The CJEU confirms the exclusive character of EU competence in PDO/PGI schemes

Author: Nicola Coppola (Centre for Intellectual Property Policy and Management (CIPPM)—Bournemouth University)

Associazione Industriali delle Carni e dei Salumi (Assica) and Kraft Foods Italia SpA v Associazione fra produttori per la tutela del ‘Salame Felino’ and others, C-35/13, EU:C:2014:1711, Court of Justice of the European Union (Ninth Chamber), 8 May 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu124, First published online: July 9, 2014

The Court of Justice of the European Union confirmed the exclusive character of the European Union's competence with regard to geographical indications relating to agricultural products and foodstuffs. The compliance of national legislation to the EU rules and principles must be determined by the national Court, so ‘Salame di Felino’ goes back to the Corte di Cassazione.

Legal context

Exclusive competence of the EU over PDO/PGI schemes

The harmonized framework for geographical indications (GIs) in the agricultural sector created in 1992 by the EU with the enactment of Regulation 2081/92 replaced the separate national systems of protection previously in force: as a result, the capacity of EU Member States to adopt national rules competing with the EU protected denomination of origin (PDO) and protected geographical indication (PGI) schemes, or to extend the scope of protection through international agreements, has been heavily limited.

In this regard, the most problematic issue lies in the extent to which Member States can give national protection to designations of geographical origin; this implies the precise determination of the scope of the EU-wide regulation.

This issue has sparked controversy between the Member States and the Commission, and can only be solved by ascertaining the character of the EU competence on the GI system of protection.

The exclusive nature of the EU's competence was established in Budvar v Ammersin, C-478/07, EU:C:2009:521, where the Court of Justice of the European Union (CJEU) affirmed the exhaustive nature of the Community system of protection laid down by Regulation 510/2006 (which replaced Regulation 2081/92), precluding the validity of agreements between two Member States in the absence of application for registration of a designation of origin in accordance with the EU Regulation, when that designation is recognized under the law of a Member State as constituting a designation of origin.

The principle held in Budvar, later confirmed in Chiciak and Fol, C-129/97 and C-130/97, EU:C:1998:274, made it impossible to establish a domestic protection for denominations of agricultural products whose characteristics are linked to a specific place.

Legislative developments

This point has not been subsequently clarified in the legislation, despite the enactment of Regulation 1151/2012, which repealed and replaced Regulation 510/2006. As in previous legislation, Article 9 Regulation 1151/2012 only allows national protection on a transitional basis, pending the decision of the Commission on the application for registration of a PDO/PGI. Where a name is not registered as a PDO/PGI, the consequences of national protection shall be the sole responsibility of the Member State concerned.

The expectations of the Member State to reverse with a clear provision on the point the perceived ‘deprivation’ of their competences were based on the role which the European Parliament had in the enactment of Regulation 1151/2012, following the inclusion of Article 118(1) of the Treaty on the Functioning of the European Union (TFEU) in its legal basis. This provision establishes the ordinary legislative procedure (Art 294 TFEU) to be pursued for the enactment of legislative acts regarding IP rights, therefore giving the European Parliament the same powers of the Council, in accordance with the reforms brought by the Lisbon Treaty.

Facts

In 1998, the Associazione fra produttori of ‘Salame Felino’, a pure pork salami sausage from the village of Felino (Italy) brought proceedings against Kraft Jacobs Suchard SpA before the Tribunale di Parma (District Court, Parma) for unfair competition on the ground that Kraft Jacobs Suchard had offered for sale a salami sausage called ‘Salame Felino’, but which was produced outside the ‘traditional’ territory of production.

In February 2001, the Tribunale di Parma found that the conduct of Kraft Jacobs Suchard constituted an act of unfair competition under Italian Legislative Decree 198/1996, containing provisions that ensure the conformity of the national industrial property legislation with the mandatory provisions of the TRIPs agreement. This decision was later confirmed by the Corte d′Appello di Bologna, which clarified that the registration of a name under the EU PGI or PDO schemes was needed only if that Regulation were to be invoked, but not for protection under national law.

Kraft appealed further to the Suprema Corte di Cassazione (the Italian Supreme Court) which was unsure of the legitimacy of the co-existence of Italian and EU rules of protection of GIs, on the basis that the former grant protection to GIs independently from a formal registration: the Cassazione pointed out the risk that such situation could lead to the prevalence of the national rule over the Community rule in the domestic market, jeopardizing protection at EU level.

Consequently, under Article 267 TFEU, the Suprema Corte di Cassazione stayed the proceedings with Ordinanza of 18 January 2013 and referred the following questions to the CJEU:

(1) Should Article 2 of Regulation 2081/92 be interpreted as precluding a producers′ association from being able to claim the right exclusively to use, within the [European Union], a designation of geographical origin used within a Member State to designate a specific type of salami sausage, without having first obtained a legally binding measure from that Member State establishing the boundaries of the geographical area of production, the rules and regulations governing production, and any requirements which producers may have to satisfy in order to be entitled to use that designation?

(2) In the light of Regulation 2081/92, which set of rules should be applied within the [European Union] market and also within the market of a Member State to a geographical designation which has not obtained the registration referred to in that regulation?

Analysis

The decision of the CJEU came on 8 May 2014, following the accelerated procedure, and therefore without receiving an Opinion of the Advocate General. According to the court (para 39):

… Regulation No 2081/92 must be interpreted as meaning that it does not afford protection to a geographical designation which has not obtained a Community registration, but that that geographical designation may be protected, should the case arise, under national legislation concerning geographical designations relating to products for which there is no specific link between their characteristics and their geographical origin, provided, however, first, that the implementation of that legislation does not undermine the objectives pursued by Regulation No 2081/92 and, secondly, that it does not contravene the principle of the free movement of goods under Article 28 EC, matters which fall to be determined by the national court.

The CJEU confirmed the exclusive character of the EU competence with regard to GIs related to agricultural products and foodstuffs. The compliance of national legislation to EU rules and principles has to be determined by the national court: the case of Salame di Felino thus returns to the Corte di Cassazione for a final decision on the substantial matters.

The decision does not take into account the shared character of EU competence on IP matters (Art 118 TFEU). The potential protection accorded by national legislation would only be valid within the relevant Member State, an outcome that would adhere to the principle of supremacy of EU Law. In fact, most EU Regulations on the protection of intellectual property rights, such as trade marks, patents and designs, provide for coexistence between EU and national systems. The CJEU has explicitly acknowledged that ‘[d]esignations of origin fall within the scope of industrial and commercial property rights’ (Budvar, para 110). Another element of systematic incoherence is that Regulation 110/2008, relating to the protection of GI spirits, also provides for co-existence between national and EU GI protection.

Practical significance

With regard to the specific case of Salame di Felino, the relevance of the decision is limited to the period before March 2013; Salame Felino has since been registered as PGI and is therefore now protected under Regulation 1151/2012.

The decision is, however, capable of having a negative impact on the protection of traditional products not covered by a PDO or PGI entitlement in the Member States, in the sense of impeding a formal national recognition of their link with a geographic place, such as the inclusion in a registry of traditional products linked to a place (there are about 4,000 in Italy alone, compared to ‘only’ 230 Italian products registered as a PDO or PGI). The registration of all those products under PDO/PGI schemes is neither practical nor desirable, because this would inflate the EU quality schemes system. Finally, the approach of the CJEU could pose questions on the participation of the EU in the New Lisbon Agreement, currently under revision at WIPO, in respect of GIs and appellations of origin registered by individual EU Member States that are party to Lisbon.