to a specific location under EU standards, according to a “Names at Risk” list from the consortium. Renaming certain foods to comply with EU restrictions could lead to other issues.

“If you have to start re-labeling cheddar cheese as ‘cheese in the style of cheddar,’ it’s confusing to consumers,” Monica P. McCabe, head of the intellectual property practice at Phillips Nizer LLP, New York, told Bloomberg Law. “They may think it’s kind of like a fake cheddar, so to speak.”

Grandfather clauses in bilateral trade agreements will protect U.S. producers with established markets in third-party countries, a source in the EU delegation to the U.S. told Bloomberg Law on condition of anonymity because the source isn’t authorized to comment publicly. The U.S. dairy consortium says the grandfather clauses don’t cover all potential U.S. producers.

Still, the Office of the U.S. Trade Representative has singled out the EU’s moves on geographic indicators, or GIs for short.

“The United States runs a significant deficit in food and agricultural trade with the EU,” the office said in its Special 301 Report in April. “The EU’s GI system contributes to this asymmetry in U.S.-EU trade in agricultural products for products subject to the EU’s GI regime.”

The asymmetry in cheese is significant—Americans buy more than $919 million annually in European cheese but sell only $4 million to the EU, according to statistics from the U.S. Department of Agriculture.

Not everyone is alarmed by the EU’s stance.

“I don’t see anything wrong with what the European Union is doing,” agriculture and trade lawyer Bernard O’Connor, an agriculture and trade attorney with the law firm NCTM Studio Legale in Brussels, told Bloomberg Law. O’Connor said the EU has the right to protect its intellectual property in free trade agreements.

Geographic Indicators vs. Certification Marks

The EU delegation member pointed out that geography-based protections aren’t entirely foreign to the U.S. Some U.S. companies benefit from protections similar to GIs, in the form of two special types of trademarks, known as certification marks and collective marks.

Certification marks and collective marks can create a geographic restriction under U.S. trademark law. For example, goods marketed under the name “Idaho potatoes” are subject to certification mark rights.

French and Swiss industry organizations have filed a certification mark application in the U.S. covering “Gruyere.” If the Patent and Trademark Office grants the registration, producers outside a small European region would have to re-label what they’re now selling as Gruyere cheese. Several American cheese producers oppose the Gruyere application, which is before the Trademark Trial and Appeal Board.

But fewer than 4,000 of the 2.2 million active federal trademark registrations cover certification marks, according to the Patent and Trademark Office. And Europeans don’t see certification marks and collective marks as adequate substitutes for true geographic protections.

Susan Upton Douglass, a trademark lawyer with Fross Zelnick Lehrman & Zissu PC, New York, also defended the EU’s geographic restrictions, saying they protect both consumers and producers from misleading products.

“The Wisconsin cheese makers, the Vermont cheese makers are not in any way being prevented from selling cheese,” Douglass, who represents associations seeking the Gruyere certification mark, told Bloomberg Law. They can sell Swiss-style cheese. They can call it Alpine cheese, so long as they aren’t calling it by a name of a region where the cheese isn’t made.”

Congress is unlikely to make substantive changes to U.S. trademark law to resolve the differences with EU protections, Douglass said. It will be up to to U.S. trade negotiators, who are seeking to recast the North American Free Trade Agreement and other trade pacts, to figure it out, she said.

The United States might fall short of its treaty obligations by offering certification marks instead of geographic protections, O’Connor said. Article 22 of the Agreement on Trade-Related Aspects of Intellectual Property Rights—a treaty requiring World Trade Organization members to protect each other’s intellectual property—requires signatories like the U.S. to protect geographic indications.

Certification marks put the onus on a producer to manage use of the mark and police its use, O’Connor said. In contrast, the government plays an active role in ensuring that products misusing geographic indicators aren’t being sold. This difference, he said, was significant.

“I’ve represented European companies who want to enforce their GIs here, and they’re not too happy to pursue the trademark route,” Frankfurt Kurnit’s Tobin said. “Although the certification route gets them most of what they want, it doesn’t get them all the way there.”

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