Originally published in Intellectual Property and Entertainment Law Committee Newsletter, October 2011.
"Portuguese great red wines are becoming more and more valuable in the international wine market. The Portuguese Douro wine region's vintages like Barca Velha, a superb full-bodied red wine from Casa Ferreira, rival its Spanish neighbour Vega Sicilia "Unico" from the Ribera del Duero region and other famous labels as Chateau Pétrus from Pomerol or Californian Opus One. It is no exaggeration to state that collections of vintage wines' more and more frequently include Portuguese great vintages not only at a local level but also in international events and auctions and that rapidly, small companies and auction players, both claiming expertise and reliable sources, are flourishing in the market.
However, some recent events within the Portuguese market or related to Portuguese wines such as the replacement of original labels and corks or inside trading linking evaluation experts of auction houses and sellers -, have resulted in a number of pending claims and disputes in connection with which issues such as the use of privileged information have to be settled by the courts. In this background the well known issue of the "crusade against counterfeiters" both in the Portuguese, as well as the international markets for Portuguese wines markets, merits careful consideration and tough initiatives to protect these banners of Portuguese winery home and abroad
All of us know that counterfeiting worldwide is a several hundred billion dollars/year industry, if we believe OECD data, and looks set to increase. The traditional legal rules and administrative tools made to protect national borders and national products are no longer responding to international counterfeiting using high tech and IT know-how and globalization appears to play against the effective enforcement of laws against counterfeit products. Counterfeit wine is part of this scourge of worldwide crime and has existed for more than a century.
Traditionally, the main counterfeit process was to buy a cheaper wine and change the label and the cork. But, in this specific market of great vintages, counterfeiters master new technologies, such as digital imaging that makes fake labels far easier to produce. On the other hand, few people have tasted truly great old wines and in some cases to detect a fake is almost an art. Worryingly, the market is full of bottles suspected of being counterfeits. Portuguese market and vintages are no longer an exception. Although fake everyday wine is also a growing problem, the collectors market's high priced collectibles have the lion share of attention and profit for criminals and great Portuguese vintages are starting to attract them..
High priced collectible wine, remains despite the awareness of the problem, an attractive target for counterfeiting activities since crime profit margins are much higher and great old wines are much more difficult to authenticate. About it, in my opinion, the key issue that has to be dealt with worldwide and in the Portuguese wine market –is the fact that collectors depend on auction houses to determine the origin of the wine. This is not a problem only to collectors. Well known family vineyards have to deal with, in Portugal as elsewhere, a problem for which they are in many cases unprepared and lack the information they need to deal with the problem. As Peter Hellman and Mitch Frank refer in a 2009 issue of Wine Spectator: "where all these fabulous wines, many never seen previously at auction, coming from? Were they too good to be true? "
Portuguese laws on counterfeiting food products and therefore in Portuguese wines are severe in the penalties which are imposed but enforcement entities are not enough aware so far as enforcement measures are concerned. Indeed, a replaced label or an altered cork is considered a crime under Decree-law 28/84 (altered by law 20/2008). Even so, in the relatively exclusive world of Portuguese auctions of great wines, investigation activity by related police authorities is quite rare and depends upon a claim being presented by a collector or a producer.
And yet, wine industry is an important sector in the Portuguese exports and national legislator and enforcement agencies as well as producers have to take a closer look to the market of admiral's flagships that are the great vintages. In the domestic market as well as abroad, in the era we live in of the financial crisis casting a cloud over our economy and livelihoods, investments in refuge markets such as high priced wine collections is an option being considered by an increasing number of investors. Abroad, from the point of view of a law firm, the interest of collectors should be seen as a new legal market opportunity. In Portugal, as well as in Spain, the potential legal market covers prestigious estates and wine producers that take decades to produce a great wine and a reputation that can be ruined in the eyes of the prime collectors because of the criminal activities referred above. Hopefully in the near future, Portuguese courts jurisprudence may contribute decisively to renewed attention being given to the issue by producers and authorities. Although undoubtedly the issues go beyond traditional trademark jurisprudence, they will fall within the remit of jurisdiction of the IP and Competition Law specialized courts that have been introduced this July 2011 in the Portuguese judicial system.
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