China: China Leads US In Champagne Protection

Last Updated: 17 July 2013
Article by Elizabeth Dunn

The Comite Interprofessionel du Vin de Champagne (CIVC), the body representing producers of Champagne has succeeded in securing protection, as a geographical indication, for the word CHAMPAGNE and its Chinese transliteration "香槟"in China.

China is currently only the 12th largest market for champagne exports in the world but it is the fastest growing.  Sales exceeded two million bottles in 2012, an increase of 52% since 2011  and a quadrupling of sales since 2006.  With a population of 1.3 billion there is enormous potential for further growth and a spokesman for CIVC is quoted as saying the country is one of the biggest future markets for champagne.  It was therefore imperative to protect the name and to avoid it becoming a generic word for sparkling wine which would dilute the reputation of 'Champagne' in the minds of Chinese consumers.

The applications were filed with the Administration of Quality Supervision Inspection and Quarantine (AQSIQ), one of three organisations which can grant geographical indication protection in China, in June 2012. . The applications were published in December 2012 and proceeded rapidly to registration on 20 March 2013.  The registrations include a list of qualifications to be met by producers labelling their product as Champagne; in order to qualify the grapes must be grown in the Champagne region of France, the grapes must be of the correct variety and the wine must be manufactured by the  traditional process.

Prior to obtaining these registrations, Champagne manufacturers had been obliged to rely on the concepts of "famous foreign place name" as set out in Chinese trade mark law and "unique name of a famous commodity" defined in the Anti-Unfair Competition law to take action against those using the mark on wine produced outside France and on numerous other goods from candles to dog toys.  The successful registrations will make it possible to initiate administrative raid actions, customs protection and civil litigation on grounds of trade mark infringement. (Wan Hui Da Intellectual Property Express No.13 - May 2013 Issue)

The rapidity with which the Chinese authorities have acknowledged the status of Champagne and allowed its protection as a GI provides a sharp contrast to the position in the US, a significantly more developed market for the product.  The United States is the second largest export market for champagne (only the British drink more). Sales of Champagne in the US totalled 23 million bottles in 2012.  However, presumably as a result of the lobbying power of its own, long established, wine producers, the US authorities have been reluctant to limit the exclusive use of the Champagne mark to the French producers.

The US is now among only a handful of countries which does not offer full protection to the Champagne name;  the others are Russia, Vietnam and Argentina.  Arguably, champagne is seen as a generic term for sparkling wine by US consumers and the dilution feared by the CIVC in China is already apparent in the US.  Californian champagne is still legally available from US wine merchants and is traditionally served at the inauguration dinner for each new US President.

The protection for geographical indications of source as it is now understood was set out in the TRIPS (Trade -Related Aspect of Intellectual Property Rights)  agreement in 1994 to which the US was a signatory. This was the first internationally codified protection for GIs. Under the TRIPS agreement, geographical indications are "indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin".  Under Article 23 of the agreement there are specific provisions which give additional protection for wines and spirits.  These state that members must enact laws that prevent the use of geographical indications for wines and spirits that do not originate from the designated geographical location.  Further, these laws must also prevent uses of such indications where the true place of origin appears in conjunction with the geographical designation of the goods.  ("Champagne or Champagne? An Examination of U.S. Failure to Comply with the Geographical Provisions of the TRIPS Agreement" Leigh Ann Lindquist GEORGIA JOURNAL OF INTERNATIONAL & COMPARATIVE LAW 27 GA. J. INT'L. & COMP. L. 309 (1999))

The US has never enforced this article to the satisfaction of the champagne producers.  The national regulations which govern the use of GIs in the US are those of the Alcohol and Tobacco Trade and Tax Bureau (TTB).  These regulations divide geographical indications for wines into categories and base their protection on these divisions.  Champagne is defined as a 'semi-generic' indication and, for many years, could be used on wines which did not originate in the Champagne region provided that the actual place of origin was used in conjunction with the geographical name, hence Californian Champagne.

Following years of negotiation between the US and the EU, an agreement on trade in wine was signed on 10 March 2006.  In that agreement, the US agreed to change the legal status of these semi-generic names to restrict their use solely to wines originating in the relevant member state.  The law to give effect to this restriction was enacted on 20 December 2006.  However, there was a significant limitation to the protection enacted which is the basis of the on-going complaint against the US by the CIVC.  There is a "grandfather" provision included in the US legislation which allows any person who was using a semi-generic name in direct conjunction with an appellation of origin disclosing the true place of origin of the wine, prior to 10 March 2006 to continue with that use.

Given that many of the sparkling wines produced in the US are made using the traditional Champagne method and were developed by representatives from, or with connections to, the French Champagne houses, it is hardly surprising that they are reluctant to relinquish the name.  The CIVC continues to educate US consumers as to the special status of Champagne via its educational and promotional arm the 'Champagne Bureau'. Their espoused goal is global protection of the Champagne name but it may be some time before the US gives in to perceived EU protectionism and removes all the rights of its producers to use the famous name.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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