The economic value of origin
The geographical origin of a product or service may enjoy an excellent reputation for quality, reliability or even environmentally high standards. The indication of a specific geographical origin therefore may represent an economic value and an important competitive advantage.
The so-called Swissness legislation
Based on a history of increasing abuses of the “Swiss made” indication and of reputed non-Swiss indications of origin on the Swiss market, the Swiss legislator, after lengthy and complicated deliberations, enacted a new legislation on the protection of Swiss and non-Swiss indications of origin, entering into force in 2017.
So, importantly, although this new legislation is called “Swissness” legislation, it also concerns non-Swiss geographical indications of origin. As in most countries, legislation and jurisprudence was rather general and flawed in Switzerland so far, based on general principles (“thou shall not lie”) and applied on a case-by-case basis, trying to assess consumer deception ex post, that is after products or services have already been marketed.
The new legislation, though, brings a change of paradigm: it is basically an ex ante approach, defining specific criteria with specific percentages of added value in order to legally use a geographical indication. As new criteria, the geographical origin is mainly determined according to the location where the essential manufacturing step took place. Additionally, for foodstuffs, as a guiding principle, 80% of the weight of the raw material composing the foodstuff must originate in the geographical place which is used as an indication of origin for that product. For industrial products, the geographical origin is determined by the place of the essential manufacturing step and the place where at least 60% of the production costs, including research and development costs, occur.
The geographical origin of natural products is determined by the place of extraction, harvest, or growth of the products. Similar new rules apply for services. The Swiss legislator also created a new national register for geographical indications for all goods (not only for agricultural products as is actually the case) whose reputation or quality is essentially attributable to their respective geographical origin.
The new geographical mark
This new legislation also “invented” the so-called geographical mark, an instrument that could be of interest especially for non-Swiss operators. By way of derogation from the crucial absolute ground of refusal of descriptiveness, a geographical mark may now be registered in Switzerland for (a) a designation of origin or a geographical indication already registered as a DOP (including non-Swiss DOPs), (b) a registered designation of origin for wine or a foreign wine designation which meets the requirements of the Swiss wine legislation, or (c) an indication of origin that is the subject matter of a governmental regulation (such as Swiss made for watches) or a foreign indication of source that is based on an equivalent foreign regulation.
The registration of a geographical mark may be requested by the group which registered the DOP, the foreign authority responsible for the regulation of wine designations as well as the group that obtained the protection of such a foreign wine designation or the umbrella organisation of an economic sector for which the Swiss government has enacted a specific ordinance or which acts on the basis of on an equivalent foreign regulation. The applicant for a geographical mark must file regulations governing the use of the mark. These regulations must correspond to the product specification (that is, the DOP specification) or the pre-existing applicable provisions; they may not provide for remuneration in exchange for use of the geographical mark.
As to the rights conferred by such a geographical mark it is important to note that it may be used by any person provided that the requirements of the regulations are fulfilled. The proprietor of such a geographical mark may prohibit others from using the mark in the course of trade for identical or similar goods where such use contravenes the regulations. Transfer or licensing of a geographical mark are not permitted. Furthermore, a geographical mark is no basis for an opposition against latter marks; on the other hand, the registration of a geographical mark cannot be opposed on the basis of prior trade marks. The provisions governing the use of the trade mark and consequences of non-use do not apply.
This geographical mark has been created to facilitate enforcing protection of the respective designations in Switzerland and abroad. The legislator’s plan of action is to open the route of trade mark enforcement for these designations by transforming them into formal trade mark rights.
Importantly, this route is opened not only for Swiss designations but also for foreign designations. We assume that this new instrument could be interesting especially for the wine sector. Whether the plan of action is going to work will be seen in the years to come.
Jürg Simon is a Partner of Lenz & Staehelin in Zurich and a member of the MARQUES GI Team