WTO name ruling: who really won?

The headline of an Associated Press article that ran in March read, "Both Sides Claim Victory in WTO Fight over Food Names." Now, if you've been following this battle between the European Union and the United States over what they call GIs (geographical indicators), or if you simply care about

wine, you'll know that the wine industry has a lot invested in the issue of place. Given the issue's importance, the headline was perplexing: A ruling in which both sides claim victory is clearly different from a compromise, which leaves no one claiming victory and everyone feeling a little bit burned. No, when both sides claim victory you know that something is messed up. And when the World Trade Organization (WTO) is involved, you know it's going to be an untidy melange of international trade legalese and confusing acronyms (CAs).

The ultimate question is: What did this ruling mean for wine? "The answer is going to be very short," says David Thual from his home in Belgium. Thual is general secretary of the Geneva-based ORIGIN, the Organization for an International Geographical Indications Network, comprised of, according to its Web site, "more than 100 producers from 24 countries (that) have decided to create an international network to protect and promote geographical indications."

Thual says, "The answer is going to be very short, because this case doesn't relate to the wine sector. This case was launched by the U.S. and Australia against the EU regulations, but outside the wine and spirits sector. There is a big problem with Budweiser. That's what this was about."

The Budweiser case, the most high profile of a host of naming issues, is instructive. Here's how it works: From the European perspective, geography protection bests trademark rights. Europe wants to reclaim names that relate to specific places, everything from Parmesan cheese to Bologna to Budweiser. But in the U.S., these names have become what trade wonks call "semi-generic." Being forced to change such names here could mean billions of dollars in repackaging and rebranding costs for American companies.

In the case of the "king of beers," Anheuser-Busch could be stripped of Budweiser, the brand name of the world's top-selling beer. But Budweis happens to be the name of a Czech town that has been brewing beer for more than 700 years. Naturally a Czech brewer, Budweiser Budvar, claims it is the rightful owner of the name. Anheuser-Busch, however, sees the name as having value only through the massive work it has done to build the brand, and believes it's the Czechs who ought to stop making Bud. A USA Today article quoted an Anheuser-Busch lawyer as saying, "The situation is intolerable. It allows the Czech company to free ride on the reputation of our brand." Not to mention anyone from the Czech town who might call themselves a Budweiser.

The WTO ruled for Bud, saying that Europe could not deny U.S. trademark owners their rights. It also ruled that Europe's regulation for protecting GIs discriminates against U.S. products (like Florida oranges and Vidalia onions, which haven't been protected in Europe) that are named for their place of origin. Although there are more than 600 registered GIs in Europe, none are from non-EU countries. But the WTO did rule--and this is the part that Europe likes--that protections must be given equally to all products, essentially validating the concept that names should be protected. So while Florida orange producers might be happy, so are Parmesan cheese producers in Parma. What it all means is that it's nowhere close to over.

So, while wine matters were not affected by this recent WTO ruling, controversy continues to roil over GIs. For instance, while everyone agrees (and the EU and WTO have ruled) that wine and spirit place names should be protected, U.S. regulations still allow some EU GIs to be used by American wine producers to designate products of U.S. origin. The most significant examples are Burgundy, Champagne, Chablis, Chianti, Malaga, Madeira, Moselle, Port and Sherry. In 1997, the D'Amato amendment codified the use of semi-generic wine names in the U.S. into federal law.

So you have two legal systems with different protections going head to head--Old World versus New World. This has created an impasse that will take years, if not generations, to properly sort out, not to mention mountains of paper and lots more CAs. But even though the issue of naming rights has spiraled off into the humdrum morass of international trade regulation, passions still remain high.

"I think it's a consumer truth and labeling issue," says Sam Heitner of the U.S. Office of Champagne, a primary player in this battle. "Wonderful wine can be made all over the world, but it's important that the consumers--particularly Americans, as more and more of them consume wine--understand where their wines come from. The words on the label are very important in this regard."

Champagne has mounted an education program through a series of advertisements that feature a big yellow question mark and the words, "Champagne not from Champagne? No way!" and explain that "some sparkling wines may look and even taste the part, but if it's not from Champagne it's simply not true Champagne. That's because Champagne isn't merely a type of wine, it's a specific region 90 miles east of Paris with a long history of winemaking expertise."

Heitner asserts that in its plea, Champagne has the benefit of all wines in mind. "For all of us to continue to prosper and grow we need to have more and more people embracing these protections," he says. "We feel that these are all further barriers in getting Americans to drink wines. If there's confusion, we believe it can inhibit that next step for Americans who want to drink wine or move up into more expensive wines."

On the other side of the fence is Gary Heck, owner and president of Sonoma's Korbel sparkling wine specialist, which has on its label a phrase that it trademarked in the 1950s: California Champagne. "I'll be real candid," Heck says. "They don't want us to use the name because they believe it's a region in France, which it is. But we believe that it's also a way of making wine, and it's a name we've been using since 1882."

Korbel and Champagne, Heck explains, already have a long history on this issue. "Up until 1915, they called it Korbel Champagne," he says, "and in 1937 there was an agreement that the appellation of origin, California, had to be put in before Champagne. But Champagne didn't start complaining about this in the '50s and '60s. If they didn't want us to do this, they should have gone back to Korbel in 1882 and said, 'Don't do that!'"

For his part, does Heck believe that Korbel's use of the word could be confusing consumers? "Not at all," he exclaims. "Everybody in the world knows where Korbel comes from. We're not trying to fool anyone. I would say, if anything, selling Korbel California Champagne helps their business."

Heck makes good points. However, he hasn't had the problem of anyone trying to take his product's name yet. If a producer from South America came out with something that read "Venezuela Korbel," he might be forced to look at the matter differently. This is, of course, the situation that Napa Valley now finds itself in, as the first American wine region to have its name borrowed. In a well-publicized case, Napa vintners fought against the Bronco Wine Company and its use of the trademarked name "Napa Ridge" on wine that was made outside the appellation. (The California Court of Appeal ruled against Bronco at the end of May.) And, bizarrely, the name Napa Valley began to turn up on wines in China; a Chinese company had applied for a trademark for the name for wines made and sold there.

After serving time on the front lines of these battles as a former president of Napa Valley Vintners, Dawnine Dyer says, "We now agree that those semi-generic names are no longer working in our favor, and our position is that we would not be adverse to their going away. I think it is a cautionary tale, and that other regions would be well advised to take note and get on board. We certainly intend to devote the majority of our time and energy to the ongoing promotion of Napa, but it just is a fact of life now that the protection of the place name is going to be part of our lives."

It's still confusing, though. OK, Champagne is from Champagne. California Champagne is from California. Budweiser is from St. Louis. And hamburgers are from where?

(Jordan Mackay lives in San Francisco, where he is wine and spirits editor for the metropolitan magazine 7X7. He is a contributing writer to Wine & Spirits, and a frequent contributor to the Los Angeles Times. Contact him at edit@winesandvines.com.)