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Taylor, Will --- "Trade Marks and the Overlap with Geographical Indications" [2000] FlinJlLawRfm 22; (2000) 5(1) The Flinders Journal of Law Reform 53


TRADE MARKS AND THE OVERLAP WITH GEOGRAPHICAL INDICATIONS

WILL TAYLOR[†]

This paper considers a vexed issue and one be-devilling parts of the Australian wine industry at the moment — that is, the conflict between pre-existing trade marks and geographical indications (GI’s) registered or proposed to be registered under the Australian Wine and Brandy Corporation Act 1980 (‘AWBCA’).

I will discuss this topic under these headings:

I WHY ARE WE CREATING REGISTERED GI’S?

There are two reasons for this:

We have to demonstrate to the world that there is no such thing as the generic ‘Australian wine’ because it is so different when it comes from distinct places in this vast continent.

Compare Clare Valley and Eden Valley Riesling, for example: two of the world’s great wine styles from two different regions that are quite close to each other but totally different wines. Therefore, when an Englishman talks about Australian Riesling, that is a nonsense. What the world needs to talk about, and what we need to educate them to talk about, is Clare Valley Riesling or Eden Valley Riesling or Tasmanian Riesling for that matter. Just as they compare great Bordeaux from Pauillac and Margaux, they should compare great Cabernet blends from Coonawarra and Margaret River — they should not compare Bordeaux with ‘Australian Cabernet’.

Therefore, the wine regions of Australia need to be encouraged to promote themselves to the world and that is happening in a significant and successful way. But their efforts will be undermined if the integrity of their GI claims on their labels is called into question. If foreigners do not believe that Coldstream Hills’ wine is from Yarra Valley, even though it has Yarra Valley on the label, that is obviously a serious impediment to the promotion by the Yarra Valley winemakers of their region. So we need a GI regime with statutory force that makes people tell the truth about their wine’s origin. That is what Part VIB of the AWBCA and accompanying regulations seek to do. They are supported by the label integrity program provided for in Part VIA of the Act.

You might gather from this introduction that I am a strong supporter of the GI regime and the Geographical Indications Committee (GIC). That is despite the fact that my firm has, to date, acted for a number of trade mark holders who have been potentially prejudiced by the process. Neither I, my firm, nor our clients in those matters are opposed to the regime; on the contrary, we and they are supporters of it, provided that the rights of trade mark holders are respected in the creation of Australia’s registered GIs.

II WHERE HAVE WE GOT TO SO FAR?

As I have already mentioned, we have had the GI provisions in the AWBCA since December 1993 and the GIC has been busy processing applications and determining GI’s since then. I think the GIC should be commended for making substantial progress in that time frame. As at 1 October 1998, it had registered 28 zones (plus the eight States/Territories), 18 regions and two sub-regions. Annexure A to this paper sets out the registered GI’s that we now have in this country and, in italic print, the GI’s forecast by the GIC to be registered by 30 June 1999.

The GIC has had relatively few disputes to deal with, certainly far less than I would have expected. It has had the well publicised boundary dispute at Coonawarra, which is yet to be resolved; a problem in the south-west of Western Australia which has now been resolved with the proposed creation of two regions, Pemberton and Warren Valley; a problem with whether Kuitpo would be in the Adelaide Hills or McLaren Vale and it ended up being in the Adelaide Hills; a problem with Barossa which it resolved by creating a Barossa zone and regions within it called Barossa Valley and Eden Valley; and another problem which it resolved by creating a super zone of Adelaide above the zones Mt Lofty Ranges, Fleurieu and Barossa. Then it had various trade mark problems with Koppamurra and some others that are still continuing. However, generally the process has gone as smoothly as I think could be expected and the GIC has made a lot of progress, which is a credit to its members.

III THE GI/TRADE MARK OVERLAP PROBLEM

A significant problem arose early in the piece, which is yet to be resolved, because the GI provisions of the AWBCA do not sit at all comfortably with trade mark law. When I say ‘trade mark law’, I am referring to the Trade Marks Act 1995 (‘TMA’), the Trade Practices Act 1974 (‘TPA’), the law of passing off and the law generally applicable to trade marks, whether registered or unregistered. This issue of the interface between the GI regime and trade mark law is an extremely complex one, involving questions of international and constitutional law, as well as trade mark law, which I do not propose to cover in detail in this paper; rather, I will endeavour to ‘give you a feel’ for the nature of the problems and make some comments on them.

I should say, of course, that there often is not a problem in GI/trade mark overlap situations because the trade mark holder is quite happy that the region is promoted under a name that corresponds with its brand name. It may, in fact, be thrilled by all the free publicity it is going to receive from the regional promotion. But, on the other hand, a number of trade mark holders have been very unhappy about what they perceive to be the usurping of their intellectual property.

The problem for a trade mark holder if a GI is registered that is the same as or similar to brand name incorporated in its pre-existing trade mark is threefold.

A The Fruit Sourcing Issue

If a GI is registered, that is the same as or similar to a brand name incorporated in a pre-existing trade mark, the trade mark holder’s rights will be restricted in that the holder will no longer be able to source fruit, to any significant extent, from outside the area of the GI for sale under that brand name. Under the so called ‘blending rules’ in the Australian Wine and Brandy Corporation (AWBC) Regulations (specifically Regulation 21), you can only state a GI on your label if at least 85% of the fruit comes from the area in respect of which the GI is registered. The registration of a GI in these circumstances detracts from the rights of the pre-existing trade mark holder to use the trade mark.

To illustrate this point and so as not to ‘tread on any toes’, I will use a hypothetical example of a company called Blue Sky Wines Pty Ltd that labels its wine with the brand Blue Sky. Assume that Blue Sky Wines Pty Ltd comes from a place called Blue Skies. Prior to the registration of the GI, Blue Skies, Blue Sky Wines Pty Ltd could use any fruit under its label. Once Blue Skies is registered as a GI, however, it has to have at least 85% Blue Skies fruit in the bottle behind the label. Blue Skies is a premium grape growing area and, at the stroke of the GIC’s pen, the cost of production of Blue Sky Wines Pty Ltd’s wine increases substantially, as does the flexibility of the winemaker to create interesting, multi-regional blends under this label. Clearly, the producer’s right to use this trade mark is prejudiced.

B The Loss of Distinctiveness Issue

The practical result of the registration of a GI, that is identical or similar to a brand name incorporated in a trade mark, is likely to be a loss of distinctiveness of the brand. If Blue Skies was registered as a GI:

Therefore, the wine producer, Blue Sky Wines Pty Ltd, may be powerless to prevent the destruction of its brand.

C The Trade Marks Act Issue

The result of the loss of distinctiveness I have just referred to may be that a trade mark in the position of Blue Sky could become deceptive or confusing over time and, therefore, liable to removal or amendment under the rectification provisions of the TMA. I will explain that in more detail.

Under s 22(1)(b) of the former Trade Marks Act 1955, the court could order rectification of the register ‘by the expunging or amendment of an entry wrongly . . . remaining in the Register’. The courts have interpreted this provision by reference to, in particular, ss 28, 60 and 61 of that Act. It seems clear, from a literal reading of the old Act and from the case law, that the registration of a mark was liable to be expunged or amended if, due to events occurring post-registration, it became deceptive or confusing. However, although the matter does not appear to have been finally settled by the courts, the law under that Act seemed to be that ‘blameworthy conduct’ of the holder of the mark was required before rectification would be granted. Rectification was discretionary and what constituted ‘blameworthy conduct’ was an issue in itself.

Under s 88(1)(b) of the TMA, a trade mark wrongly remaining in the register can be removed or amended on grounds including (through s 88(2)(a), Division 2 of Part 5 and Division 2 of Part 4 or s 88(2)(c)) if:

Sections 89(1)(b) and (c) say that a court may decide not to grant an application for rectification, on the ground that the mark is liable to deceive or confuse, if the registered owner of the mark satisfies the court that the ground has not arisen through the act or fault of the registered owner. Therefore, s 89 clearly recognises that the registration of a mark can be rectified due to post-registration events, but it allows the court a discretion to not rectify if the registered owner has not been at fault and can prove it.

The 1995 Act would, therefore, appear to have changed the position from that prevailing under the 1955 Act. Under the 1995 Act, a court may order rectification of a mark even if there has not been ‘blameworthy conduct’ on the part of the registered owner; under the 1955 Act (and associated case law), a court could not order rectification unless there had been such ‘blameworthy conduct’.

If we return to the position of Blue Sky then, as mentioned earlier, if the GI, Blue Skies, is registered:

If those results occur, the pre-existing registered trade mark may be subject to rectification in the discretion of the court under ss 88 and 89 of the TMA.

It is for these reasons that the GIC may not be entitled to register a GI that overlaps with a brand name incorporated in a pre-existing trademark. Article 24.5 of TRIPS states that measures adopted by a member country (such as Australia) to implement s 3 of Part II of TRIPS (which provides for the introduction of a geographical indications regime) shall not prejudice the validity of the registration of a trade mark, or the right to use a trade mark, on the basis that such a trade mark is identical with, or similar to, a geographical indication. Arguably, an action of the GIC to register a GI in these circumstances is a ‘measure adopted to implement’ s 3 of Part II of TRIPS. That is despite the fact that Part VIB of the AWBCA may have been introduced for the purpose of enabling Australia to fulfil its obligations under the Australia/EU Wine Agreement. That does not preclude the GIC’s actions from also being measures adopted to implement an aspect of TRIPS.

Furthermore, there is also the possibility of the removal of certain rights of pre-existing trade mark holders by the registration of GIs being an acquisition of property, unjust on terms, contrary to s 51(xxxi) of the Commonwealth Constitution.

That is looking at the matter from the point of view of the trade mark holder. The failure of the GI provisions and trade mark law to interact in a positive way is, of course, also a substantial problem for producers in various regions who want to use a particular name for their region but it is the subject of a pre-existing trade mark. The other producers in the Blue Skies area, for example, may think that there is great marketing potential in a viticultural region of that name.

The obvious problem that the producers have is that the GIC, for the reasons mentioned above, may be unable to register the GI in these circumstances, even if it wants to.

But, even if the GIC did register the GI, that would not necessarily allow the other producers in Blue Skies to use the GI. It would not preclude the operation of trade mark law remedies available to the holder of the Blue Sky mark. For example:

1 TMA Remedies

Blue Sky Wines Pty Ltd will still have its rights under ss 20(2) and 120 of the TMA, if its registered trade mark is infringed: that is, if another producer uses as a trade mark a sign that is substantially identical with, or deceptively similar to, its own trade mark, Blue Sky, in relation to wine.

However, under s 122(1)(b)(i), a person will not infringe the mark if the person uses the sign in good faith to indicate the geographical origin of goods. Therefore, if Blue Skies is actually the name of a place and it is used by the alleged infringer in good faith to indicate the geographical origin of its wine, then the TMA may not be infringed. The fact that Blue Skies is registered as a GI would, I expect, lend weight to an argument that it is a place and that the person using it is indicating the geographical origin of its wine. On the other hand, if the name was emblazoned all over the bottle in huge letters, it might appear that it is being used as a brand name, rather than as a good faith indicator of geographical origin.

2 Passing Off And Misleading Or Deceptive Conduct

The registration of a GI will not, of course, prevent the holder of a trade mark including a brand name similar to the GI, from suing for passing off or under s 52 of the TPA. BLue Sky Wines Pty Ltd may allege that another producer putting Blue Skies on its label passed off its wine as wine produced by Blue Sky Wines Pty Ltd and mislead and deceived the public in that regard. Theoretically, at least, those allegations could be substantiated.

I would expect the case of Blue Sky Wines Pty Ltd to be weaker in circumstances in which Blue Skies had been registered as a GI, but it may still succeed depending upon the circumstances. Particularly if Blue Sky is a well known brand and there is little reputation in Blue Skies as a region, consumers may think that they are buying Blue Sky when they buy wine from other producers in Blue Skies.

This very situation arose recently in proceedings brought by Jeffrey Sher of Port Phillip Estate against Donlevy Fitzpatrick. Donlevy Fitzpatrick put Port Phillip on his label as a GI claim. Despite the fact that Port Phillip was a registered GI and the fruit actually came from Port Phillip, he was still sued for passing off and misleading and deceptive conduct. The matter was settled and there is no judgment. However, this case does serve to highlight the fact that most winemakers may not appreciate that you cannot necessarily use a registered GI without having regard to trade mark law.

IV THE SOLUTION

So what is the solution to these problems? I am afraid that there is no perfect answer, but a relatively good solution has been formulated that enables the GI registration process to proceed in circumstances in which there is a GI/trade mark overlap whilst still respecting the rights of pre-existing trade mark holders.

It resulted from a meeting in August 1996 between the Australian Intellectual Property Organization (as it was then called), the Attorney-General’s Department, the Department of Foreign Affairs and Trade, the Department of Primary Industries and Energy (DPIE), the Winemakers’ Federation of Australia Inc, the Wine Grape Growers’ Council of Australia Inc, the GIC and various other interested persons. The approach the meeting developed is basically as follows by reference to my earlier example:

The meeting also agreed that clearer guidelines for the GIC in exercising its discretion, should be inserted in the AWBC Regulations. Since the meeting a draft revised version of Regulation 25 has been settled and is set out in Annexure B to this paper.

The AIDV (Australasian Chapter) has had considerable input into this debate: the August 1996 meeting that I referred to and the drafting of the new Regulation 25.

V WHAT STILL NEEDS TO BE DONE?

The answer is ‘a lot’. Although the GIC is now, and has been for some time, operating in accordance with this agreed approach, it is not yet enshrined in law. The following matters still need to be attended to:

It follows that there is still much to be done to implement this scheme and, of course, the process stalled with the Federal election having been held recently. Now that the election is over I hope that progress can be made to implement this scheme which, for the reasons I mentioned at the start of this paper, I consider to be very important for the Australian wine industry. The sooner that these issues are properly dealt with, the better for all the producers in the regions that are affected by these trade mark/GI overlap issues.

Annexure A

Forecast State of Register of Protected Names at 30 June 1999

ZONE
REGION
SUB-REGION



South Eastern Australia


New South Wales


Big Rivers
Swan Hill


Murray Darling


Riverina


Perricoota


Lachlan Valley

Central Ranges

Orange



Cowra


Mudgee

Hunter Valley
Hunter
Broke Fordwich


Pokolbin
Northern Rivers
Hastings River

Northern Slopes


South Coast
Sydney

Southern New South
Canberra District

Wales
Hilltops


Tumbarumba




Western Plains


Victoria
Goulburn Valley
Nagambie Lakes
Central Victoria
Central Victorian


Mountain Country


Bendigo




Gippsland
Rutherglen

North East Victoria
King Valley
Whitlands


Myrrhee

Mount Buffalo/


Victorian Alps




ZONE
REGION
SUB-REGION



North East Victoria
Glenrowan


Beechworth

North West Victoria
Swan Hill


Murray Darling

Port Phillip
Geelong


Yarra Valley


Mornington Peninsula


Sunbury


Macedon Ranges

Western Victoria
Grampians


Pyrenees




Western Victoria
Henty




South Australia


Adelaide (Super Zone,


above Mount Lofty Ranges,


Fleurieu and Barossa)
Adelaide Hills
Lenswood
Mount Lofty Ranges

Piccadilly Valley

Clare Valley


McLaren Vale
Clarendon
Fleurieu
Larighorne Creek


Southern Fleurieu


Mount Benson

Limestone Coast
Coonawarra


Padthaway

The Peninsulas
Riverland

Lower Murray


Far North
Barossa Valley

Barossa
Eden Valley
Springton


High Eden



Western Australia


Eastern Plains, Inland and





ZONE
REGION
SUB-REGION



North of Western
Esperance

Australia
Margaret River

West Australian South
Great Southern
Mount Barker
East Coastal

Albany
South West Australia

Denmark


Frankland River


Porongurup

Pemberton


Warren Valley


Blackwood Valley


Geographe


Perth Hills


Swan District
Swan Valley

Burnett Valley

Central Western
Granite Belt

Australia


Greater Perth


Queensland





Tasmania


Australian Capital


Territory


Northern Territory





Note: Names in italic print have not yet been registered.

Annexure B

Draft Revised AWBC Regulation 25

25 (1) For the purposes of sub-s 40T(2) of the Act, the Committee is to have regard to the following criteria:

25 (2) For the purposes of paragraphs 25(1)(i) and (1), there exists, in relation to an area, word or expression to indicate the area that is included in a registered or unregistered trade mark, if the trade mark includes a word or expression that so resembles the word or expression that indicates the area as to be likely to be mistaken for it.

25 (3) For the purposes of paragraphs 25(1)(i) and (1), the material to be taken into account by the Committee in deciding:

25 (4) For the purposes of paragraphs 25(1)(i) and (j), the material to be taken into account by the Committee in deciding:

25 (5) For the purposes of this Regulation 25:

Annexure C

Draft Revised AWBC Regulation 13(4)

13 (4) For the purposes of sub-s 40J(5) of the Act, wines with a description and presentation that includes a trade mark that includes:

are exempted from sub-ss 40C(1), (2) and (3), s 40E, sub-s 40G( 1) and Regulation 21, where the trade mark has been applied for or registered in good faith, or where rights to the trade mark have been acquired through use in good faith, either:


[†] Partner, Finlaysons, Barristers & Solicitors, Adelaide, South Australia, Australia. This paper was presented at the International Wine Law Association (Australasian Chapter) Annual Conference held in the Yarra Valley, Victoria, Australia, 25–26 October 1998.

Disclaimer: This paper is based on the law as it stands on 1 October 1998. It is not intended to be a complete and definitive statement of the law and the information and views contained in it should not be regarded as a substitute for specific advice in individual situations. Further professional advice should be sought before applying the content of this paper to particular circumstances.

Acknowledgement: I gratefully acknowledge the information provided to me by the Australian Wine and Brandy Corporation as regards the current and proposed state of the Register of Protected Names.


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