Document: Oral Statement
Date: 24 February 2004
Document codes: WT/DS290/R/Add.2
Complainant: Australia
Respondent: EU
Third parties: Argentina, Brazil, Canada, China, Taiwan, Colombia, Guatemala, India, Mexico, New Zealand, Turkey, U.S.
Dispute stage: Panel
Agreements cited: Art. 1, 2, 10, 16, 20, 24.5, 41, 42, 3, 4, 22.2, 63.1, 63.3, 65.1  Intellectual Property (TRIPS)Art. I:1, III:4  GATT 1994Art. 2.1, 2.2, Annex 1  Technical Barriers to Trade (TBT)Art. XVI:4  Agreement Establishing the World Trade Organization

ANNEX B

SUBMISSIONS BY THE EUROPEAN COMMUNITIES

Contents Page
Annex B-1 European Communities' Request for a Preliminary Ruling
(24 February 2004)

B-2
Annex B-2 First Written Submission of th e European Communities (25 May 2004)

B-20
Annex B-3 Oral Statement of the European Communities – First Substantive
Meeting (23 June 2004)

B-107
Annex B-4 Replies by the European Comm unities to Questions posed by the Panel
following the First Substantive Meeting (8 July 2004)

B-121
Annex B-5 Second Written Submission of the European Communities
(22 July 2004)

B-164
Annex B-6 Oral Statement of the Eur opean Communities – Second Substantive
Meeting (11 August 2004)

B-238
Annex B-7 Replies by the European Comm unities to Questions posed by the Panel
following the Second Substantive Meeting (26 August 2004)

B-288
Annex B-8 Replies by the European Comm unities to Questions posed by Australia
following the Second Substantive Meeting (26 August 2004)

B-347
Annex B-9 Comments of the European Communities on Australia's and the
United States' Replies to Questions posed by the Panel following the
Second Substantive Meeting (2 September 2004)

B-351
Annex B-10 Comments of the European Communities on the Reply of the
International Bureau of WIPO to the Panel's Letter of 9 July 2004
(28 September 2004)

B-376

Short Title Full Case Title and Citation of Case
Canada – Wheat Preliminary Ruling of the Panel, Canada – Measures Relating to Exports of Wheat
and Treatment of Imported Grain, , circulated on 21 July 2003
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, , adopted 25 September 1997
Guatemala –
Cement I
Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding Portland
Cement from Mexico, , adopted 25 November 1998
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products, WT/DS98/AB/R, adopted 12 January 2000
Thailand –
H-Beams
Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland , WT/DS122/AB/R,
adopted 5 April 2001
US – Carbon Steel
from Germany
Panel Report, United States – Countervailing Duties on Certain Corrosion-Resistant
Carbon Steel Flat Products from Germany , WT/DS213/R and Corr.1, adopted
19 December 2002
Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany , WT/DS213/AB/R,
adopted 28 November 2002
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations", WT/DS108/AB/R, adopted 20 March 2000
US – Lamb Panel Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia , WT/DS177/R, WT/DS178/R,
adopted 16 May 2001

I. INTRODUCTION
1. The European Communities (hereinafter "the EC ") is of the view that the requests for the
establishment of the Panel made by Australia (hereinafter: Australian request)
1 and by the United
States (hereinafter: United States request) 2 do not meet the requirements of Article 6.2 of the Dispute
Settlement Understanding (DSU).

2. The Panel requests fail to identify the speci fic measure at issue in the present dispute.
Moreover, the Panel requests do not provide a brie f summary of the legal basis of the complaint
sufficient to present the problem clearly.

3. The respect of the requirements of Article 6.2 DSU is an essential precondition for the
jurisdiction of a Panel. Where a complaining party ha s failed to clearly set out its claim in accordance
with Article 6.2 DSU, the Panel does not have jurisdiction.

4. Moreover, the deficiencies of the Panel requ ests seriously prejudice the due process rights of
the EC as a defending party. As a defending party, the EC is entitled to know the case it has to
answer. The Panel requests in the present case do not meet the minimum requirements necessary for
ensuring a fair and orderly conduct of the dispute settlement proceedings.

5. Given these fundamental concerns, the EC requ ests that the Panel issue a preliminary ruling
regarding Article 6.2 DSU.

II. THE REQUIREMENTS OF ARTICLE 6.2 DSU
6. Article 6.2 DSU sets out the following minimu m requirements with which any Panel request
must comply:

The request for the establishment of a panel shall be made in writing. It shall indicate
whether consultations were held, identify the specific measures at issue and provide a
brief summary of the legal basis of the complaint sufficient to present the problem
clearly.
A. T
HE CONTENT AND PURPOSE OF ARTICLE 6.2 DSU
7. In Korea – Dairy, the Appellate Body held that Article 6.2 of the DSU imposes four separate
requirements:3

When parsed into its constituent parts, Article 6.2 may be seen to impose the
following requirements. The request must: (i) be in writing; (ii) indicate whether
consultations were held; (iii) identify th e specific measures at issue; and (iv)
provide a brief summary of the legal basis of the complaint sufficient to present the
problem clearly. In its fourth requirement, Article 6.2 demands only a summary –
and it may be a brief one – of the legal basis of the complaint; but the summary must,
in any event, be one that is "sufficient to present the problem clearly". It is not
enough, in other words, that "the legal basis of the complaint" is summarily
identified; the identification must "present the problem clearly".

1 Request of 18 August 2003, WT/DS290/18.
2 Request of 18 August 2003, WT/DS174/20.
3 Appellate Body Report, Korea –Dairy, para. 120.

8. The objective and purpose of Article 6.2 of th e DSU is to guarantee a minimum measure of
procedural fairness throughout the proceedings. This is of particular importance to the defendant, who
must rely on the Panel request in order to begin preparing its defense. Similarly, WTO Members who
intend to participate as third parties must be info rmed of the subject-matter of the dispute. This
underlying rationale of Article 6.2 DSU has been explained by the Appellate Body in Thailand - H-
Beams:4

Article 6.2 of the DSU calls for sufficient clar ity with respect to the legal basis of the
complaint, that is, with respect to the "claims" that are being asserted by the
complaining party. A defending party is entitled to know what case it has to answer,
and what violations have been alleged so that it can begin preparing its defence.
Likewise, those Members of the WTO who intend to participate as third parties in
panel proceedings must be informed of the legal basis of the complaint. This
requirement of due process is fundamental to ensuring a fair and orderly conduct of
dispute settlement proceedings.
B. T
HE PANEL MUST NOT ASSUME JURISDICTION IN RE SPECT OF CLAIMS T HAT HAVE NOT BEEN
ESTABLISHED IN ACCORDANCE WITH ARTICLE 6.2 DSU
9. Moreover, the respect of the requirements of Article 6.2 DSU is of crucial importance for
properly establishing the jurisdiction of the Pane l. As the Appellate Body has confirmed in US –
Carbon Steel, the panel request forms the basis of the pa nel’s terms of reference under Article 7.1 of
the DSU:5

There are, therefore, two distinct requirements, namely identification of the specific
measures at issue , and the provision of a brief summary of the legal basis of the
complaint (or the claims). Together, they comprise the "matter referred to the
DSB", which forms the basis for a panel's te rms of reference under Article 7.1 of the
DSU.
10. For this reason, a strict respect of the re quirements of Article 6.2 DSU is essential for the
orderly conduct of dispute settleme nt proceedings under the DSU. As the Appellate Body has clearly
stated in EC – Bananas, Panels must therefore verify carefully that the conditions or Article 6.2 DSU
are fulfilled:6

As a panel request is normally not subjected to detailed scrutiny by the DSB, it is
incumbent upon a panel to examine the re quest for the establishment of the panel
very carefully to ensure its compliance with both the letter and the spirit of Article 6.2
of the DSU. It is important that a panel request be sufficiently precise for two
reasons: first, it often forms the basis for th e terms of reference of the panel pursuant
to Article 7 of the DSU; and, second, it informs the defending party and the third
parties of the legal basis of the complaint.
11. Accordingly, the present Panel must verify carefully that the Panel request meet the
requirements of Article 6.2 DSU. The Panel must not assume jurisdiction over any claim that has not
been set out in accordance with Article 6.2 DSU.

4 Appellate Body Report, Thailand – H Beams , para. 88 (emphasis added). Similarly Appellate Body
5 Appellate Body Report, US – Carbon Steel, para. 125. Similarly, Appellate Body Report, Guatemala
– Cement, para. 72.
6 Appellate Body Report, EC – Bananas III , para. 142 (emphasis added). Similarly also Appellate
Body Report, US – Carbon Steel, para. 126.

C. T
HE REQUIREMENTS OF ARTICLE 6.2 DSU MUST BE EVALUATED ON THE FACE OF THE PANEL
REQUEST
12. In EC – Bananas , the Appellate Body has clarified that the claims, which are set out in the
panel request, must be distinguished from the subseq uent arguments of the parties in support of their
claim. Consequently, the Appellate Body has held th at a faulty Panel request cannot be subsequently
"cured" by the written submission of the parties:7

We do not agree with the Panel that "even if there was some uncertainty whether the
panel request had met the requirements of Ar ticle 6.2, the first written submissions of
the Complainants ‘cured’ that uncertainty because their submissions were sufficiently
detailed to present all the factual and lega l issues clearly". Article 6.2 of the DSU
requires that the claims, but not the arguments, must all be specified sufficiently in
the request for the establishment of a panel in order to allow the defending party and
any third parties to know the legal basis of the complaint. If a claim is not specified
in the request for the establishment of a panel, then a faulty request cannot be
subsequently "cured" by a complaining pa rty's argumentation in its first written
submission to the panel or in any other su bmission or statement made later in the
panel proceeding.
13. As a consequence, the only basis on whic h to establish whether a Panel request is in
conformity with the requirements of Article 6.2 is the text of the request itself. This has been
confirmed by the Appellate Body in United States - Carbon Steel:
8

As we have said previously, compliance with the requirements of Article 6.2 must be
demonstrated on the face of the request for the establishment of a panel. Defects in
the request for the establishment of a pane l cannot be "cured" in the subsequent
submissions of the parties during the panel proceedings.
III. THE PANEL REQUESTS FAIL TO IDENTIFY THE "SPECIFIC MEASURE AT
ISSUE"
14. Both Panel requests identify the measure at issue as Council Regulation (EEC) No. 2081/92
on the protection of geographical indications and desi gnations of origin for agricultural products and
foodstuffs, as amended (hereinafter : Regulation 2081/92). Moreover, the Australian request, in its
fourth paragraph, defines the "EC measure" as also including "related implementing and enforcement
measures". In the view of the EC, these references are insufficient in order to define the "specific
measure at issue", as required by Article 6.2 DSU.

A. T
HE REFERENCES TO REGULATION 2081/92 ARE NOT SUFFICIENTLY SPECIFIC
15. The EC considers that the references to Re gulation 2081/92 are not sufficiently specific to
permit an identification of the "specific measure at issue" in the present dispute.

16. The EC would like to stress that Article 6. 2 DSU requires not only the identification of a
"measure", but of the "specific
 measure at issue". The wording of Article 6.2 DSU is different from
that of Article 4.4 DSU, which provides that cons ultation requests must identify "the measures at

7 Appellate Body Report, EC – Bananas III, para. 143.
8 Appellate Body Report, United States –Carbon Steel, para. 127 (emphasis added).

issue". As the Panel in Canada – Wheat has convincingly explained, th is difference in wording is
intentional, and must be given meaning:9

Having regard to the relevant context of Ar ticle 6.2 of the DSU, we note Article 4.4
of the DSU, which deals with the contents of requests for consultations. It states in
relevant part that "any request for consulta tions shall give the reasons for the request,
including identification of the measures at issue". Notably, Article 4.4 omits the term
"specific" in referring to the "measures at i ssue". We believe that this difference in
language is not inadvertent and must be gi ven meaning. Indeed, in our view, this
difference in language supports the view that requests for consultations need not be as
specific and as detailed as requests for estab lishment of a panel under Article 6.2 of
the DSU. As a corollary, in our view, this relevant context bears out the importance
of the term "specific" as it appears in Article 6.2.
17. In the view of the EC, what can be consid ered a "specific measure" will depend on the
circumstances of the particular case, and in pa rticular on the characteristics of the measure in
question. Where a measure is of a relatively si mple character, or where it is clear from the
circumstances of the case which aspect of the measure is contested, it may be sufficient to refer to the
measure as a whole and identify it by name, number, or date of adoption.

18. However, such a reference to a "measure" as a whole may not always be sufficient to
establish the "specific measure at issue". This is th e case, in particular, where the measure in question
is a complex legislative text. For instance, it w ould not seem conceivable to the EC that a WTO
member would refer, in a request for the establishment of a Panel, simply to the Civil Code of another
member, without specifying which specific provision is at issue in the dispute. Accordingly, in the
case of complex legislative measures, it will not be su fficient to refer to the measure as a whole, but it
will be necessary to identify the specific provisions or sections of the measure which are at issue.

19. In the present case, Regulation 2081/92 is a measure with establishes the legal framework for
the protection of geographical indications and desi gnations of origin for agricultural products and
foodstuffs in the European Community. The text of Regulation 2081/92, as most recently amended by
Council Regulation (EC) no. 806/2003 of 14 April 2003, is attached as Exhibit EC–1.

20. The EC does not propose to describe in de tail the content of Regulation 2081/92 in the
context of the present request for a preliminary ruli ng. However, the EC believes that even a cursory
study of Regulation 2081/92 will confirm that this re gulation is a complex piece of legislation in the
field of the protection of intellectual property. As is typical for such legislation, Regulation 2081/92
deals with a host of issues relating to all aspects of the protection of geographical indications and
designations of origin for agricultural products and foodstuffs.

21. The text of Regulation 2081/92 extends over 15 pages, including two annexes. The
operational provisions of Regulation 2081/92 are contai ned in 22 Articles, each of which in turn is
subdivided into numerous further pa ragraphs and sections. These articles deal with a host of widely
differing issues. Purely for illustrative purposes, and without any claim to being exhaustive or
particularly detailed, the following topics are dealt with in Regulation 2081/92:

• The objective and scope of application of the regulation (Article 1);
• definitions (Article 2);
• exclusion from registration of names, and in particular the issue of generic names
(Article 3);

9 Preliminary Ruling by the Panel, Canada – Wheat, para. 15.

• product specifications (Article 4);
• the right to apply for registrations and the procedure for applications (Article 5);
• the procedures for registration of geographical indications and related issues; the issue of
homonymous names (Article 6);
• objections to registrations (Article 7);
• conditions for the use of geographical indications and designations of origin (Article 8);
• the amendment of product specifications (Article 9);
• inspection procedures (Article 10);
• procedures in case product specifications are not respected (Article 11);
• cancellation of protected names (Article 11a);
• the application of the regulation to agri cultural products and foodstuffs from third
countries (Article 12);
• the application procedure for the protection of third country geographical indications
(Article 12a);
• the registration procedure for the protection of third country geographical indications
(Article 12b);
• the amendment of the product specifications for third country geographical indications
(Article 12c);
• objections to the registration of geographical indications emanating from third countries
(Article 12d);
• the protection of registered names (Article 13);
• certain questions regarding the relations hip between geographical indications and
trademarks (Article 14);
• the Committee assisting the Commission (Article 15);
• implementing rules (Article 16);
• entry into force (Article 18).

22. The unspecific reference to "Regulation 2081/ 92" made in the Panel requests does not permit
the EC to understand which specific aspects am ong those covered by Regulation 2081/92 the
complainants intend to raise in the context of the present proceedings. This appears particularly
objectionable given the fact that it would have been easily possible for the complainants to provide
more specific references to individual provisions of Regulation 2081/92.

23. For these reasons, the EC submits that the re ferences to "Regulation 2081/92" do not meet the
requirement of the identification of the "specific measure at issue" in Article 6.2 DSU.

B. T
HE REFERENCES TO "RELATED IMPLEMENTING AND ENFORCEMENT MEASURES " ARE NOT
SUFFICIENTLY SPECIFIC
24. In the fourth paragraph of its Panel request, Australia has referred to "related implementing
and enforcement measures" as part of the "EC measure". 10 The EC is of the view that this blanket
reference to "related implementing and enforcement measures" falls short of the requirement to
identify the "specific measure at issue" in Article 6.2 DSU.

25. The requirement to identify th e "specific measure at issue" m eans that if the measure is not
already identified beyond reasonable doubt through elements such as name, number, or date of

10 In this context, the EC notes that whereas the United States amended request for consultations
(WT/DS174/1/Add.1), in its second paragraph, included a reference to "related implementing and enforcement
measures", such a reference no longer appears in the Panel request, which, in its third and fourth paragraph,
refers exclusively to "Regulation 2081/92". Accordingly, the EC understands that the United States Panel
request extends only to Regulation 2081/92.

adoption of the act, then the Panel request must at the very least contain the necessary information
which enables the Panel, the defendant, and th e third parties to establish with full certainty which is
the specific measure at issu e in the present dispute. This has been convincingly stated by the Panel in
Canada – Wheat:11

We consider that in the absence of an exp licit identification of a measure of general
application by name, as in the present case, sufficient information must be provided
in the request for establishment of a panel it self that effectively identifies the precise
measures at issue. Whether sufficient information is provided on the face of the panel
request will depend, as noted above, on whether the information provided serves the
purposes of Article 6.2, and in particul ar its due process objective, as well as the
specific circumstances of each case, including the type of measure that is at issue.
26. As the Panel in Canada – Wheat also explained, due process does not allow the complainant
to shift the burden of identifying the specific measures under challenge to the defendant:
12

Due process requires that the complaining party fully assume the burden of
identifying the specific measures under cha llenge. In the present case, the panel
request effectively shifts part of that burden onto Canada as the responding party,
inasmuch as it leaves Canada little choice, if it wants to begin preparing its defence,
but to undertake legal research and exercise judgement in order to establish the
precise identity of the laws and regulations implicated by the panel request.
27. The Australian request falls entirely shor t of these requirements. The Australian request
contains no elements to identify the "measures" at issue, other than they are "related" and that they are
supposed to be "enforcement or implementing measures".

28. The statement that the measures are "related" is so vague that it does not permit any
meaningful narrowing-down of the measures in ques tion. In fact, a whole range of legislative and
other measures might be considered to be "related " in some way to the present dispute, including
trademark and other intellectual property legisla tion, unfair competition laws, law on food labelling
and food marketing, or consumer pr otection laws. Moreover, such laws may exist at the level of both
the European Community and its Member States.

29. Similarly, the reference to "enforcement or implementing measures" does not provide the
required precision with respect to the definition of the specific measure at issue. Since Regulation
2081/92 is a complex piece of intellectual property legisl ation, there is very large number of different
measures that are necessary for its implementation and enforcement.

30. First of all, implementation may occur throug h legislative measures, for instance through the
adoption of "detailed rules" on the basis of Artic le 16 of Regulation 2081/92. More importantly,
implementation and enforcement ma y require measures of the executive, for instance concerning the
transmission of applications or objections, the decision to register or to cancel geographical
indications, or to amend specifications, etc. Fi nally, implementation and enforcement is also a
responsibility of the judiciary, which is responsible for the judicial review of the actions of the
Community and Member States authorities in the application of Regulation 2081/92.

31. Moreover, it should be noted that the implem entation of Regulation 2081/92 is not only the
responsibility of the Community, but also that of its Member States, who, for instance, are responsible
for the transmission of applications and objectio ns regarding the registration of geographical

11 Preliminary Ruling by the Panel, Canada – Wheat, para. 20.
12 Preliminary Ruling by the Panel, Canada – Wheat, para. 24.

indications to the Commission. Therefore, Member States also may have to adopt implementing rules,
and take decisions which are subject to judicial review by national courts.

32. Finally, it should be noted that the measure s which have been taken for implementing or
enforcing Regulation 2081/92 are of a very high numbe r. To take only one figure, the EC has by now
registered 640 geographical indications or desi gnations of origin. The EC would consider it
inconceivable that each one of these registrations would be the subject of the present dispute
settlement proceedings simply because of the blan ket reference to "implementing and enforcement
measures".

33. For these reasons, the EC submits that the reference to "related implementing and
enforcement measures" in the Australian request fails to identify the "specific measure at issue".

IV. THE PANEL REQUESTS DO NOT CO NTAIN A BRIEF SUMMARY OF THE
LEGAL BASIS OF THE COMPLAINT
34. The Panel requests in the present case do not only fail to identify the specific measure at
issue. They also fail to include a brief summary of the legal basis of the complaint.

A. T
HE BRIEF SUMMARY OF THE LEGAL BASIS OF THE COMPLAINT
35. Article 6.2 DSU requires that a request for the establishment of a Panel must contain a "brief
summary of the legal basis of the complaint sufficient to present the problem clearly".

36. As the Appellate Body has stated in EC – Bananas, there is a distinction between the claims,
which must be contained in the Panel request, and the arguments supporting these claims, which are
set out in the subsequent submissions of the Parties.13 However, in Korea – Dairy, the Appellate Body
has also clarified that the mere listing of provisi ons claimed to have been violated may not be
sufficient for the purposes of Article 6.2 DSU:14

Identification of the treaty provisions claimed to have been violated by the respondent
is always necessary both for purposes of defining the terms of reference of a panel
and for informing the respondent and the th ird parties of the claims made by the
complainant; such identification is a minimu m prerequisite if the legal basis of the
complaint is to be presented at all. But it may not always be enough. There may be
situations where the simple listing of the articles of the agreement or agreements
involved may, in the light of attendant circ umstances, suffice to m eet the standard of
 clarity in the statement of the legal basis of the complaint. However, there may also
be situations in which the circumstances are such that the mere listing of treaty
articles would not satisfy the standard of Article 6.2. This may be the case, for
instance, where the articles listed establish not one single, distinct obligation, but
rather multiple obligations. In such a situation, the listing of articles of an agreement,
in and of itself, may fall short of the standard of Article 6.2.
37. In the concrete case, the Appellate Body was primarily concerned with the question of
whether a reference to a provision in a WTO ag reement may be sufficient when such provision
contains multiple obligations. However, the finding s of the Appellate Body are of a more general
importance. First, the Appellate Body held that the precise identification of the WTO provisions
alleged to have been violated is always require d under Article 6.2 DSU. Second, the Appellate Body
has also stated that the identification of treaty provisions may not be enough
 to state the problem

13 Appellate Body Report, EC – Bananas III, para. 141.
14 Appellate Body Report, Korea – Dairy, para. 124.

clearly. In other words, the identification of the tr eaty provisions alleged to have been violated is a
necessary, but not a sufficient condition under Article 6.2 DSU.

38. It is this second element whic h is of particular interest in the present case. Article 6.2 DSU
does not require complainants to "to list the treaty provisions alleged to have been violated". Rather, it
obliges complainants to provide a "brief summary of the legal basis of the complaint sufficient to
present the problem clearly". The reference to treaty provisions is only one element of the "legal basis
of the complaint", which must also include other factual and legal elements necessary to present the
problem clearly.

B. T
HE PANEL REQUESTS FAIL TO "PRESENT THE PROBLEM CLEARLY"
39. In the view of the EC, the Panel requests do not establish the problem clearly in accordance
with Article 6.2 DSU. Even a cursory examination of the Panel requests will show that the "summary
of the legal basis of the complaint" provided in them is in fact limited to vague listings of articles and
some narrative text which, in general, is limited to restating the language of the treaty provision in
question. As the EC will show, by adopting such a minimalist approach, both the United States and
the Australian request fail to present the problem clearly in accordance with Article 6.2 DSU.

1. The United States request
40. The United States request is drafted in an extremely minimalist way. The "claims" of the
United States seem to be contained in the third para graph of the United States request. In this short
paragraph, the United States appears to raise seven claims with respect to Regulation 2081/92. In
particular, the United States claims that Regulation 2081/92:

• does not provide the same treatment to other nationals and products originating outside
the EC that it provides to the EC's own nationals and products (claim 1);
• does not accord immediately and unconditionall y to the nationals and products of each
WTO Member any advantage, favour, privilege or immunity granted to the nationals and
products of other WTO Members (claim 2);
• diminishes the legal protection for trademarks (including to prevent the use of an identical
or similar sign that is likely to confuse and adequate protection against invalidation)
(claim 3);
• does not provide legal means for interested parties to prevent the misleading use of a
geographical indication (claim 4);
• does not define a geographical indication in a manner that is consistent with the definition
provided in the TRIPS Agreement (claim 5);
• is not sufficiently transparent (claim 6);
• and does not provide adequate enforcement procedures (claim 7).

(a) The United States request does not indicate the legal bases of the claims
41. The United States request does not provide any indication of a legal basis for each of these
claims. The only reference to substantive WTO provisi ons is contained in the fourth paragraph of the
Panel request, which states that Regulation 2081/92 appears to be inconsistent with "TRIPS
Agreement Articles 1.1, 2.1 (incorporating by reference Article 2 of the Paris Convention for the
Protection of Industrial Property (Paris Convention (1967)), 3.1, 4, 16.1, 20, 22.1, 22.2, 24.5, 41.1,
41.2, 41.4, 42, 44.1, 63.1, 63.3, 65.1" as well as "Articles I and III:4 of the GATT 1994".

42. This long list of WTO provisions, however, is in no way correlated with the individual claims
raised in the third paragraph of the United States requ est. On the other hand, it is not conceivable that

each of the claims of the United States would be based on all the provisions mentioned in the fourth
paragraph of the United States request. The result is a total lack of clarity regarding the legal bases of
the United States’ claims. By not even identifying the provisions of the WTO agreements which it
considers to underlie each of its claims, the US falls short of the minimum requirements for the brief
summary as established by the Appellate Body in Korea – Dairy.
15

(b) The United States claims are unclear
43. The absence of a sufficient summary of the lega l bases of the United States claims can also be
demonstrated for each of the claims set out in the third paragraph of the United States request.

44. As regards the first claim , the United States is alleging that Regulation 2081/92 "does not
provide the same treatment to othe r nationals and products originati ng outside the EC that it provides
to the EC's own nationals and products". This claim would appear to be a reference to the principle of
national treatment, as contained in Article 3 TRIPS and Article III:4 GATT. However, the US claim is
limited to a paraphrasing of the treaty language of these two provisions. The US claim does not permit
to understand which provision or aspect of Regul ation 2081/92 is supposed to violate the national
treatment principle, and in which way such a viola tion is deemed to occur. This does not constitue a
summary of the legal basis of the claim sufficient to present the problem clearly.

45. In its second claim , the United States claims that Re gulation 2081/92 "does not accord
immediately and unconditionally to the nationals an d products of each WTO Member any advantage,
favour, privilege or immunity granted to the natio nals and products of other WTO Members". This
claim seems to be a reference to the principle of most favoured nation treatment, as contained in
Article 4 TRIPS and Article I:1 GATT. However, as the first claim, this claim is limited to the
paraphrasing of the language of treaty provisions , without any indication of which provision of
Regulation 2081/92 is supposed to constitute the vi olation, and how such a violation occurs. More
specifically, the United States request does not indi cate which are the "other WTO members" who are
supposed to enjoy more favourable treatment, what constitutes this "more favourable treatment", and
how it is conferred.

46. As regards the third claim, the United States alleges that Regulation 2081/92 "diminishes the
legal protection for trademarks". Unfortunately , the United States does not provide any further
explanation as to why it considers that Regula tion 2081/92 diminishes the "legal protection of
trademarks". In the view of the EC, this does not constitute a meaningful description of the claim. The
claim is made no clearer by the cryptic parenthesis "including to prevent the use of an identical or
similar sign that is likely to confuse and adequate protection against invalidation", which the United
States has added to its claim. Moreover, this parenthesis would seems to indicate that there might be
other aspects diminishing the legal protection for tr ademarks, without however indicating what these
aspects are.

47. The absence of a brief summary of the third claim is further compounded by the absence of
any specific references to the provisions of Regulatio n 2081/92. It is certainly correct that Regulation
2081/92 contains various provisions also concerning trademarks. For instance, Article 14.1 of the
Regulation concerns the conditions under which the registration of a trademark conflicting with a
geographical indication will be refused or invalid ated. Article 14.2 deals with situations of
coexistence between trademarks and geographical indications. Article 14.3 provides for situations
where, in the light of a trademark’s reputation, re nown, and length of time of use, registration of a
geographical indication shall be refused. Finally, the existence of trademarks is mentioned as a
possible ground for objection in Article 7 (4) of Regulation 2081/92.

15 Appellate Body Report, Korea – Dairy, para. 124.

48. In other words, Regulation 2081/92 deals with conflicts between trademarks and geographical
indications in a number of differe nt constellations, and provides for specific solutions for each of
these. The United States request, by merely referring to the "legal protection of trademarks", does not
enable the EC to understand which specific problems the United States wishes to raise in this respect.

49. In its fourth claim, the United States alleges that Regulation 2081/92 "does not provide legal
means for interested parties to prevent the misleadi ng use of a geographical indication". This claim is
not comprehensible to the EC. In its Article 13, Regulation 2081/92 cont ains detailed provisions
regarding the protection of registered geographical indications. These provisions provide interested
parties with the legal means to prevent the misleading use of a geographical indication. In the
absence of further explanations, the EC fails to comprehend what is the claim that the United States is
intending to establish.

50. In its fifth claim , the United States claims that Regulation 2081/92 does not define a
geographical indication in a manner that is consis tent with the definition provided in the TRIPS
Agreement. First of all, the United States does not explain what are the differences in the definition of
geographical indications between the TRIPS Agreem ent and Regulation 2081/92. Moreover, there is
no conceivable legal basis for the US claim. It is certainly true that Article 22.1 TRIPS contains a
definition of geographical indications. However, this definition is explicitly made "for the purposes of
this Agreement", and in particular for the subsequent provisions setting out the substantive obligations
with respect to the protection of geographic indica tions. In contrast, Article 22.1 does not contain any
independent obligation to "define" a geographical i ndication in any particular way. It is therefore
irrelevant under the TRIPS Agreement how the legislation of a WTO Member "defines" a
geographical indication, provided that the Member affords geographical indications the necessary
protection as required in the provisions of the TRI PS Agreement. In the view of the EC, the United
States fails therefore to set out a claim in this respect.

51. In its sixth claim , the United States pretends that Regulation 2081/92 "is not sufficiently
transparent". Once again, this claim is incomprehensible to the EC. Regulation 2081/92 is a legislative
measure adopted by the Council of the European Uni on, and published in the Official Journal of the
European Union. The EC notes that unlike Australia , the United States refers to the transparency of
the Regulation, rather than that of its appli cation. The EC does not understand, however, how a
legislative measure such as Regulation 2081/92 can be said not to be "sufficiently transparent". In any
case, the US request fails to state in which respect Regulation 2081/92 is supposed not to be
"sufficiently transparent".

52. Finally, in its seventh claim , the United States claims that Regulation 2081/92 "does not
provide adequate enforcement procedures". In the view of the EC, this claim is devoid of all clarity.
The United States request neither indicates what, in its view, would be "adequate enforcement
procedures", nor in which way Regulation 2081/ 92 falls short of providing such procedures.
Moreover, the United States request does not identify what is the right to be enforced, an in particular
whether it is talking about the enforcement of geographical indications or of trademarks.

53. Overall, the EC considers that the United States request fails both to identify the specific
measure at issue, and to set out the claims of the United States . The compounded effect of these
deficiencies is a Panel request of such vagueness and ambiguity that the EC is not capable to
understand which is the case that the United States would like it to answer. For these reasons, the
Panel must reject the US request as being incompatible with Article 6.2 DSU.

2. The Australian request
54. The Australian request is marked by deficien cies similar to those of the United States request.

55. The claims of Australia appear to be cont ained in the fifth paragraph of the Australian
request. In this paragraph, Australia claims th at Regulation 2081/92 (which, according to Australia,
also includes its "related measures"):

• diminishes the legal protection for tradem arks under the TRIPS Agreement, contrary
to Articles 1, 2 (incorporating by reference Articles 6quinques(B), 10, 10bis and 10ter
of the Paris Convention (1967)), 16, 20, 24. 5, 41 and/or 42 of the TRIPS Agreement
(claim 1);

• does not accord immediately and unconditionall y to the nationals and/or products of
each WTO Member any advantage, favour privilege or immunity granted to the
nationals of any other WTO Member, cont rary to Articles 1 and 4 of the TRIPS
Agreement and/or Article I:1 of GATT 1994 (claim 2);

• does not accord to nationals and/or products of each WTO Member treatment no less
favourable than that it accords to its own nationals and/or like products of national
origin, contrary to Articles 1, 2 (incorpor ating by reference Article 2 of the Paris
Convention (1967)) and 3.1 of the TRIPS Agreement and/or Article III:4 of
GATT 1994 (claim 3);

• does not provide the legal means for interest ed parties to prevent misleading use of a
geographical indication and/or to prevent any use of a geographical indication which
constitutes an act of unfair competition within the meaning of Article 10bis of the
Paris Convention (1967), contrary to Ar ticles 1 and 22.2 of the TRIPS Agreement
(claim 4);

• is not applied in a transparent manner, contrary to Articles 1, and 63.1 and 63.3 of the
TRIPS Agreement (claim 5);

• is a technical regulation within the meani ng of Annex 1 to the TBT Agreement, does
not accord to products imported from the territory of any WTO Member treatment no
less favourable than that accorded to like products of national origin and/or to like
products originating in any other country, and/or has been prepared, adopted and/or
applied with the effect of creating unnecessary obstacles to trade, being more trade-
restrictive than necessary to fulfil a legitimate objective, taking account of the risks
non-fulfilment would create, contrary to Ar ticles 2.1 and 2.2 of the TBT Agreement
(claim 6).

(a) The legal bases of the claims indicated in the Australian request are in some cases unclear
56. The structure of the Australian request differs from that of the United States in that Australia
does indicate, for each of the claims it makes, the provision of the WTO agreements which it
considers violated. However, even these listings lack , in some instances, the precision required by the
Appellate Body in Korea – Dairy.
16

57. In its first claim, Australia is referring to "Article 41 and/or 42 of the TRIPS Agreement.
However, Article 41 TRIPS Agreement is a co mplex provision subdivided into a number of
paragraphs, which contains a nu mber of different obligations.
17 The same also applies for Article 42
TRIPS Agreement, which, although set out in one paragraph, also comprises several sentences

16 Appellate Body Report, Korea – Dairy, para. 124. For the full quotation, see above para. 36.
17 It is useful to note that the United States request refers only to Articles 41.2 and 41.4 TRIPS.

establishing distinct obligations for WTO Members. Finally, the EC does not understand the "and/or"
which seems to indicate that Articles 41 and 42 TRIPS are somehow alternative obligations.

58. Also in its first claim, Australia refers, in conjunction with Article 2 TRIPS Agreement, to
Articles 10, 10 bis and 10 ter of the Paris Convention. Once again, these articles of the Paris
Convention are complex provisions subdivided in to various paragraphs , and imposing numerous
distinct obligations.

59. Accordingly, the EC considers that the re ferences to Articles 41 and 42 TRIPS Agreement,
and to Articles 10, 10bis and 10ter of the Paris Convention do not meet the minimum requirements of
specificity under Article 6.2 DSU.

(b) The Australian claims are unclear
60. However, even where the Australian request lists correctly the provisions of the WTO
agreements, this indication of treaty provisions is not sufficient for the purposes of Article 6.2 DSU.
This is due to the fact that the narrative descripti on of the claims, as in the case of the United States
request, is limited to the paraphrasing of the text of tr eaty provisions, or is so excessively vague that it
does not permit to understand the substance of Australia’s claims.

61. Since most of Australia’s claims are similar to those of the United States, reference can be
made to what has been said about the United States request. Australia’s claim 1 is almost identical to
the United States claim 3,
18 and similarly fails to meet the requirements of Article 6.2 DSU. 19
Australia’s claim 2 is similar to US claim 2, and Australia’s claim 3 is similar to US claim 1. Like the
US claims, Australia’s claims 2 and 3 are limited to the restatement of language already contained in
treaty provisions, and therefore encounter the same objections. 20 Australia’s claim 4 corresponds to
the fourth claim of the United States, so that refere nce can be made to what has been said in this
respect.21 Finally, claim 5 corresponds to United States claim 6, with the sole difference that Australia
refers to the transparency of the "application of Regulation 2081/92", rather than that of the
Regulation itself. However, since Australia fails to explain in which way Regulation 2081/92 is not
applied in a transparent way, its claim fails to m eet the requirements of Artic le 6.2 DSU for the same
reasons as the United States claim.22

62. The only claim of Australia which finds no equivalent in the United States request is claim 6,
by which Australia raises certain claims under the TBT Agreement, namely that Regulation 2081/92
"is a technical regulation within the meaning of Annex 1 to the TBT Agreement, does not accord to
products imported from the territory of any WTO Member treatment no less favourable than that
accorded to like products of national origin and/or to like products originating in any other country,
and/or has been prepared, adopted and/or applied with the effect of creating unnecessary obstacles to
trade, being more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the
risks non-fulfilment would create, contrary to Articles 2.1 and 2.2 of the TBT Agreement".

63. As to the first element of this claim, namely whether Regulation 2081/92 is a "technical
regulation" within the meaning of Annex 1 to the TBT Agreement, the EC considers that this cannot
constitute an admissible claim, since Point 1 of Annex 1 to the TBT Agreement, which defines the

18 The only difference is that the Australian request does not contain the cryptic parenthesis included in
the United States request.
19 Supra para. 46 to 48.
20 Supra para. 44 to 45.
21 Supra para. 49.
22 Supra para. 51.

term "technical regulation" for the purposes of th e TBT Agreement, does not impose any obligations
which could have been violated by the EC.
23

64. As regards the claims that Regulation 2081/92 does not accord to products imported from the
territory of any WTO Member treatment no less fa vourable than that accorded to like products of
national origin and/or to like pr oducts originating in any other country, and/or has been prepared,
adopted and/or applied with the effect of creati ng unnecessary obstacles to tr ade, these claims merely
seem to restate language which is contained in Ar ticle 2.1 and 2.2 of the TBT Agreement, without
however providing any indication of how Regulati on 2081/92, and which provision thereof, violates
these obligations. For the same reasons as Australia’s claims 2 and 3, claim 6 therefore fails to meet
the requirements of Article 6.2 DSU.

65. In conclusion, both the United States and the US request fail to contain a brief summary of
the legal basis of the claims, as required by Article 6.2 DSU. Both request do not "present the problem
clearly". For the reasons set out above, the EC c onsiders that both the Australian and the US Panel
requests fail to meet the requirements of Article 6.2 DSU.

V. THE DEFICIENCIES OF THE PANEL REQUESTS RESULT IN SERIOUS
PREJUDICE FOR THE EUROPEAN COMMUNITY AS A DEFENDANT
66. As has been stated above, the requirements of Article 6.2 DSU also serve to protect the due
process rights of the defending party in dis pute settlement proceedings under the DSU.
24 As a
consequence, the Appellate Body has, when c onsidering the requirements of Article 6.2 DSU,
attached importance to the question of whether the defending party has suffered prejudice as a result
of the deficiencies of a panel request.25

67. In the present case, the EC considers it clear that it is prejudiced by the lack of clarity of the
United States and Australian request. As a defending party, the EC has a right to know what the case
is which it will have to defend. This information must be contained in the Panel request.

68. In the present case, the ambiguity of the Panel requ est is such that the EC is, to this date, not
sure of the case which the United States and Australia are bringing before the Panel. As a
consequence, the EC has been seriously hampered in its efforts to prepare its defence.

69. This situation is not acceptable from the point of view of the due process rights of the EC.
Dispute settlement proceedings under the DSU are subject to very strict deadlines. As a consequence,
the EC cannot be expected to wait for the first written submission of the complainants to start
preparing its defence. Rather, the time betwee n the submission of the panel request and the
constitution of the Panel is used by both complaining and defending parties for the preparation of their
case.

70. The strict respect of Article 6.2 DSU is also necessary to ensure a level playing field for the
complaining and defending parties. Since the comp lainants have the initiative in dispute settlement,
they can take all the time necessary to prepare th eir case before the introduction of the panel request.
In contrast, the defendant can begin preparing its case only once he has received a notice of the case
in accordance with Article 6.2 DSU.

23 Cf. also the discussion of United States claim 5 (supra para. 50).
24 Supra note 4.
25 Appellate Body Report, Korea – Dairy , para. 131; Appellate Body Report, Thailand – H Beams ,
para. 95. The EC does consider it necessary, in the present case, to take a position as to whether the requirement
of prejudice in Article 6.2 DSU constitutes an additional requirement to those set out in Article 6.2 DSU.

71. The EC notes that the United States has, as a defending party, frequently criticised Panel
requests for not respecting the requirements of Article 6.2 DSU, and has requested preliminary rulings
on this question. 26 In the present context, the EC consider s it useful to quote from the United States’
submissions before the Panel in US – Lamb:27

The insufficiency of the Panel requests has seriously prejudiced the United States in
the preparation of its defense. It prev ented the United States from knowing the true
nature of the claims being made against the U.S. measure and placed the United
States in the position of merely guessing wh ich of the many obligations in these
several articles might be at issue in this re view. This severely limited the ability of
the United States to begin the task of prep aring its defense. The dispute resolution
process is intended to be a relatively sp eedy process. Central to such a speedy
process is the requirement that claims be clearly stated at the required time. The
failure of a complaining party to do so prejudices the responding party and undercuts
the fairness of the entire process. It effectively stacks the deck against the responding
party.
72. The EC does not consider that different st andards should be applied in the present case. The
EC would also like to recall that Article 3.10 DSU requires Members to engage in dispute settlement
procedures in good faith. As the Appellate Body has underlined in US – FSC, this obligations applies
also to the complainants:
28

This pervasive principle requires both complaining and responding Members to
comply with the requirements of the DSU (and related requirements in other covered
agreements) in good faith. By good faith compliance, complaining Members accord
to the responding Members the full measure of protection and opportunity to defend,
contemplated by the letter and spirit of the procedural rules.
73. The EC does not wish to speculate about what are the reasons for the deficient drafting of the
Panel requests. In particular, the EC does not know whether this drafting reflects a conscious choice
on the side of the complainants to leave the EC in the dark about their prospective case, or whether
the complainants simply were unsure of the case that they were intending to bring. Whatever the
explanation may be, the Panel requests in their curr ent form would provide the complainants with a
maximum flexibility in terms of their subsequent litig ation strategy, and oblige the EC to defend itself
against a moving target. This is not in accordance with the requirement of due process underlying
Article 6.2 DSU.

74. By keeping their panel requests excessivel y vague, the United States and Australia have
prevented the EC from preparing its defence in a timely manner. They have thereby caused serious
prejudice to the EC.

VI. THE DEFICIENCIES OF THE PANEL REQUESTS HAVE BEEN RAISED BY THE
EC IN A TIMELY MANNER, AND MUST BE ADDRESSED WITHOUT DELAY
75. In considering the requirements of Article 6. 2 DSU, the Appellate Body has held that the
respect of the conditions of this provision is of a fundamental nature, and may be examined at any
stage in the proceedings.
29

26 Panel Report, US – Lamb, para. 5.5; Panel Report, US – Carbon Steel, para. 4.1-4.2.
28 Appellate Body Report, US – FSC, para. 166.
29 Appellate Body Report, US – Carbon Steel, para. 123.

76. At the same time, the Appellate Body has att ached importance to the fact that the parties
should bring procedural deficiencies to the atten tion of the Panel at the earliest possible opportunity.
30
This requirement was justified by the Appellate Body in US – FSC on the basis of the principle of
good faith, which pervades dispute settlement proceedings under the DSU:31

Article 3.10 of the DSU commits Members of the WTO, if a dispute arises, to engage
in dispute settlement procedures "in good faith in an effort to resolve the dispute".
This is another specific manifestation of the principle of good faith which, we have
pointed out, is at once a general principle of law and a principle of general
international law. This pervasive principle requires both complaining and responding
Members to comply with the requirements of the DSU (and related requirements in
other covered agreements) in good faith. By good faith compliance, complaining
Members accord to the responding Members the full measure of protection and
opportunity to defend, contemplated by the letter and spirit of the procedural rules.
The same principle of good faith requires that responding Members seasonably and
promptly bring claimed procedural deficiencies to the attention of the complaining
Member, and to the DSB or the Panel, so th at corrections, if needed, can be made to
resolve disputes. The procedural rules of WTO dispute settlement are designed to
promote, not the development of litigation techniques, but simply the fair, prompt and
effective resolution of trade disputes.
77. The present request for a preliminary ruli ng is in full accordance with these requirements
established by the Appellate Body. The EC has raised the objection regarding the compatibility of the
Panel requests with Article 6.2 DSU at the first possible occasion, namely at the meeting of the
Dispute Settlement Body (DSB) on 29 August 2003, at which the requests were discussed for the first
time.
32 At this meeting, the EC explicitly called upon the United States and Australia to submit new
panel requests compatible with Article 6.2 DSU. Since the complainants failed to do so, the EC
repeated its concerns at the second meeting of the DSB on 2 October 2003, and reserved its rights to
raise the issue during the Panel proceedings.33

78. In the view of the EC, the deficiencies of the Panel requests are such that they will affect the
entire subsequent proceedings. In particular, if th e Panel requests are not amended, the scope of the
present dispute will remain entirely unclear. This will have as an inevitable consequence that the
submissions of the parties will have to deal not only with issues of substance, but also with the scope
of the claims of the complainants. Moreover, it wo uld be regrettable for th e Parties to engage in
pleadings on the substance of the dispute, only for the Panel requests to be found insufficient in the
Panel report or by the Appellate Body. For these reasons, and in order to safeguard the proper conduct
of the present dispute settlement proceedings, the EC considers it appropriate for the Panel to issue a
preliminary ruling regarding Article 6.2 DSU.

79. This would also be in line with the ruling of the Appellate Body has EC – Bananas, in which
the Appellate Body held that questions regarding the respect of Article 6.2 DSU should be decided
early in panel proceedings, without causing prejudice or unfairness to any party or third party.
34

30 Appellate Body Report, Thailand – H Beams , para. 95; Appellate Body Report, US – Carbon Steel ,
para. 123.
31 Appellate Body Report, US – FSC, para. 166.
32 Minutes of the Meeting of the Dispute Settlement Body of 29 August 2003, WT/DSB/M/155,
para. 75 (Exhibit EC-2).
33 Minutes of the Meeting of the Dispute Settlement Body of 2 October 2003, WT/DSB/M/156,
para. 32 (Exhibit EC-3).
34 Appellate Body Report, EC – Bananas III, para. 144.

80. The EC would like to clarify that it remain s committed to a speedy resolution of the present
dispute. For this reason, the EC would not consider it inappropriate for the Panel to suggest to the
complaining parties to introduce a new Panel request in full compliance with Article 6.2 DSU. The
EC would like to note that such a course of ac tion has recently been taken by a Panel in another
dispute.35

VII. CONCLUSION
81. For the reasons set out above, the EC respectfu lly requests that the Panel find that the panel
requests do not meet the requirements of Article 6.2 DSU.

82. Given the importance of the jurisdictional issues raised in the present request, the EC
considers it appropriate that the Panel issue a prelim inary ruling on this matter before the first written
submissions of the Parties are due.

35 Cf. Preliminary Ruling by the Panel, Canada – Wheat, para. 65. In this case, the United States indeed
introduced a new Panel request (WT/DS276/9). The dispute then continued to be heard before the Panel
originally established after the first Panel request.

Table of WTO and GATT cases referred to in this submission

Short Title Full Case Title and Citation of Case
Argentina – Textiles
and Apparel
Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel
and Other Items, WT/DS56/R, adopted 22 April 1998, as modified by the Appellate
Body Report, WT/DS56/AB/R, DSR 1998:III, 1033
Australia –
Automotive Leather

Panel Report, Australia – Subsidies Provided to Producers and Exporters of Automotive
Leather, WT/DS126/R, adopted 16 June 1999, DSR 1999:III, 951
Belgian Family
Allowances
GATT 1947 Panel Report, Belgian Family Allowances, adopted on 7 November 1952,
1S/59
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry,
WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by the Appellate Body
Report, WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, 3043
EEC – Beef from
Canada
GATT 1947 Panel Report, European Economic Community – Imports of Beef from
Canada, adopted on 10 March 1981, 28S/92
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines ,
WT/DS231/AB/R, adopted 23 October 2002
India – Autos Panel Report, India – Measures Affecting the Automotive Sector , WT/DS146/R,
WT/DS175/R and Corr.1, adopted 5 April 2002
India –
Patents (US)

Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural
Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry ,
WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1, 2, 3, and 4, adopted
23 July 1998, DSR 1998:VI, 2201
Japan – Film Panel Report, Japan – Measures Affecting Consum er Photographic Film and Paper ,
WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, 1179
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, 3
Korea – Various
Measures on Beef
Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and
Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001
Norway –
Trondheim Bridge
Panel report under the 1979 Agreement on Government Procurement, Norway –
Procurement of Toll Collection Equipment for the City of Trondheim , GPR/DS.2/R,
adopted 13 May 1992
US – Tuna GATT 1947 Panel Report, United States – Restrictions on Imports of Tuna , DS21/R, 3
September 1991, 39S/155, not adopted
US – Certain EC
Products
Appellate Body Report, United States – Import Measures on Certain Products from the
European Communities, WT/DS165/AB/R, adopted 10 January 2001
US – Gasoline Panel Report, United States – Standards for Reformulated and Conventional Gasoline ,
WT/DS2/R, adopted 20 May 1996, as modified by the Appellate Body Report,
WT/DS2/AB/R, DSR 1996:I, 29
US – Section 211
Appropriations Act
Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of
1998, WT/DS176/AB/R, adopted 1 February 2002
US – Wool Shirts
and Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts
and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 23 May 1997,
DSR 1997:I, 323

GLOSSARY

Commission, EC Commission Commission of the European Communities

Committee Committee of representatives of the
Member States referred to in Article 15 of
Council Regulation 2081/92

Community Trademark Regulation Council Regulation (EC) No 40/94, of
20 December 1993, on the Community
Trademark, as amended on the date of
establishment of the Panel

Council, EC Council Council of the European Union

Court of Justice, European Court of Justice Court of Justice of the European
Communities

DSU Understanding on Rules and Procedures
Governing the Settlement of Disputes

EC European Communities

GATT General Agreement on Tariffs and Trade
1994

FWS First Written Submission

GI Geographical indication

Member States, EC Member States Member States of the European Union

Official Journal Official Journal of the European Union

Paris Convention Stockholm Act of the Paris Convention for
the protection of Industrial property, of
14 July 1967

Regulation 2081/92, Regulation Council Regulation (EEC) No 2081/92 of
14 July 1992 on the protection of
geographical indications and designations of
origin for agricultural products and
foodstuffs, as amended on the date of
establishment of the Panel

SCM Agreement, SCM Agreement on Subsidies and Countervailing
Duties

Trademarks Directive First Council Directive 89/104, of
20 December, on the Community
Trademark, as amended on the date of
establishment of the Panel

TBT Agreement, TBT Agreement on Technical Barriers to Trade

TRIPS Agreement, TRIPS Agreement on Trade-Related Aspects of
Intellectual Property Rights

US United States

WTO World Trade Organization

WTO Agreement Marrakesh Agreement Establishing the
World Trade Organization

I. INTRODUCTION
1. This submission provides the response of the European Communiti es to the first written
submissions filed by Australia and the United States on 25 May 2004.

2. Section II raises a number of issues in connec tion with the terms of reference of the Panel.

3. Section III sets out the content of Regulation 2081/1992 to the extent relevant for the present
dispute and corrects a number of errors and misrepresen tations made by the complainants in their first
written submissions.

4. Section IV addresses the various claims submitte d by the complainants to the effect that
certain requirements of Regulation 2081/92 are incomp atible with the national treatment obligations
under Article 3.1 of the TRIPS Agreement, Article 2. 1 of the Paris Convention and Article III:4 of the
GATT, as well as with the prohibition on requirements of domicile or establishment in Article 2.2 of
the Paris Convention.

5. Section V addresses the United States' claims that some of those requirements are
incompatible with the most-favoured-nation obliga tions under Article 4 of the TRIPS Agreement and
Article I:1 of the GATT.

6. Section VI deals with the complainants' vari ous claims to the effect that Regulation 2081/92
diminishes the legal protection of trademarks, th ereby violating Articles 16.1, 20 and 24.5 of the
TRIPS Agreement, as well as certain provisions of Part III of that Agreement, and Articles 10 bis and
10ter of the Paris Convention.

7. Section VII responds to the claims that the EC does not comply with the obligation to provide
protection to geographical indications under Article 22.2 of the TRIPS Agreement.

8. Finally, Section VIII deals with the claims raised by Australia that Regulation 2081/92 is
incompatible with certain provisions of the TBT Agreement.

9. For ease of reference, the EC has grouped a nd numbered sequentially the claims submitted by
the complainants. In each case, the EC has indicated which of the co mplainants has made the claim,
and referred to the paragraphs of the first submission where the claim is made.

II. TERMS OF REFERENCE
10. The present Panel has been established by th e DSB on 2 October 2003 with standard terms of
reference in accordance with Article 7.1 of the DSU.
1 These terms of reference define the Panel's
scope of jurisdiction. As the Appellate Body has explained in India – Patents (US) , a panel cannot
consider claims which are not within its terms of reference:2

The jurisdiction of a panel is established by that panel's terms of reference, which are
governed by Article 7 of the DSU. A panel may consider only those claims that it has
the authority to consider under its terms of reference. A panel cannot assume
jurisdiction that it does not have. In this case, Article 63 was not within the Panel's

1 Cf. WT/DS174/21, WT/DS290/19, para. 2. As the EC has set out in its request for a preliminary
ruling made on 24 February 2004, it considers that the pa nel requests of the United States and of Australia are
not in compliance with the requirements of Article 6.2 DSU. The EC reserves the right to raise this issue in the
context of an appeal.
2 Appellate Body Report, India – Patents (US), para. 92.

jurisdiction, as defined by its terms of reference. Therefore, the Panel had no
authority to consider the alternative claim by the United States under Article 63.
11. In its first written submission, Australia is referring to versions of Regulation 2081/92 which
were no longer in force at the time the Panel's terms of reference were established. Moreover, the
complainants have referred to a number of measure s that were not yet in existence at the time the
Panel was established. In the view of the EC, only m easures which were in force at the time that the
Panel was established are within the terms of reference of the Panel.

12. Moreover, Australia and the United States raise a number of claims which are not identified
in their requests for the establishment of the Panel. Such claims not identified in the panel requests are
not within the jurisdiction of the Panel.

A. T
HE MEASURE AT ISSUE
1. Versions of Regulation 2081/92 no longer in force at the time the Panel was established
13. In its first written submission, Au stralia (but not the United States) 3 has referred to several
versions of Regulation 2081/92 no longer in force. It has numbered these versions #1 to #3, reflecting
various subsequent amendments of Regulation 2081/92.4

14. Throughout its submission, Australia refers repeatedly to these different versions of
Regulation 2081/92. In particular, Australia claims that no right of objection was available to persons
not resident or established in the EC " until Article 12d (1) of Regulation No 2081/92#3
 changed the
situation".5 Similarly, Australia refers to the fact th at "Article 17.1 of Regulation No 2081/92#1 and
#2 provided for a simplified registration process for certain names which were already legally
protected or established by usage in the Member States".6

15. These references to versions of Regulation No . 2081/92 which were no longer in force at the
time the present Panel was established are not within th e scope of the Panel's terms of reference. This
already flows from Australia's request for the establishment of the Panel,
7 which is the basis for the
Panel's terms of reference. In its Panel request, Australia referr ed to "Council Regulation (EEC) No
2081/92 of 14 July 1992 [...] and any amendments th ereto" as "the EC measure". Australia's request
did not make it clear that Australia intended to cha llenge as the "EC measure" several versions of the
same measure resulting from subsequent amendments over time.

16. Moreover, as the Panel in India – Autos recalled, a " WTO Panel is generally competent to
consider measures in existence at the time of its establishment". 8 Accordingly, in WTO practice,
Panels have declined to examine measures which we re no longer in force at the time the Panel was
established. In US – Gasoline, the Panel explained the legal situation as follows:9

The Panel observed that it had not been the usual practice of a panel established under
the General Agreement to rule on measures that, at the time the panel's terms of

3 The United States has referred to Regulation 2081/92 "as most recently amended" (US FWS,
footnote 1).
4 Australia's FWS, para. 18.
5 Australia's FWS, para. 185 (emphasis added).
6 Australia's FWS, para. 190 (emphasis added).
7 WT/DS290/18.
9 Panel Report, US – Gasoline , para. 6.19; similarly, Panel Report, Japan – Film , para. 10.58; Panel
Report, Argentina – Textiles and Apparel, para. 6.15.

reference were fixed, were not and woul d not become effective. In the 1978 Animal
Feed Protein case, the Panel ruled on a discontinued measure, but one that had
terminated after agreement on the panel's terms of reference. In the 1980 Chile Apples
case, the panel ruled on a measure terminated before agreement on the panel's terms
of reference; however, the terms of reference in that case specifically included the
terminated measure and, it being a seasonal measure, there remained the prospect of
its reintroduction. In the present case, the Pa nel's terms of reference were established
after the 75 percent rule had ceased to have any effect, and the rule had not been
specifically mentioned in the terms of refere nce. The Panel further noted that there
was no indication by the parties that the 75 percent rule was a measure that, although
currently not in force, was likely to be rene wed. Finally, the Panel considered that its
findings on treatment under the baselin e establishment methods under Articles III:4
and XX (b), (d) and (g) would in any case have made unnecessary the examination of
the 75 percent rule under Article I:1. The Panel did not therefore proceed to examine
this aspect of the Gasoline Rule under Article I:1 of the General Agreement.
17. In the present case, there are no specific re asons which could justify an examination of
versions of Regulation 2081/92 no lo nger in force. From its adopti on in 1992 to the establishment of
the Panel, Regulation 2081/92 has been amended six times.
10 Australia has arbitrarily chosen certain
points in time to reflect versions of Regulation 2081/92 going as far back as 1997 or 1993.

18. The same applies also with respect to Australia's reference to the version of Regulation
2081/92 as applicable before its amendment by Regulation 692/2003 of 8 April 2003.
11 In accordance
with its Article 2.1, Regulation 69 2/2003 entered into force on 24 Ap ril 2003, i.e. before the present
Panel was established. The EC has no intention to repeal Regulation 692/2003, or to remove the
changes introduced by it. Therefore, Regulation 2081/92 as applicable prior to its amendment by
Regulation 692/2003 is not within the scope of the Panel's terms of reference.

19. Moreover, as the Appellate Body has recalled in US – Shirts and Blouses , the purpose of
Panel proceedings under the DSU is the settlement of concrete disputes between the parties:12

Given the explicit aim of dispute settlement that permeates the DSU, we do not
consider that Article 3.2 of the DSU is meant to encourage either panels or the
Appellate Body to "make law" by cl arifying existing provisions of the WTO
Agreement outside the context of resolving a particular dispute. A panel need only
address those claims which must be addressed in order to resolve the matter in issue
in the dispute.
20. An analysis of historical versions of Re gulation 2081/92 is not useful for the purposes of
settling the present dispute. Accordingly, the EC s ubmits that the measure at issue in the present
dispute is Regulation 2081/92 as in force at the time the Panel was established. A consolidated version
of Regulation 2081/92 as in force on 2 October 2003 is provided by the EC as Exhibit EC-1.

2. Measures not yet adopted at the time the Panel was established
21. The complainants have referred to a number of measures which had not yet been adopted at
the time the Panel was established.

10 See consolidated version of Regulation 2081/92, Exihibit EC-1, p. 1.
11 Exhibit COMP-1i.
12 Appellate Body Report, US – Shirts and Blouses, p. 22.

22. In Exhibits COMP-4b (viii) – (xvi), th e complainants are referring to a number of
amendments to Commission Regulation 2400/96 adopted between 11 November 2003 and 5 April
2004. These measures did not yet exist at the time the Panel was established, and are therefore outside
its terms of reference.

23. Moreover, the complainants have prepared a "consolidated unofficial version" of Regulation
2081/92, which they provide as Exhibit COMP-1a. Th e complainants state th at this consolidated
unofficial version incorporates amendments made by the Act of Accession of Cyprus, Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Malta , Poland, Slovakia, and Slovenia. Moreover, the
complainants have also provided an extract from the Act of Accession as Exhibit COMP-3c.

24. In accordance with Article 2.3 of the Treaty of Accession, of which the Act of Accession is an
integral part, the Treaty of Accession had to be ra tified by all Member States of the European Union
and by the acceding countries. At the time the Pane l was established, the process of ratification was
still ongoing. The Act of Accession entered into force only on 1 May 2004. Accordingly, the Act of
Accession was not yet adopted at the time the Panel wa s established, and is therefore not within the
scope of the Panel's terms of reference.

25. Accordingly, the EC submits that measures which had not yet been adopted at the time the
Panel was established are not within the Panel's terms of reference.

B. C
LAIMS
26. In its first written submission, Australia h as raised claims under Article 4 of the Paris
Convention, and Articles 43 to 49 of the TRIPS Agreem ent. None of these claims is referred to in
Australia's request for the establishment of the Panel.13

27. Moreover, both Australia and the United Stat es have made claims according to which the EC
measure imposes a requirement of domicile or resi dence for the enjoyment of intellectual property
rights contrary to Article 2.2 of the Paris Conventio n. No such claim was rais ed in the panel requests
of the complainants.14

1. Australia's claim under Article 4 of the Paris Convention
28. In its first written submission, Australia alle ges that Regulation 2081/92 is incompatible with
Article 4 of the Paris Convention, incorporated by Article 2.1 TRIPS, which requires that a WTO
member afford a right of priority of six months in respect of an application for registration of a
trademark for which an application for registra tion had previously been filed in another WTO
member.15

29. However, Australia's panel request does not refer to Article 4 of the Paris Convention.
Australia can also not argue that its reference to Article 2.1 of the TRIPS Agreement, which requires
Members to comply with Articles 1 through 12 and Ar ticle 19 of the Paris Convention, is sufficient to
bring Article 4 of the Paris Convention within th e scope of the Panel's terms of reference. The
incorporated provisions of the Paris Convention cont ain numerous distinct obligations, which need to
be referred to specifically in order to meet the requirements of Article 6.2 of the DSU. 16 In fact,
Australia's panel request specifies alongside the re ference to Article 2.1 of the TRIPS Agreement a
number of other provisions of the Paris Convention a lleged to be violated. However, Article 4 of the

13 WT/DS290/18.
14 WT/DS290/18; WT/DS174/20.
15 Australia's FWS, para. 85.
16 Appellate Body Report, Korea - Dairy, para. 124.

Paris Convention is not among the provisions alleged to have been violated in Australia's panel
request.

30. Therefore, the EC considers that Australia's claim regarding Article 4 of the Paris Convention
is outside the terms of reference of the Panel.

2. Australia's claim under Articles 43 to 49 of the TRIPS
31. In its first written submission, Australia h as claimed that the EC measure has failed "to
provide the judicial authorities the authority requi red to be conferred on them by TRIPS Articles 43,
44, 45, 46, 48 and 49 in respect of the enfor cement of trademark rights vis-à-vis the proposed
registration of an EC-defined GI".
17

32. However, Articles 43 to 49 TRIPS Agreement ar e not mentioned in Australia's panel request.
In its panel request (fifth paragraph, first bullet point), Australia has alleged that the EC measure
diminishes the legal protection of trademarks, and h as referred in this respect to Articles 41 and 42
TRIPS. However, Articles 43 through 49 of the TR IPS Agreement contain distinct obligations which
are separate from and additional to those contained in Articles 41 and 42.

33. Australia cannot argue that a reference to the specific provisions of Articles 43 to 49 TRIPS
was made redundant by its reference to Article 41 TRIPS. Article 41 is an introductory provision
contained in the first section, entitled "General Obliga tions", of Part III. It sets out general obligations
and principles to be respected by the Parties in the application of Part III.

34. More specifically, Article 41.1 is a purely introductory provision which does not create
separate legal obligations. The fact that Article 41. 1 TRIPS refers to the "enforcement procedures as
specified in this Part" cannot mean that a reference to Article 41.1 TRIPS would be sufficient to bring
all the provisions of Part III within the terms of re ference of the Panel. Otherwise, it could be argued
that a simple reference to Article 1.1 TRIPS is sufficient to bring all provisions of the TRIPS
Agreement within the scope of a pa nel's jurisdiction, or that a reference to Article XVI:4 WTO would
bring all provisions of the covere d agreements within the scope of a panel's jurisdiction. Such an
interpretation would be manifestly incompatible w ith the requirements for panel requests contained in
Article 6.2 DSU.

35. Accordingly, the EC considers that Australia 's claim under Articles 43 to 49 of the TRIPS is
outside the terms of reference of the Panel.

3. The claims regarding Article 2.2 of the Paris Convention
36. In its first written submission, the United States has argued that with respect to the
registration of foreign geographical indications, Regulation 2081/92 imposes a requirement as to
domicile or establishment contrary to Article 2.2 of the Paris Convention.
18 The United States has
made a claim based on Article 2.2 of the Paris C onvention also with respect to the conditions under
which foreign nationals can object to the registration of geographical indications.19

17 Australia's FWS, para. 148.
18 US FWS, para. 84.
19 US FWS, para. 89.

37. Australia has made a similar claim based on Ar ticle 2.2 of the Paris Convention with respect
to the alleged unavailability of a right of objection to foreign right holders prior to the amendment of
Regulation 2081/92 by Regulation 692/2003.20

38. Article 2.1 and 2.2 of the Paris Convention are drafted as follows:

(1) Nationals of any country of the Union shall, as regards the protection of
industrial property, enjoy in all the other countries of the Union the advantages that
their respective laws now grant, or may he reafter grant, to nationals; all without
prejudice to the rights specially provided for by this Convention. Consequently, they
shall have the same protection as the latter, and the same legal remedy against any
infringement of their rights, provided th at the conditions and formalities imposed
upon nationals are complied with.
(2) However, no requirement as to domicile or establishment in the country
where protection is claimed may be imposed upon nationals of countries of the Union
for the enjoyment of any industrial property rights.
39. Article 2.1 of the Paris Convention is c oncerned with national treatment. In contrast,
Article 2.2 prohibits the imposition of requirements as to domicile or establishment. This obligation is
different and additional to the obligations r esulting from the national treatment provision of
Article 2.1 Paris Convention. This is also made clear by the term "however", which indicates that
Article 2.2 goes beyond what is provided in Article 2.1.

40. This view also seems to be shared by the complainants. In its first written submission, the
United States has argued that the EC measure "is directly prohibited by Article 2(2) of the Paris
Convention".
21 Similarly, Australia has referred to the EC's obligations pursuant to Article 2(2) of the
Paris Convention.22

41. However, in their panel requests, the complain ants have merely referred to an alleged failure
of the EC measure to provide national treatment. They have not raised any issue regarding the
imposition of a requirement as to domicile or estab lishment contrary to Article 2.2 of the Paris
Convention.

42. For this reason, the EC submits that the US and Australian claims under Article 2.2 of the
Paris Convention are outside the terms of reference of the Panel.

III. FACTS
43. The measure at issue in the present disput e is Council Regulation 2081/1992 on the protection
of geographical indications and desi gnations of origin for agricultural products and foodstuffs, as in
force at the date of establishment of the Panel. A consolidated version of this Regulation is provided
in Exhibit EC-1.

44. In this section, the EC will set out the c ontent of Regulation 2081/ 1992 relevant for the
present dispute. In this context, the EC will also correct a number of errors and misrepresentations

20 Australia's FWS, para. 189, second bullet point; para. 194, second bullet point. As the EC has already
set out above, these claims relate to a measure which is no longer in force, and are therefore in any case outside
the terms of reference of the present panel.
21 US FWS, para. 85.
22 Australia's FWS, para. 189, 194.

that are contained in the first written submissions of the complainants with respect to the content of
Regulation 2081/1992.

A. T
HE DEFINITION OF GEOGRAPHIC INDICATIONS
45. Regulation 2081/92 lays down rules on the protection, within the European Community, of
designations of origin and geographical indicat ions for agricultural products and foodstuffs.
Article 2(2) of the Regulation defines the terms "d esignation of origin" and "geographical indication"
as follows:23

(a) designation of origin : means the name of a region, a specific place or, in
exceptional cases, a country, used to describe an agricultural product or a foodstuff:
– originating in that region, specific place or country, and
– the quality or characteristics of which are essentially or exclusively due to a
particular geographical environment with its inherent natural and human factors, and
the production, processing and preparation of which take place in the defined
geographical area;
(b) geographical indication: means the name of a region, a specific place or, in
exceptional cases, a country, used to describe an agricultural product or a foodstuff:
– originating in that region, specific place or country, and
– which possesses a specific quality, reputation or other characteristics
attributable to that geographical origin and the production and/ or processing and/or
preparation of which take place in the defined geographical area.

46. The distinction between designations of orig in and geographical indi cations depends on how
closely the product is linked to the geographical area in which it originates. However, both
designations of origin and geographical indications within the meaning of Regulation 2081/92 are
geographical indications as defined in Article 22.1 TRIPS Agreement.

47. Under Regulation 2081/92, designations of orig in and geographical indications are subject to
identical rules as regards their registration and prot ection. For this reason, wherever the EC, in the
present submission, refers to geographical indications within the meaning of Regulation 2081/92, this
reference shall also include designations of origin.

B. P
RODUCT SPECIFICATIONS
48. In accordance with Article 4 (1) of Regulati on 2081/92, in order to be eligible to use a
geographical indication, an agricultural product must comply with a product specification. The
purpose of this requirement is to ensure that th e agricultural product marketed using a particular
geographical indication in fact originates in the ar ea to which the indication is related, and possesses
the specific quality, reputation or other characteristics which justify the protection of the geographical
indication.

49. Regulation 2081/92 does not itself define the product specifications w ith which a particular
product must comply. Rather, in accordance with Article 5 (3) of Regulation 2081/92, the product

23 Further specific aspects of these definitions are set out in paragraphs 3 to 7 of Article 2.

specifications must be contained in the applica tion for registration of a geographical indication.
Article 4 (2) of the Regulation defines the elements with which a product specification must comply:

The product specification shall include at least:
(a) the name of the agricultural product or foodstuffs, including the designation
of origin or the geographical indication;
(b) a description of the agricultural pr oduct or foodstuff including the raw
materials, if appropriate, and principal ph ysical, chemical, microbiological and/or
organoleptic characteristics of the product or the foodstuff;
(c) the definition of the geographical area and, if appropriate, details indicating
compliance with the requirements in Article 2 (4);
(d) evidence that the agricultural prod uct or the foodstuff originates in the
geographical area, within the meaning of Article 2(2) (a) or (b), whichever is
applicable;
(e) a description of the method of obtaining the agricultural product or foodstuff
and, if appropriate, the authentic and unva rying local methods as well as information
concerning the packaging, if the group ma king the request determines and justifies
that the packaging must take place in the limited geographical area to safeguard
quality, ensure traceability or ensure control;
(f) the details bearing out the link with the geographical environment or the
geographical origin within the meaning of Article 2(2)(a) or (b), whichever is
applicable;
(g) details of the inspection structures provided for in Article 10;
(h) the specific labelling details relating to the indication PDO or PGI, whichever
is applicable, or the equivalent traditional national indications;
(i) any requirements laid down by Co mmunity and/or national provisions.
C. I
NSPECTION STRUCTURES
50. As has been explained, each protected geogra phical indication has to comply with a product
specification. However, a geographical indication is less reliable and informative for consumers if its
proper use is not ensured by an effective inspec tion regime. For this reason, Article 10(1) of
Regulation 2081/92 provides that EC Member States shall ensure that inspection structures are in
place, the function of which shall be to ensure that agricultural products and foodstuffs bearing a
protected name meet the requirements laid down in the specifications.

51. Article 10 does not regulate all details of such inspection structures. In particular,
Article 10(2) provides that an inspection structure "may comprise one or more designated inspection
authorities and/or private bodies". It thereby leav es the Member State a choice between public and
private elements in the design of the inspection bodies.

52. Article 10(3) further provides that designate d inspection authorities and/or approved private
bodies "must offer adequate guarantees of objectivity a nd impartiality with regard to all producers or
processors subject to their control and have perm anently at their disposal the qualified staff and

resources necessary to carry out inspection of agricult ural products and foodstuffs bearing a protected
name".

53. Further, the third subparagra ph of Article 10(3) provides that in order to be approved by the
Member States, private bodies mu st fulfil the requirements laid down in standard EN 45011 of 26
June 1989, which sets out general requirements fo r bodies operating product certification systems. A
copy of this standard, which is available from CEN/CENELEC, is provided as Exhibit EC-2.

54. It should be noted that compliance with st andard EN 45011 is only required for bodies to be
approved by the EC Member States. In accordance w ith the last subparagraph of Article 10(3), for
bodies located outside the Community, compliance with equivalent international standards will be
sufficient. An example for an equivalent internati onal standard is ISO/IEC Guide 65:1996 (E), a copy
of which is provided as Exhibit EC-3.

55. In accordance with Article 4(2)(g) of Regula tion 2081/92, details of the inspection structure
applicable must be included in the product speci fication, which is part of any application for
registration of a geographical indication.

D. T
HE REGISTRATION OF GEOGRAPHICAL INDICATIONS RELATING TO AN AREA LOCATED IN
THE EC
56. Articles 5 and 6 of Regulation 2081/92 set out the procedure for the registration of
geographical indications which relate to a geographical area located in the European Community.

57. In accordance with Article 5(4) of Regulation 2081/92, the application shall be sent to the EC
Member State in which the geographical area is lo cated. In accordance with Article 5(5), the Member
State shall check that the application is justified a nd, if it considers that the application fulfils the
requirements of the Regulation, shall forward the a pplication, including the product specification and
all other relevant documents to the EC Commission.

58. This involvement of the Member State in the registration process is crucial for the proper
implementation of the Regulation. In fact, Member States are particularly well placed to examine the
admissibility of applications relating to geographical areas located on their territory.

59. Within six months of the receipt of the a pplication, the EC Commission shall verify, by
means of a formal investigation, whether the re gistration application includes all the particulars
provided for in Article 4 of the Regulation. If, af ter this examination, the Commission concludes that
the name qualifies for protection, it shall publish a notice in the Official Journal of the European
Union containing among others the name of the applicant, the name of the product, and the main
points of the application (Article 6(2) of the Regulation).

60. If no statement of objection is notified to th e Commission in accordance with Article 7 of the
Regulation, the name shall be entered in the regi ster of protected names kept by the Commission
(Article 6(3) of the Regulation). The name entered in the register shall be published in the Official
Journal (Article 6.4 of the Regulation).

61. If, in the light of the investigation provide d for in Article 6(1) of the Regulation, the
Commission concludes that the name does not qualify for protection, it shall decide, in accordance
with the procedure provided for in Article 15 of the Regulation, not to proceed with the registration of
the name.

E. THE REGISTRATION OF GEOGRAPHICAL INDICATIONS RELATING TO AN AREA LOCATED
OUTSIDE THE EC
62. Regulation 2081/92 also applies to geographi cal indications relating to areas located outside
the EC. For this purpose, the Regulation lays do wn rules relating to the registration of such
geographical indications from outside the EC whic h closely parallel the provisions applicable to
geographical indications from inside the EC.

63. The purpose of these specific rules, some of which were introduced by Regulation 692/2003,
is to facilitate the registration of non-EC geographical indications while at the same time ensuring that
geographical indications from outside the EC correspond to the definition of a geographical
indication.

64. The United States and Australia have claimed that Regulation 2081/92 allows the registration
of geographical indications from other WTO memb ers only under the condition of "reciprocity and
equivalence".
24 In support of this contention, they have relied on Article 12(1) of the Regulation,
which provides as follows:

Without prejudice to international agreem ents, this Regulation may apply to an
agricultural product or foodstuff from a third country provided that:
– the third country is able to give gua rantees identical or equivalent to those
referred to in Article 4,
– the third country concerned has inspection arrangements and a right to
objection equivalent to those laid down in this Regulation,
– the third country concerned is prepared to provide protection equivalent to
that available in the Community to corres ponding agricultural products for foodstuffs
coming from the Community.
65. However, this interpretation is based on a misunderstanding of the Regul ation. Article 12(1)
of Regulation 2081/92 clearly provides that it appli es "without prejudice to international agreements".
Such international agreements include the WT O Agreements. This is made clear by the 8 th recital of
Regulation 692/2003, 25 which amended the procedures for the registration of non-EC geographical
indications, and in this context took specific account of the provisions of the TRIPS.

66. WTO Members are obliged to provide protec tion to geographical indications in accordance
with Section 3 of Part II and the general provisions and basic principles of the TRIPS Agreement. For
this reason, Article 12(1) and (3) of Regula tion 2081/92 do not apply to WTO Members. This
distinction between WTO countries and other third c ountries is also found in other provisions of the
Regulation, for instance in Article 12(2)(a) and (b ) and in Article 12d(1), both concerning objections
from outside the EC.

67. Accordingly, the registration of a geographical indication relating to an area located in the
territory of another WTO Member does not require that the Commission examines whether the
conditions set out in Article 12(1) of the Regula tion are fulfilled. Rather, the procedure for the
registration of third country geographical indications can be immediately applied. The applicant shall
therefore send the registration application to the authorities in the country in which the geographical
area is located (Article 12a(1) of the Regulati on). Like applications for registration of EC

25 Exhibit COMP-1h.

geographical indications, applications must be ac companied by the specification referred to in
Article 4.

68. According to Article 12a(2), if the thir d country deems that the requirements of the
Regulation are satisfied, it shall transmit the registration application to the Commission accompanied
by the following:

(a) a description of the legal provisions an d the usage on the basis of which the
designation of origin or the geographical indication is protected or established in the
country,
(b) a declaration that the structures provided for in Article 10 are established on
its territory, and
(c) other documents on which it has based its assessment.

69. Article 12b regulates the further procedure for the registration of the geographical indication
in a way which corresponds closely to the procedure set out in Article 6 for the registration of
geographical indications from inside the EC.26

F. O
BJECTIONS FROM PERSONS RESIDENT OR ESTABLISHED IN THE EC
70. Within six months of the date of publication of the application in the Official Journal, the
Member State may object to the registration. Artic le 7(2) of the Regulation provides that Member
States shall ensure that all persons who can demonstrate a legitimate economic interest are authorised
to consult the application. Pursuant to Article 7(3) of the Regulation, any legitimately concerned
natural or legal person may object to a proposed registration by sending a duly substantiated statement
to the competent authority of the Member State in which he resides or is established, who shall
transmit the objection to the Commission.

71. According to Article 7 (4) of the Regulation, a statement of objection shall be admissible only
if it:

either shows non-compliance with the conditions referred to in Article 2,
– shows that the registration of the name proposed would jeopardize the
existence of an entirely or partly identical name or of a mark or the existence of
products which have been legally on the market for at least five years preceding the
date of the publication provided for in Article 6(2).
– or indicates the features which demonstrate that the name whose registration
is applied for is generic in nature.
72. Where a statement of objection is admissi ble, the Commission shall proceed in accordance
with Article 7(5):

Where an objection is admissible within the meaning of paragraph 4, the Commission
shall ask the Member States concerned to seek agreement among themselves in
accordance with their internal procedures within three months. If:

26 See above paragraph 59 et seq.

(a) agreement is reached, the Member St ates in question shall communicate to
the Commission all the factors which made agreement possible together with the
applicant's opinion and that of the objecto r. Where there has been no change to the
information received under Article 5, th e Commission shall pro ceed in accordance
with Article 6(4). If there has been a change , it shall again initiate the procedure laid
down in Article 7;
(b) no agreement is reached, the Commissi on shall take a decision in accordance
with the procedure laid down in Article 15, having regard to traditional fair practice
and of the actual likelihood of confusion. Should it decide to proceed with
registration, the Commission shall carry out publication in accordance with
Article 6(4).
G. O
BJECTIONS FROM PERSONS RESIDENT OR ESTABLISHED OUTSIDE THE EC
73. Article 12d(1) of Regulation 2081/92 provides a right of objection to persons not resident or
established in the EC. Article 12d(1) is drafted as follows:

Within six months of the date of the notice in the Official Journal of the European
Union specified in Article 6(2) relating to a registration application submitted by a
Member State, any natural or legal person th at has a legitimate interest and is from a
WTO member country or a third country recognised under the procedure provided for
in Article 12(3) may object to the proposed registration by sending a duly
substantiated statement to the country in which it resides or is established, which shall
transmit it, made out or translated into a Community language, to the Commission.
Member States shall ensure that any pers on from a WTO member country or a third
country recognised under the procedure provided for in Article 12(3) who can
demonstrate a legitimate economic interest is authorised to consult the application.

74. Australia and the US have claimed that this right of objection is subject to the condition that
the individual concerned is from a country which is recognised as fulfilling the conditions of
Article 12(1) of the Regulation.27 This is wrong. Article 12d(1) of the Regulation refers to any person
that "is from a WTO Member or a third country recognised under the procedure provided for in
Article 12(3)". The phrase "recognised under the pro cedure provided for in Article 12(3)" only refers
to third countries other than WTO Members. Othe rwise, the specific reference to WTO Members
would be meaningless. WTO Members are therefore not subject to the pro cedure of Article 12(3)
applicable to other third countries.

75. This is also clear in Article 12b(2) of th e Regulation, which concerns objections against
applications for registration of geographical indica tions relating to an area outside the EC. As regards
WTO Members, Article 12b(2)(a) simply provi des that Article 12d shall apply; whereas
Article 12b(2)(b) requires for persons resident or established in third countries that the requirements
of Article 12(3) must be met.

76. In accordance with Article 12d(2), the cond itions for the admissibility of objections from
outside the EC are those laid down in Article 7(4) for objections from inside the EC. The admissibility
conditions and the further procedure with respect to objections from outside the EC do not differ from
those applicable to objections from inside the EC.

77. The United States has nonetheless seen a differen ce in the fact that whereas under Article 7(3)
of the Regulation, only persons who are "legitimatel y concerned" may object to an application, under

Article 12d, persons from outside the EC must have a "legitimate interest".
28 According to the US, "it
would appear" that the requirement to be "legitimatel y concerned" is a lower standard than that one
has a "legitimate interest".29

78. This assumption of the United States is wrong. There is no substantive difference between the
two expressions "legitimately concerned" and "legiti mately interested". The New Shorter Oxford
English Dictionary defines "concerned" as: "interested
, involved, troubled, anxious, showing
concern".30 In other words, "interested" and "concerned" are synonyms. The terminological difference
raised by the United States is therefore without any substantive relevance, and does not imply a
different standard applicable to persons resident or established outside the EC.

H. DECISION-MAKING PROCEDURES UNDER THE REGULATION
79. In its first written submission, Australia has consistently misrepresented the decision-making
process applicable under Regulation 2081/92. In par ticular, it has referred to the "Committee of EC
Member States representatives" as the "decision-making process established by Article 15 of
Regulation 2081/92". 31 Consequently, it has repeatedly referre d to decisions taken according to the
procedure set out in Article 15 of the Regulation as decisions taken "in the Committee of EC Member
States representatives".32 Finally, Australia has referred to the Committee of EC Member States as the
"ultimate decision-maker" under the Regulation.33

80. These statements are based on a misconcep tion of the decision-making process under the
Regulation, and have the effect of exaggerating the role of the Committee. Under the Regulation,
decisions with respect to the registration of geographical indications are in principle taken by the
Commission. In certain cases, for instance where a statement of objection has been received or the
Commission considers that a name does not qualify for protection, the Commission must act in
accordance with the procedure in Article 15 of the Regulation.
34 Article 15 provides the following:

1. The Commission shall be assisted by a committee.
2. Where reference is made to this Article, Articles 5 and 7 of Decision
1999/468/EC shall apply.
The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three
months.
3. The Committee shall adopt its Rules of Procedure.
81. Decision 1999/468 35 is a decision which lays down, on a general level, the procedures for the
exercise of implementing powers which the Council may delegate to the Commission in application
of Article 202 of the EC Treaty. The procedure wh ich is applicable under Regulation 2081/92 is the
regulatory procedure set out in Article 5 of Decision 1999/468.

82. According to Article 5(1) of Decision 1999/468, the Commission is assisted by a Committee
composed of representatives of the Member States. In accordance with Article 5(2) of the Decision,

28 US FWS, para. 26-27.
29 US FWS, para. 94.
30 New Shorter Oxford English Dictionary, 1993, Vol. 1, p. 467 (emphasis added).
31 Australia's FWS, para. 19.
32 E.g. Australia's FWS, para. 32, 44, 46,
33 Australia's FWS, para. 94.
34 Cf. Article 6(5), 7(5), 12b(1)(b), 12d(3) of the Regulation.
35 Exhibit EC-4.

the Commission shall submit to the Committee a draft of the measures to be taken. If the measure is in
accordance with the opinion of the Committee, the Commission adopts the Measures (Article 5(3) of
the Decision). Only exceptionally, if the measur e is not in accordance with the opinion of the
Committee, may the matter be referred to the Counc il of Ministers (Article 5(4) of the Decision). In
this case, the following procedure applies (Article 5(5) of the Decision):

The Council may, where appropriate in view of any such position, act by qualified
majority on the proposal, within a period to be laid down in each basic instrument but
which shall in no case exceed three months from the date of referral to the Council.
If within that period the Council has indicated by qualified majority that it opposes
the proposal, the Commission shall re-examine it. It may submit an amended proposal
to the Council, re-submit its proposal or present a legislative proposal on the basis of
the Treaty.
If on the expiry of that period the Council has neither adopted the proposed
implementing act nor indicated its opposition to the proposal for implementing
measures, the proposed implementing act shall be adopted by the Commission.
83. Consequently, the decision-maker under the Regulation is the Commission, or exceptionally
the Council of Ministers. The Committee assists th e Commission, but does not take decisions; it may,
however, achieve that a proposal is referred to the Council of Ministers.

I. T
HE PROTECTION OF GEOGRAPHICAL INDICATIONS
84. According to Article 13(1) of the Regulation, a name registered under the regulation shall be
protected against:

Registered names shall be protected against:
(a) any direct or indirect commercial use of a name registered in respect of
products not covered by the registration in so far as those products are comparable to
the products registered under that name or insofar as using the name exploits the
reputation of the protected name;
(b) any misuse, imitation or evocation, even if the true origin of the product is
indicated or if the protected name is translated or accompanied by an expression such
as 'style', 'type', 'method', 'as produced in', 'imitation' or similar;
(c) any other false or misleading indication as to the provenance, origin, nature
or essential qualities of the product, on the inner or outer packaging, advertising
material or documents relating to the pr oduct concerned, and the packing of the
product in a container liable to convey a false impression as to its origin;
(d) any other practice liable to mislead the public as to the true origin of the
product.

J. INDICATION OF THE COUNTRY OF ORIGIN FOR HOMONYMOUS GEOGRAPHICAL INDICATIONS
85. In their first written submission, the United St ates has claimed that Article 12(2) requires that
any use of a geographical indication in connectio n with products of other WTO Members can be

authorized only if the country of origin "is clearly and visibly indicated on the label", and that there is
no similar requirement with respect to products of EC Member States.
36

86. This interpretation is based on a misundersta nding of Article 12(2) of the Regulation. This
provision is drafted as follows:

If a protected name of a third country is identical to a Community protected name,
registration shall be granted with due regard for local and traditional usage and the
practical risks of confusion.
Use of such names shall be authorized only if the country of origin of the product is
clearly and visibly indicated on the label.
87. It follows clearly from the structure of this pr ovision that the reference to "such names" in the
second subparagraph of Article 12(2) is a reference to the names men tioned in the first subparagraph,
i.e. identical protected names from a third country and the Community. In other words, the second
subparagraph does not concern third country names in general, but only homonyms.

88. Moreover, it should be noted that the referen ce to "such names" applies both to third country
protected names and to Community protected names. In the case of identical names, the requirement
to indicate the country of origin can apply both to the third country name and the Community name.
In practice, this would mean that whichever indica tion is registered later would normally be required
to indicate the country of origin. Where a Community indication is registered after an identical third
country indication, the Community indication would therefore be required to indicate the country of
origin.

89. Finally, it should be noted that in case of homonymous names from the EC, the last indent of
Article 6(6) of the Regulation also requires "a clear distinction in practice" between the two
homonyms. Where the two homonyms are from different Member States, this may in practice require
the indication of the country of origin.

K. G
EOGRAPHICAL INDICATIONS AND TRADEMARKS
90. The relationship between geographical indicati ons and trademarks is regulated in Article 14
of the Regulation, which is drafted as follows:

1. Where a designation of origin or geographical indication is registered under
this Regulation, any application for registrati on of a trademark that is for a product of
the same type and use of which will enge nder one of the situations indicated in
Article 13 shall be refused if made after th e date of submission to the Commission of
the application for registration of the designation of origin or geographical indication.
Trademarks registered in breach of the first subparagraph shall be invalidated.
2. With due regard to Community law, a trademark the use of which engenders
one of the situations indicated in Artic le 13 and which has been applied for,
registered, or established by use, if that possibility is provided for by the legislation
concerned, in good faith within the territory of the Community, before either the date
of protection in the country of origin or the date of submissi on to the Commission of
the application for registration of the designa tion of origin or geographical indication,

36 US FWS, para. 25. Australia rightly assumed that this provision only applies to homonyms
(Australia's FWS, para. 235).

may continue to be used notwithstanding th e registration of a designation of origin or
geographical indication, provided that no grounds for its invalidity or revocation exist
as specified by Council Directive 89/104/EEC of 21 December 1998 to approximate
the laws of the Member States relating to trade marks and/or Council Regulation (EC)
No 40/94 of 20 December 1993 on the Community trade mark.
3. A designation of origin or geographi cal indication shall not be registered
where, in the light of a trade mark's reputation and renown and the length of time it
has been used, registration is liable to mislea d the consumer as to the true identity of
the product.
L. S
IMPLIFIED REGISTRATION OF GEOGRAPHICAL INDICATIONS PRIOR TO THE ENTRY INTO FORCE
OF REGULATION 692/2003
91. In its first written submission, Australia has also made certain claims regarding the simplified
registration procedure according to Article 17 of Re gulation 2081/92 as applicable until the entry into
force of Regulation 692/2003.

92. As the Commission has already set out, these clai ms relate to a measure no longer in force at
the time the Panel was established, and are therefore outside the terms of reference of the present
Panel.
37 However, since certain of the factual claims ma de by Australia in this respect are factually
wrong, the EC would like to take the opportunity to correct them.

93. In its first written submission, Australia claims that under the simplified procedure, a right of
objection was available to persons resident or est ablished in the EC, which was not available to
persons from outside the EC.
38 In support of its thesis, it relies in particular on a declaration of the
Commission and the Council quoted in the Feta judgment of the European Court of Justice.39

94. Australia's interpretation is unfounded. Article 17, as applicable until the entry into force of
Regulation 692/2003, provided as follows (emphasis added):

Within six months of the entry into force of the Regulation, Member States shall
inform the Commission which of their legally protected names or, in those Member
States where there is no protection system, wh ich of their names established by usage
they wish to register pursuant to this Regulation.
In accordance with the procedure laid dow n in Article 15, the Commission shall
register the names referred to in paragr aph 1 which comply with Articles 2 and 4.
Article 7 shall not apply.
 However, generic names shall not be added.
95. Article 17(2) thus provided clearly that Article 7, which laid down the right of objection, did
not apply in the simplified procedure. This was exp licitly confirmed by the European Court of Justice
in the Feta judgment:40

Second, as the Commission itself pointed out in its defence in Case C-293/96, it must
be noted that, even though Article 17(2) of the basic regulation expressly provides
that Article 7 thereof is not applicable in the simplified registration procedure, a
registration under that procedure also pr esupposes that the names conform with the

38 Australia's FWS, para. 39, 191-192.
39 The declaration was quoted in para. 21 of the Court's judgment (Exhibit COMP-11).
40 Paragraph 92 of the Judgment (Exhibit COMP-11; emphasis added).

substantive requirements of that regulati on. In the absence of express provisions to
the contrary, there is no possibility, under the simplified procedure, of names being
registered which do not fulfil the substa ntive conditions for registration under the
normal registration procedure.
96. Furthermore, the declaration of the Council and the Commission referred to by the Court of
Justice did not concern the simplified procedure of Article 17. The declaration read in relevant part as
follows:
41

The Council and the Commission further decl are that where ther e are agriculture
products or foodstuffs already being legally marketed before the making of this
Regulation which may be the subject of an application for registration, it has been
provided for any Member States to object to the registration under the provisions of
Article 7 of the Regulation [...].
97. This declaration simply referred to the situa tion envisaged in the second indent of Article 7(4)
of Regulation 2081/92, in which a statement of objec tion will be admissible. This declaration did in
no way refer to the simplified procedure foreseen in Article 17. Nor did the European Court of Justice,
as shown above, deduce from this declaration that a right of objection applied in the context of the
simplified procedure.

98. In accordance with the clear wording of Ar ticle 17(2) of Regulation as applicable until the
entry into force of Regulation 692/2003, the right of objection did not apply in the context of the
simplified procedure.

IV. REGULATION 2081/92 IS COMPATIB LE WITH NATIONAL TREATMENT
OBLIGATIONS, AND DOES NOT IMPOSE A REQUIREMENT OF DOMICILE OR
ESTABLISHMENT
99. In their first written submissions, the compla inants have claimed that Regulation 2081/92:

• is incompatible with the national treatme nt obligation of the TRIPS and the Paris
Convention (Article 3.1 TRIPS and Article 2.1 TRIPS in conjunction with Article 2.1
Paris Convention);

• establishes a requirement of domicile or establishment prohibited by the Paris
Convention (Article 2.1 TRIPS in conjunction with Article 2.2 Paris Convention);

• is incompatible with the national treatment obligation of Article III:4 GATT.

100. The EC will discuss the claims under each of these provisions in turn.

A. N
ATIONAL TREATMENT UNDER THE TRIPS AGREEMENT (ARTICLE 3.1 TRIPS AND
ARTICLE 2.1 TRIPS IN CONJUNCTION WITH ARTICLE 2.1 PARIS CONVENTION)
101. Under the TRIPS Agreement, the obligation to provide national treatment with regard to the
protection of intellectual property is set out in two different provisions. First, Article 3.1 TRIPS
provides as follows:

Each Member shall accord to the nationals of other Members treatment no less
favourable than that it accords to its own na tionals with regard to the protection of

41 Exhibit EC-5.

intellectual property, subject to the excepti ons already provided in, respectively, the
Paris Convention (1967), the Berne Conven tion (1971), the Rome Convention or the
Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of
performers, producers of phonograms and br oadcasting organizations, this obligation
only applies in respect of the rights provi ded under this Agreement. Any Member
availing itself of the possibilities provided in Article 6 of the Berne Convention
(1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a
notification as foreseen in those provisions to the Council for TRIPS.
102. Moreover, Article 2.1 TRIPS integrates into the TRIPS Agreement the national treatment
provision contained in Article 2.1 of the Paris Convention. Article 2.1 of the Paris Convention reads
as follows:

Nationals of any country of the Union sha ll, as regards the protection of industrial
property, enjoy in all the other countri es of the Union the advantages that their
respective laws now grant, or may hereafte r grant, to nationals; all without prejudice
to the rights specially provided for by this Convention. Consequently, they shall have
the same protection as the latter, and the same legal remedy against any infringement
of their rights, provided that the conditi ons and formalities imposed upon nationals
are complied with.
103. Since both obligations are expressed in similar terms, the EC shall discuss the claims made by
the complainants under both provisions jointly.

1. General remarks
104. Both Article 3.1 TRIPS and Article 2.1 Paris Convention oblige WTO Members to treat
nationals of other Member no less favourably than th eir own nationals with respect to the protection
of intellectual property rights. In US – Section 211, the Appellate Body has underlined the
fundamental significance of the national treatment obligation within the context of the TRIPS.
42 In its
first written submission, the United States has reca lled this fundamental importance of the national
treatment obligation under the TRIPS.43 The EC agrees.

105. However, the EC considers it equally importa nt to understand the correct scope and meaning
of the national treatment provisions of the TRI PS and the Paris Convention. Article 3.1 TRIPS
provides that each Member shall accord to the nationals
 of other Members treatment no less
favourable than that it accords to its own nationals . Similarly, Article 2.1 of the Paris Convention
provides that nationals of any country of the Union shall, as regards the protection of industrial
property, enjoy in all the other countries of the Un ion the advantages that their respective laws now
grant, or may hereafter grant, to nationals . Accordingly, the national tr eatment obligation under the
TRIPS aims at an equality of treatment between nationals.44

106. This reference to nationals is of fundamental importance in the application of the national
treatment provision under the TRIPS. This is illustrated by the findings of the Panel in Indonesia –
Cars. In this case, the United States had argued that the Indonesian system put the United States
companies in a position that, if they were succ essful in becoming a partner in the National Car
Programme, they would be unlikely to use in I ndonesia the mark normally used ("global" mark) on
the vehicle marketed as a "national motor vehicle" in Indonesia, for fear of creating confusion. The

42 Appellate Body Report, United States – Section 211, para. 241.
43 US FWS, para. 33.
44 Daniel Gervais, The TRIPS Agreement, Drafting History and Analysis , (Sweet & Maxwell, 1998),
p. 48.

Panel rejected this claim referring explicitly to th e fact that no evidence had been brought to support
the conclusion that the Indonesian system constituted discrimination between nationals
:45

We do not accept this argument for the fo llowing reasons. First, no evidence has
been put forward to refute the Indonesian statement that the system, in requiring a
new, albeit Indonesian-owned, trademar k to be created, applies equally to
pre-existing trademarks owned by Indon esian nationals and foreign nationals .
Second, if a foreign company enters into an arrangement with a Pioneer company, it
would do so voluntarily, with knowledge of any consequent implications for its
ability to maintain pre-existing trademark rights [...].
107. The emphasis put by the TRIPS Agreement on nationals is not accidental. In Article 3.1
TRIPS and 2.1 Paris Convention, national treatment is provided "with regard to the protection of
intellectual property". Intellectual property ri ghts are held by natural and legal persons. 46 It is
therefore entirely consistent with the object and purpose of the national treatment provision of TRIPS
that national treatment be granted between nationals.

108. In this regard, the national treatment oblig ation of the TRIPS differs fundamentally from
national treatment in the GATT. Article III:4 of the GATT provides that "the products of the territory
of any contracting party imported into the territory of any other contracting party shall be accorded
treatment no less favourable than that accorded to like products of national origin". Accordingly,
unlike Article 3.1 TRIPS and 2.1 Paris Conventi on, Article III:4 GATT prescribes national treatment
between goods, not between nationals.

109. The Panel in Indonesia – Autos in fact cautioned against reading Article 3.1 TRIPS so as to
apply to matters not directly related to the equal treatment of nationals:
47

In considering this argument, we note th at any customs tariff, subsidy or other
governmental measure of support could have a "de facto" effect of giving such an
advantage to the beneficiaries of this support. We consider that considerable caution
needs to be used in respect of "de facto" based arguments of this sort, because of the
danger of reading into a provision obligati ons which go far beyond the letter of that
provision and the objectives of the Agreement. It would not be reasonable to
construe the national treatment obligation of the TRIPS Agreement in relation to the
maintenance of trademark rights as preventing the grant of tariff, subsidy or other
measures of support to national companies on the grounds that this would render the
maintenance of trademark rights by forei gn companies wishing to export to that
market relatively more difficult.
110. The United States and Australia fail to acknow ledge this fundamental difference between the
national treatment obligations of the TRIPS and the GATT.
48 In their first written submissions, they
make no attempt to establish that Regula tion 2081/92 discriminates between nationals of the EC and
nationals of other WTO members.

45 Panel Report, Indonesia – Cars, para. 14.271 (emphasis added). The United States is therefore wrong
to claim that US – Section 211 has been the only dispute concerning the national treatment obligation in the
context of the TRIPS Agreement (US FWS, para. 34).
46 On the definition of nationality in this respect, cf. Bodenhausen, Guide to the Application of the Paris
Convention for the Protection of Industrial Property, p. 27-28 (1968).
47 Panel Report, Indonesia – Autos, para. 14.723 (emphasis added).
48 This is all the more striking since the US, when discussing the most-favored-nation obligation under
the TRIPS and the GATT, did distinguish between treatment of nationals and treatment of products (US, FWS,
para. 108).

111. As the EC will show, Regulation 2081/92 do es not discriminate between EC nationals and
nationals of other WTO members.

112. Moreover, the EC will show for each of the claims raised that, even if Regulation 2081/92
applied differently to foreign and EC nationals, it could not be considered as providing less favourable
treatment.

2. Claims 1: Non-EC nationals are accorded less favorable treatment than EC nationals
with respect to the registration of geographi cal indications through the application of a
condition of reciprocity and equivalence
113. The US and Australia have claimed that by subjecting the registration of geographic
indications from other WTO members to "cond itions of reciprocity and equivalence",
Regulation 2081/92 violates the national treatment provisions of Article 3.1 TRIPS and 2.1 Paris
Convention.
49

114. This claim is wrong for the following reasons:

• The EC does not apply a condition of reciprocity and equivalence for the registration
of geographical indications from other WTO members;

• The conditions for the registration of individual geographical indications do not
constitute less favourable treatment;

• The conditions for the registration of geographical indications do not depend on
nationality.

(a) The EC does not apply a condition of reciproc ity and equivalence for the registration of
geographical indications from other WTO members
115. The United States and Australia have allege d that Article 12(1) of Regulation 2081/92
subjects the registration of foreign geographical indications to a condition of "reciprocity and
equivalence". In particular, the United States has ar gued that in order to ensure the protection of
geographical indications relating to areas in other WTO Members, the EC requires them to (a)
reciprocally grant equivalent GI protection for agricultural products and foodstuffs coming from the
EC and (b) adopt a system for protecting geographical indications that the EC unilaterally decides is
equivalent to that in the EC, including equivalent inspection and objection systems.
50

116. As the EC has already set out previ ously, this claim is factually incorrect.
51 WTO Members
must provide adequate protec tion of geographical indications in accordance with the TRIPS
Agreement. For this reason, Article 12(1) of Regulation 2081/92, which applies only subject to
international agreements, does not apply to other WTO Members.52

117. Accordingly, the EC does not condition the regi stration of geographical indications relating to
the territory of another WTO Member to the conditi on that it reciprocally grant equivalent protection

49 US FWS, para. 57 et seq. It appears that Australia has also attempted to raise the same claim, albeit
in less clear form (Australia's FWS, para. 199).
50 US FWS, para. 59.
51 Above para. 62 et seq.
52 Above para. 62 et seq.

for agricultural products and foodstuffs coming from th e EC and that it adopts a system for protecting
geographical indications equivalent to that in the EC.

(b) The conditions for the registration of indivi dual geographical indica tions do not constitute
less favourable treatment
118. However, the EC would like to clarify that wh ereas it does not require equivalence as regards
the system of protection of geographical indications, it does require that the product specifications and
inspection regimes with regard to specific geogr aphical indications from third countries meet the
conditions of Regulation 2081/92. Fo r this reason, any application for a geographical indication
relating to an area in a third country must be accompanied by a product specification, and must
indicate that the necessary inspection procedures exist.
53

119. It is not entirely clear to the EC whethe r the complainants are also challenging these GI-
specific requirements. The EC notes, however, that in its submission, the United States has frequently
referred to the notion of "equivalence" without any further qualification, and has claimed that the
national treatment obligation was specifically intended to prohibit such a condition.
54

120. In case the complainants should also challenge these GI-specific requirements, the EC would
like to clarify that it considers that this interpre tation would be erroneous. Article 3.1 TRIPS and 2.1
Paris Convention oblige WTO Members to provide "tr eatment no less favourable" to the nationals of
other WTO Members; they do no oblige WTO Members to provide treatment more favourable.

121. As the EC has also explained, the objective of the product specification and the inspection
regimes foreseen in Regulation 2081/92 is to ensure that the products meet the requirements that can
be expected from products marketed using the protected name.
55 These considerations apply to
protected names from the EC and from third countries alike. Therefore, the requirement in Regulation
2081/92 of an assurance that the product specifications regarding a foreign geographical indication are
respected is not less favourable treatment, but equal treatment.

122. Accordingly, any claim regarding a viola tion of the national treatment provisions of
Article 3.1 TRIPS and 2.1 Paris Convention through the conditions for the re gistration of individual
geographic indications would be unfounded.

(c) The conditions for the registration of geographical indications do not depend on nationality
123. As the EC has set out, Article 3.1 TRIPS and 2.1 Paris Convention require equal treatment, as
regards the protection of intellectual property, between nationals
. However, the conditions and
procedures contained in Regulation 2081/92 for th e registration of geographical indications do not
depend on nationality.

124. As the EC has explained above, the cond itions and procedures for the registration of
geographical indications relating to an area locate d in the EC are set out in Article 5 and 6 of
Regulation 2081/92.
56 In contrast, the conditions and proce dures for the registration of geographical
indications relating to an area located in another WTO Member are contained in Article 12a and 12b
of the Regulation.57

53 Cf. above para. 68.
54 Cf. e.g. US FWS, para. 57.
55 Above para. 48 et seq., 50 et seq.
57 See above para. 62.

125. Whether the area to which a geographic indica tion is related is located inside the EC or
outside is in no way linked to the question of the nationality of the producers of the product
concerned. Protection of a geographical indication rela ting to an area located in the EC is obtained in
accordance with Article 5 and 6 of the Regulation, even if the producers in question are foreign
nationals. Inversely, protection for a geographical i ndication located outside the EC must be obtained
in accordance with Articles 12a and 12b of Regula tion 2081/92, even if the producers in question are
EC nationals. In both situations, the same also applies if certain producers are EC nationals, and
others are not.

126. Accordingly, Regulation 2081/92 does not di stinguish between EC nationals and other
nationals. For this reason also, the claim must fail.

3. Claim 2: Regulation 2081/92 violates the national treatment obligations under the
TRIPS and the Paris Convention by requiring that applications must be transmitted by
the country in which the geographical area is located
127. The United States (but not Australia) has claimed that Regulation 2081/92 violates the
national treatment obligations under the TRIPS and the Paris Convention by requiring that
applications must be transmitted by the count ry in which the geographical area is located.
58 The
United States has argued that this requirement implies an "extra hurdle" for foreign nationals which is
not faced by EC nationals. In particular, the Un ited States has invoked the possibility that the third
country concerned might have "neither the infrastru cture nor the inclination" to process and transmit
the application.

128. The EC submits that this cl aim must fail. First, the question which government must transmit
the application in accordance with Article 6 or Article 12a of the Regulation does not depend on
nationality, but on the question where the geographic area in question is located.
59 Accordingly,
Regulation 2081/92 does not differentiate on the basis of nationality.

129. Second, the Regulation does not constitute less favourable treatment for third country
nationals. The role of third country government s provided for in Article 12a of the Regulation
corresponds exactly to that of EC Member States where geographical indications relating to an area
located in the EC are concerned. As the EC has set out above, this involvement of the Member State
or third country concerned in the registration pro cess is crucial, as the government of the country
concerned is particularly well placed to examin e the admissibility of applications relating to
geographical areas located on its territory. Accordingly, the condition that an application relating to an
area located in a third country is transmitted by the government in question does not amount to "less
favourable treatment", but in fact ensures equal treatment.

130. The references by the US to an absence of "i nfrastructure" or "inclination" on the part of the
third country are not convincing. The verification an d transmission of an application for registration
of a geographical indication are not overly burdensome for another WTO Member. As regards
"inclination", the EC finds it remarkable that the United States would invoke its own unwillingness to
cooperate in the registration process in order to dem onstrate a national treatment violation on the part
of the EC.

131. Accordingly, the claim that Regulation 2081/92 violates the national treatment obligations
under the TRIPS and the Paris Convention by requiring that applications must be transmitted by the
country in which the geographical area is located is unfounded.

58 US FWS, para. 81.

4. Claim 3: Non-EC nationals are accorded le ss favorable treatment than EC nationals
with respect to the requirement to indicate the country of origin for homonymous
geographical indications
132. The United States (but not Australia) has claimed that the requirement contained in
Article 12(2) of Regulation 2081/92 to indicate the country of origin constitutes a violation of national
treatment provisions under the TRIPS and the Paris Convention.
60 This claim is unfounded for the
following reasons:

• Article 12(2) of Regulation 2081/92 does not apply to all geographical indications,
but only to homonyms;

• the requirement to indicate the country of origin for homonymous geographical
indications from the EC and third countries does not constitute less favourable
treatment;

• Article 12(2) of Regulation 2081/92 does not discriminate between nationals.

(a) Article 12(2) of Regulation 2081/92 does not apply to all geographical indications, but only to
homonyms
133. The United States has claimed that Article 12(2) of Regulation 2081/92 provides that use of
all foreign geographical indications require the indi cation of the country of origin. As the EC has
already clarified,
61 this claim of the United States is based on a misunderstanding. The second
subparagraph of Article 12(2) only relates to the situ ation of the first subparagraph where "a protected
name of a third country is identical to a Community protected name". Accordingly, there is no need to
examine whether a requirement to indicate the country of origin for all foreign geographical
indications would be compatible with national treatment obligations.

(b) The requirement to indicate the country of or igin for homonymous geographical indications
from the EC and third countries does not constitute less favourable treatment
134. Since it has misunderstood the meaning of Article 12(2) of the Regulation 2081/92, the
United States has not indicated whether it considers the requirement to indicate the country of origin
discriminatory also when only applying to hom onymous names from the EC and a third country.
Should the United States have intended to make su ch an argument, then it would be manifestly
unfounded.

135. Article 12(2) in fact does not only apply to third country names, but also to Community
names. As the EC has explained, it therefore may require the indication of the country of origin for
both EC and third country names, depending on wh ich geographical indication has been protected
earlier.
62 Accordingly, Article 12(2) of Regulations tr eats geographical indications from the EC and
third countries alike.

136. Accordingly, Article 12(2) of Regulation 208 1/92 is entirely compatible with the national
treatment obligations of the TRIPS and the Paris Convention.

60 US FWS, para. 68. Australia has made a similar claim under Article 2.1 of the TBT Agreement,
which will be discussed below (cf. Australia's FWS, para. 234).
61 Above para. 85.
62 Above para. 88.

(c) Article 12(2) of Regulation 2081/92 does not discriminate between nationals
137. The second subparagraph of Ar ticle 12(2) of Regulation 2081/92 provides that the use of
"such names" is authorized only if the country of or igin is clearly and visibly indicated on the label.
As the EC has set out above, 63 "such names" is a reference to th e first subparagraph of Article 12(2).
Accordingly, the requirement to indicate the country of origin applies where "a protected name of a
third country is identical to a Community protected name".

138. As the EC has already set out in response to Claim 1, whether a protected name is a
"Community name" or a "third country name" w ithin the meaning of Regulation 2081/92 depends on
where the geographical area to which the geographical indication is related is located. It has nothing
to do with nationality. Accordingly, Article 12(2) does not imply any discrimination between
nationals.
64

139. For all these reasons, the claim should be rejected.

5. Claim 4: Regulation 2081/92 accords less favou rable treatment to non-EC nationals by
subjecting the right to object to the registration of geographical indications to conditions
of reciprocity and equivalence
140. The United States and Australia have claimed that only nationals from WTO member
countries recognised in accordance with Article 12(3) of Regulation 2081/92 as fulfilling the
conditions of reciprocity and equivalence may object to registrations of geographical indications in
accordance with Article 12d of the Regulation.
65

141. This is factually wrong. As the EC has already set out,
66 Article 12d(1) of Regulation 2081/92
gives a right to object to any person that "is from a WTO Member or a third country recognised under
the procedure provided for in Article 12(3)". It is clear from this explicit reference to WTO Members
that WTO Members are not subject to the procedur e of Article 12(3) applicable to other third
countries. The same applies also under Article 12.b.2 with respect to objections against the
registration of geographical indications from outside the EC.

142. The claim is also legally unfounded. Article 3.1 TRIPS and 2.1 of the Paris Convention relate
only to equal treatment between nationals
. However, Article 7(3) of Regulation 2081/92 refers to
persons which are resident or established in the EC, regardless of their nationality. Similarly,
Article 12d(1) refers to persons resident or establis hed outside the EC, regardless of their nationality.
It should also be noted that conditions regarding domicile or establishment are the subject of
Article 2.2 Paris Convention, on the basis of wh ich the complainants have formulated separate
claims.
67

143. Accordingly, this claim should be dismissed.

63 Above para. 87.
64 The EC would point out that if national treatment under the TRIPS were considered as applying also
to discrimination between goods, then the relationship between the provisions of the TRIPS on national
treatment and Article IX:1 of the GATT would become an issue (on the relationship between Article III:4 and
IX:1 GATT, see below para. 213 et seq.).
66 Above para. 73 et seq.
67 See above Section II.B.3 and below Section IV.B.

6. Claim 5: Regulation 2081/92 accords less favou rable treatment to non-EC nationals by
requiring their own country to transmit the objection
144. The United States and Australia have cl aimed that Regulation 2081/92 accords less
favourable treatment to non-EC nationals by requiring their own country to transmit the objection.
68

145. First, it must once again be remarked that Article 12d(2) applies not to nationals, but to
persons resident or established in a third country . Accordingly, Regulation 2081/92 does not accord
different treatment on the basis of nationality.

146. Second, the treatment accorded to persons resident or established in the Community and
persons resident or established in the EC is exactly identical. For persons resident or established in the
Community, Article 7 requires that the statement of objection shall be submitted to the EC Member
State where the person is resident or established, who shall transmit the objection to the Commission.
For persons resident or established in a third count ry, Article 12d(1) provides that the statement shall
be submitted to the third country of residence or establishment, which shall transmit it to the
Commission. Accordingly, Regulation 2081/92 does not apply unequal, but equal treatment.

147. The United States has argued that the thir d country might not ha ve "the appropriate
mechanism to process the objection, or may or may not be inclined to transmit the objection, for its
own political reasons".
69 Similarly, Australia has argued that third countries "have no legally defined
relationship" regarding such objections.70

148. These objections are unconvincing. First, it does not appear that a particularly demanding
infrastructure is required for processing and transmitting a statement of objection. Second, the
complainants cannot rely on their own unwillingness to cooperate in the transmission of a statement
of objection in order to demonstrate a violation of national treatment obligations on the part of the EC.

149. Accordingly, Regulation 2081/92 does not accord less favourable treatment to non-EC
nationals by requiring their own country to transmit the objection.

7. Claim 6: Regulation 2081/92 accords less favou rable treatment to non-EC nationals by
requiring non-EC national to have a "legitimat e interest" to object to the registration of
geographical indications
150. The United States (but not Australia) has claimed that Article 12d(1) Regulation 2081/92
accords less favourable treatment to non-EC nationa ls by requiring non-EC nationals to have a
"legitimate interest" to object to the registration of geographical indications.
71

151. As the EC has shown, there is no substantive difference between the term "legitimate interest"
used in Article 12d(1) of Regulation 2081/92 and th e term "legitimately concerned" in Article 7(3).
Rather, "legitimately concerned" and "legitimately concerned" are synonymous expressions.

152. Since the claim is based on a misunderstandi ng of the Regulation, it does not need to be
discussed any further.

69 US, FWS, para. 90.
70 Australia's FWS, para. 205.
71 US, FWS, para. 93-94.

8. Claim 7: Regulation 2081/92 accords less favourable treatment because a non-EC
rightholder has no "representative" in the regulatory committee to "speak for him"
153. Australia (but not the United States) has argued that Regulation 2081/92 accords less
favourable treatment because a non-EC rightholder has no "representative" in the regulatory
committee to "speak for him".
72

154. This claim is manifestly unfounded. First, Au stralia has not correctly understood the decision-
making process under the Regulation. As the EC has set out, 73 the decision-maker under the
Regulation is the Commission, or exceptionally the Council. The Committee merely assists the
Commission, and may exceptionally achieve that a proposal is referred to the Council. In no case does
it take decisions itself. Moreover, Member Stat es representatives on the Committee do not speak for
particular rightholders, but represent the respective EC Member State.

155. Secondly, Australia's claim to have a re presentative on the regulatory committee is not
reasonable. The public authorities of a WTO Member must be presumed to administer their duties
properly and fairly. This is independent of the nationality of the civil servants and employees working
for such authorities. The EC also notes that ther e are no "EC representatives" in the public authorities
and agencies of Australia. The EC does not assume that Australia would want to suggest that for this
reason, Australian authorities cannot be assumed to correctly implement their WTO obligations with
respect to the EC.

9. Claim 8: A right of objection was available to persons resident or established in an EC
Member State that was not available to oth er WTO Member nationals in respect of the
registration of more than 120 geographical indications under the normal registration
process
156. Australia has claimed that there is a violation of national treatment in the fact that a right of
objection was available to persons resident or est ablished in an EC Member State that was not
available to other WTO Member nationals in respect of the registration of more than 120 geographical
indications under the normal registration process.
74 This claim must fail for the following reasons:

• Australia's claim relates to a measure which was no longer in force at the time of
establishment of the Panel, and which is therefore not within the terms of reference of
the Panel;

• the individual registrations are not in violation of national treatment obligations;

• Australia is seeking to obtain a retroactiv e remedy it could not have obtained had it
attacked the measure while it was still in force.

(a) Australia's claim relates to a measure whic h was no longer in force at the time of
establishment of the Panel, and which is theref ore not within the term s of reference of the
Panel
157. Australia's claim relates to Regulation 2081/92 as in force until 8 April 2003, when
Regulation 692/2003 entered into force. It therefor e relates to a measure which was no longer in force

72 Australia's FWS, para. 203.
73 Above, para. 79 et seq.
74 Australia's FWS, para. 184 et seq.

at the time of establishment of the Panel. Accordi ngly, as the EC has set out above, this measure is
therefore not within the terms of reference of the Panel.
75

(b) The individual registrations are not in violation of national treatment obligations
158. In its submission, Australia has also argued that "in respect to the registration under the
normal registration process of more than 120 EC-defined GIs" before Regulation 2081/92 was
amended by Regulation 692/2003, the "EC measure " accorded less favourable treatment to foreign
nationals. With this claim, Australia seems to sugg est that the individual registrations of geographical
indications which were carried out prior to th e entry into force of Regulation 692/2003 somehow
violate the national treatment obligations under the TRIPS and the Paris Convention.

159. This claim of Australia's is unfounded. Au stralia has made no plausible case that the 120
registrations in question in any way violate the national treatment obligations under the TRIPS and the
Paris Convention.

160. Australia's claim is based exclusively on the argument that no right of objection was available
to third country-nationals under Regulation 2081/92 before its amendment by Regulation 692/2003.
However, this claim relates to Regulation 2081/92 as applicable before its amendment, and the
procedure it prescribed for the registration of geographical indications. The rules governing the
procedure leading up to the adoption of a measure are not the same as the measure itself.

161. In contrast, Australia has advanced no argumen ts in support of its claim that the individual
registrations are incompatible with national treatme nt obligations. It is submitted that Australia is
unable to do so. Each individual registration grants protection to a specific geographical indication
relating to a specific geographical area. It is not clear to the European Community how such a
registration could be considered to grant less favourable treatment to third-country nationals.

(c) Australia is seeking to obtain a retroactive re medy it could not have obtained had it attacked
the measure while it was still in force.
162. In addition, the EC considers it important to re mark that Australia's clai m, if directed against
the individual registrations, has considerable impli cations for the dispute settlement system set up by
the DSU. In fact, with its claim, Australia is seek ing to obtain a retroactive remedy that it could not
even have obtained had it attacked Regul ation 2081/92 before it was amended by
Regulation 692/2003.

163. According to Article 19.1 DSU, where a pa nel or the Appellate Body concludes that a
measure is inconsistent with a covered agreement, it shall recommend that the Member concerned
"bring the measure into conformity with that agreemen t". It is universally accepted that this signifies
that recommendations of panels and the Appellate Bo dy are prospective, not retrospective in nature.
76
This has also been confirmed by the Appellate Body in US – Certain EC Products:77

We note, though, that there is an obvious inconsistency between the finding of the
Panel that "the 3 March Measure is no l onger in existence" and the subsequent
recommendation of the Panel that the DSB re quest that the United States bring its 3
March Measure into conformity with its WTO obligations. The Panel erred in

75 See above Section II.A.1.
76 Australia itself has argued in favour of the prospec tive character of WTO remedies even in regard to
Article 4.7 SCM Agreement; cf. Panel Report, Australia – Automotive Leather (Article 21.5 – US), para. 6.14.
77 Appellate Body, US – Certain EC Products, para. 81.

recommending that the DSB request the United States to bring into conformity with
its WTO obligations a measure which the Panel has found no longer exists.
164. Reference can also be made to the findings of the GATT Panel in Norway – Trondheim
Bridge, which clearly stated that GATT remedies were not retroactive:78

The Panel then turned its attention to th e recommendations that the United States had
requested it to make. In regard to the Un ited States' request that the Panel recommend
that Norway take the necessary measures to bring its practices into compliance with
the Agreement with regard to the Trondheim procurement, the Panel noted that all the
acts of non-compliance alleged by the United States were acts that had taken place in
the past. The only way mentioned during the Panel's proceedings that Norway could
bring the Trondheim procurement into line with its obligations under the Agreement
would be by annulling the contract and recommencing the procurement process. The
Panel did not consider it appropriate to make such a recommendation.
Recommendations of this nature had not b een within customary practice in dispute
settlement under the GATT system and the dr afters of the Agreement on Government
Procurement had not made specific provision that such recommendations be within
the task assigned to panels under standard terms of reference. Moreover, the Panel
considered that in the case under examination such a recommendation might be
disproportionate, involving waste of resources and possible damage to the interests of
third parties.

165. The Panel went on to emphasise that these considerations were in no way specific to
government procurement, but were of a general nature:79

In considering this argument, the Panel was of the view that situations of the type
described by the United States were not unique to government procurement.
Considerable trade damage could be caused in other areas by an administrative
decision without there necessarily being an y GATT inconsistent legislation, for
example in the areas of discretionary licensing, technical regulations, sanitary and
phytosanitary measures and subsidies. Moreover, there had been cases where a
temporary measure contested before the GATT had been lifted before a Panel had
been able to report.

166. In the present case, even if Australia had ch allenged a violation of national treatment before
Regulation 2081/92 was amended by Regulation 692/2003, it could therefore not have claimed that
the EC undo all the registrations already carried out, or that it reopen a possibility of objection against
such registrations.

167. Australia has also argued that when Regula tion 692/2003 entered into force, it should have
reopened a full objection period in r espect to all geographical indicati ons for which applications were
pending.
80 This argument shows even more clearly the re troactive character of Australia's claims. If
the period of objection had already fully or partially run out for EC residents, then claims based on
national treatment would not have given a retroactive right to reopen an objection period for non-EC
residents.

78 Panel Report, Norway – Trondheim Bridge, para. 4.17.
79 Panel Report, Norway – Trondheim Bridge, para. 4.23.
80 Australia's FWS, para. 188.

168. By formulating its claim not against the terminated measure but against the acts which are
derived from it, Australia is effectively trying to circumvent the principle that WTO remedies are not
retroactive in nature. For this reason also, Australia's claim must be rejected.

169. For all the reasons set out above, Australia's claim must be rejected.

10. Claim 9: A right of objection was available to persons resident or established in an EC
Member State that was not available to oth er WTO Member nationals in respect of the
registration of more than 480 EC-defined GIs under the simplified registration process
170. Finally, Australia also claims that a right of objection was available to persons resident or
established in an EC Member State that was not av ailable to other WTO Member nationals in respect
of the registration of more than 480 EC-defined GIs under the simplified registration procedure.
81 In
this respect, Australia refers to the simplified re gistration procedure provided for in Article 17 of
Regulation 2082/92 until its amendment through Regulation 2081/92.

171. With this claim, Australia is once again tryi ng to obtain a retrospective remedy for a measure
which is not within the terms of reference of the Panel, and which it did no challenge while it was still
in force. All arguments that have been set out in respect of the Claim 8 therefore apply here as well.

172. Moreover, Australia's claim is factually wr ong. As the EC has already set out, there was no
right of objection for EC residents under the simplified procedure.
82 The fact that there was no right of
objection for third-country residents therefore did not constitute a violation of national treatment
obligations.

173. Australia's claims must therefore be rejected.

B. P
ROHIBITED REQUIREMENT OF DOMICILE OR ESTABLISHMENT (ARTICLE 2.1 TRIPS IN
CONJUNCTION WITH ARTICLE 2.2 PARIS CONVENTION)
174. The complainants have also raised certain claims under Article 2.1 TRIPS in conjunction with
Article 2.2 Paris Convention. Article 2.2 Paris C onvention, which prohibits subjecting the enjoyment
of intellectual property rights to a condition of dom icile or establishment, is a separate and distinct
obligation from Article 2.1 of the Paris Convention.

175. As the EC has set out, the complainant's claims under Article 2.2 Paris Convention are not
within the Panel's terms of reference.
83 This notwithstanding, the EC will hereafter briefly refute
certain erroneous arguments made in this respect by the complainants.

1. Claim 10: Regulation 2081/92 requires non-EC nationals to become established in the
EC as a condition for registering geographical indications
176. The United States (but not Australia) has argued that Regulation 2081/92 requires non-EC
nationals to become established in the EC as a condition for registering geographical indications.
84
This claim is unfounded for the following reasons:

• Geographical indications relating to an area located in a WTO country can be
registered under Regulation 2081/92;

81 Australia's FWS, para. 190 et seq.
82 Supra para. 91 et seq.
83 See above Section II.B.3.
84 US FWS, para. 84.

• The right to register a geographical indication does not depend on domicile or
establishment;

• Article 2.2 Paris Convention does not exclude measures which ensure that a product
originates in the geographical to which a protected geographical indication area is
related.

(a) Geographical indications relating to an area located in a WTO country can be registered under
Regulation 2081/92
177. The United States has based its claim on the assumption that a US national cannot register a
geographical indication relating to an area in the United States.
85 The United States claim therefore
seems to be based on its assumption that the regist ration of geographical indications relating to an
area outside the EC is possible only if conditions of reciprocity and equivalence of protection systems
are fulfilled.

178. As the EC has already explained, the registration of geographical indications relating to an
area located in anther WTO Member does not depend on the fulfilment of such conditions.
86 Any
geographical indication relating to an area in anothe r WTO Member can be registered if it fulfils the
conditions set out in the Regulation.

179. Accordingly, there is no requirement as to domicile or establishment for the registration of
geographical indications relating to an area located in a third country. Already for this reason, the
United States claim must fail.

(b) The right to register a geographical indication does not depend on domicile or establishment
180. The United States has argued further that a US national could not register a geographical
indication relating to an area located in the EC w ithout "having some form of investment or business
establishment in the EC".
87

181. This assumption of the United States is wrong. First of all, not any form of investment or
"business establishment" would appear to constitu te "an establishment" within the meaning of
Article 2.2 of the Paris Convention.

182. Second, in order for a name to qualify as a geographical indication under Regulation 2081/92,
it must "possess a specific quality, reputation or othe r characteristics attributable to that geographical
origin and the production and/or processing and/or preparation of which take place in the defined
geographical area".88

183. Accordingly, the Regulation does not require that a producer be domiciled or established in
the EC. It merely requires that the production, processing or preparation, alternatively or
cumulatively, must take place in the defined geographical area. What specific activities of production,
processing, or preparation must take place in the specific area will depend on the specifications for the

85 US FWS, para. 85.
86 Above para. 62 et seq.
87 US FWS, para. 85.
88 Article 2.2 (b) of the Regulation. As has been noted above para. 46, a closer link with the
geographical area is required for designations of origin. However, since the procedures for registration and
protection of designations of origin are identical to thos e for geographical indications, the EC will refer only to
the latter.

product in question. It cannot be assumed, however, that these specifications will necessarily require a
producer to be domiciled or established in the geographical area in question.

(c) Article 2.2 Paris Convention does not exclude measures which ensure that a product
originates in the geographical area to which a protected geographical indication is related
184. Moreover, if the argument of the United States were accepted, it would have the effect of
rendering the protection of geographical indications as defined in the TRIPS impossible.

185. According to Article 22.1 TRIPS, a geogra phical indication identifies "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 ". Thus, the
definition of a geographical indication in the TRIPS presupposes that the good in question has an
identifiable geographical origin

186. The definition in Regulation 2081/92 that the production and/or processing and/or preparation
must take place in the defined geographical area im plements this requirement of an identifiable
geographical origin. The argument of the United States that this constitutes a requirement of
"domicile or establishment" incompatible with Artic le 2.2 of the Paris Convention is equivalent to
saying that a geographical indication should be protected even if the products in question do not
originate in the area to which the geographical indication relates.

187. Such an interpretation is incompatible with Article 22.1 TRIPS, and must also for this reason
be rejected.

2. Claim 11: Regulation 2081/92 requires non-EC nationals to become established in the
EC as a condition for objecting
188. The United States has argued that the fact that Regulation 2081/92 requires the home country
of third country nationals to transmit the statemen t of objection constitutes a requirement of residence
or domicile contrary to Article 2.2 of the Paris Convention.
89

189. This claim is manifestly unfounded. Ar ticle 12d(1) of Regulation 2081/92 explicitly allows

persons from other WTO countries who are resident or established in third countries to object to
registrations. It merely requires that, in close para llelism with the situation for EC residents, the
statement of objection be transmitted by the third country in which the person is resident. This
procedural modality does not constitute a "requirement of domicile or establishment" for the
enjoyment of an industrial property right. Accordingly, this claim must be rejected.

C. N
ATIONAL TREATMENT UNDER ARTICLE III:4 GATT
190. The complainants have raised a number of claims alleging that Regulation 2081/92 is
incompatible with the national treatment obligation contained in Article III:4 GATT. In this section,
the EC will show that Regulation 2081/92 is fu lly compatible with Article III:4 GATT. In the
alternative, the EC considers that the EC measure is justified by Article XX (d) GATT.

89 US FWS, para. 91. Australia has raised Article 2.2 Paris Convention in the context of its claims with
respect to Regulation 2081/92 as applicable before it was amended by Regulation 692/2003 (Australia's FWS,
paras. 189, 194). Like the claims raised under Article 3.1 TRIPS and 2.1 Paris Convention, these claims are
outside the terms of reference of the Panel, and therefore need not be considered further (cf. above
Section II.A.1).

1. The regulation 2081/92 is not incompatible with Article III:4 GATT
191. The national treatment obligation contai ned in Article III:4 GATT provides as follows:

The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accord ed treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation ch arges which are based exclusively on the
economic operation of the means of tran sport and not on the nationality of the
product.
192. As the EC will show, Regulation 2081/92 is entirely compatible with this obligation.

(a) General remarks
193. In Korea – Various Measures on Beef , the Appellate Body explained that for a violation of
Article III:4 to be established, three elements must be satisfied:
90

For a violation of Article III:4 to be established, three elements must be satisfied:
that the imported and domestic products at issue are "like products"; that the measure
at issue is a "law, regulation, or requiremen t affecting their internal sale, offering for
sale, purchase, transportation, distribution, or use"; and that the imported products
are accorded "less favourable" treatment than that accorded to like domestic products.
194. The EC does not contest that Regulation 2081/92 is a measure affecting the internal sale of
products. However, it considers that some genera l remarks are necessary on the first and the third
condition, namely that products at issue must be "like products", and that the imported products must
be accorded "less favourable treatment" than like domestic products.

(i) Like products
195. The EC does not contest that products from third countries falling under the scope of
Regulation 2081/92 may be "like" EC products which fall under the scope of that Regulation.

196. The EC would also like to stress, however, that the question of whether products are "like" for
the purposes of Article III:4 GATT must be separated from the question of whether the conditions for
the registration of individual geographic indications are fulfilled. In the following passage in its first
written submission, Australia seems to be merging these two issues:
91

However, the products in respect of whic h an EC-defined GI may be registered
remain subject to the provisions of Ar ticle III:4 of GATT 1994. Thus, within the
meaning of GATT Article III:4, for example: imported apples and pears would be
like products to "Savoie" apples and pears; imported oysters would be like products
to "Whitstable" oysters; imported olive oils would be like product to the many olive
oils for which an EC-defined GI has been registered; and im ported trout would be
like product with "Black Forest" trout.

90 Appellate Body Report, Korea – Various Measures on Beef, para. 133.
91 Australia's FWS, para. 162.

197. Once again, the EC has no problem in accepting that apples or oysters from Australia may be
"like" apples or oysters from the EC. However, the EC would like to remark that this does not mean
that the EC cannot apply the conditions for the regi stration of geographic indications, as long as these
conditions do not result in less favourable treatment for imported products.

198. The fact that a domestic measure may disti nguish between "like" products without for that
reason alone according less favorable treatment, was al so explicitly confirmed by the Appellate Body
in EC – Asbestos:
92

We recognize that, by interpreting the term "like products" in Article III:4 in this way,
we give that provision a relatively broa d product scope – although no broader than
the product scope of Article III:2. In so doing, we observe that there is a second
element that must be established before a measu re can be held to be inconsistent with
Article III:4. Thus, even if two products are "like", that does not mean that a measure
is inconsistent with Article III:4. A complaining Member must still establish that the
measure accords to the group of "like" imported products "less favourable
treatment" than it accords to the group of "like" domestic products. The term "less
favourable treatment" expresses the general prin ciple, in Article III:1, that internal
regulations "should not be applied … so as to afford protection to domestic
production". If there is "less favourable treat ment" of the group of "like" imported
products, there is, conversely, "protection" of the group of "like" domestic products.
However, a Member may draw distinctions between products which have been found
to be "like", without, for this reason alone, according to the group of "like" imported
products "less favourable treatment" than that accorded to the group of
"like" domestic products. [...].
(ii) Less favourable treatment
199. In Korea – Various Measures on Beef , the Appellate Body has defined the meaning of "less
favourable treatment" as follows:
93

We observe, however, that Article III:4 requi res only that a measure accord treatment
to imported products that is "no less favour able" than that accorded to like domestic
products. A measure that provides treat ment to imported products that is different
from that accorded to like domestic products is not necessarily inconsistent with
Article III:4, as long as the treatment provided by the measure is "no less favourable".
According "treatment no less favourable" means, as we have previously said,
according conditions of competition no less favourable to the imported product than
to the like domestic product.
200. The Appellate Body continued as follows:
94

A formal difference in treatment between imported and like domestic products is thus
neither necessary, nor sufficient, to show a violation of Article III:4. Whether or not
imported products are treated "less favourably " than like domestic products should be
assessed instead by examining whether a measure modifies the conditions of
competition in the relevant market to the detriment of imported products.

92 Appellate Body Report, EC – Asbestos, para. 100.
93 Appellate Body Report, Korea – Various Measures on Beef, para. 135.
94 Appellate Body Report, Korea – Various Measures on Beef, para. 137.

201. As the EC will show, Regulation 2081/92 does not modify the conditions of competition to
the detriment of imported products.

(b) Claim 12: Regulation 2081/92 accords less favourab le treatment as regards the conditions for
registration of foreign geographical indications
202. The complainants have claimed that Regul ation 2081/92 accords less favourable treatment as
regards the conditions for registration of foreign geographical indications by imposing conditions of
reciprocity and equivalence.
95

203. As the EC has already stated above, Re gulation 2081/92 does not impose a condition of
reciprocity and systemic equivalence for the regi stration of geographical indications from other WTO
Members.
96 Accordingly, it does not apply less favourable treatment to products from other WTO
Members.

204. As it has already done in response to the clai ms under the national treatment provisions of the
TRIPS and the Paris Convention,
97 the EC would like to recall, however, that whereas it does not
require other WTO Members to have an equivale nt system for the protection of geographical
indications, it must ensure that indications from th ird countries comply with the conditions set out in
Regulation 2081/92. However, in this respect, the EC treats products from the EC like it treats
products from other WTO Members.

205. The claim that Regulation 2081/92 accords less favourable treatments as regards the
conditions for registration of foreign geographical indications by imposing conditions of reciprocity
and equivalence must therefore be dismissed.

(c) Claim 13: Regulation 2081/92 accords less favour able treatment as regards the requirement
that the application must be transmitted by the government of the third country
206. The complainants have argued that Regula tion 2081/92 accords less favourable treatment as
regards the requirement that the application must be transmitted by the government of the third
country.
98

207. As the EC has already set out above with r espect to the national treatment obligations under
the TRIPS and the Paris Convention,
99 the role of third country governments provided for in
Article 12a of the Regulation corresponds exactly to that of EC Member States where geographical
indications relating to an area located in the EC are concerned. Accordingly, the condition that an
application relating to an area located in a third c ountry is transmitted by the government in question
does not amount to "less favourable treatment", but in fact ensures equal treatment. Moreover,
Australia and the United States cannot invoke their own unwillingness to cooperate in the application
process in order to argue that Regulation 2081/92 constitutes less favourable treatment for their own
nationals.

208. Accordingly, this claim is equally unfounded.

96 See above, para. 62.
97 Above para. 113 et seq.
99 Above para. 127 et seq.

(d) Claim 14: Regulation 2081/92 accords less favourable treatment as regards the requirement to
indicate the country of origin
209. The United States (but not Australia) has argued that Regulation 2081/92 accords less
favourable treatments as regards the requirement to indicate the country of origin.
100

210. This claim is unfounded for the following reasons:

• Article 12(2) of Regulation 2081/92 does not apply to all geographical indications,
but only to homonyms;

• The requirement to indicate the country of origin for homonymous geographical
indications from the EC and third countries does not constitute less favourable
treatment;

• Article IX:1 of the GATT is a lex specialis to Article III:4 GATT; national treatment
obligations therefore do not apply to requirements to mark the country of origin.

(i) Article 12(2) of Regulation 2081/92 does not ap ply to all geographical indications, but only
to homonyms
211. As the EC has already set out in response to the United States' corresponding claim under the
TRIPS Agreement, Article 12(2) of Regulation 2081/92 does not apply to all geographical indications,
but only to homonyms.101 Accordingly, there is no requirement to indicate the country of origin for all
foreign geographical indications.

(ii) The requirement to indicate the country of origin for homonymous geographical indications
from the EC and third countries does not constitute less favourable treatment
212. As the EC has also already explained, Artic le 12(2) does not only apply to third country
names, but applies on equal terms to Community names. 102 Accordingly, Article 12(2) treats foreign
and EC goods alike.

(iii) Article IX:1 of the GATT is a lex specialis to Article III:4 GATT; national treatment
obligations therefore do not apply to requirements to mark the country of origin
213. Finally, it should be noted that marks of origin are dealt with in Article IX of the GATT.
Article IX:1 provides as follows:

Each contracting party shall accord to th e products of the territories of other
contracting parties treatment with regard to marking requirements no less favourable
than the treatment accorded to like products of any third country.
214. It is noteworthy that Article IX GATT contains, with respect to marks of origin, exclusively
an obligation to provide most-favoured nation treatme nt. It does not contain an obligation to also
provide national treatment. This has been confirmed by the GATT Panel in US – Tuna:103

100 US FWS, para. 106. Australia has made a similar claim under Article 2.1 of the TBT Agreement,
which will be discussed below (cf. Australia's FWS, para. 234).
101 Above para. 133.
102 Above para. 134.
103 Panel Report, US – Import Restrictions on Tuna, para. 5.41.

The Panel noted that the title of Article IX is 'Marks of Origin' and its text refers to
marking of origin of imported products. The Panel further noted that Article IX does
not contain a national-treatment but only a most-favoured-nation requirement, which
indicates that this provision was intended to regulate marking of origin of imported
products but not marking of products gene rally. The Panel therefore found that the
labelling provisions of the DPCIA did not fall under Article IX:1.
215. This omission in Article IX:1 cannot be re garded as accidental. If the GATT had meant to
also impose a national treatment obligation with respect to marks of origin, it would have been natural
to include such an obligation in Article IX. Alternatively, Article IX could have remained silent on the
issue of national and most-favoured nation treatment , in which case the general obligations contained
in Articles I and III of the GATT would have applied.

216. By laying down an obligation only to provide most-favoured nation treatment and not also
national treatment, Article IX implies that WTO members are free to impose country of origin
marking only with respect to imported products a nd not to domestic products . This understanding is
also confirmed by a report of a GATT working party:
104

The Working Party considered that the qu estion of additional marking requirements,
such as an obligation to add the name of the producer or the place of origin or the
formula of the product, should not be brought within the scope of any
recommendation dealing with the problem of marks of origin. The point was stressed
that requirements going beyond the obligation to indicate origin would not be
consistent with the requirements of Article III, if the same requirements did not apply
to domestic producers of like products.
217. For these reasons, Article III:4 is not applicab le to requirements to indicate the country of
origin for an imported product.

218. For all the reasons set out, the EC submits that the United States claim must be rejected.

(e) Claim 15: Regulation 2081/92 accords less favourable treatment due to an overall bias in the
decision-making process
219. Australia has argued that Regulation 2081/92 acco rds less favourable treatment in that there is
an overall bias in the decision-making process due to the alleged fact:
105

that the outcome of the application is to be determined through a process, that is, the
Committee of EC Member State representatives, in which:
• there is no representative or advocate for the registration of
an EC-defined GI for an imported product; and
• there is no requirement for procedural fairness, due process
and/or transparency concerning that Committee's decision-
making process.
220. First of all, this claim is based on a mi sunderstanding of the decision-making process under
the Regulation. As the EC has already explaine d, the decision-maker under the Regulation is the

104 L/595, adopted on 17 November 1956, 5S/102, 105-106, para. 13 (emphasis added).
105 Australia's FWS, para. 177.

Commission, or exceptionally the Council.
106 The Committee merely assists the Commission, and
may exceptionally achieve that a proposal is referred to the Council.

221. Secondly, as the EC has already argued, Aust ralia's claim to a have representative on the
regulatory committee is manifestly unfounded.
107

222. Finally, the Australian statement that there is "no requirement for procedural fairness, due
process and/or transparency" concerning the decision -making process of the Committee is completely
unsupported by fact.

223. For these reasons, the Australian claim must be rejected.

2. The measure would be justified under Article XX (d) GATT
224. As explained, it is unclear to the EC whet her the complainants clai m that the requirements
imposed by Article 12a, in conjunction with Article s 4 and 10, of Regulation 2081/92 with respect to
the registration of each specific geographical indicati on are as such incompatible with Article III:4 of
the GATT. The EC has shown that those requirements do not provide less favourable treatment to
imported like products and, therefore, are consistent with that provision.

225. In the event that the complainants were to cl aim that such requirement s are inconsistent with
Article III:4 of the GATT, and should the Panel find that they afford less favourable treatment to
imported products, the EC submits in the alternative that such requirements would be justified under
Article XX(d) of the GATT.

226. More specifically, the EC subm its that the requirements at is sue are necessary in order to
ensure that only those products which conform to the definition of geographical indications contained
in Article 2(2) of Regulation 2081/92, which is itself fully consistent with the GATT, benefit from the
protection afforded to geographical indications by Regulation 2081/92.

V. REGULATION 2081/92 IS COMPATIBLE WI TH THE OBLIGATION TO PROVIDE
MOST-FAVOURED-NATION TREATMENT
227. The United States (but not Australia)
108 has claimed that Regulation 2081/92 is incompatible
with the obligation to provide most-favoured-natio n treatment under Article 4 TRIPS and Article I:1
GATT. The EC will discuss the United States claims under both provisions separately.

A. A
RTICLE 4 TRIPS
228. The United States has made two claims under the most-favoured-nation provision of Article 4
TRIPS:

• As among non-EC WTO Members, nationals from WTO Members that satisfy the
EC's conditions of reciprocity and equi valency are accorded more favourable
treatment than nationals from those WTO Members that do not;

106 Above, para. 79.
107 Above, para. 155.
108 Australia has not made any claim in this respect, bu t has reserved the "right to pursue such a claim"
in the event that the EC "is applying" or "begins to apply Community-wide protection to EC-defined GIs for
foodstuffs and agricultural products from another WTO Member" (Australia's FWS, para. 65).

• under Regulation 2081/92, an EC Member Stat e grants more favourable treatment to
nationals from other EC Member States th an it accords to nationals from non-EC
WTO Members.

1. Claim 16: As among non-EC WTO Member s, nationals from WTO Members that
satisfy the EC's conditions of reciprocity a nd equivalency are accorded more favourable
treatment than nationals from those WTO Members that do not
229. The United States has claimed that nationa ls from WTO Members that satisfy the EC's
conditions of reciprocity and equivalency are accord ed more favourable treatment than nationals from
those WTO Members that do not.109

230. This claim is unfounded for the following reasons:

• the EC does not apply a condition of reciprocity and equivalence for the registration
of geographical indications from other WTO members;

• the conditions for the registration of indi vidual geographical indications from third
countries are not discriminatory;

• Article 12 of Regulation 2081/92 does not gr ant any advantage, favour, privilege or
immunity to any other country;

• the conditions for the registration of geographical indications do not depend on
nationality.

(a) The EC does not apply a condition of reciproc ity and equivalence for the registration of
geographical indications from other WTO members
231. Article 4 TRIPS requires that "with regard to the protection of intellectual property, any
advantage, favour, privilege or imm unity granted by a Member to the nationals of any other country
shall be accorded immediately and unconditionally to the nationals of all other Members".

232. As the EC has already explained, it does not apply a condition of reci procity and equivalence
to the registration of geographical indications from other WTO Members. 110 Accordingly,
geographical indications relating to an area located in another WTO country can be registered under
Regulation 2081/92 in accordance with Article 12a and 12b of Regulation 2081/92.

233. In contrast, the conditions of Article 12(1) and 12(3) are applicable for the registration of
geographical indications from third countries wh ich are not WTO Members. Moreover, it should be
recalled that Article 4 TRIPS does not require that benefits are extended to third countries which are
not WTO Members.

234. Accordingly, Regulation 2081/92 does not tr eat nationals of other WTO Members less
favourable than those of other third countries.

109 US FWS, para. 119.
110 Above para. 62 et seq.

(b) The conditions for the registration of individua l geographical indications from third countries
are not discriminatory
235. As in respect of the claims regarding nationa l treatment, the EC is not sure whether the United
States also challenges the product-specific conditions for the registration of geographical indications
from third countries.

236. However, if it does, such a claim would have to be regarded as unfounded. The conditions for
the registration of individual geographical indicati ons, and in particular th e requirement of a product
specification and the existence of inspection structur es, do not discriminate on the basis of nationality
or product origin. Moreover, they are examined for each product individually.

237. In this context, it is usef ul to recall the Panel report in Canada – Autos , which stated that
most-favoured nation treatment does not exclude subj ecting advantages to conditions, as long as these
conditions are non-discriminatory:
111

In this respect, it appears to us that ther e is an important distinction to be made
between, on the one hand, the issue of whet her an advantage within the meaning of
Article I:1 is subject to c onditions, and on the other, whether an advantage, once it
has been granted to the product of any count ry, is accorded "unconditionally" to the
like product of other Members. An advantage can be granted subject to conditions
without necessarily implying that it is not accorded "unconditionally" to the like
product of other Members. More specifically, the fact that conditions attached to such
an advantage are not related to the imported product itself does not necessarily imply
that such conditions are discriminatory with respect to the origin of imported
products. We therefore do not believe that, as argued by Japan, the word
"unconditionally" in Article I:1 must be interpreted to mean that making an advantage
conditional on criteria not related to the imported product itself is per se inconsistent
with Article I:1, irrespective of whether and how such criteria relate to the origin of
the imported products.
238. Accordingly, the application of the conditions for the registration of individual geographical
indications from other WTO Members is not incompatible with most-favoured-nation principles.

(c) Article 12 of Regulation 2081/92 does not grant any advantage, favour, privilege or immunity
to any other country
239. Second, Article 12 of Regulation 2081/92 does not involve the granting of any advantage to a
third country.
112

240. Article 12(1) of Regulation 2081/92 provides the conditions under which the Regulation may
apply to a third country which is not a WTO Me mber. In accordance with Article 12(3) of the
Regulation, the Commission must examine whether th e conditions in Article 12(1) are fulfilled. The
conditions set out in Article 12(1) are the same fo r all third countries which fall under this provision.
In the absence of a decision under Article 12(3) of the Regulation, Article 12 does not confer any
advantage onto a third country.

112 The EC notes that Australia seems to share this view, since it reserves to make a claim in regard to
most-favoured-nation treatment only in the event that the EC "is applying" or "begins to apply Community-wide
protection to EC-defined GIs for foodstuffs and agricu ltural products from another WTO Member" (Australia's
FWS, para. 65).

241. In support of its claim, the United Stat es has referred to the GATT Panel Report in Belgian
Family Allowances .113 However, this Panel report does not support the proposition of the United
States. In this case, Belgium had in fact granted an exception from a certain levy to a number of third
countries.114 This resembled the situation in EEC – Imports of Beef from Canada , where the Panel
found as follows:115

The Panel further found that exports of like products of other origin than that of
United States were in effect denied access to the EEC market considering that the
only certifying agency authorized to certify the meat described in Article 1(1)(d),
listed in Annex II of the Commission Re gulation, was a United States agency
mandated to certify only meat from the United States.
(b) The Panel further found that the mention "Beef graded USDA 'choice', or
'prime' automatically meets the definiti on above" could accord an advantage to
products of United States' origin in so fa r as other like products were not mentioned
in the same manner. The Panel found, however , that only the practical application of
the Commission Regulation would make it possi ble to judge whether this mention in
itself was inconsistent with Article I of the General Agreement.
4.3 The Panel concluded that Commission Regulation (EEC) No. 2972/79 and its
Annex II, in their present form had the effect of preventing access of "like products"
from other origin than the United States, thus being inconsistent with the most-
favoured-nation principle in Article I of the General Agreement.

242. In both cases, it was the granting of c oncrete advantages to specific countries which led the
Panels to find a violation of the most-favoured-natio n principle. This is fundamentally different from
the situation under Article 12 of Regulation 2081/92, which merely provides for the conditions under
which Regulation 2081/92 may apply to geographica l indications from third countries which are not
WTO members.

243. The United States has also referred to a Join t Declaration of the European Community and
Switzerland made on occasion of the signature of the Agreement between the European Community
and Switzerland on Trade in Agricultural Products.116 This declaration reads in full as follows:117

The European Community and Switzerland (hereinafter referred to as "the Parties")
hereby agree that the mutual protection of designations of origin (PDOs) and
geographical indications (PGIs) is essential for the liberalisation of trade in
agricultural products and foodstuffs between the Parties. The incorporation of
provisions relating thereto in the bilateral Agreement on trade in agricultural products
is a necessary addition to Annex 7 to the Agreement on trade in wine-sector products,
and in particular Title II thereof, whic h provides for the mutual protection of the
names of such products, and to Annex 8 to the Agreement on the mutual recognition
and protection of names of spirit drinks and aromatised wine-based drinks.
The Parties shall provide for provisions on the mutual protection of PDOs and PGIs
to be incorporated in the Agreement on trad e in agricultural products on the basis of
equivalent legislation, as regards both th e conditions governing the registration of

113 US FWS, para. 115.
114 Panel Report, Belgian Family Allowances, para. 3.
115 Panel Report, EEC – Imports of Beef from Canada, paras. 4.2–4.3.
116 US FWS, para. 119.
117 Exhibit US-6 (emphasis added).

PDOs and PGIs and the arrangements on controls. The incorporation of those
provisions should take place on a date which is acceptable to both Parties , and not
before Article 17 of Council Regulation (EEC) No 2081/92 has been fully applied as
regards the Community as constituted at pr esent. In the meantime, the Parties shall
keep each other informed of th eir work in this area while taking legal constraints into
account.
244. This declaration is merely a political declar ation stating the intention of the parties to
incorporate, at a later stage, provisions on the protection on geographical indications into the
Agreement on Trade in Agricultural Products. No such provisions have so far been incorporated into
the Agreement between the EC and Switzerland. This declaration is therefore irrelevant for the
purposes of the present dispute.

245. Accordingly, Article 12 of Regulation 20 81/92 does not grant any advantage, favour,
privilege or immunity to any other country.

(d) The conditions for the registration of geographical indications do not depend on nationality
246. Finally, as the United States has recognised itself,
118 Article 4 TRIPS establishes a most-
favoured-nation obligation as regards the treatme nt of nationals, whereas Article I:1 GATT
establishes a most-favoured-nation obligation with resp ect to products. As the EC has set out above,
this difference between the TRIPS and the GATT is not accidental, but results from the different
object and purpose of both agreements.119

247. Furthermore, as the EC has already set out with respect to the claims regarding national
treatment under the TRIPS, whether a geographical indication can be registered under Regulation
2081/92 does not depend in any way on nationality. 120 In particular, Article s 12a and 12b govern the
registration of geographical indications where the ar ea to which the indication is related is located
outside the EC, and this irrespective of the na tionality of producers. This means that where a
geographical indication from a third country is protected under the Regulation, this protection also
extends to producers which are nationals of other third countries.

248. For all the reasons set out above, the United States claim must be rejected.

2. Claim 17: Under Regulation 2081/92, an EC Member State grants more favourable
treatment to nationals from other EC Member States than it accords to nationals from
non-EC WTO Members
249. The United States has claimed that under Re gulation 2081/92, an EC Member State grants
more favourable treatment to nationals from other EC Member States than it accords to nationals from
non-EC WTO Members.
121

250. In the view of the EC, this argument mu st fail already because under Regulation 2081/92,
geographical indications from third countries whic h are WTO Members are protected on the same
terms as geographical indications from other Member States.
122

118 US FWS, para. 108.
119 Above para. 104.
120 Above para. 123 et seq.
121 US FWS, para. 121.
122 Above para. 134 et seq.

251. Secondly, as the EC has already set out, the conditions for the registration of geographical
indications do not depend on nationality. 123 Accordingly, the EC is not discriminating between third-
country nationals on the basis of nationality.

252. Finally, it should be noted that Article 4 TRIPS requires WTO Members to extend to other
Members the advantages, favours, privileges or immun ities that they grant to "the nationals of any
other country ". However, through Regulation 2081/92, the EC is not granting an advantage to the
national of "any other country".

253. Regulation 2081/92 is a m easure which the EC has adopted on the basis of its own
competences, and which applies throughout the EC. In accordance with Articles IX:1 and XIV:1 of
the WTO Agreement, the European Community is an original member of the WTO. Measures with
which the EC harmonises the law inside the Euro pean Community can therefore not regarded as
granting advantages to "other countries".

254. The fact that the EC Member St ates are also Members to the WTO
124 is irrelevant in this
respect. The measure at issue is a Regulation adopted by the EC. It is not a measure of the Member
States. Accordingly, it cannot be said that through Regulation 2081/92, Member States are granting
one another "advantages".

255. Finally, since the measure at issue is an EC measure, the subject matter of the present dispute
falls within the exclusive competence of the EC, a nd not of the Member States. The United States has
accepted this by correctly bringing the present dispute settlement pro ceedings against the EC. It can
therefore not now raise a claim assuming a violati on of most-favoured-nation-obligations on the part
of the EC Member States.

256. Accordingly, this claim of the United States must be rejected.

B. C
LAIM 18: BY SUBJECTING THE REGISTRATION OF THIRD -COUNTRY GEOGRAPHICAL
INDICATIONS TO CONDITIONS OF RECIPROCITY AND EQUIVALENCE , THE EC MEASURE IS
INCONSISTENT WITH THE MOST -FAVOURED-NATION OBLIGATION UNDER THE ARTICLE I:1
GATT
257. The United States has argued that by subjecting the registration of third-country geographical
indications to conditions of reciprocity and equivalence, the EC measure is inconsistent with the most-
favoured-nation obligation under Article I:1 GATT.125

1. Article I:1 GATT is not violated
258. Contrary to the claim of the United States, there is no violation of Article I:1 GATT.

259. Article I:1 GATT requires in relevant part that "[...] with respect to all matters referred to in
paragraphs 2 and 4 of Article III, any advantage, favour, privilege or immunity granted by any
contracting party to any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like product orig inating in or destined for the territories of all
other contracting parties".

260. As the EC has already set out with respect to Article 4 TRIPS, Regulation 2081/92 does not
involve any less favourable treatment of WTO members compared to other third countries.

123 Above, para. 137.
124 US FWS para. 121.

261. First of all, the EC does not apply a c ondition of reciprocity and equivalence for the
registration of geographical indications from other WTO members, which can therefore be registered
as geographical indications under the conditions set out in Regulation 2081/92.
126

262. Secondly, as the EC has also explained, th e conditions for the registration of geographical
indications from third countries are not discriminatory.
127

263. Finally, as the EC has also set out, Article 12 of Regulation 2081/92 does not grant any
advantage, favour, privilege or immunity, bu t merely sets out the conditions under which
geographical indications from third countries other than WTO members may be registered.
128

264. For these reasons, Regulation 2081/92 is not incompatible with Article I:1 GATT.

2. The EC measure would be justified under Article XX (d) GATT
265. It is unclear to the EC whether the compla inants claim that the requirements imposed by
Article 12a, in conjunction with Articles 4 and 10, of Regulation 2081/92 with respect to the
registration of each specific geographical indication ar e as such incompatible with Article I:1 of the
GATT. As shown above, the EC considers that those requirements are fully consistent with Article I:1
of the GATT.

266. In the event that the complainants were to cl aim that such requirement s are inconsistent with
Article I:1 of the GATT, and should the Panel find that they are inconsistent with that provision, the
EC submits in the alternative that such requireme nts would be justified under Article XX(d) of the
GATT, for the same reasons already advanced in connection with the complainants' claim under
Article III:4 of the GATT.

VI. REGULATION 2081/92 DOES NOT DIMI NISH THE LEGAL PROTECTION OF
TRADEMARKS
267. The complainants have raised a number of claims to the effect that Regulation 2081/92
diminishes the legal protection of trademarks. Th e EC will show hereunder that these claims are
unfounded.

A. A
RTICLE 16.1 OF THE TRIPS AGREEMENT
1. Claim 19: Article 14(2) of Regulation 2081/92 is inconsistent with Article 16.1 of the
TRIPS Agreement in that it allows the co -existence of geographical indications and
earlier registered trademarks
268. The complainants claim that Article 14(2) of Regulation 2081/92 is inconsistent with
Article 16.1 of the TRIPS Agreement in that it allows the "co-existence" of a registered geographical
indication and a prior similar or identical register ed trademark for similar or identical goods, which
results in a likelihood of confusion. 129

269. As will be shown in this section, th is claim is unfounded for several reasons.

126 Above para. 231 et seq.
127 Above para. 235 et seq.
128 Above para. 239 et seq.
129 Australia's FWS, paras. 100-107. US FWS, paras. 130-170.

270. First, this claim is based on a misunde rstanding of the relevant provisions of
Regulation 2081/92. Contrary to the complainants ' assumption, Article 14(3) of Regulation 2081/92
prevents the registration of geographical indicati ons that would result in a likelihood of confusion
with an earlier trademark. Thus, as a matter of fact , the situation alleged by the complainants does not
even arise.

271. Second, the exclusivity conferred upon the trademark owners by Article 16.1 of the TRIPS
Agreement is without prejudice to the protection th at Members are entitled to accord to geographical
indications in accordance with Part II, Section 3, of the TRIPS Agreement. The boundary between a
Member's right to protect geographical indications a nd its obligation to protect trademarks is defined
by Article 24.5 of the TRIPS, which provides for the co-existence of geographical indications and
earlier trademarks. Article 14(2) of Regulation 2081/92 is fully consistent with Article 24.5.

272. Third, irrespective of whether the co-exi stence of geographical indications and earlier
trademarks is permitted by Article 24.5, the EC is re quired to maintain such co-existence by virtue of
Article 24.3 of the TRIPS Agreement, a "stand- still" provision that prohibits Members from
diminishing the level of protection of GIs that existed at the time of entry into force of the WTO
Agreement.

273. Finally, even assuming that Artic le 14(2) of Regulation 2081/92 were prima facie inconsistent
with Article 16.1, it would be justified as a "lim ited exception" to the trademark owner's exclusive
rights under Article 17 of the TRIPS Agreement.

(a) Regulation 2081/92 does not allow the registration of confusing trademarks
274. The exclusivity conferred by Article 16.1 of the TRIPS Agreement is not absolute. That
provision does not grant to the owner of a registered trademark a right to prevent any possible use of
the same or a similar sign, but only its use for identical or similar goods, "where such use would result
in a likelihood of confusion".

275. As will be shown below, because of the crite ria of registrability applied under EC trademark
law, the risk of confusion between trademarks and geographical indications is very limited a priori.
To the extent that those criteria do not preclude su ch possibility, the problem is addressed adequately
by Article 14(3) of Regulation 2081/92, which provides that

A designation of origin or geographical indication shall not be registered where, in
the light of a trademark's reputation and renown and the length of time it has been
used, registration is liable to mislead the consumer as to the true identity of the
product.
276. The complainants have erroneously charact erized Article 14(3) as a "narrow exception".
130 As
explained below, the terms of Article 14(3), if prop erly interpreted, are su fficient to prevent the
registration of any confusing geographical indications.

277. According to their own interpretation of Artic le 16.1 of the TRIPS Agreement, in order to
establish a violation of that provision, the complain ants would need to prove that Regulation 2081/92
mandates necessarily the registration of confusing geographical indications. The complainants have
failed to do so. Indeed, the complainants have not even shown that the actual application of
Regulation 2081/92 has resulted occasionally in th e registration of confusing geographical
indications. As of the date of establishment of this Panel, the EC authorities had registered more than
600 geographical indications. The complainants have not alleged, let alone prove d, that any of those

130 US FWS, para. 158.

geographical indications has resulted in a likelihood of confusion with any prior registered trademark.
The complainant's claim is purely theoretical and, as will be shown below, unfounded.

(i) Registrability of geographical names as trademarks
278. The purpose of a trademark is to distinguish the goods or services of one undertaking from
those of other undertakings. A sign that cannot fulfil this function, i.e. a sign which is not
"distinctive", cannot be registered as a trademar k. Thus, Article 15.1 of the TRIPS Agreement
provides that

Any sign, or any combination of signs, capable of distinguishing the goods or
services of one undertaking from those of ot her undertakings, shall be capable of
constituting a trademark.
131
279. Geographical names are primarily "non-distinc tive" and, as such, non apt for registration as
trademarks.132 For example, the name "Australia", if u sed as a trademark by an undertaking, would
not allow to distinguish the goods of that undertak ing from those of any other Australian undertaking
selling the same or similar products. Moreover, the use of geographical names as trademarks may be
deceptive in so far as they are used for goods which do not originate in the location designated by that
name. For example, the name "Australia", if u sed as a trademark for US goods, could mislead the
consumers as regards the origin of the goods.

280. For the above reasons, the registration of ge ographical names as trademarks is subject to
restrictions in all countries.
133 Broadly speaking, it is permitted onl y in two situations: first, where
consumers would not expect the goods to be produced in that place; and, second, where the name has
become distinctive through use. In other words, when, as a result of its continued use by an
undertaking, the geographical name acquires a "s econdary meaning", so that consumers do not
associate it with a geographical location but instead with the undertaking in question. 134 T h i s
possibility is expressly envisaged in the second sen tence of Article 15.1 of the TRIPS Agreement,
which provides that

131 Similarly, Article 6quinquies B (2) of the Paris Convention (1967) provides that the registration of
trademarks may be denied "when they are devoid of any distinctive character".
132 Article 6 quinquies B of the Paris Convention (1967) provides that trademarks may be denied
registration when

2. … they consist exclusively of signs or indications which may serve, in trade, to
designate the … place of origin;

3. when they are … of such a na ture as to deceive the public.
133 Section 2 of the US Lanham Act prohibits the registration of trademarks that, when used in
connection with the goods of the applicant, are "primarily geographically descriptive", unless they have become
distinctive through use, or "primarily geographically deceptively misdescriptive" (15 USC. 1052 (e) and (f)).
(Exhibit EC-6).

 Similarly, Australia's Trade Marks Act of 1995 pr ohibits the registration of trademarks that are not
"inherently adapted to distinguish goods or services" unless they have become distinctive through use.
Trademarks that are not "inherently ad apted to distinguish goods or services" include "trade marks that consist
wholly of a sign that is ordinarily used to indicate: (a) the … geographical origin… " (Section 41(6) Note 1 (a))
(Exhibit EC-7)
134 A well known example of trademark consisting of a geographical name which has become
distinctive through use in some countries is "Budwei ser". After much litigation in the United States, it was
deemed to have acquired secondary meaning in that country , so that it could be registered as a trademark. See
Albrecht Conrad, "The Protection of Geographical Indications in the TRIPS Agreement", 86 The Trademark
Reporter, p.43.

Where signs are not inherently capable of distinguishing the relevant goods or
services, Members may make registrability depend on distinctiveness acquired
through use.
281. Like in other jurisdictions, in the EC the re gistration of geographical names as trademarks is
permitted only exceptionally. Article 3.1 of the Trademarks Directive provides that the following shall
not be registered or, if registered, shall be liable to be declared invalid:

(b) trade marks which are devoid of any distinctive character;
(c) trade marks which consist exclusivel y of signs or indications which may
serve, in trade, to designate … the geographical origin;
(g) trade marks which are of such nature as to deceive the public, for instance as
to the … geographical origin of the goods…
135
282. The European Court of Justice has held that:

under Article 3(1)(c) of the Directive, the competent authority must assess whether a
geographical name in respect of which application for registration as a trade mark is
made designates a place which is currently associated in the mind of the relevant
class of persons with the category of goods concerned, or whether it is reasonable to
assume that such an association may be established in the future.
136
283. By way of exception to letters (b) and (c) of Ar ticle 3.1 (but not to letter (g)), Article 3.3 of
the Trademarks Directive provides that geographical names that are primarily non-distinctive may be
registered where they have become distinctive through use:

A trademark shall not be refused registrati on or be declared invalid in accordance
with paragraph 1 (b), (c) or (d) if , before the date of application for registration and
following the use which has been made of it, it has acquired a distinctive character.
137

135 Similarly, Article 7(1) of the Community Trademark Regulation provides that:

 The following shall not be registered:

 (b) trade marks which are devoid of any distinctive character;

(c) trademarks which consist exclusively of signs or indications which may serve, in trade, to designate
the…geographical origin of the goods or service;

 …

(g) trade marks which are of such a nature as to deceive the public, for instance as to the …
geographical origin of the goods or service;
136 Judgement of the European Court of Justice of 4 May 1999, C-108/97 and C-109/97, Chiemsee,
137 Similarly, Article 7 (3) of the Community Trademark Regulation provides that

Paragraph 1(b), (c) and (d) shall not apply if th e trade mark has become distinctive in relation
to the goods or services for which registration is required in consequence of the use which has
been made of it.

284. In sum, under EC law, the registration of a geographical name as a trademark is possible only
in the following circumstances:

• where the geographical name is not curre ntly associated, and it can be reasonably
assumed that it will not be associated in the future, with the product concerned; or

• where the name has acquired distinctiveness through use.

285. In principle, any geographical name which qualifies, or may reasonably qualify in the future,
as a "designation of origin" or a "geographical indi cation" within the meaning of Article 2(2) of
Regulation 2081/92, will not fall within the first situa tion. Thus, it may be concluded that, in practice,
a geographical indication, or a geographical name with the potential to become a geographical
indication, may not be validly registered as a trademark unless it has become distinctive through use.

(ii) Article 14(3) of Regulation 2081/92
286. The complainants' claim is based on an unwa rrantedly narrow interpretation of Article 14(3)
of Regulation 2081/92. When properly interpreted, th at provision allows the registering authorities to
refuse the registration of any confusing geographical indications.

287. Australia does not even attempt to interpret th e terms of Article 14(3). For its part, the United
States declares it to be a "narrow exception"
 138 after a cursory analysis. Moreover, the United States
reaches that conclusion by reading into Article 14( 3) additional requirements which are not stated in
that provision. Thus, according to the United States, this provision would exclude the registration of a
geographical indication "only where the trademark has been used for a long time and has a
considerable reputation or renown". 139 Neither of those two qualifications is provided in
Article 14(3).

288. Article 14(3) has been applied only once by the EC authorities since Regulation 2081/92
came into force.
140 It has never been interpreted by the Europ ean Court Justice or by the courts of the
Member States. This confirms that, as explained above, the criteria for the registrability of trademarks
ensure that the potential for conflicts between tradem arks and geographical indications is indeed very
limited.

289. The EC Commission considers that the criteria listed in Article 14(3) are not limitative. The
registering authority may take into account also ot her relevant criteria in order to assess whether the
registration of the geographical indication will result in a likelihood of confusion. For example, it is
obvious that the degree of similarity between the signs or between the goods concerned is always
relevant in assessing the likelihood of confusi on between two signs for goods. Nevertheless, given
that geographical names are primarily non-distinctive as trademarks, the two criteria specified in
Article 14(3) will often be of partic ular relevance in practice. It is for that reason, and not because
they are the only relevant criteria, that the regist ering authorities are directed expressly to consider
those two criteria.

138 US FWS, para. 158.
139 Ibid.
140 In that case, the EC Council concluded that the registration of the GI "B ayerisches Bier" was not
likely to lead to confusion with the existing trademar ks "Bavaria" and "Hoker Bajer"; Council Regulation (EC)
No 1347, of 28 June 2001, OJ (2001) L 182. (Exhibit EC-9).

290. It is well-established that the more distinc tive the trademark the greater the likelihood that
consumers will confuse another sign with that trademark 141. As explained above, geographical names
are primarily non-distinctive. Thus, the degree of distinctiveness and, consequently, the likelihood
that it may be confused with a geographical indica tion will depend to a large extent on the degree of
distinctiveness which the trademark has acquired thr ough use. In turn, the basic criteria to measure
such acquired distinctiveness are the length of time during which the trademark has been used and the
extent of the reputation or renown acquired as a result of such use.

291. Consumers are unlikely to confuse a geographi cal indication with a trademark that has never
been used and/or has no reputation or renown simply because the signs and/or the goods concerned
are similar. In fact, as explained above, a trademark consisting of a geographical indication, which has
never been used or which has no reputation or renow n, should not have been registered in the first
place because it would lack the required distinctiveness.

(iii) Provisional conclusion
292. In order to substantiate their claim that Ar ticle 14(2) of Regulation 2081/92 is inconsistent
with Article 16.1 of the TRIPS Agreement, the comp lainants should have established that Regulation
2081/92 mandates necessarily the registration of later confusing geographical indications. In turn, this
would have required them to show that Article 14(3) cannot be inte rpreted in a manner which allows
the registering authorities to refuse the registration of confusing geographical indications, or, at the
very least, that, in practice, Article 14(3) is being interpreted and applied in a manner which results in
the registration of confusing geographical indications. The complainants have proved neither.

293. Therefore, the Panel should conclude that, as a matter of fact, the complainants' claim is
unfounded even on their own interpretation of Article 16.1 of the TRIPS Agreement. In any event, as
discussed below, that interpretation is incorrect.

(b) Article 24.5 envisages the co-existence of GIs and earlier trademarks
294. The complainants' claim rests on a misconcepti on of the relationship between trademarks and
geographical indications, as well as between Article 16.1 and Part II, Section 3, of the TRIPS
Agreement. The TRIPS Agreement recognises geographical indications as intellectual property rights,
on the same level as trademarks. It confers no superiority to trademarks over geographical indications.
Nor are the provisions of Part II, Section 3, "exceptions" to Article 16.1. There is no hierarchy
between them.

295. In an attempt to establish the superiority of trademarks over geographical indications, the
complainants emphasise that exclusivity is an essenti al feature of trademarks. It is, of course, correct
that trademarks are exclusive rights. But from this it does not follow that trademarks must prevail over
geographical indications. Geographical indications are also exclusive rights, because their basic
purpose, like that of trademarks, is to distingu ish the goods from a certain source. The fact that
geographical indications are collective rights does not render their exclusivity less indispensable. If
any producer of cheese could use the term "Roquefort", the geographical indication "Roquefort" could
not fulfil its distinctive function and would be deprived of its economic value.

296. As explained above, the criteria for the registrability of trademarks limit a priori the
possibility of conflicts between geographical indicati ons and trademarks. However, to the extent that
geographical indications may exceptionally be valid ly registered as trademarks, there may arise

141 Judgement of the European Court of Justice of 11 November 1997, C – 251/95, Sabel, para. 24.
(Exhibit EC-10).

conflicts between the exclusivity of those two ty pes of intellectual property rights. The question
before the Panel is, therefore, how to resolve those conflicts.

297. Article 16.1 does not address this issue. More specifically, and contrary to the complainants'
claims, Article 16.1 contains no provision to the e ffect that trademarks must prevail over later
geographical indications. The complainants argue th at the right conferred by Article 16.1 to the
trademark owner in order to prevent the confusing u se of identical or similar "signs" for identical or
similar goods applies also with respect to late r geographical indications, because geographical
indications are "signs". True, geographical indications consist of a special type of "sign": words or
other signs with a geographical connotation. But they are more than mere "signs". They are a distinct
intellectual property right, with a specific subject matter and a specific function, different from those
of trademarks, which Members are entitled to prot ect under their domestic laws and which, indeed,
they are required to protect under Part II, Section 3, of the TRIPS Agreement.

298. The boundary between geographical indications a nd trademarks is not defined in Article 16.1,
but instead in Article 24.5 of the TRIPS Agreement. Therefore, the WTO consistency of Article 14(2)
of Regulation 2081/92 must be determ ined in relation to that provision, and not with respect to
Article 16.1.

299. Article 24.5 provides that

Where a trademark has been applied for or registered in good faith, or where rights to
a trademark have been acquired through use in good faith either:
(a) before the date of application of these provisions in that member as defined in
Part VI; or
(b) before the geographical indication is protected in its country of origin;
measures adopted to implement this Secti on shall not prejudice eligibility for or the
validity of the registration of a trademark, or the right to use a trademark, on the basis
that such trademark is identical with, or similar to, a geographical indication.
300. Article 24.5 must be read together with Articles 22.3
142 and 23.2 143, which require that the
registration of trademarks must be refused or inva lidated in certain situations. Those two provisions,
however, do not exhaust the protection afforded to geographical indications vis-à-vis trademarks.
Right holders of geographical indications can invoke also Articles 22.2 144 and 23.1 145 in order to

142 Article 22.3 of the TRIPS Agreement provides that:

A Member shall, ex officio if its legislation so permits, or at the request of an interested party,
refuse or invalidate the registration of a trademark which contains or consists of a geographical
indication with respect to goods not originating in the territory indicated, if use of the
indication in the trademark for such goods in that Member is of such nature as to mislead the
public as to the true place of origin.
143 Article 23.2 of the TRIPS Agreement provides that:

The registration of a trademark for wines which contains or consists of a geographical
indication identifying wines or for spirits which contains or consists of a geographical
indication identifying spirits shall be refused or invalidated, ex officio if a Member's legislation
so permits or at the request of an interested pa rty, with respect to such wines or spirits not
having this origin.
144 Article 22.2 of the TRIPS Agreement provides that:

prevent the use of a trademark (whether registered or non-registered) in the circumstances described
in those provisions. In addition, in implementing Part II, Section 3, Members are entitled to provide
more extensive protection for geographical indications , in accordance with Article 1.1 of the TRIPS
Agreement.

301. Article 24.5 has two implications:

• with respect to grandfathered trademarks (or applications for trademarks), Members
are not allowed to prejudice the validity of the registration (or the eligibility of the
application) or the "right to use the trademark", but they may prejudice other rights
of the trademark owner, including in particular the right to prevent others from using
the sign of which the trademark consists.

• with respect to other trademarks (or applications for trademarks), Members may
prejudice any right.

302. Regulation 2081/92 implements Part II, Sec tion 3, of the TRIPS Agreement. The rule of
conflict between geographical indications and trademar ks defined in Article 25.4 has been transposed
by Articles 14(1) and 14(2) of Regulation 2081/92 . Article 14(1) maintains the eligibility of the
applications and the validity of the registrations "g randfathered" by Article 24.5. In turn, Article 14(2)
preserves the right of the owners of "grandfathered" trademarks to continue to use their trademarks
concurrently with the geographical indications.

303. Article 14(2) of Regulation 2081/92 is fully c onsistent with Article 24.5, which provides that
Members shall not prejudice "the right to use a trad emark". That phrase alludes to the owner's right to
use the sign of which the trademark consists, which is one of the two basic rights of the trademark
owner, together with the right to prevent other persons from using that sign.
146 If the drafters had
meant to exclude the co-existence of trademarks and geographical indications, they would have
provided instead that Members shall not prejudice "the exclusive right to use a trademark".

In respect of geographical indications, Members shall provide the legal means for interested
parties 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
Article 10bis of the Paris Convention (1967).
145 Article 23.1 of the TRIPS Agreement provides that:

Each Member shall provide the legal means fo r interested parties to prevent use of a
geographical indication identifyi ng wines for wines not origina ting 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 th e 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. [footnote omitted]
146 WIPO's "Introduction to Intellectual Property, Theory and Practice" (Kluwer, 1997), aptly describes
the rights arising from trademark registration as follows (para. 9.147):

The registered owner has the exclusive right to use the trademark. This short definition of the specific
subject matter of trademark right encompasses two things: the right to use the trademark and the right
to exclude others from using it.

304. Furthermore, if Article 24.5 did not allo w co-existence, the protection of geographical
indications provided under Part II, Section 3, would become pointless whenever there is a
grandfathered trademark. Indeed, why protect a ge ographical indication against illegitimate uses by
third parties if the legitimate users cannot use it themselves? Yet, Article 24.5 assumes that Members
will continue to protect geographical indications ("…measures adopted to implement this Section
shall not prejudice…"), notwithstanding the existence of "grandfathered" tradem arks. If the drafters'
intention had been to prohibit the use of geographi cal indications concurrently with grandfathered
trademarks, they would have excluded completely the applicability of Part II, Section 3, with respect
to the geographical indications concerned, rather than providing that the implementation of that
Section shall not prejudice "the right to use the trademark".

305. Australia has suggested
147 that the phrase "the right to use a trademark" alludes exclusively to
the trademark rights acquired through use, to which reference is made in the introductory phrase of
Article 24.5. However, if so, it would have been more logical to say that the measures taken to
implement Sections 3 "shall not prejudice … the tr ademark rights acquired through use", rather than
that they "shall not prejudice … the right to u se a trademark". Australia confuses the mode of
acquisition of the trademark rights (use or registrati on) with one of the basic rights of the trademark
owner (irrespective of whether the trademark rights have been acquired through use or registration),
i.e. the right to use the trademark.

306. Moreover, trademark rights acquired through use are also, as a general rule, exclusive within
the boundaries of the area in which they have be en used. Article 16.1 of the TRIPS Agreement
recognises expressly the right of Members to make available trademark rights, including exclusive
rights, on the basis of use. In view of that, there is no good reason why Article 24.5 should provide for
the co-existence of geographical indications and non-registered trademarks, but prohibit the co-
existence of geographical indications and regist ered trademarks, which would be the anomalous
consequence of Australia's interpretation.

307. Co-existence may not be a perfect solution to resolve conflicts between different types of
intellectual property rights. But then there is no such perfect solution. Co-existence is preferable to a
rigid application of the first-in-time rule, which is what the complainants are proposing. That rule is
generally appropriate to resolve conflicts betw een trademarks, but not between trademarks and
geographical indications, because they are distinct intellectual property rights, each with its own
characteristics. In particular, the following differences make inappropriate the strict application of that
principle to conflicts between geographical indications and trademarks:

• trademarks are much easier to create than geographical indications. Trademarks can
be acquired almost instantaneously, simply by an "intent to use" or by the mere
lodging of an application with a registration system. In contrast, the creation of a
geographical indication requires to establis h first a "link" between the name and
certain product characteristics, which may require years. Indeed, as is often the case
in the EC, such link is the result of centu ries of tradition. Thus, the first-in-time
principle would provide an unfair advantage to trademark owners;

• trademarks are arbitrary, with the consequence that there is a virtually unlimited
choice of trademarks. By choosing delibera tely a geographical name as a trademark,
an undertaking accepts the risk that the sa me sign may be used concurrently as a
geographical indication. In contrast, geogr aphical indications are "necessary" in the
sense that the range of names used to designate a certain geographical is limited a
priori by well established usage. Right holders of geographical indications may not

147 Australia's FWS, para. 74.

easily change the name given by the public to the geographical area where they are
located. For that reason, it is much more difficult to find an alternative geographical
indication than it is to find an alternative trademark;

• geographical indications serve to inform consumers that the product originates in a
certain area and has certain characteristics linked to that origin. Trademarks only
guarantee the identity of the undertaking that markets the product. Thus, in addition
to having a commercial function, geographi cal indications serve a public interest,
which deserves additional protection.

• geographical indications are the common patrimony of all the producers of a certain
area, and ultimately of the entire population of that area, which may potentially
qualify for the right to use the geographical indication. It would be unfair to deprive
that population from the use of a geographical indication for the exclusive benefit of
an individual trademark owner, who may or may not have contributed to the
development of the geographical indication, simply because he happened to register
that name first as a trademark.

308. The co-existence of intellectual property rights is by no means an unusual solution for
resolving conflicts between intellectual property rights, including between trademarks. Indeed, several
other provisions of the TRIPS Agreement provide for co-existence:

• Article 23.3 provides for co-existence between homonymous geographical indications
for wines;
148

• Article 24.4 permits, under certain circumstanc es, that the nationals or residents of
one Member continue to use a geographical indication of another Member in co-
existence with the users of that Member;149

• Article 16.1 itself provides that the exclusivity of registered trademarks "shall not
prejudice any existing prior rights".

309. The co-existence of different types of intell ectual property rights, and in particular between
geographical indications and trademarks, is provided also in the law of other Members.150

148 Article 23.3 of the TRIPS Agreement provides that:

In the case of homonymous geographical indications for wines, protection shall be accorded to
each indication, subject to the provisions of paragraph 4 of Article 22. Each Member shall
determine the practical conditions under which the homonymous indications in questions will
be differentiated from each other, taking into account the need to ensure equitable treatment of
the producers concerned and that consumers are not misled.
149 Article 24.4 of the TRIPS Agreement provides that:

Nothing in this section shall require a Member to prevent continued and similar use of a
particular geographical indication of another Member identifying wines or spirits in connection
with goods or services by any of its nationals or domiciliaries who have used that geographical
indication in a continuous manner with regard to the same or related goods or services in the
territory of that Member either (a) for at least 10 years preceding 15 April 1994 or (b) in good
faith preceding that date.
150 See "Review under Article 24.2 of the Applicati on of the Provisions of the Section of the TRIPS
Agreement on Geographical Indications – Summary of the Responses to the Checklist of Questions",
IP/C/W/253/Rev.1, 24 November 2003, paras. 149-150.

310. Remarkably, the United States itself provides fo r the co-existence of geographical indications
and earlier trademarks with respect to wines. Specifically, the regulations of the US Alcohol and
Tobacco Tax and Trade Board (the "TTB") provide that a brand name of viticultural significance
(including the name of US approve d viticultural areas) may not be used unless 1) the wine meets the
appellation of origin requirements for the geographical area concerned; or 2) the brand name is used
in accordance with a "certificate of label approval" issued prior to 1 July 1986.
151

311. In other words, under the TTB Regulations, th e existence of a registered trademark including
a geographical name (e.g. "Rutherford Vintners") does not prevent the subsequent recognition and use
of that name as a geographical indication ("Ruther ford"), which is what would be required by the
interpretation of Article 16.1 of the TRIPS Agre ement put forward by the United States in this
dispute. Quite to the contrary, the use of the earlier trademark is prohibited, subject to a very limited
temporal exception, with a narrower scope than that of Article 24.5 of the TRIPS Agreement.
Furthermore, grandfathered trademarks are allowed to co-exist with the later geographical indications,
provided only that they are used in accordance with special labelling requirements. The United States
should explain why this solution to the conflic ts between geographical indications and earlier
trademarks, which is undoubtedly a sensible one, must be deemed compatible with the TRIPS
Agreement when US geographical indications for wines are at stake, but not in the case of EC
geographical indications for other products.
152

(c) The EC is required to maintain the co-exist ence of geographical indications and earlier
trademarks by Article 24.3
312. Irrespective of whether the co-existence of ge ographical indications and earlier trademarks is
consistent with Article 24.5, the EC is required to maintain such co-existence by virtue of Article 24.3
of the TRIPS Agreement, which provides that

In implementing this Section, a Member shall not diminish the protection of
geographical indications that existed in that Member immediately prior to the date of
entry into force of the WTO Agreement.
313. Article 24.3 is in the nature of a "stand still" obligation. It requires Members to maintain at
least the level of protection of geographical indica tions that they applied immediately prior to the
entry into force of the WTO Agreement, where su ch level is higher than the level of protection
required by Part II, Section 3, of the TRIPS Agreement.
153

314. Regulation 2081/92 was adopted on 14 July 1992 and entered into force on 14 July 1993. As
of 31 December 1995, i.e. the day before the entry in to force of the WTO Agreement, Article 14(2) of
Regulation 2081/92 provided for the co-existence of geographical indications and earlier trademarks.
If the EC were to allow now the owners of prior re gistered trademarks to prevent the use of later
geographical indications, as demanded by the complain ants, it would be diminishing the protection of
geographical indications, contrary to the obligation imposed upon the EC by Article 23.4

151 27 CFR 4.39 (i). (Exhibit EC-11).
152 The lack of consistency appears to be even mo re blatant in the case of Australia. The Wine and
Brandy Corporation Act prohibits the use of a register ed GI for wine which does not originate in the area
covered by the GI. No exception is provided with respect to prior trademarks. Australia can hardly complain
about the fact that the EC allows the co-existence of GIs with earlier trademarks grandfathered under
Article 24.5, when it prohibits the use of those trademar ks, unless the wine originates in the area designated by
the GI. (Sections 40 D-F). (Exhibit EC -12).
153 See e.g. Daniel Gervais, The TRIPS Agreement, Drafting History and Analysis , (Sweet & Maxwell,
1998), p. 135.

(d) In any event, the co-existence of geographical indications and earlier trademarks would be
justified under Article 17 of the TRIPS Agreement
315. Assuming that 14(3) of Regulation 2081/92 did not prevent the registration of confusing
geographical indications, and assuming further that the co-existence of geographical indications and
earlier registered trademarks were neither consiste nt with Article 24.5 of the TRIPS Agreement nor,
in the case of the EC, required by Article 24.3 of the TRIPS Agreement, the EC submits in the
alternative that such co-existence would be justified under Article 17 of the TRIPS Agreement.

316. Article 17 states that:

Members may provide limited exceptions to the rights conferred by a trademark, such
as fair use of descriptive terms, provided that such exceptions take account of the
legitimate interests of the owner of the trademark and of third parties.
317. Article 14(2) is a "limited exception" because it allows the concurrent use of the geographical
name registered as a trademark only by those producers who are established in the geographical area
designated by the geographical indication and who, furthermore, comply with the relevant product
specifications and other requirements for using th e geographical indication. The trademark owner
retains the exclusive right to prevent the use of that name by any other persons.

318. Moreover, Article 17 mentions expressly as an example of "limited exception" the "fair use of
descriptive terms". Geographical indications are "descriptive terms".
154 The use of a geographical
indication in order to indicate the true origin of the goods and the characteristic associated to that
origin is certainly a "fair" use of that descriptive term.

319. Finally, the legitimate interests of the trademark owner and of third parties are "taken into
account" in several ways:

• even if Article 14(3) of Regulation 2081/92 did not avoid completely the registration
of confusing trademarks, it would at the very least prevent the most significant cases
of confusion, in the interest of both the trademark owner and the consumers;

• moreover, the concurrent use of the geogr aphical indications is subject to the
generally applicable EC legislation on labelling and misleading advertising, as well as
to the laws of the Member States on unfair competition;

• finally, geographical indications serve to inform consumers about the origin of the
products and their characteristics and, therefore, "take account of the interests of third
parties" also in that way.

154 The trademark laws of both the Un ited States and Australia provide that the use of a term registered
as a trademark to indicate the origin of goods does not constitute an infringement of the trademark.

 Section 33(b)(4) of the US Lanham Act (15 USC 115 (b) (4))(Exhibit EC-6) provides the following
defence against a claim of infringement of the exclusive right of a trademark owner:

That the use of a term … charged to be an infri ngement is a use, otherwise than as mark … of
a term … which is descriptive and used fairly and in good faith only to describe the goods …
of such party, or their geographical origin.

 In turn, Section 122(1) (b)(i) of Australia's 19 95 Trade Mark Law provides that a person does not
infringe a registered trade mark when "the person uses a sign in good faith to indicate the … geographical origin
… of goods." (Exhibit EC-7).

2. Claim 20: Regulation 2081/92 does not provide for a presumption of a likelihood of
confusion in the case of use of an identical sign for identical goods
320. Australia claims that Regulation 2081/1992 is inconsistent with Article 16.1 of the TRIPS
Agreement because it does not "implement" the pres umption of a likelihood of confusion in the case
of use of an identical sign for identical goods.
155

321. The EC's response to Claim 19 disposes also of this claim. However, for the sake of
completeness, the EC would like to add the following comments.

322. First, contrary to what Australia appears to suggest, Members are not required to reproduce
explicitly the presumption of Article 16.1 in their do mestic law. It may be sufficient if their domestic
law leaves to the registering authority, or to the courts, the necessary discretion to apply the
presumption and, in practice, the presumption is complied with.
156

323. Second, it is extremely unlikely that the s ituation described by Australia will ever present
itself in practice. In the first place, as explained ab ove, the criteria for the registrability of trademarks
limit a priori the possibility to register as a trademark a name which is identical to that of a
geographical indication or of a potential geogra phical indication. Moreover, the definition of
"geographical indication" in Regulation 2081/92, t ogether with the requirement to comply with
certain product specifications, would normally ha ve the consequence that the goods covered by a
registered geographical indication are not identical to other goods. In any even t, should the situation
arise, Article 14(3) would allow the registering authority to refuse the registration of a proposed
geographical indication, if necessary to implement the presumption.

324. Finally, Australia's complaint is, once again, purely theoretical. Australia has not alleged, let
alone proved that any of the more than 600 register ed geographical indications is identical to any
earlier registered trademark used for identical goods. The EC considers that none of the registered
geographical indications falls within that situation.

3. Claim 21: Article 7(4) of Regulation 2081/92 is inconsistent with Article 16.1 of the
TRIPS Agreement because it limits the grounds of objection
325. Australia (but not the United States) claims that Article 7(4) of Regulation 2081/92 is
inconsistent with Article 16.1 of the TRIPS Agreement
157 because it does not allow trademark owners
to object to the registration of a proposed geographical indication where there is likelihood of
confusion, but only where the proposed geographical indication would "jeopardize the existence of an
entirely or partly identical trademark."

326. This claim is unfounded, both as a matter of law, because Article 16.1 does not confer a right
of objection, and as a matter of fact, because Ar ticle 7(4) of Regulation 2081/92 does not limit the
grounds of objection in the manner alleged by Australia.

155 Australia's FWS, para. 93.
156 Thus, for example, the EC understands that the US trademark laws do not restate the presumption,
but the US authorities are satisfied that the criteria usua lly applied in order to appreciate the likelihood of
confusion between trademarks are sufficient to meet the presumption.
157 Australia's FWS, paras. 88-92.

(a) Article 16.1 of the TRIPS Agreement does not confer a right of objection
327. Article 16.1 does not grant to the trademark owners a right to formulate objections in the
framework of a procedure for the acquisition of an other intellectual property right, whether it is a
trademark or a different right such as geographical indication.

328. Article 16.1 regulates exclusively the substa ntive content of the rights conferred to the
trademark owners. It does not address the procedur al means to exercise those rights, which are
regulated elsewhere in the TRIPS Agreement. Thus, the possibility to raise objections to the
registration of another intellectual property right is addressed in Article 62.4, with respect to all
intellectual property rights in general, and in Article 15.5, with respect specifically to trademarks.

329. Article 62.4, which is included in Part IV of the TRIPS Agreement, dealing specifically with
the "Acquisition and Maintenance of In tellectual Property Rights and Related Inter Partes
Procedures", provides that

Procedures concerning the acquisition or ma intenance of intellectual property rights
and, where a Member's law provides for such procedures
, administrative revocation
and inter partes procedures such as opposition, revoc ation and cancellation, shall be
governed by the general principles set out in paragraphs 2 and 3 of Article 41.158
330. In turn, Article 15.5 provides that Members "may afford an opportunity for the registration of
a trademark to be opposed".159

331. The above quoted provisions make it clear that Members are not required to grant a right of
opposition to the trademark owners with respect to the acquisition of another intellectual property
right.

332. Moreover, contrary to Australia's assertions, the right to formulate objections is not necessary
to "exercise" effectively the substantive right conf erred by Article 16, if final registration decisions
are subject to judicial review, as they should under Article 62.5 of the TRIPS Agreement.

333. Since Article 16.1 does not confer to the trad emark owners the right to formulate objections
with respect to the registration of a geographical indication, the fact that Article 7(4) of
Regulation 2081/92 limits the possible grounds of objection cannot be inconsistent with Article 16.1.

(b) Australia has misread Article 7(4) of Regulation 2081/92
334. In any event, Australia's claim is based on a misreading of Article 7(4) of Regulation 2081/92.
The text in force of that Article provides in relevant part as follows:

A statement of objection shall be admissible only if it:
…
– shows that the registration of the name proposed would jeopardize the
existence of an entirely or partly identical name or of a
 mark … 160

158 Emphasis added.
159 Emphasis added.
160 Emphasis added.

335. The term "entirely or partially identical" qua lifies only the term "name", and not the term
"mark". Thus, an objection is admissible if the pr oposed name "would jeopardize the existence of the
mark", regardless of whether the mark is "entirely or partially identical". This is confirmed by the
other linguistic versions of the Regulation, including the French and the Span ish ones, which read as
follows:

Pour être recevable, toute déclaration d'opposition doit :
…
l'existence d'une dénomination totalement ou partiellement homonyme ou d'une
marque …
…
de una denominación total o parcialmente homónima o de una marca…
336. The ground provided in Article 7(4), i.e. that the proposed name "would jeopardize ("porterait
préjudice" in French, "perjudicaría" in Spanish) the existence of a mark" is broad enough to
encompass the likelihood of confusion between the proposed name and the trademark.

337. Australia appears to have been confused by the English version of the text in force until the
amendment introduced by Council Regulation 806/2003, which read as follows:

A statement of objection shall be admissible only if it:
…
– shows that the registration of the name proposed would jeopardize the
existence of an entirely or partly identical name or trade mark …
338. However, no consequences can be attributed to the omission of the term "of a" before the
term "trade mark", which appears to have been a translation error. Indeed, the other linguistics
versions in force until the said amendment, including the French and the Spanis h, were identical on
this point to the text currently in force in those versions.

4. Claim 22: Regulation 2081/92 does not ensure that objections from trademark owners
will be considered by the Committee
339. Australia (but not the United States) claims that Regulation 2081/92 is inconsistent with
Article 16.1 because it does not ensure that an objec tion from the owner of a registered trademark is
considered by the Committee
161, which Australia characterizes as "the ultimate decision maker".

340. For the reasons explained in the response to Claim 3, Article 16.1 does not confer a right of
objection to the trademark owners. Therefore, the procedures laid down in Regulation 2081/92 with a
view to organize the exercise of such right cannot be inconsistent with Article 16.1.

161 Australia's FWS, paras. 94-99.

341. In any event, Australia's allegati ons are incorrect as a matter of fact.

342. First, as explained above,
162 the Commission, or the Council, and not the Committee is "the
ultimate decision-maker" under the Regulation.

343. Second, Regulation 2081/92 entrusts to the authorities of the Member States the task of
receiving and examining the objections because they are generally better placed to ascertain and
assess the relevant facts. While Member States are not required to transmit the statements objections,
their decisions are not discretionary and may be s ubject to judicial review under the national law of
each Member State.

344. Third, the authorities of other WTO Members enjoy complete discretion in order to decide
whether or not to forward the objections to the EC Commission. Thus, Australia would be estopped
from complaining that the refusal by the Australian au thorities to transmit a statement of objections to
the EC Commission would infringe the trademark right s of its own nationals in the EC. The same
would be true of any other WTO Member.

B. C
LAIM 23: BY REQUIRING THE CO -EXISTENCE OF A REGISTERED GEOGRAPHICAL INDICATION
AND AN EARLIER TRADEMARK , ARTICLE 14(2) ENCUMBERS UNJUSTIFIABLY THE USE OF THE
TRADEMARK, CONTRARY TO ARTICLE 20 OF THE TRIPS AGREEMENT
345. Australia (but not the United States) claims that by requiring the co-existence of a an existing
trademark and a later geographical indication, Article 14(2) of Regul ation 2081/92 "encumbers
unjustifiably" the use of the trademark, thereby violating Article 20 of the TRIPS Agreement. 163

346. Article 20 of the TRIPS provides that

The use of a trademark in the course of trade shall not be unjustifiably encumbered by
special requirements, such as use with another trademark, use in a special form or use
in a manner detrimental to its capability to distinguish the goods or services of one
undertaking from those of other undertaki ngs. This will not preclude a requirement
prescribing the use of the trademark iden tifying the undertaking producing the goods
or services along with, but without linking it to, the trademark distinguishing the
specific goods or services in question of that undertaking.
347. Australia has misunderstood the purpose and, as result, also the scope of Article 20. That
provision is not concerned with the issue of exclusivity (i.e. who has the right to use a sign), which, as
between trademarks, is dealt with exhaustively by Article 16. Instead, Article 20 addresses the distinct
issue of which requirements may be imposed upon the trademark right holder with respect to the use
of his own trademark (i.e, how to use a trademark").

348. On Australia's interpretation Article 20 w ould overlap, and potentially conflict, with
Article 16. For example,

• Article 16.1 allows the use of a later si milar trademark for similar goods, provided
that it does not result in "likelihood of conf usion". Yet, on Australia's theory, the use
of that trademark would still be proh ibited under Article 20 if it "encumbered
unjustifiably" the use of the earlier trademark, for example by "diminishing its
distinctiveness";

162 See above Section II. H.
163 Australia's FWS, paras. 108-112.

• Article 16.1 provides that the exclusivity of registered trademarks is without
prejudice of existing prior rights. Yet, on Au stralia's interpretation, the exercise of
such prior rights could still be prohibited if it "encumbered unjustifiably" the use of a
later trademark;

• Article 16 allows the use of identical or similar signs for different goods, except as
provided in Article 16.3. On Australia's in terpretation, however, such use could be
prohibited by Article 20 whenever it "encum bers unjustifiably" the use of another
trademark.

349. The three examples of "special requirements" included in the first sentence confirm that
Article 20 does not address the issue of exclusivity:

• the first example ("use with another tradem ark") refers to the requirement that an
undertaking uses, in addition to its own tr ademark, another trademark for the same
goods, and not to the use of a trademark in coexistence with another trademark used
by a different undertaking for its own goods.
 A typical example is the requirement to
use a foreign trademark together with the trademark of a domestic producer.164

• the second example ("use in a special from") is, by its owns terms, concerned
exclusively with the form in which the trademark may be used, rather than with the
issue of who has the right to use it. It concerns, for example, the requirements
affecting the affixing of the trademark. 165

• as regards the third example ("in a manner detrimental to the capability to distinguish
the goods or services, etc."), on which Australia places particular emphasis, the term
"in a manner" confirms that the requirement must relate to the "way", "method" or
"mode"
166 in which the trademark is used by each trademark owner, rather than to the
issue of exclusivity.

350. Article 14(2) of Regulation 208 1/192 limits the exclusive right of the trademark right holder
to prevent the use of the trademark by others, by providing for the co-existence of a geographical
indication, but imposes no "requirement" with respect to how the trademark owner may use its own
trademark. Since Article 14(2) imposes no requiremen ts falling within the scope of Article 20 of the
TRIPS Agreement, it cannot be inconsistent with that provision.

351. In any event, as shown in the response to Claim 19, co-existence is consistent with the
relevant EC's obligations under the TRIPS Agreement and, therefore, would not be "unjustified".

C. C
LAIM 24: ARTICLE 14(1) OF REGULATION 2081/92 IS INCONSISTENT WITH ARTICLE 24.5 OF
THE TRIPS AGREEMENT BECAUSE IT DOES NOT AFFORD THE RIGHT OF PRIORITY PROVIDED IN
ARTICLE 4 OF THE PARIS CONVENTION
352. Australia (but not the United States) claims th at Article 14(1) of Regulation 2081/92 violates
Article 25.4 of the TRIPS Agreement because it does not afford the right of priority in respect of an

164 See Daniel Gervais, The TRIPS Agreement, Drafting History and Analysis (Sweet and Maxwell,
1998), p. 116. See also Eleanor.K. Meltzer, "TRIPS and Trademarks, or GATT got your tongue?" (1993) 83
The Trademark Reporter, pp. 18-37, p. 29.
165 Daniel Gervais, op.cit., p. 117.
166 New Shorter Oxford English Dictionary, 1993, Vol. I, p. 1687.

application for registration of a trademark previ ously filed in another WTO Member provided in
Article 4 of the Paris Convention (1967). 167

353. As explained in Section II,
168 the EC considers that this claim is outside the terms of reference
because it is entirely dependent on a supposed violation of Article 4 of the Paris Convention (1967),
which was not mentioned in Australia's panel request.

354. In any event, Australia's claim is insuffi ciently argued and difficult to understand.

355. Australia appears to be arguing that, in acco rdance with Article 4 of the Paris Convention
(1967), an application for a trademark that was filed in Member X up to six months prior to one of the
two dates mentioned in Article 24.5 of the TRIPS Agreement would have the effect of bringing within
the scope of the protection provided by Article 24.5 any subsequent application made after those dates
in Member Y. That interpretation, however, would be incorrect, beca use it relies on the legal
consequences of Article 24.5 in order to establish that certain facts fall within the scope of that
provision. In other words, Australia 's interpretation of Article 24.5 already anticipates the result of
such interpretation.

356. Article 24.5 requires to afford the priority right of Article 4 of the Paris Convention (1967) to
those applications that are "grandfathered" by virtue of that provision, i.e. to the applications filed
before the date of entry into force of the WTO Ag reement (1 January 1996) or before the date of
protection of the GI in its country of origin. But Article 4 of the Paris Convention (1967) cannot be
applied in order to determine whether an app lication is "grandfathered" in accordance with
Article 25.4. For that purpose, the only relevant da te is the actual date of filing in the Member
applying the implementing measures. When that date is taken into account, Article 14(1) of
Regulation 2081/1992 is fully consistent with Article 24.5 of the TRIPS Agreement.

D. A
RTICLES 41.1, 41.2, 41.3, 41.4, 42, 43, 44.1, 45, 46, 48 AND 49 OF THE TRIPS AGREEMENT
1. General Considerations
357. Australia and the United States claim that Re gulation 2081/92 is incons istent with numerous
provisions of Part III of the TRIPS Agreement becau se it does not afford to trademark right holders
the enforcement rights stipulated in those provisions.

358. The EC considers that these claims are unf ounded because Part III of the TRIPS Agreement
does not apply to Regulation 2081/92.

359. Regulation 2081/92 lays down an administra tive procedure for the acquisition of geographical
indications via a system of registration. It does not purport to regulate the procedures for enforcing
trademark rights, which are provided instead in th e trademark laws, and related civil and criminal
procedural laws, of the EC and of its Member St ates. Those laws, which have been notified to the
WTO, are not within the terms of reference of the Panel.

360. The TRIPS Agreement draws a clear distinc tion between, on the one hand, the procedures for
the "enforcement" of intellectual property rights, wh ich are provided in Part III, and, on the other
hand, the "procedures for the acquisition and ma intenance of intellectual rights and related inter
partes procedures", which are addressed in Part IV. The procedures provided in Regulation 2081/92
for the registration of geographical indications at issue in this dispute fall clearly within the second
category and are subject exclusively to Part IV, and not to Part III.

167 Australia's FWS, paras. 81-87.
168 See above paras. 28-30.

361. The purpose of Part III is expressed in Article 41.1 which provides that

Members shall ensure that enforcement pr ocedures as specified in this part are
available under their law so as to permit effective action against any act of
infringement of intellectual property rights covered by this Agreement, including
expeditious remedies to prevent infri ngements and remedies which constitute a
deterrent to further infringements.
362. The granting of an intellectual property righ t in accordance with the domestic law of each
Member is not an "infringement" and, therefore, is not subject to Part III of the TRIPS Agreement.
Further, the subsequent use of a validly granted intellectual property right in conformity with the
domestic laws of a Member is also not an "infringement".

363. For the purposes of Part III, the existence of an "infringement" must be established with
respect to the applicable domestic law implementi ng Part II of the TRIPS Agreement, and not in
relation to Part II itself. In other words, an act which is consistent with a Member's domestic law, such
as the use of a validly registered geographical indicat ion, is not an "infringement" for the purposes of
Part III, even if the domestic law is inconsistent with Part II. Indeed, requiring Members to provide
"enforcement" procedures against acts that are co nsistent with their ow n domestic laws, but are
inconsistent with Part II, would be as much as requiring them to give direct effect to the WTO
Agreement in their domestic legal order.

364. In addition, applying the provisions of Pa rt III to the procedures for the acquisition of
intellectual property rights, such as those regul ated in Regulation 2081/1992, would render redundant
many of the provisions of Part IV and give rise to conflicts between Part III and Part IV.

365. Moreover, it would have unacceptable resu lts for most Members, as illustrated by the
complainants' claims. It would mean, for example, that intellectual property rights would have to be
conferred always by a judicial body in accordance with judicial procedures, rather than by an
administrative body in accordance with administrative procedures, as is currently the case in most
Members, including Australia and the United States. The EC does not believe, for instance, that the
complainants' own systems of registration of trad emarks, which are operated by an administrative
body, would comply with the provisions of Part III.

2. Claim 25: Regulation 2081/92 is inconsistent with Article 41.1 of the TRIPS Agreement
366. Both Australia and the United States claim that Regulation 2081/92 is inconsistent with
Article 41.1 of the TRIPS Agreement
169.

367. Article 41.1 of the TRIPS Agreement is an introductory provision, which does not impose any
obligation by itself. Australia appears to agree beca use it argues that the measure is inconsistent with
Article 41.1 "as a consequence of"170 the fact that it is inconsistent with Articles 41.2, 41.3, 42, 43, 44,
45, 46, 48 and 49. As explained in Section II, the EC considers that Articles 43, 44, 45, 46, 48 and 49
are outside the terms of reference of the Panel, b ecause they were not mentioned in Australia's panel
request. Australia's claims under Articles 41.2, 41.3 and 42 will be addressed here below.

368. The United States submits no arguments in support of this claim.
171

169 Australia's FWS 145-148. US FWS, para. 185.
170 Australia's FWS, para. 148.
171 US FWS, para. 185.

3. Claim 26: Regulation 2081/92 is inconsistent with Article 41.2 of the TRIPS Agreement
369. Both Australia and the United States claim that Regulation 2081/92 is inconsistent with
Article 41.2 of the TRIPS Agreement172 because

• it does not make available to trademark ow ners "fair and equitable procedures" for
objecting to the registration of geographical indications;

• the objection procedures are "unnecessarily complicated" and "entail unwarranted
delays".

370. For the reasons explained above, the EC consider s that Article 41.2, like the rest of Part III of
the TRIPS Agreement, does not apply to the procedures for the acquisition of intellectual property
rights, which are instead subject ex clusively to the provisions of Part IV. In the case of Article 41.2,
this is made clear by Article 62.4 of the TRIPS Agreement, which provides that

The procedures concerning the acquisition or maintenance of intellectual property
rights and, where a Member's law provides for such procedures, administrative
revocation and inter partes procedures such as opposition, revocation and
cancellation, shall be governed by the genera l principles set out in paragraphs 2 and 3
of Article 41.
371. The cross-reference to "the general principles set out in paragraphs 2 and 3 of Article 41"
would have been superfluous if Ar ticle 41 could be applied, as such, to the procedures for the
registration of an intellectual property right.

372. Neither Australia nor the United States ha ve claimed in their panel requests that
Regulation 2081/92 is inconsistent with Article 62.4, which is, therefore, outside the terms of
reference of the Panel.

373. In any event, as shown below, the complain ants' allegations are unfounded as a matter of fact.

(a) The procedures provided in Regulation 2081/92 are neither inequitable nor unfair
374. The accusation that a Member acts in an "unf air and inequitable" manner is a very serious
one. One could expect that such an accusation w ould be made against another Member only after
careful consideration and on the basis of indisputable evidence.

375. Yet, the United States does not even bother to provide argument, let alone evidence, in
support of its claim under Article 41.2.
173

376. For its part, Australia alleges that the objection procedures provided for in
Regulation 2081/92 are neither fair nor equitable because

• objections must be lodged with an agency "that is likely to have an interest in supporting
and promoting the registration of EC-defined GIs";
174

172 Australia's FWS, paras. 126-136. US FWS, para. 186.
173 US FWS, para. 186.
174 Australia's FWS, para. 130. Emphasis added.

• objections must be considered by a Committee comprised of "delegates of the same EC
Member States agencies which are likely to have an interest in supporting and promoting
the proposed registration of EC Member State geographic terms as defined GIs"
175

• "trademark right holders not resident in the EC face the additional hurdle of not having a
national representative in the Committee".176

377. Australia concludes that "in such circumstances, the possibility of bias in favour of both the
proposed EC-defined GI and the interests of EC Member States cannot be seen to be excluded."177

378. At the outset, the EC would submit that the me re fact that the "possibility of bias cannot be
seen to be excluded" cannot be sufficient to estab lish a violation of Article 41.2. Instead, it would
need to be shown that the procedures at issue ar e positively unfair and inequitable. In any event,
Australia has not met even the very low standard which it has set forth itself.

379. To begin with, Australia's a llegations are fraught with factual errors. Australia repeats, once
again, the mistake of considering that the Committee is the decision-making body. Moreover, it is also
incorrect to describe the members of the Committee as "delegates" of the national agencies in charge
of applying Regulation 2081/92.
178 The members of the Committee re present the Member States, and
not specific agencies.

380. Even more crucially, Australia 's allegations of "possibility of bias" are not based on actual
fact, but on mere speculations about the "likely" conduct of public agencies and their officials. Those
speculations are baseless and, indeed, offensive.

381. Neither the agencies of the Member St ates responsible for the administration of
Regulation 2081/92, nor the officials employed by such agencies, are unde r any instructions to
"promote" the registration of "their" geographical indications at the expense of the rights of trademark
holders, whether they are EC nationals or foreigne rs. To the contrary, they are under a statutory duty
to apply Regulation 2081/92 in an objective a nd unbiased manner. In the absence of compelling
evidence, which Australia has not provided, it ca nnot be assumed that those agencies, or their
officials, are "likely" to breach systematically those duties.

382. Surely, Australia would agree that Australia's own trademark office, and the officials of that
agency, are not "likely" to be biased in favour of registering trademarks requested by Australian
nationals over the objections of EC's right holders of geographical indications. Australia would also
agree that the fact that the EC or its Member St ates are not "represented" in the decision making
bodies of Australia's trade mark office does not render the procedures before that office "unfair" and
"inequitable". Again, in the abse nce of any compelling evidence to the contrary, which Australia has
not provided, it cannot be assumed that the agencies of the EC Member States, and their officials, will
behave differently from Australia's own agencies and officials.

(b) The procedures provided in Regulation 2081/92 are not unnecessarily complicated and do not
entail unwarranted delays
383. Again, the United States has not submitted any argument in support of this claim.
179

175 Ibid., para.131. Emphasis added.
176 Ibid., para. 134.
177 Ibid., para. 135. Emphasis added.
178 Ibid., para. 131.
179 US FWS, para. 186.

384. The thrust of Australia's clai m is that the requirement to lodge the statement of objection with
the authorities of the Member State or the WTO me mber of residence "adds unjustifiable complexity
and delay" to the enforcement of trademark rights.180

385. Australia's complaint is unfounded. As explained, Regulation 2081/92 entrusts the
examination of objections to the Member States because they are closer to the facts and better
equipped to ascertain and assess them. Even if objections were lodged directly with the EC
Commission, it would still be necessary for the EC Commission to request the assistance of the
authorities of the Member States in order to verify the relevant facts. Thus, it is very doubtful that
centralising the submission of objections at the Commission level would add simplicity or speed to
the procedures.

386. The same is true as regards the statements of objections filed with another WTO Member, in
particular when they relate to the registration of a geographical indication from that WTO Member.
Moreover, each WTO Member has complete discretion in order to decide whether or not to transmit
an objection to the EC Commission. If they wished , the Australian authorities could limit themselves
to forward immediately to the EC Commission any objection that they receive. This can hardly be
described as an "unnecessarily co mplicated" formality or as an "unwarranted delay". Once again,
Australia cannot plead its own unwillingness to forw ard the statement, or its failure to do so
expeditiously, in order to claim that this requirement adds unjustified complexity or delay.

4. Claim 27: Regulation 2081/92 is inconsistent with Article 41.3 of the TRIPS Agreement
387. Australia (but not the United States) claims that Regulation 2081/92 is inconsistent with
Article 41.3 of the TRIPS Agreement in that th e registration decisions are not "based only on
evidence on which parties were offered the opportun ity to be heard". Specifically, Australia alleges
that Regulation 2081/92 does not ensure that the Committee will consider the objections lodged with
the Member States.
 181

388. Like the rest of Part III of the TRIPS Agreement, Article 41.3 does not apply to the
procedures for the acquisition of intellectual property rights, which are instead subject to the
provisions of Part IV. This is made clear, once agai n, by Article 62.4 of the TRIPS Agreement, which
makes a cross-reference to the general principles stated in paragraph 3 of Article 41. As mentioned,
Australia did not state in its panel request Article 62.4, which is, therefore, outside the terms of
reference of the Panel.

389. In any event, Australia's factual allegations under this heading are incorrect. (See above the
responses to Claims 21 and 22)

5. Claim 28: Regulation 2081/92 is inconsistent with Article 41.4 of the TRIPS Agreement
390. The United States (but not Australia) claims that the measure is inconsistent with Article 41.4
because "owners of registered trademarks trying to enforce their Article 16.1 rights vis-à-vis a
confusing GI or interested parties with GIs based in other territories other than the EC" are not
provided an opportunity for review by a judicial authority.
 182

391. Again, the United States limits itself to assert this claim, but does not submit any argument in
order to support it.

180 Australia's FWS, para. 138.
181 Australia's FWS, paras. 141-144.
182 US FWS, para. 187.

392. In any event, Article 41.4 of the TRIPS Agreement does not apply with respect to the
procedures for the acquisition of intellectual property rights. As discussed below, Article 62.5 of the
TRIPS Agreement provides that final administrative d ecisions in those procedures shall be subject to
judicial review. The United States, however, has not mentioned this provision in its panel request. In
any event, registration decisions under Regulation 2081/92 are subject to judicial review.

6. Claim 29: Regulation 2081/92 is inconsistent with Article 42 of the TRIPS Agreement
393. The complainants claim that Regulation 2081/ 92 is inconsistent with Article 42 because it
does not provide to trademark right holders civil judicial procedures for the enforcement of their
rights vis-à-vis the registration of geographical indications.
 183

394. The valid registration of a geographical indication in accordance with Regulation 2081/92
does not constitute an "infringement" of trademark ri ghts for purposes of Part III. Accordingly, there
is no obligation under Article 42 to provide judicial procedures for "enforcing" those rights against the
registration of a geographical indication.

395. As explained, Regulation 2081/92 lays down an administrative procedure for the acquisition
of geographical indication rights via a system of regi stration As such, it is subject to Part IV of the
TRIPS Agreement, and not to Part III. Unlike Part I II, Part IV does not require to provide judicial
procedures. In most countries, including the Unite d States and Australia, registration procedures are
administrative in nature.

396. While Part IV does not require to provide judi cial procedures, it requires that final decisions
in administrative procedures must be subject to judicial review. Thus, Article 62.5 states that

Final administrative decisions in any of the procedures referred to under paragraph 4
shall be subject to review by a judicial or quasi judicial authority. However, there
shall be no obligation to provide an opportunity for such review of decisions in cases
of unsuccessful opposition or administrative revocation, provided that the grounds for
such procedures can be the subject of invalidation.
397. Consistent with Article 62.5, the fi nal decisions on registration reached under
Regulation 2081/92 are subject to judicial review. Likewise, the decisions of the Member States
authorities with regard to inter alia objections may be subject to judicial review under their national
laws. In any event, neither the United States nor Au stralia have stated in their panel requests any
claim under Article 65.2, which is therefore outside the terms of reference.

E. C
LAIM 30: REGULATION 2081/92 IS INCONSISTENT WITH ARTICLE 10BIS (1) AND 10TER (1) OF
THE PARIS CONVENTION
398. Australia (but not the United States) claims that Regulation 2081/92 is inconsistent with
Article 10bis (1) of the Paris Convention (1967) 184 because "it does not provide a Community wide
system of effective protection of trademarks from acts of unfair competition arising from the later
registration of EC-defined GIs under the Regulation".
185

399. This claim is insufficiently argued and difficu lt to understand. Australia does not explain how
the use of a registered geographical indication, which is otherwise consistent with the TRIPS

183 Australia's FWS, paras. 119-125. US FWS, para. 187.
184 Australia's FWS, paras. 113-118.
185 Australia's FWS, para. 114.

Agreement, and in particular with Articles 24.5 a nd 16, could constitute an act of unfair competition
within the meaning of Article 10bis (1).

400. In any event, the use of registered geogr aphical indications remains subject to the EC
legislation on labelling and misleading advertising, as well as to the laws of the EC Member States on
unfair competition. That legislation is not within the terms of reference of the Panel.

401. Australia suggests that the violation would ar ise from the fact that there is no Community
wide system of protection.
186 However, there is no basis in Article 10 bis (1), or anywhere else in the
Paris Convention (1967) for the proposition that th e protection against unfair competition must be
provided at any given territorial level.187

402. Australia's claim under Article 10 ter (1)of the Paris Convention (1967)
188 is based on the
same allegations as the claim under Article10bis (1) and is equally unfounded for the same reasons.

F. CONSEQUENTIAL CLAIMS
1. Claim 31: Regulation 2081/92 is inconsistent with Article 2.1 of the TRIPS Agreement
403. Australia claims that, because Regulati on 2081/92 is inconsistent with Articles 10 bis (1) and
10ter (1) of the Paris Convention (1967), it is also inconsistent with Article 2.1 of the TRIPS
Agreement.189

404. This claim is entirely dependent on the previous claims under Articles 10 bis (1) and 10ter (1)
of the Paris Convention. Both claims are unfounded and, as a consequence, so is this claim.

2. Claim 32: Regulation 2081/92 is inconsistent with Article 1.1 of the TRIPS Agreement
405. Australia claims that because Regulation 2081/92 is inconsistent with Articles 2.1, 16.1, 20,
24.5, 41.1, 41.2, 41.3 and/ or 42 of the TRIPS Agreem ent it is also inconsistent with Article 1.1 of the
TRIPS Agreement. 190

406. The EC has shown that Australia's claims unde r those provisions are without merit. Therefore,
Australia's claim under Article 1.1 is likewise unfounded.

3. Claim 33: The transitional national prot ection provided by the Member States is
inconsistent with Articles 2.1, 16.1, 41.1, 41.2, 41.3 and/or 42 of the TRIPS Agreement
407. Australia (but not the United States) claims th at the transitional protection that Member States
are entitled to provide under Article 5(5) of Regu lation 2081/92 pending a registration decision is
inconsistent with Articles 2.1 (incorporating Articles 10 bis (1) and 10 ter (1) of the Paris Convention
(1967)) 16.1, 41.1, 41.2, 41.3 and/or 42 of the TRIPS Agreement.
 191

186 Australia's FWS, para. 114.
187 Australia is a federal state. Surely, Australia would agree that Article 10 bis (1) does not require it to
change the constitutional allocation of powers between the Commonwealth and the State and Territory
Governments.
188 Australia's FWS, para. 117.
189 Australia's FWS, para. 151.
190 Australia's FWS para. 152.
191 Australia's FWS, paras. 149-150.

408. This claim is entirely dependent on the pr evious claims submitted by Australia under the
above listed provisions. Since those claims are unfounded, so is this claim.

VII. THE EC MEASURE IS CONSISTENT WITH THE OBLIGATION TO PROVIDE
PROTECTION TO GEOGRAPHICAL INDICATIONS UNDER ARTICLE 22.2 OF
THE TRIPS AGREEMENT
409. Australia
192 and the United States 193 have submitted very different claims under this heading.
The EC will address them separately here below.

1. Claim 34: Regulation 2081/92 is inconsistent with Article 22.2 of the TRIPS Agreement
410. Australia claims that
 194

Regulation No. 2081/92 establishes a Comm unity-wide regime for the registration
and protection of EC-defined GIs. Howeve r, the EC measure does not provide –as
concerns those same EC-defined GIs - legal channels for interested parties to prevent
on a Community-wide basis any use of those EC-defined GIs which would mislead
the public as to the geographical origin of a good or any use which would constitute
an act of unfair competition within the meaning of Paris Article 10 bis.
411. Once again, this claim is insufficiently argue d. Here below, the EC will provide a provisional
answer based on its limited understanding of Australia's rather obscure arguments.

412. First, the EC considers that Article 22.2 of the TRIPS Agreement is concerned exclusively
with the protection of geographical indications. It cannot be invoked by a trademark right holder in
order to prevent the use a geographical indicati on which supposedly infringes its trademark right,
which is what Australia appears to be suggesting.

413. Second, Regulation 2081/92 only allows the u se of a geographical indication in connection
with goods that originate in the geographical area designated by that geographical indication. The EC
fails to see how the use of a validly registered geogr aphical indication, which is otherwise consistent
with the TRIPS Agreement, could possibly mislead the public as to the geographical origin of the
goods. In fact, the registration of the geographical indication seeks to avoid precisely that result.

414. Third, the EC also fails to understand how the registration or the use of a geographical
indication consistently with the EC domestic laws , as well as with all other provisions of the TRIPS
Agreement, including Articles 24.5 and 16, could ever constitute an act of unfair competition within
the meaning of Article 10 bis of the Paris Convention (1967). Australia has not explained it. In any
event, the use of registered geographical indications remains subject to the EC legislation on labelling
and misleading advertising, as well as to the laws of the Member States on unfair competition. That
legislation is not within the terms of reference of the Panel.

415. Finally, Australia suggests that the violati on would arise from the fact that there is no
Community-wide system of protection. However, there is no basis in Article 22.2, or anywhere else in
the TRIPS Agreement, for the proposition that protecti on must be provided at any particular territorial
level.

192 Australia's FWS, paras. 154-155.
193 US FWS, paras. 171-183.
194 Ibid., para. 155.

2. Claim 35: Regulation 2081/92 is inconsistent with Article 1.1 of the TRIPS Agreement
because it is inconsistent with Article 22.2
416. Australia claims that, because Regulation 2 081/92 is inconsistent with Article 22.2 of the
TRIPS Agreement, it is also inconsistent with Article 1.1.195

417. This claim is entirely consequential on Claim 21. Since there is no violation of Article 22.2,
there is also no violation of Article 1.1.

3. Claim 36: Regulation 2081/92 is inconsistent with Article 22.2 TRIPS
418. The United States claims that Regulation 2081/92 is inconsistent with Article 22.2 because it
fails to provide to "interested parties" establis hed outside the EC the means to prevent the acts
specified in that provision.
196

419. The United States cites the following reasons:

• the registration of geographical indications is subject to the conditions of equivalence
and reciprocity;

• the applications for registration of geogra phical indications must be made by the
foreign governments;

• the right to lodge an objection against a registration is subject to certain restrictions.

420. As shown below, the reasons mentioned by the United States are either incorrect, as a matter
of EC law, or irrelevant under WTO law. Theref ore, Regulation 2081/92 implements adequately the
EC's obligations under Article 22.2 also with r espect to the "interested parties" of other WTO
Members.

421. In any event, the EC recalls that Regulati on 2081/92 is not the only means made available by
the EC and its Member States to the "interested parties" of other WTO Members in order to prevent
the acts mentioned in Article 22.2. Therefore, even assuming that the US arguments with respect to
Article 2081/92 were correct, the EC would still comply with its obligations under Article 22.2.

(a) Regulation 2081/92 provides to interested parties of other WTO Members the means to
prevent the acts mentioned in Article 22.2
(i) Reciprocity and equivalence conditions
422. In support of its claim, the United States h as claimed that the registration of geographical
indications is subject to conditions of "reciprocity and equivalence".

423. As the EC has already stated before,
197 this claim is factually not correct. Article 12(1), to
which the United States has referred, is not applic able to WTO Members. Accordingly, the United
States' claim under Article 22.2 TRIPS is equally unfounded.

195 Australia's FWS, para. 156.
196 US FWS, paras. 171-183.
197 See above paras. 62-69.

(ii) The requirement that the application must be transmitted by the Government
424. The United States has also refe rred to the fact that the a pplication for registration of a
geographical indication must be transmitted by the g overnment of the country in which the relevant
area is located.

425. As the EC has already set out, this requireme nt is a modality of the registration process which
equally applies to applications from Member Stat es and from third countries, i.e. concerns the
procedure for the acquisition of an intellectual property right. According to Article 62.1 TRIPS,
Members may require, as a condition of the acquisiti on or maintenance of intellectual property rights
provided for under Sections 2 through 6 of Part II, compliance with reasonable procedures and
formalities.

426. The United States has not shown that the requirement of transmission by the third country
government is an unreasonable procedural requirement . In any event, such a claim would be a claim
under Article 62.1 TRIPS. Since the United States h as not referred to this provision in its Panel
request, such a claim would be outside the Panel's terms of reference.

(iii) The right of objection
427. As explained above in response to Claim 21, the EC considers that the right to formulate
objections to the registration of another intellectual property right is not inherent in the exclusivity
rights conferred to trademark rights holders by Article 16.1. For the same reasons, the EC submits that
Article 22.2 does not confer to "interested parties" a right to object to the registration of a
geographical indication under Regulation 2081/92.

428. In any event, the US arguments are unfounded.

429. First, the exercise of the rights conferred by Article 22.2, like that of other intellectual
property rights, can be made subject to compliance with reasonable procedures and formalities.
198 The
requirement that statements of objections must be channelled through the authorities of other WTO
Members is equivalent to the re quirement imposed on EC residents. It is neither excessive nor
unreasonable. Indeed, the authorities of other WTO Members enjoy complete discretion to decided
whether or not to transmit an objection. If the US authorities wished, they could limit themselves to
forward immediately any objection that they recei ve. Furthermore, the United States would be
estopped from pleading that, because of its own willingness to forward a statement of objections to
the EC Commission, US nationals are depriv ed from the means of protection required by
Article 22.2.
199

430. Second, as explained in the factual part, the United States has misread Article 12d of
Regulation 2081/92. 200 The requirement that the country must have been recognized under
Article 12(3) does not apply to WTO Members.

431. Third, Articles 12b (2) and 12d (1) of Regulati on 2081/92 require a "legitimate interest" as a
condition for objecting to the registration of a geographical indication. However, this term does not, in
accordance with its ordinary meaning, require th at the person concerned must have an economic
interest "in the EC" in the sense that it must be "established" or "do business" within the EC.
201

198 Cf. Articles 62.1 and 41.2 of the TRIPS Agreement.
199 US FWS, para. 179.
200 US FWS, para. 180.
201 US FWS, para. 181.

432. Fourth, a name which is misleading as to the or igin of the product would fail to comply with
the requirements of Article 2 (the firs t ground of objection under Article 7(4)). 202 The EC fails to see
what "acts of unfair competition", in addition to those already covered by the existing grounds of
objection, could arise from the valid registration of a geographical indication under
Regulation 2081/92.
203 The United States has specified none.

(b) The EC and its Member States provides to interested parties of other WTO Members other
means to prevent the acts mentioned in Article 22.2
433. Regulation 2081/92 is not the only means made available by the EC and its Member States to
interested parties established both in the EC and in other WTO Members in order to prevent the acts
mentioned in Article 22.2.

434. Specifically, additional means of protection are provided in:

• Directive 79/112 on the labelling, presen tation and advertising of foodstuffs
204 and
implementing legislation of the Member States;

• Directive 84/450 on misleading advertising 205 and implementing legislation of the
Member States;

• the Trademarks Directive and implementing legislation of the Member States;

• the Community Trademark Regulation;

• unfair competition laws of the Member States.

435. The United States is aware of the above measu res, which were specified in the responses
provided by the EC and its Member States in the context of the review under Article 24.2 of the
TRIPS Agreement
206 and have been notified to the WTO.

436. The means of protection provided by the above measures are sufficient to implement the EC's
obligation under Article 22.2. In any event, these m easures are outside the terms of reference of the
Panel.

VIII. REGULATION 2081/92 IS CONSISTENT WI TH OBLIGATIONS UNDER THE TBT
AGREEMENT
437. Australia (but not the United States) has raised two claims under the TBT Agreement:

• that Article 12(2) of Regulation 2081/92 is incompatible with Article 2.1 of the TBT
Agreement (claim 37);
207

202 US FWS, para. 182.
203 Ibid.
204 Directive 2000/13/EC of the European Parliament and of the Council, of 20 March 2000, on the
approximation of the laws of the member States relating to the labelling, presentation and advertising of
foodstuffs, OJ (2000) L 109/29.
205 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws,
regulations and administrative provisions of the Member States concerning misleadin g advertising, OJ (1984)
L 250/17.
206 IP/C/W/117/Add. 10, 26 March 1999.
207 Australia's FWS, para. 234 et seq.

• that Articles 4 and 10 of Regulation 2081/92 are incompatible with Article 2.2 of the
TBT Agreement (claim 38).
208

438. Hereafter, the EC will first show that th e provisions of Regulation 2081/92 referred to by
Australia cannot be regarded as technical regulations within the meaning of Articles 2.1 and 2.2 TBT
Agreement. Subsequently, the EC will show that in any event, Australia's claims under Article 2.1 and
2.2 TBT Agreement are unfounded.

A. R
EGULATION 2081/92 IS NOT A TECHNICAL REGULATION
439. Australia has argued that Regulation 2081/92 is in part a technical regulation within the
meaning of Annex 1 to the TBT Agreement. 209 In this respect, it has referred on the one hand to
Article 12(2) of Regulation 2081/92, and on the other hand to Article 4, in particular 4 (2) (g), and 10
of Regulation 2081/92. 210 As the EC will show, none of these provisions constitutes a technical
regulation within the meaning of the TBT Agreement.

1. General
440. Articles 2.1 and 2.2 of the TBT Agreement impose obligations on WTO Members with
respect to "technical regulations". As the Appellate Body has explained in EC – Asbestos, whether the
measure is a technical regulation is therefore a threshold issue which determines whether the
obligations contained in Article 2 TBT Agreement are applicable.
211

441. Point 1 of Annex 1 to the TBT Agreement defines a technical regulation as follows:

Document which lays down product charact eristics or their related processes and
production methods, including the applicable administrative provisions, with which
compliance is mandatory. It may also include or deal exclusively with terminology,
symbols, packaging, marking or labelling requirements as they apply to a product,
process or production method.
442. As the Appellate Body has stated in EC – Sardines , there are three criteria which must be
fulfilled cumulatively in order for a measure to be considered a technical regulation:212

We interpreted this definition in EC – Asbestos. In doing so, we set out three
criteria that a document must meet to fall within the definition of "technical
regulation" in the TBT Agreement. First, the document must apply to an identifiable
product or group of products. The identifiable product or group of products need
not, however, be expressly identified in the document. Second, the document must
lay down one or more characteristics of the product. These product characteristics
may be intrinsic, or they may be related to the product. They may be prescribed or
imposed in either a positive or a negative form. Third, compliance with the product
characteristics must be mandatory. As we stressed in EC – Asbestos, these three
criteria are derived from the wording of the definition in Annex 1.1.

208 Australia's FWS, para. 249 et seq.
209 Australia's FWS, para. 209 et seq.
210 Australia's FWS, paras. 219–221.
211 Appellate Body Report, EC – Asbestos, para. 59 ; similarly Appellate Body Report, EC – Sardines,
para. 175.
212 Appellate Body Report, EC – Sardines, para. 176.

2. Article 12(2) of Regulation 2081/92 is not a technical regulation
443. Contrary to the view of Australia, Article 12(2) of Regulation 2081/92 is not a technical
regulation within the meaning of the TBT Agreement.

(a) Article 12(2) does not apply to identifiable products
444. First of all, Article 12(2) of Regulation 2081/92 does not apply to identifiable products.

445. Australia has argued that Regulation 2081/92 applies to agricultural products and foodstuffs,
and that these are identifiable products.
213 However, the EC would like to recall that the requirement
to indicate the country of origin contained in th e second subparagraph of Article 12(2) applies only to
the names in the situation referred to in the first subparagraph of Article 12(2).214

446. Accordingly, the requirement of Article 12(2) does not apply to all agricultural products and
foodstuffs for which a registration is obtaine d under Regulation 2081/92, but only to cases of
homonymous protected names from the EC and a third country. Moreover, as the EC has also
explained, the requirement in Article 12(2) can apply both to geographical indications from a third
country or from the EC, depending on which name has been protected earlier.
215

447. The Regulation itself does not allow to identify the products which might be affected by this
requirement. Accordingly, Article 12(2) does not apply to identifiable products.

(b) Article 12(2) does not lay down product characteristics
448. Second, Article 12(2) does not lay down produc t characteristics. Aust ralia has argued that
Article 12(2) "sets out a specific labelling requir ement" falling within the meaning of a technical
regulation as defined in Annex 1 to the TBT Agreement.
216

449. Australia overlooks that Article 12(2) does not contain a specific labelling requirement for
any specific product. Article 12(2) sets out me rely the conditions under which a geographical
indication will be registered in a situation where there are homonyms from the EC and a third country.
The requirement to indicate the country of origin will be a condition for the registration of the
geographical indication for which protection is sought later.

450. However, it is not Article 12(2) TBT Agre ement itself which imposes a labelling requirement.
The application for the registration of any geographical indication, whether from the EC or a third
country, must be accompanied by a product specifica tion. In accordance with Article 4 (2) (h) of
Regulation 2081/92, the product specification shall contain the specific labelling details relating to the
geographical indication. In the situation envisaged by Article 12(2), the requirement to indicate the
country of origin will be among the labelling deta ils which must be indicated in the product
specification.

451. Moreover, it must be noted that the definition of "technical regulation" in Annex 1 to the TBT
Agreement encompasses labelling requirements only "as they apply to a product, process or
production method". In the present case, the labelli ng requirement does not relate to a product,

213 Australia's FWS, para. 231.
214 Above para. 85 et seq.
215 Above, para. 88.
216 Australia's FWS, para. 220.

process, or its production method, but merely to its geographic origin. As the EC has already set
out,
217 this question of origin marking is covered by the special disciplines of Article IX GATT.

452. Accordingly, Article 12(2) does not lay down product characteristics within the meaning of
the definition of a technical regulation.

(c) Article 12(2) of Regulation 2081/92 is not mandatory
453. Finally, Article 12(2) does not impose a re quirement with which compliance is mandatory.

454. Regulation 2081/92 establishes a system for the registration and prot ection of geographical
indications. The possibility to apply for registration of a geographical indication is a right, not an
obligation. In particular, registration under Regulation 2081/92 is not a precondition for the marketing
of products.

455. Article 4(1) of Regulation 2081/92 provides that in order to be eligible to use a geographical
indication, a product "must comply with a specificati on". However, it is important to note that this
compliance refers only to the specifications in Article 4(2), not to the Regulation itself.

456. Similarly, Article 12(2) is a condition for th e registration of a geographical indication. Since
the registration process is voluntary, compliance with Article 12(2) is not a mandatory condition for
the placing of products on the market.

457. For all the reasons set out above, Article 12(2) of Regul ation 2081/92 is not a technical
regulation within the meaning of the TBT Agreement.

3. Articles 4 and 10 of Regulation 2081/92 are not a technical regulation
458. Contrary to the view of Australia, Articles 4 and 10 of Regulation 2081/92 are not a technical
regulation within the meaning of the TBT Agreement.

(a) Articles 4 and 10 do not lay down product characteristics
459. First of all, Article 4 and 10 of Regulati on 2081/92 do not lay down product characteristics.

460. Article 4(g), to which Australia has referre d specifically, provides merely that the product
specification shall include the details of the in spection procedures provided for in Article 10.
Article 10 provides the basic criteria with whic h such inspection structures must comply. These
provisions cannot be regarded as laying down product characteristics.

461. First, Article 10(1) defines that the functi on of inspection structures is "to ensure that
agricultural products and foodstuffs bearing a protect ed name meet the requirements laid down in the
specifications". Accordingly, the purpose of Article 4( g) in conjunction with Article 10 is not to lay
down product characteristics, but to ensure conformity with the product specification.

462. However, the TBT Agreement makes a clea r distinction between measures laying down

product characteristics, and measures ensuring conformity with technical regulations. Articles 2 to 4
of the TBT Agreement deal with technical regulations and standards , whereas Articles 5 to 9 of the
TBT Agreement are concerned with the assessment of conformity with technical regulations and
standards. Point 3 of Annex 1 to the TBT Agreement defines a conformity assessment procedure as
follows:

217 Above 213.

Any procedure used, directly or indirectly, to determine that relevant requirements in
technical regulations or standards are fulfilled.
463. Even if the product specification were to be considered a technical regulation, the inspection
structure ensuring conformity with the specification would not be a technical regulation, but a
conformity assessment procedure. Accordingly, Aust ralia's claim regarding the inspection procedure
does not concern a technical regulation, and accordingly does not fall under Article 2 TBT
Agreement. Rather, Australia's claim would appear to fall, depending on the nature of the conformity
assessment body involved, under Articles 5 to 9 of th e TBT Agreement. However, since Australia did
not refer to these provisions in its Panel request, any such claim would be outside the terms of
reference of the present Panel.

464. Second, Article 4 of Regulation 2081/92 does not lay down product characteristics.
Article 4(2) simply sets out the requirements with which a product specification must comply in order
to permit the registration of a geographical indication. Article 4 (2) does not itself set out the product
characteristics for specific products; rather, these ch aracteristics are contained in the application for
registration of a geographical indication in accordance with Article 5 (3) of the Regulation.

465. Moreover, it is not exceptional that the defi nition of product characteristics is required as a
condition for the acquisition of certain intellectual property rights. In particular, the system of
certification marks which used by certain countries requires that products bearing the mark comply
with certain product characteristics.
218 However, it does not appear that such trade mark laws have so
far been considered as falling under the TBT Agreement.

466. Accordingly, Article 4 in conjunction with Article 10 of Regulation 2081/92 cannot be
regarded as laying down product characteristics.

(b) Articles 4 and 10 are not mandatory
467. As the EC has already explained, Regulati on 2081/92 establishes a system for the registration
and protection of geographical indications which is voluntary. The requirement that inspection
structures must exist is a necessary requirement for the registration of geographical indications.
However, this registration is not a precondition for the placing of products on the market.

468. For these reasons, Articles 4 and 10 of Re gulation 2081/92 are not a technical regulation
within the meaning of the TBT Agreement.

B. C
LAIM 37: ARTICLE 12(2) OF REGULATION 2081/92 IS INCOMPATIBLE WITH ARTICLE 2.1 OF
THE TBT AGREEMENT
469. Australia has claimed that Article 12(2) of Regulation 2081/92 is incompatible with
Article 2.1 of the TBT Agreement.219 As the EC has already explained, Article 12(2) of the Regulation
is not a technical regulation, and Article 2.2 TBT Agreement is therefore not applicable.

470. Alternatively, the EC considers that Article 12( 2) is fully compatible with Article 2.1 of the
TBT Agreement. In this respect, the EC can also re fer to the response the EC has already given to the
United States' claims 3 and 14, regarding Article 12(2) with respect to the national treatment
provisions of the GATT and the TRIPS.

218 Cf. e.g. US Trademark Act, 15 US § 1127 (Exhibit EC-6).
219 Australia's FWS, para. 234 et seq.

1. General
471. Article 2.1 TBT Agreement c ontains a national treatment provision applicable to goods in
respect of technical regulations. The provision is drafted as follows.

Members shall ensure that in respect of technical regulations, products imported from
the territory of any Member shall be acco rded treatment no less favourable than that
accorded to like products of national origin and to like products originating in any
other country.
472. There is so far no WTO jurisprudence on this provision. For the reasons set out below, the EC
does not consider it necessary to define, in the present context, the meaning of each of the elements of
Article 2.1 TBT Agreement.

473. However, the EC would also like to recall that each provision of a covered agreement must be
interpreted within the specific cont ext of that agreement. For this reason, the EC does not agree with
Australia that the jurisprudence concerning Article III GATT can simply be transposed to Article 2.1
TBT Agreement, for instance with respect to the likeness of products.
220

474. Such an approach would overlook that there are important structural differences between the
GATT and the TBT Agreement. In particular, ther e is no provision corresponding to Article XX of
the GATT in the TBT Agreement. These structural differences between the two agreements must be
taken into account when interpreting the requirements of Article 2.1 TBT Agreement.

2. Article 12(2) of Regulation 2081/92 does not apply to all geographical indications, but
only to homonyms
475. As the EC has already set out, Article 12( 2) merely sets out the conditions under which a
geographical indication will be registered in a situ ation where there are homonyms from the EC and a
third country. The requirement to indicate the count ry of origin will be a condition for the registration
of the geographical indication for which protection is sought later.
221

476. Accordingly, Article 12(2) does not treat fore ign and EC geographical indications differently;
on the contrary, it treats them exactly alike. Accordingly, there is no violation of the national
treatment obligation in Article 2.1 TBT Agreement.

3. The requirement to indicate the country of origin for homonymous geographical
indications from the EC and third count ries does not constitute less favourable
treatment
477. Australia has argued that a violation of Article 2.1 exists to the extent that a requirement to
indicate the country of origin does not exist in the case of two homonyms from the EC.
222

478. This claim is equally unfounded. First of all, such a difference of treatment would also affect
EC geographical indications, which are equally covered by Article 12(2), and therefore not be an issue
of national treatment. In addition, the relevant point of comparison in this case would be the treatment
of two homonyms within Australia; however, th is is not a question which falls within the
responsibility of the EC.

220 Australia's FWS, para. 226.
221 Above para. 88.
222 Australia's FWS, para. 235.

479. Moreover, Article 6(6) of Re gulation 2081/92 requires "a clear distinction in practice" also
where conflicts between homonyms arise within th e EC. As the EC has explained, where the two
homonyms are from different Member States, this may in practice require the indication of the
country of origin.
223 The only reason why the last indent of Article 6 (6) does not explicitly require the
indication of the country of origin is that this provision deals with a wide r set of conflicts than
Article 12(2). In particular, Article 6(6) also a pplies to conflicts between homonyms from the same
EC Member State. In such a situation, the indication of the country of origin would not be a
meaningful way of achieving the necessary "clear distinction".

480. Accordingly, Article 12(2) of Regulation 2 081/92 is compatible with Article 12(1) TBT
Agreement.

4. National treatment obligations do not appl y to requirements to mark the country of
origin
481. Finally, it must be recalled that marks of orig in are specifically dealt with in Article IX:1 of
the GATT, which excludes the applicability of th e national treatment obligation under Article III:4
GATT.
224 Should Article 12(2) of Regulation 2081/92 be considered as a technical regulation, then
this should not have the effect of rendering th e specific provision of Article IX:1 GATT useless.
Accordingly, in this case, the national treatment obligation contained in Article 2.1 TBT Agreement
could not apply to origin marking requirements.

482. In conclusion, Article 12(2) of Regulation 2081/92 is not inco mpatible with Article 2.1 TBT
Agreement.

C. C
LAIM 38: ARTICLES 4, 10, AND 12 (1) OF REGULATION 2081/92 ARE INCOMPATIBLE WITH
ARTICLE 2.2 OF THE TBT AGREEMENT
483. Australia has claimed that Articles 4, 10, a nd 12(1) of Regulation 2081/92 are incompatible
with Article 2.2 of the TBT Agreement.225 Article 2.2 is drafted as follows:

Members shall ensure that technical regula tions are not prepared, adopted or applied
with a view to or with the effect of creating unnecessary obstacles to international
trade. For this purpose, technical regulations shall not be more trade-restrictive than
necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment
would create. Such legitimate objectives are, inter alia: national security
requirements; the prevention of deceptive pr actices; protection of human health or
safety, animal or plant life or health, or the environment. In assessing such risks,
relevant elements of consideration are, inter alia: available scientific and technical
information, related processing technology or intended end-uses of products.
484. Australia has explicitly recognised that Regulation 2081/92 pursues a legitimate objective,
and is capable of fulfilling its legitimate objective.
226 However, Australia argues that Article 4, 10, and
12(1) of Regulation 2081/92 read together requi re that another WTO Member have in place
"inspection arrangements equivalent to those laid down" in the Regulation, and that this is more trade-
restrictive than necessary to fulfil the legitimate objective.

223 Above para. 89.
224 Above para. 213.
225 Australia's FWS, para. 249 et seq.
226 Australia's FWS, paras. 247–248.

485. As the EC has already explained, the provision of Regulation 2081/92 regarding inspection
structures do no constitute a technical regulation, a nd therefore do not fall under Article 2.2 of the
TBT Agreement. In any case, the EC considers that the requirements regarding inspection structures
are not more trade-restrictive than necessary, and this for the following reasons:

• the existence of inspection structures is onl y required with respect to the specific
product for which protection is sought;

• the Regulation does not determine the specific design of the inspection structures;

• the existence of inspection structures is necessary to achieve the legitimate objectives
of Regulation 2081/92.

1. The existence of inspection structures is only required with respect to the specific
product for which protection is sought
486. In support of its claim, Australia has referre d also to Article 12(1) of Regulation 2081/92.
However, as the EC has explained, Article 12(1) is not applicable to WTO Members.
227

487. Accordingly, the registration of a geogra phical indication from another WTO country does
not require the existence of equivalent inspection st ructures for all products in that country. Rather,
Article 12a, 10 and 4(2)(g) require the existence of equivalent inspection structures only with respect
to the specific product for which protection is sought.

2. The Regulation does not determine the specific design of the inspection structures
488. Australia has argued that Article 10(1) of Regulation 2081/92 sets out the "detailed
requirements" for the inspection structures, and cl aimed that the Regulation "provides no leeway for
regard to be had to the particular circumstan ces or the existing arrangements of another WTO
Member".
228 Similarly, Australia has argued that th e Regulation imposes an "EC model", and rules
out the acceptability of other types of inspection mechanisms.229

489. These allegations are wrong. As the EC has e xplained, Regulation 2081/92, and in particular
Article 10 thereof, provides considerable flex ibility as to the specific design of inspection
structures.230 Article 10 limits itself to setting out the b asic functions and principles applicable to
inspection bodies, without regulating their design in detail. Moreover, Articles 10(2) specifically
allows a choice between public and private elements in the design of the inspection bodies. Finally,
for bodies outside the EC, Article 10 does not mandate compliance with EC standards, but also allows
compliance with equivalent international standards.

490. Accordingly, Australia's allegation that Re gulation 2081/92 "leaves no leeway" for the design
of inspection structures is unsupported by fact. Indeed, Australia does not explain what specific
problems it has with the principles and objectives set out in Article 10 of Regulation 2081/92.
Moreover, it does not give any example for "other types of inspection mechanisms" which would be
excluded by Regulation 2081/92.

491. Accordingly, Australia fails to show that th e requirements relating to inspection structures are
more trade-restrictive than necessary.

227 Above, para. 62.
228 Australia's FWS, paras. 249–250.
229 Australia's FWS, para. 252.
230 Above para. 50 et seq.

3. The existence of inspection structures is necessa ry to achieve the legitimate objectives of
Regulation 2081/92
492. Indeed, it appears from Australia's submission th at its real concern is not with the specific
requirements for inspection structures set out in Regu lation 2081/92, but rather that it considers that
no inspection structures at all should be required.231

493. However, this argument of Australia mu st be rejected. The le gitimate objective of
Regulation 2081/92 is the protection of geographical indications. Geographical indications within the
meaning of Article 22.1 TRIPS relate to goods th at have "a given quality, reputation or other
characteristic" essentially attributable to their geographical origin.

494. The objective of the inspection procedures for eseen in Regulation 2081/92 is to ensure that
products using a protected geographical indication do comply with the product specifications, and
therefore have the "quality, reputation or other characteristic" which justifies this protection.

495. The existence of such inspection procedures is beneficial both to consumers and to producers.
Through the existence of inspection regimes, cons umers have a higher degree of assurance that a
product using a specific geographic indication will indeed comply with their expectations. This in turn
will increase the value of the geographical indi cation, and thereby benefit the producers which
produce in accordance with the product specifications.

496. The EC notes that as regard s certification marks, the United States has also recognised that
some form of control of the proper use of the name may be necessary, and that this cannot be simply
left to the user of the mark:
232

When a geographic term is used as a certification mark, two elements are of basic
concern: first, preserving the freedom of all persons in the region to use the term and,
second, preventing abuses or illegal uses of the mark which would be detrimental to
all those entitled to use the mark. Normally a private individual is not in the best
position to fulfill these objectives satisfactorily. The government of a region would be
the logical authority to control the use of the name of the region. The government,
either directly or through a body to which it has given authority, would have power to
preserve the right of all persons and to prevent abuse or illegal use of the mark.

497. Australia has argued that inspection structures might not be necessary where there is only one
producer, for instance where there is only one occu pant of the geographical area where the good can
be produced.233 The EC does not agree with this argument. Even where there is only one producer, the
expectations of consumers should still be protected. In fact, a monop olistic situation might require
inspections even more strongly then where several producers produce a good protected by a
geographical indication.

498. Australia has also argued that other systems of protection of geographical indications might
achieve the same objective, and has referred in partic ular to the application of unfair competition law.
The EC does not consider this convincing. The EC does not contest that Members are free to
implement Article 22 TRIPS through different system s of protection. This follows explicitly from

231 Australia's FWS, para. 255 et seq.
232 IP/C/W/117/Add.3, p. 10, 1 December 1998 (emphasis added).
233 Australia's FWS, para. 254.

Article 1.1 TRIPS, according to which Members sha ll be free to determine th e appropriate method of
implementing the provisions of the Agreement within their own legal system.

499. However, Article 1.1 TRIPS also provides th at Members may implement in their law more
extensive protection than is required by the TRIPS, provided that such protection does not contravene
the provisions of the TRIPS. By establishing a sp ecific system for the protection of geographical
indications, the EC has established a system which grants more extensive protection, in respect of
geographical indications, both to consumers and pr oducers. This discretion left to the EC under
Article 1.1 TRIPS cannot be limited on the basis of Article 2.2 TBT Agreement.

500. The requirements regarding inspection structure are an indispensable part of the EC system
for the protection of geographical indications. It is therefore necessary to achieve the legitimate
objectives of Regulation 2081/92.

501. Accordingly, Regulation 2081/92 is fully compatible with Article 2.2 TBT Agreement.

IX. CLAIM 39, 40: THE EC MEASURE IS COMPATIBLE WITH ARTICLE 65.1 TRIPS
AND ARTICLE XVI:4 WTO
502. The United States has claimed that the EC h as not fulfilled its obligations under Article 65.1
TRIPS.
234 Similarly, Australia has claimed that the EC has not complied with its obligations under
Article XVI:4 WTO.235

503. Both claims are dependent on substantive claims discussed above. Since these claims are
unfounded, the consequential claims under Ar ticle 65.1 TRIPS and XVI:4 WTO are equally
unfounded.

X. CONCLUSION
504. For the reasons set out in this submission, the EC requests the Panel:

• to find that the claims and the measures specified in Section II are outside its terms of
reference;

• to reject all the claims within its terms of reference.

234 US FWS, para. 190.
235 Australia's FWS, para. 267.

ANNEX B-3

ORAL STATEMENT OF THE EUROPEAN COMMUNITIES
FIRST SUBSTANTIVE MEETING

(23 June 2004)

Mr Chairman, distinguished Members of the Panel,

1. The European Communities (the "EC") welcomes this opportunity to submit its views in this
dispute. The EC has provided a comprehensive response to the complainants' claims in its first written
submission. In this statement we will limit ourselves to outline briefly our main arguments.

2. I will first recall a number of objections raised by the EC in connecti on with the coverage of
the terms of reference of the Panel. I will then address the complainants' claims that
Regulation 2081/92 diminishes the legal protection of trademarks, contrary to Articles 16, 20, 24.5
and several provisions of Part III of the TRIPS Agreement. I will then turn to the complainants' claims
that the EC measure is inconsistent with the obligation to protect geographical indications under
Article 22.2 of the TRIPS Agreement.

3. Following that, my colleague, Mr Martenczuk, will discuss the claim that Regulation 2081/92
is inconsistent with the national treatment oblig ations under the GATT and the TRIPS Agreement. He
will then respond to the US claims that Regulati on 2081/92 is inconsistent with the obligation to
provide most-favoured nation treatment under those two agreements. To conc lude, he will address
Australia's claims that Regulation 2081/92 is inconsistent with the TBT Agreement.

I. TERMS OF REFERENCE
4. At the outset, we would like to stress that th e Panel should consider only those claims which
are properly within its terms of reference.

5. First of all, certain claims of Australia, in particular those regarding the right of objection,
concern versions of Regulation 2081 /92 which had already been repeal ed at the time that the Panel
was established. In addition, the complainants have also referred to certain measures which were not
yet adopted at the time that the Panel was establis hed. The EC has submitted that such measures
which were no longer, or not yet, in existence at the time when the Panel was established are not
within the terms of reference of the Panel.

6. Moreover, a number of claims raised by the co mplainants in their first written submissions are
based on WTO provisions that were not cited in thei r panel requests. For this reason, the Australian
claims made under Article 4 of the Paris Conventi on and Articles 43 to 49 of the TRIPS Agreement
are outside the Panel's terms of reference. The same is true of the complainants' claims under
Article 2.2 of the Paris Convention.

II. REGULATION 2081/92 DOES NOT DIMI NISH THE LEGAL PROTECTION OF
TRADEMARKS
7. The Complainants have raised numerous claims (we have counted as many as fourteen) to the
effect that the registration of geographical indi cations under Regulation 2081/92 diminishes the legal
protection of trademarks. The complainants' argument s could suggest to the Panel that the registration
of confusing geographical indicati ons is a frequent occurrence in the EC, which should be a cause of
immediate and serious concern to all WTO Members. That suggestion is totally unfounded.

8. As of the date of establishment of this Panel, the EC authorities had registered more than 600
geographical indications. The complainants have never alleged that any of those geographical
indications has resulted in a likelihood of confusio n with any prior registered trademark, let alone
with a trademark owned by a US or by an Australia n national. The complainants' claims, all fourteen
of them, are purely theoretical. They are based on supposed "systemic" concerns. Those concerns,
however, have not prevented the complainants fro m enacting in their own statute books legislation
which is less protective of the rights of trademark owne rs than the EC measure that they attack in this
dispute.

A. A
RTICLE 16.1 OF THE TRIPS AGREEMENT
1. The issue of "co-existence"
9. Both Australia and the United States clai m that Article 14(2) of Regulation 2081/92 is
inconsistent with Article 16.1 of th e TRIPS Agreement in that it allows the "co-existence" of a later
confusing geographical indication and a prior registered trademark.

10. As we have shown, this clai m is unfounded for several reasons.

11. First
, this claim is wrong as a matter of fact. Be cause of the registrability criteria provided
under EC trademark law, the risk of confusion be tween trademarks and geographical indications is
very limited. To the extent that there subsists an y such risk, the problem is addressed adequately by
Article 14(3) of Regulation 2081/92. The complain ants have mischaracterized that provision.
Article 14(3) is not a "narrow exception". The term s of Article 14(3), if properly interpreted, are
sufficient to prevent the registration of any confusing geographical indications.

12. In order to substantiate their claim, the co mplainants should have established that Regulation
2081/92 mandates necessarily the registration of later confusing geographical indications. In turn, this
would have required them to show that Article 14(3) cannot be inte rpreted in a manner which allows
the registering authority to refuse the registration of confusing geographical indications. At the very
least, the complainants should have established that, in practice, Artic le 14(3) is being interpreted and
applied in a manner which results in a consistent pattern of registrations of confusing geographical
indications. The complainants have proved none of th is. Indeed, they have not even attempted to do
so. As mentioned, their complaint is purely theoretic al. The Panel, therefore, should conclude that, as
a matter of fact, the complainants' claim would be unfounded even on their own interpretation of
Article 16.1 of the TRIPS Agreement.

13. Second
, in any event, the complainan ts' interpretation of Article 16 .1 is wrong as a matter of
law. The complainants' claim rests on a misconcep tion of the relationship between trademarks and
geographical indications. The TRIPS Agreement r ecognises geographical indications as intellectual
property rights, on the same level as trademarks. It confers no superiority to trademarks over
geographical indications. Nor are the provisions of Pa rt II, Section 3, "exceptions" to Article 16.1.
There is no hierarchy between them. In an attemp t to establish the superiority of trademarks over
geographical indications, the complainants have em phasised the exclusivity of trademarks. But from
this it does not follow that trademarks must prevail over geographical indications. Geographical
indications are also exclusive rights.

14. The boundary between a Member's right to pr otect geographical indications and its obligation
to protect trademarks is not established in Article 16.1. It is defined in Article 24.5 of the TRIPS
Agreement. Article 14(2) of Regulation 2081/92 is fully consistent with Article 24.5, which provides
that Members shall not prejudice "the right to use a trademark". Had the drafters meant to exclude the
co-existence of trademarks and later geographical in dications, they would have provided instead that

Members shall not prejudice "the exclusive right to use a trademark". Furthermore, if Article 24.5 did
not allow co-existence, the protection of geographical indications would become pointless whenever
there is a grandfathered trademark. Indeed, why protect a geographical indication against illegitimate
uses by third parties if the legitimate users cannot u se it themselves? Yet, Article 24.5 envisages such
protection even in the presence of grandfathered trademarks.

15. Co-existence may not be a perfect solution, but then there is no such perfect solution. Co-
existence is, nonetheless, a more reasonable solution th an a rigid application of the first-in-time rule,
because when comparing trademarks and geographical indications one is not comparing apples with
apples. Trademarks and geographical indications are distinct intellectual property rights, each with a
different subject matter and a different function. Moreover, the co-existence of intellectual property
rights is by no means an unusual solution. Severa l other provisions of the TRIPS Agreement provide
expressly for co-existence. The same is true of the law of other Members, including the United States
itself.

16. The following example, drawn from the US own practice, illustrates the unreasonable
consequences of the interpretation put forward by th e complainants in this dispute. Napa Valley is a
famous geographical indication for wine. Prior to its official recognition by the US authorities, the
term "Napa" had been registered as part of several trademarks, some of which were not used for wine
originating in that region. On the complainants' in terpretation, the owners of those trademarks should
be entitled to prevent the winemakers of Napa Valle y from using that term in order to describe the
origin and the characteristics of their wine. This r esult would be manifestly inequitable. And, indeed,
the US authorities seem to agree. The applicable regulations reserve the term "Napa Valley"
exclusively for the wine originating in that region. By way of exception, prior trademarks including
that name are allowed to "co-exist" with that geographical indication, subject to certain labelling
requirements. This solution is similar to that provided under Regulation 2081/92. The EC, therefore,
fails to understand why the Unite d States has considered it necessary to bring this claim against
Regulation 2081/92.

17. Third
, irrespective of whether the co-existence of geographical indications and earlier
trademarks is envisaged by Article 24.5 of the TRIPS Agreement, the EC is required to maintain such
co-existence by virtue of Article 24.3, a "s tand-still" provision that prohibits Members from
diminishing the level of protection of geographical i ndications that existed at the time of entry into
force of the WTO Agreement.

18. Finally
, even assuming that Article 14(2) of Regulation 2081/92 were prima facie inconsistent
with Article 16.1, it would be justified as a "lim ited exception" to the trademark owner's exclusive
rights under Article 17 of the TRIPS Agreement.

2. Article 16.1 does not confer a right of objection
19. Australia (but not the United States) also clai ms that Regulation 2081/92 is inconsistent with
Article 16.1 of the TRIPS Agreement in that it r estricts the grounds on which trademark owners may
object to the registration of a geographical indication and does not ensure that objections from
trademark owners are considered by the Committee.

20. These claims are based on a mistaken prem ise. Contrary to Australia's assumption,
Article 16.1 does not confer to trademark owners a right of objection. The wording of Article 15.5 and
62.4 of the TRIPS Agreement is unequivocal in this respect. Members may, but are not required to,
make available opposition procedures. In any event, as a matter of fact, Article 7(4) of Regulation
2081/92 does not limit the grounds of objection in the manner alleged by Australia. Nor is it correct
that the Committee is the "ultimate decision-make r" under Regulation 2081/92. Furthermore, while

Member States are not required to forward all objections to the Commission, their decisions are not
discretionary and may be subject to judicial review.

B. A
RTICLE 20 OF THE TRIPS AGREEMENT
21. Australia (but not the United States) claims th at, by requiring the co-existence of an existing
trademark and a later geographical indication, Article 14(2) of Regul ation 2081/92 "encumbers
unjustifiably" the use of the trademark, thereby violating Article 20 of the TRIPS Agreement.

22. As we have shown, Australia has misunderstood the purpose and the scope of Article 20. That
provision is not concerned with the issue of exclusivity (i.e. who has the right to use a sign). Instead,
Article 20 addresses the distinct issue of which requirements may be imposed upon the trademark
right holder with respect to the use of his own trademark. As described in our first written submission,
on Australia's interpretation, Article 20 would overlap and conflict with Article 16. The three
examples of "special requirements" included in its first sentence confirm beyond doubt that Article 20
does not address the issue of exclusivity.

C. A
RTICLE 24.5 OF THE TRIPS AGREEMENT
23. Australia (but, again, not the United States) cl aims that Article 14(1) of Regulation 2081/92 is
inconsistent with Article 24.5 of the TRIPS Agreemen t because it does not afford the right of priority
provided in Article 4 of the Paris Convention (1967).

24. As the EC has already explained, Article 4 of the Paris Convention was not identified in
Australia's Panel request and is therefore outside the terms of reference. Moreover, this claim is
insufficiently argued and difficult to understand. In so far as the EC understands it, Australia's claim is
patently flawed. Article 24.5 requires to afford the priority right of Article 4 of the Paris Convention
(1967) to those applications that are "grandfathered" by virtue of that provision. But Article 4 of the
Paris Convention (1967) cannot be applied in or der to determine whether an application is
"grandfathered".

D. P
ART III OF THE TRIPS AGREEMENT
25. Australia and the United States claim that Re gulation 2081/92 is incons istent with numerous
provisions of Part III of the TRIPS Agreement becau se it does not afford to trademark right holders
the enforcement rights stipulated in those provisions.

26. These claims are unfounded because Part III of the TRIPS Agreement does not apply to
Regulation 2081/92.

27. Regulation 2081/92 lays down an administra tive procedure for the acquisition of geographical
indications via a system of registration. It does not purport to regulate the procedures for enforcing
trademark rights. Those procedures are provided in th e trademark laws, and related civil and criminal
procedural laws, of the EC and of its Member States. Those laws are not within the terms of reference
of the Panel.

28. The TRIPS Agreement draws a clear distinc tion between, on the one hand, the procedures for
the "enforcement" of intellectual property rights, wh ich are provided in Part III, and, on the other
hand, the "procedures for the acquisition and ma intenance of intellectual rights and related inter
partes procedures", which are dealt with in Part IV. The procedures provided in Regulation 2081/92
fall clearly within the second category and are subject exclusively to Part IV, and not to Part III.

29. The granting of an intellectual property righ t in accordance with the domestic law of each
Member is not an "infringement" and, therefore, is not subject to Part III of the TRIPS Agreement.
The subsequent use of a validly granted intellectual property right in conformity with the domestic
laws of a Member is also not an "infringement". Requiring Members to provide judicial
"enforcement" procedures against acts that are co nsistent with their ow n domestic laws, but are
inconsistent with Part II of the TRIPS Agreement, would be as much as requiring them to give direct
effect to the WTO Agreement in their domestic le gal order. The EC would be surprised if the
complainants agreed with that proposition.

30. Furthermore, applying the provisions of Pa rt III to the procedures for the acquisition of
intellectual property rights, such as those regul ated in Regulation 2081/1992, would render redundant
many of the provisions of Part IV and give rise to conflicts between Part III and Part IV.

31. Moreover, it would have unacceptable results for most Members. It would mean, for example,
that intellectual property rights woul d have to be conferred always by a judicial body in accordance
with judicial procedures, rather than by an ad ministrative body in accordance with administrative
procedures, as is currently the case in most Member s, including Australia and the United States. The
EC does not believe, for instance, that the complain ants' own systems of registration of trademarks,
which are operated by an administrative body, would comply with the provisions of Part III.

III. THE EC MEASURE IS CONSISTENT WITH THE OBLIGATION TO PROVIDE
PROTECTION TO GEOGRAPHICAL INDICATIONS UNDER ARTICLE 22 OF
THE TRIPS AGREEMENT
32. Australia and the United States have submitte d very different claims under this heading.

33. Australia's claims are, once again, insufficie ntly argued and difficult to understand. Australia
suggests that the alleged violation would arise from the fact that there is no "Community-wide system
of protection" outside Regulation 2081/92. However, there is no basis in Article 22.2, or anywhere
else in the TRIPS Agreement, for the proposition that protection must be provided at any particular
territorial level. Again, the EC would be surprised if it were the considered view of Australia, a
federal state, that the WTO Agreement may affect the constitutional allocation of competencies within
Members.

34. For its part, the United States claims that Re gulation 2081/92 is inconsistent with Article 22.2
because it fails to provide to "interested parties" established outside the EC the means to prevent the
acts specified in that provision. As we have shown in our first written submission, the grounds alleged
by the United States are either incorrect, as a matter of EC law, or irrelevant under WTO law.

35. In any event, Regulation 2081/92 is not the only means made available by the EC and its
Member States. Additional means of protection are provided in:

 • Directive 2000/13/EC on the labelling, presenta tion and advertising of foodstuffs and
implementing legislation of the Member States;

 • Directive 84/450 on misleading advertising and implementing legislation of the
Member States;

 • the Trademarks Directive and implementing legislation of the Member States;

 • the Community Trademark Regulation; and

 • the unfair competition laws of the Member States.

36. The United States was aware of the above measu res, which were specified in the responses
provided by the EC and its Member States in the context of the review under Article 24.2 of the
TRIPS Agreement and have been notified to the WTO.

37. The means of protection provided by th ese measures are sufficient in themselves to
implement the EC's obligation under Article 22.2. In any event, they are outside the terms of reference
of the Panel.

IV. REGULATION 2081/92 IS COMPATIB LE WITH NATIONAL TREATMENT
OBLIGATIONS, AND DOES NOT IMPOSE A REQUIREMENT OF DOMICILE OR
ESTABLISHMENT
38. The complainants have raised a large numbe r of claims alleging that Regulation 2081/92 is
incompatible with national treatment obligations under the TRIPS Agreement or under the GATT,
and with the prohibition on requirements of domicile or residence in Article 2.2 of the Paris
Convention.

39. As the EC has shown in its written submission, these claims are unfounded both in fact and in
law. In particular, many of the claims of the comp lainants seem to be based on misunderstandings of
the content of Regulation 2081/92. The EC will now briefly recall its main arguments regarding the
most salient of these claims.

A. N
ATIONAL TREATMENT UNDER THE TRIPS AGREEMENT
1. The conditions for the registration of geographical indications from third countries
40. The complainants have argued that Regul ation 2081/92 violates the national treatment
obligation of the TRIPS Agreement by imposing a condition of reciprocity and equivalence for the
registration of geographical indications relating to areas located outside the EC.

41. At the outset, the EC would like to point ou t that neither complainant has identified an
example where the EC has refused to register a geographical indication from the United States or
Australia – or from any other WTO Member, for that matter – on account of conditions of reciprocity
and equivalence. In fact, there has never been an application for registration of a geographical
indication from the United States or Australia. Like many other claims in the present dispute, it
appears therefore that this claim is purely theoretical in nature.

42. More importantly still, the claim is based on a misinterpretation of the Regulation. As the EC
has set out in its first written submission, the EC does not impose conditions of reciprocity and
equivalence on the registration of geographical i ndications from other WTO Members. Article 12 (1)
of Regulation 2081/92, on which the complainants have based their arguments, clearly applies
"without prejudice to international agreements", including the WTO Agreements.

43. This important element of Article 12 (1) has been completely ignored by the complainants.
Under the TRIPS Agreement, WTO Members are ob liged to provide protection to geographical
indications. This is why the EC does not apply co nditions of reciprocity an d equivalence to other
WTO Members. Moreover, other provisions of Regul ation 2081/92, in particular those regarding the
right of objection, similarly distinguish the situation of WTO Members from that of other third
countries. Accordingly, it should be clear that WTO Members are not in the same situation as other
third countries with respect to the registration of geographical indications relating to areas on their
territory.

44. Accordingly, the registration of geographical indications from other WTO Members is subject
to exactly the same conditions as the registration of geographical indications from the EC. As the EC
has confirmed in its written submission, this means that geographical indications must comply with
the same requirements regarding product specifi cations as geographical indications from the EC.
Moreover, just like for EC indications, there must be inspection structures in place that ensure that the
products comply with the product specifications for the specific geographical indication in question.

45. In their written submission, the complainants ha ve not made clear whether they also consider
these product-specific requirements to be in violatio n of national treatment obligations. In case they
intended such a challenge, the EC w ould like to affirm that this would be manifestly unfounded. The
very definition of a geographical indication is that products must have a certain quality, reputation, or
other characteristics attributable to their geographical origin. The regulation simply intends to ensure
that products using a protected name indeed comply with these requirements, and it does so in a way
which does not distinguish between domestic and foreign products. The application of these product-
specific conditions does therefore not constitute less favourable, but indeed equal treatment.

46. As a final point, the EC would like to reca ll that Article 3.1 TRIPS Agreement, just like
Article 2.1 of the Paris Convention, requi res national treatment as between nationals
, i.e. natural or
legal persons. National treatment under the TRIPS Agreement therefore differs in an important
respect from Article III:4 GATT, which requires na tional treatment as between foreign and domestic
products. It is striking that in their written submi ssions, the complainants do not acknowledge this
important difference, and indeed provide no indica tion of how they consider that Regulation 2081/92
discriminates between nationals.

47. Contrary to the assumption of the complainants, the conditions for registration of
geographical indications do not depend on nationality. The regulation contains parallel procedures for
the registration of geographical indications, dependi ng on whether the area to which the indication is
related is located inside or outside the EC. This is a question which may concern the origin of the
product, but which has nothing to do with the na tionality of the producer. The nationality of the
producers is simply of no relevance for the registra tion of geographical indications. Accordingly, for
this reason also, the Regulation cannot be said to discriminate between EC and non-EC nationals.

48. For all these reasons, the conditions for regi stration of geographical indications are fully
compatible with national treatment obligations.

2. The right of objection
49. The complainants have also claimed that Regulation 2081/92 violates the national treatment
obligation under the TRIPS Agreement by subjecting th e right to object to a registration to conditions
of reciprocity and equivalence.

50. Once again, this claim is based on an incorr ect interpretation of Regulation 2081/92. As the
EC already has set out, Article 12d (1) of Regulation 2081/92 gives a right to object to any person that
"is from a WTO Member or
 a third country recognised under the procedure provided for in Article 12
(3)". It is therefore clear that WTO Members ar e not subject to the procedure of Article 12 (3)
applicable to other third countries. The same a pplies also under Article 12b (2) with respect to
objections against the registration of geographical indications from outside the EC.

51. Moreover, the claim is also legally unfounded. Once again, the complainants fail to establish
that there is discrimination between nationals . Article 12d (1) of the Regulation refers to persons
resident or established outside the EC, regardless of their nationality. It cannot simply be assumed that
the reference to "nationals" in the national treatme nt provisions of the TRIPS Agreement also applies

to persons who are domiciled or established abroad, regardless of their nationality. In fact, conditions
regarding domicile or establishment are the subject of Article 2.2 Paris Convention, on the basis of
which the complainants have formulated separate cl aims. It is not clear to the EC how these claims
are consistent with the complainant's apparent view that Article 3.1 TRIPS Agreement and 2.1 of the
Paris Convention also provide for national treatment between domestic and foreign residents.

3. The transmission of applications and objections
52. The complainants have argued that the require ment that applications for the registration of
geographical indications must be transmitted by the government of the country where the
geographical area is located, constitutes a violation of national treatment obligations. Moreover, they
have raised the same claim also with respect to the transmission of statements of objection.

53. The EC considers this claim to be unfounded. First of all, the requirement of transmission
through governmental channels applies to domes tic and foreign geographical indications alike.
Accordingly, the Regulation cannot be said to disc riminate between nationa ls, nor between foreign
and domestic geographical indications.

54. More importantly still , governments fulfil an important role in the registration process. It is
clear that the government in whose territory the ge ographical area is located to which a geographical
indication relates, is better placed than any other to verify the admissibility of applications relating to
such an area. It is rather striking to the EC that the complainants seem to consider that the protection
in one country of a geographical indication related to an area located in th e territory of another
country could be achieved without any cooperation between the two countries concerned. Moreover,
it does not appear that the responsibilities of govern ments in the transmission of applications and
objections are unduly burdensome or difficult for another WTO Member to fulfil.

55. In fact, as the complainants themselves have indicated in their written submission, the real
problem is essentially their absence of "inclinatio n" to cooperate in the process. However, this
unwillingness to cooperate is not attributable to the Community, but is the choice of the complainants.
The complainants should therefore not be permitted to label as less favourable treatment by the EC a
situation that would exclusively be due to their own attitude.

4. Indication of the country of origin for homonymous names
56. The United States has argued that Article 12 (2) of Regulation 2081/92 provides less
favourable treatment to nationals because it requir es in certain circumstances the indication of the
country of origin.

57. Once again, this claim is theoretical in natu re, and is moreover based on a misinterpretation of
the Regulation. First of all, it should be relativel y clear that Article 12 (2) is not a provision which
requires the origin labelling of protected products generally, but is a provision which applies only in
very specific circumstances, namely where there are identical protected names from the EC and a
third country.

58. Secondly, the provision, when understood prop erly, in no way discriminates between foreign
and domestic geographical indications, let alone nationals. It simply requires that the country of origin
be indicated in order to avoid confusion and to achie ve a clear distinction in practice. Logically, this
requirement will normally be applied to whichever name is protected later, regardless of whether this
is the EC or the foreign indication. Accordingly, Article 12 (2) of the Regulation treats foreign and
domestic products exactly alike.

5. The historical claims of Australia
59. Australia has formulated a number of claims al so regarding the alleged absence of a right of
objection under Regulation 2081/92 before it wa s amended through Regul ation 692/2003, which
entered into force on 8 April 2003.

60. The EC finds it astonishing to have to defe nd itself against claims which are formulated
essentially in the past tense. The objective of WTO dispute settlement is to solve actual disputes and
to achieve compliance with WTO obligations. It is not the object of WTO dispute settlement to dwell
on historical grievances, whether real or percei ved. As the EC has already stated, it therefore
considers that Australia's claims relating to measur es no longer in force at the time of the Panel's
establishment are outside the Panel's terms of reference.

61. However, since Australia has raised these hi storical claims, the EC nonetheless would like to
take the opportunity to correct the historical fact s. Australia has referred to the simplified procedure
which used to be provided for in Article 17 of Re gulation 2081/92, and has claimed that under this
procedure, a right of objection was available to EC residents which was not available to foreign
residents. This claim is historically incorrect. As the EC has set out in its first written submission,
under Article 17 of Regulation 2081/92, the right of objection was explicitly excluded. Therefore,
there existed no possibility for objection, regardless of whether the person in question was an EC or a
foreign resident. Australia's claims of unequal treat ment are already for this reason deprived of any
historical basis.

62. The EC notes furthermore that in its submissi on, Australia appears to have made its national
treatment claims not just with respect to the Regul ation itself, but also with respect to the over 600
registrations of individual geographical indications carried out until the entry into force of Regulation
692/2003. In the view of the EC, this apparent a ttempt to invalidate the individual registrations is
devoid of all legal basis. The registrations of the i ndividual indications are not in violation of national
treatment obligations. In reality, Australia is simp ly attacking the procedure that was set out in
Regulation 2081/92 until its amendment through Re gulation 692/2003, but which it did not challenge
when it was still in force.

63. Moreover, Australia seems to forget that WT O remedies are not retroactive. Even if it had
challenged Regulation 2081/92 before it was amended through Regula tion 692/2003, all it could have
achieved would have been the amendment of that pa rticular measure. It could not have claimed the
cancellation of the hundreds of geographical indications already registered. It seems to the EC that not
having attacked Regulation 2081/92 before it was am ended, Australia can certainly not claim more
now than it could have claimed then.

B. P
ROHIBITED REQUIREMENT OF DOMICILE OR ESTABLISHMENT
64. The United States has claimed that the conditio ns for registration of geographical indications
amount to a requirement of domicile or establis hment prohibited by Article 2.2 of the Paris
Convention. As the EC has already mentioned, this claim was not identified in the Panel requests, and
is therefore outside the terms of reference of the Panel. Moreover, as the EC has also set out, this
claim also fails on its merits.

65. In a first alternative, the United Stat es has argued that Regulation 2081/92 imposes a
requirement of domicile or establishment because it prevents a US national from registering a
geographical indication relating to an area located in the US. Quite apart from the question of whether
this has anything to do with domicile or estab lishment, the EC has already confirmed that
geographical indications relating to areas in the US can
 be registered under Regulation 2081/92.
Therefore, this claim must fail.

66. Presumably conscious of this weakness, th e United States has also tried an alternative
formulation of this claim. In this formulation, Regulation 2081/92 imposes a requirement of domicile
or establishment because a US national could not register a geographical indication relating to an area
located in the EC without some form of investment or business establishment in the EC.

67. This claim already does not do justice to the content of Regulation 2081/92. Faithful to
Article 22.1 of the TRIPS Agreement, Regulatio n 2081/92 requires that in order to qualify for
protection as a geographical indication, the product in question must possess characteristics
attributable to that geographical origin and that "the production and/or processing and/or preparation
"
of the product must take place in the defined geographical area. Nowhere does the Regulation, nor
indeed Article 22.1 of the TRIPS Agreement, impose a requirement of domicile or establishment.

68. Moreover, the implications of the United St ates claim are worth noting. The United States
seems to believe that a US nationa l should be allowed to register a geographical indication relating to
an area in the EC regardless of whether this produ cer or his products have any link with that area.
Taken to its logical consequence, this view of the United States would entirely undermine the
protection of geographical indications as foreseen in the TRIPS Agreement. The EC regrets to have to
say that this claim casts some doubt on how serious ly the United States takes the conditions for the
protection of geographical indications.

69. Finally, both complainants have also a lleged that the conditions for objecting to the
registration of geographical indications impose a requirement of domicile or establishment. These
claims seem to be based on th e assumption that residents of WTO Members cannot object under the
Regulation. As the EC has already stated, that is not so. Accordingly, this claim is unfounded.

C. N
ATIONAL TREATMENT UNDER ARTICLE III:4 GATT
70. The complainants have raised a number of their national treatment claims also under the
GATT, namely as regards the conditions of registra tion, the transmission of applications, and the
labelling of homonymous geographical indications.

71. As the EC has already set out, none of these elements of Regulation 2081/92 constitute less
favourable treatment, regardless of whether one refers to nationals or to goods. The EC will therefore
not restate its arguments in this respect, which equally apply to Article III:4 GATT.

72. The EC would merely signal one additional question regarding the issue of origin labelling,
which the Panel would have to consider should it co me to the conclusion that, contrary to the EC's
submission, Article 12 (2) of the Regulation doe s involve discrimination between domestic and
foreign products. When they argue that there is a violation of national treatment under the GATT of
other agreements, the complainants seem to have fo rgotten the existence of Article IX GATT, which
is, however, the specific provision in WTO law concer ning origin marking. Remarkably, Article IX:1
GATT does specifically contain a most-favoured nation rule in respect of origin marking, but does not
contain a national treatment rule. If Article IX:1 GATT is to have any useful meaning at all, then it
must be that it contains a specific – and exclusive – set of disciplines for origin marking. Accordingly,
national treatment obligations would not seem to apply to origin marking.

73. As a final point on national treatment unde r the GATT, and only in case the Panel should
come to the conclusion that Regulation 2081/92 does entail a difference in treatment between
domestic and foreign products, the EC considers that the challenged elements of Regulation 2081/92
are justified by Article XX (d) GATT. All relevant aspects of the Regulation, and in particular the
conditions for the registration of geographical i ndications, are necessary to secure compliance with
the conditions for the registration and protection of geographical indications.

74. In conclusion, Regulation 2081/92 is therefore compatible with national treatment obligations
under the GATT.

V. REGULATION 2081/92 IS COMPATIBLE WI TH THE OBLIGATION TO PROVIDE
MOST-FAVOURED-NATION TREATMENT
75. The United States has also claimed that Regulation 2081/92 is incompatible with the
obligation to provide most-favoured-nation treat ment under the TRIPS Agreement and under the
GATT. In this respect, the US has claimed that a) the EC discriminates among non-EC WTO
Members by imposing conditions of reciprocity and equivalence and b) that the EC Member States
grant each other more favourable treatment than they accord to non-EC WTO Members.

A. T
HE EC DOES NOT DISCRIMINATE AMONG WTO MEMBERS
76. The first of these US MFN claims is alread y clearly unfounded in fact and in law.

77. First of all, the US claim is based on the assumption that the EC applies a condition of
reciprocity and equivalence to WTO Members. As the EC has already stated, it does not apply such a
condition to WTO members. Therefore, WTO Member s are treated as well as any other in respect of
the conditions of registration of geographical indications.

78. Second, the conditions which the Regulation re quires to be fulfilled for registration, notably
the requirement of product specifications and inspection structures, apply without discrimination to all
foreign products. Accordingly, they cannot be argu ed to be incompatible with most-favoured-nation
principles.

79. Third, even if Article 12 (1) of Regulati on 2081/92 did apply to WTO Members, which it
does not, it is worth pointing out that this provision does not yet confer any advantage on any third
country. It merely sets out the abstract conditi ons for rendering the Regulation applicable to non-
WTO third countries. These conditions do not distin guish between third countries, and can therefore
not be said to confer an advantage on any particular country.

80. Finally, as regards most-favoured-nation treat ment under the TRIPS Agreement, it should be
recalled that unlike Article I:1 GATT, Article 4 TR IPS requires discrimination between nationals, not
between products. However, Regulation 2081/92 does not refer to nationality, but to the question of
where the geographical area is located. As the EC h as said already, this may have something do with
the origin of the product, but it has nothing to do with the nationality of the producer.

81. For all these reasons, this claim of the United States should be rejected.

B. R
EGULATION 2081/92 DOES NOT INVOLVE THE GRANTING OF ADVANTAGES BETWEEN
MEMBER STATES
82. The second claim of violation of Article 4 TR IPS Agreement by the United States is a rather
curious one. In essence, the United States is arguing that "through Regulation 2081/92", EC Member
States are granting "each other" advantages, which are not available to other WTO Members, and are
thereby violating Article 4 TRIPS.

83. In the view of the EC, this claim is entirel y unfounded. To begin w ith, as the EC has already
set out, the conditions for the registration of ge ographical indications do not discriminate between
geographical indications from the EC and from WTO countries. Accordingly, the EC does not
understand which are the specific advantages which the US claims are being withheld from it.

84. Moreover, Article 4 TRIPS refers to advantages which are granted to the "nationals of another
country". Regulation 2081/92 does not grant any advantage to nationals of "another country". The EC
is a founding member of the WTO. When it adopts a measure which harmonises the law within the
EC, it does therefore neither grant its Member States any advantages, nor do its Member States grant
each other advantages.

85. As the United States knows perfectly well, Regul ation 2081/92 is a measure of the EC. This is
why the United States has correctly brought this case against the EC, and not against its Member
States. The US claim that "through Regulation 2081/92", Member States are granting each other
advantages is therefore entirely artificial and in c ontradiction with the United States' own actions in
the present dispute settlement proceedings.

VI. REGULATION 2081/92 IS CONSISTENT WI TH OBLIGATIONS UNDER THE TBT
AGREEMENT
86. Australia has alleged that Regulation 2081/92 is inconsistent with the TBT Agreement in two
respects: first, it has claimed that the requirement to indicate the country of origin in Article 12 (2) of
the Regulation is inconsistent with Article 2. 1 TBT Agreement; and second, it has claimed that
Articles 4 and 10 of Regulation 2081/92 are incompa tible with Article 2.2 TBT Agreement to the
extent that the require they existence of inspection structures.

A. R
EGULATION 2081/92 IS NOT A TECHNICAL REGULATION
87. Article 2 of the TBT Agreement applies only to technical regulations. The claims raised by
Australia under the TBT Agreement must fail alread y because none of the provisions of Regulation
2081/92 challenged by Australia constitutes a techni cal regulation within the meaning of the TBT
Agreement.

1. Article 12 (2) of Regulation 2081/92 is not a technical regulation
88. As the EC has already set out in its writte n submission, Article 12 (2) is not a technical
regulation within the meaning of the TBT Agreement.

89. First of all, Article 12 (2) does not apply to a ll agricultural products and foodstuffs covered by
the Regulation, but only to products in the specific si tuation envisaged in the provision, namely where
a protected name from the EC is identical to a pr otected name from a third country. Accordingly,
Article 12 (2) does not apply to identifiable products.

90. Moreover, Article 12 (2) does not lay down pro duct characteristics. First of all, the provision
does not itself lay down how any specific product shoul d be labelled. As the EC has set out in its
written submission, where the situation envisaged in Article 12 (2) occurs, the labelling requirement
will normally be part of the product specifications. In addition, the indication of the country of origin
does not constitute a labelling requirement as it applies "to a product, process or production method".

91. Finally, it should also be noted that the possibility for registration under Regulation 2081/92
is a right, but is not a condition for marketing of products in the EC. The registration process is
entirely voluntary. Accordingly, Regulation 2081/92 cannot be held to lay down product
characteristics with which compliance is mandatory.

2. Articles 4 and 10 of Regulation 2081/92 are not a technical regulation
92. With its claim regarding Articles 4 and 10 of Regulation 2081/92, Australia is challenging the
requirement that inspection structures must exist. As follows from Article 10(1) of
Regulation 2081/92, the objective of inspection structures is to ensure that agricultural products and
foodstuffs bearing a protected name meet the requirements laid down in the specification.

93. As the EC has set out in its first written s ubmission, this requirement of the existence of
inspection structures cannot be regarded as cons tituting a technical regulation. Under the TBT
Agreement, a technical regulation is a me asure which lays down product characteristics
. The TBT
Agreement carefully distinguishes technical regul ations from conformity assessment procedures,
which are used to determine whether the requireme nts contained in technical regulations are met.
Whereas technical regulations are dealt with in Articles 2 and 3 of the TBT Agreement, the WTO
obligations regarding conformity assessment procedures are set out separately in Articles 5 to 9 of the
TBT Agreement.

94. Even if the product specifications, with which the inspection structures must ensure
conformity, were to be regarded as a technical re gulation, then the inspection structure itself could
still not be regarded as a technical regulation falli ng under Article 2 of the TBT Agreement. Rather, it
would have to be regarded as a conformity assessme nt procedure falling under Articles 5 to 9 of the
TBT Agreement. However, Australia has not referred to these provisions in its panel request, so that
such a claim would be outside the terms of reference of the panel.

95. For this reason, Articles 4 and 10 of Regul ation 2081/92 cannot be regarded as technical
regulation falling under Article 2 of the TBT Agreement.

B. A
RTICLE 12 (2) OF REGULATION 2081/92 IS NOT INCOMPATIBLE WITH ARTICLE 2.1 OF THE
TBT AGREEMENT
96. Australia has claimed that the requirement to i ndicate the country of origin in Article 12 (2) of
Regulation 2081/92 violates the national treatment pr ovision in Article 2.1 TBT Agreement. In the
view of the EC, even if the Panel came to cons ider that Article 12 (2) constitutes a technical
regulation, this claim would have to fail.

97. As the EC has said earlier, Article 12 (2) does not treat EC and foreign geographical
indications differently. It merely requires that wh ere there are identical protected names from the EC
and from a third country, the country of origin must be indicated. This requirement may affect the EC
or the third country geographical indication, whicheve r is registered later. There is therefore perfect
equality of treatment between domestic and foreign geographic indications.

98. Australia has criticised the fact that Article 6 (6) of Regulation 2081/92 does not contain the
same requirement as regards identical geographical i ndications from within the EC. In the view of the
EC, this comparison is not pertinent. First of a ll, the EC does not see how Australian products can be
disadvantaged by the way in which conflicts between homonyms from within the EC are being
resolved. Moreover, it should be noted that Article 6 (6) deals with a larger set of potential conflicts
than Article 12 (2). In particular, it also may c oncern conflicts between geographical indications from
within the same Member State. It is therefore not surprising that the provision requires a "clear
distinction in practice", rather than requiring the indication of the country of origin in all cases.

C. A
RTICLES 4, 10, AND 12 (1) OF REGULATION 2081/92 ARE NOT INCOMPATIBLE WITH
ARTICLE 2.2 OF THE TBT AGREEMENT
99. Finally, even if the Panel considered that Articles 4 and 10 constituted a technical regulation,
there would be no violation of Article 2.2 TBT Agreement.

100. Article 2.2 TBT Agreement provides that t echnical regulation must not be more trade-
restrictive than necessary to fulf il a legitimate objective. The EC su bmits that the requirement that
inspection procedures must exist to ensure that pr oducts bearing a protected name comply with the
product specifications is necessary to fulfil the legitimate objectives of Regulation 2081/92.

101. The legitimate objective of the inspection pr ocedures foreseen in Regulation 2081/92 is to
ensure that products using a protected geogr aphical indication do comply with the product
specifications, and therefore have the "quality, reput ation or other characteristics" which justify this
protection. The existence of such inspection pro cedures is beneficial both to consumers and to
producers.

102. The existence of such inspection structures is also in no way disproportionate to this
objective. First of all, as the EC has set out in its written submission, Article 10 of Regulation 2081/92
limits itself to fixing the general principles, and leaves a maximum of flexibility as regards the
specific design of the inspection procedures. De spite its complaints that Article 10 is unduly
restrictive and obliges other WTO Members to foll ow an "EC model", Australia has not actually
explained what specific type of inspection structures it envisages which would be ruled out by
Article 10 of Regulation 2081/92.

103. In reality, Australia's argument seems to be that the existence of inspection structures should
be required at all. However, this does not seem to be compatible with the objectives of Regulation
2081/92 regarding the protection of geographical indi cations. In fact, Australia does not take into
account the specific nature of geographical indications, which are defined as having a specific quality,
reputation, or characteristics attributable to their geographical origin. It is therefore entirely
appropriate that the EC provides for mechanisms which ensure that products marketed bearing a
geographical indication do in fact comply with these requirements.

104. Whether there are also, as Australia argues, other systems of protection which may achieve
the objective of protecting geographical indications in accordance with Article 22 TRIPS is not the
question. Article 1.1 TRIPS explicitly allows each WTO member the freedom to determine how to
implement the provisions of the Agreement within their legal system. Moreover, Article 1.1 also
allows the WTO Members to provide more extensive protection than required by the Agreement. This
is indeed what the EC has done in Regulation 2081/ 92. However, it would not be acceptable for third
country geographical indications to take advantage of this extensive protection without complying
with the same requirements as an EC indication. This would in fact not result in equal treatment, but
in more favourable treatment for foreign products.

105. Accordingly, Australia's claim under Artic le 2.2 TBT Agreement must be rejected.

106. Thank you for your attention. This conclud es our statement. We look forward to answering
any questions that the Panel may wish to ask.

ANNEX B-4

REPLIES BY THE EUROPEAN COMMUNITIES TO QUESTIONS
POSED BY THE PANEL FOLLOWING THE FIRST SUBSTANTIVE MEETING

TABLE OF WTO CASES REFERRED TO IN THE RESPONSES

Short Title Full Case Title and Citation
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive
Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000,
DSR 2000:VI, 2995
Canada – Pharmaceutical
Patents

Panel Report, Canada – Patent Protection of Pharmaceutical Products ,
WT/DS114/R, adopted 7 April 2000, DSR 2000:V, 2295
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products , WT/DS135/AB/R, adopted
5 April 2001
EC – Bananas III Appellate Body Report, European Communities – Regime for the
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, adopted
25 September 1997, DSR 1997:II, 591
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, 9
US – Corrosion-Resistant Steel
Sunset Review
Appellate Body Report, United States – Sunset Review of Anti-Dumping
Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan ,
WT/DS244/AB/R, adopted 9 January 2004.
US – Section 110(5) Copyright
Act
Panel Report, United States – Section 110(5) of the US Copyright Act ,
WT/DS160/R, adopted 27 July 2000, DSR 2000:VIII, 3769
US – Section 211
Appropriations Act
Panel Report, United States – Section 211 Omnibus Appropriations Act of
1998, WT/DS176/R, adopted 1 February 2002, as modified by the Appellate
Body Report, WT/DS176/AB/R
US – Section 211
Appropriations Act
Appellate Body Report, United States – Section 211 Omnibus
Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974 ,
WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815

Question 1

To what extent is the Panel bound by the EC's interpretation of its own Regulation?

1. Regulation 2081/92, which is the measure at i ssue in the present proceedings, is an act of EC
domestic law. As the Appellate Body has held in India – Patents , domestic law may constitute
evidence of compliance or non-complian ce with international obligations. 1 Accordingly, as the
Appellate Body has held, a Panel may be required to determine the meaning of an act of domestic law
in order to establish whether such act is compatible with WTO obligations.2

2. The Panel's approach to the interpretati on of Regulation 2081/92 should therefore be
governed by Article 11 of the DSU, according to which the Panel must make "an objective assessment
of the facts of the case". Accordingly, the EC does not consider that the Panel is "bound" by the EC's
interpretation of Regulation 2081/92.

1 Appellate Body Report, India – Patents, para. 65.
2 Appellate Body Report, India – Patents, para. 66.

3. However, the EC would like to underline that in making an objective asse ssment of the facts,
and in particular of the meaning of Regulation 20 81/92, the Panel must take due account of the fact
that Regulation 2081/92 is a measure of EC dom estic law. It can therefore not "interpret"
Regulation 2081/92, but rather must establish the meaning of its provisions as factual elements. In this
context, reference can be made to the approach described by the Panel in US – Section 301:
3

In this case, too, we have to examine asp ects of municipal law, namely Sections 301-
310 of the US Trade Act of 1974. Our mandate is to examine Sections 301-310
solely for the purpose of determining whether the US meets its WTO obligations. In
doing so, we do not, as noted by the Appellate Body in India – Patents (US), interpret
US law "as such", the way we would, say, interpret provisions of the covered
agreements. We are, instead, called up on to establish the meaning of Sections 301-
310 as factual elements and to check whether these factual elements constitute
conduct by the US contrary to its WTO oblig ations. The rules on burden of proof for
the establishment of facts referred to above also apply in this respect.
It follows that in making factual findings concerning the meaning of Sections 301-
310 we are not bound to accept the interpretation presented by the US. That said, any
Member can reasonably expect that consider able deference be given to its views on
the meaning of its own law.
4. It follows from this approach that th ere are considerable differences between the
interpretation of the WTO agreements by a Pane l, and the establishment of the meaning of a
challenged act of domestic law by a Panel. First of all, as a question of fact, the rules regarding the
burden of proof must apply. Accordingly, the burden of proof for establishing that
Regulation 2081/92 as the measure at issue has a pa rticular meaning is on the complainants, not on
the EC.

5. This is particularly important in the case of per se challenges against measures which have so
far not been applied by the authorities of a Member. In such a case, a Member should not be held in
violation of its WTO obligations unless it is establishe d beyond doubt that the measure in fact entails
the violations alleged by the complainants.

6. Second, the establishment of the meaning of an act of domestic law is not governed by the
customary principles of interpretation of internati onal law. Rather, the objective assessment of the
facts requires establishing the meaning that the act will normally have within the legal order of the
WTO Member in question. This means that the in terpretation should be guided by the rules of
interpretation customary in the legal order of such member, and taking account of the legal context of
the measure in the domestic law of the Member.

7. Third, even though a Panel is not bound by the interpretation of a WTO Member of it own
measure, due account must be taken of the fact that it is the authorities of this Member which must
interpret and apply the measure in the domestic le gal order. Therefore, as the Panel set out in US –
Section 301 , the explanations given by such Member of the meaning of its own measure must be
given considerable deference.

8. This deference accorded to the author of a do mestic act is also illustrated in Panel practice.
When establishing the meaning of domestic measures, Panels have regularly relied on statements and
explanations given by the defending party in the course of the proceedings. This is the case for
instance in US – Section 301, where the Panel relied to an important extent on statements made by the

3 Panel Report, US – Section 301, para. 7.18 (footnotes omitted).

United States as regards the interpretation and application of the challenged measure. 4 The same was
also the case in Canada – Pharmaceutical Patents , where the Panel relied on assurances given by
Canada during the proceedings. 5 Similarly, in US – Section 211 , the Panel relied on a US response
given to the Panel in order to establish the meaning of the challenged measure.6

Question 2

Can the procedures under Articles 5 and 6 of Regulation (EC) No. 2081/92 apply to names of
geographical areas located outside the EC?

9. The procedures set out in Articles 5 and 6 of Regulation 2081/92 in principle apply only to
names related to geographical areas located inside the EC. The corresponding procedures for
geographical indications related to geographical areas located outside the EC are contained in
Articles 12a and 12b. However, these provisions al so contain a number of references to specific
sections of Articles 5 and 6, which to this extent are applicable to the registration of geographical
indications from outside the EC.

Question 3

Did the phrase "[w]ithout prejudice to international agreements" in Article 12(1) of Regulation (EC)
No. 2081/92 predate the TRIPS Agreement? Did it refer to any specific agreements when it was
adopted? Which agreements does it refer to now? Would it cover bilateral agreements for the
protection of individual geographical indications?

10. The phrase "[w]ithout prejudice to internati onal agreements" was already contained in
Article 12(1) of Regulation 2081/92 as originally adopted in 1992.

11. The phrase "without prejudice to internationa l agreements" is not in any way limited to
particular specific agreements or types of agre ements. Accordingly, this phrase applies both to
multilateral and to bilateral agreem ents. Moreover, the phrase does not just apply to agreements in
force at the time the Regulation was adopted, but also to agreements which were adopted
subsequently.

12. At the time that Regulation 2081/92 was adopted, the GATT was one of the agreements to
which the "without prejudice" clause applied. Mo reover, at the time that Regulation 2081/92 was
adopted, the TRIPS Agreement was in the final phases of its negotiation. It was therefore the
objective that the "without prejudice" clause should also apply to the TRIPS and other WTO
agreements resulting from the Uruguay Round.

13. The importance of the WTO Agreements, a nd notably of the TRIPS Agreement, for the
interpretation and application of Regulation 2081/92 was reconf irmed by Regulation 692/2003,
7 the
8th recital of which prominently refers to the obligations resulting from the TRIPS Agreement.

Question 4

Is it unusual that the text of Article 12(1) of Regulation (EC) No. 2081/92 covers only a small number
of countries that are non-WTO Members, but th e introductory phrase "[w]ithout prejudice to

5 Panel Report, Canada – Pharmaceutical Patents, para. 7.99.
7 Exhibit COMP 1h.

international agreements" covers th e entire membership of the WTO? Why was this structure
retained when the Regulation was amended in April 2003?

14. The EC does not consider this as unusual. First, the EC would like to point out that out of the
191 current Members of the United Nations, 48 are not Members of the WTO, including certain
important countries such as Russia. Therefore, even though this group has been shrinking since the
establishment of the WTO, the EC does not consider this number as "small".

15. It is also not surprising that the fundamenta l structure of Article 12 was not changed. When
proposing to amend an act of the Council, it is a concern for the Commission to preserve the Council
act to the extent that it does not require amen dment. Therefore, the Commission proposal will
frequently limit itself to those amendments which ar e strictly speaking necessary, and will leave those
provisions the amendment of which is not necessary untouched.

Question 7

Do the last sentence of Article 12(3) of Regu lation (EC) No. 2081/92 and the first clause in
Article 12a "[i]n the case provided for in Article 12(3)" limit the applicability of Article 12a?

16. No. The last sentence of Article 12 (3) of Regulation 2081/92 merely provides that where the
Commission decision provided for in this provision is in the affirmative, the procedure set out in
Article 12a shall apply. This does not mean that the procedure in Article 12a cannot apply in other
cases.

17. As regards the reference in Article 12a (1) to Article 12 (3), the EC would like to point out
that Article 12 (3) refers to the conditions set out in Article 12(1). As the EC has confirmed, by virtue
of the "without prejudice" clause, these conditions do not apply to WTO Members. Accordingly, since
the procedure in Article 12 (3) is inapplicable to WT O Members, so is the reference to this provision
in Article 12a (1).

Question 8

Which references to a "third country" in Articles 12, 12a, 12b and 12d of Regulation (EC)
No. 2081/92 include all WTO Members, and which do not? What, in the co ntext of each reference,
indicates what "third country" means? Why are different terms not used?

18. Whether the term "third country" includes WTO Members or not must be established on the
basis of the wording, context, and objectives of th e specific provision in question. In Article 12(1) of
Regulation 2081/92, this context includes the "without prejudice" clause. Accordingly, as the EC has
explained, the references to "third countries" in Article 12(1) do not include WTO Members. The
same applies where a provision refers to a "third country meeting the equivalence conditions of
Article 12(3)" (Article 12b[2][b]) or a "third c ountry recognised under the procedure provided for in
Article 12(3)" (Article 12d[1]), or where a provision specifically distinguishes between third countries
and WTO Members. Where this is not the case, as for instance in Article 12a(1) or Article 12b(1), the
reference to third countries may also include WTO Members.

Question 9

Why is it that only the rights of objection in Articles 12b(2)(a) and 12d(1) of Regulation (EC)
No. 2081/92 mention a "WTO Member" or "WTO member country"? Is it relevant that
Regulation (EC) No. 692/2003 explained, in its 10 th recital, that in the matter of objections the
provisions in question apply without prejudice to international agreements but, in its 9 th recital, it
explained that the protection provided by registra tion is open to third countries' names by reciprocity
and under equivalence conditions?

19. This is due to the differences in the st ructure of Article 12 on the one hand, and of
Articles 12b and 12d, on the other. Article 12 contains the introductory clause "without prejudice to
international agreements", which made it possible not to specifically single out the position of WTO
Members in the text of the provision. Articles 12b and 12d do not contain such a clause, so that it was
necessary to differentiate between WTO Members and other third countries.

20. The 10
th recital of Regulation 692/2003 confirms this interpretation by stating that the
objective of the amendment of the provisions regard ing objections was "that it should be made clear
that in this matter nationals of WTO member countries are covered by these arrangements and that the
provisions in question apply without prejudice to international agreements ". In order words, the
distinction between WTO Members and third count ries was intended to have exactly the same
function as the without prejudice clause in Article 12(1) of Regulation 2081/92. Given this common
objective of ensuring compatibility with WTO oblig ations, the differences in drafting technique
between Articles 12(1) and 12b and 12d appear secondary.

21. As regards the 9
th recital, this recital refers to the reciprocity and equivalence conditions "as
provided for in Article 12" of Regulation 2081/92. This reference of course includes the "without
prejudice" clause of Article 12(1). Accordingly, the 9th recital does not concern WTO Members.

Question 10

Has the Commission recognized any countries under th e procedure set out in Article 12(3) of
Regulation (EC) No. 2081/92? Have any countries requested to be recognized under that procedure?

22. No (to both questions).

Question 11

Has an application for registration under Regulatio n (EC) No. 2081/92 ever been made in respect of
the name of a geographical area located outside the EC? If so, what happened?

23. No.

Question 13

What discretion does the Commission enjoy in the application of Regulation (EC) No. 2081/92?

24. Whether the provisions of the Regulation leave the Commission a discretion or not, and the
extent of such discretion, will depend on the word ing of each particular pr ovision conferring powers
on the Commission. Where such provisions provide th at the Commission "shall" take a certain action,
the Commission would normally be obliged to take such action. Where the Regulation provides that
the Commission "may" take a certain action, then the Commission would normally enjoy a discretion
as to whether to take such action or not. In an y case, the Commission is bound to respect and apply
the terms of the Regulation.

Question 14

Please express your view on whether and to what extent the mandatory/discretionary distinction in
GATT and WTO jurisprudence applies under the TRIPS Agreement. Would the nature of those TRIPS
obligations which are not prohibitions but rather oblige Members to take certain actions, affect the
application of the distinction?

25. The relevance of the distinction between "m andatory" and "discretionary" measures under the
TRIPS Agreement is the same as under the other WTO Agreements.

26. As clarified by the Appellate Body in United States – Carbon Steel (Japan)
8, panels are not
required, as a preliminary jurisdictional matter, to examine whether the challenged measure is
"mandatory". Rather, this issue is relevant as part of the panel's assessment of whether the measure is,
as such, inconsistent with particular obligations. Ac cordingly, whether or not the distinction between
"discretionary" and "mandatory" measures is "rel evant" under the TRIPS Ag reement will depend on
the specific obligations imposed by each provision at issue.

27. That the distinction between "discretionary" and "mandatory" measures may be relevant also
under the TRIPS Agreement is illustrated by United States – Section 211, where the Appellate Body
recalled such distinction and concluded that the panel had applied it correctly.
9

Question 15

What would be the most authoritative statement of the interpretation of Regulation (EC) No. 2081/92?
Is a statement by the EC delegation to this Panel legally binding on the European Communities?

28. According to Article 220 (1) of the EC Treat y, it is the European Court of Justice which
ensures that in the interpretation and application of the Treaty the law is observed. This judicial
function of the Court of Justice also applies to acts of the Community institutions adopted on the basis
of the Treaty. Accordingly, the highest judicial authority competent to interpret the meaning of
Regulation 2081/92 is the European Court of Justice.

29. The European Commission represents the Europ ean Community in the proceedings before the
Panel. Accordingly, the statements made by the ag ents of the European Commission before the Panel
commit and engage the European Communities.

30. However, it should also be noted that wher e the statements of the European Communities
regard the interpretation of Regulation 2081/92, these statements con cern an issue of fact
. These
statements are made in order to assist the Panel in its function to make an objective assessment of the
facts. Their purpose is therefore to clarify the ex isting legal situation in European Community law.
Their intention is not to create new legal obligations in public international or in Community law.

31. This being said, the EC does not consider that its statements before the Panel are without legal
significance. In this context, the EC is aware that its submissions to the Panel will be public as part of
the final report to the Panel. It is not conceivabl e to the European Commission that it would, in the
interpretation or application of the Regulation, ta ke a different approach to the one it has set out
before the Panel.

8 Appellate Body Report, United States – Carbon Steel (Japan), para. 89
9 Appellate Body Report, United States – Section 211, para. 258.

32. As regards the approach to be taken by the European Court of Justice, the European
Commission considers it important to underline that the European Court of Justice has shown a
consistently high degree of awareness and respect fo r the international obligations of the European
Communities.

33. According to the settled case law of the Court of Justice, Community legislation must, so far
as possible, be interpreted in a manner that is consiste nt with international law, in particular where its
provision are intended specifically to give effect to an international agreement concluded by the
Community.
10

34. As one scholar of Community law has observe d in a recent book on the external relations law
of the European Communities, the principle of c onsistent interpretation has been particularly
important with respect to GATT and WTO law: "The EU Courts have never hesitated to make use of
consistent interpretation for the purpose of applying GATT and WTO law".11

35. As regards specifically the TRIPS Agreement, the Court for instance has held as follows:12

It is true that the measures envisaged by Article 99 and the relevant procedural rules
are those provided for by the domestic law of the Member State concerned for the
purposes of the national trade mark. However, since the Community is a party to the
TRIPs Agreement and since that agreement applies to the Community trade mark, the
courts referred to in Article 99 of Regu lation No 40/94, when called upon to apply
national rules with a view to ordering provisional measures for the protection of
rights arising under a Community trade mark, are required to do so, as far as possible,
in the light of the wording and purpose of Article 50 of the TRIPs Agreement.
36. The Court of Justice will be particularly prone to take into account the international
obligations of the Community where the Community legislative act itself indicates that it is intended
to implement obligations of intern ational law. For instance, in a re cent judgment, the Court held that,
on the basis of a recital in the Community Anti-Dumping Regulation, the duty to provide an
explanation contained in Article 2.4.2 of the AD Ag reement had to apply also in the context of the
application of the Community Regulation:
13

However, where the Community intended to implement a particular obligation
assumed in the context of the WTO, or where the Community measure refers
expressly to precise provisions of the agreem ents and understandings contained in the
annexes to the WTO Agreement, it is for the Court to review the legality of the
Community measure in question in the light of the WTO rules (see, in particular,
Portugal v Council, paragraph 49).
The preamble to the basic regulation, and more specifically the fifth recital therein,
shows that the purpose of that regulation is , inter alia, to transpose into Community
law as far as possible the new and detail ed rules contained in the 1994 Anti-dumping
Code, which include, in particular, those re lating to the calculation of dumping, so as
to ensure a proper and transparent application of those rules.

10 Case C-61/94, Commission/Germany, [1996] ECR I-4006, para. 52 (Exhibit EC-13); C-341/95,
Bettati, [1998] ECR I-4355, para. 20 (Exhibit EC-14).
11 Piet Eeckhout, External Relations of the European Union, Oxford University Press, p. 315 (2004).
12 Case C-53/96, Hermès, [1998] ECR I-3603, para. 28 (Exhibit EC-15); confirmed in C-300/98 and
392/98, Dior, [2000] ECR I-1344, para. 47 (Exhibit EC-16).
13 Case C-76/00 P, Petrotub, [2003] ECR I-79, para. 54–57 (Exhibit EC-17).

It is therefore established that the Community adopted the basic regulation in order to
satisfy its obligations arising from the 1994 Anti-dumping Code and that, by means
of Article 2(11) of that regulation, it inte nded to implement the particular obligations
laid down by Article 2.4.2 of that code. To that extent, as is clear from the case-law
cited in paragraph 54 of the present judgment, it is for the Court to review the legality
of the Community measure in question in the light of the last-mentioned provision.
In that regard, it should be recalled that Community legislation must, so far as
possible, be interpreted in a manner that is consistent with international law, in
particular where its provisions are intended specifically to give effect to an
international agreement concluded by th e Community (see, in particular, Case
C-341/95 Bettati [1998] ECR I-4355, paragraph 20).
37. The interpretation of Article 12 of Regulati on 2081/92 which the EC has set out before the
Panel is therefore in full accordance with the prin ciples of interpretation applied on a constant basis
by the European Court of Justice.

38. In addition, it also useful to know that the Court of Justice may take account of statements
which the Commission has made on behalf of the Eu ropean Community in the WTO. For instance, in
the judgement just cited, the Court of Justice referr ed in support of its inte rpretation to a assurances
given by the European Commission to the secret ariat of the WTO Committee on Anti-Dumping
Practices:
14

Such an interpretation coinci des in essence with the intern ational assurances given in
the communication of 15 February 1996 from the Commission to the secretariat of
the WTO Committee on Anti-Dumping Practices , according to which the explanation
referred to in Article 2.4.2 of the 1994 An ti-dumping Code will be given directly to
the parties and in regulations imposing anti-dumping duties.
Question 16

Can the EC provide the Panel with any official st atement predating its first written submission that
names of geographical areas located in all WTO Members could be registered under Regulation (EC)
No. 2081/92 without satisfying its equivalence and reciprocity conditions?

39. In the context of the review under Article 24. 2 TRIPS, the EC explained that the reciprocity
requirement applied without prejudi ce to international agreements.
15 Moreover, in the meeting of the
TRIPS Council of 16 June 2004, the EC was asked to clarify whether it applied conditions of
reciprocity and equivalence to other WTO Members. The EC provided the following response to this
question:16

EC Regulation No 2081/92 applies to geogr aphical indications relating to areas
located inside as well as outside the EC. For this purpose, the Regulation lays down
rules relating to the registration of geographical indications from outside the EC
which closely parallel the provisions app licable to geographical indications from
inside the EC. The purpose of these specifi c rules, some of which were recently
introduced by Regulation No. 692/2003, is to facilitate the registration of non-EC
geographical indications while at the same time ensuring that geographical

14 Case C-76/00 P, Petrotub, [2003] ECR I-79, para. 59 (Exhibit EC-17).
15 IP/C/W/253/Rev.1, p. 27 (Exhibit EC-18).
16 The EC's statement should be reflected in due course in the minutes of the TRIPS Council.

indications from outside the EC correspond to the definition of a geographical
indication.
As to the conditions which must be fulfille d for registration to take place, some WTO
Members have considered, on the basis of Article 12(1) of Regulation No 2081/92,
that registration of geographical indications from outside the EC is possible in only
under conditions of "reciprocity and equiva lence". However, Article 12(1) of
Regulation No. 2081/92 provides that it applies "without prejudice to international
agreements" including the TRIPs Agreemen t. Since WTO Members are obliged to
provide protection to geographical indi cations in accordance with the TRIPS
Agreement, the reciprocity and equivalence conditions mentioned in Article 12(1) of
Regulation 2081/92 do not apply to WTO Members.
In other words, the EC GI register is open to GIs from other WTO Members, and
registration of such GIs may take place on the same substantive conditions which
apply to registration of GIs from EC Member States.
40. Moreover, the EC would like to remark that this question concerns evidence regarding the
interpretation of Regulation 2081/92 as in force at th e time of establishment of the Panel. Regarding a
question of admissible evidence, the EC does not cons ider that only evidence which predates the date
of its first written submission in the present proceedi ngs is relevant. For this reason, for instance, the
statements made by the EC in the course of the Panel proceedings should also be taken into account.

Question 17

Is the EC's explanation of the availability of registration of foreign GIs under its system, set out in its
written statement to the Council for TRIPS in Se ptember 2002, (IP/C/M/37/Add.1, para. 142 and
Annex, pp. 77-85) consistent with the text of Ar ticles 12-12c of the Regulation? Why did that written
statement not qualify the position that the Regul ation's equivalence and reci procity conditions apply
to foreign GIs, if they did not apply to WTO Members, to whom the statement was addressed?

41. The EC considers that the written statement to the TRIPS Council is not incompatible with
the text of Regulation 2081/92 as in force at the time it was made or with the statements of the EC in
the present case.

42. The EC would like to remark, however, that th is statement is of limited relevance for the
present case. It was made in the context of the negotiations for the extension of protection under
Article 23 TRIPS to products other than wines and spirits. The intention of the statement was
therefore not primarily to explain the EC system for the protection of geographical indications. In
addition, the statement was made in 2002, and ther efore does not take into account the amendments
made by Regulation 692/2003.

Question 18

Did the EC member States agree with the Commission' s written statement to the Council for TRIPS in
September 2002 with respect to the conditions attached to the registration of foreign GIs? How can
the Commission ensure that the Council of Ministers will not prevent registration under the
Regulation of the name of a geographical area lo cated in a third country WTO Member because that
Member does not satisfy the equivalence and reciprocity conditions of Article 12(1)?

43. It is the European Commission which represen ts the European Communities within the WTO.
Where appropriate, the European Commission consults with the competent in stances of the Council.
The position of individual Member States is therefore of no relevance in the present proceedings.

44. Like the Commission, the Council of Ministers is bound to apply the terms of
Regulation 2081/92. Like the Commission, it is bound to give effect to the wording "without
prejudice to international agreements", and to take account of the Community's international
obligations under the WTO Agreements.

Question 19

Has a judicial authority ever ruled on the availability of protection provided by registration for third
countries under Regulation (EC) No. 2081/92? If the Commission registered the name of a
geographical area located in a third country WTO Me mber, could that registration be subject to
judicial review because the area was located in a WTO Member that did not fulfil the equivalence and
reciprocity conditions of Article 12(1) of the Regulation?

45. Community courts can only rule on an issu e when concrete cases are brought before them.
Since no request for registration has ever been ma de in respect of a geographical indication from a
third country, no judicial authority has ever had the occasion to rule on the availability of protection
provided by registration for third countries under Regulation 2081/92.

46. The registration of the name of a geographi cal indication, whether from a third country or
from within the EC, takes the form of a regula tion of the Commission. The condition under which
such a regulation can be challenged before the Europ ean Court of Justice are set out in Article 230 of
the EC Treaty, which reads as follows:

The Court of Justice shall review the legality of acts adopted jointly by the European
Parliament and the Council, of acts of the Council, of the Commission and of the
ECB, other than recommendations and opinions, and of acts of the European
Parliament intended to produce legal effects vis-à-vis third parties.
It shall for this purpose have jurisdiction in actions brought by a Member State, the
European Parliament, the Council or the Commission on grounds of lack of
competence, infringement of an essential procedural requirement, infringement of this
Treaty or of any rule of law relating to its application, or misuse of powers.
The Court of Justice shall have jurisdic tion under the same conditions in actions
brought by the Court of Auditors and by the ECB for the purpose of protecting their
prerogatives.
Any natural or legal person may, under th e same conditions, institute proceedings
against a decision addressed to that pers on or against a decision which, although in
the form of a regulation or a decision addr essed to another person, is of direct and
individual concern to the former.
The proceedings provided for in this Article shall be instituted within two months of
the publication of the measure, or of its notif ication to the plaintiff, or, in the absence
thereof, of the day on which it came to the knowledge of the latter, as the case may
be.
47. The question of the validity of EC regulati ons may also become an issue in proceedings
before the courts of the Member States. According to Article 234 of the EC Treaty, national courts are
obliged to refer questions concerning the validity of EC regulations to the European Court of Justice
for a preliminary ruling. Such preliminary ruli ngs are legally binding upon the national courts.
Article 234 of the EC Treaty provides:

The Court of Justice shall have jurisdiction to give preliminary rulings concerning:
(a) the interpretation of this Treaty;
(b) the validity and interpretation of act s of the institutions of the Community
and of the [European Central Bank];
(c) the interpretation of the statutes of bodies established by an act of the
Council, where those statutes so provide.
Where such a question is raised before any court or tribunal of a Member State, that
court or tribunal may, if it considers that a decision on the question is necessary to
enable it to give judgment, request the Court of Justice to give a ruling thereon.
Where any such question is raised in a case pending before a court or tribunal of a
Member State against whose decisions there is no judicial remedy under national law,
that court or tribunal shall bring the matter before the Court of Justice.
Question 20

With reference to paragraph 43 of the EC's oral st atement, does the EC contest that equivalence and
reciprocity conditions such as those under Article 12(1) and (3) of Regulation (EC) No. 2081/92, if
applied to other WTO Members, would be inconsistent with the nationa l treatment obligations in the
TRIPS Agreement and/or Article III:4 of the GATT 1994?

48. First of all, the EC considers that this ques tion may be too broad to be answered in abstract
terms. Since different things may be understood by "conditions of reciprocity and equivalence", an
answer can only be given on a case by case basis. Th is is aptly illustrated by the United States'
reference to the EC's requirement of inspecti on structures as "equivalence by another name".
17 As the
EC has already indicated during the first meeting w ith the Panel, it emphatically considers that this
requirement is not inconsistent with the national treatment obligations of the TRIPS Agreement or the
GATT.

49. As regards the specific conditions contained in Article 12(1) of Regulation 2081/92, the EC
has already confirmed that it does not apply the se to WTO Members. For this reason, the EC
considers that the question whether these conditions are inconsistent with the national treatment
obligations of the TRIPS Agreement and the GATT does not arise.

Question 21

If Switzerland, as a WTO Member, can apply for registration of its GIs under Regulation (EC)
No. 2081/92 without satisfying equivalence and reci procity conditions, what was the purpose of its
joint declaration with the EC concerning GIs set out in Exhibit US-6 and mentioned in paragraph 119
of the US first written submission and paragraphs 243-244 of the EC's first written submission?

50. The bilateral agreement envisag ed in the declaration represents an alternative approach to the
protection of geographical indications to the dir ect registration under Regulation 2081/92. Compared
to the registration on a case-by-case basis, a bila teral agreement would have the advantage that
protection of the parties' geographical indications would be obtained in one single act. Moreover,

17 Oral Statement of the US at the first substantive meeting of the Panel, para. 17.

possible controversial issues, for instance regard ing generic names, homonyms, or registrations
concerning cross-border areas, could be resolved in a non-contentious way.

51. However, the declaration is without prejudice to the possibility of applying for protection of
Swiss geographical indications under Regulation 2 081/92. Accordingly, the envisaged agreement
merely represents an alternative approach to prot ection which does not exclude direct applications
under Regulation 2081.

52. Finally, as the EC has already said in its firs t written submission, it would like to recall that
the declaration is merely a political text, and that so far no such agreement has been concluded.

Question 22

Are there any legal requirements or other provisions in EC or national laws which ensure that groups
or persons entitled to apply for registration und er Article 5 of Regulatio n (EC) No. 2081/92 are
always, or usually, EC citizens or legal persons organized under the laws of the EC or an EC member
State? What conditions have been laid down for nat ural or legal persons to be entitled to apply for
registration pursuant to Article 5(1)?

53. There are no such requirements.

54. The conditions subject to wh ich a natural or legal person shall be entitled to apply for
registration are set out in Article 1 of Commission Regulation 2037/93,
18 which reads as follows:

Applications for registration pursuant to Article 5 of Regulation (EEC) No 2081/92,
may be submitted by a natural or legal pers on not complying with the definition laid
down in the second subparagraph of paragraph 1 of that Article in exceptional, duly
substantiated cases where the person con cerned is the only producer in the
geographical area defined at the time the application is submitted.
The application may be accepted only where:
(a) the said single person engages in au thentic and unvarying local methods; and
(b) the geographical area defined possesses characteristics which differ
appreciably from those of neighbouring areas and/or the characteristics of the product
are different.
2. In the case referred to in paragraph 1, the single natural or legal person who
has submitted the application for registra tion shall be deemed to constitute a group
within the meaning of Article 5 of Regulation (EEC) No 2081/92.
55. These conditions define only the conditions under which a natural or legal person, as opposed
to a group as defined in the second subparagraph of Article 5 (1) of Regulation 2081/92, may apply
for registration. As can be seen, these conditions have nothing to do with nationality.

18 Exhibit COMP-2.

Question 23

How do you interpret the term "nationals" as used in Article 1.3, including footnote 1, and
Articles 3.1 and 4 of the TRIPS Agreement and Article 2 of the Paris Convention (1967) in relation to
this dispute? Do a Member's nationals necessarily include natural persons who are domiciled, or
legal persons who have a real and effective indus trial and commercial establishment, in that
Member?

56. As regards the definition of nationals in Article 3.1 and 4 of the TRIPS Agreement and
Article 2.1 of the Paris Convention, a distinction must be made between natural and legal persons. For
natural persons, a national is an y person who holds the nationality of the State in question in
conformity with the legislation of such state. As regards legal persons, the question of nationality
depends on the law of the state in question, which may use criteria such as the law of incorporation,
headquarters, or other criteria. The legal situ ation has been summed up by Bodenhausen in his
commentary to Article 2.1 of the Paris Convention as follows:
19

In deciding the question who are such nationa ls, account has to be taken of the fact
that the Convention can also apply to legal persons or entities , so that a distinction
must be made between the nationality of natural and legal persons, respectively.
With respect to natural persons, nationality is a quality accorded or withdrawn by the
legislation of the State whose nationalit y is claimed. Therefore it is only the
legislation of that State which can defi ne the said nationality and which must be
applied also in other countries where it is invoked.
With respect to legal persons, the question is more complicated because generally no
"nationality" as such is granted to legal pe rsons by existing legislations. Where these
legal persons are the States themselves, or State enterprises, or other bodies of public
status, it would be logical to accord to them the nationality of their country. With
regard to corporate bodies of private status, such as companies and associations, the
authorities of the countries where application of the Convention is sought will have to
decide on the criterion of "nationality" which they will employ. This "nationality" can
be made dependent upon the law according to which these legal persons have been
constituted, or upon the law of their actual headquarters, or even on other criteria.
Such law will also decide whether a legal person or entity really exists.
57. Natural persons who are merely domiciled in a St ate, but are not nationals of that state, are
not "nationals" within the meaning of the nationa l treatment provisions of the TRIPS Agreement and
the Paris Convention. Similarly, legal persons who have a real and effective industrial and
commercial establishment in a State, but do not fulfil the conditions for nationality of such state, are
not nationals of such state. Domicile and establishment can therefore not simply be equated with
"nationality" within the meaning of the national treatment provisions of the TRIPS Agreement and the
Paris Convention.

58. That nationality on the one hand, and domic ile or establishment on the other hand, are not
identical concepts also follows fro m the context of the Paris Convention. First of all, if all persons
domiciled or established in a partic ular State were its nationals, th en the separate prohibition on
conditions of domicile or establishment in Article 2. 2 of the Paris Convention would be devoid of all
useful purpose.

19 Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial
Property, p. 27-28 (1968).

59. More importantly still, Article 3 of the Paris Convention enlarges the national treatment
obligation to "nationals of countries outside the Union who are domiciled or who have real and
effective industrial or commercial establishments in the territory of one of the countries of the Union".
This provision would be completely unnecessary if all residents of a member of the Union were in any
event to be considered as its nationals, and therefore benefited from national treatment under
Article 2.1 of the Paris Convention. Article 3 of th e Paris Convention therefore clearly illustrates that
the Paris Convention, and similarly also the co rresponding provisions of the TRIPS Agreement,
regard nationality as a concept different from domicile or residence.

60. Finally, this is also illustrated by footnote 1 to Article 1.3 of the TRIPS Agreement. This
footnote defines nationals, in the case of a sep arate customs territory which is a WTO Member
, to
mean persons natural or legal w ho are domiciled or who have a real and effective industrial or
commercial establishment in that customs territo ry. This definition was necessary since separate
customs territories are not states, and therefore normally do not have "nationals". Thus, the criterion
of residence or establishment is used here as a replacement for the criterion of nationality, which
cannot apply to separate customs territories. In turn , this special definition for custom territories
would have been unnecessary had this been already the normal meaning of "nationality". Once more,
footnote 1 to Article 1.3 proves that nationality and residence or establishment are not identical
concepts under Articles 3.1 and 4 TRIPS and 2.1 Paris Convention.

Question 24

In your view, which natural or legal persons c an be considered "interested parties" in the sense of
Article 22.2 of the TRIPS Agreement? Is Article 10(2) of the Paris Convention (1967) relevant?

61. The notion of "interested parties" must be de fined in relation to the intellectual property rights
that Article 22.2 seeks to protect. Article 22.2 is included in Section 3 of Part II of the TRIPS
Agreement dealing with "Geographical Indications " and is entitled "Protection of geographical
indications". Moreover, the introductory phrase of Ar ticle 22.2 provides that the obligation set out in
that provision apply "in respect of geographi cal indications". Accordingly, for purposes of
Article 22.2, "interested parties" are those whic h can claim an interest in the protection of a
geographical indication, and not of other intellect ual property rights, such as, for example, a
conflicting trademark.

62. The definition of "interested parties" in Ar ticle 10(2) of the Paris Convention does not apply
to Article 10bis, which is the only provision of the Paris Convention referred to in Article 22.2 of the
TRIPS Agreement. Nor should Article 10bis be extra polated by way of contextual interpretation to
Article 22.2. Article 10bis is concerned with fal se "indications of source", a notion which is much
broader than that of geographical indications, as defined in Article 22.1 of the TRIPS Agreement.

63. Without prejudice to the above, the EC reca lls that Regulation 2081/92 grants to "any
legitimately concerned le gal or natural person"
20 the right to object to the registration of a
geographical indication. The EC considers that this wording is broad enough to encompass all
"interested parties", as defined in Article 10bis of the Paris Convention.

20 Cf. Article 7(4). Equivalent wording is used in Articles 12b(2) and 12d(1), which confer a right of
objection to any legal or natural person with a "legitimate interest".

Question 25

Is it appropriate to compare nationals who are int erested in GIs that refer to areas located in
different WTO Members in order to examine national treatment under the TRIPS Agreement? Why or
why not?

64. The EC is not entirely certain that it understa nds the meaning of the phrase "nationals who are
interested in GIs that refer to areas located in different WTO Members" in the present context.
However, the EC would like to recall that nationa l treatment under the TRIPS requires a comparison
as between domestic and foreign nationals
 who are otherwise in the same situation.

Question 26

If national treatment can be examined in relation to GIs in terms of the location of the geographical
area to the territory of a Member, is it appropriate to examine nati onal treatment in relation to any
other intellectual property rights in terms of an atta chment to a Member besides the nationality of the
right holder? Why or why not?

65. The EC would once again like to stress that th e term "nationality" in Articles 3.1 and 4 TRIPS
and 2.1 Paris Convention is not linked to an attachment to the territory of a Member.

66. Moreover, the EC would like to stress that the term "national" must be given a uniform
meeting regardless of which intellectual property right is concerned. It is incontestable that in
accordance with Article 22.1 TRIPS, geographical indications are characterised by a link with a
particular geographical area. However, this link, wh ich is an inherent part of the definition of a
geographical indication, provides no justification for defining the term "national" in Articles 3.1 and 4
TRIPS and 2.1 Paris Convention differently when geographical indications are concerned.

Question 29

The Japan - Alcoholic Beverages II, Korea - Al coholic Beverages and Chile - Alcoholic Beverages
disputes show that measures which are origin-neutral on their face can be inconsistent with Article III
of GATT 1994. Is Regulation (EC) No. 2081/92 also open to challenge under Article 3.1 of the TRIPS
Agreement despite its apparently national-neutral text?

67. The EC notes that the disputes Japan - Alcoholic Beverages II , Korea - Alcoholic Beverages
and Chile - Alcoholic Beverages all concerned tax measures which were found to be incompatible
with Article III:2 of the GATT.

68. The EC considers that this jurisprudence concerning the interpretation of Article III:2 of the
GATT is not relevant for the present dispute. Artic le III:2 GATT is a provision dealing specifically
with national treatment as regards internal taxes or other internal charges. As the Appellate Body has
stated in EC – Asbestos , there are important textual and struct ural differences between Articles III:2
and III:4 of the GATT. Accordingly, the Appellate Body found for instance that the term "like
products" in Article III:4 GATT could not be interprete d in the same way as the same term in the first
sentence of Article III:2 GATT.
21

69. These findings of the Appellate Body conf irm that national treatment provisions cannot
simply be assumed to have the same scope and meani ng, but must be interpreted on the basis of their
specific wording and context. If this already app lies between two paragraphs of Article III GATT,

21 Appellate Body Report, EC – Asbestos, para. 94-96.

even more caution is necessary when attempting to transpose national treatment principles from one
agreement to another.

70. As the Panel in Canada – Pharmaceutical Patents has convincingly explained, there is
therefore no general concept of discrimination which would be common to all WTO Agreements.
Rather, the meaning of each provision prescribing equal treatment must be established on the basis of
the precise legal text in issue:
22

In considering how to address these conflicti ng claims of discrimination, the Panel
recalled that various claims of discrimination, de jure and de facto, have been the
subject of legal rulings under GATT or th e WTO. These rulings have addressed the
question whether measures were in conf lict with various GATT or WTO provisions
prohibiting variously defined forms of discr imination. As the Appellate Body has
repeatedly made clear, each of these rulings has necessarily been based on the precise
legal text in issue, so that it is not possibl e to treat them as applications of a general
concept of discrimination. Given the ve ry broad range of issues that might be
involved in defining the word "discrimin ation" in Article 27.1 of the TRIPS
Agreement, the Panel decided that it would be better to defer attempting to define that
term at the outset, but instead to determin e which issues were raised by the record
before the Panel, and to define the con cept of discrimination to the extent necessary
to resolve those issues.
71. The EC would suggest that such a case-speci fic approach would also be appropriate in the
present case. In this context, the EC would not ex clude entirely that under certain circumstances,
measures which are neutral on their face may nonetheless constitute less favourable treatment of
foreign nationals. However, the EC would suggest that when considering whether Regulation 2081/92
involves discrimination as between nationals within the meaning of Article 3.1 TRIPS and 2.1 of the
Paris Convention, the Panel should also take account of the following considerations:

72. First, Article 3 TRIPS refers to nationals. This specific reference, which differs from Art III:4
GATT, must be given meaning. For this reason, it should not be argued that because a measure
involves discrimination on the basis of the origin of a good, or of domicile and establishment, it also
constitutes de facto discrimination of nationals, since such discrimination is already covered by
Article III:4 GATT, or Article 2.2 of the Paris Convention.

73. Second, the Appellate Body has held repeatedly that de facto discrimination is a notion
intended to prevent circumvention of national treatment obligations.
23 Such a risk does not exist if a
specific issue is already dealt with in other national treatment provisions, such as those of the GATT.

74. Third, the national treatment provisi ons of the TRIPS and the GATT should not
systematically overlap. The Panel must also take account the different legal context of the provisions,
which are contained in different agreements. For ex ample, the Panel would have to consider whether
Articles XX and XXIV GATT, which are available as defenses against national treatment claims
under the GATT, could also apply under the TRIPS Ag reement. This is an issue of major systemic
implications, which should be ta ken into account in the interpre tation of the national treatment
provisions of the TRIPS Agreement.

22 Panel Report, Canada - Pharmaceutical Patents, para. 7.98 (footnotes omitted).
23 Cf. Appellate Body Report, EC – Bananas III , para. 233; Appellate Body Report, Canada – Autos ,
para. 142.

Question 30

In Article 2(1) of the Paris Convention (1967) as incorporated in the TRIPS Agreement by its
Article 2.1, should the words "country of the Uni on" be read mutatis mutandis to refer to "WTO
Member"?

75. Yes.

Question 31

What is the respective scope of the national treatm ent obligations in Article 2(1) of the Paris
Convention (1967) and Article 3.1 of the TRIPS Agreement? Do they overlap?

76. The scope of the national treatment obligations in Article 2(1) of the Paris Convention (1967)
and Article 3.1 of the TRIPS Agreement must be derived from the precise wording of those
provisions. Given the closely parallel wording of th e two provisions, it appears to the EC that they
overlap to a considerable extent.

Question 33

Is there a public policy requirement specific to GI s which underlies the requirement that a group or
person must send a registration application under Regulation (EC) No. 2081/92 to the EC Member
State or authorities of a third country in which the geographical area is located, rather than directly
to the Commission?

77. The requirement that a group or person must send a registration application to the EC
Member State or authorities of a third country in which the geographical area is located reflects the
important role that Member States or third country authorities play in the registration process under
Regulation 2081/92.

78. According to Article 5 (5) of Regulation 2 081/92, the Member State shall check that the
application is justified and shall forward the app lication, including the product specification referred
to in Article 4 and other documen ts on which it has based its decision, to the Commission. In a recent
judgment, the European Court of Justice has explaine d that this role of Member States is due in
particular to the detailed knowledge of Member Stat es in respect of geographic indications relating to
their territory:
24

It follows that the decision to register a designation as a PDO or as a PGI may only be
taken by the Commission if the Member State concerned has submitted to it an
application for that purpose and that such an application may only be made if the
Member State has checked that it is justified. That system of division of powers is
attributable particularly to the fact that registration assumes that it has been verified
that a certain number of conditions have been met, which requires, to a great extent,
detailed knowledge of matters particular to the Member State concerned, matters
which the competent authorities of that State are best placed to check.
79. These same considerations are also underlyi ng the requirement in Article 12a (2) of the
Regulation, according to which the third country must verify that the requirements of the
Regulation are verified before it transmits the applic ation. Indeed, the need for an involvement of the
national authorities appears even more compelling when the application concerns a geographical
indication from a third country rather than from a Member State.

24 Case C-269/99, Karl Kühne, [2001] ECR I-9517, para. 53 (Exhibit EC-19).

80. First, the evaluation of whether a name fulf ils the conditions for protection as a geographical
indication requires familiarity with a host of geogr aphical, natural, climatic and cultural factors
specific to the geographical area in question. More over, knowledge of the market conditions in the
country of origin may also be required, e.g. in order to establish whether the product in question has a
particular reputation. Like in the case of applications from Member State, it is the third country's
authorities which are best placed to evaluate such factors. In contrast, the European Commission is
less likely to be familiar with such factors than in the case of an ar ea in a Member State. Moreover,
the evaluation may also require knowledge of the lan guage of the third country in question, which the
authorities of the European Community may not have.

81. Second, the evaluation of the application may require the assessment of legal questions
arising under the law of the country where the area is located. In particular, Article 12a of the
Regulation requires the application to be accompanie d by a description of the legal provisions and the
usage on the basis of which the geographical indication is protected or established in the third country.
The Commission cannot unilaterally resolve such i ssues pertaining to the law of a third country,
which therefore necessarily require the implication of the authorities of the third country.

82. Third, the involvement of the third country government appears called for also out of respect
for the sovereignty of the third country. The assessment of whether an application meets the
requirements of the Regulation, in particular con cerning the link with the geographical area, requires
in-depth knowledge of the conditions related to this area, as well as the possibility to verify on the
spot the relevant claims made in the applica tion. It would not be possible for the European
Commission to carry out such inspections on the territory of the third country without the agreement
or involvement of the third country.

83. Fourth, the involvement of the third country government also facilitates the cooperation of the
authorities of the Community and of the third country throughout the registration process. If doubts or
question arise during the registration process, the European Commission may need a contact point in
the third country to which it can address itself. Moreover, the Regulation foresees that the third
country which has transmitted the application must be consulted at certain stages of the procedure
before the Commission can take a decision (cf. Articles 12b [1] [b]; 12b [3]).

84. Fifth, the involvement of the third country authorities should also be beneficial to the
applicant. Regulation 2081/92 effectively enables th e applicant to discuss, prepare, file, and where
necessary refine and amend his application directly with the authorities where the geographical area is
located. Since these authorities are mo re familiar with the area in question, this should help speed up
the registration process. Moreover, frequently thes e authorities may be geographically closer to the
applicant and may speak the applicant's language, which may also be a further benefit to the applicant.

Question 34

Is there a public policy requirement specific to GI s which underlies the requirement that a person
wishing to object to a registration under Regulation (EC) No. 2081/92 must send an objection to the
EC Member State or authorities of a third country in which he resides or is established, rather than
directly to the Commission?

85. Article 12d(1) requires any natural or legal pers on that has a legitimate interest and is from a
WTO Member Country to transmit a duly substantiate d statement to the country in which it resides or
is established, which shall transmit it to the Commission.

86. It is to be noted that under this provision, the third country is not required to verify the
admissibility of the objection on the basis of the criter ia laid down in Article 7(4) of the Regulation.

Accordingly, the transmission of such applications does not require the same degree of verification as
the transmission of applications for registration, a nd should therefore not be particularly burdensome
for third countries.

87. Despite this somewhat less important role of third countries in the transmission of statements
of objection, some degree of involvement of the th ird country government remains necessary. First, it
is necessary to verify whether the person objecting is indeed resident or established in the third
country, which is only possible for the authorities of that country. Second, it is not excluded that in the
further procedure, questions relating to the territory of the third country might arise, in which case it is
useful for there to be an official contact point in the third country. Third, it should also be beneficial to
the person making the objection to be able to deal dir ectly with an authority in the country where it is
resident or established. Finally, if a statement of objection is admissible, Article 12d (3) provides that
the third country which has transmitted the statemen t of objection is to be consulted before the
Commission takes its decision.

Question 35

Has an objection to the registration of a name u nder Regulation (EC) No. 2081/92 ever been filed by
a person from a third country? If so, what happened?

88. No.

Question 37

Please indicate examples of other international a rrangements, such as the Madrid Protocol, under
which national governments cooperate by acting as agents or intermediaries in the protection of
private rights. Which of these arrangements are established under international treaties and which
under the legislation of one of the parties to the arrangement? Which are relevant to the matter
before the Panel?

89. There are a large number of examples in in ternational law and prac tice in which national
governments cooperate by acting as agents or intermed iaries in the protection of private rights. Given
the limited time available, the EC will limit itself to providing some examples drawn from a number
of different sectors.

90. As referred to by the Panel, a first example is already provided by Article 2 (2) of the Protocol
to the Madrid Agreement concerning the internati onal registration of trademarks (Exhibit EC-20),
which reads as follows:

The application for international registra tion (hereinafter referred to as "the
international application") shall be filed with the International Bureau through the
intermediary of the Office with which the b asic application was filed or by which the
basic registration was made (hereinafter refe rred to as "the Office of origin"), as the
case may be.
91. Similar examples where the protection of an intellectual property right requires action of the
home country of the right holder can also be fou nd in other agreements. For instance, Article 6
quinquies A (1) of the Paris Convention provides th at Members of the Union may require, before
registering a trademark duly registered in the count ry of origin, a certificate of registration in the
country of origin, issued by the competent authority.

92. Similarly, Article 5(1) of the Lisbon Agreem ent for the Protection of Appellations of Origin
(Exhibit EC-21) provides that applications for the registration of appellations of origin must be
requested by the offices of the countries of the Special Union:

The registration of appellations of origin sha ll be effected at the International Bureau,
at the request of the Offices of the countries of the Special Union, in the name of any
natural persons or legal entities, public or private, having, according to their national
legislation, a right to use such appellations.
93. Such examples for requirements for coopera tion between governmental authorities can also
be found outside the area of intellectual propert y protection. For instance, the Specific Annex on
Origin to the International Convention on the Simplification and Harmonisation of Customs
Procedures (Kyoto Convention) provides that in certa in cases, a certificate of origin issued by the
competent authorities of the country of origin may be required.
25 Moreover, the Specific Annex also
provides that in certain cases, the customs aut horities of the importing party may request the
competent authorities of the party where the certifi cate of origin has been established to carry out
controls.26

94. Further examples can be found in the field of technical standards and conformity assessment.
For instance, the EC has concluded mutual rec ognition agreements with both the United States and
Australia. Under these agreements, the parties mu tually recognize the results of conformity
assessment carried out by conformity assessment bodies recognized under the agreement. Each party
designates its conformity assessment bodies to be recognized under the agreement.
27 Moreover, each
party remains responsible for monitoring the conformity assessment bodies which it has designated.28

95. Similar arrangements can be found in the field of transport. According to Article 31 of the
Chicago Convention on International Civil Aviatio n (Exhibit EC-25), every aircraft engaged in
international navigation shall be provided with a certificate of airworthiness issued or rendered valid
by the State in which it is registered. Similarly, according to Article 32 of the Chicago Convention,
the pilot of every aircraft and the other members of the crew of every aircraft engaged in international
civil aviation shall be provided with certificates of competency and licences issued or rendered valid
by the State in which the aircraft is registered.

96. Another example can be drawn from the field of fisheries. In accordance with Article 62 of
the UN Convention on the Law of the Sea, bilateral agreements may give other states access to fishing
resources in the exclusive economic zone of a coastal state. However, the applications for fishing
licenses must usually be transmitted by the authorities of the fishing state to those of the coastal state.
By way of example, reference can be made to the Annex of the bilateral fisheries agreement between
the European Community and Mozambique (Exhibit EC-26), which provides the following:

The procedure to be followed in appl ying for and issuing licences authorising
Community vessels to fish in Mozambican waters shall be as follows:
(a) for each vessel, the European Commission, acting via its representative in
Mozambique and through the agency of its delegation in that country, shall submit to
the Mozambican authorities a licence a pplication drawn up by the vessel owner

25 Specific Annex K to the Kyoto Convention, pts. 2 to 5, 9-12 (Exhibit EC-22).
26 Appendix III to Specific Annex K to the Kyoto Convention, pt. 3 (Exhibit EC-22).
27 Cf. Article 7 of the Agreement with the United St ates (Exhibit EC-23); Article 5 of the Agreement
with Australia (Exhibit EC-24).
28 Cf. Article 10 of the Agreement with the United St ates (Exhibit EC-23); cf. also Article 8 of the
Agreement with Australia (Exhibit EC-24).

wishing to carry on fishing activities under this Agreement; the application shall be
submitted no later than 25 days before th e start of the validity period mentioned
therein. Applications shall be made us ing the forms provided for this purpose by
Mozambique, specimens of which are give n in Appendix 1 for tuna seiners and
longliners, and in Appendices 1 and 2 fo r freezer bottom trawlers. They shall be
accompanied by proof of payment of the advance payable by the vessel owner;
97. Finally, examples can also be found in the field of judicial cooperation in civil and
commercial matters. For instance, Article 3 of the Hague Convention on the Service Abroad of
Judicial and Extrajudicial Documents in Civil or Commercial Matters (Exhibit EC-27) provides as
follows:

The authority or judicial officer competen t under the law of the State in which the
documents originate shall forward to the Ce ntral Authority of the State addressed a
request conforming to the model annexed to the present Convention, without any
requirement of legalisation or other equivalent formality.
98. Finally, the EC would like to recall that it is a common feature of customary international law
that states act on behalf of their nationals and their rights and interest . This is most clearly recognized
in the institution of diplomatic protection, on the b asis of which states may raise claims against other
states on the basis of injury suffered by the national of the claiming state.29

99. That fact that most of the examples above are drawn from international agreements does not
diminish their relevance for the present case. Rather , these examples illustrate that in an increasingly
interdependent world, the effective protection of i ndividual rights in cross-border situations inevitable
engenders a need for cross-border cooperation.

100. The EC considers that the examples quoted above are merely a fraction of the cases where
intergovernmental cooperation occurs in the cross- border protection of individual rights. The EC
reserves the right to elaborate further on this questi on in the later stages of the procedure. However, at
this stage, the EC would like to remark that th e Panel should be mindful that the claims of the
complainants may have implications that go far beyond the present case.

Question 39

Does an EC member State participate in decision-making on a proposed registration either in the
Committee established under Article 15 of Regula tion (EC) No. 2081/92 or in the Council of
Ministers, where that EC member State transm itted the application or an objection to it to the
Commission? Is the EC member State identified with the applicant or person raising the objection in
any way? Are there any limits on the participation of the EC member State - for instance, can it
object to an application which it transmitted?

101. The Committee assisting the Commission in accordance with Article 15(1) of
Regulation 2081/92 is composed of representatives of all Member States. This includes also the
Member State which has transmitted the application or the statement of objection.

102. As the EC has already explai ned in its first written submission,
30 the constitution of regulatory
committees is a typical modality under which the Counc il of Ministers delegates regulatory powers to

29 Cf. Diplomatic Protection of Foreign Nationals, in: Encyclopaedia of Public International Law,
Vol. 1, p. 1067 (1992).
30 EC, FWS, paras. 79 to 83.

the European Commission. Regulatory committees such as the one foreseen in Article 15(1) of
Regulation 2081/92 are therefore an integral part of the Community's constitutional system.

103. When fulfilling their functions under Regula tion 2081/92, a Member State is in no way
identified with the applicant or the person raising the objection. In verifying the applications or
statements of objection, the Member State must co rrectly, impartially and objectively apply the terms
of the Regulation. Similarly, when exercising its role in the Committee, the Member States must be
guided by the terms of the Regulation, and not act as a representative of any individual applicant or
objecting person.

104. It should be noted that already when examining the admissibility of an application, the
Member State must take into account all objections from within its own country, and resolve these
before transmitting the application. The situation e nvisaged in the last sente nce of the question can
therefore not occur. This has been clarified in a recent judgment of the European Court of Justice:
31

In this connection, it should be observed that it follows from the wording and the
scheme of Article 7 of Regulation No 2081/92 that a statement of objection to a
registration cannot come from the Memb er State which has applied for the
registration and that the objection procedure established by Article 7 of that
regulation is not therefore intended to settle disputes between the competent authority
of the Member State which has applied for registration of a designation and a natural
or legal person resident or established in that Member State.
Question 40

How many applications to register names under Regulation (EC) No. 2081/92 have been considered
by the Committee established under Article 15 of the Regulation or the Council of Ministers?

105. Under the simplified procedure foreseen in Article 17 of Regulation 2081/92 as applicable
until its amendment through Regula tion 692/2003, the consultation of the Committee was required in
all cases. A number of these applications were also, for various reasons, referred to the Council.

106. As regards the normal procedure, out of 171 ap plications, only a small number (10) have been
considered by the Committee. Non of these cases was referred to the Council.

107. For the convenience of the Panel, the EC subm its as Exhibit EC-28 a table which sets out in
more detail the different cases of consultation of the Committee and referral to the Council.

Question 41

In paragraph 137 of your first written submission, you indicate t hat the term "such names" in the
second sub-paragraph of Article 12(2) of Regulation (EC) No. 2081/92 is a reference to the first sub-
paragraph of Article 12(2), and that th is means that the requirement to indicate the country of origin
applies where "a protected name of a third country is identical to a Community protected name".
Please clarify the meaning of the following terms, as used in Article 12(2) of Regulation (EC)
No. 2081/92:

 (a) what is the meaning of the term "prot ected" in the phrase "a protected name of a
third country"?

31 Case C-269/99, Karl Kühne, [2001] ECR I-9517, para. 55 (Exhibit EC-19).

108. Both in "protected name of a third country" and in "Community protected name", "protected"
in principle means "protected under Regulation 2081 /92". However, the provision also applies where
protection under Regulation 2081/92 is sought for a protected name from a third country.

 (b) does the phrase "a Community protect ed name" cover both names of geographical
areas located in the EC as well as in third countries, registered under the
Regulation?

109. No. "Community protected name" covers onl y protected names of areas located in the EC.

 (c) does the requirement to indicate the c ountry of origin apply also where a name of a
geographical area located in the EC is identical to a Community protected name
(irrespective of whether this Community protected name is the name of a
geographical area located in the EC or in a third country).

110. No. "Community protected name" covers only protected names of areas located in the EC.
Moreover, the provision applies only to protected names.

Question 42

If Article 12(2) of Regulation (EC) No. 2081/92 applies to the registration of a name of a
geographical area located in the EC that is identical to a name, already registered in the EC, of an
area located in a third country, what is the differen ce in its scope compared to Article 6(6) of the
Regulation? Why is it necessary to cover this situation in both provisions?

111. Article 12(2) is a specific provision dealing with certain cases of conflicts between
homonyms which may arise between Community and thir d country protected names. Article 6(6) is a
more general provision dealing with a wider set of conflicts, and notably conflicts between homonyms
from within the Community, but including also conflicts involving third country names not yet
resolved by Article 12(2), for instance between nam es from within the same third country, or between
third countries.

Question 43

Where does Regulation (EC) No. 2081/92 provide for the registration of a name of a geographical
area located in a third country WTO Member whic h is a homonym of an alre ady registered name?
Where does it provide for the registration of a nam e which is a homonym of an already registered
name of a geographical area located in a third country WTO Member?

112. As regards the first question, if the already registered name is a name from the Community,
this situation would be covered by Article 12(2) of Regulation 2081/92. As regards the second
question, if the name to be registered is from th e Community, this situation would equally be covered
by Article 12(2).

Question 44

Can the EC provide the Panel with any official st atement predating its first written submission that
Article 12(2) of Regulation (EC) No. 2081/92 applie s to names of geographical areas located in the
EC and that Article 12(2) will be applied on the basis of the date of registration?

113. No. The EC would like to remark that sin ce there have been no cases of application of
Article 12(2) so far, the EC has not felt a need to make official statements as regards the application
of this provision.

Question 45

With respect to paragraph 135 of the EC's first written submission, could the Council of Ministers
prevent a registration because the Commission applie d Article 12(2) to names of geographical areas
located in the EC on the basis of the date of registration?

114. No. As the Commission, the Council is bound by law to apply the terms of
Regulation 2081/92.

Question 46

Has a judicial authority ever ruled on the applic ability of Article 12(2) of Regulation (EC)
No. 2081/92? If the Commission applied Article 12(2) to the name of a geographical area located in
the EC on the basis of the date of registration, coul d that action be subject to judicial review due to
the fact that the area was located in the EC?

115. Since Article 12(2) has never been applied, no judicial authority has ever had the occasion to
interpret this provision.

116. Any Commission decision regarding the regist ration of a geographical indication can be the
subject of judicial review under the conditions to which the EC has referred in its response to
Question 19.
32

Question 49

Do you seek separate rulings on the procedural aspects of Regulation (EC) No. 2081/92 or a ruling
on the Regulation as a whole? For example, shoul d the provision in Article 12(2) be examined in
isolation, or would it be appropr iate to adopt an approach like the Panel in Korea – Beef, which only
examined a display sign requirement within its findings related to a system as a whole?

117. In accordance with Article 3.7 of the DSU, th e purpose of the present proceedings is to secure
a positive solution to the dispute. In the view of the EC, securing a positive solution to the dispute
requires the Panel to address all the claims which have been raised by the co mplainants with respect
to particular aspects of Regulation 2081/92.

118. Moreover, Article 19.1 of the DSU provides th at where a Panel concludes that a measure is
inconsistent with a covered agreement, it sha ll recommend the Member concerned to bring the
measure in conformity. The Panel's recommendations are the basis for implementation in accordance
with Article 21 of the DSU. In order to enable the Member to properly implement the Panel's
recommendations, it is therefore essential that a Panel's recommendation be as specific and clear as
possible.

119. For this reason, if the Panel came to the conclusion that certain aspects of Regulation 2081/92
are inconsistent with a covered agreement, it w ould be necessary that these aspects be specifically
identified in the Panel's conclusions and recomme ndations in order to enable the EC to duly
implement the report.

32 Above para. 46 et seq.

Question 50

In paragraph 451 of its first written submission, the EC argues that labels which address the
geographical origin of a product cannot be considered a technical regulation under the TBT
Agreement, since they do not apply to a "product, process or production method". Why in the EC's
view is the geographical origin of a product not rel ated to that product or its process or production
method? Does the coverage of the TBT Agreement with respect to labels depend on the content of the
labels?

120. First of all, the EC would like to recall that Article 12(2) is not a labelling requirement, but
merely sets out the conditions under which geographical indications can be registered in the case of
homonymous protected names from the EC and from a third country.

121. Second, it is clear that the origin of a product is not a "process or production method". The
question can therefore only be whether the indi cation of the country of origin is a labelling
requirement as it relates to a product. However, it see ms to the EC that the origin of a product is
different from the product itself.

122. Of course, the origin of a product may confer specific characteristics or a reputation on it,
which may entitle it for protection as a geographical indication. However, these issues are already
covered in the TRIPS, and do therefore not need to be addressed by the TBT Agreement. Moreover,
as the EC has already remarked, the question of or igin marking is already covered by the special
disciplines of Article IX GATT.
33

Question 51

How should the term "like products" be interpreted under Article 2.1 of the TBT Agreement? If the
labelling requirement in Article 12(2) of Regulation (EC) No. 2081/92 applies to situations where
identical names arise between imported products and EC products, but does not apply to situations
where identical names arise between two EC products , to what extent would this be a distinction
between "like situations" rather than a distinction between "like products"?

123. The EC agrees that Article 2.1 TBT Agre ement requires a comparison between like products,
not between "like situations". In the view of the EC, Australia has not shown that homonymous
products from within the EC covered by Article 6 (6 ) of the Regulation would in any sense be "like" a
third country product which is covere d by Article 12(2) of the Regulation. Accordingly, Australia has
failed to establish any claim under Article 2.1 TBT Agreement.

124. Moreover, the EC considers that under Australia 's argument, the two situations are not even
like. In fact, the comparable situation to two homonymous EC GIs protected under
Regulation 2081/92 would be that of two homonym ous Australian GI's protected under Australian
law. This is obviously not a situation which can give rise to discrimination between Australian and EC
products. In fact, as the EC has already stated, it does not understand how Australian products could
be affected by the way in which conflicts between homonymous names from within the EC are
resolved.

125. Since Australia has in any case failed to establish a case under Article 2.1 TBT Agreement,
the EC considers that the Panel does not need to resolve the meaning of the expression "like products"
in Article 2.1 TBT Agreement. As the EC has alread y said in its first written submission, this is an
issue of considerable legal complexity, which coul d not be resolved simply through transposition of

33 EC FWS, paras. 450-451.

jurisprudence on Article III:4 GATT, but rather would also have to take the structural differences
between the TBT Agreement and the GATT into account.
34

Question 54

Article 12(2) of Regulation (EC) No. 2081/92 is desi gned to avoid "practical risks of confusion".
How would the application of the country of origin label on the basis of a product's date of
registration help avoid those risks of confusion?

126. Typically, the geographical indication which is registered first will have been marketed under
that name longer, and will therefore already be known by consumers. Inversely, the geographical
indication which is registered later will have been used less long, and will be less known by
consumers. It is therefore in line with consumer expectations to require appropriate labelling for the
indication registered later. This solution also take s into account the fact that the older geographical
indication is already registered, and that the term s of its protection can therefore no longer easily be
amended.

Question 55

Does the TRIPS Agreement apply as lex specialis as regards GATT 1994 and the TBT Agreement,
with respect to a practical condition to differentiate homonymous or identical GIs on a label? Please
comment in the light of Article 23.3 of the TRIPS Agreement, which is applicable to homonymous GIs
for wines, and the national treatment obligation, which is applicable to GIs for other products.

127. The EC would agree that Article 23.3 TRIPS must be considered as a lex specialis with
respect to the practical conditions to differentiate homonymous or identical GIs on a label. Under this
provision, the practical conditions for differentiati on of homonymous indicatio ns will be determined
by each Member, taking into account the need to ensure equitable treatment of the producers
concerned and that consumers are not misled. This constitutes an exhaustive set of disciplines for this
issue, which exclude the application of the nati onal treatment provisions of the GATT and the TBT
Agreement.

128. It is noteworthy that the TRIPS Agreement does not contain a corresponding provision for
homonymous geographical indications for products other than wines. Therefore Members must decide
whether and how to accord protection to homonymou s geographical indications on the basis of the
general provisions of Section 3, and notably of Ar ticle 22.4 of the TRIPS Agreement. This indicates
that Member enjoy a greater degree of discretion as to how to resolve conflicts between homonyms
for products other than wines. This further confirms the view of the EC that the national treatment
provisions of the GATT, the TRIPS and the TBT Agreement should not be held to apply to
Article 2(2) of Regulation 2081/92.

Question 57

Does the EC consider that it may apply equivale nce and reciprocity conditions to WTO Members
under Article 12a(2) or any other provision of Re gulation (EC) No. 2081/92, even if Article 12(1)
does not apply to them?

129. No. The EC merely requires that the c onditions of Regulation 2081/92 regarding product
specifications and inspections are met as regards the specific product for which protection is sought.

34 EC FWS, para. 474.

Question 59

Under what circumstances would the Commission consider the holder of a GI certification mark
registered in another WTO Member to meet th e requirements for inspection structures under
Article 10 of Regulation (EC) 2081/92 (read together with Article 12a of that Regulation)?

130. The EC understands that the question of th e Panel relates to a certification mark which
protects the use of a name which would qualify for protection as a geographical indication under
Regulation 2081/92.

131. Any inspection structure must comply with the conditions set out in Article 10 of
Regulation 2081/92. According to Article 10 (2) of Regulation 2081/92, the inspection structures must
offer adequate guarantees of objectiv ity and impartiality with regard to all producers or processors
subject to their control. The answer to the ques tion would therefore depend on how the holder of the
certification mark is related to the producers or pr ocessors in question. If the holder is not itself a
producer or processor, and is independent of them, then it would not seem excluded that it could also
function as an inspection structure. Otherwise, it would be necessary to establish an independent
inspection structure which offers the necessary guarantees of independence and impartiality.

Question 60

Australia argues that the EC's inspection structures requirements are a technical regulation under the
TBT Agreement (paragraphs 209-224 of its first written submission). Is there a dividing line lies
under the TBT Agreement between a technical regulati on and a conformity assessment procedure? If
so, where does it lie?

132. In the view of the EC, the dividing line follows clearly from the definitions in points 1 and 3
of Annex 1 to the TBT Agreement. According to point 1 of Annex 1, a technical regulation "lays
down product characteristics". According to point 3, a conformity assessment procedure ensures that
"relevant requirements in technical regulations [...] are fulfilled".

133. In other words, technical regulation set down product characteristics in general and abstract
terms. Conformity assessment procedures verify th e compliance of concrete products with such
requirements. In yet other words, the difference is the one between abstract regulation and the
enforcement of regulations in concrete cases.

134. In accordance with Article 10(1) of Regulati on 2081/92, inspection structures ensure that
agricultural products and foodstuffs bearing a protect ed name meet the requirements laid down in the
specifications. In other words, in spection procedures ensure the compliance of concrete products with
the abstract specifications. On the basis of the defi nitions set out above, there should therefore be no
doubt that the requirements regarding inspectio n structures concern a conformity assessment
procedure.

Question 61

If the inspection structures are conformity assess ment procedures, are the eligibility criteria for
registration under Regulation (EC) No. 2081/92, agai nst which conformity is assessed, technical
regulations?

135. As a preliminary point, the EC would like to remark that the only claim which Australia has
raised with respect to the eligibility criteria for registration under Re gulation 2081/92 concerns
Article 12(2), i.e. the provision regarding homon ymous protected names from the EC and third

countries. The Panel does therefore not need to th e address the question of whether other eligibility
criteria contained in the Regulation might constitute technical regulations.

136. Furthermore, the EC notes that it is wrong to suggest that "conformity is assessed against" the
eligibility criteria for registration. The existen ce of inspection structures constitutes a condition for
registration. Accordingly, inspection structures do not ensure that the criteria for the eligibility of
registration are met; they ensure that concrete pr oducts bearing a protected name comply with the
product specifications.

137. In reality, the eligibility criteria for registra tion have nothing to do with technical regulations.
They do not lay down characteristics for specific pr oducts, but apply for all geographical indications
for which protection is sought under the Regulation. Accordingly, the Regulation, and in particular its
eligibility criteria for registration, do no lay dow n product characteristics. Rather, they require the
definition of product specifications as part of the application process. However, "requiring the
definition of product characteristics" (by the appli cant) is not the same thing as "laying down product
characteristics".

138. Quite remarkably, Australia has character ised Regulation 2081/92 as "establishing a process
related to product characteristics".
35 However, as the EC has already had the occasion to remark at the
first meeting with the Panel, a measure "establishing a process related to product characteristics" is
not the same thing as a measure actually laying down product characteristics.

139. Are the very most, the question could ther efore be asked whether the individual product
specifications for specific protected names constitute technical regulations. However, the EC notes
that Australia has made no claims with respect to any particular specifications, and that this issue is
therefore outside the terms of reference of the Panel.

Question 63

What does Article 14(2) of Regulation (EC) No. 2081/92 mean where it provides that a prior
trademark "may continue to be used"?

140. Article 14(2) of Regulation 2081/92 is an ex ception to Article 13(1) of the same regulation,
which provides that registered geographical indicati ons shall be protected against certain practices,
including certain uses of trademarks. Article 14(2) al lows trademark owners to continue to use their
trademarks in relation to goods which do not comp ly with the requirements of the geographical
indication, in circumstances where such use would be prohibited by Article 13(1).

Can a trademark owner invoke the rights conferred by the trademark registration against the user of
a GI used in accordance with its GI registration?

141. Article 14(2) of Regulation 2081/92 does not conf er to a trademark owner the right to prevent
the use of the name, as such, that has been register ed as a geographical indication by the right holders
of such indication. That would render meaningless the registration of that name as a geographical
indication and the protection attached to such registration by Article 13(1).

142. On the other hand, and contrary to what is erroneously assumed by the United States
36, a
trademark owner may use its trademark rights in orde r to prevent the right holders of a geographical
indication from using confusingly any other names or other signs (e.g. graphic signs) in conjunction
with, or in place of, the name registered as a ge ographical indication, which are not covered by such

35 Oral Statement by Australia at the First Panel hearing, para. 43.
36 US Oral Statement paras. 54-55.

registration. In other words, the right holders of a geographical indication only have a positive right to
use the name registered as a geographical indicati on. That right does not extend to other names or
signs which have been not been registered. If the use of such unregistered names or signs leads to
likelihood of confusion with the same or a similar sign which is the subject of a valid trademark it
may be prevented by the owner of that trademark.

143. Furthermore, while the right holders of a ge ographical indication have a positive right to use
the registered name, this does not mean that they are allowed to use it in any possible manner. As
explained37, the name registered as a geographical indi cation must be used in accordance with the
generally applicable provisions of Directive 2000/ 13 on the labelling, presenta tion and advertising of
foodstuffs38 and of Directive 84/450 on misleading advertising 39, as well as with the unfair
competition laws of the Member States.40

Question 64

Does Article 14(2) of Regulation (EC) No. 2081/92 im plement the provision in Article 24.5 of the
TRIPS Agreement that measures adopted to im plement the Section on GIs shall not prejudice
"eligibility for or validity of the registration of a trademark, or the right to use a trademark" or does it
only implement the provision that such measures shall not prejudice "the right to use a trademark"?

144. As explained in the EC's First Written Submission (paragraph 302), Article 14(1) of
Regulation 2081/92 maintains the eligibility of the a pplications and the validity of the registrations
grandfathered by Article 24.5 of the TRIPS Agreem ent, while Article 14(2) preserves the right of the
owners of grandfathered trademarks to continue to use their trademarks concurrently with a registered
geographical indication.

Question 65

Does the scope of Article 14(2) of Regulation (E C) No. 2081/92, as drafted, include trademarks
applied for or registered, or to which rights have been acquired, subsequent to both dates set out in
Article 24.5(a) and (b) of the TRIPS Agreement?

145. This question does not appear to be relevant to resolve the issues before the Panel, since the
complainants have not made any claim to the effect that the temporal criteria laid down in

37 EC's First Submission, para. 319. See also the re sponses of the EC and its Member States to the
review under Article 24.2 of the TRIPS Agreement contained in document IP/C/W/117/Add10 (Exhibit EC-29).
38 Exhibit EC-30. See in particular Article 2.1, which provides that

The labelling and methods used must not: (a) be such as could mislead the purchaser to a material
degree, particularly: (i) as to the characteristics of the foodstuff and, in particular, as to its … origin or
provenance …

39 Exhibit EC-31. Article 2.2 of the Directive defines "misleading advertising" as

"any advertising which in any way, including presentation, deceives or is likely to deceive the person to
whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely yoto
affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor".

Article 3 provides that in determining whether advertising is misleading account shall be taken inter alia of
information concerning the geographic or commercial origin of the goods and of the rights of the advertiser,
including ownership of commercial, industrial and intellectual property rights.
40 References to the relevant laws of the Member States are found in their responses to the review under
Article 24.2 of the TRIPS Agreement. (Exhibit EC-29)

Article 14(2) of Regulation 2081/92 would be somehow inconsistent with those of Article 24.5 of the
TRIPS Agreement. Were the complainants to raise an y such claim at this stage of the proceedings, it
would have to be considered outside the terms of reference of the Panel.

146. In any event, Article 14(2) is fully consiste nt with Article 24.5 of the TRIPS Agreement. Any
trademark applied for, or established by use, before 1 January 1996, but after the date of application
for a registered geographical indication, could not be deemed to have been so "in good faith".

147. Furthermore, the complainants have not allege d, let alone proved, that the registration of any
of the geographical indications that were applied fo r before 1 January 1996, which constitute a closed
category, has resulted or will result in a likelihood of confusion with any of the trademarks that were
applied for, registered, or established by use be fore 1 January 1996, but after the date of the
application for the geographical indication, which also constitute a closed category.

Question 66

Has Article 14(2) of Regulation (EC) No. 2081/92 ever been applied in a specific case? For example,
what did the national courts finally decide in th e Gorgonzola case, referred to in Exhibit US-17 and
in footnote 140 to paragraph 163 of the US first wr itten submission, after the order of the European
Court of Justice?

148. Article 14(2) of Regulation 2081/92 does not have to be "applied" by the registering
authorities. Rather, it sets out the legal consequen ces that follow from a decision providing for the
registration of a proposed geographical indication.

149. The "Cambozola"
41 case mentioned in the question rema ins so far the only instance where
Article 14(2) has been interpreted by the European Court of Justice. In essence, the issues in dispute
in that case were whether the use of the trademark "C ambozola" fell within one of the situations listed
under Article 13(1) and, if so, whether the conditio ns laid down in Article 14(2) for allowing the
continued use of that trademark were met.

150. The European Court of Justice concluded that the use of the trademark "Cambozola" might be
deemed to evoke the registered geographical indica tion "Gorgonzola" and, therefore, fall within the
scope of Article 13(1)(b), even if the true origin was indicated in the package. As regards the question
of whether the trademark "Cambozola" could continue to be used in accordance with Article 14(2) the
Court ruled that

… It is for the national court to decide wh ether, on the facts, the conditions laid down
in Article 14(2) of Regulation No 2081/ 92 allow use of an earlier trademark to
continue notwithstanding the registration of the protected designation of origin
'Gorgonzola', having regard in pa rticular to the law in force at the time of registration
of the trade mark, in order to determine whether such registration could have been
made in good faith, on the basis that use of a name such as 'Cambozola' does not, per
se, constitute an attempt to deceive the consumer.
151. Following the Judgement of the European Court of Justice, the Supreme Court of Austria
ruled that the trademark "Cambozola" had been regi stered in good faith and was not affected by any

41 Judgement of the European Court of Justice of 4 March 1999, Case C- 87/97, Consorzio per la
tutela del Fromaggio Gorgonzola v. Kaeserai Champignon Hofmeister GmbH & Co. KG, Eduard Bracharz
GMbH. (Exhibit EC-32).

ground of invalidity a nd, therefore, in accordance with Artic le 14(2), could continue to be used
concurrently with the registered geographical indication "Gorgonzola".42

152. The EC Commission is not aware of any other d ecisions of the courts of the Member States
where Article 14(2) has been interpreted.

Question 67

Does Article 14(3) of Regulation (EC) No. 2081/92 af fect the possibility of coexistence of GIs already
on the register with prior trademarks, such as Gorgonzola? In these cases, is Article 14(3) relevant
to the applicability of Article 14(2)?

153. Article 14(3) remains relevant even afte r a geographical indication has been formally
registered. The owner of a concurrent trademark (e.g. "Cambozola") could challenge before the courts
the decision to register the geographical indication by claiming that the decision is inconsistent with
Article 14(3).

Question 68

Article 14(3) of Regulation (EC) No. 2081/92 mentio ns certain criteria. If these are not exhaustive,
why does is it not expressly stated as in Articles 3(1), 4(2) and 6(6) of the Regulation?

154. At the outset, it is useful to recall the wo rding of Article 14(3) of Regulation 2081/92:

A designation of origin or geographical indication shall not be registered where, in
the light of trade mark's reputation and renown and the length of time it has been
used, registration is liable to mislead the consumer as to the true origin of the product.
155. Thus, contrary to what has been claimed by the complainants, Article 14(3) does not say that
the registering authority shall refuse the registration of a geographical indication only if it gives rise to
a likelihood of confusion with a trademark which is famous and has been used for a long period of
time. Rather, Article 14(3) says that the registration of a geographical indication shall be refused if it
is likely to lead to confusion with a trademark, "in light of" the trademark's reputation and renown and
the length of time that it has been used.

156. In other words, the length of use and reput ation/renown of the trademark are not separate
"requirements"
43, additional to the likelihood of confusion, for the application of Article 14(3). Rather,
they are criteria for establishing the existence of a likelihood of confusion. From the fact that the
Commission must consider those two criteria when assessing the likelihood of confusion, it does not
follow a contrario that it cannot consider also other criteria. Indeed, as explained below, in practice it
would be impossible to evaluate the likelihood of confusion on the basis of only those two criteria.

157. As explained
44, Article 14(3) directs expressly the registering authority to consider the length
of use and the reputation and renow n of earlier trademarks because those criteria will generally be
decisive in order to establish the likelihood of conf usion, given that geographical names are primarily
non-distinctive, and not because only the likelihood of confusion with famous marks that have been
used for a long time is deemed relevant.

42 Austrian Supreme Court (Oberster Gerichtshof), Case 40625/01 G, Judgement of 7 October 2001.
43 US Oral Statement, para. 53.
44 EC's FWS, paras. 278-291.

158. If Article 14(3) does not mention expressly the similarity of goods and signs, it is simply
because those criteria are always relevant to estab lish the likelihood of conf usion between two signs
and must necessarily be taken into account. Indeed, as discussed below, neither the length of use nor
the reputation and renown of a trademark can be assessed meaningfully without taking into account
the degree of similarity of the goods and signs. More over, it must be recalled that the application of
Article 14(3) presupposes the applicability of Article 13(1) and that, in order to determine whether the
use of a trademark falls within one of the situ ations listed under Article 13(1), it is necessary to
consider the similarity of goods and signs.

159. Furthermore, the interpretation of Article 14( 3) made by the complainants would lead to a
result which conflicts and cannot be reconciled with the obligations imposed upon the EC institutions
by Articles 7(4) and 7(5)(b).

160. Article 7(4) provides that a statement of objection shall be admissible, inter alia, if it shows
that "the registration of the name proposed would jeopardize the existence of a mark".
45 This language
encompasses any instance of likelihood of confus ion between the proposed geographical indication
and an earlier trademark. If Article 14(3) only required the refusal of a proposed geographical
indication where it gives rise to likelihood of confusion with a famous trademark used for a long time,
as claimed by the complainants, th e admissible grounds of objection would have been limited to the
cases where one such mark is likely to be jeopardized . Article 7(4), however, refers to all trademarks,
without any distinction or qualification. It would be pointless to admit an objection on certain grounds
if, in any event, it were not possible to reject the application on such grounds.

161. Further confirmation is provided by Article 7( 5)(b), which provides that where an objection is
admissible, and no agreement is reached among the Member States concerned,

the Commission shall take a decision in accord ance with the procedure laid down in
Article 15, having regard to traditional fair practice and likelihood of confusion.
46
162. Thus, Article 7(5)(b) requires the Commissi on to adopt a decision having regard to the
"likelihood of confusion" between the proposed geographical indication and any other marks. There is
no basis in Article 7(5)(b) for the proposition that only the likelihood of confusion with famous
marks used for a long time must be taken into account by the Commission.

Do other criteria, such as similarity of signs and goods fall within "reputation and renown"?

163. As suggested by the question, the criteria mentioned expressly in Article 14(3) cannot be
applied without taking into account at the same ti me the degree of similarity between the goods and
signs concerned, which must, therefore, be deemed implicit in Article 14(3).

164. The mere fact that a trademark enjoys reputation and renown and that it has been used for a
long time is not sufficient to establish that a geog raphical indication will be confused with that
trademark, if the two signs are not similar. For example, it is beyond dispute that "Coca-Cola" is a
trademark that enjoys a formidable reputation and renown and has been used for a long time. Yet, it
would be absurd to pretend that, as a result, th e EC public is likely to confuse the geographical

45 Articles 12b(3) and 12d(2) provide, respectively, that the criteria of Article 7(4) shall apply also with
respect to the admissibility of objections to the registration of foreign geographical indications and of objections
from outside the EC to EC geographical indications.
46 Similar language is found in Articles 12b(3) and12d(3) with regard to the registration of
geographical indications from other WTO Members and third countries and to the registration of EC
geographical indications, following an objection from outside the EC, respectively.

indication "Jijona" with the trademark "Coca-Cola", given the lack of similarity between the two
signs.

165. Similar considerations can be made with r espect to the similarity of goods. For example, a
geographical indication for cheese may be less likely to be confused with a trademark that enjoys
great reputation and renown with respect to shoes th an with a trademark for cheese even if it has less
renown and reputation. Similarly, the length of time during which a trademark has been used must be
determined in relation to a given category of goods. To continue with the same example, a
geographical indication for cheese may be less likely to be confused with a trademark for shoes that
has been used for decades than with a relatively recent trademark for cheese.

166. The above examples illustrate that the like lihood of confusion between two signs cannot be
properly established by considering only the length of use and the reputation/renown of one of them,
but must take into account necessarily the similarity of the goods and signs concerned. An
interpretation of Article 14(3) which prevented the registering authority from considering the
similarity of goods and signs would be neither re asonable, nor workable, and cannot be correct. It
must be concluded, therefore, that the criteria mentioned in Article 14(3) do not purport to be
exhaustive.

Is the criterion of "length of time [a trade mark] has been used" relevant to its liability to mislead if
the trademark has not been used for a significant, or considerable, length of time?

167. Article 14(3) requires the registering authorit y to consider the length of time during which a
trademark has been used. The reason why this crite rion must be considered is because, as a general
rule, the longer a trademark has been used, the more distinctive it will be, and, as result, the more
likely that a proposed geographical indication may be confused with it.

168. However, contrary to what has been argued by the complainants, Article 14(3) does not say
that the registering authority must refuse the registration of a geographical indication only if it has
been shown that the trademark has been used for a long time. It is conceivable that a trademark which
has been used for a relatively short period of time may, nevertheless, have become strongly distinctive
through other means (e.g. publicity), so as to make it likely that the proposed geographical will be
confused with it.

Question 69

Can the EC provide the Panel with any official st atement predating its first written submission that
application of the grounds for registration, invalidity or revocation of trademarks and Article 14(3) of
Regulation (EC) No. 2081/92 will or should be applied in such a way as to render Article 14(2)
inapplicable?

169. The EC institutions have not issued any genera l interpretative "statement" of Article 14(3) of
Regulation 2081/92. The same is true of all the other provisions of Regulation 2081/92. Indeed, unlike
in other jurisdictions, it is relatively unusual fo r the EC authorities to issue any such general
interpretative statements with respect to the EC legislative acts.

170. As mentioned in the EC's First Written Submission
47, Article 14(3) of Regulation 2081/92 has
been applied only once by the EC institutions. The in terpretation made in that case is consistent with
the interpretation advanced by the EC in this di spute. The Council concluded that there was no
likelihood of confusion with earlier trademarks "in view of the facts and information available". There
is no suggestion in the Council decision that it was considered that there was no likelihood of

47 EC's FWS, para. 288.

confusion because the trademarks concerned were not famous enough or had not been used for a
sufficiently long time.

171. The EC wishes to clarify that it is not the EC's position that its trademark legislation, together
with Article 14(3) of Regulation 2081/92, "render Article 14(2) inapplicable". Rather, the EC's
position is that its trademark legislation, together with Article 14(3), prevent the registration of
geographical indications that result in a likelihood of confusion with pre-existing trademarks, which is
the only type of confusion envisaged in Article 16.1 of the TRIPS Agreement. Article 14(2) applies
to other situations not involving that type of c onfusion where, in accordance with Article 13(1) of
Regulation 2081/92, the right holders of a register ed geographical indication would be entitled, in
principle, to prevent the use of an earlier trademark.

Question 70

Do the EC member States agree with the Commission' s submission to this Panel that the terms of
Article 14(3) of Regulation (EC) No. 2081/92, if pr operly interpreted, are sufficient to prevent the
registration of any confusing GIs?

172. The EC recalls that the submissions to th e Panel are made on behalf of the European
Communities, and not of the EC Commission.

173. The EC also recalls that Regulation 2081/ 92 is a measure of the European Community and
not of its Member States. Therefore, in principle, only the views of the EC institutions, and not the
individual views of the EC Members States, are relevant for the interpretation of Regulation 2081/92.

174. In any event, the Member States of the EC are aware of the legal interpretations stated in the
EC submission. They have expressed no objections or reservations.

Could the EC member States apply national trademark laws in a way that made this impossible?

175. This question is unclear to the EC. The EC fa ils to see how the Member States could, through
the application of their national trademark laws, pr event a correct application of Article 14(3) of
Regulation 2081/92.

176. In any event, the EC Member States are requi red under EC law to apply their trademark laws
consistently with all the releva nt provisions of EC law, including in particular the Trademark
Directive. For the reasons explained by the EC in its First Written Submission, the registrability
criteria provided in the Trademark Directive limit a priori the risk of conflicts between trademarks
and geographical indications. The complainants have not been able to identify one single case where a
registered geographical indication has resulted in a likelihood of confusion with a trademark
registered by the authorities of the Member States un der their national trademark laws. This confirms
that, in practice, Member States apply those laws c onsistently with the interpretation advanced by the
EC in this dispute.

Could the Council of Ministers prevent the application of Article 14(3) of the Regulation if proposed
by the Commission in a specific case and apply Article 14(2)?

177. In principle, the Commission is not required to submit proposals to the Council. Rather, the
Commission must request the opinion of the Committee in accordance with Article 15 of
Regulation 2081/92 before adopting a decision gran ting or refusing a registration. If the Committee
gives a negative opinion, the Commission must subm it a proposal to the Council, which may, acting
by qualified majority, adopt it or indicate its oppos ition within a certain period of time. The Council

could oppose a proposal from the Commission to refuse a registration on the basis of Article 14(3) if
it considers that the conditions provided in that Article are not met.

Question 71

Has a judicial authority ever ruled on the interp retation of Article 14(3) of Regulation (EC)
No. 2081/92?

178. As noted in the EC's First Written Submissi on (para. 288) Article 14(3) of Regulation (EC)
No. 2081/92 has never been interpreted by the Europ ean Court of Justice or by the courts of the
Member States. Once again, this confirms that , as explained by the EC, the criteria for the
registrability of trademarks ensure that the potential for conflicts between trademarks and
geographical indications is very limited.

179. As explained above
48, according to well-established case law of the European Court of
Justice, EC law must be interpreted, to the extent possible, in a manner that ensures its consistency
with the WTO Agreement, in particular where it is intended specifically to give effect to that
agreement. This principle of interpretation must be observed also by the other EC institutions and by
the courts of the Member States when interpreting EC law.

180. Moreover, as also explained
49, the European Court of Justi ce takes account of the assurances
regarding the interpretation of EC law given by the EC Commission on behalf of the European
Communities in international fora, such as the WTO.

If Article 14(3) of the Regulation, the Commun ity trademark regulation and national trademark laws
were applied in such a way as to prevent the registr ation of GIs that were confusing with a prior
trademark, could this be subject to judicial review?

181. A decision refusing the registration of a proposed geographical indication on the grounds
provided in Article 14(3) of Regulation 2081/92 can be challenged before the courts, just like any
other decision refusing or granting the registration of a proposed geographical indication.

182. Likewise, the decisions of the trademark author ities of the Member States or of the Office for
Harmonisation in the Internal Market to refuse the registration of a trademark on the grounds provided
in letters (b), (c) or (g) of Article 3.1 of the Trad emarks Directive, or in letters (b), (c) or (g) of
Article 7.1 of the Community Trademark Regulation, respectively, are also subject to judicial review.

Question 73

Please supply a copy of the wine regulations referred to in paragraph 16 of the EC oral statement.

183. The wine regulations referred to in paragraph 16 of the EC's First Oral Statement are the same
mentioned in paragraphs 310-311 of the EC's First Written S ubmission. A copy of the relevant
provisions of those regulations has been supplied as Exhibit EC-11, together with the EC's First
Written Submission.

48 Response to Question 15.
49 Ibid.

Question 74

Which particular GIs did the EC protect under Regulation (EC) No. 2081/92 prior to
1 January 1995?

184. The registration of a geographical indicati on under Regulation 2081/92 produces effects vis-
à-vis concurrent trademarks from the date of appli cation (cf. Article 14(1) of Regulation 2081/92). Of
the 658 geographical indications currently registered, 487 were applied for prior to 1 January 1995.

185. Furthermore, many of the geographical i ndications registered or applied for under
Regulation 2081/92 were already protected at the Member State level prior to 1 January 1995.

Is Article 24.3 of the TRIPS Agreement relevant to any other GIs?

186. Yes. Article 24.3 requires to maintain the level of protection of geographical indications
available on 1 January 1995, rather than the protecti on of the particular geographical indications that
were registered, or applied for on that date.

187. On the interpretation suggested in the question, Article 24.3 would impose obligations only
upon those Members which protect geographical indica tions via a system of registration, or another
system involving the recognition ex ante of geographical indications, but not where protection is
provided through other systems (e.g. unfair compe tition laws or generally applicable consumer
protection regulations that apply indistinctly to any geographical indications).

188. For example, assume that, before 1 January 1995, a Member had legislation in place
prohibiting the use of any geographical indications for products of a different origin, even when the
geographical indication is used together with terms such as "type", "kind", etc. On the interpretation
suggested in the question, after 1 January 1995, that Member would be free to repeal such legislation
with respect to products other than wine and spir its, even though this would clearly "diminish the
protection of geographical indications".

189. Moreover, the above result would be at odds w ith the principle established in Article 1.1 of
the TRIPS Agreement, according to which Members are free to determine th e appropriate method of
implementation of their WTO obligations. Members ca nnot be said to be "free" to choose the method
of implementation of Section 3 of Part II, if choosing a certain method has the consequence of
subjecting them to stricter obligations under Article 24.3.

190. The United States has argued that the meaning of Article 24.3 is that "the protection provided
to those GIs should not diminish the protections (sic) for the GIs that existed when the TRIPS
Agreement came into force."
50

191. This proposition is difficult to understand. Pr oviding protection to geographical indications
cannot, as a matter of simple logic, "diminish" su ch protection. Rather the existing protection of
geographical indications may be "diminished" as a re sult of the implementation of the limitations to
the protection of geographical indications provided in Section 3 of Part II, including in particular
those stipulated in Article 24.5 in order to mainta in certain rights of the owners of grandfathered
trademarks.

192. Moreover, the US interpretation has no textua l basis in the wording of Article 24.3, which
reads as follows:

50 US Oral Statement, para. 70.

In implementing this section, a Member shall not diminish the protection of
geographical indications that existed in that Member immediately prior to the date of
entry into force of the WTO Agreement.
193. First, Article 24.3 alludes to the "protecti on of geographical indications", and not to the
"protections" in the plural form, as argued by the United States. Moreover, the term "geographical
indications" is not preceded by the word "the". This indicates that the drafters had in mind the general
level of protection available in each Member. Se cond, the term "existed" refers to the word
"protection" and not to the "geographical indicati ons". It is not required, therefore, that the
geographical indications "existed", or a fortiori that they had been specifically recognised as such, as
of the date of entry into force of the WTO Agreem ent. This is made clear by the Spanish and the
French versions, which read as follows, respectively:

immédiatement avant la date d'entrée en vigueur de l'Accord sur l'OMC. [emphasis
added]
194. The United States also argues that Article 24.3 is an "exception" with respect to the
"implementation of the GI Section of the TR IPS Agreement" and not an "exception to the
implementation of the trademark obligations".
51 This argument is specious. In the first place,
Article 24.3 is not an "exception" to the protec tion of geographical indications, because it does not
exempt Members from the obligations provided unde r Section 3 of Part II. Rather, it adds a
supplementary obligation. Second, the "protection" of geographical indications includes "protection"
vis-à-vis the exercise of trademark rights. Indeed, Section 3 of Part II provides expressly for such
type of protection in Articles 22.3, 23.2 and 24.5. Those provisions operate as limitations to the
"trademark obligations" under Article 16.1. Artic le 24.3 provides for another limitation to those
"trademarks obligations".

195. The objective of Article 24.3 is to main tain the balance between the protection of
geographical indications and that of trademarks that existed in each Me mber at the entry into force of
the WTO Agreement. If, prior to that date, a Member provided protection vis-à-vis trademarks going
beyond that required by Section 3 of Part II, it is required to continue do so after that date. For
example, if prior to 1 January 1995 a Member pr ovided generally the type of protection required by
Article 23.2 for wines and spirits with respect to all products, it must continue to do so after that date,
whether or not a certain geographical indication had been specifically recognised as such before that
date.

196. Finally, the United States argues that the EC interpretation would allow Members to derogate
from "any WTO provision".
52 This is simply not true. Article 24.3 requires Members to depart from
other WTO provisions only to the extent necessar y to maintain the existing "protection" of
geographical indications. In order to "protect" geographical indications it is not necessary, for
example, to limit patent rights or copyrights. 53 On the other hand, as mentioned, it is beyond question
that "protecting" geographical indications may require to limit trademark rights.

51 Ibid.
52 Ibid., para. 72.
53 Ibid.

Question 75

Which party bears the burden of proof in relation to:

 (a) Article 24.5 of the TRIPS Agreement? In particular, does this relate to the scope of
the obligation in Article 16.1? Does it create an exception for measures otherwise
covered by Article 16.1? Or neither?

197. Article 24.5 is not an "exception" to Article 16.1. Rather, it defines the boundary between a
Member's right to implement protection for geogra phical indications and its obligation to protect
trademarks under Article 16.1.
54 The burden of proving that a measure falls within the scope of the
obligations provided in Article 16.1 is on the complainants.

198. The EC notes that, while the United States now argues that Article 24.5 is an "exception"
55, in
its panel request it has stated a claim under that provi sion. Similarly, Australia cited Article 24.5 in its
panel request and has made a claim under that provision in its First Written Submission.56

 (b) Article 17 of the TRIPS Agreement? In particular, does this only permit exceptions to
the rights conferred by a trademark, or does it also create an exception to the
obligations imposed on Members?

199. Article 17 allows Members to provide limited exceptions to the rights which they are obliged
to confer upon the owner of trademark by virtue of Ar ticle 16. To that extent, it is an exception to the
obligations imposed upon Members by Article 16. The function of Article 17 is similar to that of
Articles 13 and 30. Previous panels have taken the view that the burden of invoking those provisions
and of proving that the relevant conditions for their applicability were met was on the defendant.
57

Question 76

Article 24.5 of the TRIPS Agreement uses the phrases "validity of the registration of a trademark" and
"the right to use a trademark". Please set out y our interpretation of these phrases, in accordance
with the general rule of treaty interpretation in Article 31 of the Vienna Convention on the Law of
Treaties and, if appropriate, the supplementary means in Article 32. Please explain how you
determine what is the relevant context.

The ordinary meaning

200. A "trademark" is not a right. It is a sign which may be the subject of a right. Thus,
Article 15.1 of the TRIPS Agreement provides in relevant part that

Any sign, or any combination of signs, capable of distinguishing the goods or
services of one undertaking from those of ot her undertakings, shall be capable of
constituting a trademark.
201. Therefore, the "right to use a trademark" is th e right to use a sign. That right is different from,
and does not include the right to prevent others fro m using the same or a similar sign. According to

54 Australia's FWS, para. 105.
55 US Oral Statement, para. 58.
56 Australia's FWS, paras. 81-87.
57 See Panel Report, United States – Section 110(5) of the Copyright Act , paras. 6.9-6.16; and Panel
Report, Canada – Patent Protection of Pharmaceutical Products, para. 7.16.

WIPO58, typically the owner of a registered trademark has an "exclusive right to use the trademark",
which "encompasses two things":

 • the "right to use the trademark" and

 • the "right to exclude others from using the mark".

202. In turn, according to WIPO the "right to use a trademark" means the following:
59

It means first the right of the owner of the mark to affix it on goods, contains,
packaging, labels, etc. or to use it in a ny other way in relation to the goods for which
it is registered.
It means also the right to introduce the goods to the market under the trademark.
203. The term "validity" alludes to something wh ich is "valid", which in turn means something
"having legal strength or force, executed with proper formalities, incapable of being rightfully
overthrown or set aside."
60 The opposite of "valid" is "invalid ", which means "having no force,
efficacy, or cogency, esp. in law".61

204. In order to be "valid", the registration of a trademark does not necessarily have to confer
exclusive rights vis-à-vis all third parties. The fact that the owner of a registered trademark cannot
prevent the use of the same or a similar sign by th e right holders of a geographical indication does not
mean that the registration of the trademark is, for that reason alone, "set aside", or "overthrown" or
that it is without "legal strength" or "efficacy".

205. The US interpretation of Artic le 24.5 fails to give meaning to the phrase "the right to use the
trademark". If the exclusive right to use a trademark were already inherent in the term "validity of the
registration", it would have been superfluous to pr ovide in Article 24.5 that the implementation of
Section 3 of Part II shall not prejudice "the right to use the trademark".

206. The United States asserts that the phrase "the right to use a trademark" clarifies and adds to
the protection of grandfathered trademarks alre ady provided by the other terms of Article 24.5.
62
However, as a matter of simple of logic, that phrase cannot do both things simultaneously. Either it
adds an obligation, or it clarifies those obligations already provided by the other terms of Article 24.5.

207. If the phrase "the right to use a trademark" adds new obligations, it would mean that, as
argued by the EC, the "validity" of a registration does not confer per se the exclusive right to use a
trademark. Moreover, the United States does not explain how it can reconcile its position that
Article 24.5 is an "exception" with the view th at Article 24.5 confers to the trademark owners
additional rights which they do not have under Article 16.

208. On the other hand, if the purpose of the phrase "the right to use a trademark" is to clarify the
obligations provided by the other terms of Artic le 24.5, then why did the drafters not use clear
wording to that effect, such as, fo r example, that the implementation of Section 3 of Part II is without
prejudice to "the exclusive right to use the trademark" or to "the rights conferred by Article 16.1"?

58 WIPO, Introduction to Trademark Law & Practice, The Basic Concepts, a WTO Training Manual ,
Geneva 1993, p.51
59 Ibid.
60 Black's Law Dictionary, West Publishing Co., St. Paul, Minn., 1990.
61 The New Shorter Oxford English Dictionary, Ed. Lesley Brown, Clarendon Press, Oxford 1993.
62 US Oral Statement, para. 64.

209. The United States also argues that the EC's in terpretation would allow to "deny all the rights
connected with registration" and would render it "meaningless".
63 This is simply not true. It must be
emphasised, once again, that, on the EC's interpre tation, the trademark owner retains the right to
prevent all others parties from using the trademark.

210. For its part, Australia has suggested 64 that the phrase "the right to use a trademark" alludes
exclusively to the trademark rights acquired thr ough use, to which reference is made in the
introductory phrase of Article 24.5. However, if so, it would have been more logical to say that the
measures taken to implement Sections 3 "shall no t prejudice … the trademark rights acquired through
use", rather than that they "shall not prejudice … th e right to use a trademark". Australia confuses the
mode of acquisition of the trademark rights (use or re gistration) with one of the basic rights of the
trademark owner (irrespective of whether the trad emark rights have been acquired through use or
registration), i.e. the right to use the trademark.

211. Moreover, trademark rights acquired through use are also, as a general rule, exclusive within
the boundaries of the area in which they have be en used. Article 16.1 of the TRIPS Agreement
recognises expressly the right of Members to make available exclusive trademark rights on the basis
of use. In view of that, there is no good reason why Article 24.5 should provide for the co-existence of
geographical indications and non-registered trademar ks, but prohibit the co-existence of geographical
indications and registered trademarks, which w ould be the anomalous but necessary consequence of
the complainants' interpretation.

The context

212. Article 24.5 is included in Section 3 of Part II, the purpose of which is to provide a minimum
of protection to geographical indications. Such pr otection is subject to limitations in order to
accommodate other intellectual property rights. However, it would be a paradoxical result if
Article 24.5 were interpreted in such a way that , far from providing any protection to the legitimate
right holders of a geographical indication, it prohibited them from even using that indication.

213. As already explained by the EC, co-exist ence is by no means an unusual solution. It is
envisaged by several other provisions of Section 3, of Part II, and not just by Article 23.3, contrary to
what is argued by the United States. Furthermore, co-existence is envisaged even where it may lead to
some confusion. For example:

 • Article 23.2 allows co-existence of a geogra phical indication for wines or spirits and
a trademark consisting or including such geographical indication if used for wines
and spirits originating in the area to which the geographical indication relates. A
priori, the risk that consumers may confuse that geographical indication with the
trademark may be the same as when the products covered by the trademark do not
originate in that area. Nevertheless, co -existence is allowed because it does not
mislead consumers as to the true geographical origin of the products;

 • Co-existence may arise as well from Article 24.3, when the protection of
geographical indications existing before th e date of entry into force of the WTO
Agreement provided for such co-existence (see the response to Question 74 above);

 • Finally, co-existence is envisaged also by Article 24.4, which provides that a Member
may allow "continued and similar" use of a geographical indication for wines or

63 Ibid.
64 Australia's FWS, para. 74.

spirits of another Member by its nationals or domiciliaries who have used it before 1
April 1994 in good faith or for at least 10 years preceding that date, regardless of
whether this gives rise to confusion with the products of the other Member that are
entitled to use that geographical indication.

Object and purpose

214. In its First Written Submission, the United States stressed that Article 16.1 had to be
interpreted "in the light of the object and purpose of the TRIPS Agreement, and specifically with
respect to Article 16.1 and its grant of exclusive rights".
65

215. It must be recalled, however, that, under Article 31 of the Vienna Convention, only the object
and purpose of the treaty as a whole is relevant. To the extent that granting exclusivity to trademark
owners is one of the objects and purposes of the TRI PS Agreement, so is affording exclusivity to the
right holders of geographical indications. As expl ained, exclusivity is as essential to geographical
indications as to trademarks. Indeed, it could be argue d that exclusivity is even more important in the
case of geographical indications because the choice of geographical indications, unlike the choice of
trademarks, is not arbitrary, and because it takes longer to establish a geographical indication.66

Drafting history

216. The United States has argued that the predecesso r to the current Article 24.5 included in the
so-called Brussels Draft made no referen ce to the right to use the trademark. 67 However, such
reference was included in the predecessor to the current Article 24.4, which provided as follows:68

Where a geographical indication of a PART Y has been used with regard to goods
originating outside the territory of the PA RTY in good faith and in a widespread and
continuous manner by nationals or domiciliaries of another PARTY, including as a
trademark, before the date of application of these provisions in the other PARTY as
defined in Article [65] below, nothing in th is Agreement shall prevent such continued
use of the geographical indication by those nationals or domiciliaries of the said other
PARTY. [emphasis added]
217. The scope of the above draft provision overla pped, as far as trademarks are concerned, with
the predecessor to Article 24.5, which read as follows:69

A PARTY shall not take action to refuse or invalidate registration of a trademark first
applied for or registered:
(a) before the date of application of those provisions in that PARTY as defined
in Article [65] below;
(b) before the geographical indication is protected in its country of origin;
on the basis that the trademark is identical with, or similar to, a geographical
indication.

65 US FWS, para. 145.
66 EC's FWS, paras. 295 and 307.
67 US Oral Statement, para. 64.
68 Reproduced in Daniel Gervais, "The TRIPS Agreement, Drafting History and Analysis", Sweet and
Maxwell, 1998, p. 133.
69 Ibid.

218. The reference in the predecessor to Article 24.4 to the continued use of the geographical
indications as trademarks indicates that the authors of the Brussels Draft envisaged the co-existence of
trademarks and geographical indications of other Members. Such co-existence, however, would be
rendered impossible by the US reading of the predecessor to Article 24.5, which would confer to the
owners of the trademarks covered by the predecessor to Article 24.4 an exclusive right to use the
geographical indication.

219. In the final text of the agreement, the refe rence to the "use of trademarks" was deleted from
the predecessor to Article 24.4 and added to Article 24.5, but it has the same meaning and purpose as
when it was included in Article 24.4.
70

Question 77

Article 24.5 of the TRIPS Agreement uses the phrase "right to use" a trademark. Why did the drafters
not choose to state, for example, "exclusive rights" or "rights under Article 16.1"? Is that fact
relevant to interpretation of the phrase "right to use" a trademark?

220. As suggested in the question, if the drafters had intended to preserve the right of the owners
of the grandfathered trademarks to prevent the u se of the geographical indication, they would have
used express language to that effect.

221. Furthermore, if Article 24.5 did not allo w co-existence, the protection of geographical
indications provided under Part II, Section 3, would become pointless whenever there is a
grandfathered trademark. Indeed, why protect the intellectual property rights of the holders of
geographical indications against illegitimate uses by third parties if the right holders cannot use it
themselves? Yet, Article 24.5 assumes that Members will continue to protect geographical indications
("…measures adopted to implement this Sectio n shall not prejudice…"), notwithstanding the
existence of "grandfathered" trademarks. If the draf ters' intention had been to prohibit the use of
geographical indications concurrently with gra ndfathered trademarks, th ey would have excluded
completely the applicability of Part II, Section 3, with respect to the geographical indications
concerned, rather than providing that the implementa tion of that Section shall not prejudice "the right
to use the trademark".

Question 86

Article 4 the Paris Convention (1967) creates no right of priority for indications of source. Does this
indicate that they are irrelevant for the purposes of the right of priority?

222. The fact that the Paris Convention does not pr ovide for a right of priority in respect of
indications of source (including appellations of origin) suggests that the parties to the Paris
Convention were of the view that conflicts between indications of source and other industrial property
rights should not be resolved according to the first-in-time principle.

70 Several reasons may explain why the reference to the use of trademarks was deleted from
Article 24.4 and added to Article 24.5. First, unlike its pr edecessor in the Brussels Draft, Article 24.4 applies to
wines and spirits only. Second, the temporal criteria for the application of Article 24.4 were changed and differ
from those of Article 24.5. Third, unlike its predecessor in the Brussels Draft, Article 24.4 applies only to the
use of geographical indications by nationals and domiciliaries of the Member concerned. Finally, from a
systematic point of view, it is more logic to group in the same Article all the provisions concerning the
relationship between geographical indications and earlier trademarks.

Question 87

What is the significance of the EC's statement that the complainants' claims a re "theoretical"? Does
the EC suggest that this affects the Panel's mandate or function in any way?

223. The fact that the claims raised by the complainants are purely theoretical cast doubts on
whether the complainants have a genuine interest in bringing this dispute. The EC, nevertheless, is not
suggesting that the Panel's jurisdiction is affected by the complainants' apparent lack of genuine
interest. In particular the EC does not consider it necessary to request the Panel to rule on whether the
complainants have acted consistently with Article 3.7 of the DSU.

224. If the EC has insisted that the complainants' claims are often theoreti cal it is because this has
implications for the Panel's assessment of whether such claims are well-founded. In particular, in
some cases the fact that the complainants' claims are theoretical confirms that they are based on a
misinterpretation of the measures in dispute.

225. For example, the fact that the complainan ts have not been able to identify any single
registered geographical indication which gives ri se to likelihood of confusion with any prior
trademark confirms that, as argued by the EC, the criteria for registrability of trademarks, together
with Article 14(3) of Regulation 2081/92, prev ent the registration of confusing geographical
indications.

226. Similarly, to mention but another example, the fact that Australia has not been able to provide
any evidence that the EC authoriti es have rejected statements of objection for the reasons mentioned
by Australia under Claim 21
71 confirms that Article 7(4) does not provide for the limitation of the
grounds of objection alleged by Australia.

Question 89

Is there a notion of estoppel in WTO dispute settle ment which applies where a Member refrains from
raising claims in relation to a measure until after it is amended?

227. According to Article 3.10 of the DSU, the pa rticipants in dispute settlement procedures under
the DSU are bound by an obligation of good faith. Th e principle of estoppel is similarly based on the
notion of good faith. Accordingly, the EC considers that the notion of estoppel is applicable in the
context of WTO dispute settlement.

228. However, the EC considers that the Panel ma y not have to rely on the notion of estoppel in
the present case. As the EC has set out already in its first written submission, it considers that the
Panel does not have jurisdiction to hear claims whic h are directed at measures which were no longer
in force at the time the Panel was established.
72 Similarly, as regards the individual registrations, even
if these were considered to be within the terms of reference of the Panel, the EC has already set out
that these registrations in now way violate the principle of national treatment.73

229. Since the claims which Australia has raised are either manifestly inadmissible or unfounded,
the EC does not consider it necessary to rely on the no tion of estoppel at this stage. However, the EC
is ready to return to this issue at a later stage should the Panel consider it necessary.

71 Australia's FWS, paras. 89-92.