The world’s favourite premium spirit

Scotch Whisky has been made in Scotland for over 500 years and it has grown from a cottage industry, where farmers distilled their left over barley to prevent it going to waste, to one of the UK’s most important export industries. According to British Customs data, Scotch Whisky exports are worth around ￡4 billion (US$ 5.9 billion) per annum and represent 23% of the UK’s food and drink exports. Scotch is made at more than 100 distilleries spanning the length and breadth of Scotland and accounts for over 40,000 jobs directly and also indirectly in support industries such as transport and agriculture. Many of these jobs are in remote rural areas where there is little alternative employment. Going beyond these numbers, due to its reputation as a high quality, natural product, Scotch Whisky is an ambassador for Scotland and the United Kingdom, projecting a favourable image of our country from Boston to Beijing.

There are many reasons for Scotch Whisky’s success, not least the marketing and promotion of Scotch Whisky brands, such as Johnnie Walker and Dewar’s, stretching back over a century, but one important factor is that it is a geographical indication of origin (GI). At its simplest, this means that “Scotch Whisky” may only be used on a whisky produced and matured in Scotland according to a strict legal definition. Not only does this enable producers to maintain high standards of quality, but also it provides effective remedies against those who try to take unfair advantage of Scotch’s reputation. This has enabled the industry to compete across world markets based on quality rather than price and the higher profit margins generated as a result can be reinvested to further develop the category.

What is a geographical Indication of origin?

Compared t o t r a de marks, patents and copyright, GIs are a comparatively unknown form of intellectual property. In their modern incarnation, they are a creation of the World Trade Organisation Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”). Article 22.1 of TRIPS defines a GI as:

“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”.

As can be seen, it is essential not only that a good comes from a particular place, but also that it must have a connection with that place. In the case of Scotch Whisky there are a range of natural and human factors that make it a unique product of Scotland. For example the cool, mild climate of Scotland is particularly favourable for maturation in wooden barrels over a long period of time. Also many of the skills necessary to make Scotch Whisky, such as those of the blender who selects the different barrels of whisky which are to go into a particular bottling, are passed down from generation to generation and it is difficult for them to be learned from academic study alone. Further Article 22.1 recognises that a product can be a GI based on the reputation attaching to its place of production and so, on account of its 500 year connection with Scotland, Scotch Whisky qualifies under this heading also.

Article 22. 2 requires WTO Members to provide the legal means for those with an interest to prevent:

“(a) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; (b) any use which constitutes an act of unfair competition within the meaning of Article10bis of the Paris Convention (1967).”

Those with an interest can include both individual producers, trade associations such as the Scotch Whisky Association and public bodies. It is also worth noting that the protection is broad – it does not just protect the word for example, but also prevents the use of other means to suggest that a good is Scotch Whisky when it is not. In addition, it is left up to the individual countries to decide how to provide this protection. Around the world, this has led to a variety of different systems including specific laws or regulations, GI registers, and protection through collective or certification trade marks being developed to suit individual legal systems.

Article 22.3 requires members to prevent the registration of trade marks containing GIs for goods that do not originate in the territory concerned Article 23.1 of TRIPS provides additional protection for wine and spirits GI’s in that it requires each member to:

“provide the legal means for interested parties to prevent use of a geographical indication identifying wines for wines not originating in the place indicated by the geographical indication in question or identifying spirits for spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” or the like.”

This is intended to create an absolute ban on using wine and spirit GIs on other goods, whereas the Article 22.1 protection only applies where the use misleads the public, something which may be difficult to prove in certain jurisdictions. On the other hand, some might argue that this protection applies to the name itself and does not give the wide protection against evocation found in the earlier provision. Accordingly, to ensure full protection, it is important that both Articles 22 and 23 are implemented into national laws.

Protection in the European Union

Each country can choose its own way of implementing the provisions of TRIPS but I would like to focus on the situation in the European Union (“EU”) as not only does it contain many of Scotch Whisky’s most important markets but also it is the “home” system for Scotch Whisky.

The EU has chosen to create a specific GI regime rather than go down the certification or collective trade mark route followed in other countries. This has distinct advantages in that the GI is protected for all to use and makes it easier to manage for the long term benefit of producers as a whole. On the other hand, it is quite inflexible and in the case of some products, where there are perhaps only one or two producers, a decision has been taken not to apply for GI protection, or even relinquish it in favour of trade mark protection, even where all the legal requirements for GI status have been met.

A range of different systems operate in the EU to protect GI’s including Protected Designations of Origin (“PDO”), that apply to foodstuffs and agricultural products which are produced, processed and prepared in a particular geographical area and Protected Geographical Indications (“PGI”), where at least one of the stages of production, processing or preparation take place in the geographical area. There is a distinct regime for protecting spirits which can be found in Chapter III of Regulation (EC) 110 2008 of the European Parliament and Council dated January 15th 2008 on the definition, description, presentation, labelling and the protection of spirit drinks (“the Regulation”).

In line with Article 22.1 of TRIPS, Article 15.1 of the Regulation defines a GI as:

“an indication which identifies a spirit drink as originating in the territory of a country or region or locality in that territory where a given quality, reputation or other characteristic of that spirit drink is essentially attributable to its geographic origin”.

Article 15.2 refers to the list of spirit GI’s contained in Annex III to the Regulation. This includes many famous products including, alongside Scotch Whisky, Cognac, Irish Whiskey and Polish Vodka.

Article 15.3 provides that the GIs listed in Annex III may not become generic whereas a name that has become generic may not be registered as a GI. A product becomes generic when although it is named after its original place of production, it has subsequently lost its link with that place. An example is London Dry Gin, which although originally referring to a spirit produced in the UK’s capital city, now refers to a style of gin that can be made anywhere. Whether or not a spirit (or indeed any product) is a GI or a generic term is perhaps the most controversial issue affecting the GI system but fortunately through a combination of good fortune and foresight, Scotch Whisky has never been produced outside Scotland which means that its GI status does not have the same political aspects as the protection of some other products.

Article 15.4 requires that the GIs comply with the Technical File referred to in Article 17(1) of the Regulation.

The Technical File is a dossier filed by the EU Member State, where the GI originates (Article 17.2) or if it originates outside the EU, by the authorities of the country concerned (Article 17.3) with the EU Commission. In practice the Technical File will be produced in consultation with producers. It provides information about the GI including:

- The name and category (such as rum, whisky, brandy etc.) of the GI

- A description including its main chemical, physical and organoleptic characteristics and how it is distinct from other drinks in its category.

- The geographical area it comes from

- The link between its origin and its characteristics

- Any legal requirements set out in national or EU law

- Details of the applicant, and - Any supplemental requirements or labelling rules

(Article 17.4)

The Technical File for Scotch Whisky, filed by the UK Department of Environment Fisheries and Rural Affairs, can be found at https://www.gov.uk/government/publications/ scotch-whisky-technical-file.

For established GIs, meaning those like Scotch Whisky that already appear in Annex III to the Regulation, all that is required is that the Technical File be lodged with the Commission. It is possible for the Commission to raise objection should it have any concerns about the contents but the File takes immediate legal effect. For new GIs, the Commission must confirm within six months of filing whether it complies with the necessary requirements of Article 17.5. Assuming that it does, the Technical File must be published in the Official Journal of the European Communities (Article 17.6) and thereafter any person with a legitimate interest has six months in which to object (Article 17.7). If there are no objections the GI will be considered registered and if there is an objection, the Commission will publish its decision in the Official Journal (Article 17.8).

The Regulation sets out the various protections given to GIs in Article 16 which, if anything, goes slightly further than the minimum requirements contained in the TRIPS Agreement. These include:

a) Any direct or indirect commercial use in respect of products not covered by the registration in so far as those products are comparable to the spirit drink registered under that geographical indication or insofar as such use exploits the reputation of the registered geographical indication.

b) Any misuse, imi tat ion or evocation even if the true origin of the product is indicated or the geographical indication is used in translation or accompanied by an expression such as “like”, “type”, “style”, “made”, “flavour” or any similar term.

c) Any other false or misleading indication as to the provenance, origin, nature or essential qualities on the description, presentation or labelling of the product, liable to convey a false impression as to its origin.

d) Any other practice liable to mislead the consumer as to the true origin of the product.

These provisions are broad enough to enable action to be taken against all manner of deceptive practices, from selling a spirit as “Scotch Whisky” when it is not, through using Scottish words and symbols such as men in kilts to suggest Scottish origin, to more subtle methods such as concealing the true origin of a whisky on the basis that many consumers will assume that it is Scotch Whisky. In the EU, this and other Articles of the Regulation are directly enforceable in the national courts of each Member State but they can be supplemented by national laws dealing with the practicalities of enforcement, such as The Scotch Whisky Regulations 2009, in the United Kingdom.

Applying for a geographical indication of origin

A GI can bring great benefits to producers of spirits, wines, cheeses or indeed any foodstuff with strong connections to its place of production. It can develop new markets as consumers increasingly look for products with guaranteed authenticity and it is also a way to ensure that quality standards are maintained through universal production rules. It is also an effective way to prevent unscrupulous traders taking unfair advantage of the reputation of a distinctive product.

On the other hand, it is not something that can be undertaken lightly. Because it is a form of communal intellectual property it is essential to obtain consensus amongst producers before proceeding as well as securing support of Government, which actually has to make the application. This makes a strong and effective trade association important. Indeed, registration is only the start as it is also essential to ensure that the GI is properly enforced and the burden will inevitably fall mainly on the producers.

For the Scotch Whisky industry, indicators suggest that the positives far outweigh the negatives, and that its status as a GI is an important factor in Scotch Whisky’s continuing global success.